DUST Trade

Friday's signal to buy DUST on the open this morning has turned our rather well, with a daily gain of 5.96% and a gain from the open of 4.89% for 1 day! 

To help put that in perspective, there were only 25 trades today out of 7193 that closed up more then 5% on rising volume, DUST was one of them. There were only 31 trades total that closed up more then 5% today; that's less then .005% of the market.

Tonights signal keeps the trade open.

DUG

DUG is a trade that has been setting up for a while now. It is a leveraged Ultrashort ETF on oil and gas.

As with any ETF, especially leveraged, we want to catch them as close as possible to the trend, not during choppy basing, even though that basing may be bullish.

 Dug first came to light as a potential long trade late last year as t formed a bullish descending wedge. Since then it has gone on to create a lateral trading range where we often see bases constructed. The bigger the base, the more potential upside. Another rule of thumb is that wedges retrace their base, in this case, the price pattern implied target is near $70, more then a double. RSI and MACD are both positively divergent.

 The big picture in 3C shows confirmation until late 2010/early 2011 when 3C started making higher lows, despite price making lower lows. Through the lateral consolidation in 2011, 3C has gone into a sharp leading positive divergence.

 The daily chart shows a base pattern similar to a complex inverse head and shoulders bottom with the neckline (breakout) around $31.40-$31.90.

 The hourly chart has been supportive of the most recent rally and volume has picked up on this rally as it should for this price pattern.

In the very near term there is the probability of a pullback, which may offer a better risk/reward set up. Or you may choose to wait for a breakout on volume. There's plenty of room on the upside so 5% here or there isn't a big deal.

I've been watching this trade develop for a long time and it is finally starting to come into its own. This is one you definitely want to have on the watchlist.

In to the Close

 SPY major support level just taken out by a bit.

 Here's how the 1 min chart has responded. The bottom red trendline is the daily support I showed you above.

 SPY 5 min has stayed pretty positive.

 If the SPY can get back above this level, it should cause a short squeeze.

 Here's the same level on the DIA, also just barely taken out today.

 The DIA 1 min chart's reaction

And the 5 min chart's reaction.

As mentioned above, if the SPY can get back above that level on a close or tomorrow a.m., it should cause a decent short squeeze. At that point, you'll want to be watching the top pattern stocks I just put out, any strength in those is where I want to look at getting short, either phasing in or jumping in. They are all in good position and I believe al option-able.

PUT THESE ON YOUR WATCHLIST

These are the kind of tops that are in great position, any strength in them and they are in even better position. I can't put up analysis for each and every one, but if you have an interest in a specific few, email me.

 ARUN

 FIG

 GBX

 HOG-I especially like today's action.

 ISYS

 LNC

 MBFI

 MDR

 MERC

 MU

 NRTL- this is the kind of action I like, a break and a kiss of resistance

 PNFP

 SKH

 TSO

 TTMI

 VSH

 WDR

WU

DUST-Gold Miner Trading System

Friday we had our second signal in DUST using the tweaked second system I posted which sported higher returns, and fewer trades (especially fewer failed trades). The idea was to buy on the open today and if you did so, you have somewhere around a 3+% gain on the day.

How you want to manage the trade from here is up to you, you can put in a trailing stop and guarantee a profitable trade or go along with the system. One of the important parts of the system is the stop loss which is not trailing, but static and calculated as a 3% decline from today's opening price.

I update the signals after market and they are executed the following day on the open.

XOMA possible LONG Set up

XOMA is a C&D trade by price and volume, although by far not the worst of the Cats and Dogs, but still speculative. Risk management should reflect that, but even if you don't trade it, these Cats and Dogs are worth watching as indicators of the market.

Here's the set up...

 A very obvious triangle, these are often broken before moving higher in a shakeout.-today we have a break of the triangle.

 There have been some recent positive divergences in the triangle and the break that just occurred was not confirmed by 3C, in other words, it's still in a positive divergence.

A high probability low risk trade here would be to set an alert for XOMA moving back into the triangle and above $3.00. At that point you may want to consider going long with a stop around $2.91 or so.

Australian Dollar As A Leading Indicator

As always, the size of the divergence, usually dictates the importance of the divergence. FXA (The Australian Dollar has shown in the past a tendency to act as a leading indicator for equities.

Here the market in red (S&P-500) has spent the last several days moving down, the Australian dollar (green) has found its footing and made a move a few days higher.

Here are some quick examples:#1 FXA fails to make a new high with the market, the S&P declines from there. #2 FXA recovers and moves higher while the S&P is still trending down, a few days later, the S&P follows FXA up. #3 FXA again fails to make a higher high with the market, the S&P pulls back from there.

It's probably not a dead on indicator, but it has been useful in the past when it diverges from the market as it is doing now.

Follow Up on the Dollar Range-SPY

If I'm a short term trader, I take this trade long the SPY right here (short term meaning I have the ability to close the trade today if need be).

Remember what I said about the US dollar perhaps giving the market a little breathing room. Two things I like here, 1) the positive divergence, 2) the positive divergence into a breach of the intraday lows -finally, from a risk perspective, your stop is only a fraction of a percent away, maybe just below the new intraday lows.

We May Have Found Our Dollar Accumulator!

None other then Bernanke's Arch-embarrasment, John Taylor.

Full Article Here...

UUP $USD

 UUP 60 min-From what I see, it looks like a large position i the dollar is being accumulated.

 The 15 min chart would suggest the same

 As would the 10 min chart

 Looking at the 1 min chart, it seems like maybe the dollar is getting a little above the level in which they want to be buyers, thus a negative divergence on the 1 min chart.

Looking at this range, UUP is toward the top of it, it seems by the volume the accumulation is happening at the lower end of the range. So it seems like UUP/US dollar may seem some downside pressure to bring it back within the range. This should provide a little short term relief to the commodity complex as well as equities. We'll find out pretty soon.

SPY Update

 Here's our 3C action for today starting with the early morning positive divergence, the SPY hit some resistance, but seems to be making some progress now. The SPY will have to break through $130.20-$130.25 or so to see any momentum build into it.

The TICK chart has improved also since hitting the resistance area around 11 a.m.

GLD UPDATE

So far, so good...

 GLD's daily resistance breakout-and failure.

 5 min 3C

 10 min 3C

15 min 3C right on a false breakout, this is usually a good timeframe for a reversal and the false breakout-so long as it holds through the close, is another excellent timing signal.

DZZ is a double short ETN with some decent volume you might want to take a look at.

I don't like this move in GLD and I do

I think this morning's move in GLD is not to be trusted, in that sense I don't like it, from a potential short position entry, I do like it.

 For timing's sake, false breakouts have always been pretty good indicators of a reversal. GLD hasn't mad a new high in the trend which is bad for the near term outlook, but it did cross recent resistance this morning. This is the daily chart with resistance at the red trendline.

 Here's a 1 min chart of GLD crossing that daily resistance, look at buy side volume swell.

 Price action is getting very fragile as it starts to wedge. Often there's one final pop above a pattern like this before a reversal.

 And the 5 min 3C chart is not confirming today's move up,

nor is the 1 min chart.

Just something to consider.