Q's Wedge

The SPY has done nothing ZERO!  The Dow is down a bit, but the QQQQ has gained .50% or so. The Q's also formed a bearish rising wedge, a very obvious one that has seen the first of what may be several head fakes in the area. Keep an eye on this. A real move to the down side will retrace the base or should and bring the Q's back to the $51.20 area.

FX markets

Last night 3C didn't show any divergences toward EOD as I said in the wrap up, this seemingly directionless market seems to confirm 3C's bland readings. However, the EUR/USD pair as I said last night, seem to be filling out a Head and Shoulders top nicely.

 Above is a 1 min chart of the pair, the Euro just broke support of a mini head and shoulders that is part of a bigger right shoulder below.

Here's the hourly chart with a H&S pattern in the Euro and the right shoulder seems to be heading toward completion, this would mean a top in the Euro and a stronger dollar which would effect most classes of investments from gold, commodities and equities, al negatively.

Something Doesn't Add Up

Take a look at this quick article, don't forget we've had 25/26 weeks the BLS has revised their statistics.

http://www.zerohedge.com/article/bls-reports-jobs-losses-state-september-more-double-95k-loss-reported-nfp-report

POMO is over, lets see what happens, thus far AMZN which was down over 4% last night and had taken back all of yesterday's gains, is currently being bid up.

PMCS actually worked out...

Up 3.85% today, it didn't look like it would in AH last night. However RVBD seems to be the big winner, up over 15% today.

Maybe we'll take a look at a few more for EOD today.

Daily Wrap

Lets start with GLD tonight....

GLD tested the gap support and filled the gap, but closed at slightly higher support, still all in all it was down another 1.42% on increasing volume.

As you can see above GLD has broken its 22 day moving average, an average its never even tested before. Also for the first time in its up trend, RSI has dipped below 50. If you look carefully you can also see an RSI negative divergence. These indicators like RSI, Stochastics, etc are always best utilized for spotting divergences rather then overbought/oversold levels or other uses they have been renown for. MACD has been negative the last 3 days, where before it has only been negative once throughout the up trend.

On the 3C 5 min chart, I think day traders may be able to make some money long on a play in GLD tomorrow as 3C 5 min is showing a positive divergence so I'd expect a bounce in GLD Friday.

However, unless that continues and materializes over the longer charts, the 60 minute 3C chart still rules with a massive negative leading divergence.

USO also backed away from yesterday's gains and is in quite a deep pullback at this point, but again for nimble traders, there's a 5 min positive divergence there that may allow a quick buck to be made on the long side.

Given the probability of a bounce in GLD and USO I'd think I'd see weakness in UUP, not the case, the 5 min charts look good and the 15 minute is even better. Maybe we see a day of decoupling? In any case, UUP continues to suggest it's (The US dollar) forming a bottom.

However, the EUR/USD does look an awful lot like it's putting in a top, specifically a Head and Shoulders top, so to complete or begin rather the right shoulder, the Euro would need to rally-perhaps that's what we are seeing in USO/GLD. See the chart below. There's no doubt that the uptrend has ended in the FX pair, at least this leg of it.

As for the market, the short term end of day 3C charts do not suggest anything conclusive, although we should see front running early on and a late morning early afternoon rally based on a POMO day as per usual. However, strangely the Fed withdrew $1.5 Billion dollars in liquidity today through reverse repos. It's strange that they're conducting market operations to inject and now withdraw money from the economy. Perhaps this calls back to the Yellen speech about the fruit punch bowl being withdrawn in various asset classes that are forming bubbles? I really don't know and tomorrow's market operations “may” not be what traders have been conditioned to expect. It almost never fails, when it becomes obvious, it's obviously wrong. So that will be an interesting event to see if anything unusual occurs.

3C charts in longer time frames still remain negative.

As you can see, this 10 minute chart of the DIA is extremely negative looking. Yesterday's (Tuesday's) POMO rally saw little follow through, the majors ranged from +.20-+.40 on lower volume, it really can't be considered follow through. 

Half of the 10 important averages were down, half were up for an average move of -.06%

There was no real dominance in the price volume relationship today, the closest was PDVU but hardly dominant.

Goldman Sachs came out today and more or less told said the “TRADE” is front running POMO. Now does anyone really believe that GS is this late to the party? Or, perhaps are they setting up their own little game?

