PUT TZA ON YOUR BUY WATCHLIST

It's created a bear trap-remember it's inverse so it's really a bull trap and it's showing accumulation. This is another good indication for us and you could pick it up on the cheap today maybe with a stop below today's lows.

Thanks J.

DBRN

This is creating a short sell opportunity as there is a H&S top in place, price has broken through that resistance and made a recovery intraday high, this should lead longs in on the assumption of a failed H&S top. Again, I would enter in phases, maybe some here and the rest on a break below the neckline (confirmation) around $22.75

Trades from Last night

MSPD is up pretty good, there's leading negative 3C divergences in place on the 1 min, the 5 min needs time to respond, but I suspect we'll see them. If I was new to this position I would consider entering 1/3 or 1/2 of my intended position, add on anymore strength or a break down.

GLD seems like there may be a move up yet to come, 3C is just starting to show some leading upside divergences, this is a trade I would probably enter more incrementally until we have a confirmed downside reversal.

Encouragingly, AAPL is in some very negative 1 min negative divergences. Again, I would prefer to phase into these positions, but here I may take on 1/2 of my intended position size.

GOOG  I doubt with the gap too many people got in on the quick long, who knows, there may be a pullback and afternoon ramp up job, but right now 3C is leading it lower. As for shorting it, incrementally would be my approach and in smaller size on this one initially.

PRWT is doing what we wanted, if you have been in this trade, you are in the double digits, 3C is not going to give great signals here because of the spotty trading, but I may take some off the table or set a tighter trailing stop for at least a portion of the trade.

JNPR is showing some 3C distribution, not as heavy as the others, probably because it has not convincingly cleared the resistance zone to suck in longs-watch for that and then I'd expect heavier distribution.

SNDK is pretty much the same as JNPR, although it's made a better head fake, I'd expect bulls to get excited if it moves into that gap.

HPQ is the first now to show a positive divergence, probably because it did nothing this a.m., but I think last night I said this one is weaker then the rest. In any case, it appears to be getting ready to move up

CSCO is in 3 1 min leading negative divergences and 1 5 minute. This may be as high as it goes today.

OVTI looks bad, I think it's setting up a situation now in which it will begin falling.

3C shows no reason for CAVM not to move higher. Technically even with the nearly 6% move, it hasn't broke any resistance/patterns that could be game changers from a bull's perspective. I'd expect higher prices to come short term.

Same thing as above for ISRG although it's done virtually nothing. 3C is not looking horrible, but not good either, it leaves room for it to move up if it wanted to which I'm not sure if it does with no real accumulation.

GBG has one small positive 1 min divergence suggesting maybe 1 more run intraday leg up, the longer charts are in leading negative divergences and look bad.

VGZ is inconclusive in the short term, but the GLD chart looked similar, long run they don't look good. If you are in any of the gold bounce longs, I would use some trailing stop and on an INTRADAY basis in this situation.

The divergences in the SPY are starting to look a lot worse relative to price.

USO update

3C is tracking noticeably lower in USO on the 1 min, all 3 are in some form of a leading negative divergence. Even a 5 min is moving into a leading negative divergence. UUP (the dollar) is near it's support in that flag I showed you last week (bullish flag) and the 3C charts, especially 1 min are quite positive. Remember oil and the Dollar as well as the market and the dollar typically have an inverse relationship.

SPY Update

The SPY is approaching a 1-min leading negative divergence, the 5 min is pretty much in a light leading negative divergence. The DIA's 5 min 3C is in an unbelievably low position. The Q's are in a bad relative divergence.

Still, the derivative ETFs look worse.

The fact the SPY hit $112.95 is good for our bearish scenario as that is the region in which the Inverse H&S bottom's neckline is, depending on who draws the trend line. There was no appreciable pickup in volume, so it doesn't appear (if we didn't have 3C) that volume analysis would suggest anyone other then retail and light at that, is chasing this.

Remember that the example chart I showed you of what the reversal could/should look like started with a big gap up and ended the day significantly lower.

Update

OK, expiration date is moved up, so we need to be watching the market carefully. Which also means longs and profits should be considered early rather then later. The SPY is showing some 5 min distribution which is good (for our bearish scenario.)

But some of the leveraged ETFs are looking a lot worse...

I'm hearing reports of certain traders going in 100% long, which is what we want. This is the kind of gap up I have been wanting to see, it's also near that inverse H&S top neckline which the bulls have been talking about all week.

Understand volume is crucial to confirming either type of H&S, but more so with a bottom. The volume confirmation for a bottom is not there. By this time it should be huge, not some of the lowest of the year. So our scenario seems to be setting up well, just moved forward quite a bit.

