A Third Day

Usually Wall Street is a little more subtle about what they're doing, but I would think that even the most basic Technical trader can recognize 3 consecutive days of pumping the market in the morning and dumping through the afternoon, it's not just in 3C we see this, but price as well.

I honestly don't recall them ever doing something so blatantly out in the open.

As I mentioned, I was looking for the intraday positive divegrence in the SPY that would indicate the move below the support trendline of the triangle was the start of a Crazy Ivan shakeout, I didn't see it, but it's not that large yet so I suppose there's still time. The only average that showed any kind of small divergence in to the close was the IEWM on 2-3 min charts, but then the 5 min looks horrible, as if it's about to fall off a cliff.

 intraday the 3 min shows distribution in to the IWM's run and at the EOD a very slight positive, however the next timeframe which is where we typically see institutional moves on an intraday basis looks horrible.

The 5 min chart and a deep leading negative in to this move.

The pump and dump of stocks three days in a row and the SPX going green on the year 3 days in a row and losing it is now to the point in which it is blatant. I truly can't decide whether there's a head fake set up as we'd normally expect or whether this is just pure all out panic and they don't really care who catches on.

After all, Yellen will be testifying tomorrow before the Senate Banking Committee, I don't know whether this would come up or not, but the market was more than a little surprised by the last F_O_M_C minutes in which a rate hike was put on the table mid-2014, that's only a few months from now, previously there had been noises about 20145, maybe even 2016, the market is going to be looking for guidance on that issue, it's a much bigger deal than the QE taper.

What I feel from looking at the charts is there's a time to be using price strength to set up positions that are meant for longer term trending trades, in my view that time is most definitely now. Now is not the time to miss the forest for the trees.

Looking For Signs of a Crazy Ivan

I'm looking for the positive divegrence that would need to develop for the SPY's dip below the triangle to be considered a Crazy Ivan and I don't see anything yet.

As explained earlier, this shakeout below the triangle, "if" followed by one above the triangle would be a Crazy Ivan shakeout, both sides of the triangle and them it fails on the downside.

So far I don't see any signs of the small accumulation intraday that would be needed to push the SPY back above the triangle.

This is NOT a strong looking market at all, in fact quite the opposite.

GDX / DUST Trade

Like GLD I think GDX (Gold Miners) is likely headed to the lower end of its range. I have a DUST (3x short gold miners) ETF position open and it's already green, but it's still very low in the base area and has not moved to stage 2, I'd still consider a D?UST long or GDX short in the area, especially with GLD confirming.

Here are a few charts.

 Long term I think GDX, like Gold will probably be an interesting long play, but for now I think it's heading back down toward the low $20's/$20-ish. Look at the leading negative on the 60 min chart here. Then look at DUST's 60 min leading positive, that's confirmation.

GDX near term for timing, 5 min also leading negative

DUST near term 3 min leading positive

DUST 5 min leading positive, thus I'd have little trouble taking a long DUST position in the area.

DUST 30 min leading positive

And I don't even have to point out the leading positive on DUST's 60 min chart.

I like the DUSt long or GDX short (or puts even).

Trade Idea: NFLX Option / PUT

I'm going to enter about a half size NFLX April $440 (monthly) Put position, I prefer to have about 6 weeks on expiration and March is cutting it a bit tight for my taste. If NFLX Gains some ground, I'd add the rest of the position, then hopefully if all goes as planned and the SPX makes a stop at the 200-day m.a., I can look at PCLN for a longer term equity short.

NFLX Position Update

Yesterday I said NFLX, GOOD and PCLN all looked like parabolic moves that would fail, so far all 3 have.

I like NFLX, perhaps as a core short position, but I'd rather keep a closer eye on this one, if I had room or if I can make room, I'd put at least a partial short NFLX position in place. There's a small intraday bounce right now that may allow enough upside to fill out a full size position.

Really in the larger scheme of things, I don't see any reason why I wouldn't take a full size position here and now, but you may have some very near term upside like I just mentioned, on a daily chart basis though, I'd probably just go ahead and take it here and now.

 I don't like to chase anything, but on a daily chart, this really isn't chasing, it's a reversal Star candle with a confirmation bearish engulfing candle today, that's not really chasing especially looking at the larger picture.

 This is the daily 3C negative divegrence so NFLX has some decent downside to go.

On an intraday basis...

