Chart Request-FIO

FIO missed on earnings after the bell today with $.04 a share on revenue of $118.1 mn vs consensus of $.07 on revenue of $110.8 mn, it sounds like another margin squeeze as revs were higher and EPS were nearly half of consensus.

The real trouble is in guidance as this is the most important part of earnings, guidance was for flat revenues were consensus expected a bump up to $125 mn.

As far as an earnings leak goes, I don't have evidence of that, what I would say I do have evidence of is a dramatic shift in the outlook for the company is a VERY short period of time, smart money isn't always right and they, just like anyone else, reserve the right to change their minds.

What stands out about FIO is not that there may have been an earnings leak, but that there was a massive re-evaluation of FIO and those who initially wanted in, wanted out as fast as possible and this would have been well before earnings for the quarter even started, someone knew there were big problems here.

 Back in the summer, June-August, there was a decent size base put together, if you follow the red arrows tracking price you can see it's a "W" or double bottom. Whoever was accumulating was pretty aggressive in June and less so at the second bottom of July/August, but once your in a position that large (this is a 60 min chart), you have to see it through if you want out, you have to move it higher and have some demand to sell in to. Immediately on the first gap up off the base FIO was under heavy distribution, by the time the top hit it was deeply leading negative and well below the levels of the base, that happened fairly fast considering the size of the base and accumulation. I'm not even convinced they were able to get all the way out.

 The 15 min chart has some more detail and shows the accumulation at the same two spots in June and July/August, again as soon as there was demand for FIO it was in a leading negative divergence and never once moved out of it.

 This 10 min chart shows the second half of accumulation in July/August and distribution throughout, but an especially desperate move recently with that leading negative divergence, that divergence was formed in a spot where most of the action was down so the selling in to strength was abandoned and it looks like they sold in to anything with heavy volume days on the 18th, 19th and today the 24th.

 The 2 min trend shows distribution at the top, but especially heavy leading negative distribution at the red box area, there was a short burst of strength.

I'd say this company was in trouble for some time and whoever bought it figured it out just about the time they finished buying it, talk about buyer's remorse.

FIO is down around 9% in After Hours trade

Market Update

Here are the positive divergences EOD I mentioned in the last post

 DIA 1

 DIA 5

 IWM 1

 IWM 3

 QQQ 1

QQQ 2

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Leading Indicators

We've used the Euro ETF FXE to predict the next day's movement, for whatever reason divergences in FXE, no matter what happens overnight, seem to play out the next day. As a reminder a higher Euro almost always means a higher market, there are numerous positives in FXE on the timeframes that are key right now (mostly the shorter term) especially for near term trade.

As far as leading indicators, there's some deterioration here and there, but for the most part they are not only holding up intraday, but still have large divergences that are along the lines of a pretty serious move up.

Also the market averages which have seen a pretty tight 3C correlation today (AAPL 3/5 min charts were an example of a relationship that wasn't tight as they were leading strongly) with the intraday trade are at this time seeing positive divergences in the 1 min area.

 Commodities ar not only holding up better relative to the SPX intraday since 2 pm today, but also on a longer basis with this large relative positive divergence.

 FCT which has had decent predictive value through divergences is holding up and positive vs the SPX intraday.

 It went negative at last week's highs, but has moved to a positive stance since.

 Yields were negative at the first and second reaction high in the SPX, but they are positively divergent at this area.

 The $AUD has a strong intraday positive divergence vs the SPX

 And also longer term at this area as well.

 Intraday the Euro is showing better relative strength.

 Also on a longer term (bounce/rally) basis it is in a much more positive position relative to the SPX.

 HY credit which I mentioned earlier as having its first positive divergence, is still positive vs the SPX.

 HYG intraday is still positive, but has moved down with the SPX

Longer term it remains in a positive position as does Junk Credit.

AAPL / Market Update

Since AAPL is a decent barometer for the market, the signals here are relevant for the broader market.

The earlier 3/5 min leading positives are still there, the short term intraday 1 min is negative.

 3 min AAPL as seen earlier


 5 min AAPL as I posted earlier (currently)

1 min intraday is negative in to the afternoon high.

I'm not making any changes based on this, but I do want to keep an eye on it.

FB Update

As I wrote first thing this morning:

"With FB looking to gap up about +27%, you might want to consider taking some profits, and let some run"

The opening craziness and volatility is a time I usually try to avoid, but in this case it worked well for our purposes. I closed a little less tan half of the FB position, I'm hearing from a lot of you who have taken partial profits and many playing options taking full profits with some really impressive gains.

In any case, I really don't see much more on the upside for the near term in FB. In case anyone asks, I also Do NOT see this as the opportunity to add to FB, although I am betting we will get a chance.

 FB 1 min intraday, as you can see, the open or even pre-market was the best time to take profits, what a GREAT move in FB today and a GREAT example of patience paying off, so long as that patience is backed up by an edge and facts.

 3 min FB intraday not looking any better, looking worse.

 5 min

 The 15 min trend is why I believe FB has much more upside as it enters stage 2 mark up, but

near term I think this move has peaked for the moment.

Gold Futures (YG)

Here are 32 charts of gold mini size futures (YG), a 30 min chart (remember I don't have enough evidence to take a long term stance on Gold) and the 1 min chart (however I do see positive charts that look like gold could see a decent bounce from here).

 30 min futures have a leading positive divergence now.

As do the 1 min futures as gold is in a VERY tight triangle, it should break one way or the other very soon and I'm on the long side of that break.

Interesting Intraday signals in AAPL

These are a bit strange, I'm bringing them to you because they may very well be a cue for the broader market.

 The longer trend of the 3 min chart, notice anything about today?


