Tuesday, January 31, 2012
ES/VWAP
BAC EDIT
Apparently I have a sticky "C" key and the 3rd chart in the BAC post was not the correct ticker.
Here are the correct charts.
15 min BAC
5 min
1 min divergent at a little head fake move and in line on the downside move since.
As for the mistaken symbol, BA, I assume they may have been the respondent in the Chicago PMI that complained of lower defense spending. In any case, they'd fall in the same boat.
Probable churning day
Swing Stop on a close, we are very close
Position / Trend Stop
3C 15 min (although you already saw it)
A break below the lower trend line would make for an interesting possible trade as well as a slight bounce to the upper trend line.
Here are the correct charts.
As for the mistaken symbol, BA, I assume they may have been the respondent in the Chicago PMI that complained of lower defense spending. In any case, they'd fall in the same boat.
More on Greek Subterfuge...
I suppose it was about 2 hours ago that I pointed out the inherent contradiction in the Reuters story that Greece was close to concluding debt restructuring negotiations as early as tomorrow.
More Disinformation on the Greek Debt Restructurin...
Sure enough, the sewing circle is back in full swing, nothing against the Greeks personally, but they are a little difficult to depend on.
Business Insider reports:
Emergency Meeting Called In Greece, New Sign Bailout May Be In Trouble
And the Guardian UK reports the same...
Prime minister Lucas Papademos calls crisis meeting to ask backers for further concessions after 'tough and honest' discussions in Brussels and Frankfurt
Greek officials launched a vociferous behind the scenes attack onEuropean Union and International Monetary Fund negotiators as talks in Athens over the country's mounting debts appeared to stall.
Prime minister Lucas Papademos told aides that a crisis meeting of party leaders would be called as early as Thursday to thrash out a response to an increasingly intransigent negotiating team sent by Brussels, which is demanding severe austerity measures before sanctioning a further €130bn (£109bn) of bailout funds.
The Key take away, instead of Wednesday, now an emergency meeting is set as EARLY as Thursday and why? An increasingly intransigent negotiating team sent by Brussels
That would be the ECB and Central banks mentioned in the earlier post.
More Disinformation on the Greek Debt Restructurin...
Sure enough, the sewing circle is back in full swing, nothing against the Greeks personally, but they are a little difficult to depend on.
Business Insider reports:
Emergency Meeting Called In Greece, New Sign Bailout May Be In Trouble
And the Guardian UK reports the same...
Prime minister Lucas Papademos calls crisis meeting to ask backers for further concessions after 'tough and honest' discussions in Brussels and Frankfurt
Greek officials launched a vociferous behind the scenes attack onEuropean Union and International Monetary Fund negotiators as talks in Athens over the country's mounting debts appeared to stall.
Prime minister Lucas Papademos told aides that a crisis meeting of party leaders would be called as early as Thursday to thrash out a response to an increasingly intransigent negotiating team sent by Brussels, which is demanding severe austerity measures before sanctioning a further €130bn (£109bn) of bailout funds.
The Key take away, instead of Wednesday, now an emergency meeting is set as EARLY as Thursday and why? An increasingly intransigent negotiating team sent by Brussels
That would be the ECB and Central banks mentioned in the earlier post.
BAC Setting Up Again...
Financials are performing relatively well on the day, which is good.
I like the idea of buying in the money puts with a March expiration, but using them as a trading tool, not holding them. Previous BAC trades using this strategy have made 30% and 53% in 24 hours.
More Disinformation on the Greek Debt Restructuring
In a just released Reuters article the tag-line itself is one big contradiction:
Negotiations between Athens and its private creditors on restructuring Greece's debt could wrap up as early as Wednesday, bankers and officials said, but European Central Bank action to further reduce the burden is now seen as imperative and is proving a sticking point.
And there it is, you almost don't need to read any further. However if you do, you'll see that instead of the private sector taking a 50% loss as was the original starting point,
"Greek Finance Minister Evangelos Venizelos said the loss could even exceed 70 percent."
Yet even at a 70% haircut, it's still not enough and they see the need for the ECB and sovereign EU central banks to get involved in taking losses.
How could negotiations be wrapped up by Wednesday if they don't have a deal 1) with the ECB and 2) with each nation's own central bank?
