Post After-Hours ES Trade and Other Curiosities

You saw the very abnormal trade in equities after-hours, huge volume with little to no price movement which is in itself the definition of churning when strong hands offload shares to weak hands, also an event that marks a top.

 Here's the 1 min ES futures going in to after-hours. It was interesting as the futures held relatively flat as did 3C as well as the SPY, right at 8 p.m. when after hours trade wraps up, 3C went negative and ES futures started to fall.

This is the 5 min ES chart and it did the exact same thing. The vertical trendline is 8 p.m. , this is when the retail suckers (that's about the only group of people who consistently trade after hours and pre-market and many are working day jobs making this the only time they can trade and making them on average, less then sophisticated investors) trade and 8 pm marks the end.

Futures are now trading slightly negative having lost about 2 points from the close and over 3 points since 8 p.m.

The Euro is also trading solidly below both parabolic trendlines.

In a side note, Treasury and Agency backed paper has seen relentless selling, some of it is a warning from China in response to the Congressional bill labeling China as a "currency manipulator", but much, much more is coming from Europe. As was speculated 2 weekends ago right here, one substantial reason that the EUR has melted up and taken the stock market with it over the last few weeks was Europe selling US dollar denominated assets to recpaitalize their banks. The selling was very evident in the PrimeX market and as the US assets were sold, the dollars were sold putting downward pressure on the dollar and Euros were bought putting upward pressure on the Euro (repatriation of capital) and hence, sending the Euro much higher. It turns out that PrimeX was only 1 asset class; as reported by FAZ CommerzBank has been selling all bonds including US ones. Today's update of international holdings in the "FAD'S" custodial accounts saw $20 billion in sales, $19 billion alone in treasuries making this the second largest sell-off EVER! Furthermore, in the last 8 weeks and think about the timing of this rally as dollars are repatriated in to Euros, the custodial account has seen $93 billion dollars in sales!

Remember, there are several asset classes that are dollar denominated that Europe will sell: PrimeX (the evidence is in on that one), CMBS (Commercial Mortgage Backed Securities), Bonds and other Agency Paper and finally-EQUITIES (STOCKS). As pressure mounts on these European banks to recapitalize (and they have already made clear they will not raise new money through offerings when their share price if less then half of book value) they will continue to sell everything that is not nailed down to the floor. One must wonder when it will be equities' turn? I would guess the minute the market shows weakness (or even more likely they have already been selling in to the rise, thus the ridiculously bearish 3C readings over the last several weeks), watch out below. From an investor standpoint, US treasuries (a safe haven trade anyway) are going to look exceptionally appetizing at these prices and the minute the market goes from risk on to risk off... PRESTO, you have a risk off rally with fundamental underpinnings that we probably have never seen in our lifetimes and the makings of a decline that we have no way of judging just how bad it will be. One thing is for sure, it will be worse then we think, there will be just about zero international buyers as the banks put every cent in to re-caps and the short interest as of this week has fallen substantially so you don't have shorts to put a floor in on a sell off.

This will be interesting.

One last thing, the Japanese currency intervention was an absolute dud, sending the Yen to new lows when it was supposed to do the opposite. Of course the last 4 interventions haven't worked very well if at all.

More Then Meets The Eye

Expect several posts tonight because there are oddities from fundamentals, to news to technicals and 2+2 is NOT equaling 4.


First lets start here at home as it is earnings season and for the most part, besides a few big headline misses, earnings are coming in a bit better then consensus. Here's the secret of earnings, "What have you done for me lately" or better yet, "What will you do for me next quarter?" 


It's little wonder earnings are coming in pretty good considering just about every report I have read was prefaced with a seemingly boilerplate statement that consensus has been lowered at least once if not several times before the company beat. Some companies aren't even beating lowered consensus, so in effect the bar has been lowered making it much easier for a company to beat lowered expectations. It doesn't stop there though, guidance, the important part of earning which tells investors what to expect for the next quarter (after all t doesn't matter if you beat this quarter is you are lowering your sales and EPS for the next quarter-why pay current prices for less performance?) is starting to move down, at the rate it is moving down, the 12 month EPS expectations are sitting around -8.5%. 


Looking at the chart below, the last time this happened was Q4 of 2007 (if you weren't trading then, look at a chart to see what happened next).

Note the rolling over of the red line (S&P-500 12 month consensus) at the end of 2007 and look at 2011, it's happening again.


I've laid out quite a few charts and recently several that show the very eery similarities between now and the last market crash. This is just one more piece of the puzzle to consider.


