A Nice End to the Week

I liked today's end of the week, it didn't leave me with an annoying question in my head that I knew I'd spend hours over the weekend trying to solve. The market showed some real changes in character, even though that process has been underway for weeks (which should give you an idea of what we could be dealing with) and did so on an op-ex day.

The TICK charts were beautiful, the way credit acted the last 3 days and closed today as well as FCT were beautiful (get that run of the stops/bear trap set), even the way AAPL closed was nice, a big hammer with huge volume which is one of our concepts that is a high probability reversal, plus AAPL not only took out the bearish descending triangle and trapped shorts, but the longer term support @ $522.18 which is what traders are looking at for a large H&S, that level was shaken out today as well.

The Euro showed some good underlying trade signals, the $USD popped convincingly above resistance (head fake move) and saw negative divergences the whole day (distribution of the move) which sets the $USD up for a fall, which is something we have been looking for and have found increasingly important.

The flight to safety trades such as Treasuries saw sharp negative divergences to go with their longer term ones, but I mean sharp specifically today.

There were a bunch of little signals that you could see if you paid close attention and they all add up to higher probabilities. What really struck me were the ES 3C charts in timeframes from 5-60 minutes, I think we've been using futures/3C for close to  year now and I don't recall ever seeing such clear divergences across all timeframes.

I'll be working on a new indicator this weekend and of course looking out for any new information, which I will post if I find it.

I hope you have a great weekend and profitable week ahead!

AAPL, Can You Ask For More?

I think only the profits accumulate in your account. Check out what AAPL did today...

 On a daily chart AAPL didn't only close with a bullish reversal Hammer Candle and on HEAVY/Increasing Volume, but it also made a head fake move below long term support, beautiful set up even if we had to wait a long time for it.


 Intraday AAPL shook out a 4 day triangle that was slightly descending which means traders would have taken it as a consolidation/continuation pattern meaning the next leg down should develop after support is broken, that's why volume picks up when support is broken as the shorts now have confirmation. There's 2 ways the shorts are stuck in a beautiful bear trap and from failed moves come fast moves.

The 30 min chart is insane, look at the move today, 10 of 13 ticks all to the upside on a 30 min chart-the volume was there to make that an accurate signal.

AAPL also happens to be a bellwether...

AMD Charts

I still consider this speculative, not only because of the predominant market signals, but because of the price as well, but other than that, I like what I see today especially.

 3 min chart with a great leading positive right at the flat area today after a break below support.


 5 min overall tone of AMD has held up and added today

 10 min overall shows the change in character in AMD since the transition from the downtrend to lateral.

Finally a 60 min positive ..

Adding a Little to AMD long here

Leveraged Long Add to

I'm looking to add to the 3x leveraged longs that are already in place, the choices are FAS (long Financials 3x), TQQQ (Long the QQQ 3x), TNA (Small Cap Bull 3x), UDOW (3x long Dow-30) and ERX (3x long Energy).

Here are either the charts of the leveraged ETFs or the charts of the underlying issue, for example XLE for ERX.

 I tried to fit in the entire cycle, this is the DIA for UDOW on a long leading positive 15 min.


 XLF for FAS-10 min leading positive divergence

 FAS 15 min with a recent leading positive divergence. It's not really surprising that leveraged ETFs would see interest late in the cycle from Wall Street so it doesn't really bother me that XLF in general looks better than FAS.

 TNA-small caps, 15 min has a really sharp leading positive divergence, great momentum there.

 TQQQ 15 min also looks really great as does the QQQ.

XLE has a decent 15 min leading positive divergence.

I decided to go with TNA as an add to. UDOW covers large caps, Energy I think is important to have some exposure to, but I'd rather have the least there as geo-political events are totally out of our control.
TQQQ for me is very close to AAPL long so I think that's covered. So for me it comes down to Financials (FAS) which is also close to SPY coverage given the Financial weighting in the SPY and TNA. Since there's coverage in large caps and TNA is also similar to the IWM and the IWM should lead a risk on move, I think I'll go with TNA for IWM coverage and small caps and it looks fantastic.

AAPL Dec Calls

You know the standard I have for AAPL calls now after having been burnt on them recently, but I'd feel comfortable now with a small Dec Call position, probably $540's

Market Update-More on Recent Momentum

This gives me even more confidence in making whatever last minute moves I feel I need to make, now.

I've never seen this before, the Futures timeframes are weighted heavier than the stock market averages or stocks, for instance, a 5 min chart of ES is probably about the same as a 10-15 min chart of the SPY.

I've told you about the recent momentum increasing, but you haven't used 3C for 8 or 9 years so it probably doesn't mean as much to you as it dos to me, for me it's something that is rarely seen and I've found, not to be ignored.

So I was floored when I went just to check a few different timeframes in ES. It takes a lot more underlying action to move a 10 minute chart than a 5 min, or a 60 min than a 15 min, so the longer the timeframe the divergence is on, the heavier the underlying trade associated with the timeframe; this could be because ES is more expensive to by per contract than the SPX of course.

 ES 5 mins, there's the momentum over the last several days, that's huge alone as I'm not sure I've ever even seen that clear a positive divergence on a 5 min chart of ES.

 ES 15 min with even more momentum

 ES 30 min chart!

