GOOG Closing Candle

First I closed the GOOG core short position which was a partial position (it needed to be filled out) partly to protect the profit and partly because I saw an opportunity to open the entire position at a better level.

Closing GOOG Core Short (Partial Position) for Now

This is the rough P/L...

Then I showed you the charts of why you might want to consider a (long) hitch-hiking trade in GOOG...

GOOG Charts & Trade Idea 

One of the reasons was the daily "Closing Candle" which we hadn't seen yet, but I suspected it would be an upside reversal candle...It looked like this...

 I was looking for today to close with a bullish Hammer on higher volume, we weren't there at the time of the post, but take a look on the close...

That's even better than a Bullish Hammer, it's called a "Harami" or as the Japanese call the 2 candle pattern, "Mother with baby" and is a strong upside reversal candle. 

The second part is volume, when we have heavier volume on a reversal candle they just work, I'd say 2 or 3 times better, but really it's hard to say because I don't recall the last time one didn't work (although I'm sure there was a time).

So I'm glad to have closed out the position and will look to re-open a full core short on a volatility shakeout above resistance (>$550).

*Often the third day (confirmation candle) will gap lower and close higher than today's close, the IWM 1 min chart of the last post suggested that to be a probability so if you are interested in a GOOG long for a swing trade and then perhaps enter a short at the right time, you might get a chance to grab some shares art a better price tomorrow morning.

Chart Grab Bag

Instead of posting 60 charts of all the timeframes of the averages, I just grabbed some example charts from each that give you a good feel for the very short term, short term, sub-intermediate, intermediate and long term, as always the longer the chart the more meaningful the divegrence as that's the underlying flow.

 IWM 1 min recovered a lot today off the intraday lows, but looks like it could pullback which may widen out a small base that the late day charts on Friday were pointing to for early trade this week, volatility, macro-economic events, geo-political and the F_O_M_C are all wildcards this week.

If this pulls back and forms something that looks reliable, I may look at an options position or something with leverage, but 1 day isn't enough for me to take that risk, the market needs to show me.

3 min SPY, this is the improvement that occurred today, basically what we were expecting as of late Friday, with the 1 min IWM looking like we'll see an early pullback there's a chance this could strengthen a bit and if so, it may be worth considering a short duration long position to take advantage of what we expected to see early this week, I do want to keep the F_O_M_C in mind though and make sure any position that is entered or closed is done so for very good reason.

DIA 5 min looking good for the move we talked about Friday, a pullback "could" give this a larger footprint which is what it would need to be more reliable or reliable enough to consider trading the move.

 As mentioned in the last post and every other, the intermediate timeframes don't look good for the market like this 10 min QQQ which is leading negative. It's hard for the market to go very far on a 1-day 5 min positive when you have a 10 min leading negative's crushing weight acting as a roof.

 IWM 15 min also leading negative, the interesting thing about this chart though is 3C has been either very much in line with the trend lower or has shown where the pivots/divergences are with a lot of accuracy. Just looking at this chart, the market looks like its in a very normal downtrend here, lower lows and lower highs with good 3C confirmation. Of course you'll always have a bounce or counter trend move within a trend, that's where we find opportunities, but this looks like a very reasonable downtrend with few surprises.

IWM 60 min from in line to relative negative to leading negative

DIA 2 hour, I couldn't bring myself to draw on this chart, no need to.

IWM 4 hour also from in line to relative negative to leading negative.

EOD Market Update

The same choppy/noisy upside I expected Friday for early this week I still expect. There's some question in my mind whether the charts will make this one worth trading or not, usually volatility increases and this week has all kinds of events that would do that on their own.

I'm not ready to make a decision about trading this move yet, if the market adds a little base to it and comes down a bit I may consider it, but the key charts in intermediate and longer term timeframes are still (and will continue to be) very negative and that's the direction I want most of my assets leaning, to the short side.

I'll put up a few charts, really simple so you get a visual and if the market opens an opportunity we'll look at it and make decisions, if not, I'm content to sit here on the short side and just wait it out.