Unless of course the private sector hedge funds are just willing to let this go through and then take Greece to court to try to recover full par, meaning 0% haircut.
Furthermore, why would US treasuries be rallying as a safe haven trade? This would also be about the 30th time we've heard negotiations are nearly complete. Here are just a couple of treasuries.
7-10 year
20+ year
Sounds like more subterfuge, and what happened to the German demand that Greece give up its financial independence for any kind of deal on the next bailout tranche?
Negotiations between Athens and its private creditors on restructuring Greece's debt could wrap up as early as Wednesday, bankers and officials said, but European Central Bank action to further reduce the burden is now seen as imperative and is proving a sticking point.
And there it is, you almost don't need to read any further. However if you do, you'll see that instead of the private sector taking a 50% loss as was the original starting point,
"Greek Finance Minister Evangelos Venizelos said the loss could even exceed 70 percent."
Yet even at a 70% haircut, it's still not enough and they see the need for the ECB and sovereign EU central banks to get involved in taking losses.
How could negotiations be wrapped up by Wednesday if they don't have a deal 1) with the ECB and 2) with each nation's own central bank?
Unless of course the private sector hedge funds are just willing to let this go through and then take Greece to court to try to recover full par, meaning 0% haircut.
Furthermore, why would US treasuries be rallying as a safe haven trade? This would also be about the 30th time we've heard negotiations are nearly complete. Here are just a couple of treasuries.
Sounds like more subterfuge, and what happened to the German demand that Greece give up its financial independence for any kind of deal on the next bailout tranche?
Quick Market Update
The Euro looking very toppy here and it has broken support
Today is the last day of the month, although window dressing for the month (not as typical as for the quarter, but for January it is probably one of the more important months) has the T+3 settlement rule, which means last week was the end of moves for any window dressing, Thursday to be exact. Since then the market has lost more then 1.82% on an intraday basis and about .70% on a closing basis through the present.
IRE Trade Idea (long)
While I'm running some scans, I've been just browsing some charts and came across IRE. I wouldn't think I would find a bullish chart that had the words, "Bank" and "Ireland" in the name, but you take what the market gives.
My Trend Channel on a daily basis has held both the down and up trends very well (I used an average entry point and the TC's exact exit point). Note volatility at the top in the bottom window. The small red arrow is the Chanel's stop or buy to cover.
RSI is positive at the bottom, which has the look (flat price and low volume) of an accumulation zone. There's also been a recent break out.
The X-over Screen did its job and rejected the first price crossover signal, but recently went long w/ a pullback to the 10 day s.m.a.
Here's a closer look at the Trend Channel stop and this is what I would use and calculate my risk management to in case of a deeper pullback.
While I don't have my main 3C layout open because of the scan I'm running, there is confirmed accumulation on the 60 min chart right where I'd expect to see it. I would almost treat this as a position trade with the wider stop, which means fewer shares initially, but if the trade moves in your favor, averaging up a winner is a winning idea.
While I don't have my main 3C layout open because of the scan I'm running, there is confirmed accumulation on the 60 min chart right where I'd expect to see it. I would almost treat this as a position trade with the wider stop, which means fewer shares initially, but if the trade moves in your favor, averaging up a winner is a winning idea.
Member Submitted Charts
They say those who can't do teach, well I traded exclusively for a living with no other income source and taught and as much as I learn every day from the market, I learned just as much in teaching. I first realized that teaching is a great way to learn when I was in my teens and gave other kids guitar lessons.
In teaching Adult Education for our county school system, I learned a lot too. First because I probably had over 300 students during the 3.5 years, I was asked a lot of questions and nothing forces you to really clarify your position like being asked a question in the middle of class. I also learned a lot in just going back to the basics (preparing lessons each week).
With the number of WOWS members and the diversity, I often hear interesting ideas that may spark additional ideas and thoughts. So I just received these two charts in an email from a member, I like them first and foremost because they focus on the big picture and cut out the noise of the daily or intraday gyrations. In using standard indicators, I almost always use non-standard settings and 90% of the time, they are much longer settings as clearing out the noise uncovers the trend.
