Email from a friend/subscriber

"So what I outlined as my expectations for today are on track. I expect tomorrow we'll see the same and be done with this bounce."

BOLD CALL !


Just to be clear, I give you the best information that I have in as unbiased a fashion as I can. Calling a top is very difficult, it's not meant as an absolute, the only absolute is the actual reversal in price, that's the final say. However, for many traders, at that point, the information is useless. So use the information provided to gain an edge, to plan strategically and act tactically, but always understand that the final say is the markets and be sure to use risk management consistently.

SPY Update

My first post this morning outlined what I expected to see today/tomorrow and thus far, it's right on track.

Earlier in the week, I said that there was a bearflag developing and just like GLD had to make a new hgh/false breakout, I expected a "scary" bounce in the market in general that would throw the validty of the bear flag into question. It's the same principle as what I just outlined in GLD, just a different price pattern. The reasoning for breaking up th bear flag is the same though.

Here's what it looks like on the Q's which had a very clear/clean and attention grabbing bear flag.

 The bear flag is obvious, that's why it needs to be broken by locals, it doesn't negate the negative implication of the bearflag, it just creates the volatility, volume, bid/ask spread, etc, that the HFT firms have come to rely upon as income in a low volume, low participation environment-both of which ironically make these head fakes easier to pull off.

 Here's the possible target in the SPY I put up several days ago, that would create a sufficiently scary bounce to achieve their goals before a reversal. Note however that technically, the SPY is still well within the downtrend. This is why I tell you to keep your eye on the bigger picture and not to be so swayed by these regularly occurring head fake moves.

 The 1 min chart did exactly what I hoped to see, it went negative without pulling price down, this tells me that we are not seeing the trades or distribution of market makers/specialists, but bigger money.

 And the 5 min chart has deteriorated badly today as well.

At the 10 minute chart, 3C hasn't moved above the level it was at when the SPY was trading at $129.50, so at nearly $131, this is a negative divergence on a relative basis. If the pressure keeps up tomorrow on the 1/5 min charts, the 10 min should take a turn down and the 15 min chart will be effected. For newer members, usually by the time there's a negative divergence on the 15 minute chart, we are at or very close to a reversal (not a 1 day reversal, but a swing move).

So what I outlined as my expectations for today are on track. I expect tomorrow we'll see the same and be done with this bounce.

GLD/SLV

Yesterday's GLD/SLV post

As you can see, yesterday I was waiting for GLD to make that new intraday high, which is almost a prerequisite for any reversals now (some sort of false breakout); today that happened and what I was hoping to see developed.

 Crossing above the top trendline today, GLD crossed into new high territory where I was hoping to see a false breakout as indications have been showing distribution in GLD. This is such typical behavior now, it's almost guaranteed. The 1 min chart not only did not confirm the move, but went negative very quickly. The idea here is simple, technical retail traders (in gold and silver tend to have very strong opinions) are the demand that the institutional money can sell/short into. Locals know that retail will step up and buy a breakout and the locals are only too happy to take the other side of the trade. Here, the locals won, retail as usual lost. I wrote at some length about the psychology of the new trends in the market and why traders fail to adapt to them. In any case, we are approaching some gap support so in the short term (intraday) that may act as support and GLD may bounce around a little between the two trendlines, ultimately the gap support should fail.


 This 15 min chart went negative today, like I said earlier, it can happen in a day, but rarely does, here it did and the volume shows why. The 15 min. has also gone into a leading negative divergence so I think the locals did a lot of distribution today and/or short selling.

SLV went negative on a 10 min chart today which is also pretty rare, it's also in a leading divergence. SLV has been stronger then GLD all week. The next support level is the former intraday high breakout level. Again, we may see some bouncing around between support and resistance or at least a bounce off the next support level. I still think SLV will trail GLD to the downside as it still is stronger. Note that the divergence today on GLD that was impressive happened o a 15 min. chart, in SLv, a less influential 10 min chart.

I'll feel more confident of SLV's downside reversal (a swing move down) when the next level of support is broken.

GLD looks to be in worse shape to me.

