Silver

Long time member's know how I feel about silver/SLV or any derivative, I hate analyzing them because silver has been one of the most manipulated assets out there since 2008 when JP Morgan took over Bear Stearns and inherited their large short SLV/Silver position.

Since a long time member asked, I took a look and didn't like what I saw. As for SLV/Silver, the probabilities look solidly lined up against it, as for a trade, it's not in a great risk/reward area, maybe with a move in the right direction it would be worth it, but otherwise as it sits right now, it's not something I would pursue and I'll show you why.

 Here's the big silver manipulation of 2011 led by Max Kieser, "BREAK JPM'S SILVER SHORT". The line in the sand for JPM was supposed to be $32, above that they were underwater on their short, but who knows. We just know that SLV broke a certain level and took off for a 57% gain in two months, then the COMEX stepped in and hiked margins several days consecutively, some with a day inbetween, but even after the move in silver was killed, the COMEX still hiked margin requirements to make sure silver was dead. Why? I think JPM did the F_E_D and Hank a big favor when they took Bear Stearns, it seemed to me that these big institutions didn't want to see JPM hurt for helping them out, and thus SLV fell 30% in 2 weeks.
 
 There's a daily Bollinger Band Squeeze and it looks like SLV will soon make a highly directional move, which way though?

 This is my Demark inspired indicator, it has called tops and bottoms in SLV and right now it's calling a large top.

 Embedded Stochastics are fine with me, it's a sign of strength, but when they start to turn down, it's a change in character, also note RSI in a negative divergence.

 The X-Over Screen isn't quite there yet, but it is moving closer to a sell/short signal.

 My Trend Channel on a 2-day setting shows where the short starts at the left, where it ends at the red arrow in the middle, and where the long stop is now, around $32. The blue indicator shows where SLV has closed within the daily range which is interesting information.

Here's the 1 day TC for a tighter stop...

As for this move that has held the bulk of the uptrend, it's already stopped out. i find after the Trend Channel stops out, there's just volatility, there's usually not much hope for further gains. The Custom "Close Within Range" indicator also shows the daily closing action in SLV turning bearish.

 The 4 hour chart is negative

The hourly chart is negative.

 The 30 min is negative, that's enough confirmation for me to not trade this long.

I also wouldn't trade it short unless it gave a price concession and lowered the risk on the short, I'd need to see prices around $33.50 to $34 or greater before entering a short in SLV. That's my take.

UNG @ New Recovery High

And not only that, it's looking to close near that high on volume, stage 2... Here we come!!!!

While the rest of the market sits around indecisive "looking" near the close, UNG is decisive.

 That's a new daily closing high and the candle looks to close near or at the high of the day on a nearly 5% gain with rising volume.

 UNG 30 min through most of the base, nice confirmation now...

However that last pullback seemed to be very important, it sent a 4 hour chart to a new leading high and right after, UNG followed. Smart money was at work right before the breakout.

GDX-Miners

If you have been paying attention to the South African gold and other metals, miners' strike which I haven't followed as closely as I should recently, I know the first company's negotiations ended up giving miners' who were striking about a 22% pay increase, of course other mines went on strike looking for the same treatment, I know at least one told their employees to go take a long walk off a short pier.

The point is, gold miners "USE" to lead the actual metal, not anymore. When putting together an automated trading system the two biggest factors were the price of oil (for operations) and the currency exchange rate as the fluctuations may make their wages very high vs the gold's value very low or the other way around.

In any case, we need to look more closely at miners, but a quick look at DUST, the Bear 3X Gold Miners or GDX, looks pretty solid as a long which wouldn't be good for GDX/miners.

Here's a sneak peak of a long term chart and the trend of a short term chart.

 This is the trend (5000 bars) of the 3 min chart, an obvious huge positive divergence meaning DUST is looking good as a long, although it seems to be building a base to launch that move from.

Longer term the 30 min. chart shows where DUST went negative and the confirmation of the move down, also a positive divergence (rather a series of them) at the same place the 3 min trend is showing them.

Something bad is happening to miners which is good for DUST longs.

How Fast Things Change

 This was the NASDAQ intraday futures just 30 minutes ago in this post 

 This is the NASDAQ 1 min intraday futures 5 minutes ago, they're even higher now.