So thanks George for sharing these charts with us. You can expect a little something in the mail, I don't know who it will be from or what it will be, but I'm sure you'll find it in your mailbox, I just hope you like it! ;)
These are long term moving averages of 200/300/360 days. This chart is especially interesting to me because the bear market counter trend rally crossover in 2008 is the same area that I find to have numerous similarities with the current market; I've posted charts highlighting the two areas dozens of times.
And here's a long term view going back to 1993. Note the Macro price pattern, especially in the context of my view that we will likely see the first ever secular bear market in equities born from the 2007 market top.
In teaching Adult Education for our county school system, I learned a lot too. First because I probably had over 300 students during the 3.5 years, I was asked a lot of questions and nothing forces you to really clarify your position like being asked a question in the middle of class. I also learned a lot in just going back to the basics (preparing lessons each week).
With the number of WOWS members and the diversity, I often hear interesting ideas that may spark additional ideas and thoughts. So I just received these two charts in an email from a member, I like them first and foremost because they focus on the big picture and cut out the noise of the daily or intraday gyrations. In using standard indicators, I almost always use non-standard settings and 90% of the time, they are much longer settings as clearing out the noise uncovers the trend.
So thanks George for sharing these charts with us. You can expect a little something in the mail, I don't know who it will be from or what it will be, but I'm sure you'll find it in your mailbox, I just hope you like it! ;)
Chi-Town PMI
Goldman's own Dave Kostin said the economy has turned for the worse, probably annoying Goldman's trading desk as they issued a long Russell 2000 note, which simply means they are selling the R2k to their clients.
Chicago PMI thus far is validating Kostin, while the R2k is down a half a percent since the GS long call.
The expectation was for Chicago PMI to beat the previous print of 62.5 with consensus at 63, it came in below both at 60.2.
The particulars show the employment component falling, the order backlog falling in to contraction (which isn't good news when everyone just restocked -remember Q4 GDP had it's biggest gain in restocking and now the orders have dried up, which doesn't bode well for Q1 GDP at all), new orders also fell, production fell (not good for employment).
From the comments section of the report, a decline in defense spending by the Federal government was hurting one respondent, another said that their orders were "uncharacteristically slow". Another said the "Talk indicates a busy quarter, but there seems to be some hesitation in getting orders out".
The devil is always in the details.
Chicago PMI thus far is validating Kostin, while the R2k is down a half a percent since the GS long call.
| Released on 1/31/2012 9:45:00 AM For Jan, 2012 | ||||||||||
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The particulars show the employment component falling, the order backlog falling in to contraction (which isn't good news when everyone just restocked -remember Q4 GDP had it's biggest gain in restocking and now the orders have dried up, which doesn't bode well for Q1 GDP at all), new orders also fell, production fell (not good for employment).
From the comments section of the report, a decline in defense spending by the Federal government was hurting one respondent, another said that their orders were "uncharacteristically slow". Another said the "Talk indicates a busy quarter, but there seems to be some hesitation in getting orders out".
The devil is always in the details.
AAPL Where are the buyers?
AAPL just posted blowout earnings after posting a rare miss, rare because AAPL is known throughout the market to issue VERY conservative guidance, which they easily beat, it's the "Scotty" principle for any Star Trek fans, when the warp drive of the Enterprise fails during a Klingon attack, Captain Kirk asks the Chief engineer, Scotty, "How long before the warp drive is back up?" Scotty answers, "15 mins Captain", all the while knowing he can fix it in 5 minutes and appear to be the hero. It's a concept I've used in management as well.
In any case, with Steve Jobs gone, the question is, "Will the amazing innovation at AAPL continue?"
Blowout earnings aren't always the best thing for a stock because as mentioned earlier, it's not about what you did, but perception of what you will do moving forward and a blowout quarter looks like a high bar to beat, if the perception is "They can't do better then this next quarter", the stock will sell off and in AAPL's case, that's a market moving event, at least for the NASDAQ 100.
Being that AAPL's gains all came in extended hours trading after their earnings (which we know smart money is not going to be buying-and lets not forget AAPL gapped up, but opened significantly lower then the extended hours trading highs), AAPL hasn't done much of anything since earnings. That divergence in RSI (Wilder's Relative Strength Index) is not a relative strength divergence vs the market, it's vs. AAPL's own relative strength.
60 min 3C
30 min 3C-Both of these charts seem to indicate that smart money has their doubts about AAPL moving forward.
Today's open (5 min)
2 min
Longer term 1 min trend.
