Trade Idea: AAPL Long

Like NFLX or AMZN, AAPL is putting in the same kind of signals, nice and strong. This is still a bounce move like the others, but if you like AAPL, there are some nice signals there for a bounce, maybe some AAPL calls?

Looking Forward to Next Week

I think we saw a couple things today, an o-ex pin that was lower and the market quickly moved to that area and of course the 3C signals after 2 p.m. are of great interest to me because whatever price does Friday afternoon, it doesn't have a high correlation to how it starts the new week, the 3C signals pick up where they left off so if we have positive divergences this afternoon, the chances are VERY high that we'll have positive price activity early in the week (next).

There are positive divergences in all of the major averages (Dow, SPX, Russell 2000 and NASDAQ 100), my favorite is the IWM, my least favorite is the SPY which hasn't been able to put in a 5 min positive, whereas most everything else has and the IWM has gone further.

I'm not sold on an immediate move Monday morning, the reversal process in the averages to me looks incomplete, a pop higher immediately would look a little premature so I wouldn't be surprised if there was a little more lateral/sideways work done in the major averages, but that's an opinion, the most important thing for near term trade is there are positive divergences.

Also remember that no matter how far they may have reached, like the IWM out to 10 mins intraday today, it's still only 1 day of positive signals meaning it's a small base/foot print and the best analogy I have is if you put 1 gallon of gas in your car, don't expect to be driving across the state.

I still maintain a net short bias, I haven't let go of any short positions whatsoever and I look at today's positive activity as no more than a very brief, speculative move to the upside, perhaps it may have some head fake correlation as the market never put in anything resembling a normal, strong or convincing head fake move.

Other than that, I have a little more digging to do, as I said with any and all of the longs. THESE ARE SPECULATIVE. I think you could go with something as easy as a leveraged ETF like UWM (2x long IWM) or URTY (3x long IWM) or the same with the Q's, QLD or TQQQ if you prefer to stick with equity positions rather than options.

I'M GOING TO SEE WHAT ELSE MAY SHOW UP IN THE LAST FEW MINUTES OF TRADE THAT MAY BE OF INTEREST.

As I said, I'm still leaning VERY clearly net short, I'm not worried about a bounce, but if you can hitch hike a little ride and make some extra cheese, why not. The VXX/VIX futures are still KEY to timing our downside pivot.

MCP Trade Follow Up

As most of you know, MCP is a long term (long) favorite. MCP is in a large base and I think it will enter a primary uptrend despite the market, which is not all that common, most boats float with the tide so it makes a nice little addition (in my view) for true diversification as the F_E_D has the market so correlated people think sector rotation is something that is suppose to last for 6 hours.

In any case, I try to maintain a CORE/Trend long position in MCP at all times, but on a trading basis we have been in and out and used leverage here and there and have done pretty well.

One of the last updates as far as what we were looking for to start an MCP long position (on a trading basis) was from March 25th,  and in that post we were looking at a symmetrical triangle on that particular day that was pretty mature, just about at its apex and I asked the question, "What do you think is most probable?" and almost all of you who answered said the same thing that I said in the post...

From the post on 3/25...
"

 MCP daily triangle, there's a decent chance for a head fake/stop run, if that happened it would be even more attractive as a long"

The next day MCP Update...

 This was what MCP's daily chart looked/looks like, the head fake move would almost certainly be there, today's move below the triangle will likely turn out to be a head fake move, but just like earlier today when I didn't enter the IWM calls on the break of $116.19 because I didn't have confirmation yet, we need confirmation no matter how likely if we are really going to have probabilities lined up on out side."

And...

"

 If you look at MCP's 15 min chart, what's missing now?

If you said a reversal process you are 100% correct, even with a 1-day or half day move down, we still should see a proportional reversal process whether in the form of a "U" or a "W" or a rectangle, etc."

So what do we have now?

 From the first day it was brought up as a new trade on the 25th and what we were looking for, a break below the triangle and a reversal process. The reversal process (as reversals are almost always a process that takes some time rather than an event that is a sharp "V" reversal) is apparent on a daily chart, that's pretty impressive.

Since MCP is still so low in the base, I wouldn't be opposed to setting a limit buy on this above the apex of the triangle, it's not something I like to do (chase prices), but I think MCP will be fine as long as you remember it's still in the hot/volatile zone of a base and give it some room in your risk management plan (I';d rather take fewer shares and have a wider stop when we're in a stage 1 base or stage 3 top).

