TLT / TBT

TLT is going to be heading up , it has already begun, thus the TBT trading position long will move down, however I think this is going to set up another TBT long entry.

Typically TLT is a flight to safety trade, however with the F_E_D continuing to taper and the BLS's latest data (by the way, our BLS caption contest produced some interesting submissions, not all of which I can post here, "Bureau of Laughable Statistics" was a good one) which as predicted, before it came out, would likely be exactly what the F_E_D needed to justify continuing to taper until they are out of QE3 which I think they have to do from a survival or profit standpoint as the F_E_D is a quasi-governemental/shareholder corporation which is "FOR PROFIT".

In any case, without the F_E_D buying up Treasuries like they have been and with the teaming up of Russia and China (although Russia's holdings are very small relatively speaking), it's difficult to judge just exactly what the market is reacting to with Treasuries, I suspect there's more and more discounting going on because of the trajectory the F_E_D continues to move, that is consecutive tapers. This even in the face of a Non-Farm Payrolls print that was a head line BLOW-AWAY of consensus, but as the household survey showed (loss of 74k jobs), it was all smoke and mirrors as the only way they could arrive at that beat was by adjusting the Labor Pool down as nearly a million Americans fell of extended unemployment benefits in April as Congress' budget did not refund the extended benefits.

In any case, that's my "opinion" as of now. I'll have some charts up in a few minutes hopefully if nothing in the market distracts me or needs my attention, that will essentially show how the TBT trade set up can work on a "Come to us" basis. Since the trading position in TBT was at half size, I left room to add there.


If you have the ability to day trade and Reg. T is not an issue I suspect you can make a quick busk intraday on a market pullback, but again these little choppy moves are not something  want to personally risk resources for.

Quick Intraday Update

It looks like there's a decent reversal process (intraday ) from the move up off the a.m. gap lows. There are also intraday signals that are negative so it looks like we'll see some downside, this is not the signal I'm looking for as mentioned Friday, I think this is likely more of the chop, but that signal I'm looking for in which all of the charts are clear for a trade (as I mentioned I looked at a lot on Friday and they looked very good, but each had a chart or two that were not where I'd like them to be and when you see that many charts all showing the same thing, that's a trend so I'm looking for that trend to change, which shouldn't take much as the majority of charts are already looking good for opening new positions).

 ES / SPX E-Mini Futures intraday show the EXACT same signals on the open this morning as the averages, a small positive divegrence just after the gap down and a little more downside, now they are all showing intraday negatives like this.

NOTE How low volume is, I know we have a couple of international holidays, Japan being 1. This could lead to some very high volatility.

 The SPY 1 min , again it's showing the exact same thing that ES 1 min above is showing since the open of regular hours trade, also negative right now.

A 1 min negative divegrence by itself has about a 50/50 chance of being a consolidation or correction through time (moving sideways) or a consolidation through price, a pullback in the average.

However when 2 and 3 min charts go negative, the probabilities are dramatically skewed toward a pullback in price as this 3 min IWM chart show a leading negative intraday signal.

As I said, I don't think this is anything to get too worked up over yet, we've had a lot of chop, it's pretty nasty to trade unless you are Johnny on the spot, this is why I've largely maintained patience and not jumped the gun too early.

GDX / NUGT Update

GDX's dip below the trading range last week was not as large as I'd expect for the repair on the 10-15 min charts and I talked about that in in Friday's GDX / NUGT Update

 The dip below the range is enough to trigger stops and/or to activate short positions as retail traders see the break of support as confirmation and short that break, this is what a head fake move is often good at achieving, momentum as new shorts are squeezed we have a momentum run from Friday and continued this morning, but also created the exact opposite as it moved ABOVE the range causing shorts to cover and new longs to step in, so the further GDX moves back in to or under the range, the more momentum it should do it with.

I still DO NOT like DUST even as a short term trade, even with expectations of GDX coming down, THE SIGNALS FOR A DUST LONG ARE NOT THERE AND I ALWAYS WANT TO SEE OBJECTIVE EVIDENCE.  I could go off the GDX/NUT charts, but they aren't the asset being traded, it would be DUST and as I said, the signals are not there.

 This is the 1 min trend view of NUGT (smaller trend) and it looks like the pop over resistance of the range saw no confirmation and likely distribution so I think it's coming down which is what I think it needs to do to resolve the 10/15 min charts and set up a solid GDX / NUGT long trade worth trading.

This is the 1 min intraday chart view, again no confirmation and it's heading down already, which as I said, in my view is good news because that's where it will be accumulated, either on a move down or below the range, not moving up.

The 2 min GDX chart confirms the NUGT 1 min charts above as far as intraday activity.

 Just for confirmation, NUGT 3 min also showing no confirmation and they should be coming down.

The 5 min chart shows the positive divegrence put together inside the range, each time there was a positive it's at the lower trend line and at the break below the range from last week. The negative divergence on this chart is negligible, but confirms the intraday / near term signals of the charts above for GDX/NUGT.

This is GDX's 10 min chart that looks specifically like there was a distributive move, enough to send GDX below the support of the range. This is one of two charts that needs to be repaired and go positive and the way that will happen is the accumulation of shorter timeframes on a move lower and/or below the range.