 This 10 min chart shows where the trend Channel broke for NFLX as I showed yesterday, it was lucky to catch the overall market's move just after as 2/3rds of the directional pull on any given stock comes from the overall market.

 This is the 10 min chart intraday, as I said yesterday, I don't trust parabolic moves and I thought all 3 would fail (NFLX, PCLN and GOOG) and all 3 have failed thus far.

 This is the 5 min chart, it's not just the broad market that's seeing pump and dump.

This is the 1 min intrraday divegrence that built just a few minutes back and we are seeing a bit of upside.

I'd seriously consider entering at least a partial position if I could make some room (SHORT) and try to see if I could enter the rest on a move a bit higher/


Bottom line is I like NFLX as a short, it may have to be watched over a bit more than some others, but I'd prefer to be able to trade around it and make more gains.

Third Day of Pump and Dump

Last night in the Daily Wrap I showed this chart with the following commentary...

"

 This late day positive divegrence in the QQQ tells me they aren't done with this pump and dump pattern yet, but there's serious damage done so I don't think there's too much time left..."

So far that was right on, but even more right on was the "Pump and Dump". 

Take a look at the IWM, and the Q's to a lesser degree, you already saw the SPY in the triangle post.

 This is the 60 min IWM chart, just to show there's as much damage here as there is on the SPY 60 min chart.

As far as today's specific action and why I keep saying "Use this"...

 5 min IWM leading negative in to it's move or pump.

Intraday 3 min IWM distribution, this is the 3rd day of this pattern of pumping in the morning, distribution  and dumping...

2 min IWM

The Q's didn't have as strong of a signal, but they hadn't done as much either, the 5 min QQQ - compare to the 5 min IWM above.

3 min Q shows the pump that I talked about above from last night's post and why I said we had at least 1 more day and the distribution or dump.

And a 2 min intraday QQQ chart.

You saw the SPY earlier, you may recall, I thought it would come down to either the lower support of the triangle or maybe a Crazy Ivan shakeout.

YOU DON'T SEE DISTRIBUTION LIKE THIS IN TO HIGHER PRICES 3 DAYS IN A ROW ON TOP OF ALREADY LARGE DISTRIBUTION (SEE 60 MIN CHARTS) IF YOU ARE PLANNING ON PUSHING THE MARKET HIGHER AND KEEPING THE BULL ALIVE.

Quick Intraday Update

IWM/R2K is not looking too good right here, has some pretty severe negatives, I'd say it's right about at a pivot.

I'll have charts up in a moment.

Remember the Steering Divergences?

Earlier this week I showed you what were clearly steering divergences, I assumed they were being used to keep the market close to VWAP where positions can be either unloaded or loaded up (selling longs or likely putting together short positions, either way, they'll want VWAP or better), I assumed this is what was going on, but today's second day in a row early market move caused by a USD/JPY test that we have not seen at any other time during the entire 24 hour period certainly grabbed my attention and as soon as I saw the SPY triangle developing, things started to fall in to place and make more sense. I don't think those steering divergences were just about VWAP, although that would be a consequence of crating a lateral consolidation price pattern like a symmetrical triangle, I think we have pretty good evidence that the steering divergences are to form this triangle, take a look...

 Looking at the 3 min chart it would make sense for the triangle to become more obvious by heading to the lower support area, there just happens to be a 3 min negative divergence, what I'd call a steering divergence.

The 2 min chart has the exact same divergence in the same place, that would send price down to the lower trend line and make the triangle very obvious if it isn't already.

And the 1 min has the same divergence, again, a steering divegrence as these timeframes are not large enough to depict true accumulation or distribution.

So what would happen in this scenario and why do I think this is the highest probability?

Just like we had a head fake move which was predicted before it materialized and members were told what to expect before it materialized, these moves are run for good reason. For any members who have not read the two articles I wrote on the subject, they should answer all of your questions, they are always linked at the top right side of the member's site and called, "Understanding the Head Fake Move" and here they are for reading if you have time... Part 1 and Part 2

 There are two scenarios, a normal straight head fake and a Crazy Ivan , "B" would be the normal head fake move which is a broad and general term, the specific head fake created here would be a bull trap just as the one that proceeded this monster rally was a bear trap which I will show you.

