Personally I think this trade is a hold and is still in good position to establish a new short position.
7 years ago
Tuesday, January 18, 2011
JPM Earnings Trade FOLLOW UP
JPM WAS AN EARNINGS PLAY FROM THIS POST from last Thursday. It's made no forward progress since earnings and the 3C charts seen in the original post seem to show JPM under distribution. JPM spent most of the day in the green, but take a look at the closing trade, even as SPY and Q's held their ground into the close when the pros come out.
Late afternoon intraday trade (1 min. chart)-note the volume rising on the slide.
The 15 min 3C chart has worsened and is now in a new negative leading divergence to the downside.
Personally I think this trade is a hold and is still in good position to establish a new short position.
Personally I think this trade is a hold and is still in good position to establish a new short position.
Last update
At 2 p.m. the DIA was showing negative divergences on the 5 min chart and trading at $118.30, it's gained no ground so it appears distribution or churning has been underway since.
The 30 min chart is now showing a negative divergence as well.
The 30 min chart is now showing a negative divergence as well.
SBCF Follow up
Here's a C&D trade from Thursday of last week (1/13/2011). SBCF broke out at $1.58 and is now up 16.5%
Huge daily 3C accumulation.
the 5 min 3C chart is showing signs of profit taking.
Given the size of the base and accumulation, I believe there's more upside here after a pullback to the area in the red square.
The pattern implied target is over $2.00 so a pullback may offer a great opportunity to add to or establish a new position in SBCF
Great looking base-healthy MACD and volume on the breakout.
The pattern implied target is over $2.00 so a pullback may offer a great opportunity to add to or establish a new position in SBCF
AMR Possible Earnings Play
DAL is dragging the space down today on their earnings. Tomorrow before the open, AMR reports. I found these charts to be the most interesting of all the earnings plays I've looked at thus far.
AMR Daily-some accumulation in white, resistance near $8.75 3x with a small daily negative divergence.
A closer look at the 15 min chart shows each successive attempt at $8.75 showing negative divergences.
A few years ago AMR telegraphed very well via 3C on a upside move. This isn't looking too good for AMR. Remember though, the earnings play idea is not about whether they beat or miss, but the reaction to earnings which can take several days to play out or it can be immediate. What I'm seeing on the chart above looks like money moving out of AMR. One concern I have is whether the DAL earnings will create an oversold environment. In any case, they report before the bell tomorrow and always, earnings trades are speculative and need god risk management a the report before the open can produce an unfavorable gap. This is the best looking chart though thus far for an earnings play-this one on the short side.
A few years ago AMR telegraphed very well via 3C on a upside move. This isn't looking too good for AMR. Remember though, the earnings play idea is not about whether they beat or miss, but the reaction to earnings which can take several days to play out or it can be immediate. What I'm seeing on the chart above looks like money moving out of AMR. One concern I have is whether the DAL earnings will create an oversold environment. In any case, they report before the bell tomorrow and always, earnings trades are speculative and need god risk management a the report before the open can produce an unfavorable gap. This is the best looking chart though thus far for an earnings play-this one on the short side.
AAPL-Fulcrum
Every day there's a stock or sometimes a report that is the fulcrum of the market, today the fulcrum is one of the heaviest fulcrums out there, AAPL.
The European sentiment data which seems absolutely ridiculous to me, which also lifted US equity futures this morning seems to have made some HFTs a little profit in AAPL today.
That's a large 1 min positive divergence off the opening gap-someone bought aggressively and now they are showing their hand in the first negative divergence of distribution. This is a 1 min chart and the divergence is new so whether it continues or not to the 5 min chart will be interesting.
The European sentiment data which seems absolutely ridiculous to me, which also lifted US equity futures this morning seems to have made some HFTs a little profit in AAPL today.
USO
USO hit resistance and a negative divergence just as it crossed the gap from this a.m. The volume is a bit high, but not extraordinarily so. We'll see what develops from this pullback.
Market Update
The DIA is showing the first significant negative divergence o the day via a 5 min. chart.
It's a bit early, but enough that I'd expect some downside selling pressure.
Insider Transactions
Every week I bring you insider transactions as they are released from Bloomberg. Here' a new one, I can't give you a ratio because there wasn't a single buy last week. On the sell side, there were 54 transactions for $163,000,000
This is the first time I've ever seen no insider buys. On the other side of the coin, the insider sell transactions aren't exceptionally high, we've seen much higher in the recent past.
This is the first time I've ever seen no insider buys. On the other side of the coin, the insider sell transactions aren't exceptionally high, we've seen much higher in the recent past.
A Goofy Tuesday
We started with the Holiday announcement of Steve Jobs taking sick leave again which sent AAPL shares much lower in overseas trade. This morning though, the indications for AAPl and futures were miraculously lifted due to the German and Eurozone ZEW economic sentiment survey, which maybe should be called "zoo".
On the Eurozone, the print came in at 25.4 vs. previous 16.6 and on Germany 15.4 which is double the anticipated 7.0 with previous month's at 4.3
Ask yourself, do you believe economic sentiment is that MUCH BETTER in Europe? This sent the Euro higher as well as US stock futures. By the way, AAPL also reports today.
I'm literally speechless. I guess the Fed's swap lines carry some weight, if I were to be cynical.
Empire Manufacturing Survey also missed consensus, but we'll dig into that later. NAHB also misses consensus-National Association of Home Builders.
On the earnings front, the big miss was CITI.
We'll see how today develops, but thus far there's been some interesting props thrown under the market from some unlikely places.
