Bank of Korea cuts rates in a surprise move by 25 basis points, more from the WSJ.
The Yen could be a real party pooper, that's the one I'm watching.
Wednesday, May 8, 2013
Futures Update
Futures made a quite fast, but not so big move. Interestingly CONTEXT jumped from-10 to +0.67 almost instantly.
The only news I can dig up is that FOREX traders are embracing riskier currencies and selling the Dollar, but looking at the charts. something doesn't look right, it's not consistent yet through single currency futures and the pairs, but for example, the Euro which moved up, has a worsening negative 3C tone, the Dollar should look worse, but almost looks as if it's about to transition to a more positive stance. R2K Futures have a negative divergence and couldn't make a new high.
This has the look of a rumor knee jerk, if I find out any more or if signals start becoming more consistent as this is very new, I'll post the update ASAP.
The only news I can dig up is that FOREX traders are embracing riskier currencies and selling the Dollar, but looking at the charts. something doesn't look right, it's not consistent yet through single currency futures and the pairs, but for example, the Euro which moved up, has a worsening negative 3C tone, the Dollar should look worse, but almost looks as if it's about to transition to a more positive stance. R2K Futures have a negative divergence and couldn't make a new high.
This has the look of a rumor knee jerk, if I find out any more or if signals start becoming more consistent as this is very new, I'll post the update ASAP.
Daily Wrap
Today is a really difficult day to write the daily wrap because there are so many moving parts that effect each other, I literally started gathering charts just for the FX side of the analysis and had 25 charts, that's not going to work.
The bottom line is pretty simple, the mechanics and relationships are the difficult part.
If you read and understood last night's post, nothing has changed in that sense, in fact that's what continued today.
Going back to May 1st, we closed a whole slew of Put positions in this post, Taking Profits in All Market Index Puts, Might Leave Some Long Dated Ones Open in fact there were 7 trades closed with 1 loss at about 7% and gains up to 80+% in short term put positions. There were a number of strange "red flags" as I called them that had me pretty convinced the market was going to bounce higher, in fact the same day we closed the Puts we opened calls in IWM and GOOG. I remember distribution in TLT (short term-not the longer term trend that's been going on most of the year) had me convinced that TLT was coming down, I've talked about this recently because I thought it was strange there was distribution in TLT, but seemingly to move it down not to actually distribute the Flight to Safety trade, I wasn't sure if it was gap filling or just going to be accumulated at lower prices. In recent days my view has been that TLT was being positioned for a move down because it opened up room for the SPX and several days later, the Dow to make new highs, take a look at the TLT distribution and TLT vs SPX chart.
After a distribution area in April ad a gap down that was accumulated, TLT bounced in to early May in to deeper distribution on this 5 min chart, May 1 was the day we had a crazy afternoon closing Puts and opening some calls.
The longer term (main underlying trend) of TLT as seen on a much more serious daily chart...
When a daily chart has positive divergence this large, there's a very serious flow of money in to the asset, TLT accumulated near the lows, even put in a head fake move below support and then moved higher.
The daily chart of TLT (green) vs. the SPX (red) looks like this...
Note the SPX was at resistance more or less on May 1, the same day we closed all of our Index Puts which was also TLT's high. May 2nd TLT was a bit lower, the SPX a bit higher, but it wasn't until May 3rd that TLT moved down -2.36% and the SPX up +1.05% and a clean cut through resistance to make a new high. The Dow made $15k on 5/7, looking back it seems like these assets: TLT, HYG and VXX were clearly positioned in advance (such as short term TLT distribution to move it lower) to help the market as it has been fairly clear it has been struggling despite the headlines, does anyone really think today's +0.31% gain in the Dow on falling volume is a strong follow through day on an all-time new high?
As mentioned in a number of updates, both TLT and VXX (which you may recall was making new 7 year lows just a littler more than a month ago) have put in a floor and no matter how many head line new highs the SPX or Dow put in, the VIX and TLT just won't be driven lower (rightfully to all-time new lows taking the natural correlation in to consideration).
I don't want to go through and repost all the charts from last night's post, but clearly it is showing an almost panicky accumulation of VIX Futures (bid for protection) and TLT (which is the "Flight to Safety trade"), but it is at least worth a reminder without having to go through the entire post.