I'm going to be exceptionally busy today watching charts, it takes 3x longer for me to update with charts and I need to watch the market so I'll try to get them up when I can. Emails I'll answer as soon as I can, but if it's urgent, please put that in the subject line.

IMPORTANT UPDATE

Well, I've told you a lot of times I'm not an options trader. We do have quadruple witching this Friday which includes options contracts. However, while this month there will be weekly Friday options expiration in the VIX introduced, the contract I mentioned last night expires either Tuesday or Wednesday, I'm trying to get clarification as Yahoo's options Chain has the expiration as of the end of trading Tomorrow, but the CBOE site says this:

"One day each month, on the Wednesday that is thirty days prior to the third Friday of the following calendar month, the SPX options expiring in exactly 30 days account for all of the weight in the VIX calculation. VIX options settle on these Wednesdays in order to facilitate the special opening procedures that establish opening prices for those SPX options used to calculate the exercise settlement value for VIX options."

Being they are talking about the settlement date, I'm assuming the Yahoo site is correct, meaning the last day to trade them is tomorrow. Friday we still have options expiration including: Stock Index Futures, Stock Index Options, Stock Options and single Stock Futures.

So today and tomorrow are the days we need to watch closely for our reversal-not Thursday or Friday.

In any case, that makes me more comfortable with the price action today as it is nearing or at the level in which it could trigger a head fake for bulls.

NEW SEPTEMBER LIST IS UP

I've been looking, running scans and that VIX chart is the thing that I'm really focused on. Last time we saw 3C accumulation it doubled, that means the market falls-a lot. I think that was the sell-off that ended with the flash crash.

So open interest on the VIX is $45-that's the heaviest for the calls, I don't know if it goes that high as they tend to pin the big open interest, but that all depends on who owns those calls and if we're seeing accumulation in the VIX, then we may assume Institutional money owns them. In any case options expiration is this Friday, which is starting to fit together.

I laid out several shorts, but looking at a lot of charts, I'm seeing a mini version of what we saw just prior to Sept. 1. Which means we have some time early in the week to get that head fake I mentioned. We got a couple and Thursday's was pretty close to what I wanted to see, but not exactly. It needs to be convincing. If you are in serious doubt and ready to cover shorts, then that's probably the one.

There's a lot of bullish sentiment building about this inverse head and shoulders that is part of the bigger head and shoulders top. So a nice big move up, one day or 3, whatever, may do it for the bulls. The market is under heavy distribution, GOLD is too, and they look like they want this bounce or head fake. The VIX lines up perfectly with a big sell-off, but like I've said about this Judo concept, they need fuel for it and the more longs they can slam in the door the better for the decline.

I know it's been since September 1st and it seems like forever, but it's only 8 market days for what needs to be a serious catalyst. There is the off chance that something drops early in the week and we are down, but I'm guessing and it's just a guess that this is going to go down on Thursday or Friday, I'm leaning toward Thursday. There's a lot of reports that will be out those two days and I have a feeling the revisions on Initial and Continuing claims are not going to be very good. It just makes sense, the government guesses for seven states and the biggest economy in the IS, the 8th biggest in the world, estimates? Those revisions have got to be the key and I think Wall Street knows it because it's likely the data is already out.

So if you do like I do and keep at least 25% cash on hand, I'd play the bounce with any of the leveraged longs-UPRO or SOXL, FAS, URTY would probably be a big mover, UWM, UDOW, TQQQ, etc.

Look, this isn't going to be a ride in the park, it'll be scary, but everything seems to be lining up. Back in late August we could see the bounce, we had an idea of what is was (not an oversold bounce), but we just didn't know how it would end. Seeing that VIX chart looking the way it did, kind of connects all the dots. So as I say often, the market is like a pendulum that swings way too far one way and way too far the other, rarely is it mediocre.

It's been months since we've seen accumulation in the VIX, a move higher will put it at new lows, probably for the year and we know that it trades inversely against the market, add the accumulation, and this all smells of a scary bounce and major crash this week. That's me going out on the limb which I hate to do, but there's too many things lining up. All these shorts I put on the list, but said wait for a bounce, the charts look horrible.

So that's my opinion. There's a few "cats and Dogs" longs on the list because they tend to be there at the end of a bull move and they move fast and far, but remember they are speculative so take the gifts f they come, don't assume they'll last all week.

Nuff said for now.

Have a great week and look at those charts. I'll be adding more and more to the list.

Accumulation in the VIX in the green boxes and white arrows, blue arrow is the move, the market goes the opposite direction.

Is the VIX Telling Us Something?

I got an email tonight about the VIX from a subscriber, as you know I've been watching the low levels in the VIX-which trades inversely to the market. Low reading indicate complacency and typically lead to a sell-off on the market.

