Both systems are long NUGT as of tonight's close. NUGT actually showed substantial underlying improvement today and closed well off the open. I was hoping that the system wasn't going to call for an exit after looking at the NUGT chart.
The current stop-loss (on a closing basis) is at $27.41.
For risk management/position sizing purposes, the statistics show that the worst draw down on a bad trade is about 8% (not the average) so you can roughly use that figure to calculate risk in your position sizing.
Thursday, June 23, 2011
NUGT Update
NUGT showed substantial improvement today, and f you bought it on the open, you should now be in the green by nearly 2%
3C 5 min leading positive divergence
3C 10 min relative and leading positive divergence
and a relative positive divergence even on the 15 min chart for the day.
That's pretty impressive
That's pretty impressive
This Was NOT Institutonal Accumulation
Twas the News-and Where would you expect it from?
From Reuters:
Greece has won the consent of a team of EU-IMF inspectors for its new five-year austerity plan on Thursday after committing to an additional round of tax rises and spending cuts, sources with knowledge of the talks said.
"We have a deal," said one of the sources.
Another source close to the negotiations said that a few remaining technical details would be finalised on Friday.
Finance Minister Evangelos Venizelos announced on Thursday Greece's Socialist government would lower the minimum threshold for income tax to 8,000 euros a year, increase the tax on heating oil and impose a one-off solidarity levy on income of between 1 and 5 percent.
Interesting...
Either someone just set some algos loose or something broke in the news I haven't seen yet, this isn't normal market acton.
Maybe a forced short squeeze?
Gold Update
The same issues mentioned in the last silver post re: Dodd/Frank also apply to gold.
Gold looks similar to silver in its break down today. I usually don't trust the first break of support, but yesterday's false breakout gives it a bit more credibility in my view.
The daily chart/Triangle and the false breakout yesterday, leading to a break of support today
Here's the 15 min 3C chart. Clearly yesterday's move above resistance was a false/failed breakout, as such we typically see fast moves in the opposite direction as we have today. If you trade this short, I'd still be cautious as I don't usually trust the first break, but there could be at least a decent swing move and perhaps even more. 3C is currently in line with price action.
Gold looks similar to silver in its break down today. I usually don't trust the first break of support, but yesterday's false breakout gives it a bit more credibility in my view.
SLV update
Looking at the pattern on the daily chart, there could be a significant move down. I've covered this pattern numerous times, it's more or less a large bear pennant.
USO Update
USO has made some progress today, you can see yesterday's false breakout I warned about n two posts (at the red square). Right now there's a 5 min leading positive divergence in USO, however, accumulation rarely occurs in to higher prices, so I'd expect a pullback shortly. Overall, it's fairly good progress today.And on a bizarre note, this was released by ZH. Remember, GS doesn't pay millions of dollars for research to give it away for free.
UNG Natural Gas Follow Up
I've talked recently about UNG, a poorly performing commodity, potentially turning this around.
Take a look at this 60 min chart which sent UNG lower in the last cycle.
The 60 min chart, cycle from accumulation (stage 1) to decline (stage 4)-a complete cycle.
Looking at UNG vs. the 50 day moving average, it's obviously turning and likely forming a base. When large positions are sent to specialists to be filled, there's an average target price, if UNG runs too high, they simply knock it back down and begin accumulating again.
Now take a look at the daily 3C chart.
Rarely do we see a divergence this big on a daily chart. It looks like someone is putting together one big position in Natural gas.
Take a look at this 60 min chart which sent UNG lower in the last cycle.
Now take a look at the daily 3C chart.
Market Update
Some of the big boys are showing pretty good relative strength
AAPL
INTC
PFE
As for the market, understand that Tuesday we hit resistance at the $129.75 area, that's when I started seeing some negative divergences develop and started talking about the need for the market to pullback, regroup and basically accumulate to make another run at the resistance level. Wednesday we had slightly higher, but marginal gains, 3C continued to fall apart suggesting as I said yesterday, we'll see a pullback which is not a bad thing so long as the underlying 3C action shows some accumulation in to the pullback.
Accumulation has to start somewhere and that is on the 1 min chart. As accumulation grows stronger, it will move to the 5 min, 10 min and 15 min charts. By the time accumulation is obvious on the 15 min chart, we should have enough fuel to launch a new test of resistance.
Here are the current market charts:
DIA 1 min showing some decent 1 min 3C positive and leading positive divergences.
DIA 5 min with both positive relative and leading divergences
The IWM hasn't shown much yet on short timeframes, but the hourly chart is encouraging that it hasn't taken a deeper dive.
QQQ-early morning divergences suggested the Q's would back and fill into the gap. Right now, the 1 min is in a leading positive divergence.
The hourly has also held up well.
SPY 1 min. relative and leading positive divergences.
SPY 15 min chart has held up pretty well thus far.
As for financials, FAS has been lateral in a price range, but 3C is in a leading positive divergence
There are similar signs on the 5 min chart
As well as the 10 min chart.
I suspect averages like the Q's will pullback a bit and hopefully we'll see some stronger divergences on the intraday pullback. Right now the positive divergences are rather slow in building. An event in the SPY like a brief break of the 200 day moving average around $121.20 could trigger a lot of stops and that could allow for a nice pop in accumulation, we'll have to see if something like that happens and watch t closely to make sure there is accumulation on such an event.
As for the market, understand that Tuesday we hit resistance at the $129.75 area, that's when I started seeing some negative divergences develop and started talking about the need for the market to pullback, regroup and basically accumulate to make another run at the resistance level. Wednesday we had slightly higher, but marginal gains, 3C continued to fall apart suggesting as I said yesterday, we'll see a pullback which is not a bad thing so long as the underlying 3C action shows some accumulation in to the pullback.
Accumulation has to start somewhere and that is on the 1 min chart. As accumulation grows stronger, it will move to the 5 min, 10 min and 15 min charts. By the time accumulation is obvious on the 15 min chart, we should have enough fuel to launch a new test of resistance.
Here are the current market charts:
I suspect averages like the Q's will pullback a bit and hopefully we'll see some stronger divergences on the intraday pullback. Right now the positive divergences are rather slow in building. An event in the SPY like a brief break of the 200 day moving average around $121.20 could trigger a lot of stops and that could allow for a nice pop in accumulation, we'll have to see if something like that happens and watch t closely to make sure there is accumulation on such an event.
Quick Trade In Financials
We'll have to see about the pullback and whether t starts accumulating, but in the short term (intraday), it looks like financials will fill some of the gap and that may be a trade some of you may be interested, perhaps long FAS for an intraday trade?
XLF 1 min positive divergence
FAS (Financial bull 3X) positive divergence
FAZ (Financial bear 3x) negative divergence.
USO Update
Well USO dis what was expected. Right now though it looks as f it'll move in to the gap and fill a bit.
3C was negative, but didn't fully confirm the move down, I'd expect some backing and filling, as morning trade passes, we'll get a better picture of what's coming next, although there are, as I pointed out yesterday, some very bullish looking charts on the long end in USO.
The PMs
Early Market Update
Both the above chart did not confirm on a 1 min 3C timeframe, suggesting they will most likely back and fill into this morning's gap.
Initial Claims
Missed consensus this morning by 14k at 429k with the previous being revised higher, not a good start for the day.