I used a 30 min chart for TLT as opposed to the 5 min chart above, the reason I did this was to show the extent of the recent positive divergence in TLT, a 30 min chart is a very large divergence, in addition it's leading (nearly to the May 2nd area) and has formed this large of a divergence in a mere two-days. The reasons the distribution at the red arrow is not as clear as the 5 min chart is because it wasn't strong enough to register on a 30 min chart, that's why I said above,
" I thought it was strange there was distribution in TLT, but seemingly to move it down not to actually distribute the Flight to Safety trade, I wasn't sure if it was gap filling or just going to be accumulated at lower prices. "
As you know, the stronger the divergence, the longer the chart it shows up on (migration of the divergence from shorter timeframes to longer represent a growing/stronger divergence), this is why the negative divergence doesn't show up well on the chart above, it wasn't that strong and wasn't meant to close a position, just to move an asset.
Numerous times today and in recent days, I've mentioned the relative strength in both TLT and VXX vs the SPX, so much so it seems the only asset to counter the pressure both were putting on the market (obvious from a Dow 0.31% follow through day with a lot of help) today was the 3rd of the 3 assets used in the SPY Arbitrage, HYG (High Yield Corporate Credit).
This is the intraday Leading Indicator layout chart of TLT (light blue) vs. the SPX (always green in Leading Indicator charts unless otherwise noted) for today. It's not very common that TLT (20+ year Treasuries) and the SPX move up together, it's an oxymoron of sorts. Conventional wisdom is the market is either risk on or risk off with relative performance difference, but not Risk on (SPX moving up) and risk off (TLT, the flight to safety trade) moving up, it's more common for these two to have a nearly mirror opposite relationship.
In the white box, there's some pressure on TLT as it is pushed lower from the 12:30 highs, in the orange box the strength in TLT is fading and in the green box it is moving as the normal correlation would suggest, however, with the SPX where it is, the normal correlation would also suggest that TLT would be near new lows for the year or lower, not a simple dip intraday.
I believe the reason TLT saw weakness in the area had to do with today's 10-year bond auction right around 1 p.m. that was weaker than expected and pressured the entire bond complex, that's around the same time TLT began to lose relative strength today.
As for the VXX (Short Term VIX Futures), the other asset that is bid up for protection, just as the VIX itself is called the fear index and rises when the market drops, it too prpessures the market when it moves up which is also against its natural correlation that is usually nearly the mirror opposite of the SPX..
This is today's 1 min intraday chart of VXX (light blue) vs. the SPX (green as usual). From left to right, the opening downside in the SPX sent the VXX higher as is natural (in the green box), although you could tell from that first move that the VXX was moving higher than you'd expect. In the red box, again there's a flight toward protection as VIX futures are bid while the SPX also moves higher, again it's pretty much an oxymoron, the market is risk on or off, today it was both in both protective assets (TLT and VXX). At the red arrow, with the SPX where it was, you'd expect the VXX to be near the lows of the day, if not all time lows. At the green arrow with the SPX dropping a bit, the VXX hits a new intraday high. Only during the last 30 mins or so does the correlation look normal in that green box alone, but then again with the position the SPX is in, the true normal correlation would be the VXX at or very close to all time new lows-wasn't happening.
So as mentioned today, both were putting pressure on the market, Capital Context's SPY Arbitrage model uses the 3 assets alone for institutional clients. Seemingly as there was another reach for protection and flight to safety the only asset of the 3 left was HYG (High Yield Credit which was seemingly used to help offset the negative pressure VXX and TLT were putting on the market.
HYG (High Yield Corp. Credit)...
This is HYG which should move with the SPX under its normal correlation as being a High Yield product, it is considered a risk asset unlike the other two. In the White boxes HYG was actually showing better relative strength than the SPX, so it seems clear that to keep the Dow's follow through dat from ending in the red, the lever called HYG was being pulled.
However just because HYG was moving up, doesn't mean Credit traders were buying in to the risk on sentiment, in fact...
The trend in HYG as it has been used several times this week has been clear distribution-a leading negative divergence, HYG traders didn't mind HYG moving higher, they were either selling or selling it short in to price strength.
And just like that, the Dow's anemic follow through day looks even more anemic. As I have been warning the last week, in fact with greater frequency and seriousness, since March, the market is going to get more volatile, that's not just the ATR, but unpredictability and volatility in both directions. Two days before I warned to expect more volatility and where the market is, more unpredictability (I used AAPL as an example of what happens when the Hedgie heard starts to panic), we saw the SPX down 0.93% one day, up 0.94% the next and for all the volatility it was exactly unchanged at 0%.