Trade Idea: Last Call FXI

I've put this out there 3 times now, I don't think there's probably much time left if you are interested in FXI, here are the previous posts.

Trade Idea: FXI (long) Reiteration April 28 11:28 a.m.

Closed FXP trading position long, opened regular size FXI trading position long & FXI Calls April 25th 3:33 p.m.

Trade IDEA: FXP / FXI (LONG) April 25th 3:20 p.m.

This is the additional chart today that causes me to put this out there 1 more time...

This is a 15 min leading positive divegrence, the point of the chart is the amount of 3C upside added in a single day, it's quite a lot and I really can't ignore charts like this.

GOOG Charts & Trade Idea

Basically the GOOG Core short position was a half size position that I was looking to add to, I'm more thinking along the lines of just re-opening the whole (full size) position at higher prices and book the +15% gain from the Core position just closed.

In essence the idea of the position is very simple for GOOG... It's an initial stage 4 Volatility Shakeout, you can even view it as a H&S neckline break shakeout (of new shorts).

This is the 1 min intraday positive, I'd never close a core short or any trend-based position because of an intraday 1 min chart, but this lets you see that GOOG looks like it's finding its timing for a counter trend move or shakeout as an important support area was breached like the break of a H&S neckline to the downside.

The 5 min chart looks pretty good, I still wouldn't close a core/trend position because of this, but I would consider this for a long trade along the lines of a bounce if it stopped at the 5 min chart and the charts from 1-3 min. were also positive.

 This is a 15 min leading positive divegrence, I "may" consider closing a core short on a chart like this, but there would have to be other circumstances and those can be found on the very next chart...

I haven't verified GOOG as a H&S top here with volume analysis because it doesn't really matter, an important support or H&S neckline was broken on heavy volume (red arrows) moving GOOG to stage 4. We know that one of the first things that happens when an asset moves to stage 4 in a very obvious way and in a popular asset is new shorts come in to the asset and Wall St. delights in shaking them out and essentially stealing their positions at better prices which is basically what I'm looking to do and what we are usually doing in following 3C signals. Today's daily candlestick looks a lot like a possible bullish Hammer (reversal candlestick) , it's not quite there, but could be by the close and its the psychology of the candlestick that matters, not the exact textbook definition. Also volume is higher, again, it doesn't need to be a lot higher than Friday, but we do want to see higher volume as that increases the probabilities of a reversal candle working.

In yellow I drew in an area that would be a likely target because it nullifies the lower lows/lower highs that traders look at in defining a trend which creates demand which can easily be sold or shorted in to.

So if you like the idea of a quick GOOG trade (long), that's probably a pretty reasonable target to use to calculate your risk management.

As far as the Trend Channel, there are larger trends in GOOG, but I'm following the most recent volatility and character with a 2-day TC chart which would put a stop above $561.50 on a 2-day candle, not intraday, but on a closing basis. I don't think that really matters too much if you are looking at a possible long position here, it may just tell you where to tighten up your stops, otherwise I'll just be watching the 3C chart and setting soem price alerts to remind me and look for the next entry in GOOG (short) as a core/trend position, it has the longer term charts to support a trend short.

For those who recall the 3 places I'll short a H&S top, this would be the third and last place before stage 4 moves to a new lower low and we are solidly in the stage 4 decline.

Closing GOOG Core Short (Partial Position) for Now

I'll have some charts up in a few minutes, I have every intention of re-entering, but I'd like to protect the gains.

Quick FAZ Update and Example...

Earlier today I posted my intensions as to how I'd likely handle some trading positions including SRTY, VXX and FAZ, I expected some drawdown in them, but wasn't too worried about it.

I just closed the SRTY position as the IWM was down 2% today, that's a nice move in SRTY and worth taking if I feel I can get in at a better area.