 Unlike VXX which I noted this week and said it was uncommon for an asset to start accumulating right away on the first break in a head fake move (usually they are lowered to the target area and then accumulated), MCP was brought down to what must have been a fill area for a larger order, you know I think Goldman Sachs is one of the players long MCP. The 3C downrtrend confirmation at the green arrow demonstrates what I'm talking about followed by some positive 5 min divergences.

 We see the same on a 3 min chart.

And intraday the 1 min chart has been busy...take a closer look...

MCP 1 min.

All in all I still like it, I liked the idea of a phased entry or just waiting on a move below the triangle to get in at a better price with lower risk.

In all honesty this isn't the most impressive divegrence I've seen in MCP, but I have no problem holding the long position or adding to it if I had room to do so.

AMZN Should See a Bounce

AMZN is VERY similar to NFLX in its situation, what I expect which would be what most would call an oversold bounce, but I view this in a different light which is not important right now.

I'm already in (Trading tracking portfolio and options tracking portfolio) to NFLX long/call positions so I like it, I think it will deliver, but I don't think it will last.

The real trade is not the hitch-hike trade on the upside, but shorting price strength as the upside starts to see short term distribution as the intermediate and long term charts are already solidly there.

AMZN I think is very similar.

 As far as the longer term, this is why AMZN is a CORE/TREND short that I won't let go of despite a bounce.

Note the trend line and then as usual as there's a change in character, there's a change in trend right behind it and the change in character is the typical increased price ROC to the upside, it looks bullish, but almost always leads to a top. These ROC changes are typically seen at transition points between almost all of the 4 stages, whether the breakout from stage 1, the move from stage 2 to a stage 3 top or the increased volatility from a stage 3 top to the start of stage 4 decline and of course, CAPITULATION, the end of stage 4.

 That's not enough for me though, the Daily 3C chart for AMZN is certainly enough for me theoretically, it's just a matter of logistical concerns like the right place to enter, the right assets to use, position sizing, phasing in, head fakes, etc.

However, this is a very strong and very negative signal...distribution right at the area we'd call a stage 3 top and its leading negative in a big way.

As far as the Calls on a short term basis, there's the head fake break under support, note the volume pick up as stops are hit and new shorts enter, all of that is selling across the tape that means all of that is potential supply on the cheap, easy to accumulate in size as no one ever seems to ask, "Who's taking the other side of the trade?"

 Intraday 2 min, I didn't think I even needed to draw on the chart, the leading positive s pretty clear.

The actual multi-day accumulation period and head fake move are very reminiscent of NFLX.

 As for migration, the 3 min chart is seeing it as it leads positive, I included some other signals there as well.

The 5 min chart is impressive so this is my minimum standard for a position, the 5 min chart must have a divegrence.

At 10 min things get sloppy so it hasn't migrated that far, at 15 min things are downright negative, so the positive divegrence is not that big, but big enough for a leveraged position like calls.

Intraday Market Update

Here's what the charts are looking like, ironically right around the hour the op-ex pin is lifted. Some look like they need a little more work, in my opinion the IWM has the best looking short term underlying trade for a bounce, that's why I chose it for the Spec. Call position.

 IWM 2 min intraday was perfectly in line (price / 3C trend confirmation) and then as the IWM makes a bearish descending triangle that would serve as a perfect head fake to draw in more shorts as they expect this bearish consolidation/continuation pattern to break lower to make a new leg lower, they short squeeze them in a bear trap essentially on a smaller scale, but this is the fractal nature of the market.


Note the divergence, it's 2 min, not a huge deal, but it's in the right place at the right time and is impressive for the timeframe.


We talked about migration when looking at NFLX, here it is on the IWM's 3 min chart also in a leading positive divegrence at the same area.

 Just to put things in perspective so we don't get "Lost in the lines", miss the forest for the trees... this is the 3 min trend in 3C, you can see that no matter what today shows intraday and no matter what comes of it, this is a very bearish trend in 3C and has moved the IWM.

This was surprising, a 5 min intraday leading positive divegrence and the reason I chose the IWM over the other averages.

We also have migration all the way out to 10 min intraday so the IWM looks like it's going to see a real bounce here.