The other HY Credit was also weak in to the afternoon and selling in to the S&P's closing ramp.
Yields should move with the SPX, when they diverge they tend to act like a magnet for stock prices, this is directly connected to the Flight to Safety in Treasuries as prices of Treasuries rise, the Yields fall.
These are the risk positive currencies that support the market, they are very dislocated from the SPX, but I've zoomed them in so you can see the intraday trend.
The $AUD fell through the entire afternoon and especially during the closing ramp.
The Euro did the same.
When the Dow started it's End of Day (EOD) closing ramp, it was only 1 point above yesterday's close and in danger of closing red for a follow through day at all time new highs.
And the $USD has an inverse relationship with the market so when it falls it is supportive of the market as it did earlier and when it rises it puts pressure on the market.
As I had mentioned in a verbal update, the afternoon saw sector performance change a bit with Financials, Industrials and Discretionary (all risk on sectors) fading in to the close, while the safe-haven sectors of Staples and Healthcare saw better relative performance in to afternoon/closing trade.
I'll probably update the futures as well, but the bottom line is no different than last night's analysis,
"The obvious question is, "If Dow $15k is suppose to bring new investors in to the market, why didn't the multitude of SPX new highs (although Dow 15k sounds better) and the more important question, why are the professionals running away from risk? They aren't even hanging around for a little bit?"
The bottom line is pretty simple, the mechanics and relationships are the difficult part.
If you read and understood last night's post, nothing has changed in that sense, in fact that's what continued today.
Going back to May 1st, we closed a whole slew of Put positions in this post, Taking Profits in All Market Index Puts, Might Leave Some Long Dated Ones Open in fact there were 7 trades closed with 1 loss at about 7% and gains up to 80+% in short term put positions. There were a number of strange "red flags" as I called them that had me pretty convinced the market was going to bounce higher, in fact the same day we closed the Puts we opened calls in IWM and GOOG. I remember distribution in TLT (short term-not the longer term trend that's been going on most of the year) had me convinced that TLT was coming down, I've talked about this recently because I thought it was strange there was distribution in TLT, but seemingly to move it down not to actually distribute the Flight to Safety trade, I wasn't sure if it was gap filling or just going to be accumulated at lower prices. In recent days my view has been that TLT was being positioned for a move down because it opened up room for the SPX and several days later, the Dow to make new highs, take a look at the TLT distribution and TLT vs SPX chart.
The longer term (main underlying trend) of TLT as seen on a much more serious daily chart...
The daily chart of TLT (green) vs. the SPX (red) looks like this...
As mentioned in a number of updates, both TLT and VXX (which you may recall was making new 7 year lows just a littler more than a month ago) have put in a floor and no matter how many head line new highs the SPX or Dow put in, the VIX and TLT just won't be driven lower (rightfully to all-time new lows taking the natural correlation in to consideration).
I don't want to go through and repost all the charts from last night's post, but clearly it is showing an almost panicky accumulation of VIX Futures (bid for protection) and TLT (which is the "Flight to Safety trade"), but it is at least worth a reminder without having to go through the entire post.
" I thought it was strange there was distribution in TLT, but seemingly to move it down not to actually distribute the Flight to Safety trade, I wasn't sure if it was gap filling or just going to be accumulated at lower prices. "
As you know, the stronger the divergence, the longer the chart it shows up on (migration of the divergence from shorter timeframes to longer represent a growing/stronger divergence), this is why the negative divergence doesn't show up well on the chart above, it wasn't that strong and wasn't meant to close a position, just to move an asset.
Numerous times today and in recent days, I've mentioned the relative strength in both TLT and VXX vs the SPX, so much so it seems the only asset to counter the pressure both were putting on the market (obvious from a Dow 0.31% follow through day with a lot of help) today was the 3rd of the 3 assets used in the SPY Arbitrage, HYG (High Yield Corporate Credit).
In the white box, there's some pressure on TLT as it is pushed lower from the 12:30 highs, in the orange box the strength in TLT is fading and in the green box it is moving as the normal correlation would suggest, however, with the SPX where it is, the normal correlation would also suggest that TLT would be near new lows for the year or lower, not a simple dip intraday.
