Some Short Trade Ideas

As I said earlier, I ran a new scan and came up with a LOT of candidates. I wanted to get some out there to you before the close, that does not mean you need to rush into them. You may want to establish partial positions or take the weekend to take a closer look at them (of course you can email me as well with any questions), but here are a few that I've had a chance to take a closer look at. These all have 3C negative divergences plus the Stochastics/RSI divergence that has proven to be very useful in identifying turn around situations. The red square on the first of each daily chart is an approximate stop out level, of course they are just suggestions and should be considered as such. Make sure you are comfortable with the risk in determining your stops and position sizes. Most of all, don't over react to today's price action, there's plenty of time to establish positions still.

ERTS

 Daily

 Hourly accum./dist. cycle

JOYG

 Daily

 15 min cycle in a leading negative divergence.

KLAC

 Daily

 60 minute cycle

MU

 Daily-the white arrow is just there for example showing no neg. divergence in RSI until the most recent at a double top.

 MU 15 min cycle in a leading negative divergence.

MXIM

 Daily top formation

 15 min cycle with previous negative divergences and effects of them.

ROST-Retail I think is a strong candidate.

 Daily

 30 min acc/dist. cycle

XRAY

 Daily with a confirmed reversal

Hourly negative divergences and the Stoch/RSI indications.

Margin Calls

As the way things stand right now, the market sold off so quickly, there's bound to be those who like catching falling knives, stepping in to provide an end of day bounce. However, should this not materialize to any significant effect, chances are Monday morning margin calls will go out and continued selling would be a high probability.

 DIA bearish engulfing candle, this is why gaps up in the a.m can't always be assumed to be a good thing. there can be no bearish engulfing candle-here a signal of reversal confirmation, without a gap up in the a.m.

 DIA intraday waterfall is likely to attract the knife catchers.

 IWM with 3 lower lows.

 IWM breaking support, this is why I continually remind you not to put in stops with your brokers unless you have no other choice and keep them away from obvious stop levels like this intraday support trendline.

 QQQ bearish engulfing daily candlestick pattern.

 Q's triggering the same limit/stop orders on increased volume.

 SPY bearish engulfing candle and the 3rd lower low.

And again, stops/limits hit on the break of obvious support.

Remember to pay attention to the close as it could very well trigger a wave of Monday morning margin calls which will increase supply and downside movement.

For our USO Traders

Earlier today I thought USO would continue to discount the Israeli/Gaza situation, it has. USO has added nearly another percentage point since that earlier post today.

 On this 5-day chart of USO, you can see how important this recent breakout is, it's now entering 2+ years of blue sky territory.

Here's the 60 min chart that is now inline with price, other mid term charts are quickly moving in the same direction.

Market Bellwether AAPL breaking to new closing lows?

I've been warning about AAPL's deteriorating condition, now it's getting very serious which has consequences for the broader market.

 AAPL currently is at a level which would be a new closing low since the March bounce, this wouldn't be good for AAPL or the market as it would most likely carry AAPL to its 3rd major trend lower low and definitively break any interpretation of AAPL's top.

The 15 min 3C for AAPL showed the March rally was indeed all about manipulating returns as it couldn't even confirm similar price levels marked at the start of the red arrow. The red box shows 3C moving into a new low on a negative leading divergence, even though price is higher then the mid-March lows. This is very negative behavior.

On another note, don't forget to take a look at yesterday's long trade idea, TZA.

FORGOT THE IWM

Since I captured the screen shots, the IWM has broken down even worse so the %'s are worse then they will appear in this post.

 Important support levels on a daily chart, the $84.23 has already been taken out in the last few minutes, now at $84.14

 Here ar the important support levels, the last one ($84.23) has already been broken

 3C IWM 30 minute in a leading negative divergence, not when it started, April 1st.

 The Stoch/RSI signal I've been using more frequently has a pretty bad RSI divergence (compare price levels with the marked period in RSI and Stochastics is turning down.

Here's the 60 min crossover screen which has generated a sell signal, the daily will take a day or two to catch up. Also the red dotted line is a VWAP (volume weighted average price); it has acted as support during the rally, it's now broken so there are some people caught at a loss here.

Before the move down in the last few minutes, the 6 day period ending Q1 saw a huge gain of 3.26% (remember that the Fed has seemingly concentrated it's firepower to levitate the broad Russell 2000 index). The April performance (again calculated before the last few minutes in which the IWM broke important support came in at -.40% making it the second worst performing average for April. I just quickly recalculated it, the IWM is now at an April loss of -.60.

