More Confirmation?

These are ETFs so when you see divergences in them, even though they are based on FX that trades 24 hours, the move is usually the next day. Lets take a look at UUP vs FXE or the $USD v the Euro, a strong Euro is a strong market, a strong dollar is a weak market, pay attention to the timeframes, I'll "A-B" each.

 $USD 3 min is negative-very short term trade.


 Euro 3 min is positive, again very short trade/trend

 $USD 5 min is neutral with slight negative


 Euro 5 min is neutral with a slight positive

 $USD 15 min large positive divergence-longer trend, more important timeframe.

Euro 15 min is leading negative-again, stronger trend and important timeframe. This seems to confirm pretty much all of the recent posts

Also Closing TNA Hedge-Small Cap Bull ETF

This hasn't been a great hedge anyway.

ERX-Follow Up

ERX is an Energy 3x Bull (long) ETF that was in place as a hedge for core short positions in the equities model portfolio, I'm interested in that next trend and may not have got out at the exact right place, but I'll take the gain.

A 27.41% gain...

The 15 min ERX chart, taken with the other charts and the $USD, I feel it's time to act based on what the evidence is now.

Closing ERX Long Position

Market + Energy, Tech and Financials

I'm not so interested in the knee jerk move unless I can use it to my advantage for strategic positioning, I'm more interested in the probabilities for the next trend. I think these charts are so clear that they don't need my annotation. Plus they fall in line with the $USD post.

 DIA 15 m

 QQQ 5 min

 QQQ 15 min

 SPY 5 min

 SPY 15 min

 Energy 15 min

 Financials 30 min

Tech 15 min

The $USD

To go along with my earlier Guess, take a look at the $USD which has an inverse relationship to stocks and most commodities (they move opposite each other).

 This short term 2 min chart move up in the $USD is what is helping send market prices down, it's too parabolic and it has a short term negative divergence, I don't think this will hold, if this falls, then the market should see the knee jerk strength I mentioned.

 Go to the 15 min chart though and the $USD has a very strong positive divergence

 The 30 min above and 60 below also have very strong leading positives, this would represent the move down in the market as the $USD moves up.

It fits almost perfectly with what I posted earlier.

AAPL's reaction

It looks like the AAPL 1 min chart posted earlier with my "Guess", worked out pretty well THUS FAR.

To the left was the positive leading divergence highlighted, AAPL fell at the 2:15 announcement and bounced right back up to a higher high.

ES Update

I wouldn't call this the "knee jerk reaction" yet, we'll see in to the close. The bigger call is the move down. Here's ES and CONTEXT followed by the 1/2 min market charts.

 There's a small positive divergence in ES, not the same size as the negative.

 CONTEXT is very close to neutral

 DIA 1 min

 IWM 1 min

 QQQ 1 min

SPY 1 min

FB Follow Up (Charts)

Remember, this is a speculative trade and position size.

 FB 1 min trend

 FB 1 min since yesterday

 2 min

 3 min

This is what I really like, the 15 min chart eliminates a lot of noise, not that there's much noise as most of the charts are all positive and leading, but the amount the 15 min chart has moved up today in a leading positive divergence is interesting. Remember yesterday I told you that I like to open positions when I se the signals, assuming I'm opening around the same area as deeper pockets.

Adding another to FB Calls

I'm going to open another 25% of FB August $21 calls, this will make a speculative position of 50% the size of a normal position as 25% of a normal position was added yesterday, this may be a very quick trade or it may not, but I will add them now.

Charts coming

ES Update

When I posted the ES (S&P E-Mini Futures) negative divergence, it was the first serious or even semi-serious divergence of the day as price was stalled, as you can see, the divergence was right on and reacted, this has nothing to do with my last post, it's just interesting.

The first signal in ES today and it actually moved price

A Guess and AAPL Update

It's very hard to try to guess what the F_E_D will do, what the reaction will be, what the ECB will do, what the reaction will be. As I mentioned, there seems to be a lot of fence sitting this week, but the closest thing I can find to confirmation among various assets gives me a thought.

I almost don't want to even print this because it is probably wildly irresponsible and I hope you won't hold it against me, but "If" I HAD TO GUESS, I'd guess there will be an initial knee jerk reaction up followed by a move down, as far as timeframes, I HAVE NO IDEA, maybe today, maybe several days.

AAPL presents several charts that I have found to probably be the closest thing to confirmation among various assets. PLEASE REMEMBER THIS IS A GUESS, KIND OF FOR SPORT LETS SAY.

 AAPL 1 min very short term looks positive intraday and over the last couple of days. This is the knee jerk move up.


 3 min negative

 5 min negative

 15 min negative

 30 min negative

 60 min negative

Maybe it looks something like this.

THIS IS JUST a GUESS

A Few other charts

Finally some movement, but it's not consistent, this may be jitters before the announcement in about 30 mins.

 I do like the QQQ 5 min chart because there's a serious negative divergence there, but price hasn't moved, these are the kind of divergences that often are showing leaked information, I don't think that is the case as it's not that consistent everywhere, but interesting.