"A" is a variation on the head fake move called a Crazy Ivan shakeout which gives the head fake on the upside a little more momentum by running stops below the triangle and engaging some shorts before moving up and forcing the shorts to cover and those who were stopped out to buy back in creating stronger upside momentum, but the entire point is "C", to get above the triangle where retail will buy on "Breakout confirmation" or chasing.

Stops will usually be placed just inside the triangle, at the apex (point) of the triangle or just below or below the lower trendline of the triangle. As price rolls over and engages those stops it creates downside momentum the same way a bear trap creates upside momentum through a short squeeze, at some point on the way down shorts enter creating more momentum just as in the last move up longs enter creating more momentum, it's the EXACT SAME CONCEPT, JUST IN REVERSE.

Here's the last head fake move that we called long in advance, even what it was for and what trend would folow it (a down trend to at least the SPX's 200-day m.a.

The first accumulation was in the range "A" which started on a Monday morning, but we had made the call Friday that a range would develop early the following week which is one of the hardest trends to call, it lasted the entire week and that Friday we called for a head fake move below the range and the next Monday we got a strong move down of -2.25% at "B" and then finished with more accumulation confirming the head fake move.

"C" is engaging the bear trap as they are forced to cover their shorts entered on the move down at "B". This is what creates the enormous momentum we saw on this run up.

HOW DID WE KNOW THERE WOULD BE A HEAD FAKE MOVE BEFORE IT MATERIALIZED?

 First we had the price formation that was very obvious, second we had the accumulation on a 30 min chart as seen above and the head fake was confirmed in the area of "B" as that divergence grew stronger.

WHAT DO WE HAVE NOW THAT SUGGESTS THIS WOULD BE A HEAD FAKE MOVE TOO?

This is a wider view of a 60 min chart, price is just as high and sometimes higher than the last leading negative divergence, but this time the leading negative divegrence is much lower and sharper, if the move were going to stick on the upside we'd expect to see strong accumulation so they can make money on the upside move, but with strong distribution like we have, it suggests even stronger than the last head fake move that this will be used for short positions moving down as fear is even stronger than greed.

We'll see soon enough, but the head fake move is just about the best entry you  can get.

There is one more thing to consider, in Technical Analysis, a breakout of a triangle that is 2/3rds complete (hasn't reached a full apex) is considered to be a stronger breakout than a full length triangle and then breakout.

GLD / DZZ Update

DZZ is a 2x leveraged short Gold ETN. I have to say that long term as in primary trend, I like gold a lot and I'll show you why, but short term I have been looking for a pullback in Gold because of the signals I have been seeing. This morning BofA launched their "Sell Gold Campaign" which has apparently hit silver pretty hard, but I do find it interesting that this is  the 3rd or so position BofA has been involved with this last week publicly. Yesterday it was the AUD/JPY which they were pushing people to buy, so they obviously have some to sell and it has been the worst performing of the 3 carry trades.

This is what GLD looked like and why I entered a DZZ (2x short gold) long position in the trading portfolio.

 30 min clear negative divegrence, I was considering Put options on a move higher, but decided to go with an equity/ETN, DZZ.

I pointed out the gap and that very few gaps are left unfilled, as well as this 10 min negative as well, but the divergences get more and more interesting considering BofA came out with their "Sell Gold" Analysis today, which tells me they are likely buyers. Take a look at the very recent signals...

This is an intraday version of the 15 min chart, that'sd a pretty sharp leading negative divegrence on a long timeframe that developed VERY quickly just 2 days before their report.... Hmmm.

Look at this intraday chart, that's distribution all day yesterday from about 10:45 until the close right before BofA says sell gold.

I'll hold the DZZ position open for now because if anything I'd think BofA wants to buy gold on the cheap and I'll show you why, it's the same reason I like gold a lot as a long term primary trend play.

 The 60 min chart is one reason I like GLD longer term, but the least of 3 reasons...

The 4 hour leading positive divergence is the second reason I like GLD long term and if you look at the location of the positive divergences you'll notice they are very low in the range, thus BofA's call to sell gold as that would allow them to accumulate Low in the....

 And the first reason I like GLD/gold long term, the daily chart's leading positive divegrence after a large relative positive divegrence.

If you look at DZZ, it's not giving the kind of signals that would suggest a primary trend trade, it seems more than worthwhile trading, but more along the swing trade line...

It has a 15 min leading positive chart, but not much past that, I figure that's about right to put GLD around the bottom of its range....