I believe the reason TLT saw weakness in the area had to do with today's 10-year bond auction right around 1 p.m. that was weaker than expected and pressured the entire bond complex, that's around the same time TLT began to lose relative strength today.
As for the VXX (Short Term VIX Futures), the other asset that is bid up for protection, just as the VIX itself is called the fear index and rises when the market drops, it too prpessures the market when it moves up which is also against its natural correlation that is usually nearly the mirror opposite of the SPX..
So as mentioned today, both were putting pressure on the market, Capital Context's SPY Arbitrage model uses the 3 assets alone for institutional clients. Seemingly as there was another reach for protection and flight to safety the only asset of the 3 left was HYG (High Yield Credit which was seemingly used to help offset the negative pressure VXX and TLT were putting on the market.
HYG (High Yield Corp. Credit)...
However just because HYG was moving up, doesn't mean Credit traders were buying in to the risk on sentiment, in fact...
And just like that, the Dow's anemic follow through day looks even more anemic. As I have been warning the last week, in fact with greater frequency and seriousness, since March, the market is going to get more volatile, that's not just the ATR, but unpredictability and volatility in both directions. Two days before I warned to expect more volatility and where the market is, more unpredictability (I used AAPL as an example of what happens when the Hedgie heard starts to panic), we saw the SPX down 0.93% one day, up 0.94% the next and for all the volatility it was exactly unchanged at 0%.
These are the risk positive currencies that support the market, they are very dislocated from the SPX, but I've zoomed them in so you can see the intraday trend.
When the Dow started it's End of Day (EOD) closing ramp, it was only 1 point above yesterday's close and in danger of closing red for a follow through day at all time new highs.
I'll probably update the futures as well, but the bottom line is no different than last night's analysis,
"The obvious question is, "If Dow $15k is suppose to bring new investors in to the market, why didn't the multitude of SPX new highs (although Dow 15k sounds better) and the more important question, why are the professionals running away from risk? They aren't even hanging around for a little bit?"
TF Futures in trouble
The Daily Wrap post is nearly finished, but I've been bouncing back and forth between the post and checking the futures, this leading negative divergence in TF (Russell 2000 E-mini Futures) is leading negative at a new low for the day and price isn't far behind it.
Post Coming
I think you'd need a degree that doesn't exist today to figure out what all the moving parts were, a PhD in Forensic Market Analytics.
I could probably spend two hours on any 1 asset, that' not of much help though so the gist is what we're after, there are some stone walls I want to show you in the next post which will be abbreviated, there's no way I can even look at everything I need to much less capture and post it in the next 45 mins, but watch for this because there will be at least a few very interesting tidbits and I'll give you my theory on what's going on.
I could probably spend two hours on any 1 asset, that' not of much help though so the gist is what we're after, there are some stone walls I want to show you in the next post which will be abbreviated, there's no way I can even look at everything I need to much less capture and post it in the next 45 mins, but watch for this because there will be at least a few very interesting tidbits and I'll give you my theory on what's going on.
Market Update
This is going to be verbal as things are changing too fast and it takes too long to capture and upload charts.
The SPY is not confirming on even the fastest intraday timeframe of 1 min, it lost its 2 pm positive 1 min divergence by making a new leading low just before 3 p.m. and as price is in the $163.30 area, 3C is leading negative and near the lowest reaction high of the day, imagine the highs and lows of 3C, the current high in 3C with the SPY is near the lowest high of the day, in other words a leading negative divergence.
These divergences, unlike the futures ones that play-out due to around the clock trade, almost always and quite amazingly play out as well, in this case it would be likely for it to play out in the a.m.
The DIA 1 min chart is in line with price, the 2, 3, 5 min, etc are all negative-mostly leading negative, this seems to be more about the Dow than anything, I have a guess why, but I'll withhold that for a bit.
None of the QQQ timeframes are in line, at 15 min there's a new leading negative divergence, straight down.
None of the IWM timeframes are in line either, the 10 min there is leading negative even more deeply, especially in the area where they really pumped.
I'll bring you more after the close, something is slipping, not sure what yet.
The SPY is not confirming on even the fastest intraday timeframe of 1 min, it lost its 2 pm positive 1 min divergence by making a new leading low just before 3 p.m. and as price is in the $163.30 area, 3C is leading negative and near the lowest reaction high of the day, imagine the highs and lows of 3C, the current high in 3C with the SPY is near the lowest high of the day, in other words a leading negative divergence.
