Quick Update on USO

This is a quick request...

Everything -the market and USO is down right now on a weak Euro/Strong dollar.

 The USO 1 min chart doesn't look bad at all,

 The longer term 30 min also looks good, it's a matter of the Euro finding support.

 Here's the Euro, note it has been falling in correlation with the market and crude, but it is also very close to a support area.

It looks like the Euro will find some support soon.

GLD Update

 This is the 150 day long term moving average where I have long considered GLD a buy, however just looking at the chart above, it seems that GLD hits the moving average and you buy, as simple as that. the area in the red square is about 8 days of GLD touching, bouncing off and tagging the average again. In other words, it almost builds a small base at the moving average. This is why I have said that I would prefer that GLD consolidates along the 150 day moving average, especially in light of the distribution and very sharp downtrend that preceded the move to the average.

 Here we see the current hart, we have about 3 days in the area of the 150 day average and today it is moving back toward the moving average, while no one likes a long play that is declining, I think it is a healthy move and a little bit of a trial by fire to make sure that it will hold this long term buy area. You might want to consider even building a position every time it touches the 150 m.a. you add a little more to the position.

 Today's pullback on the 1 min chart actually looks pretty healthy.

 As does the 10 min

 The 15 min looks good as well

And the hourly is stable, which is positive after such a nasty sell-off. So this looks to be a good opportunity in GLD, but give it some time to consolidate as it has many times in the past when it has touched the long term average.

Highest Probability Entries

The highest probability entry is on the completion of a head fake and when the traders who jumped in on the trade (shorts here) start to feel the pain.

 DIA first in to the descending triangle and then above it, around $112.

 IWM is just about in the triangle now, so above it around $67

 SPY around $117.50

As you can see, the correlations are off again today. A move in the VXX below $47.50 would be strong for the market.

HEAD FAKE LOOKING GOOD

 DIA 1 MIN POSITIVE

 DIA 10 min positive

 IWM 1 min positive

 IWM 5 min positive

 QQQ 1 min leading positive

 QQQ 5 min positive

 QQQ 10 min positive

 SPY 1 min leading positive

 SPPY 15 min positive

 VXX 1 min negative leading

VXX 5 min negative


There's not the broad confirmation I'd like to see, but it's enough for me to add back the rest of my positions

UPRO, UDOW, TYH and TQQQ

Head Fake Update

So far so good.

 DA has gone more positive at the break

 IWM is looking good

And the SPY remains positive.

I would think for a head fake, to make it worthwhile, they (Wall Street-SmartMoney, etc) would want to make it as convincing as they can, which would mean sending it lower, otherwise what's the point?

I would keep an eye on VXX for a reversal, that will probably be pretty good timing for a general market reversal, also watch the NYSE intraday TICK chart.

Possible Head Fake

If we get this head fake with positive divergences, I'll likely start adding other positions back in to the model portfolio.

 DIA This is a descending triangle, it has bearish implications as a consolidation/continuation pattern, meaning, according to the dogma of Technical Analysis, this is the kind of pattern that traders would usually go short on, especially on a downside break, which if we see positive divergences in to, just like yesterday's upside head fake saw negative divergences, then we'd have a head fake and probably a pretty good area to add long positions back in to the mix.

 DIA 10 min positive 3C divergence in the bearish pattern.

 IWM with the same bearish pattern, a break below the lower trendline on positive divergences would expose this as a head fake move, trapping bears/shorts. THIS IS WHAT I MEAN WHEN I SAY TECHNICAL ANALYSIS OFTEN DOES MORE HARM THEN GOOD.  WALL STREET has adapted to technical traders, but technical traders keep falling for the same games. This pattern is over 100 years old, it is burnt in to the collective minds of technical traders, making them VERY predictable and making it very easy for Wall Street to manipulate these patterns and cause technical traders to be trapped in losing situations.

 IWM 5 min positive divergence in the pattern.

 SPY descending triangle...

 1 min positive divergence in the pattern.

 Here's the VXX, which trades nearly the exact opposite of the market, it has a bullish ascending triangle and traders expect it to break out to the upside and create the next leg up. This too looks like a head fake set up.

VXX 1 min negative divergence in to the formation of the bullish pattern which is breaking out right now, the averages should be breaking down shortly, actually I just looked and they are breaking right now.

MODEL PORTFOLIO TRADES

I will admit this is a bit early, but I like the looks of the following positions that are in the model portfolio, yesterday I took 25% profits in them and was looking for a pullback to add to them.

Thus far, I believe I will add some shares back to FAS, URTY, TNA and BAC.

There are others I took profits in including TYP, TQQQ, URTY, UPRO and UDOW.

I'm not quite ready to add those back, but I may soon. I will let you know.

Remember, this is early as far as I'm concerned because we still don't have the kind of confirmation I'd like to see, but the pullback has not been that deep and adding to them later may defeat the purpose of having taken profits yesterday to add back at lower prices.

VXX Update

Yesterday VXX looked exceptionally strong on the 3C charts, see this post from last night with VXX near the bottom.

Today, they've lost some ground.

 VXX 1 min negative divergence

 VXX 2 min negative divergence and note the distribution picking up on the 3C depth chart from an area of accumulation.

VXX 10 min is still leading positive and today is still in line, but we have a start on the short term charts, if they strengthen with distribution it will make its way to the longer charts such as this 10 min.

Thus far today the market is acting a lot like I suspected it would.

Market Update

 DIA 10 min positive divergence

 IWM 2 min positive divergence, also note the 3 depth chart.

 IWM 5 min positive divergence

 IWM 10 min relative positive divergence

 QQQ 5 min positive divergence

 QQQ 10 min positive divergence

 The 15 min is still leading negative.

 SPY 1 min positive leading divergence

 SPY 2 min positive divergence.

As you can see, we have initial signs, but they are sporadic and spread throughout different timeframes in different averages, there needs to be more consistency.

Two under currents to this months end of month action are 1) The end of Q3, funds and Wall Street tend to try to pump the market, many of you have also heard of window dressing, especially at a quarter's end when new prospectuses will be going out.

The second under current is an unusually late options expiration day, which is this week. Typically the market pins the options to make as many as possible expire worthless, being that most traders are buyers of options and Wall Street tends to be sellers of options, so in pinning the most contracts to expire worthless, Wall Street gets to keep their positions as well as the premium.

These are two undercurrents that are a dichotomy or opposed to each other in their intended effect on the market. The only thing that I can think of with regard to quarter's end is the T+3 settlement rule, but that would be on trades or window dressing, not actual performance which will run right through the end of the month. Funds right now aren't doing well as a general statement, they really can't afford redemptions so I would think they would seek to juice their returns as much as possible, which is at odds typically with options expiration. Interesting dilemma huh? But only for us, they already know the answer.

Here is the options chain for the SPY starting with the Calls and followed by the Puts.

 It would seem maximum pain to me is not at $117/118, but further out at $119-$122, which means the market could rise up to about $119 and still pin the highest open interest AS OF TODAY.

Here are the Puts

Again, maximum pain doesn't look like it usually does, around the "in the money mark", but rather lower down at $110-$115. If the market were to rise from here or even hold steady here, these puts with high open interest would be wiped out. It seems to me that Op-Ex shouldn't be a major factor over the next two 2 days, at least for a modest return to a rally.