This is the same chart for NUGT with the same signal, there is VERY early signs of the kind of repair of this chart that I want to see, GDX coming down more should just make this chart look better and better, that's when I want to get long NUGT and possibly GDX calls and we should get a move that is not just up and down chop in this range, but is VERY substantial, substantial enough not to need any leverage although I'd still likely use NUGT and possibly some GDX calls.

Opening Indications

Good morning...

The futures activity overnight has been blamed of course on the Ukraine situation and escalation, oddly enough though this situation has been there for months now and hasn't caused the market to move.

On the other hand, last week we saw the Index futures move from 1 min negatives overnight to 5 min negatives and through the next trading day to 15, 30 and all the way out to 60 min negatives which are still there, this was significantly BEFORE today's escalation and bloodshed in the Ukraine.

Friday afternoon I had looked at a lot of possible trades and concluded,

"There are a lot of potential trades...they are missing a few charts here and there, the only thing I can think of is that they need a day or so, as in a Monday entry."

Meaning we are right there, but as far as entries, we probably need a day for a "Full House" of multiple timeframes to evolve to the highest probability and what I see in opening indications doesn't argue with that too much.

 This is the fastest intraday chart, negative Friday afternoon so the gap down isn't surprising as 3C signals tend to pick up where they left off and this was pointing negative Friday afternoon for intraday trade.

This morning at the lows an intraday positive divegrence halted that little slide after the gap down and bounced the market.

 However the 2 min trend shows clearly the damage  as well as showing the small positive this morning.

I think we have at least today to let a few charts resolve to going from great looking trades to excellent looking trades, that little bit of patience looks like it will mean a lot in positioning.

And of course the current cycle that we are dealing with in which we saw a bounce coming on the 11th and prepared for it, such as Closing SQQQ (long) Trading Position on 4/11 and Trade Idea: Opeing QQQ May $84 Calls on the 15th as we saw the trades were ready to move to the upside and by 11/22 we were closing longs... Closing MCP Long Trading Position For Now.

The trend makes it clear where we want to be trading long, where we want to be exiting, and where we want to be patient.

This shows the 11th, the 15th, the 21/22 and where the chop meant the reversal process was/is taking place, a place to be patient to set up the next round of trades that have a chance at something more than a day up or down and we look to be pretty much there.

SQQQ Follow Up

As mentioned earlier, there were a number of assets I had looked in to from GLD which I'm virtually certain is coming down to inverse ETFs (even though earnings season is close to over) and numerous companies.

The Q's, near term have looked to be in the worst shape to me and for initial momentum with leverage, SQQQ looked pretty darn good vs. confirmationary signals in QQQ. 3C is interesting in that even though SQQQ is suppose to (and generally does) move exactly the same as the QQQ, except inversely and 3x leveraged), the difference in volume and size of trades can give you very different signals, I saw that earlier this week and declined to enter trades because I wasn't seeing confirmationary signals in GDX vs. NUGT vs. DUST except in one important place, the 10 and 15 min charts which all suggested GDX and NUGT which were at the high end of the range that day, would move below the range and it was just a day and a half later that this happened and these were the only 2 charts (10 and 15 min) that had confirmation between the 3 linked assets.

So I'm going to show you SQQQ (UltraPro 3x Short QQQ) next to the same timeframe is QQQ, there are some minor variations, but it's the underlying trend that I'm interested in, not small differences in noise.

 SQQQ 2 min. with a rounding bottom and an increased ROC on the 3C leading positive divegrence as we go in to today.

Interestingly the QQQ 2 min looks a bit different but was picking up on the same increased ROC in 3C intraday signals with the mirror opposite leading negative divegrence (confirmation).

 SQQQ 3 min, like VXX, I wonder if this is two distinct bases of one large double bottom? I suspect it is one large base because of the nature of the divegrence and how it is even stronger at the second potential bottom as is the case with "W" or double bottom patterns.

VXX is very similar as are many other assets.

QQQ 3 min could generate the same question as distribution sent it lower around the 24t through the 28th.

We also have a stronger divergence, much stronger at the second top like SQQQ's second bottom.

SQQQ 5 min leading positive

QQQ 5 min leading negative and this is also around the same double bottom/top area.

SQQQ 10 min

QQQ 10 min

SQQQ 15 min

QQQ 15 min and below a longer look at the QQQ 15 min

Remember the 11th when we not only posted at the lows we'd see an upside move, but pretty much hit the target on the nose thus far before we saw the first day of price movement higher.

However, the deterioration in the Q's on this important timeframe is the real issue. Having the short term fast charts in line with these longer ones is what I call a full house and generally means a move is right around the corner.

SQQQ 30 min and watch the chart from left to right, from confirmation to leading positive divegrences and the possible double base.

Now look at the QQQ with the same confirmation to the left, the same deep divergence except distribution and possible two bases.

I also compared QLD and QID to SQQQ and QQQ for additional confirmation.