These divergences, unlike the futures ones that play-out due to around the clock trade, almost always and quite amazingly play out as well, in this case it would be likely for it to play out in the a.m.
The DIA 1 min chart is in line with price, the 2, 3, 5 min, etc are all negative-mostly leading negative, this seems to be more about the Dow than anything, I have a guess why, but I'll withhold that for a bit.
None of the QQQ timeframes are in line, at 15 min there's a new leading negative divergence, straight down.
None of the IWM timeframes are in line either, the 10 min there is leading negative even more deeply, especially in the area where they really pumped.
I'll bring you more after the close, something is slipping, not sure what yet.
Late Afternoon Sector Rotation
This is interesting because we can see where sentiment is going.
Late afternoon rotation is seeing Financials start to fall behind, Discretionary is also falling behind, Energy has been slowly slipping all day (not oil alone, the entire Energy complex), Industrials appear to be starting to back off as well and Tech is right on the edge (risk sectors). On the defensive side or Flight to safety, HealthCare and Staples are moving in to better relative performance, Utilities are still lagging far behind, put perhaps so far behind they've hit a bottom of sorts, I've seen it many times.
Still watching the Risk Assets to see what's being used and how to understand the character if not motivation.
Late afternoon rotation is seeing Financials start to fall behind, Discretionary is also falling behind, Energy has been slowly slipping all day (not oil alone, the entire Energy complex), Industrials appear to be starting to back off as well and Tech is right on the edge (risk sectors). On the defensive side or Flight to safety, HealthCare and Staples are moving in to better relative performance, Utilities are still lagging far behind, put perhaps so far behind they've hit a bottom of sorts, I've seen it many times.
Still watching the Risk Assets to see what's being used and how to understand the character if not motivation.
REALLY WORKING HARD
The relative strength in VIX futures which is a bid for protection based on fear and the relative move or even the outright in Treasuries-TLT is enormous, HYG has been used as it looks like there's no stopping the other two and there's only the 3 assets.
There appears to be a move to try to send the risk currencies higher, the AUD, Euro, EUR/USD, etc and the $USD lower. Some of these have made very strong moves against the market like the $AUD so that may fly on an oversold basis, but currencies themselves don't seem to want to cooperate, they are apparently being set up to be forced to, whether that can happen by the close or not is an unknown.
On a different note, I haven't seen this kind of desperation since the PPT went in to action in early 2009, every time the market threatened a new low, they'd pop in with the same kind of maneuvers, David DT (a lot of you know him) and I were trading together at the time and we could call the intervention within 10 minutes based on where the market was.
Even during the obvious POMO days, I've never seen anything like this, this is different too in that the natural, organic demand for protection is so strong, this is what is really forcing them to push and pull on anything they can.
There appears to be a move to try to send the risk currencies higher, the AUD, Euro, EUR/USD, etc and the $USD lower. Some of these have made very strong moves against the market like the $AUD so that may fly on an oversold basis, but currencies themselves don't seem to want to cooperate, they are apparently being set up to be forced to, whether that can happen by the close or not is an unknown.
On a different note, I haven't seen this kind of desperation since the PPT went in to action in early 2009, every time the market threatened a new low, they'd pop in with the same kind of maneuvers, David DT (a lot of you know him) and I were trading together at the time and we could call the intervention within 10 minutes based on where the market was.
Even during the obvious POMO days, I've never seen anything like this, this is different too in that the natural, organic demand for protection is so strong, this is what is really forcing them to push and pull on anything they can.
Levers Definitely Being Used
There's ZERO doubt about it, the levers of intraday manipulation are being used, mostly in credit, the sole reason the levers are being used is because the bid for protection in VIX futures and the Flight To Safety Trade in Treasuries is so strong, apparently they had no other recourse than to use the last of the 3, HYG.
I'm not sure how long it can hold out, or what the point actually is, but I can say for sure, there's real fear as these two safety plays are seeing immense demand.
I'm not sure how long it can hold out, or what the point actually is, but I can say for sure, there's real fear as these two safety plays are seeing immense demand.
GS Short Very Tempting
I know a lot of you are interested in this one as well, I do believe this one is best left in the oven for a bit longer. I'm 95% sure it will get there and I feel we have about a 70% chance of getting the position exactly where we want it.
I'd hold for a while longer before jumping in to a new position or an add-to.