Long Term Quarterly Sell signals, the first saw AAPL dip at least 10%, the second over 51% and now we have the largest signal yet.
It's not just 3C, but Don Worden's Moneystream is saying the same, this is the man who invented tick volume which all other money-flow indicators were derived from.
Long Term Volatility, remember an increase in volatility often marks a turning point.
This is a 10-day average of where AAPL has closed within its daily range.
This is the same indicator on a weekly basis, moving up is good (green arrow), closing in the lower end of the range tends to be a negative.
Keep an eye on AAPL at $453, $451 and $450, especially watch volume should those areas be hit. One thing about a bear market rally is that it pulls in dumb money, creates a false sense that dumb money is missing out, it appeals to their sense of greed. This is an especially interesting effect in AAPL. Have you ever been to an AAPL message board? Try it sometime. You won't find many traders there, you will find a lot of buyers who are in love with the stock. I LOVE Apple products, I love my wife, I love my job, I never fall in love with a stock. Upon a bear market rally break down, AAPL will easily be the most intriguing stock and probably trade as well.
In any case, with Steve Jobs gone, the question is, "Will the amazing innovation at AAPL continue?"
Blowout earnings aren't always the best thing for a stock because as mentioned earlier, it's not about what you did, but perception of what you will do moving forward and a blowout quarter looks like a high bar to beat, if the perception is "They can't do better then this next quarter", the stock will sell off and in AAPL's case, that's a market moving event, at least for the NASDAQ 100.
Keep an eye on AAPL at $453, $451 and $450, especially watch volume should those areas be hit. One thing about a bear market rally is that it pulls in dumb money, creates a false sense that dumb money is missing out, it appeals to their sense of greed. This is an especially interesting effect in AAPL. Have you ever been to an AAPL message board? Try it sometime. You won't find many traders there, you will find a lot of buyers who are in love with the stock. I LOVE Apple products, I love my wife, I love my job, I never fall in love with a stock. Upon a bear market rally break down, AAPL will easily be the most intriguing stock and probably trade as well.
Trade Idea PFE (Short)
PFE reported today, they beat EPS by $.03 with in line revenues, but they lowered Full Year 2012 guidance. You've seen it many times, a company beats and sells off or the miss and rally, it because what they did doesn't matter, except within the context of sentiment regarding what they will do and lowering guidance is a very clear way for analysts to make up their minds without a bunch of guess work, as such, PFE is being punished today, but it looks like just the start.
This flat range with small bodied candles is indicative of distribution, the fact RSI went negative is a bonus, and the large volume spikes from last week, a possible earnings leak.
Stochastics which has been embedded, is now crossing down.
Cutting through the noise, a 6-day chart of my custom De-mark influenced buy/sell indicator has hit the bottom and every top thus far and is giving a sell signal now.
Price Volatility was large at the last minor top and large at the bottom, it has been very narrow through the period of distribution I mentioned before, but seems to be picking up again now.
The X-over layout just gave a short/sell signal today, usually we will get a decline before the first pullback to the 10-day average, so PFE might not be so bad right here.
The Trend Channel gave a sell signal last Friday, now that the earning wild card is out of the way, this looks to be a high probability, fairly low risk trade.
The daily 3C has shown distribution has been very heavy at the recent top.
The 60 min chart confirms it and suggests a lot more downside off this top then the previous two.
The 30 min 3C chart confirms the same and shows PFE in a very ugly situation. It looks like smart money has left the building.
A more detailed view on the 15 min chart also shows distribution in the flat area I mentioned.
Here's a closer view of the 15 min.
And the 5 min shows the same with a head fake new high being distributed .
On the open today, the gap up was quickly sold off in underlying trade.
The Trend Channel would suggest a stop of $21.95, although you can email me if you want to look at stops more appropriate to your trading style.
I would consider a partial position here of maybe 50%, if we get any bounce then you can add, but make sure your risk management is set up before you enter the trade with that in mind. There's also nothing wrong with adding to a trade that moves in your favor, or you could add on the first pullback.
I would consider a partial position here of maybe 50%, if we get any bounce then you can add, but make sure your risk management is set up before you enter the trade with that in mind. There's also nothing wrong with adding to a trade that moves in your favor, or you could add on the first pullback.