 The SPY 1 min went negative, if price had stayed in place, I'd say there's probably a leak, but price started to follow the divergence, perhaps market makers moving inventory?

The 15 min SPY chart is similar to the QQQ chart above, earlier in the week this chart was in line, now it has a leading negative divergence. I have to think our trend expectations are still on track, it may not happen right off the bat, but I still think the next significant move (based on the charts now) will be down.

ES Follow up

Is it nervousness or a sign? While I was putting together the last post, the ES 3C negative divergence grew a lot worse very fast.

ES Update

Looking for any sign that something might be known in the market today is frustrating, take a look at ES trade, there is an interesting move starting right now, 3C is in it's first leading negative divergence, but the rest of the day....

 I have highlighted some divergences, but I have not seen ES this close to in line (meaning 3C is moving well with price-usually taken as price confirmation), this would suggest that there's very little underlying movement in front of the F_O_M_C, price itself looks the same way. However, right now we are seeing the FIRST divergence right now, a negative divergence and this is the biggest of the entire day.

Here's a closer look.

To make the market look even more like it is sitting on the fence, take a look at CONTEXT.

The model and ES are almost EXACTLY the same, this model is 30+ mins. delayed so it's not showing the most recent negative divergence .

All in all, A VERY TOUGH MARKET to read, it seems most of the big boys are sitting on their hands, but the algo story is still strange and I have a feeling it is not coincidental.

Does all of this Algo/NYSE Trade Coverage Strike You as Strange?

This is an F_O_M_C day with the ECB and BOE (3 Central banks coming out today and tomorrow with major market decisions), yet all the media is talking about is the action in 148 NYSE stocks, and the fact that this story even popped up when it did is strange.

I don't have an opinion about why, but this strikes me as VERY STRANGE.

GLD Follow Up

I've been looking for a pullback in GLD, that started yesterday and continues today with a gap down. I DID NOT put out a short trade, I don't think GLD should be traded from the short side right now, I think any price weakness with 3C strength should be considered to be a buy. Recently we've had 5 in a row successful quick trades in GLD, for each of them we let the stock come to us and traded in the direction of highest probabilities based on the underlying trade.

So I'm watching GLD for further downside and positive divergences in to that downside, there are a range of possibilities here and what the F_O_M_C and ECB do today and tomorrow respectively, could have a HUGE impact on GLD, that is another reason not to get too caught up in GLD with such a wild card unknown, that's basically gambling-betting on red or black, we want to trade with the probabilities and step back when there aren't high probabilities or wild-cards that we can't predict.

In any case, here's what we saw in GLD, what we are seeing now and some ideas for how to play this.

 The 1 min chart looks pretty much like confirmation of the move in GLD over the last few days, there appears to be a small negative divergence intraday as GLD has moved up in to the gap, I would think GLD will be one of the ETFs that sees a lot of volatility on the F_O_M_C announcement.

 The 2 min chart has been looking like a pullback was likely as it has been in leading negative position for the last 3 days and today as well.

 The 3 min chart-and this is what I like because I was expecting a pullback, not an all out sell-off in GLD, the 2 and 3 min charts and their trends have been deteriorating as you can see happened here Monday and Tuesday, showing higher probabilities of a pullback and then we get the gap down this a.m.

 At 5 mins, we have an overall negative relative divergence, but there is some positive activity the last couple of days, it will be interesting to see if this builds as this could represent some bigger orders starting to come through as price weakens. It also could be a bit of noise, but that's why we keep an eye on it, the reason I suspect it may not be is that I was expecting a pullback, if the 5 and 15 min charts were really bad, that would indicate the probability of a sell-off rather than a correction.

 You can see something similar on the 5 min chart.

Now this is where it gets a bit confusing and it has been for me too, GLD has shown some extraordinary 1 day moves in 3C on the 30 and 60 min charts, we have played some of these for short term trades and did well, these are typically NOT timeframes that express probabilities of short term moves, but for the last 2+ months, they have been and doing so very accurately.

 The 30 min chart takes a lot of noise out of the trend in 3C and shows a clear negative divergence and GLD moves down, the positive divergences moved it up as well to the left. Right now the position of the 30 min is interesting and I wonder if GLD will see an pullback capped off with a volatile move before a reversal to the upside, that would present a GREAT opportunity.

 The 60 min chart's overall positive bias and WHY I want to trade GLD from the long side, but I want to buy price weakness, not chase price strength.

 The 4 hour chart is also overall positive and this goes to what I was showing you yesterday on the daily chart in which GLD "looks" very much like it is preparing for at least an intermediate and maybe even a primary up trend.

Because we have a bear flag and a diamond and probably several other price patterns as well as support below, it's hard to tell what traders are paying attention to, that is why my pullback range is so large, maybe below the diamond, maybe even briefly below support, if we get a move below support and have strong positive divergences, I'd say we are closer to a long term long trade in GLD, but we'll continue to listen to the message of the market rather than try to guess. We tend to be ahead of the herd any way by just paying attention.