I'd hold for a while longer before jumping in to a new position or an add-to.
Adding to SCO
I don't have much room to add to it, but whatever I can at this point I'm going to.
This is a 2x leveraged play on USO short.
This is a 2x leveraged play on USO short.
Quick IOC Update
The IOC short is doing well, it's one I'd love to add to, but only if it comes to us, I would not add to it today.
As far as the near term, the 5 min chart which represents the near term, is leading positive, we still have a good chance to get a head fake move above the $80-$82 level and that's where it makes sense to add.
The 30 min chart represents the trends ultimate probabilities, I don't think I need to explain this and this is probably our short with the greatest profit potential. Still, I'd stay patient and not ruin and already good position set up, if we get the chance and I think we do, then great, if not, we can pyramid what we have.
AMD Update
We have been in and out of AMD so often that I would think some of you may still have it, it so, today it's up nice, +7% after a 55% run.
I would consider taking some profits or at least having a trailing stop.
Personally I'd take all profits and wait for a new set up
I would consider taking some profits or at least having a trailing stop.
Personally I'd take all profits and wait for a new set up
NOT GOOD
Check the TICK out here
Perhaps this is the answer for the 2 p.m. divergence, note the trend up in TICK, one last run to sell in to, that break from TICK is the strongest, cleanest break all day, it seems to be getting volatile now.
Quick Market Update
I'm going to try to make this quick so I can take a look at several other stocks on the list and more importantly (for the big picture) is to jump to the Leading Indicators Layout and see what's going on there, the only thing is, if there's a high probability trade setting up in any of the stocks left on my list, it can be missed so I'll check those out, bring you anything interesting and then check out the more important leading indicators.
Email responses are pretty much non-existient today, as much as I want to help everyone independently, my first commitment is to the group collectively, if there's an area where it looks like it will slow down, I'll get to emails.
Here are some charts I grabbed quickly, I'd like to see the 2 p.m. SPY Arbitrage, we aren't there yet with the 30 min delay, but there were some intraday 1 min positives that seem to have failed already and in most cases didn't go beyond 1 min, but I want to keep an eye on everything.
SPY Arbitrage as of 1:45 p.m., 2 p.m. is what I'm interested in
DIA 1 min overall intraday is negative, but there's a good example of that positive divergence at 2 p.m., to be fair it is in leading negative position so it would be one of thee weakest positives you can find, but it is intraday trade.
DIA 5 min, I thought the DIA would be important because of the DOW 15k yesterday, for an institutional timeframe, that's pretty sharp.
IWM at last check is the only average in the red, it also tends to lead the market, that's a pretty nasty looking chart
IWM 10 min with a sharp leading negative divergence, these longer timeframes don't often lose this much ground in a day, this is impressive.
QQQ 1 min, not showing the 2 p.m. divergence, nor was the IWM for that matter.
QQQ 2 min, What I'm really trying to show is the specific action of this week since the post from last night showed a very specific, strong move this week, one that looked like total fear or panic.
SPY 1 min has the 2 pm divergence
But not on the next timeframe of 2 min, suggesting it's not that strong.
3 min
The TICK trends and the breaks from the trends, there looks to be a few crazy Ivan shakeouts at least on the TICK.
Email responses are pretty much non-existient today, as much as I want to help everyone independently, my first commitment is to the group collectively, if there's an area where it looks like it will slow down, I'll get to emails.
Here are some charts I grabbed quickly, I'd like to see the 2 p.m. SPY Arbitrage, we aren't there yet with the 30 min delay, but there were some intraday 1 min positives that seem to have failed already and in most cases didn't go beyond 1 min, but I want to keep an eye on everything.
CONTEXT for SPX futures (ES) and the 9:30 open in green, there was a -14 point differential, that has faded a bit in the afternoon to about -10 points.
AAPL Update
Here's yesterday's AAPL Update, I've been trying to remain patient with AAPL and wait for good signals. My opinion is that AAPL is in a bear market (AAPL's own bear market) rally. There could be more upside on this rally, but for now it looks like it will come down. If I see accumulation in to the move down, I'll close the newly opened positions at a profit and wait to re-establish a new CORE short position in AAPL.
Since the update above contains all of the trade data, I'm just going to show you why I like AAPL today as a put and equity short.
