Wednesday, August 17, 2011
Chart Request: Euro vs. U.S. Dollar
This is a comparison between FXE the ETF for the Euro and The Dollar Index (and UUP and EFT for the dollar Index for intraday charts). The Euro makes up about 50% of the dollar index so it is the most influential currency paired against the dollar, thus they tend to have inverse relationships. Furthermore, when the dollar is strong, generally speaking commodities and the stock market are weak, when the dollar is weak, the stock market and commodities are strong.
DXY-Dollar Index
UUP ETF for the Dollar Index
This sequence fits well with my theory about the market and Op-Ex. That theory basically says that we get some strong market weakness the next two days, which cleans out the calls and they expire worthless, the Puts position in the $120-$130 SPY range is about 60% larger, my thinking is that these shorts who are itching to get back on the short side, exercise their options rather then selling them and next week we see a short covering rally which will take out the PUT holders/shorts. After that, I expect the next leg down to be the worst thus far. With the daily dollar chart looking as t does, if we see massive strength in the dollar, that will be massively negative for equities. That's my take as of this moment.
The Safe Haven Trade
VXX Follow Up
I think the VXX which trades the opposite of the market confirms my general thoughts on how it's going to go down in the market.
First the longer term VXX 60 min is negative, implying a move up in the market as far as the bigger picture.
The 30 min chart is also in a leading negative divergence, again suggesting the bigger picture will include a pretty good rally in the market before the next leg lower.
However, at 15 mins, it is positive and ready to move up, this means the market should move down as I suggested earlier and over the last 4-5 days.
The 5 min chart has some support and is starting to move higher on heavier volume.
Quick Short ETF Ideas Follow Up
On 8/16 I listed several ETFS that are excellent for short term trading on a bear move. Since they were first listed, they have all grown even stronger, refer back to the original post to compare.
EDZ
ERY
FAZ
SDOW
SQQQ
SRTY
TZA
Market Update
The market definitely looks short term choppy/toppy.
15 min neg. divergence (SPY)
Here's a 5 min negative divergence in what appears to be a small broadening top. The measuring/target implications from the pattern as of now would be $114.80.
$114.80 also happens to be about the same as the S3 Pivot at $114.89!
Theory on How OP-EX Friday Fits In To The Big Picture
I just looked at the SPY Options chain, between $120-$130 there's heavy open interest in both, but about 60% more in the puts then the calls.
So this is just a theory, but if Wall Street creates a SHARP sell-off between now and Friday, they wipe out most of the call contracts, the holders of Put options may be more likely to exercise their Puts then sell them if they see such a sharp sell-off. The long term 3 has been bullish, so f next week Wall Street runs the market up then the exercised Puts will be in a short squeeze and they effectively knock them out too on a Sharp rally.
Here are some of the charts that have me expecting the pullback/head fake/possible sharp sell-off....
DIA 15 min neg. divergence
DIA 10 min neg. divergence
DIA 30 mn positive-Big picture, near new highs in leading positive divergence
IWM 15 min negative divergence
IWM 2 min negative divergence
IWM 30 min chart-Big picture, leading positive at new highs.
QQQ 15 min negative divergence
QQQ 30 mn Big Picture w/ a positive leading divergence at new highs.
SPY 15 min negative divergence
SPY 5 min negative divergence
SPY 30 mn Big Picture with a leading positive divergence close to new highs.
This is just a theory, but it makes some sense or some variation of this theory. Either way, the 30 min harts seem to suggest that we have more upside and haven't even seen a short squeeze yet.
So this is just a theory, but if Wall Street creates a SHARP sell-off between now and Friday, they wipe out most of the call contracts, the holders of Put options may be more likely to exercise their Puts then sell them if they see such a sharp sell-off. The long term 3 has been bullish, so f next week Wall Street runs the market up then the exercised Puts will be in a short squeeze and they effectively knock them out too on a Sharp rally.
Here are some of the charts that have me expecting the pullback/head fake/possible sharp sell-off....
This is just a theory, but it makes some sense or some variation of this theory. Either way, the 30 min harts seem to suggest that we have more upside and haven't even seen a short squeeze yet.
Market Update
Things are happening quick, the first positive divergence sent the market up, then it came back down, now we have a strange 2nd positive divergence... The following charts are the 1 min then the 5 min 3C charts for each average.
DIA
DIA
QQQ
QQQ
SPY
SPY
HOV Trade Management
If you haven't already taken profits, partial or full, in HOV, I would consider doing dso now, we can always find another entry on a pullback.
HOV was a long trade from 8/15 in that short time, it's up nearly 19%!
These are the charts that have me thinking, "Time to take profits"...
This is the entry
1 min negative
5 min negative
10 min negative
HOV looks ready for a correction and after that move, I believe it, however, I do think there will be another buying opportunity, but to leave nearly 20% gains on the table for 2-days work doesn't seem reasonable to me.
HOV was a long trade from 8/15 in that short time, it's up nearly 19%!
These are the charts that have me thinking, "Time to take profits"...
This is the entry
HOV looks ready for a correction and after that move, I believe it, however, I do think there will be another buying opportunity, but to leave nearly 20% gains on the table for 2-days work doesn't seem reasonable to me.