The QQQ 1 min since the opening gap where it was in non-confirmation, actually worse, distribution and then the downside 3C confirmation and a positive divegrence developing since it started moving laterally.

The 2 min chart with roughly the same signal.

And the QQQ 5 min chart so not bad, but the IWM looks a lot better.

SPY 2 min, you can see about how far along the reversal process is in this case.

We have SPY 3 min migration with a small leading positive

The larger view of the 5 min showing where resistance and the head fake area would be or is, we also have a relative negative divgerence between the first resistance area to the left and the highs to the right as well as a negative and leading negative divegrence to the far right. There is no intraday positive on the 5 min SPY, again the reason I chose the IWM calls for a quick long/bounce.

TRADE IDEA: IWM CALL

OPENING A SMALL APRIL (STANDARD) $114 CALL FOR A QUICK BOUNCE TRADE.

I see this as very speculative so the position size and risk management will reflect that.

GLD/ UGLD / GDX / NUGT

All 4 assets (I have open longs in UGLD 3x long gold) and NUGT (3x long gold miners) are going to be coming down intraday, probably another gap fill.

My view hasn't changed at all since the update on 4/2 when I said they'd be coming down the next day, but I had no intention of closing them.

I feel the EXACT same way today, these are meant to be longer term counter trend upside positions, they have barely moved out of stage 1 and have a lot of upside potential, I'm not going to waste time and have more transaction costs than the trading around the bone is even worth, they are staying put as they are, but they will be coming down intraday and likely filling today''s gap.

Here's yesterday's update on the 4 assets...

If you want to fade them, that's up to you.

Here's what you are working with and working against...

 GLD intraday 1 min distribution, should be coming down soon.


UGLD 5 min with a negative divegrence, stages 1 and 3 are the most volatile, the hardest to make money in as they don't trend like stage 2 and 4, but this is a solid stage 1 base doing some backing and filling of gaps.

 GLD 10 min, now we are in the institutional timeframes, you can see distribution at a stage 3 top, look at the size of the stage 1 base vs the previous top and remember that bases are almost always about half the size of a top's reversal process, that's why I'm excited about a counter trend rally in these assets and will stay put.

That's also a massive leading positive divegrence.

 UGLD 15 min, the same stage 3 top, stage 4 downtrend confirmation and a huge stage 1 base with a very mature reversal process and huge leading positive divegrence.

GDX and NUGT...

 1 min intraday negative in NUGT (3x long gold miners), there's no upside gap confirmation tooday, not surprising really, but not a big deal to me either.

GDX (gold miners) 2 min with the negative on the 2nd I warned about and said, "I'm staying put" unless it was an options related trade, you can see the accumulation yesterday on a short term basis, the gap up and distribution intraday, likely to fill today's gap.

 NUGT 5 min with the negative on the 2nd as well as a leading negative today, these will come down, maybe a GDX or GLD Put position for a quick trade/hedge would work well.

However at the more important 10 min GDX, a strong leading positive at the stage 1 base

And NUGT 15 min, a much stronger timeframe with the different stages, but the reversal process/base and the divegrence are the highest probabilities, I'm not going to react to every little jot and tittle, that being said, if you can set up a put at the right place for a quick trade it may be worth while.

Quick Market Update

It may have been the Friday Max-Pain Op-Ex Pin, it may have been something else, it doesn't matter, although I think it's the op-ex pin.

Remember most contracts are closed by 2 p.m. and the pin lifted, the price action after 2 p.m. is not that important to me, but the 3C action is as it almost always picks up where it left off on the next trading day (Monday).

That being said, all of the major averages have intraday positive divergences, they should all bounce soon, I'd say definitely by 2 p.m.

If you wanted to play a quick leveraged trade to the upside, we're about in the perfect spot to enter it now.

I'll get some charts out showing you what we are looking at, this doesn't change anything about stage 3 positioning, but I did mention at least a half dozen times in the last 24 hours, "For a head fake move, this has been a VERY tame one", so who knows with certain assets like NFLX looking like they can pop and some others.

NFLX TRADE FOLLOW UP

Yesterday I featured NFLX as a long trade, this isn't much more than what most people would identify as an oversold bounce, I'd call it a counter trend shakeout.

