Not much to do

If you have your shorts in place, there's not a lot to do right now other then manage the trades and take advantage of any countertrend pops we may get to make some extra cash along the way. The price action the last 2 days is significant and plays right into our core positions. It appears we will see a Head and Shoulders top unfold, s of now, the first or minimum downside target for the SPY should be $87 which makes sense on the charts. However, such downdraft is likely to bring more downside momentum and I have maintained for months now that I expect to see new lows in the averages. Remember, Fear is stronger then Greed so the market will fall a lot faster then it rallied.

The only unfinished business is UNG. The trade is precarious, but it did hold the line in the sand I drew last night. Here are  a few charts and we do have a few positive divergences suggesting upside tomorrow and that may build.

Above is the Trend Channel I use for stops, UNG held the line today which was very encouraging

This is a 2-day 3C chart and very significant in the leading upside divergence or extreme accumulation

This is a 1-dy 3C chart written with  different code, but the same leading divergence

The 15 min 3C chart suggests the downside is over as accumulation has begun again 

The 10 min chart confirms this as does the 5 min chart below.

Here is my proprietary crossover system, all 3 parts of the system still are calling this a long trade. As I mentioned, note the first pullback to the 10-day moving average in yellow and the second to the 22 day in blue, I see this time and time again. Also MACD is positive and the VWAP is in good position as the average price paid over the last 30 days weighted by volume is just above $7.50 (VWAP in red, the top window is a 10 day ma in yellow, 22 day in blue, the middle window is a custom indicator in yellow and it's moving average in blue. With MACD in white is a 22 period RSI which is above 50. All 3 components are needed to place a long position and hold it. Despite the volatility, I continue to believe in this trade. I think it is at an excellent Risk:reward level to initiate a long trade in UNG or to add to it.

Look for updates tomorrow as the market events unfold. I'll be adding selective shorts, but for the most part we already have everything we need to take advantage of the market's stance. Trades will be issued as opportunities arise, most will be quick counter trend trades, there may be some tomorrow night listed. Keep an eye on the site.

Update 2

We have 1 very minor 1 minute positive divergence, it may not amount to anything, it may be day traders covering shorts, but in any case, all the other timeframes are solidly bearish at this point. Yesterday's bearish engulfing candle is known in western terminology as a "one day key reversal" and it appears it was exactly that.

Remember that UNG's stop around $8.08 (actually below, but that is just a recommendation) is only for the end of day, not intraday. All stops found here are the same (both recommendations, not written in stone and for the end of day).

ANO

Keep an eye on ANO from last night's list, it's looking like it wants to breakout.

Update

At 10:3 I posted a chart at Trade-Guild that 3C 5min was forecasting one more move to the upside, we got that move. However, the positive divergence on the 5 min chart persists, there may be more upside coming. The longer term charts are still solidly bearish so this may be of some use in entering short positions at better pricing with less risk as they are closer to natural stop out levels.

The Gap Was Helpful

As a way of entering shorts at a better price. See Trade Guild, it looks like we'll get another upside attempt soon.

UNG has a 1 min positive divergence right now, that's about it. It could develop into more, but if it closes below the Trend Channel at $8.08, I would close the position just before the end of day. However, as I mentioned, the second pullback in a new trend is usually at the 22 day moving average which is at $7.94 (it may rise a little later today), normally the Trend Channel is inline with this concept, in this case it's a bit higher so it is not unusual to see a move to the 22 ma, you'll have to decide how you want to handle it. If I see anything that is relevant to UNG today, I will post it.

Today Was A Positive Development

First before I get into the market, I have several emails regarding UNG, I still like the trade, I'd still buy it. The stop on the trade is at $8.08 and unless it breaks that level, I consider it a long position and we are still holding it. Today it pulled back a little past the 10 day moving average, not by much though. It looked bad because it did it in a day, but it's common for the first pullback to be in that ares and the second to the 22 day, this is the second pullback, the first was exactly to the 10 day, so I do not feel that it is a problem at this point.

As for the market, you probably heard my tone last night, cautiously bearish and expecting most likely to see a false breakout, but unwilling to commit as the indicators had been turned around by Friday's options expiration. Today we got the clarity I was hoping for and then some. My fear was that Friday the S&P/SPY calls at $112 (the highest open interest) were possibly being pinned down to make them expire worthless and then there would be the possibility that they'd let the market rise after that. the market had an enormous head start on that scenario this morning and failed miserably, but as I have noted, we saw 2 false breakouts last week alone, now we have a third.

There is some early 3C divergences on the 1 minute chart suggesting early strength, again I do not feel this will lead to anything significant and it is time to start watching for the tell-tale signs of a decline as almost all of 3C timeframes have lined up in all 4 versions and in almost all timeframes in all averages on the distribution side. This is extraordinary to see, it doesn't happen often. We've had to sit through some enormous volatility and drawdown, but I do believe we are close to realizing the trend we have been preparing for.

In the meantime, despite some negative action in the miners, there remains positive accumulation in several names. I will list those long trades tonight, this is not at odds with my bearish market stance, there's always a bull market somewhere even in the middle of a bear. However, these are most probably counter trend trades and needed to be respected for the danger that they can bring in trading against a trend that is emerging so make sure not to over commit, make sure to properly position size and set a wide stop initially (take in fewer shares) to give the trade some space to work. It's not easy to short into strength and buy weakness but that is what is called for right now.

If you are a new member and are unsure of where you stand and what you might want to consider having in your portfolio, please email me and as many members will attest to, I WILL give you the support you need as best as I can as soon as I can.

At this point, unless you feel you need it, the hedging strategy discussed last night is off the table in my mind for the time being. Interestingly, every time we consider starting to hedge, the next day the market falls apart.

It looks like in the early trade, the DOW will outperform the SPY and the SPY will outperform the NASDAQ. That's based on 3C interpretation and only references the early trade, but if there are positions you are looking for, that information may be of some use.

I'm going to add a few more trades to the list tonight and it will be up shortly. Several members are past due on their memberships, I'll try to notify you and I will leave your membership open until at least tomorrow night so you can see the new trades. Because of the blogger format I can only have 100 private readers and we are nearing that number.

Update 3

It looks like there's a positive divergence building on the 1 minute chart, look for upside shortly, but the close is what will really count. I'll update again before the close if I see anything truly significant. At this point, the market has failed to capitalize on the bullish momentum, however we have seen extreme intraday volatility so we can't easily dismiss anything right now.

Update 2

Above we have a break of the a.m. range with a descending triangle which is a bearish price formation.

This 3C chart reinforces the negative break we see above with a leading downside divergence, but...

This other version of 3C is showing a positive divergence just forming.

Check back in an hour or so for another update

Update

It looks like the gap will be filled, to what drgree, I can't say yet, but look at the 3C charts below, each show there is no accumulation following the gap up, it does not preclude it from happeneing as the gap is filled, but as of now, it doesn't seem to be there.

UNG Still Strong

Russia is playing it's typical political "cut the gas flow" game again. UNG should benefit from it. This has been a long here for a couple of weeks, I wouldn't mind adding a little to it or establishing a position still if you haven't. You could open half at the open at market and wait (hopefully) for a pullback to add the other half.