Trade Idea: Adding Trading Position SQQQ Long

The Q's look the worse to me near term, I think there are more than sufficient signals in SQQQ (3x short the QQQ) to justify an entry here.

Looked at a LOT of Potential Trades

There are a lot of potential trades, for instance, GLD should come down, however as close as some of the charts on trades like this or inverse ETFs of the averages are to being choice, they are missing a few charts here and there, the only thing I can think of is that they need a day or so, as in a Monday entry.

In many cases I'd have already entered a lot of these, but in this environment, as much as I want to get set up and make some money, I continue to remind myself, "It's easier to keep it than make it back", so I'm requiring a very high standard for new trades.

I'm going in to the weekend holding positions that were opened for a near term move down including FAZ long, VXX May 17th calls, FXI long, TBT long, SPXU long (that's been in the trading portfolio-down about 5%) and I'm looking forward to adding as you saw the averages, the Index Futures, VXX and Leading Indicators.

I guess, Patience is sometimes the hardest thing, but it's generally been the most rewarding.

Leading Indicators

There are some very interesting indications here, for one it looks like they're going to try an EOD ramp using HYG and VXX, TLT likely will not cooperate, but that's 2 of 3 of the SPY Arbitrage lever (short term or intraday market manipulation) and the bigger message is just as I suspected with the market averages, Index Futures and VXX.

 This is HYG, the lever as I posted earlier this week is broken and you can see that clearly in price, High Yield Credit tends to lead the market and this chart is suggesting it will be leading the market lower shortly.

As far as EOD manipulation, this is VXX with the SPX's price inverted so you can see the correlation which was near perfect until just recently as VXX is underperforming which is what you see when they try to activate intraday manipulation using the SPY Arbitrage, but they need HYG as well.

This is HYG on an intraday basis and SPX scaled normally, there's some out-performance there, so it looks like they'll try to ramp the close, but the HYG chart above is a much stronger signal or indication, this is just EOD intraday stuff.

 TLT needs to move down to help the SPY Arbitrage, not sure that will happen, but this chart of TLT with its correlation to the SPX which has price inverted to show what the normal correlation should be, shows a clear flight to safety in Treasuries.

 And on the sentiment side of things (professional, not Stocktwits), they are clearly getting out of town, expecting something ugly coming which is right in line with our charts.

Quick VXX Update / Trade Reiteration

I am going to put this out there once more as a long trade position, whether VXX or the 2x leveraged UVXY. As for a call position, I would have preferred enter that on the move below support today, the same one I suspect was our head fake move (used for timing ) and was saying yesterday that this was the only thing missing from the reversal process in VXX / UVXY.

Again, I like either as long positions, I'd prefer UVXY for the 2x leverage, but that's a very personal choice as far as risk tolerance goes.

Here are 5 charts of VXX, in nearly every one look at how much it has added just today alone and these are the "Flying " divergences only seen in VIX related assets that I spent almost 2 months waiting for.

 1 min which is actually stronger than it looks here, I just wanted to show the area I suspect was out head fake move this morning as well as how much it added today alone on such a move.

This is a PERFECT example of the "Flying divergences" that we only see here and on a 5 min chart as well

This is how much VXX added to a 5 min chart today alone in leading divergence.

And here's the 10 min chart, I suspect both of these rounding bottoms are like 1 large "W" base as the second bottom almost always (90+% of the time) makes a lower low whereas technical analysis tells traders to look for a higher low, this is one of the many ways TA is used against traders and it makes a lot of sense from a Wall St. perspective.

Here's the 15 min chart and how much it added today alone as well as the rounding reversal process which I compare to an "Igloo with a Chimney", except in this case upside down. The head fake move is usually right at the very end , just before a reversal (to the upside in this case) and the averages don't argue with these charts nor do the Index futures as you saw yesterday stretching out to 60 min negative divergences.

Market Update

Considering what the VXX looks like (this is a VXX update from Wednesday April 29th) and the probable head fake move put in today, taken with these charts, I think the information that I gather the last two hours of Friday is pointing very clearly to a significant move to the downside in the market.

I said if I had a chance I'd put up some charts, here are some charts of the averages, I'm also looking at potential trades in several different assets, I like VXX or UVXY long a lot and there are several (actually many) others, but in most there's 1 nagging chart I'd like to see resolve.

In any case, if you look at the VXX signal trends and these, I think you'll agree, we are on the edge of a significant move down, not the noisy , volatile chop that has dominated for about 2 weeks now, but a real move that makes a lower low in an index like the NASDAQ 100 (I mention that one specifically because it had retraced the most (all of the Feb. rally).

 DIA 1 min

DIA 2 min

DIA 5 min

DIA 15 min, this is the killer that's screaming new lower low.

IWM 1 min intraday

IWM 2 min

IWM 3 min

QQQ 1 min

QQQ 2 min, that's a lot of movement even for these faster charts.

QQQ 3 min trend

QQQ 10 min

SPY 1 min. -you see what I mean, this looks like it's ready to fall off a cliff timing wise.

SPY 2 min, another great example.

SPY 5 min

I'll be adding more as it comes up, I'm really trying to decide whether positions here are appropriate or a day more...the op-ex doesn't help