In any case, you may recall the trade idea Trade Idea: NFLX Long and the charts that were posted just after, NFLX Charts

One of the keys to the trade that I mentioned and I even said that I thought you might use it as a qualifier, in other words if NFLX does "A"you might consider "B" as it would be coming to you, lowering your cost basis as well as risk and if the signals confirmed today, giving you an excellent timing marker.

This is from yesterday's NFLX idea...

" I would personally leave some room for a stop run/head fake in the area of about $349.90. In fact, if you want to place a high standard on the trade idea and get the best entry/lowest risk, you might consider setting an alert for <$349.90 and consider that the make or break for a long entry....the reason I mention a possible head fake is because it is already so close to support which would be a wider "W" base and they typically see a small stop run to give them some initial momentum as shorts will enter on a break of support and be caught in a bear trap and forced to cover as price reverses."

Wouldn't you know it...the < $349.90 doesn't mean right at $349.89, it means below that level as that's where the head fake would occur, how far it moves from there is a function of the market and that's why we always check head fake moves, even if they are very high probability, we can really only tell what the timing looks like by paying attention to what happens below that level which was a former support area.

Here's the charts for NFLX right now...

 This was the support area I mentioned yesterday and waiting for a break below that area, we want to see some volume so we know that there's supply, one of the reasons head fake moves are run as it's hard to accumulate a large position for institutional money without supply and whether it's a stop that's hit or a short that's entered, they both produce supply.

Supply is not enormous, but it's enough to have made the run worthwhile.

 What we also want to see is a reversal process as we know very few reversals are an event, so either a "W" or "U" shape which we may just be starting to see as price has stopped the ROC decline and started with some lateral movement, we need to see more of that.

As far as 3C on the move, it looks like the initial signal is supply was absorbed/accumulated, these divergences always start on the fastest chart (1 min) and "IF" the divergence is strong enough it will migrate to the longer charts showing us that it's a healthy divegrence of some increasing size.

 The 2 min chart is both confirming and migrating. If this were a serious break, I'd expect to see 3C confirm it by moving lower, that didn't happen.

Next we need to see the in line charts move to positive divergences...

 The 3 min is in line intraday which is good, this means if this chart goes positive we are seeing stronger accumulation as the migration spreads to the more serious timeframes.

 My standard for a trade is the 5 min chart being divergent, so the 3 min and then the 5 min (which wouldn't happen until we got more of a reversal process) would need to show positive divergences, that would be the key to timing an entry.

Of course one of the main reasons for considering a NFLX long which I'm already in , is the 30 min leading positive at a lateral range that looks like a reversal process to start a counter-trend rally/bounce, the head fake (if that is what we have and the 30 min chart puts the probabilities at high) is just a timing marker we see at least 80% of the time before a reversal making it an outstanding timing indication.

If you like the NFLX idea, I'd have this on your radar, I'm already in and fine with the position, if anything changes I'll let you know.

Market Update

Hopefully you can see now why the SPY Put trade was meant to be so short, but in opening that position I had said,

"I'm going to enter what I think for the moment, will be a short term trade, however the longer term set up I don't think is far behind"

First let me use the SPY as a proxy for the broader market, it applies for all the staging except for the IWM, this is easier than posting 10 charts for each of the averages.

"If you don't know where you are on a map, you have no idea where you are going", this has been a theme recently I've been trying to stay on top of because just about every trend in every timeframe has 4 stages and then it starts over again, if you know where you are in a stage, you have some idea of what's coming next. Taking that a step further, especially with a probable head fake move in play, we are also looking at multiple timeframe analysis which has aligned with both the large and small trends both at stage 3 except for the IWM which entered stage 4, but reacts similar to stage 3 and should move in similar fashion as it is in the first move of stage 4 which is a volatility shakeout of new shorts entering on the break of the stage 3 top.

 This is a map of the stages for the longer February Cycle in a stage 3 top with recent action the last few days at a head fake area which is what we see about 80% of the time just before a reversal, it's the shape of the top and head fake that I often describe as "An igloo with a chimney on the right side". That Chimney area happens to be stage 3 of the shorter cycle that started March 27th, so both trends have aligned at stage 3.

Here's the same chart with the staging, to the left at the "U" is the larger cycle's stage 1 base and the larger stage 3 top, to the far right is the March 27th stage 1 base and now stage 3 top which is acting or at least in the right place for the "Chimney" part of the larger trend's Igloo shaped top or the head fake move, even though it's a pretty tame head fake move thus far.