Now on to the event of the year, the EU bailout "PLAN". We have some strange after hours activity, so I checked the news and nothing good. Here's what I found:


As I said last night, the countries (really country now that France is at risk of losing it's Aaa rating) that are strongest and going to bat for the weaker countries that are pulling the EU apart are not as you would think, in a position of strength. They are now the ones being held hostage by the PIIGS. It didn't even take 24 hours for Ireland to start plotting and trying to figure out what they could get if the most misbehaved country in the EU, Greece, can get 50% of its private debt forgiven with so far, no consequences. Furthermore, while yields dropped today on the PIIGS meaning there was some bond buying (which was part of the goal of this whole exercise) , the powerhouse with the best credit, Germany saw their yields rise, which means they have to pay more interest to sell their debt because they have effectively backstopped this whole operation and that is now being discounted as investors demand more interest to buy their bonds, making Germany pay more for being a good neighbor (or so we are supposed to believe).


Meanwhile, back in Germany, as reported by the Telegraph, "Holes are emerging in the grand solution". Apparently,


"A trillion euro bail-out to save the EU’s single currency is in danger of unravelling after Germany’s central bank warned that the rescue measure was too dependent on the high-risk deals that caused the economic crisis."
WHAT?
"The concerns were led by Germany’s powerful central bank, which expressed fears that a plan to leverage a €440 billion eurozone rescue fund to amass a “fire power” of €1 trillion, or £880 billion, resembled the risky finance methods that triggered the crisis in 2008. Jens Weidmann, the president of the Bundesbank and a member of the European Central Bank, sounded the alarm over the plan to “leverage” the fund by a factor of four to five times without putting any new money into the pot.

He warned that the scheme could be hit by market turbulence with taxpayers left holding the bill for risky investments in Italian and Spanish bonds."

It appears, after all the due diligence Finance Ministers and EU leaders put in to this last minute effort, the very Central Bank in the country that led the charge  (Germany) has some very serious misgivings. I wonder why this wasn't discovered earlier?

But the news doesn't stop there, hows this for gratitude?

"Greek opposition parties to the Left and Right united to condemn the eurozone deal amid mounting social conflict.

Antonis Samaras, the conservative opposition leader, said: “We are not closer to the solution but are faced with nine years of collapse and poverty.”

Dimitris Papadimoulis, a Left-wing MP, said new EU powers in the agreement to
impose austerity measures on Greece had a conflict of interest. “Those who
monitor us do not have our interests in mind,” he said. “Their priority is
that we pay back our loans.”

Soooo... I guess there's a large contingent of Greek politicians that don't even want this monstrosity that was supposedly created to save them? It kind of sounds that way. Well, that should make raising that private capital a breeze when the sponsoring country's Central Bank says it's a bad idea and the sponsored country says they don't really want it to start with!


OK, well this is a mess that just gets messier the more you look at it, but I guess it's not bad for 3 days of work starting from scratch.


Technically speaking, today looks a lot like an Exhaustion Gap. I could explain it, but I'd rather copy and paste as I have a lot to get to.


Exhaustion Gaps:

tion gap)".

Sound Familiar?

It would also make for an excellent head fake move and after hours trade may be signaling just that!

This isn't the best example, but I needed something quick and I liked that this broke a technical level that would induce buying.

The part that is missing is the prolonged, parabolic uptrend.

Quickly let me touch on after hours because I have to be somewhere before 8 and then 'll be back to work.

 This is the SPY with pre and post market trade in the lighter shade and regular hours in the darker shade. It is a current chart, do you notice anything about today's AH session?

 If you said huge volume, you were right. During regular hours this red arrow is the largest volume of the day, compare to AH.

There are 5 transactions I want to focus on. First we closed at $128.60, the 12:23 pm volume spike was 4,562,055 shares. There are 5 spikes in AH (A-E). 

A) 12,033,900  shares @ $128.57

B) 5,001,224  shares @ $128.57

C) 8,596,262  shares @ $128.57

D) 3,010,376  shares @ $124.32-128.76 (In this case, this was an old trick I use to play as a day trader, put a ridiculously low bid and some sucker would come along with a market order and get screwed)

E) 5,001,917  shares @ $128.73

Those 5 transactions amounted to more then 10% of the regular hours total volume. From my experience, high demand, chasing a rally moves prices up big time in a thin market like AH. The fact prices barely moved seems like someone may have been offering what seemed like a lot of supply at a sweet deal. If you just got home from work and missed the move today and have the chance to buy at prices that are pretty fair on what looks to be a technical breakout, you would buy, wouldn't you? Or rather, most non-professional traders who know enough about technical analysis to get themselves in a lot of trouble would buy. Very fishy.