I didn't close FAZ, XLF was down as much as 1.56%, but I'm still okay with that short position as I said Friday, it was opened Thursday and is meant to take advantage of a larger negative trend in XLF/Financials, that's why I didn't use the leverage of options, but rather the 3x leveraged ETF (inverse ) FAZ.

Here are the charts that break it down pretty simply for FAZ, the original XLF/FAZ charts are here...

 This is FAZ 1 min intraday, you can see it's moving to a leading negative divegrence, nothing horrible, but what I'd expect on a day like today, exactly what I expected Friday.

However, FAZ was entered as a Swing or longer trade, if I was going for a trend trade I'd use less leverage and maybe just short XLF or a particular financial, if I was looking for a quick move I'd use the leverage of options to make it worthwhile, but if I don't need the leverage to make the trade worthwhile, I'd rather not worry about time decay, I'd prefer not to use options, so I'm matching the trading vehicle/asset to the trade.

The 5 min FAZ chart shows a minor relative negative divegrence, again pretty much what was expected as of Friday afternoon in the posts regarding trade management of positions like FAZ.

 However, that 5 min chart is no where near as strong as this 10 min positive leading divegrence, not only in size, in type of divergence, the longer timeframe, but also the larger footprint of the base.

The "B" is where we opened the FAZ long on Thursday of last week so a little drawdown near term isn't a concern.

Moreover, the 60 min chart's large leading positive divegrence is where the highest probabilities are with a longer trade (even longer than a swing trade), so I'm not concerned at all about FAZ.

I could make the same argument for SRTY, but there was a decent exit, there are intermediate and longer charts that show a very high probability of SRTY moving much higher and the very short term charts that show a high probability of the IWM moving up near term made it worthwhile to take what the market offered with the SRTY gains, with every intention of re-entering the position at a better price level than what it was closed at today, it's just some extra $ on an opportunity the market presented, but hasn't changed anything about expectations that I had Friday and still have today.

I hope that makes some sense, if not, feel free to email me as usual.

MARKET UPDATE

Friday I was pretty content to hold on to short trading positions , there are some that may be time sensitive or that I think are worth taking some gains on that I may do so, of course I'll let you know, you have to take what the market offers, not what you think it should, it cares less about what we think.

In any case, things are moving along pretty quick in a number of assets, I'm going to try to cover as many as I can where I see opportunities brewing.

As far as today's action, a lot of it is being blamed on increased tensions in Ukraine, specifically the Donetsk area in Eastern Ukraine where Ultra-nationalists are clashing with riot police and of course pro-Russian mobs are doing their part to add to the chaos as is Putin, but that's another story and I'm not sure if it is really the cause , a convenient excuse or really has little to do with events, we will know soon enough though as the charts develop.

Here's what we have now, I suspect there's going to be an intraday bottom coming along soon and from that... Well I expected continued noisy chop which has dominated the market since last week, then we move to a new phase.

Imagine the volatility ahead this week as today is the lightest day of macro economic data and we have the F_O_M_C Wednesday with a lot of Macro-Economic data starting tomorrow so I also want to be careful in what is moved and when, as usual I want to see good reason and confirmation on the charts, but with time sensitive or leverage sensitive assets, it might be wise to make some moves considering some of the opportunities today.

I have to switch layouts and take a look at Leading Indicators, I'll let you know if anything there is pointing or screaming at any particular signals in the market, but so far this looks like increased chop from last week.

In this environment the 3C charts can move so fast that sometimes thay've already answered open questions by the time I capture, upload and post them so I may add commentary without charts or too many, but I do think a visual is helpful.

 SPY 1 min is in line with price action, this hasn't changed much

However there are certain charts just after that refuse to confirm the downside price action like this 2 min chart.

 the 3 and 5 min charts are in position in which they "could" easily confirm a relative positive divegrence, in this case 3C needs to pivot to the upside and lock in the signal which I think will happen as the 3 min chart is doing that and the 5 is starting to do the same.

 While the 10 min was pretty darn negative and we've seen price follow the signal, it's also seemingly being slowly accumulated in a relative positive divegrence (weaker form of divergence).