That last post-ooohhh!!!

I'm not a told you so kind of guy, but the market has behaviors that you'll notice if you watch it often enough. In this case, this is nearly a century of price pattern conditioning of Technical Traders, Wall Street figured out what Technical traders will do when confronted with these price patterns a long time ago, around the time the Internet, cheap online brokers and everyone switching to Technical Analysis so they could trade their own portfolios. After that, slowly and surely these patterns were used more and more often against technical traders, they are too predictable and haven't changed or adapted, which makes Wall Street's response predictable, which is an edge.

In the last post I showed you the same pattern, the confirmation of it and as soon as it's posted, take a look....

Note the volume pick up in AAPL as the bearish price pattern, a descending triangle is broken to the downside by a few cents, VOLUME SURGES as the shorts step in on "Confirmation".

Now the second half of the story, "The bear trap". On a reversal, just as AAPL saw on the open above resistance where retail would have bought on a breakout move, once prices move against the shorts that just entered, their covering creates the demand that kick starts the move higher, the higher it goes, the more shorts covering at a loss and the more demand sending it even higher. THIS IS EXACTLY WHY FAILED MOVES ARE SUCH FAST REVERSALS.

Where Have I seen this before-AAPL/SPY

 AAPL intraday with a very familiar bearish descending triangle which is a consolidation/continuation pattern, any technical trader who has read a few hours of a TA price pattern handbook knows this pattern and well, often shorting inside the pattern, but most wait for confirmation which is the break below the pattern, sometimes it comes, sometimes it doesn't. However the larger point is the more obvious the pattern, the more likely it gets manipulated or was set up as a manipulation. It reminds me of another descending triangle we saw with a positive divergence going in to it.

IT was in the SPY on a longer timeframe, but the markets are fractal, we already knew the bearish continuation pattern had a positive divergence and thus we'd be seeing a move to the upside, the break below the pattern (confirmation) where the shorts jumped in is where we added a bunch of leveraged longs as hedges to core short positions.

What happened next?

That was the June 4th low, the market rallied ever since, well recently it's been a little "ify"

Market Update

There seems to be a lot of gap filling going on today, but I think this is more about AAPL than anything else. This post from earlier today though is by far the most important, Futures update , everything else is short term tactical stuff or noise. On to the noise...

 IWM 5 min is already in place as in a positive position, it didn't quite fill any gaps, but close enough.
The change in character from the negative divergence sending the market lower and confirmation (green arrow) to the leading positive is important, still the futures timeframes are all the stronger.

 NASDAQ 1 min intraday saw a positive at the same area as the AAPL stop run. Still the 1 min chart isn't showing anything like the futures 5, 15, and 30 min charts seen in the link above.

 QQQ 5 min like the IWM 5 min is also showing a significant change in character, we did get a gap fill here.

 The reaction of the QQQ 1 min around the AAPL stop run, there were positives in place earlier, but nothing like that leading positive at the stop run in AAPL.

 ES 1 min futures, again it is positive, but the real story is in the earlier post linked above on the more important 5, 15 and 30 min ES charts.

SPY 10 min in place and a large change in character, the 1 min isn't showing anything spectacular yet, maybe it will fill the gap?

AAPL Update

Actually I didn't get the exact timing I wanted because I was in the middle of capturing these AAPL charts showing that the time was nearing and as I was capturing them, the time came so the entry is a bit off, but over the next day or several days I don't think it will matter much. As mention, I chose AAPL October $630 calls which were at a $7 discount from yesterday.

 As mentioned earlier, because reversals are a process and not an event, the most probable odds were for AAPL to consolidate somewhat laterally, as you can see the Rate of Change (ROC) of price reversed by noon and was heading up as the downside momentum fell off.

 There were two intraday stops in AAPL, the hammer at the far left and a reaction low around 12:45, when price dropped below both volume picked up, that creates supply that institutional money can accumulate or market makers and no one knows the difference as someone has to take the other side of the trade, but...

 After non-confirmation on the open, the 1 min chart did show an increasingly large positive divergence right when those stops were triggered making it likely market makers or someone else with deep pockets accumulated AAPL there.

