Re-Cap

Lets take a quick look at the market using the Institutional gauge of whether their orders where filled at advantageous prices or bad prices, if they didn't get a good fill on the average total of their position, it's not likely they'll be sending more business to that market maker or specialist and/or in house traders would have some explaining to do. Watch how the pieces fit together.

 Here we have last week's trade action with a weekly VWAP in ES. We had gone long in leveraged long ETFs and AAPL calls for the move up and as you can see the market or ES moved up and we were closing out those longs like AAPL calls on Tuesday at a +47% gain and Wednesday we closed FAS, TQQQ and ERX at small gains of 5-6% and , but they were still gains.

By Wednesday last week we could already see distribution was coming in to the market and by Thursday it was VERY clear and we were entering leveraged short positions for a move down in ETFs like FAZ, UVXY, FXP, etc. Friday the market fell, below you can see all of the signals that got us long and short last week. I actually thought it was a bit ironic that we were trading both FAS and FAZ the same week and making money on both.

 Here on the 10 min SPY chart we see accumulation before the run up and by Wednesday distribution was already clear, Thursday it was unmistakable. The recent longs entered late Friday afternoon and this week are in response to the next wave of accumulation which started late Friday after most options positions were likely already closed out (see below).

As the market fell on Op-Ex Friday, by late afternoon we could already see accumulation was starting (see above) which seemed like they were in a hurry to get started and not waste time; remember they need time as reversals and accumulation/distribution at reversals are a process, not an event. Last Friday afternoon I started opening partial speculative Leveraged long positions, you may recall I didn't want to open more than half on Friday and wait to add the other half at better prices. Some of the long positions included AAPL $615 November Calls that were closed yesterday for a 13.5% profit , I closed the PCLN short trade at a +26.5% profit and entered ERX, XIV and TNA  and before the close UDOW as well, all positions that are in preparation for the next move.


 Above is a weekly VWAP of ES, in the white area we saw the market pop on a Market Watch article that the F_E_D would be expanding QE3; this move threatened to break above the 2nd standard deviation of VWAP which is not an advantageous area to fill new long positions, ES had to be halted and brought back down. After hours yesterday at the red arrow Moody's gave the market the excuse it needed by downgrading 5 Spanish Regions as the Spanish Regions bailout fund has less than 5% left and the borrowing costs will rise with the Moody's downgrade for the Spanish regions. In essence, the Regions will need more bailout money, but Spain doesn't have anymore in the fund-THAT WAS ENOUGH TO SEND ES NOT ONLY BACK BELOW THE WEEKLY VWAP, BUT TO WALK THE LOWER 2ND STANDARD DEVIATION. This would be an advantageous area to fill long positions and I used it for that purpose today in filling out some of Friday's initial long positions as well as starting the Financial long position in FAS that I didn't think was ready on Friday as Financials did underperform and finally gave some signals today.

 Looking at the daily VWAP for ES, you may recall the positive divergence early today pre-market and in to the lows of the day, as ES moved toward the top of the daily VWAP we had already seen negative divergences today and expected some intraday pullback.  The net effect, ES was kept below VWAP where long orders could be filled.

Here's one of the many intraday signals we saw today that kept ES and the market from rising above VWAP and within the range. Also note the early positive divergence as most likely long orders were filled in the area.

In after hours so far ES looks like this...

1 min ES and weekly VWAP.

Today's 3C signals in ES, right now we are pretty much in line after the last negative divergence halted ES at the daily VWAP (see charts above).

The range we were looking for is starting to look pretty obvious in the Q's...

The positive divergences that we expected to see are coming along...

I can't say what ES will do overnight, but as we have seen so many times before, the Euro and Treasury signals that I showed you before the close today tend to be good signals for the market open/movement the next day.

I see FB is doing well after reporting earnings, I gave the evidence I had for an earnings based trade which was biased toward a positive reaction short term/on earnings and I gave the evidence that supported our longer term long position in FB and explained how these longer term signals themselves were predicting earnings reactions. I see FB is up over 10% in after hours, as I mentioned in the updates for FB today, earnings or not, the positive divergences we have been following there are enough for me to stay long FB.

I feel very good about our positioning over the last few weeks as we have been in front of the market getting some of the best entries. I also have a good feeling about our current positioning.