USO Update

 USO still looks set to pullback a bit and regroup before going on to take out the March highs. Today and yesterday's daily candle show the loss of upside momentum that typically precedes a reversal much the same as the first red square when the upside reversal kicked off. Being USO is at the March highs, there's resistance in the area and this is really the ideal spot to expect a pullback.

 The 60 min chart of USO is still very strong so I'm not expecting a anything more then a healthy market correction.

The 5 min chart and distribution the last 3 days, two of which were star/doji candles.

We still have a long signal on the crossover screen and typically the yellow moving average is where the first pullback occurs after a new move up. This move is a little extended and may pullback a bit more, perhaps to $40-ish.

Oil right now is extremely sensitive to events in Israel, it hasn't reacted to other MENA events on a daily basis the way it has to Israeli conflict. That's the only real fundamental change that I could see effecting oil in way other then what's expected above.

MVIS Trade (long)

This is another trade mentioned earlier this week with a limit order at the breakout around $1.36-$1.37. This is a speculative trade. It can be entered and a intraday stop can be used. What is important with these trades is that they close strong with increasing volume as that is usually followed up by a follow through day in which gains can be even greater.

Just make sure your risk management reflects the speculative nature of the trade.

HDY Follow Up

HDY is a trade from Feb 16th, it's up 25+%. It was featured this week as it's close to a breakout of the next resistance level. Today it made a pretty impressive intraday move of 13% (in that gift zone in which we take partial profits), however it hasn't been able to hold the breakout.

I know a couple of you have been in the trade for over a month, I would consider taking profits here or at least enough that this can't turn into a loss. 25+% is a decent move, I wouldn't get reckless or greedy considering today's action. If it can move back above resistance , then you can always re-enter or add shares.

ADM TRADE FOLLOW UP

ADM was a short idea from March 22nd 

Thus far, it's continued to deteriorate, despite the market's move up, which shows poor relative strength.

 The red arrow is the 22nd, ADM has been lateral since, even though the market has been up the last 2 days.

Looking at the 3 minute chart, we've had several negative divergences that have turned ADM down, the current one looks to be one of the worst on the chart. It's already leading negative and threatening a new 3C low.

SLV too

SLV has been stronger then GLD all week, it not only took out the intraday highs, but managed to close at a new high. It's also pretty ugly right now.

 The red trendline on this 1 min chart is the close yesterday and is providing some support as I'd expect. A break of this support will be an important event for SLV's trend and likely reversal.

The 10 min chart got ugly very fast today, as I mentioned, this whole process can happen in a day, but rarely does, Given the volume today, I can see why the 10 min chart went so negative so quickly.

Some of you may also want to take a look at TRID which had a limit buy order at $1.00-$1.03, it's made quit a move today, a pullback may offer an opportunity here, but this is a very speculative trade. Volume is up considerably, a close near the high increases the chance of a follow through move tomorrow.

GLD

As you probably remember, I'm expecting a reversal down in GLD. We got the move above the intraday highs, it's turned ugly since.

 Today's intraday move above the intraday highs at the red trendline (1 min chart)

The 15 min chart is already negative. Volume picked up pretty well as support was taken out.

So Far, So Good

I'm referring to my earlier post, "What I'm looking for today and tomorrow"

 As you may recall from yesterday, the 3C market charts went pretty negative starting @ 2:45, today that has continued into the uptrend. As I said earlier in the linked post above, this is the behavior I'm expecting as none of the averages have put in that, "scary" break of the bear flag, except perhaps the DIA to some extent. Today is the first day the QQQ has broken out of the flag.

Here's the 5 min chart which is now leading negative. Next up, we want to see the 10 and 15 min charts move into similar position. At this point we have the common false breakout/shakeout of the market flags.

It can be done in one day, although I'd expect two days. We'll see how they continue to develop.

Keep an eye on FXE as it is sitting just above the support zone mentioned in the currencies update. The last move up in EUR/USD was very parabolic, so if that support breaks, it's likely to see a sharp drop.

Currencies

The Euro this morning got a nice boost, which allowed FXE to fill the gap, however, this still looks like a longer term reversal and provide an opportunity on a trade in either FXE (short) or UUP (long)

 The bounce in the EUR/USD hits resistance on this 5 min chart.