However his question dealt with accumulation via my 3C indicator and the largest open interest contract at $45, the VIX is currently at $21.99. Apparently options expiration will be Friday the 17th of September, next week. A move up this high and fast in the VIX would fit perfectly with our "malicious bounce" and the consequential "Judo Concept".

For newer members, we saw the bounce accumulation as early as August 25th, by the 30th I was detailing that I thought this was not a simple oversold bounce because of the institutional accumulation 3C was showing, but a malicious bounce used to throw traders off, to squeeze shorts which would propel the market higher. Eventually the longs (as human nature is optimistic in the market) would soon buy the bounce as it made higher highs. There's a lot of talk of this inverse head and shoulders bottom pattern which is really part of the larger head and shoulders top. Volume confirmation is more important for a H&S bottom then a top and it's not there, it is there perfectly for a H&S top though.

So the "malicious bounce concept is to squeeze shorts, pushing the market higher, then to inspire longs to enter the market. Finally we were looking for a new high and we still may get one more higher high, but what we have now and Thursday's intraday highs will do. The bounce is malicious because of the intent.

Which brings us to the "Judo Concept" in which you use your opponents energy against them. So the first major crack in the bounce will see some longs sell, as they sell prices fall, which puts more longs at a greater loss and the snowball effect takes over, this is very typical of false breakouts. As prices continue to fall due to more supply then demand, the shorts enter the market with further selling and before you know it, our bounce has created a snowball effect sell-off.

Last week 3C showed us institutional money selling and shorting into higher prices, so they are set for a sell-off and the VIX chart is another piece of the puzzle that increases the probabilities. We Trade the probabilities and objective market data, not gut feelings or speculation.

So here's the VIX chart showing accumulation. If it does what it did in April, we should see on heck of a sell-off.

Paying MY Respects....

There use to an incredible video with Enya's Only Time, unfortunately the music was disabled. I posted the video every year and could not get through it without choking up. There are now hundreds of videos and I could spend all day looking for the right one, I think that's not the point though.

This tragedy didn't touch my family members thankfully, but so many innocent people around the world can not say the same. I was at work the morning of September 11, 2001 when I received a phone call from my mother telling me one of the towers had just been hit. We all immediately ran to the TV and I recall my boss's wife was hysterical because her cousin worked in the financial district. For 4 hours there was no way to get in touch with him. We all took turns holding and consoling her and watched in disbelief as the second plane hit the second tower. We all knew they'd come down, but seeing it happen was unbelievable. Almost a year to the date I was on the observation deck. Luckily through family, my employer's family were fine.

My ex-wife's family (she too is Hungarian) were staying with us. We had planned a trip, we were to go to New York City, only several days before, but decided on the Grand Canyon instead. I think had we chose New York, had our flight plans deviated by 2 days, we might, as tourists have been in those towers. Her parents speaking no English saw this on TV and thought it was some sort of an action film. Imagine that. I don't fault them, they had no way to understand what was being said, but it was that unreal that they dismissed it as an action film.

Being we lived in Deerfield Beach and we both worked in Boca Raton, we were sort of one of the epicenter's of the investigation. I recall that night (9/11) watching television and we saw a motel just 6 blocks from where we lived. There were all kinds of emergency response vehicles there and we saw on television a body bag on a stretcher being wheeled out in the parking lot, we immediately drove over and did not observe anything else. Apparently the terrorists had stayed at the motel. We never heard anything else about the body bag being wheeled out of the motel. I assume it may have been a potential hijacker that may have lost his nerve and was murdered. The next two weeks the FBI was confiscating security camera film from every restaurant and store in our neighborhood.

Even more stunning, my ex-wife had worked for SunTrust Bank in Boca Raton. I remember maybe a few weeks earlier her telling me about a man who seemed to be from the middle east, he had been very rude to her and had cashed at least one bad check which is a big deal for a bank teller. I believe she waited on him twice. Later in the week after 9/11 an article ran in the Sun Sentinel, one of our bigger local newspapers about the terrorists having a connection to SunTrust and when their faces were released, my ex-wife immediately identified the man whom she had told me of earlier-one of the hijackers.

I can't remember exactly how long after it was, but the first Anthrax attack occurred approximately 2 miles from where we both worked. Our local post office had also been shut down because they detected Anthrax in the equipment there. Every day going to the mail box was frightening as you had no idea if your mail had been tainted by the postal equipment.

So I guess the tragedy of 9/11 and the aftermath did touch our lives in a tangental way.

In any case, I post this video in remembrance and respect for all the innocent, whose lives were forever changed on that day and the days and weeks, even years to follow. I just wonder why 9 years later there are still so many unanswered questions and unresolved business. Who was pulled from that motel, who was really behind the Anthrax events, why Bin Laden still fills his lungs with air?

With utmost sincerity and respect,

Brandt