 As far as the highest probabilities, this 4 hour chart of the SPY makes it pretty clear what the underlying trend for the entirety of the larger February trend has been, distribution as we expected and clearly wrote about days before the move up started, again I reference the Feb. 4th note that was meant to anchor expectations so you didn't end up in an emotional decision, essentially trying to prepare you for what you'd see so you knew in advance, but also knew what the condition of the market was. This is clearly deeply leading negative/distribution, which was the entire point of the February cycle.

 On a 15 min chart we have essentially the same thing just with more detail/noise, leading negative at the February (larger) cycle.

Looking at the trend of the 1 min chart you can see the distribution trend at the February cycle's stage 3 top and even as it is in leading negative position, you can see accumulation from the 27th for the smaller cycle as both stage 3 tops are now aligned. To the far right there's a small positive divegrence in a deep leading negative position, this is exactly why Wednesday's put position was expected to only last a day, but also why I said, "I'm going to enter what I think for the moment, will be a short term trade, however the longer term set up I don't think is far behind"

 On a SPY 2 min chart (locally) you can see the negative divegrence and reason for the Put position and why it was closed as well yesterday, you also see in yellow, price in an area that would or could be considered a head fake are or bull trap, but price action there is VERY tame as those head fake moves generally are convincing, meaning strong.

 The 3 min chart shows the same distribution signals for the Put trade on Wednesday as well as reasons to close it yesterday, as you saw, I didn't expect it to last much more than a day, but it was a good set of signals worth trading. So far the positive divegrence intraday that closed the Put trade hasn't led to much, that could be NFP or op-ex related or just the stage progression.

In this situation, the VXX signals are the tie breaker and have been for a while.

 This is the same 3 min chart, just to show you the trend, this is CLEARLY negative, the shorter trend that's in stage 3 is in leading negative position so any head fake move, no matter how strong from here forward really has strong probabilities against it holding which is the definition of a head fake move.

 As far as the shorter cycle, it was defined by a 5 min positive divegrence on 3/27, the first one in weeks, it's stage 3 area is defined by a 5 min leading negative/distribution. Thus, ANY MARKET STRENGTH OR ASSET STRENGTH, I WANT TO SERIOUSLY CONSIDER USING TO ENTER SHORTS OR ADD TO SHORTS.

By the time the VIX futures divergence is flying, we won't have much time left to get organized.

And the SPY 10 min chart brings us full circle as we started with longer charts above. I think both the larger and shorter trends are clearly in distribution and at a possible head fake move as so many of you have written me about the last 2-days.

As for the other averages, we don't need to go through the entire staging/cycle thing as the SPY works fine as a proxy for the large market averages.

IWM

 IWM 1 min chart with a positive intraday yesterday afternoon, this was in no way strong enough to trade so I just left it alone and let it do its thing and follow along until the set up emerges.

You have to look at this 3 min trend chart of the IWM more closely, but you can see where it broke down from stage 3 to stage 4 and just like the initial break of the neckline of a H&S top, we got the volatility shakeout of new shorts that I went over several times yesterday, that means although the IWM is not at the same stage, it is in the same position to move with the market as the volatility shakeout should turn to the downside the same time the broad market transitions from stage 3 top/distribution to stage 4 decline. The IWM should move to a lower low and establish the stage 4 decline.

 This IWM 5 min chart is interesting, although it's a very close up view, note the positive yesterday (mentioned above yesterday afternoon), still not worth the risk in trading it considering where we are.

 QQQ 2 min smaller trend from 3/27 accumulation or stage 1 to what is clearly stage 3 distribution/top and acting pretty bad, it could see some counter trend moves or bounces intraday and I want to use those to enter short positions on price strength/3C/Trend weakness...

QQQ 5 min with the smaller cycle from 3/27, remember it was the first in 2 weeks to make a 5 min positive, still not worth the risk of trading for me, the distribution we are seeing stages this at a solid 3 and in to stage 4. With the short and longer cycles aligned, the break of the smaller trend to stage 4 should lead the February larger trend to do the same.

Thus the only real business we have left as far as timing is the VXX/VIX futures, as they have been for weeks, they remain the key to timing of the pivot.