On the Eurozone, the print came in at 25.4 vs. previous 16.6 and on Germany 15.4 which is double the anticipated 7.0 with previous month's at 4.3
Ask yourself, do you believe economic sentiment is that MUCH BETTER in Europe? This sent the Euro higher as well as US stock futures. By the way, AAPL also reports today.
I'm literally speechless. I guess the Fed's swap lines carry some weight, if I were to be cynical.
Empire Manufacturing Survey also missed consensus, but we'll dig into that later. NAHB also misses consensus-National Association of Home Builders.
On the earnings front, the big miss was CITI.
We'll see how today develops, but thus far there's been some interesting props thrown under the market from some unlikely places.
Monday, January 17, 2011
Jobs, a Market Changing Event?
We start out this week where we left off last week; late Friday I posted this update on the Euro and true to the pattern volatility and the 3C charts on the Euro, it does look like that was a reversal formation/distribution area.
The square is the pattern mentioned in last week's post, the arrow is the start of this week's FX trading on a 15 minute chart. As you can see, the Euro appears to have reversed, for now at least. How far this is going will remain to be seen when the market opens tomorrow, I'll take a look at FXE/ UUP and see how serious this move looks to be.
Some other notable events last week included the VIX closing at new lows since 2007.
This is not the first time we have seen the VIX hit 2007 lows, however as you may know the VIX typically trades inversely to the market and extremes are often reversal points.
The huge positive divergence in 3C on the VIX remains. You can see what happened last time we had a much smaller positive divergence last year, the market sold off hard. This divergence below is much, much bigger.
In some other news, Steve Jobs has taken a medical leave of absence Monday-THIS IS NOT RUMOR. In the past, speculation over Jobs' health has negatively impacted shareholder value. Thus far we don't know what the indication will be in US markets, some speculate AAPL could take a 15% hit. In Frankfurt on Monday, AAPL traded -6.2% to -8% lower.
Effect on the market...
Considering AAPL's weight on the NASDAQ 100 is near 20% or about equal to the bottom half of the NASDAQ 100 combined, any downturn will significantly impact the NASDAQ 100's performance this week. This is one of the reasons I did not want to try any earnings plays for Friday A.H. or Monday, there's just to much that you can't control over a long weekend and we want to be able to control as much as we can, especially in speculative earnings trades.
Another angle to the Jobs story is the amount of hedge and mutual funds holding AAPL. It's difficult to predict what may happen, but should a run out of AAPL shares take place, we could see some very interesting trade this week. The averages tend to move together and the NASDAQ won't take a -2% hit with the S&P and Dow in positive territory.
Furthermore, the market is about sentiment, not valuation. If the later were true we wouldn't be trading up here where we are. Should sentiment shift as a result of the AAPL catalyst (and I've talked recently about sentiment having shifted as evidenced by poor market breadth), we could be in for a real ride, especially with European contagion ad the reversal in the dollar thus far which won't help the multinationals and our short trade in MCD.
I don't want to speculate too much here as we do have a market moving catalyst at hand. As I've said, this market's poor breadth leaves it one headline away from a major shift.
I will say that we had a 3rd day on Friday of a dual price/volume dominance, both were price up-one volume up the other volume down. 3 Consecutive days of this behavior puts the market in an overbought position, with the AAPL news, the poor market breadth, the cracks in the bellwether names and the extremely low VIX, this could be a watershed week for the market.
Lets get a feel for the sentiment and see where the opportunities pop up.
Have a great week.
Some other notable events last week included the VIX closing at new lows since 2007.
The huge positive divergence in 3C on the VIX remains. You can see what happened last time we had a much smaller positive divergence last year, the market sold off hard. This divergence below is much, much bigger.
In some other news, Steve Jobs has taken a medical leave of absence Monday-THIS IS NOT RUMOR. In the past, speculation over Jobs' health has negatively impacted shareholder value. Thus far we don't know what the indication will be in US markets, some speculate AAPL could take a 15% hit. In Frankfurt on Monday, AAPL traded -6.2% to -8% lower.
Effect on the market...
Considering AAPL's weight on the NASDAQ 100 is near 20% or about equal to the bottom half of the NASDAQ 100 combined, any downturn will significantly impact the NASDAQ 100's performance this week. This is one of the reasons I did not want to try any earnings plays for Friday A.H. or Monday, there's just to much that you can't control over a long weekend and we want to be able to control as much as we can, especially in speculative earnings trades.
Another angle to the Jobs story is the amount of hedge and mutual funds holding AAPL. It's difficult to predict what may happen, but should a run out of AAPL shares take place, we could see some very interesting trade this week. The averages tend to move together and the NASDAQ won't take a -2% hit with the S&P and Dow in positive territory.
Furthermore, the market is about sentiment, not valuation. If the later were true we wouldn't be trading up here where we are. Should sentiment shift as a result of the AAPL catalyst (and I've talked recently about sentiment having shifted as evidenced by poor market breadth), we could be in for a real ride, especially with European contagion ad the reversal in the dollar thus far which won't help the multinationals and our short trade in MCD.
I don't want to speculate too much here as we do have a market moving catalyst at hand. As I've said, this market's poor breadth leaves it one headline away from a major shift.
I will say that we had a 3rd day on Friday of a dual price/volume dominance, both were price up-one volume up the other volume down. 3 Consecutive days of this behavior puts the market in an overbought position, with the AAPL news, the poor market breadth, the cracks in the bellwether names and the extremely low VIX, this could be a watershed week for the market.
Lets get a feel for the sentiment and see where the opportunities pop up.
Have a great week.
