Have a Great Holiday

I'll likely have some more posts out tomorrow, depending on what I find in internals, but I think we have a pretty good grasp.

Have a fantastic Holiday weekend.

EOD Update for Next Week

I think I've seen enough to make an earlier call than usual for a Friday (Thursday -shortened trading week)... Keep in mind today was a monthly options expiration so a lot or most of the price action is many assets had to do with the op-ex max pain pin, right around the 2 pm mark as usual we sart seeing some changes which help us plan for the following week, that's what the VXX call and SRTY long are all about.

My initial impression is we get a pullback early next week, I want to say Monday, but there may be a little more work to do before we are there, that depends on how much things move in the last 45 mins of today.

These charts were captured about 15 mins ago, but they are still relevant. Remember, on op-ex days price will do whatever it wants the last 2 hours after the pin is lifted, it's the 3C signals that will generally, really almost always, pick up where they left off on the next trading day - even over a 3-day weekend.

 The longer intraday charts like this SPY 3 min have been flashing pullback signals, short duration pullback, but pullback. Today, I suspect because of the op-ex (as this is normal behavior), we have had a lot of intraday charts in line with price, that is until 2 p.m. which is why I pay so much attention to what happens after the 2 pm-ish area.

 SPY 5 min also flashing a relative negative divegrence, suggesting a quick pullback or what we're calling the short term trend.

 Even out to 10 mins we have a relative negative, not a big deal, but it does suggest a pullback that is tradable.

You can see coming in t the 2 pm hour today the intraday 1 min SPY starts going leading negative, this is what I was waiting to see and part of the reason I entered the SRTY long position.

 SPY 2 min is showing migration from the 1 min divergence and pretty quickly so that's what I want to see with VXX calls and SRTY long.

QQQ 10 min has a small relative negative short term trend signal, the mid term trend's signal is still intact and fairly impressive.

 QQQ 5 min with the same relative negative, now it is really about the intraday charts.

 QQQ 2 min going negative intraday

And migration to the 3 min chart already.

 IWM 5 min still has an impressive mid term positive divergence, but there's a relative negative (short term trend pullback signal).

This is why I chose SRTY, the intraday IWM 1 min just collapsed to a leading negative divegrence and right in to the 2 pm hour.

 We have migration on the 2 min chart as well

And the 3 min chart already looks ready to move.

The intraday Russell 2000 Futures/TF 1 min also collapsed to a leading negative divegrence so there's decent confirmation there.

And as I pointed out earlier, the 5 min charts are negative.

This is the 1 min ES chart turning negative.

Interestingly the USD/JPY's signal has gone deeply leading negative and now we have some confirmation in single currency futures.

1 min $USDX wasn't negative earlier, but it sure is losing ground in 3C now, this all fits together well for a pullback early next week.

The trend is not big enough for me to want to trade it beyond a speculative position, but I think it is tradable.

AAPL Update

I'm not going to enter this position (AAPL short) for a pullback, at least not yet as I do think it has very good upside potential in the mid-term trend, in fact for now I'll probably hold the AAPL long trading position, but AAPL is quickly deteriorating.

 1 min intraday leading negative

2 min intraday leading negative, very impressive...

We are just getting moigration over to the 3 min chart, the difference between the signals on the 2 min and 3 min chart should give you some idea of how much difference there is in these timeframes that would otherwise seem so close, it is substantial, especially when you reach 5 min charts.

If the 3 min chart had the same divergence as the 2 min chart does, I'd assume the 5 min would see migration and would at least close the AAPL long that is in the green just over 1% and I'd be thinking VERY hard about entering a put or short for an AAPL PULLBACK trade like the market.

As far as the medium term trend, it could use a pullback to strengthen it, but it's already pretty impressive, this is why I'd require some strong evidence out to 5 min or what I described above, but this is a new divegrence and happening so quickly that it may just hot the 5 min chart before the close, although I'm thinking more like Monday.

30 min AAPL leading positive for the medium term bounce trend, a pullback in price would allow AAPL to accumulate a stronger position and a wider foot-print on the base.