 The 15 min chart has clear signals from left to right and I drew in the noise/chop in yellow from one day to the next since last week, today looks like a more volatile version of that, but that can also set up a pop to the upside if this is accumulated and my gut feel Friday was it would be, but still within the realm of choppy/noise, perhaps a bit more volatile, there's no large positive here by any stretch of the immagination.

*Right now I see the SPY 1 min is improving a bit intraday and price action is starting to move laterally (intraday base?).

 In fact the SPY right now as I type this post is looking more like this IWM 1 min chart

 Earlier I wasn't impressed by the IWM at all, now it's looking more interesting as you see this 2 min leading positive intraday today.

 The same for the 3 min

I may want to close the SRTY trading position based on this.** Actually I just posted I did close it for now, make hay while the sun is shining.

 Like all of the other averages, when you get to 10-15 mins they are negative and /or leading negative. This is a difficult, move quick trading environment unless you can withstand a little drawdown here and there, if I didn't have access to the market like I do, I'd leave SRTY in place as this is the higher probability move, to the downside with a more impressive move, but if you can make trades around the position , there's extra $ to be made.

 QQQ 1 min was in line at the capture... it is "starting" to transition away from in line to a more positive stance, but not a positive divegrence as of yet.

This QQQ 5 min relative positive or what can be a relative positive if 3C locks in the pivot is what is giving us a bit of a heads up on intraday action below the 5 min charts in the same way the 10-15 min negatives are giving us a heads up of what to expect on a slightly longer basis as they sit. This is why I say, "If you don't have the kind of access to the market to trade in and out, I wouldn't feel uncomfortable holding IWM short or SRTY long, there's just going to be the normal counter trend moves, but you have to expect that when you are trading on a longer/swing basis.

 This is a longer look at the same QQQ 5 min chart as above, the dominant signal is really negative as it is leading negative, but short term there's the relative positive I mentioned above, the market is as dynamic as anything I've ever seen so very few things move in linear fashion.

When looking at a QQQ 10 min chart, this is what I meant when considering probabilities and why if I had a QQQ short on, intraday positives faster than a 10 min chart wouldn't bother me too much as this is the stronger signal, it has to be matched though with the appropriate trade, this signal is not for a day trade, it's more in the swing category.

More as I dig it up.

Closing SRTY Trading Long Position

MCP Follow Up / Trade Set up

For newer members, MCP is a position that has been basing and one that I like for a longer term trend trade, we do trade in and out of it on a trading basis every now and then so you might here me talk about a "Core long position" which is the longer term trend trade and "trading positions" which are shorter term trades up and down.

Last week on April 22nd MCP broke out of a large triangle base on a strong price move of  at least +5.68% when I wrote about it, but something didn't look right and I exited the trading long position that day, here are the posts from last Tuesday and excerpts.

MCP (long) Position Follow Up... 1:33 p.m. April 22nd

"I'm not sure yet if today's move is the start of mark-up or a transition form the stage 1 base to stage 2 mark up, I'd like it to be, but so far we have a parabolic move (granted there's nice volume) and very little in the way of intraday confirmation so far, that can change in a hurry.

For now I am keeping the MCP long open, but if I don't see some improvement or I see deterioration, I may close out the trading position on today's move of +5.68% thus far...

A breakout of a triangle like this at its apex is a clear technical trading buy signal, what bothers me is there was no head fake/ stop run on a very obvious support level, first. Thus, if I feel this is going to end up being a false start, I'd likely try to book the gains, get out and wait for what would more likely than not, be a head fake move below support, that's where I'd want to re-enter, but lets give this a little time and see how things pan out."

Closing MCP Long Trading Position For Now 3:21 p.m. April 22nd

"I don't mind holding any core long MCP positions, but there's just not much confirmation on the parabolic move up today, thus I'm going to free up some space considering where the market is at and no real confirmation today."

Here are the charts since and right now...