 The 3 min chart shows earlier positive divergences, but a nice one at the exact same time.

And the 5 min chart shows a slight head fake trade on the open as it opened above local resistance and failed, the same concept holds in reverse on the stops and the 5 min chart even picked up on that stop level.

Opening AAPL Oct $630 calls

Selling GLL at -1% portfolio loss

My normal risk management loss per position is 2%, GLL is not performing like I'd like it to and I see a different way I'd like to trade Gold without having long term open risk.

 The GLL position is at a 12.7% position loss and less than 1% portfolio loss, but I see a different way I'd like to trade GLD and some near term upside looks likely.

 As suspected, the very last breakout of the range in the yellow box was a failed breakout like the two previous ones, this is where I was looking for a quick put position in a gold equity or derivative, I know  at least two members took the trade and made some money in a single day. I'd rather play the short term/leveraged gold plays than leave a position open while we are rangebound.

 While the 4 hour chart doesn't look good in the range, it's still a range and opportunity cost as well as risk.

 For instance, the 15 min GLD chart is looking better since the failed breakout, it will probably make another run and I'll look for a trade when it does, but that won't help GLL at all.

 10 min chart looks the same

As does the 2 min chart so it looks nearby, you can see the failed breakout on a negative divergence, that's the trade I'd rather take as I can make jut as much if not more in a day or two than sitting in GLL for another month and I don't have open risk or opportunity cost.

Very Close to that AAPL Call position Entry....

TJX Short Follow Up

On October 2nd I opened a starting short position in the Equities Model Portfolio in TJX and showed you why in this post.

I'll be setting some price alerts to add to TJX on any price strength, so far the position is slightly in the green, but I specifically only opened about a 1/3 size normal position to be able to add to TJX in the future. We may get our chance soon, as far as the premise of the short, it's still very much intact.

For members who like the idea, but missed the original entry, I think you'll have a great chance to get in at the same if not slightly better prices with low risk and high probabilities as a longer term core short position.

 TJX when it was healthy gained approx. 3000%, on the QE sugar high as volume declined (which is a bad sign on an advance), although it looks like a lot because of the parabolic move of 2012, it's about 400% from the 2009 lows, all QE fed, but values are coming back in to the equation most surprisingly.


 My 3 day Trend Channel held the entire parabolic move of 2012, but was recently stopped out at the red arrow, while we often see volatility and sometimes higher prices after a Trend Channel stop out, it's a real gamble and 9/10 you are better off just exiting there, especially when the lateral chop and opportunity cost are considered, the Trend Channel says something big has changed, you are wise to pay attention to it.

 The 3 day 3C chart shows rough confirmation on the move up from 1990 - 2006, after that a negative divergence sets in, I think we've established the long term negative outlook for TJX.

 The 4 hour chart has gone from confirmation earlier in the year to a leading negative divergence, I think we have established near term downside probability.

 Even the 30 min chart is showing the TJX move to the downside is close, thus I want to fill out the rest of the core short position on any price strength.

 The 10 min chart shows a positive divergence that may give us exactly that chance.

 As does the 2 min chart, suggesting it's close at hand, I've set upside price alerts already.

I think we can get a move to the $45.50-$46 area and that's where I'm most interested.

As for downside, I don't think $25 is unreasonable at all.

FB Update

Our longer term long in FB as it builds a base is looking good, yesterday I said I thought the pullback was ending, today we have more confirmation as the Twitter crowd shorts FB, last time that happened FB was the most hated stock and we had members making 200% on call options.

 The FB basing area, much larger than our last long position so it should sustain a bigger move to the upside. The red arrow shows the most recent pullback and the white arrow is what I believe to be the end of that pullback, making this an interesting area to start building a long position in FB or perhaps adding to an existing position if that was part of your risk management plan when you entered the trade.

 The intraday 3 min is positive all this week with the price momentum on the downside failing yesterday and today.

 The 5 min chart is in a large leading positive divergence, especially at the last 2 days.

 The 10 min chart showing the pullback and positive divergence this week.

 The 15 min chart doing the same, note it is in a much better overall leading positive position to start with.

Finally the 30 min chart, I do think there could be a little more lateral consolidation, but all in all, this looks as good as any place to consider FB long.