I started with the longer term charts because a counter trend rally is different in many ways from a normal rally or even the whacky manipulative rallies we have seen the last 4 years. First they tend to be very strong because to survive and complete their mission, they need people to believe in them, they are almost ALWAYS stronger than a bull market rally, thus they are REALLY fun to play. Also they have more or a reversal event than a process. The traders that are in the bear market have already pretty much positioned themselves, it's not like a new top where they are moving out of one position and sliding in to another, that is largely what the "process/time" is about in a reversal; not these guys though, they know where they are, what they are doing and honestly, short sellers tend to be some of the best informed, savviest traders out there.
Take a look at the 1929 Dow Crash and the first bear market rally of an additional 5 during the bear market.
Dow Jones Industrial Average 1929-May of 1930.
"A" the original Crash, "B" the bear market rally which rallied +52%, that's pretty impressive and if you made a ton of money in the roaring twenties, you might be inclined to think the 1929 crash was over and the 30's were about to start roaring-this is the secret to the bear market rally's strength. "C" There's very little process for such a strong rally, iyt's almost an immediate reversal.
So I want to look at AAPL possibly in the same light, we'll know as it declines, if it sees accumulation then the bear market rally isn't over. If you disagree with me that AAPL is in a bear market, than what would you call a 45% decline and 315 points in 7 months? A Pullback?
The 30 min chart has signs of a possible negative divergence, what we need to see is that this came from migration from the timeframes below or faster than 30 min.
The next fastest timeframe-15 min showing accumulation and a stronger 3C negative divergence, so far we have migration.
The 10 min chart is even more defined, again, more migration.
The 5 min chart, so I think the migration issue is settled, there has been solid distribution in to AAPL's price highs, bulls may think AAPL is coming back, but this is why I say, "Price is deceiving", it's going up, but they majority of the institutional action is selling, not buying, I know that doesn't make sense from a supply/demand or Technical Analysis standpoint, but that's how the market works.
Intraday on the 1 min, note how much worse today's action is right after a head fake move in yellow.
Here's the 2 min, distribution at higher highs.
That's why we're short AAPL and may stay that way.
Since the update above contains all of the trade data, I'm just going to show you why I like AAPL today as a put and equity short.
I started with the longer term charts because a counter trend rally is different in many ways from a normal rally or even the whacky manipulative rallies we have seen the last 4 years. First they tend to be very strong because to survive and complete their mission, they need people to believe in them, they are almost ALWAYS stronger than a bull market rally, thus they are REALLY fun to play. Also they have more or a reversal event than a process. The traders that are in the bear market have already pretty much positioned themselves, it's not like a new top where they are moving out of one position and sliding in to another, that is largely what the "process/time" is about in a reversal; not these guys though, they know where they are, what they are doing and honestly, short sellers tend to be some of the best informed, savviest traders out there.
Take a look at the 1929 Dow Crash and the first bear market rally of an additional 5 during the bear market.
Dow Jones Industrial Average 1929-May of 1930.
So I want to look at AAPL possibly in the same light, we'll know as it declines, if it sees accumulation then the bear market rally isn't over. If you disagree with me that AAPL is in a bear market, than what would you call a 45% decline and 315 points in 7 months? A Pullback?
That's why we're short AAPL and may stay that way.
UNG Update-if you like, you might not have long
This is Monday's UNG Update, it shows why we sold at the price highs on a 5+% 1-day move and why we were right to do that on that day, it shows what we expected to happen and how it happened. It shows how the trade came to us offering a low cost, low risk, high probability entry/add-to.
This is yesterday's -2% move down and what I suspected was a head fake, here's the post in which I not only wasn't concerned at all, but thought it was a decent place to add to UNG.
Here's the updated charts for today... I still think UNG is a good buy/add-to right here, but remember this is a long term position so make sure you want that and make sure you give it the room it needs over a longer term trade.
The candlesticks and their smaller bodies alone tell you something about UNG's pullback, that it's loosing momentum and this is likely a tight range accumulation area.
Yesterday's lower low in yellow.
Even with yesterday's move, a reversal is a process, not an event and as such, a nice rounding bottom like this is what we like to see, yesterday actually made the bottom look better, volume is low in the price range, typical of accumulation environments.
I'm pointing out another head fake move, you may not see it as a big deal or a head fake move, but when price moves above resistance, whether short or longer term, traders pay attention and react, but even more importantly is how the Head Fake happened right before the reversal and did exactly what a head fake move is suppose to do, look at the downside momentum from the head fake and subsequently, this is the power and reason head fake moves re such a great timing tool. As for the base area, the 1 min 3C chart is very clear about what's happening there.