ES right now looks almost flat, it's actually down a hair, another strange chart.

As for the EUR/USD, I drew 2 trend lines-today was a parabolic move in the Euro, so the first was the late afternoon trendline that was really parabolic and the second was the trendline for the entire day which was parabolic on its own.

 This 2 week chart shows how parabolic today was and parabolic moves up like this generally end with parabolic moves. So now you can put today in to context.

Here are the 2 trendlines for today, the most parabolic (afternoon) trendline was broken during regular hours, the second, which is the entire day is being broken right now.

I'll be back with more soon.

Too many alerts, I can't keep up with them

 DIA and that area  said looks like a set up-check the volume

 Euro with the sell signal and BB's reflecting a highly directional move, so far it looks like down.

 IWM breaking down from an apparent head fake-negative MACD/RSI

 QQQ the same situation

 SPY the same

I'm glad a member asked this

I'm looking at 30 charts a minute, but I missed this one. The question, "Is the 3C daily chart still in line?"

No, it's now considered leading negative. If I'm writing a manual on 3C, I would hopefully have the conclusion of this to show, but I would say that the last 3-5 days have been used to sell in to which can certainly mean sell short. NYSE short interest is way down after the short squeeze so their own their own there.

More Charts

Sorry about the lack of organization, I'm just trying to get them out.

 DIA in today's Linear Regression Channel vs the Euro (red), there's no technical or fundamental reason for the DIA to add strength while the Euro is falling, it seems like a set up and on big churning volume.

 FXE with my Demark-style indicator at a turning point for a highly directional move with a Demark sell signal.

 The same on a longer 15 min chart.

 IWM has been outperforming, but is one of the first to degenerate in the channel vs the Euro

 SPY very extended over the most conservatively drawn neckline.

SPY, again there's no technical or fundamental reason for the SPY to hit that high with the Euro in decline and again on heavy volume, seems very much like churning.

Updates

I'm just going to get charts out as fast as I can, the breadth charts take a while to load.

 EUR vs IWM

 Longer view, negative MACD/RSI

 NASDAQ 5 min breadth falling off.

 NASDAQ 15 min breadth falling off

 McClellan Osc. Negative

QQQ vs Euro and volume.

Today's Uptrend in the Euro was just broken

The Party may have just hit a snag

 EUR/USD 2 p.m. change, not huge yet, but potentially.

 SPY saw some downside and pretty big candles on increased volume about the same time, you can see its divergence with the Euro. The timing isn't coincidental.

And the EUR/FXE negative divergence, also 2 p.m. ish.

So remember that this is all EFSF "Plans" not action and one of the plans was to get financing from China, well China just chimed in and they want a lot in exchange.

1) They want substantial guarantees.
2) They don't want to be seen as dumb money and don't know how this will go over with the populace
3) They want other countries (the BRICS) to kick in, Brazil (one of the BRICS) has already said no.
4)They want the EU to recognize China's market economy status, something the EU and the US have been loathe to do
5) They want the EU to split away from the US on the topic of China's currency manipulation (you may have heard about a bill in the senate taking China to task) this will cause a big rift with Washington.


China s holding all the leverage, we'll see what Europe does and what the US might do.

UNG Chart Request

First off, I'm sorry it took so long to get to.

UNG reminds me a lot of URRE-the pattern, the signals, etc, just not quite as mature yet.

 URRE had avery similar price pattern to UNG-a bullish descending wedge. There is a base forming to the right of the wedge now.

 Here's the daily chart, which also looks a lot like URRE's daily chart just before it broke out this week.

 The 30 min seems to confirm a base being made

 As does the 30 min chart

 The 15 min hart is what makes me think it's still a little immature yet and I would expect price to bounce back and forth in the range for a bit longer, however, watch for any breakouts on expanding volume.

Here is URRE for comparison (daily), it didn't build the same base as UNG, but looks very similar on the 3C daily chart.

Cont...

 Worst ES divergence of the day

 Same with the DIA

 and the QQQ

and IWM

Afternoon U Turn Ahead?

I'll have more charts in a moment

 FXE/Euro and SPY Diverge. MACD and RSI also diverge

 The strongest SPY 1 min divergence all day.

 SPY 5 min also leading negative

 NYSE TICK chart diverges from the market as well, now trending down.

 VXX (trades inversely to the market ) putting in a solid divergence.

 FXE/Euro seeing the worst negative divergence of the day.

Safe haven treasuries, which were slaughtered earlier in an auction now showing the first divergence of the day.

More charts coming...