 3 min intraday since the negative on the open, a leading positive

 How about the 5 min trend? See anything today?

 An intraday look at the 5 min AAPL chart...

 There even seems to be some migration to the 10 min chart.

AAPL calls are still open.

Maybe it's what the F_E_D DIDN'T SAY

Well, the F_E_D didn't say much and the market hasn't reacted much, but remember initial reactions (which may even include no reaction) are almost always wrong.

It may VERY well be what the F_E_D DID NOT say today that moves the market and that is they did not follow up on the idea of gauging the market and doling out stimulus on the merits of the economic reports rather than the timetables they have been giving. In my opinion, that was one of the scariest things for the market and why it didn't react well after the minutes. The fact that they seemingly haven't made any progress on that front or are at least not implementing anything now, may just be what the market needs to get a boost or a primer to get the market moving.

Gold/ UGL

As you know, the last several days I've been looking at gold, something seems to stick out on the bullish side, at least in the timeframes that I'm looking for our shakeout move, it was just difficult to find the short term signals in GLD so I found them first in the leveraged GLL (Ultrashort Gold) and now I've found them in UGL (Ultra Long Gold).

Here they are, UGL is still in a decent position, perhaps GLD is even worth a call position, see what you think. *I already addressed the longer term charts so we're only looking at short term.

 GLD 10 min leading positive

 UGL 3 min leading positive, but still not enough for a tactical entry.

 UGL 5 min leading positive recently, I like it, still not quite there.

 5 min intraday is more like it.

 2 min intraday is more like it

3 min intraday is more like it and now even futures short term are in line with these charts

Added a little to XIV and UGL

Final Market Update

Before the F_O_M_C

I don't see any big, quick movements pre-announcement, but overall the 5, 10 and 15 min charts in the averages are all looking good, I do like them, I do like what I saw in leading indicators.

I'm still looking for a short term shakeout of any shorts before entering the market short, that is the big picture.

Adding a little to UGL

This is long gold, (Ultra Gold).

I like the near term probabilities for some Gold upside.

F_O_M_C

A Few things to remember, as you know the F_O_M_C is a wild card, we don't know what they'll say and we CERTAINLY don't know how the market will react, I think a LOT of longs were very disappointed in market performance since QE3 was announced at the last meeting.

There have been times we have caught a leak in policy statements the same day, I wouldn't go that far, but I would say if there were no wild card event today, with everything in place I have seen, I'd be increasing long positions and I still may, but I already have good representation on the long side.

Don't forget the knee jerk effect, it may be something we can use tactically.

Finally I would consider your ability to be nimble, you don't want too much exposure and have to change a position on the same day and not be Reg. T compliant or at least don't have so many positions unhedged that you can't move a few without violating reg. T.

Leading Indicators

To save time I'm not positing charts, but we have a good intraday divergence in HY Corp. Credit as well a a longer term and in Junk Credit as well.

The $AUD is showing a very nice intraday positive divergence and as you know this is one of my favorite leading indicators among the currencies.

The Euro is showing clearly why the market has been just range bound or treading water.

Yields also have a nice positive divergence short term and an even more impressive longer term (Swing-or like the move up we have been looking for).

High Yield Credit which has been stuck, glued to the SPX is also diverging to the upside for the first time in weeks today.

As for sector rotation, as mentioned yesterday, Financials looked to be at the low of their rotational cycle and they are up today showing better relative performance vs the SPX than yesterday, Tech is rotating out vs Financials so that also is a theme touched on yesterday, the momentum stocks of Basic Materials are seeing that sector come in to rotation today as it was WAY out yesterday, everything else is unremarkable except defensive sectors are continuing on the rotation from yesterday except for Utilities.

From looking at the Leading Indicators only, I'd guess we are going to see a risk on move VERY shortly, possibly at the F_O_M_C.

We also had a number of risk indicators flashing in the on position yesterday.

I'll be looking at the balance of my positions and try to maintain some hedge a no one can predict the F_O_M_C, unless these signals we are seeing are some sort of leak, but if I can without upsetting the balance of the short positions too much, I'd like to add to leveraged long positions BEFORE the FOMC.

MCP-Add or not

That's the question I've received in several emails today as MCP is up +3.33%. Again, my take on MCP is that it is a longer term trade, not as long as FB and certainly not UNG, but a position that takes some patience, adding in the right areas.

For me, I don't like to chase anything, there's no advantage in pricing, more importantly there's a disadvantage in risk management. I already have been building a position in MCP that's already in the green so I don't have to make this choice and as stated above, my preference is to be patient and add at the right spots, However if I HAD TO DECIDE RIGHT NOW, I'd probably say the probabilities look better for MCP to see some additional gains in the days ahead from here, I'd still prefer to wait for the pullback though in case I wasn't clear enough already.

 Here's a false breakout in MCP, the second candle gave it away a bit with the longer upper wick as higher prices were rejected.

 I'd have preferred if MCP continued to consolidate laterally before making a move higher, it still may do so.

 Today's price pattern is biased toward an upside breakout, but we see these manipulated all the time with a downside shakeout first.

 I don't like the 1 min chart much in this triangle.

 The 2 min chart looks the same, but it does have a recent positive divergence building as the apex of the triangle is reached (time to make a move).

 The 3 min chart overall is in good leading positive position.

 The 5 min chart shows the same leading positive divergence, I do like the looks of that.

The 15 min chart is leading positive here, so this is why I am biased toward the long side in near term trade, I'd still rather a pullback with the positives continuing.

I won't be adding to MCP here even though I have room, I'll be patient with it. I may be wrong not to add here, but when you average out hundreds of decisions like this that have to be made, this is where you see portfolio performance or attrition.