Market Update

Since the full text of Bernanke's speech is already out, the market is already discounted/discounting his comments. I've heard some doozies thus far.

Here's the SPY

Link to Bernanke Speech

http://press.org/events/npc-luncheon-ben-bernanke-chairman-federal-reserve

GLD

OK, maybe I'm losing it, but I thought I just showed this triangle in GLD yesterday, although I can't find the price. Maybe it was an email response or maybe my I am losing it?

Here's the GLD chart, I suspect that we are seeing a flight to safety here, there's a lot of talk about stealth bank runs-not the kind where people line up at the door of the bank, but where corporations, etc click a mouse button and empty an account. Egypt just put in a maximum limit withdrawal of $10k when their banks open, obviously trying to prevent exactly that and as the unrest is global, I think the bank run fears are far beyond Egypt. Not to mention inflation which I will cover in a post I've been working on for a few hours now. The latest non-manufacturing ISM today beat, but once again, it's what's behind the headline and what's behind the headline is the prices paid part of the index which jumped 3.7% to highs not seen since 3Q of 2008. Bernanke will be speaking soon at 1 p.m., will he ever recognize inflation? So GLD is up today out of a nice tight triangle.

 Here's the tight triangle and while GLD may have been headed toward a downside correction, the worldwide events have to clear the slate and we have to start with new analysis as fundamentals that largely were not discountable have changed. The breakout thus far is not showing any great volume so it needs to be watched if you are long here.

 This is so deja-vu, I have to find the GLD update. In any case, here's the 10 min intraday triangle with 3C confirmation and a very recent positive divergence, and it's interesting where it happened.

 The positive divergence took hold on a dip BELOW the triangle-so once again we have the concept of the black box trading systems running stops-PLEASE consider keeping your stops mental and end of day if at all possible. They have the entire order book and they know what technicians think when they see a triangle like this, they'll take advantage of it nearly every time. Thus far we have pretty decent confirmation on the move, no real extreme selling although you can see a small negative divergence bringing prices off today's highs.

Here's a Heiken Ashi chart on an hourly timeframe, the candle is bullish-remember Heiken Ashi charts read differently then candlestick charts and while the upper wick in a candlestick chart is a little bearish, in a Heiken Ashi chart it IS BULLISH. You can also see the volatility squeeze in the Bollinger Bands implying a highly directional move is about to take place. Pure technicians would have read this triangle as a continuation triangle, meaning a break to the downside, so when there was that small drop below support, any technicians shorting it were at an instantaneous loss when prices moved higher causing them to cover and causing the demand side of the equation to push prices higher,it's a mini bear trap scenario. Later I'll try to get a more in depth analysis of GLD and try to see what is going on here. As I said about oil, the same applies for gold, they are not going to let surprise events cause these to go too far north without having the chance of accumulating shares.

POMO results show reason for positive diverences

The submitted to accepted ratio came in at a low 2.6x (vs the median 4.1x) which means the Primary dealers have a lot of cash in hand and it generally ends up in the market around 11 a.m. at the end of operations.

Once again, the Fed picks up a bond that the PD's just purchased from the treasury last WEEK!!!!! This bond accounted for more then 58% of the entire POMO operation. So once again, the Primary dealers pockets are filled with cash for taking a bond from the treasury, not even holding it a week and selling it at a profit to the Fed with almost no downside risk whatsoever. Lets hope Ron Paul questions this absolutely questionable and highly immoral behavior. Unreal.

Market Update

I haven't seen the results of the POMO yet, looking for the submitted to accepted ratio, this will be key.

Here are the charts showing some accumulation into the dip, it was to be expected that the broken support earlier would be tested as resistance. Again we are still fairly early on.

For newer members in understanding the 3C charts below, changes in trend start on the earlier timeframes like 1 -5 minute. This is also where we can see accumulation and distribution of the market's middle men like the NASDAQ's  market makers and the NYSE's specialists as they accumulate or distribute shares in front of an impending intraday change of direction. If the divergence (accumulation or distribution) is strong, it will make it's way to the longer intraday charts like the 10-min and 15 min charts where we can see reversals for market swings on a short term basis. Hourly charts won't show information as quickly, but they have a greater impact and daily charts show the most significant longer term information.

In reading the charts, I use arrows to point out divergences between 3C and price. A red arrow=a negative divergence (distribution) a white arrow= a positive divergence (accumulation) and a green arrow indicates that the trend is being confirmed as 3C trades with price. When you see boxes around 3C that shows a more important leading divergence, same color codes. Click on the charts for larger views.

 DIA 1 min. chart

 DIA 5 min. 3C chart

 IWM 1 min chart

 IWM 5 min chart

 QQQQ 1 min chart

 QQQQ 5 min chart

 SPY 1 min chart

SPY 5 min chart

Take a look at USO which was added as a probing trade as USO is sitting on the 50 day moving average, a good place to launch a move -whether it be a bounce or something more. It's on the February Trade list linked at the top right on the site.

Emails...

Hi everyone, I'm getting a ton of emails which is great, however I'm also trying to get the posts more together so there aren't as many-while listening to Al Jazeera real time and following the market/running scans so my response time may be a little slow today until I get this figured out. If your email is urgent, please put "Urgent" in the subject line.

Thanks for your understanding-I need an assistant, any volunteers ?
:)

This is What I Was Looking For-Now, Does It Hold

Last night's post/daily wrap showed the multitude of negative divergences in the SPY, DIA, QQQQ and IWM as well as the candlestick patterns that all pointed to a reversal save for the Dow's. We still have the issue of Primary Dealers and the SFP program unwind which is speculated to perhaps put as much as $25 billion dollars into risk assets starting today, so we have to watch whether that money comes into the market on accumulation at lows or not. As I said last night, in a normal market, both the candlestick patterns and the 3C charts would all call for a downside reversal. The question remains, what the Primary Dealers have from the Treasuries SFP unwind and what they do with it.

 The white block is the new breakout highs in both the S&P and DOW, it's also a potential bull trap as buyers buying the new highs expecting a new uptrend are now underwater. their selling, just like in the FXE (EURO) can create a fast move down. Do the PD's accumulate that pullback? We have to watch, it's also a bit early to be claiming victory as we are in early morning trade.

And There it Is!

Take a look at UUP this morning. Here's yesterday's update  and the updates the last few days I've suspected this was a false breakdown and a false breakout in FXE.

As you know I'm midterm bullish the dollar vs the Euro and this breakdown below obvious support is now confirmed as a false move. These false moves tend to reverse pretty fast and can run up pretty quick.

This is also a prime candidate lesson of how even in the FX markets, technical analysis is used against it's practitioners as many would have placed stops just below or at support and probably placed the stops with their brokerage which means Wall Street can see your cards. This is why I never set any orders except mentally. Keep an eye on UUP for further upside, FXE for further downside.

Here's the 3C chart

 For newer members, see yesterday's analysis linked above as to why I suspected this was a false breakdown. Here on the 15 minute chart, 3C did not register distribution on the break-in fact there was a positive divergence.

The 5 min chart shows the accumulation taking place below support and the move today is confirmed.

Trade Alert

USAT (LONG) is looking like it's starting a new leg up, this is a Cats and Dogs trade so it is speculative, make sure your risk management reflects that. Any questions, please email me.

Welcome New Members

Please be sure to read this link, if you have any questions, email me anytime.

LINK