Trade Idea: Adding a Small Spec. SRTY Trading Position (long)

This is the 3x levergaed IWM short ETF, basically for a pullback play in addition to the VXX calls already open, this is VERY speculative

Trade Idea: VXX / UVXY

I already have the VXX calls so I probably won't be adding anything to that, but I do like the way VXX and UVXY (2x leveraged long of VXX) look here for a short term trade (Long)

FXP Follow Up

I know this isn't a glamorous momo stock, but I think it's one that has given us a fantastic opportunity and shows a lot of promise not just because of what's going on in China, but because of the nature of the chart / price pattern, a Channel Buster.

Channel Busters are the pinnacle of my motto, "Price is above all, deceiving" and a Channel Buster is one of the most deceiving price patterns out there, but they typically have excellent reversal probabilities combined with huge momentum, it doesn't hurt that it happens to be an asset that's short China which is an entry we've been looking for through multiple assets all of 2014.

Earlier today in the FXP Looking Interesting post, I showed you the longer term accrued positive divergences in FXP, but it was lacking 1-3 min positives which are more of our timing indications. I suggested that the range in FXP in this gap fill area would probably see a head fake move below the range and that is where the 1-3 min charts would go positive giving us a Full House of divergences from 1 min through 60 min (positive).

Just a few minutes ago my alert went off letting me know FXP broke the first of two support levels I was looking for as part of a head fake move.

 Here's the first break of the range of the last 2-days which is a gap fill pullback, there's another support level just below that I think will likely be hit too, it is in this head fake range/area I suspect we will get the 1--3 min positive divergences or "timing" divergences to re-enter , start a new position or add to FXP.

This is a graphic I drew that would depict the head fake and the reversal process, we just need to wait now and see if the 1-3 minute charts start accumulating as some supply is created via hitting stops.

Index Futures / VIX Futures Trend Update

There really isn't much of a change here and the charts are confirming what I showed you in the last post, except I'm only dealing with the "pullback" scenario with this update.

 As  mentioned earlier in the week and yesterday, we use to trade 5 min Futures signals, we did with a couple of options recently and I still would as far as the short term trend. The 5 min chart has been deteriorating suggesting a pullback, it may have already come if not for the op-ex max pain pin that is in place on an options expiration day.

NQ/NASDAQ 100 futures on a 5 min chart show the same confirmatory signal as ES.

And TF does as well (Russell 2000 futures).

I think that's pretty good short term confirmation. I'm not so sure I want to trade this move beyond the VXX calls entered yesterday as it's not a major trend.

As for the VIX/VXX, you may recall earlier in the week I posted this chart of the Daily Spot Vix Sell Signal based on a breakout and failure of spot VIX above and then below the Bollinger Bands.

 The breakout above (green ) turns to a sell (VIX) signal when the following day we had a close back inside the Bollinger Bands, you can see since then the signal proved to be accurate. However with the charts of this post and the last, it looks to me that VIX will rally while the market makes a short term (duration) pullback.


VIX futures, 5 min are showing a relative positive divegrence here after the negative/sell signal.

More impressively we have a leading positive VIX futures signal on a 15 min chart so the MAy VXX calls should be fine. The nature of the trend we are looking at, a short duration pullback, is what dictated me choosing VXX Calls, if this was a longer term move like the medium term bounce, I'd use less or no leverage. This isn't about trying to make huge gains using leverage, it's about choosing the right tool for the job.

Multiple Trend / Timeframe Analysis

Just to try to clear some things up for you between "Bounce", "Pullback", "Primary Stage 4 Decline" as all of these trends exist at once, depending on the timeframe you are trading, this is why we want to align our trades with a specific trend and that's a decision each of us has to make based on the time we have, the kinds of trades we prefer, account size, risk tolerance, etc.

So I'm going to use the SPY which is pretty much in line intraday as I'd expect with an op-ex pin in play for at least another hour.

I'm going to use the SPY as a proxy for the overall market as the signals are largely the same (so I'm not posting 3-4x as many charts).

 This is the 3 min chart, it's along the same lines asES's 5 min chart which both suggest a pullback, thus yesterday's VXX option/call position.

 The 5 min chart is suggesting the same thing.