 This is the large triangle, it is a descending triangle that is usually taken as a bearish consolidation/continuation pattern, but at this size it's way too big (daily chart) and these triangles typically act as bottoms or tops depending on the preceding trend, this would be a bottom.

April 22nd is at the white arrows where there's a technical breakout, the kind technical traders buy as they see it as price confirmation, it was pretty strong, actually a little too strong as it had a very parabolic look as I mentioned that day and I rarely trust parabolic moves.

However, the thing that really made me suspicious is the clear support of the triangle never saw a head fake move (Run of the stops) BEFORE the upside breakout, technical analysis doesn't really look for that, they look for exactly what you see above, but reality is that Wall St. runs these obvious support levels all of the time, I conservatively estimate 80% of the time before a significant reversal and on any timeframe. In fact, the head fake move is so reliable that we use it as a timing/trade entry indication as they typically occur just before the reversal or breakout in this case.

 This is the parabolic move I mentioned on the 22nd last week (Tuesday), that was my second bit of suspicion (the first being no run of the stops before this breakout of the triangle. I don't trust parabolic moves, I have seen them fail more often than not and usually they fail just as spectacularly as they begin, sometimes much worse.

With MCP coming down with some momentum, long stops from the breakout last week will be inside the triangle, tight below the upper (former) resistance trendline , at the apex of the triangle and below the lower support line so a move below the apex of the triangle will likely give us that move below that I would have expected before a breakout which also means that another long set up in MCP is likely going to materialize that can be used either for longer term core long trending trades or just a trading long position or both.

 This is a 3 min chart of MCP with enough accumulation to create the breakout, but it's not so significant that it looks like the strong type we see right before a real move,  this looked like a false breakout on Tuesday, it looks more like one today.

You can see the lack of confirmation even on a very fast short term 3 min chart at the red arrow, this is what I was talking about last Tuesday, "The lack of 3C confirmation of the breakout" and why I was watching it closely and considering exiting the newly formed breakout even though I was long MCP. *This is essentially the exact opposite of what most technical traders would think, they'd see a strong breakout from a perfectly shaped triangle with good momentum and volume initially increasing, although hardly anyone expects volume from this market since 2009.

 The long term 60 min chart at the triangle looks beautiful, this is why I like MCP as a longer term trend trade and why I think MCP will likely set up a head fake move below the triangle on the daily chart, likely accumulate and confirm a false break under support and give us a very high probability, low risk, cheap long entry.

If you are interested in MCP I'd set price alerts below $4.55 (support) as that will have to be taken out for the set up to work.

Also look for some initial loitering around the apex at $4.60 or so, we should see a move lower after that and that's where MCP gets very interesting as a long.

THESE ARE MY FAVORITE KINDS OF TRADES, THEY REQUIRE SOME PATIENCE, BUT THEY COME TO YOU RATHER THAN YOU CHASING THEM AND THEY HAVE TO PROVE THEMSELVES BEFORE YOU ENTER.

NFLX Trade Idea Update

Last Wednesday I posted this NFLX update, NFLX looks likely to put in a move to the upside soon with the following excerpt...


"...NFLX has been one that I have liked for an upside move most of the month.

I personally will wait for stronger confirmation before making any moves, things feel just choppy and transient, maybe noisy would be the best word, but noisy for a reason, not just random noise."

Looking at the NFLX charts today I think I understand what it was that was holding me back from taking a long position in NFLX and what to look for from here. We have a lot on the docket this week (Today excluded), you can get a look here. The point is the volatility that comes with all of this, especially the F_O_M_C knee jerk reaction, is likely where we are going to find out opportunity in NFLX for a long trade that should have massive relative strength vs the market, it looks like a real move that doesn't need any leverage.

 First off, the 5-day chart to give us some idea of where we are in the primary cycle, stage 3, but that doesn't mean NFLX can't put in a strong counter-trend move as it just breaks to stage 4, in fact, that's the highest probability.