ES 60 min chart

Market Update

I can't help but feel like I should be picking up longs right now, but on the other hand I've already prepared and it also feels very much like an op-ex pin today. The 1 min negative divergences look like we see selling in to the close, but the 5 min charts which would have accrued momentum from the last 2-3 days of very heavy 3C momentum, heavier than I remember seeing it in a long time keep me from really becoming very concerned with intraday trade. The TICK chart is more recent evidence, the Leading Indicators, Credit, the way the market rebounded off today's lows and how it took so many stocks with it (TICK) etc.

Here's a quick look, I will be looking around though for longs/shorts that look like they have good probabilities because today just feels like a waiting game or the calm before the storm.

 DIA 1 min is more or less in line, kind of like the waiting game I mentioned above as today is Op-Ex.

 ES positive divergence at that low and large volume on the move up, that hasn't been the norm, it's been exactly the opposite, and light volume at the neg. divergence. As the market was moving down it was light volume rallies pushed by algos and then heavy volume sell-offs, this is exactly the opposite.

 IWM 1 min

 IWM 5 min

 NASDAQ 1 min Futures


 QQQ 1 min

 I already showed you, but here it is again, QQQ 15 min with a huge move in 2.5 days


 SPY 1 min pretty close to in line, but with a relative negative divergence.

The TICK

If I could show you a longer 1 min chart I would, note the extreme lows over the last 2 days , the median and the extreme highs. Do you see the change in character in the trend?

Leading Indicators

In a lot of these, especially Credit, they all seemed to move together yesterday at 1 pm. There are some interesting daily closes as well.

 High Yield Credit vs SPX (green) note 1 pm yesterday

 The daily of High Yield Credit, if you were trading HY Credit, you got rocked yesterday and Wednesday on a stop run. Note the beautiful bullish reversal Hammer formed yesterday and today's move thus far is huge confirmation of that hammer.

 High Yield Corp. Credit also moved at 1 p.m., also closed the daily on a bullish reversal hammer on rising volume.

 HY Junk Credit, Also yesterday 1 pm, also a closing bullish reversal hammer.

 FCT  also put in a huge closing Hammer yesterday (bullish with an enormous confirmation candle today.

I find it interesting not only credit, but even FCT all took out support, ran stops, put in very bullish candles with very bullish confirmation today, this is a run right at EXACT support. The timing of this is certainly interesting and that so many different and unrelated risk assets did the same thing.

 This is what the Euro looked like yesterday with a huge leading positive divergence...

 Then today, intraday the market and Euro are in sync pretty well.

 Here's a break out of the $USD right above clear resistance, I have to wonder what happens next here, like Credit and it drops below support and hits a low below the range?

 TLT/Treasuries or the "Flight to Safety Trade" has been seeing longer term negative divergences.

 The intermediate timeframes though are showing extreme momentum as the last several days we have seen that almost every where.

3 min chart, the trend is leading negative, but I wanted to show the intraday at what also looks likw a false breakout here, perhaps like the $USD?

Market Update

The market is moving in the direction of the longer term divergences, or basically starting to move toward the underlying cycle of accumulation. Intraday there are several negative 1 min divergences that showed up in most averages right as they crossed the break-even from yesterday's close.

I'm really not sure what a reversal at this point should look like, I just feel comfortable with the longs as I mentioned yesterday based on the positive divergences, the intensity, confirmation and length of them. We can't forget today's also Op-Ex Friday and we have a short holiday week next week, so there are quite a few things that are out of the norm. Then we have the Israel situation which I believe some recent news about reservist call ups may be behind this latest intraday turn and of course the Fiscal Cliff which "seems" to have been behind the earlier ramp as Boehner:

Boehner says talks with Obama were constructive. Outlined a
framework with Obama; Will accept revenue if spending cuts

However the recent momentum in 3C, timeframes, and now the participation rate in the TICK are all things that are deeper than the usual skin deep ramps on low volume/low participation.
Here's an example of what I mean when I talk about being comfortable with the big picture and then a few of the intraday charts.

 This is the intraday negative 1 min divergence that kicked in right as the Q's passed yesterday's close, Op-Ex pin action?


 Movement toward the 3 min

 5 min

 10 min


 15 min (I show you the intraday 15 so you can see the momentum in such a long timeframe so quickly.

 Here's the 15 min trend in the cycle area.

Now intraday 1 min negatives are also in ES and NQ Futures...


 As well as IWM, again tight at yesterday's close.

The SPY is in line and the DIA is a bit more positive than in line.

I want to check the leading indicators again as well as the FX charts.

Intraday Pullback Coming

Market Update

This is what I mean when I said the gains are accruing, I'll use the IWM as an example as it is the risk-on leader in most rallies, this is also the reason I felt comfortable yesterday with opening call and long positions, every decline is not a bearish event.

 Remember the last 3 days have shown a dramatic increase in 3C momentum, here's the 5 min chart, note where all the divergences fall, right at lows. Also note the recent surge in momentum in 3C.

 These migrate and accrue on the longer timeframes, like institutional accumulation for real, you pick up a chunk of shares at lows, pick up another chunk at lows, so on and so forth until they have put together their intended position size.

The 10 min IWM is not only leading, but far above where the last cycle ended October 17/18th and where the new one began around Oct. 23

That Wasn't Just a Bounce

That last move up wasn't just a bounce off support, in recent days the positive divergences have been stronger and have been acruing, but this move was something diffrent altogether.

 DIA positive at the low

 Look at the ES volume on the bounce up-it's as if someone did NOT wanting the market to go there.

The $TICK hit new extremes on the recovery, +1650, but not just one or two, almost the entire period is +1250