The last 2 hours of the day today should provide us with better or additional signal information for next week, but as it stands, SPX futures and the SPY are showing the same thing, a short term pullback that is really in between what should be a larger move to the upside. Lets say short term (the charts above) are looking like a pullback, medium term are the charts in the 10-15 min range, even some 30 min charts suggesting a bounce as we have been looking for and primary trend being the large, highest probability trend (for instance if I was trading the Primary trend only, I'd be short as we are with core positions and just leave that position in place and 6 months from now (that's only an example) that trend should be very much in the money and doing well as it is the highest probability, I wouldn't even be concerned about any trend shorter than that.

 SPY 10 min is transitionary between the bounce base that is in place and a near term pullback negative divegrence.

The 30 min chart would be the medium term or bounce as there's a substantial base and divergence suggesting the bounce we have been talking about.

The 60 min chart clearly shows nothing but distribution, this would be the primary trend.

So you could trade any or all of these trends, but you have to align your trades with the timeframes and trends you are trading.

FXP Looking Interesting

As you know, I love FXP, but recently saw there was a gap fill pullback was coming after a 5-6% day up. I'd like to put this out as a new position (long) or an add to and have been waiting on the signals to do that.

We have some interesting ones that I'm not sure what to make of yet, I think a partial entry here wouldn't hurt and leave some room to add to it on what may be a small head fake to the downside, take a look and you'll see what I mean.

 This is the daily chart of FXP and when I put out this post FXP Update about a probable pullback/gap fill. 

I'd like to put FXP out as a new position for those interested or an add to, some of you may have even taken the gains and have been waiting for the signal to get back in.

 On a 60 min chart you can see to the far right that the gap fill is not yet complete, there's no rule that says it needs to be, but from a market mass psychology and behavioral perspective, I'd expect a gap fill and a head fake move just before the new trend to the upside resumes.

This is the 60 min chart, I'm not going through all of the reasons I love FXP (long), but the Channel Buster was a gift allowing us to get in and this 60 min chart's base/divergence is SUBSTANTIAL, it can support a LOT more upside.

Near term the charts are interesting as they have divergences that have accrued like this 5 min positive in the flat trading range (blue), you see the day before in which I had posted about a gap fill the day before (linked above).

The 10 min chart has the same accrued accumulation

As does the 15 min chart which makes the 1-3 min charts seem a bit odd...

The 3 min chart is not showing a positive as I'd expect and I suspect until it does, the timing to enter FXP will not be pinpoint.

We have a small lateral consolidation, this is where we often see a lot of underlying activity (3C) as the rest of the market is looking at price thinking, "Boring".

I suspect we may get a little run on stops of to suck in some shorts just below the range/"W" consolidation and I'm guessing that's where the intraday charts will fall in line with the 5-15 min charts above.

"If" you like this one, I'd consider either a phased partial entry leaving some room in your risk management to add to in case of a head fake move on the downside and I'd definitely set price alerts to let you know if that happens.

Opening Indications

First you'll have to excuse me today, I'm a bit dazed. I spent the night with one of the best friends anyone could ask for as he passed from a 2 year bout with melanoma so while I'm here and alert... I guess you probably understand what I'm saying.

This morning's open was typical op-ex behavior, usually the open is very close to the previous day's close...

 SPY opening very close to yesterday's close, presumably for the op-ex max-pain pin

ES intraday needed to ramp to make that happen after a fairly dull overnight session, it's looking a bit congested in the area with a small intraday negative building.

 As far as a market pullback, this ES 5 min chart still looks very much like that's on the table, the longer 10-15 min charts still say we bounce, it just looks like we pullback a bit before.

Even as far out as the ES 15 min chart a pullback looks probable.

As far as this morning, USD/JPY had to help Index futures move up enough to open close to yesterday's close, ES gained about 10 points this morning before the open on this ramp, however there are negative divergence signs building in USD/JPY intraday as well, the $USDX and Yen don't have very strong signals right now for any clear divergences.

 As you'd expect on an options expiration max pain pin, SPY opened and has pretty much stayed "in line" intraday 1 min

However the 3 min chart is suggesting a pullback.

 As is the SPY 5 min chart.

IWM intraday 1 min is in line as well

As is the Q's.

Really right now, everything looks just like an options expiration day, if I didn't know what day it was and just looked at the charts, I'd likely think to myself, "This looks like op-ex behavior".