Broad Market Update

You may recall that prior to Q1 ending March 31st, I had made mention several times that the returns must be kept as high as possible for Q2 prospectuses and to avoid redemptions, even if it is done in an artificial manner. Since Q1 has ended, we have seen momentum fall off a cliff and internals deteriorate.

Manipulation of the market, especially at qtr/year end is not uncommon, but it can't last too long, eventually the realities of the market trump any short term attempts to keep prices artificially high.

The last 6 days of Q1 returned an average of +% with the Dow only a fraction lower at +1.28% (this is also a good representation of how the market's move together). The last 6 days (including today thus far) since the start of Q2 on April 1st have broken down like this: The S&P +.01%, the Dow +.21% and the NASDAQ 100 -.56%. This set of returns is also notable, not only for the complete lack of momentum, but also for the divergence between the averages, this is usually a short term effect, but one seen at transitionary periods.

 DIA's April performance +.21% an -83% decline from the previous 6 day period.

 Today's DIA intraday support

 The Stoch/RSI setup I mentioned a few nights ago that has given pretty reliable and consistent results, which also shows an RSI divergence that is worse then the 2007 top. For calling reversals, Stochastics (for me) is just about useless without adding the RSI component, then it becomes much more effective, rarely giving a signal, but the success rate for the signals is much higher and tend to mark major tops, not just swing corrections.

 The QQQ performance since April 1 @ -.56% compared to +1.29 in the previous 6 day period at the end of Q1.

 Today's QQQ intraday support, which is at an important level on a daily chart.

 This is the same level of support for the Q's we are seeing intraday, just on a daily chart. You can see it's been an important level on a closing basis.

 The 60 min. Bollinger Bands for the QQQ shows momentum has died and volatility is starting to narrow which is typically an indication of a highly directional move.

The SPY's April performance at +.01% for the 6 day period vs 1.29% for the previous Q1 6 day period.

 Today's SPY intraday support, also an important level on the daily chart, note the uptick in red volume on the slightest breach.

 The same SPY support level on a daily chart has shown 4 closes just barely holding the level and 1 with a hammer which found support exactly at the trendline, today we are vert close to that support after an initial gap higher that could not hold.

 Here's today's TICK chart with 3 areas in red breaking the -1000 level. This shows the TICK for al NYSE stocks each minute, it's derived by taking advancing ticks and subtracting declining ticks, a reading below -1000 is extreme and until recently has been quite rare. In orange we have a sub -1250 tick which is at the bottom of the useful scale, meaning it's an extreme rarely seen.

 Looking at the Tick chart since 3/31, you can see an increasing bulk of ticks below the "0" line and the deterioration of the Tick Index since Q1 closed.

On a daily Tick chart since 4/1, look at the closing tick and the nature of the candlestick bodies as the week has progressed. Starting out at +1000 with the following 2 days showing TICKS ending the day higher then they started (but still declining) to TICK readings that end the day lower then where they started and also declining. Today's data hasn't shown up yet until the close.

I think that should give you a pretty good feel for the end of quarter window dressing/push for returns and the subsequent new quarter's deteriorating price and internal structure.

EEE FOLLOW UP

EEE is a trade idea from 3/31 to me it looks decent still, just in a consolidation.

 Lateral bases have been very common for the last 6 months or so coming out of a wedge pattern, this wedge is actually a bullish wedge with an implied target a little above $4.50.

 Daily Bollinger Bands are pinching so a directional move should be around the corner.

 The 60 min 3C chart showed accumulation before the breakout of the wedge and again during this small triangle consolidation.

 The same positive 3C stance is seen on the 15 min chart.

ADX shows the downtrend as having ended and is in good position to start a new trend. Also the downtrend was broken on the Trend channel at the white trendline, with a stop at the red trendline.

All in all, I think EEE still looks fine, it just seems to be gathering itself together for the next run. For a speculative trade, the Risk:Reward ratio is excellent right here.

On another note, I've been running scans on several indicies, so far I have candidates from the Russell 2000, the Dow 30 and am currently writing down the signals for the NASDAQ 100 scan just completed. I'll probably put these on a spreadsheet and link them at the top right of the site. I still need to go through each one individually to look for the best set ups.

Gaza tensions rise, Oil Follows

Here's yesterday's USO analysis centered on the Israeli effect.

Here's USO

If i'm long USO, I'm heavily leaning toward holding over the weekend as the likelihood of rising tensions is very high. In yesterday's article linked above, I mentioned how Oil responds most dramatically to events in Israel/Palestine, even more so then the MENA mess. I'd expect USO to put in additional gains today to discount the situation there.