 Here's a level of intraday support for FXE, if I was short here or wanted to be, I'd enter the trade below the red trendline when support is broken.

UUP has back and filled the gap. If I was to add or initiate a long in UUP, I'd wait for that FXE support to be taken out.

Earthquake hits Thailand

Here's the link

News events are fast and furious. I do believe I read that their was an expectation for more quakes based on how much the plates had shifted after the Japan Quake, something like 50 miles.

GLD

Yesterday, GLD closed at below the intraday highs, I remarked several times yesterday how it was only $.06 away from taking them out, which would be an event we'd want to watch carefully for a false move, even better would have been a close above the intraday highs. Today we are seeing GLD trade above the intraday highs, which warrants watching it for a reversal and it seems we have some cause as well.

 Here's today's daily chart, the red trendline represents the intraday highs or resistance.

 Here on a 1 min chart, you can see what it is so profitable for HFT and other institutional traders to take out these levels, whether they intend to move the ETF higher or not, just look at the volume which provides revenue through the bid/ask volume rebates and if they choose, excellent positioning and a bulltrap on a reversal). Now is the time to watch for a break down below the red trendline.

The 1 min chart is negative here so some downside should occur, whether it breaks the support at the trendline or not is what we want to see. If it does, volume should rise and a short position could be initiated with minimal risk using today's highs as a stop.

FCEL (long)

Here's a trade to keep on the radar.

There's a decent base that has formed this year and a current, bullish ascending triangle. I would consider this a but on an upside breakout around $2.18-$2.20. A stop could be placed inside the triangle around $2.04

An Interesting Alternative energy

There's been a long running dispute over the effectiveness of "Cold Fusion", apparently an Italian has developed the first commercially available cold fusion units. I'd very much like to investigate the first company taking this technology public.

Here's a short video

USO and a Visual Representation

Yesterday I said that USO looked ready for a pullback, not a bearish pullback, but a bullish one that will stop USO from becoming overbought and allow the trend to continue up in a neat manner.

However, the 3C cycle in USO is very much what I'm going to be looking for in the market as I just posted, here's what it would look like.

 Yesterday's daily closing candle in USO is a Doji which is a reversal candle. Most often these candles are confirmed the next day as reversal candles with a gap up which we have seen this morning and then a close lower then yesterday's which would be represented by the white extension I attached to today's candle.

 The 1 min chart is very negative and didn't react to the gap up at all, but this is just the final stage for the 1 min chart.


 Note the approximate 2 days of a negative divergence on this 5 min chart INTO higher prices, this is what distribution looks like, selling into demand to get the best possible exit price.

And the 15 min chart is usually the last chart where we expect a negative divergence before a reversal, it also has about 2 days of negative divergence into higher prices.

This is similar to what I'm looking for in the market averages as I noted in the last post.

What I'm Looking For Today/Tomorrow

This is what I have written and referenced several times this week as the major averages have been caught within the bear flag,

"Thus far, that analysis has been correct so we are still in wait and watch mode as the title of the post I quoted above was, "Bounces are Scary" and the first sentence was "And they are meant to be"."


Thus far, we haven't seen that "scary" bounce, just a flag develop which is especially well defined in the QQQ and SPY.


Yesterday at the end of the day, I posted some very negative, very nasty divergences that started near 3 p.m. So my expectations for today and probably tomorrow which timing-wise with the weekend would make perfect sense, is to see that divergence develop INTO HIGHER PRICES. Many times a min divergence will change the market's course intraday, not so much yesterday and certainly it didn't this morning, which hints at the fact that the 1 min divergence is not a market maker bump in the road intraday, but more probably the cycle of distribution which should continue into higher prices.


That gives us the "scary" component as there's not much reason for a bounce now-a-days unless it shakes out traders and creates volume, bull or bear traps, etc. 


Thus far on the open, there's been no confirmation of the gap higher, a sort of continuation of yesterdays's late day 3C activity. This course suggests to me that the cycle is entering the distribution/ending stages, which occur into higher prices.


So that's what I'm looking for, these divergences to build throughout the short to intermediate charts without pushing prices down as they form. This can happen in a day in rare instances, but two days is perfect which would take the institutional money out of the market before the unpredictable weekend comes.