We'll take a look at GLD as a possible long when we get to crossing that bridge, for now, I'm going to assume that the above is probably pretty close to what's going on and DZZ should do well over the next week or so.

SPX Triangle

I was looking at this yesterday and today when the USD/JPY tested lower again, this time not immediately pre-market, but just on the open, I really started to wonder and by this time U'm sure I'm not the only one who sees the SPX/SPY triangle right on the resistance area and right before Yellen's testimony tomorrow.

Big moves usually have big head fakes before them, for example...

 The set up for the Feb 6/7th rally started back on Jan.27th at "A" with a range that was under accumulation, we predicted the break below that range in advance as a head fake set up because the range was so clear, all of the orders and stops would be right below at "B" and then we saw even more accumulation confirming a head fake/bear trap at "C" when a small "W" base was complete , the next day our short squeeze began, this was a strong rally up as had been predicted in detail Feb 4th, but even before it began we expected it to see distribution which it has and lead to an even larger move down to the first stop at the SPX 200-day s.m.a., so is this triangle of the last 3 days with strange USD/JPY moves right at the open that are  helping to form it just coincidence as it sits right at a level where a head fake breakout would cause retail to buy just like the last head fake breakdown caused them to short and create a bull trap this time whereas last time it created a bear trap?

All I know is the sym triangle is the most recognizable of the consolidation/continuation patterns, traders will buy it on a breakout above the triangles resistance, thus creating a bull trap , I don't think it could possibly be anything else with this in the way...

 This is a worse leading negative divegrence than the previous one that was quite volatile with 2+% days down and the increased volatility was apparent on the rally up out of the bear trap/short squeeze.

A pop out of a triangle would be a very obvious technical setup, in fact if someone were to go to Stocktwits right now and checkout the SPY stream, I'm sure they'd be talking about the triangle.

Otherwise the reversal process as they are typically tighter on the bottom and broader on the top looks fairly mature. It;'s interesting this triangle would pop up just before Yellens first Congressional testimony when the market is looking for guidance on the first rate hike which was already hinted at to be mid-2014, about a full year ahead of expectations.

I don't think this is a coincidence, I also don't think it is what technical traders assume it to be, it never is. If anything, if it is a real triangle put there purposefully, I'd say 90% it's a bull trap.

IOC Position Management and New Trade

I prefer that I had put IOC and a few others in a core portfolio rather than a trading portfolio because I really don't think trading around these is the best idea, but that means pullbacks are opportunity cost.

For those not in these positions and maybe interested a pullback is the time to take a look.

Here's IOC which was features earlier in the week in greater detail.

 IOC looked like an interesting candidate after a capitulation event and a base started forming, it's in the green for us now, but after just breaking out of the base, it too looks set for a small pullback.

 I showed the X-Over screen earlier this week and where the false signal had been and the real buy signal, the 10-day yellow moving average is also the most likely place for the first pullback after a new buy signal, it should be higher by the time price and it meet.

The longer term chart is still very positive so I think this is a constructive pullback we will see meaning it is accumulated for the next leg higher.

Around the 3 min chart we see profit taking and some light damage that makes me think it will pullback. This is another I'll probably just sit on rather than try to trade around a small pullback.

Decision Time For URRE

URRE is similar to UNG and perhaps MCP as it's a long term secular bullish stock in a huge base that looks like it could rise for years.

Over the last 3 days, until just a few moments ago it had been up 4.23% Monday, 13.65% yesterday and 5.5% today making for a 25% gain over the last 3-days with no leverage, I warned about this yesterday as we are at resistance, some are taking profits and URRE is likely to pullback. For me, I have no problem holding on to URRRE because I entered it as a long term position, nit a trading position.

Here are the charts, a pullback may create an opportunity for those who are interested in a new position or those who want to add to an existing one.

 Long term 5-day chart/base, similar to UNG.

Daily chart with the last 3-days' gains and hitting resistance, it's not surprising some profit taking is occurring.

 The daily chart in the bowl looks great, but this is a long term chart.

 This is the 30 min chart, it was obviously ready to make a move.

The same is seen on the 15 min chart.

On the 5 min chart we are in line so there's no really serious distribution, just profit taking as far as I can tell.

It's pretty much contained to 1-3 minute intraday charts, that's not a concern big enough for me top trade around, I'm going to leave my position in place, but if we get a decent retracement some might want to consider a position here as a long term secular bullish play despite the market.