In after hours, AMZN gave back it's hefty 4% gain, this has been a Wall Street darling so it'll be interesting to see what it does tomorrow. I said earlier today in the earnings trades that AMZN was bought yesterday for the gap up today and today it was sold, telling me that if the earnings were to be good, why sell it, why not just hold at the lower cost basis and collect further gains? Here's the chart...

Another big mover in after hours was LEG, my hypothesis was wrong, but 3C was right about bad earnings. This is the kind of stuff that tells me there are leaks all over this market, it's just finding them and capitalizing on them. I think LEG ended the AH session down about 9%. Here's the chart...

Look at the obvious selling at the top. With all of the insider selling we've been documenting week after week, I'm wondering if we won't see a lot more like this.

Lastly I mentioned a short on BAC t. Take a look.

 BAC's hammer yesterday may have put in a temporary bottom/support

 Here is today's intraday action, note that it did not rally toward the end of the day and gave up early gains fast, but don't assume that's all bad...


 Looking at 3C, you can see the distribution you can see that it was sold right off the opening, but it also showed signs of accumulation. A steady lateral trend is a typical sign of accumulation that's why I said don't assume it's bad. They may have been buying for a bounce within a narrow ranged order.

 As you can see, the trend channel has captured some big swings, so if it bounces, all the better. You can build the position a little at a time and add the majority when it reverses. The red box would be the current stop for risk management planning and position sizing.

 The big picture of the 3C daily chart shows bounce or not, this one is seeing severe distribution with a leading negative divergence on a daily chart! The top is also clear.

To get a feel for the forest, you can see BAC still has a lot of downside and shorting an equity rather then buying an inverse ETF like FAZ will allow you to pyramid the position, something you can't do in a long, not even an inverse long. This means you CAN make more then 100% on a short, there's an article under "Resources and Concepts" at www.Trade-Guild.net that explains the procedure. I'd take a serious look at this one, this seems to be shaping up for an excellent entry and a probable trend with minimal risk as long as you follow risk management and position sizing which can always be found with the links at the top right of the site.

Today's After Hours Earnings

Remember, the 3C call on these is not about a good or bad report, it's about how the stock will react initially and n the next few days.

Here were the short ideas:


ACTG Short which was a miss so far as it is up big about 11% in AH. Their call was scheduled for 4:30 today.

ALB Short is up about .66% in A.H. with their conference call scheduled for tomorrow.

AMZN Short This is an important one and one which beat the street consensus, still  3C was right on and it's down over 7 points or over 4% A.H.

AXP Short Their profit rose 71% yet they're down 1% AH, the call starts at 5 p.m. today. This is one I said I thought may have a mediocre reaction.

LEG Short This is what I had to say about LEG: "this is a tough call because it appears that some bad earnings may have already been discounted into the stock, which means even on a bad earnings call, it may bounce, however, there was major distribution at it's top. So I would not play the earnings here, but after earnings, this may very make a great short, especially if we get a bounce." Here are the results: Down 11 % in AH call scheduled for tomorrow. While my speculation was off target, 3C was on target with LEG.

PMCS LONG  There seems to be no after hours trade here, they sound like they came in inline on expectations. Their call is scheduled for 5:30 today.

RMBS LONG down -1.45% in AH with the call scheduled for 5 today

RVBD LONG up about 8.5%% in after hours with the call at 4:30

SNDK SHORT Up 9.6% in AH with the call scheduled for 5 pm today

Last Market Update

As I told you there were weak positive divergences and the dollar/equities trade decoupled, we saw rising prices. Now the QQQQ and DIA both have 1 min negative divergences into the close which is interesting given the front running bounce. Is there a bigger dog selling?

BAC looking like decent trend trade.

The top line of the channel is the stop out price. I would build this short in pieces, short any strength so long as it does not close above the trend channel. With risk management/position sizing, there's no reason not to take a shot at this trade with a 2% of portfolio risk.

SNDK One Last Stock

SNDK short reports after the close. There was good accumulation in late September, that seems to have been sold off mid-October. I'm not sure if this is a leak of just reaction to smart money moving positions around **

Market update

Short term positive divergences are taking shape in the 3 majors, these are in my opinion front runners of tomorrow's POMO day. The market has now detached from the FX pairs that have been guiding it all today as the Euro is sliding while the market is up. Again, they are at this point rather small positive divergences, probably as I suggested, retail front running POMO tomorrow.