Euro Update

I'm nearly sure the Euro will move higher, so be patient on the shorts and you'll probably get a great position.

The 1 and 2 min FXE charts are moving up in 3C, the 5 min has been up, so I expect that test to come, it may be overnight, it may carry in to tomorrow. It's a gift, just be patient.

AMZN Update-Why We Don't Chase

AMZN is still looking like a great short, but entries are important and can often make the difference between a profitable trade and a stop loss (even if the stock is a good short). So we don't want to chase weakness on a short, there are too many good opportunities and with a little patience you can get the position you want. Just as with long trades we don't want to chase rallies, but wait for a pullback which reduces risk, gives us a cheaper entry and a higher probability trade.

 Here's the daily chart of AMZN which shows it rallied off its lows, it would not have been good to chase and short at those lows.

 Here's what it looks like intraday. So we wait for a bounce and a weak 3C signal.

 So far there's some negative divergences forming as AMZN closes in on the unchanged mark

 You can see it here too, it may be intraday momentum HFTs/Traders taking profits.

 The 5 min chart suggests we may have some more upside to go, or it may not have caught up to the 1,2 min chart weakness being seen.

Long term on the daily, this is one of the worst daily leading divergences I have seen. This makes AMZN a high probability short, the entry is all that is left.

BBY Follow up

Anyone still holding BBY short from the earnings call the other day? Down now over 17% in 2 days!

Credit/Risk Update

As I mentioned earlier, I think the bounce and whatever bounce may materialize from here if the Euro doesn't break to a new low first, is all technically based because the $1.30 level which is a hugely symbolic level in the Euro as well as where the most long positions are, has been broken. We rarely see a break without a test or even a head fake (like a move above $1.30 so the institutional longs can exit and get short). As a matter of fact, we already saw both, a test and head fake earlier today.

From left to right and this is early this a.m. to present, the break of $1.30 in red, a failed test in orange, a head fake above $1.30 in yellow (but it didn't last long enough for all the $1.30 contracts to be unwound and reversed) and right now we are looking at the possibility of another test to the far right of $1.30. A break below $1.2950 is probably the end of the subject and at that point things start to move quickly, the further we are from $1.30, the more the selling snowball effect will build and since equities are now coming undone from their frothy empty bounce higher and starting to move toward the dislocations, there are a lot of DOW points way above and beyond the correlation with the Euro, in other words, the market is extremely rich to all metrics and traditional correlations so it has a LOT to lose in closing the dislocations.

I wanted to make sure there's nothing behind this other then a technical move in the Euro, meaning I checked the risk/credit indicators to see if any were willing to put on a risk trade, thy are not.

 Commodities are really selling off, if you didn't get a chance to take a look at the VALE trade idea, I would use ANY price strength to consider the trade. Any move above $22-$23 would be worthwhile considering, but even here it seems to have excellent profit potential, I just cannot advocate chasing trades, instead patience and let the trade come to you.

 Today intraday, commodities didn't care what the Euro did, they sold off during the Euro led bump higher, which explains why oil is getting hit so hard today-PLEASE some one tell me they took that trade from yesterday (short USO)?

 And here's USO vs the S&P today, you can see it didn't care what the Euro was doing either, apparently it looks like commodity traders understand how serious the Euro break of $1.30 is and they aren't messing around with an intraday bump.

 High yield credit has a VERY small uptick, but this could be due to a number of reasons that aren't exactly bullish and it is not enough to be considered "risk appetite"

 I have shown you how fast the market can close dislocations on the longer term charts, but here's an intraday chart of yields which the market eventually gravitates toward, they sold off hard yesterday at 1 p.m. and it didn't take the market long at all to sell off to reach intraday parity with them.


 Here's yesterday's attempt in ES to hold VWAP where institutional traders want to sell short, they don't want to chase the market either, but look how fast it collapsed, even after weeks of the market ignoring the Euro.

 HYG High Yield Corporates have a slight bump intraday, but again, nothing that resembles risk appetite.

Interestingly, financial momentum is a lot stronger then the market, maybe anticipating a test in the Euro?

Euro head fake

The intraday triangle in the euro/FXE broke down signaling a failed consolidation, but I think it is a head fake. $1.30 is too important to give up that easy.

It should take the market higher. Short term traders in USO short should use trailing stops right now.

 Short term bounce in USO? I think so.

Longer term still ugly.

If you took yesterday's "Fade USO with SCO trade" you made almost 10% in less then a day!

Market Update

I think the market is taking a breather, this is all Euro based as it tries to test $1.30 and the market moves with the Euro or against the dollar, so lets start with the Euro.

 Here's an intraday triangle or consolidation pattern, this looks like the breather the 1 min charts are showing.

 FXE 1 min negative, this is enough to cause the trend to consolidate for a bit.


 FXE 2 min also negative.

 But the 5 min remains positive, hinting that the Euro/FXE will move higher and still take a shot at the $1.30 level and it will drag equities higher with it, which gives us an opportunity to short some stocks in to price strength.

 The DIA shows the same, a 1 min negative as a breather/timeout or consolidation

 But the 5 min is still showing the chance for more upside.

 The QQQ 1 min shows the same.

 And the QQQ 2 min shows more upside likely, so in essence we've had a brief pause in an intraday bounce.

 SPY 1 min

SPY 2 mn.

I would still keep an eye on the FXE/Euro trade, but as  said before, $1.30 will be defended and there are a lot of contracts there, a break of $1.30 that is sustained will drop the Euro and the market like a rock, so this is the time to be productive and look for candidates that you like and look for tactical entries.

S&P CANDIDATES (SHORT)

Here are some of the S&P scan candidates, the prices next to them are areas in which a short position would be worth looking at, we want to enter on price strength and technical weakness, not chase these stocks. So if you can set alerts, that helps, if not, I will be setting alerts on these.

 CBS->$25.50

 CCE >$25.50

 CCL $33.50 area

 CF $140 area

 CMI $94

 DIS $36 area

 NOV $69.50

 NSC $72

 SRCL $77.50-$79

 TER $13.50

 TXT $17.75 area

 XOM $80.50

XRAY $35.60

AMZN

AMZN IS NEARING THE TARGET RANGE, WE JUST NEED SOME 3C CONFRMATION

Scan Ideas-NASDAQ 100

Since we are getting an intraday bounce thanks to the Euro trying to test the $1.30 level,  I figured now would be a good time to see what today's scan candidates are as they may be entered on the intraday strength. It takes a little longer to scan all the component stocks of the averages, so far I have done the NASDAQ 100 and the S&P-500 is scanning now. Here are today's candidates from the NDX.

 ADSK

 AMZN-Interesting in the $176.30 area, feel free to check with me for a 3C read before entering.

 CHKP-Above $52, $52.50 area is even better.

 CTSH-the $66.50-$67 area

 CTXS-$66.40 area

PCLN-$454.50 area.


The s&P candidates are coming up next, if you have the ability to set price alerts it makes it a lot easier to see which stocks may be offering the best entry.

The Euro bounce?

So far we only have a few charts suggesting it, but it looks like the Euro is going to take another shot at the $1.30 level, this should lift equities a bit and give you a chance to get short at a better price with less risk, keep an eye out for the move.

I doubt the test will succeed.

AAPL rocking as well

Here's the original post where we were looking for a head fake breakout to short in to, it came that day. The follow up posts can be found on December 8th

Here's AAPL today-that's about 14 points so far.

The red box on price is the head fake to be shorted last Thursday, there have been many follow up posts since. Right now AAPL looks ugly and so does 3C.