This is NFLX taking out April 15th support today, this would be a probable head fake move, I'll show you why in a moment, but this is why the charts weren't looking quite right for a long entry. Short term charts weren't looking right, they were more than likely waiting to accumulate on a head fake move and that would be starting today or at least wouldn't start until stops were hit by breaching the April 15th support where stops would likely be lined up as well as shorts, that's a lot of supply.

 What I'd be looking for from here is that accumulation process of that supply and that should take the form of lateral price movement from this steady move down, maybe a rounding bottom or a "W".

Don't get me wrong, I'm still a huge NFLX core short fan and would open or add to a NFLX trend short on price strength, but that's a different/longer term trade.

 This 60 min chart shows distribution at the highs and the resulting decline, we also see a positive divegrence way out here on a 60 min chart as NFLX breaks support like a typical "W" or double bottom (not what you see in textbooks, but what you see in reality every day).

 Sorry to skip around on you, but at 10 mins we have the positive that reaches from here to the 60 min chart, thus the reason I've liked the idea of NFLX long for a good part of the month, but haven't acted on it as some other charts were not lined up for a long entry. The assumption that there was more noise or it just hadn't got there yet is giving way now to what is a clear, typical head fake set up today so now we have a pretty decent idea of what to look for from here on out for a long position trade entry.

This is the 30 min chart's positive as well, these longer timeframe charts have looked good, it has been the short timeframes that have been keeping me sitting on my hands with NFLX in particular.

This is a 5 min chart, the 1-3 min charts look the same, they wouldn't accumulate or show that kind of near term action telling us we are close to an entry until a supply area was reached as it was just broken through today.

What we need to see from here is the target range in which they'll accumulate. The price chart will start to lose downside ROC, there may be a final flush of stops and a steep drop before that happens, but NFLX "should" start moving to the side/laterally and forming something like a rounding bottom or a "W" pattern AND THAT'S WHERE THE 1-5 MIN CHARTS SHOULD START MOVING UP (3C) and that's where we'll likely find out NFLX long trade entry.

I will tell you now that I'll be one of the first to short NFLX on a bounce or add to a core short, but I also think the bounce trade in NFLX will be well worthwhile and likely have much better relative performance than the market as well as most sectors.

I'll keep updating NFLX as the situation starts to turn which I feel confident it will based on 10-60 min charts.

Trade Idea: FXI (long) Reiteration

Friday this was the only position added, FTSE Xinhua China 25 Index ETF.

From Friday:

Trade IDEA: FXP / FXI (LONG)

Closed FXP trading position long, opened regular size FXI trading position long & FXI Calls

As you can see I added a small call position as well as the FXI equity long to give it some more kick, even though my longer term trade that I like is FXP UltraShort FTSE Xinhua China 25 Index ETF, it clearly looks like FXP is pulling back and FXI should rally.


Here are the charts for FXI once again, it's still in a great looking area for a long position.

 Friday's candle was just short of a bullish Hammer, but with candlesticks as with almost anything on a chart, looking like the textbook isn't always that important, what the candle tells you is, lower prices were rejected Friday on heavier volume, typical of a short term oversold/capitulation event.

As you know, on reversal candles I look for heavier volume than the preceding day, it doesn't have to be huge, just heavier as this is.

 This morning's opening indications leave FXI in a leading positive position, overnight the PBoC will take action on their regularly scheduled Tuesday/Thursday open market operation which may be a catalyst for FXI (these are normal bi-weekly operations usually adjusting liquidity).

 The 3 min chart and a nice positive with the "Igloo and Chimney" price pattern as support was broken with a positive divegrence, a likely head fake move and the place I love to buy as long as there's confirmation like we see above.

The 5 min chart...

The 10 min chart

The 15 min chart, at this point this is far enough out on a 15 min timeframe that I wouldn't normally require any extra leverage as the duration of the trade would likely be swing trade or longer with a positive out this far.

We also have a positive all the way out to 60 mins. 

So considering where FXI is right now and the charts above, I'd be remiss not to reiterate FXI long as an idea you might want to take a look at.