Market Update

As suspected, there was a retest, and it has given some reading now that seem to indicate some backing and filling of the gap will take place.

 DIA 1 min

 QQQ 1 min

SPY 1 min

VICL Follow Up

VICL was also a May 9th trade idea that went on to gain 22% before pulling back. There was also an earlier trade from March 9th, in which it went on to gain 103%, currently around 73% on the pullback.

VICL was in need of a deeper correction so the blue 22 day moving average seems like a reasonable area to take a look at VICL for a potential next leg up.

VICL still looks good on the long screen, we just want to see some accumulation on the pullback. 1 min charts are starting, but I'd like to see that reach the 15 min charts before deciding to pull the trigger again.

Following Up on BPAX

BPAX, a trade idea from May 9th when the chart looked like this

is now 22% higher and looking like this today

Did you miss the boat? I don't think so. This appears to be a large base multi-year in fact. I would keep a trailing stop on this one, but the volume for the base is perfect. I may wait for a pullback before entering if you haven't already. Remember, patience.

Long term 3C base.

Our TMF Trade

We've been following along the bullish behavior, especially in 20+ year treasury ETFs, such as TLT and the leveraged long TMF.

While there's still the possibility of a nasty shakeout in TMF, it's certainly performing well this morning. We're going to have to consider the many possibilities outside of the obvious as to  why Treasuries are behaving as they are.

Up 1.81%

Market Update

It's very early to be making assumptions, but from a few things that are starting to emerge, it looks lie the market is going to try to retrace and back fill into this gap. The TICK chart is moving positively, there may however be a retest of the morning lows, that would be best as far as getting a reading on 3C.

USO Update

Friday USO was at the breakout point, it did not breakout, I said that I hoped that it would return to the lower trendline 1 more time and I thought there was still time in the price pattern for that to happen. That's exactly what has happened this morning.

 Right now it's fairly close, but not at the bottom.

The 60 min 3C chart is the most bullish chart which you have seen. Right now because of the drop and because it's early, there's no short term data yet to look at, so this trade if bought here is because it appears that the long term chart is positive, despite the negative price pattern. Also because the pricing at this level doesn't hold a lot of risk if USO where to fail below the trendline. As I warned on Friday, I'll remind you again today, that often before a move up starts, or a move down for that matter, it will start with a shakeout. In this case, that would be a break below the trendline to shake out longs who have been buying in the area. If we get that shakeout, that may be a chance to get in on the position or to add to it. We'll have to see if it happens and if it shows buying if it happens. Just keep USO on your radar.

Our Big Fat Greek Default

Even in the matter of a few hours overnight, the situation in Greece has turned the risk trade OFF, lights out on risk.

The head of E.U. economics said in a Vienna conference that Greece doesn't stand a very good chance of privatizing $50 billion in public assets which is a condition for further bailout help. Furthermore 80% of the population will not agree to more wage cuts, tax increases and cutting of social programs.

The question the Greeks must be really wrangling over right now is whether to embark on the sale of assets, being it doesn't look likely and the other conditions for continued assistance aren't sitting well with the population, or to just cut loose from the EU, re-introduce a new Greek currency and stick the rest of the EU with the tab. This is the domino that would shatter Europe, banish the thought of Ireland and Portugal following in the same foot steps.

Today, everything is about Greece. The Euro continued to slide overnight and is now at  $1.4001 VERY close to an important technical level at $1.40 so it looks as of now, things are about to get a lot worse. It's reflected in premarket trading. The US economic schedule is light, so Greece will dominate the day.

Computer Trading

Check out this article. 


I've told you about the pattern recognition software, a family member of mine that works on a black box system and the millions of dollars a small independent firm spent of reducing latency by microseconds.

This is serious stuff-you can'r compete on the same level, but you can compete as long as you don't let them define your game.

In any case, the interesting stuff is how pervasive it is and how powerful.

In my view, every trade should have a human's finger pushing the order button. If the stock market is ever to return to what it was originally intended as, this will have to happen. Until then, I hope you know how to handle a flash crash.

Starting the Week

I guess we'll start with European contagion, Italy just saw its outlook lowered to negative by the S&P ratings agency. While Italy faces enormous fiscal burdens, much of the burden is past debt. With the ratings downgrade, borrowing in the open market is going to get more expensive for Italy. As far as the PIIGS scenario goes, Greece, Ireland and Portugal were expected to fall and just about in that order. The bigger problems are Spain and Italy. The current bailout mechanism cannot handle Spain, much less Italy.   You may recall the S&P also downgraded Greek debt last week. A Greek default is looking like a sure thing, timing is the issue and if there ever was a domino effect of "what ifs" to be contemplated, a Greek default would be the fuse that brought Europe down. Whether it starts in 2 months, which is about the current schedule for a Greek default or whether they manage to kick the can down the road a bit longer, start looking into those European Banks, even with little exposure to Greece, the domino effect will take them down, probably the ECB as well.

As I mentioned in several different post on different Euro topics, the friendly, "We're all one" atmosphere is falling apart quickly which leaves Euro banks a prime target. DB was one of my picks from last week, it's already taken a hit, but nothing like we can expect. To make matters worse, the austerity measures that are required in bailout terms are creating rage on the streets, you probably read about Spain this week and Greece just about every week. Voters throughout Europe are voting against either bailouts or austerity measures, look to the Spanish elections this week for the later and the German for the former. All in all, not a good mix for the future of bailouts and defaults.

In the short term, the Icelandic volcanic eruption should reach Europe this week, we'll have to what effect it has on the economy, but I think it won't be a good week for the Euro, which means the Dollar may have a good week and all of those inverse correlations will come home to roost, right about on schedule with the thinking I've had with regard to the market's trajectory regarding this triangle we've been watching. In fact the FX open is seeing the Euro continue the downtrend started around May 5th. $1.40 continues to be the level to watch.

Here at home some of the most interesting news and it'll be interesting to see how this plays out (recall the Liberty Dollar story), Utah has made gold and silver "legal tender". Look for the Feds/Fed to try t stomp that flame out real quick lest it spread to other states and leave the Fed with a bunch of worthless green colored cotton denominated holdings.

As for the market, at last check the Dow futures were down around 36 points. Asian markets are down in the early going on Greek default concerns,  I'll be very interested in the underlying tone of any gap down in the a.m.

I've just about completed my scan for market trends that I posted this week, except it'll be looking at the shorter term expectancy from 31 days to the 10 day expectancy vs reality.

Have a great week, see you in the a.m.

Industry Rotation Part 2

This morning I ran the same scan as I posted yesterday, this time on individual stocks of the NASDAQ 100

Here's the complete list of those performing outside of the expected trend I described yesterday.

More Bullish then expected:
EXPD, FFIV, CELG, BIIB, VMED, NTAP, EXPE, INTC, / CELG, BIIB




More Bearish then expected:
CTSH, CMCSA, SHLD, RIMM, ALXN, APOL, NWSA, JOYG, FAST, PCLN, WFM, BIDU, GOOG, ISRG, NFLX , MRVL, SNDK, MU, FSLR, AMAT, KLAC, LRCX, SBUX, SPLS, INFY, SRCL, VOD