TSO Update

This is a position we made some money in. It just broke out to new intraday highs, I am a little concerned about this being a vlid move, however it could be traded long with a very tight stop around $26.83 and on the other hand, if it fails to close above that level, it may turn into a nice false breakout move which could be played on the short side. Typically false breakouts reverse fairly fast and deep so either way, the trade is worth keeping an eye on.

Back to GOOG

In the last GOOG post about an hour ago, I showed the stops being hit, why and how you can protect yourself. Now, lets take another look at the chart.

The red arrow and big red volume was our last update and I listed several reasons why a market maker, etc would hit these stops, one was for their own position. If you look at the white arrow, there's a 1 min positive divergence so looking back now, we can see very clearly what happened, the stops were hit, the market maker or whoever was behind the shakeout, picked up the shares on the cheap easily and has run GOOG up for a decent little intraday trade/profit. This is another reason I prefer to use stops on the close as well as all of the other reasons I provided as to how and why the GOOG longs got hit. If you were one of them, how would you feel now?

Again, this is an example post for reasons of learning about the market and is not analysis of GOOG itself.

FCEL (Long)

FCEL was highlighted March 24th

Today, it just broke out of the level I mentioned as a buy area, $2.18-$2.20.

Take a look as it may provide a quick gain. I do believe I did see FCEL on the insider transaction sell list though. By the way, Insider selling:buying ratio came in at 18:1 with sellers taking the lead as has been the trend for months, many, many months.

Fed's Reverse Repo

This is the second time this week the Fed has conducted a reverse repo. I'm not sure what the end game is here, but it seems between the extraordinarily large number of Fed regional presidents and voting members holding speaking engagements this week and the hawkish tone of them, it would seem at a minimum that the Fed is letting the market know that QE3 is not a foregone conclusion and perhaps that QE2 might not even make it to the end of it's scheduled operation.

Inflation seems to be the key here. Inflation has been evident for quite some time in manufacturing reports and MIT's recent projection of a rate of inflation near 8% for 2011. This may be causing the Fed actions.

Here's more on the story...

UUP Prepping for the Next Leg Up?

It apears that way and if successful, this is the most important price level for UUP in weeks and could have some major implications for a more solid footing and advance.

 The intraday trend. There's nothing wrong with this picture, a simple intraday pullback.

 The start of 1 min accumulation near the lows and in a lateral trend.

If UUP can close above the white trendline, then it has broken resistance and will be set to change a few of the trends in the short and sub-intermediate terms. Remember that historically the dollar has an inverse relationship with equities and most commodities including precious metals. So whether you trade UUP or not, it's a useful ETF to keep an eye on for broader market implications.

A Quick Market Lesson (GOOG)

In my rik management article, I talk about never placing stops at whole numbers and if you can avoid it, try not to place stop loss orders on the books with your broker. The market makers and all kinds of Wall Street participants can see where you have placed your stop. When a bunch of stops are congregated in a particular area, you can be sure if it's within reach of the market makers. etc, they go for it and try to knock those stops out. In doing so, the create volume which creates profits for them, whether it be the difference between the bid and ask (the spread-which is their profit) or volume rebates or just popping off one of their own positions, they stand to gain.

Take a look at GOOG's intraday chart...

 Error # 1, stops were placed at extremely visible intraday support. Error #2, the stop level was a whole number- $579.00. Error #3 as evidenced by the immediate turn up in volume, the stops were placed with brokers. Just look at the volume the minute $579 was breached by a penny, volume surged as the stop loss orders were triggered.

For those of you short term trading/day trading and using 3C, the signal of a negative divergence was pretty clear, it's especially more accurate as GOOG has been range bound and this is often where we find accumulation/distribution so when you see a negative or positive divergence in a lateral trending market, the chances are that it is VERY reliable. That being said, it's still a 1 min divergence which is the realm of intraday movements, helpful for day traders, but not very meaningful for longer term traders.

ASTI

Remember that alternative energy post I put up on 3/20 (Sunday Afternoon), ASTI was one of the picks there. Take a look at it today.

I'm still thinking AE is going to be an upcoming trend so I'm building my watchlist and seeing which stocks are going to emerge as the leaders. ASTI has a nice head start.

TSLA

Here's a potentially interesting  long trade in TSLA (Tesla Motors).

 A Bullish descending wedge, sets the implied target near $34

 30 min 3C positive divergences in a base building environment.

 Recent 15 min positive divergence leading to higher prices.

The first level of resistance is taken out thus far today, the next level would lift TSLA into stage 2 or mark up where it would have a decent chance of hitting the $34 upside target. Technically this is still a base so there's still volatility issues. You may like the trade here or may want to wait for the $25.50 resistance area to be taken out. In either case, this isn't a quick pop trade, but looks to be more of a longer term trending trade. Currently I'd try to give it as wide a stop as possible if you enter here, a bit under $22.

INTRADAY DIVERGENCE AT WORK

All of the majors are showing a negative divergence on a 1 min timeframe  (intraday moves), but the QQQ is by far the worst.

 1 min 3C

Declining Advance/Decline Ratio

Quarter's end

We discussed the selling late yesterday and the reasoning, the quarter ends March 30, which is tomorrow. The divergences I look for in a reversal are there and deep, there hasn't been anything positive to back up today's move up which isn't much, but it's not down. So thinking about it, it does make some sense, the funds who are more afraid now then ever about redemptions have to show the greatest possible performance. Yesterday it looked very much like they were positioning themselves for a downturn, however until quarters end, they need to keep their returns as high as possible. Like I said, I'm not seeing anything that suggests the reversal isn't on track, however a short term manipulation of the market of a day or two isn't that hard. It's not anything written in stone, just a passing thought.

As hard evidence of confirmation of the thought or evidence showing it was nothing more then a passing thought, comes in, I'll be posting it. Right now the market is trading in confirmation so there's not much to report as of yet, except that the divergences we look for in  reversal are still very much there and they are very deep.