The 3 min chart/migration, but more importantly, look at the strength of yesterday's 3C divergence at the head fake break below recent lows, this is one of the reasons for these moves, which made yesterday a VERY high probability, low cost,. low risk trade, but they are difficult emotionally, you have to retrain yourself to look at objective data and take emotion out of the decision making process.
.
Overall, the 30 min trend.
This is yesterday's -2% move down and what I suspected was a head fake, here's the post in which I not only wasn't concerned at all, but thought it was a decent place to add to UNG.
Here's the updated charts for today... I still think UNG is a good buy/add-to right here, but remember this is a long term position so make sure you want that and make sure you give it the room it needs over a longer term trade.
Yesterday's lower low in yellow.
.
This might be your last chance to buy UNG on a pullback
Charts coming, but if you like it, this is letting the trade come to you. I'd add to it right here and now if I had any room for it.
USO Short / SCO Long
This is a position from yesterday, SCO (2x Long Crude), keep in mind a stronger $USD pushed the price of crude down as a general rule.
First USO...
This is most of yesterday and all of today on a 5 min line chart, what does this look like to you? If you said a bull flag, which is a bullish continuation/consolidation pattern, you'd be correct. In addition to that, USO has been in a lateral consolidation (we know that these are often used for distribution-this is why dull/quiet markets are usually where things are happening) so considering this is a breakout from that range, it looks extra bullish to Oil bulls.
However, the long lost art of volume analysis (volume is probably in the top 3 most important indicators to me), this is NOT the kind of volume confirmation one expects from a bull flag, volume should decline almost diagonally as the flag portion pulls back, so clear a trend line on volume is easily drawn.
However most people are attracted to Technical Analysis out of laziness and in 2010 when the market was just getting started, they didn't even bother to check the volume on what everyone thought was a H&S top, it was just a random price pattern that looked like a H&S and went on to make higher highs.
Now look at today in a different context, what does it remind you of now?
This is how Technical Traders are so easily manipulated, they react the same way every time to these patterns. If I were running the show and making the market in oil, I'd run price up above the flag to make it look like an upside breakout or the continuation of the bull flag they'll suspect, draw in the longs which many probably are already there or today's breakout from the range and then slam the door with a move below the recent range forcing them to sell and sending USO down quickly. "FROM FAILED MOVES COME FAST MOVES".
USO 30 min, I didn't draw the 3C divergences, just the areas where they'd effect.
The 15 min chart has a remarkably similar pattern to the 30 min 3C chart, it's a bit more extreme and developed, but it should have more detail as a faster timeframe.
Even the 5 min chart looks similar, look at all of the charts and what 3C looks like today in to this "Technically" bullish-looking price pattern.
On a 1 min chart we even have one of those areas in yellow, I included the 1 min so you could see today's intraday action and compare to the 2 min chart below, keeping in mind the concept of "Migration of the divergence".
Interesting?
Since I've made the case with USO, I don't need to post that many SCO charts, but here are a few.
1 min looks like the mirror opposite of USO's action, that's good confirmation and we even have one of those areas in yellow.
As for migration, the 3 min chart shows that and more...
I just thought you might find the overall trend in large money flows of the 60 min chart of SCO interesting.
If I could, I'd add to SCO long today.
AAPL Coming
First USO...
However, the long lost art of volume analysis (volume is probably in the top 3 most important indicators to me), this is NOT the kind of volume confirmation one expects from a bull flag, volume should decline almost diagonally as the flag portion pulls back, so clear a trend line on volume is easily drawn.
However most people are attracted to Technical Analysis out of laziness and in 2010 when the market was just getting started, they didn't even bother to check the volume on what everyone thought was a H&S top, it was just a random price pattern that looked like a H&S and went on to make higher highs.
This is how Technical Traders are so easily manipulated, they react the same way every time to these patterns. If I were running the show and making the market in oil, I'd run price up above the flag to make it look like an upside breakout or the continuation of the bull flag they'll suspect, draw in the longs which many probably are already there or today's breakout from the range and then slam the door with a move below the recent range forcing them to sell and sending USO down quickly. "FROM FAILED MOVES COME FAST MOVES".
If I could, I'd add to SCO long today.
AAPL Coming
