Today's Flash Crash-ASIA

I'll check this one out as soon as 3C is back up, but I'm sure I'll find the same thing I always find, a negative divergence late yesterday.

The moral of the story continues to be, Keep stops in your head, not with your broker, t's only a matter of time before the next flash crash hits the averages and don't panic, they always recover, even though you'd have to have superman like reflexes to sell on a flash rash, that is unless you have a stop in with your broker.

Lets take bets on whether the SEC will investigate! I'm saying, uhhhmmm.... NO!

I'll bring you the 3C charts on this one as usual ASAP, but as I said on the earlier FC this week, these algos keep pulling them off, even though they know most trades will be nixed, but there's still some profit motive at work here and the sooner we figure it out, the better.

Here's ASIA on the open.

Click on the chart for a larger view.

Intraday market bounce?

I still don't have my preferred tool of choice, but looking at the SPY, it looks possible we just saw a shakeout.

A good RSI positive divergence on a 1 min chart.

Here support is broken, volume picks up, there's your shake out. Watch for a bounce from here if the SPY crosses back above the trendline (now resistance), it'll produce a mini-short squeeze.

The market didn't like this one...

After the Fed minutes came out, the QE-crack addicted bulls were as Mike Tyson says with such lovely lisp, "eksthatic" which of course would be "ecstatic".

So Bernanke saying the following regarding QE3 took the wind out of their collective sails...

 Bernanke Says Fed Not Prepared to Take Action at This Point, but, Bernanke Says Recovery 'Still Rather Fragile'.


That's okay, I'm sure Wall Street can still ramp the ES to get the pin they want by Friday.

DUST Update

This is another I look forward to seeng the underlying 3C action (very frustrating for me right now and I'm sure you). In any case, yesterday I showed you the improvement in DUST, even though it's not a long signal in the trading system, I know several of you had a cost basis and risk management that allowed you to hold it. So far so good. Here's yesterday's 3C update of DUST.

And here's DUST today...

Moving up off a gap lower in to the green.

The moral of the 3C analysis is when you have all timeframes lining up like they did yesterday, it's a pretty good bet that there's been accumulation. Next up, we need to quantify it to get an idea of where this is going. The fact I'm a bit blind right now doesn't matter too much in this case, we need several hours of data to see what the longer timeframes are dong, whether they are confirming , leading or out of confirmation.

I'll get the updated charts up ASAP.

USO Update

Still blind, but things are happening thus far as expected. Yesterday I posted this about USO, be sure to check out the charts.


In Short, I'm still intermediate term bullish on USO, but yesterday it was bumping up against resistance and showing 3 negative divergences as you can see n the post above. Today t's backed off that resistance level.

Remember, resistance is only an exact level for technical traders. Much of what you see on a price chart s created by the two main drivers of price, those would be Fear and Greed. As I've mentioned before, a price chart is an emotional map when read correctly, therefore exact resistance/support levels are really only useful to Wall Street in shaking out technical traders who get a little too technical about these levels. The truth is support and resistance are areas and if you think about the emotional process of how each are created, you'll understand why they are areas and not exact levels.

In any case, my original thinking was for a pullback to the $37.75-$38 area. I'll be very interested to see what 3C looks like as soon as real time is restored.

Keep an eye on GLD

You know I've been warning of underlying weakness in GLD the last 2 days.

Right now it's in a doji switching back and forth from unchanged to slightly green to down on the day. It's not an unusual reversal pattern to see a candle open higher like we have today and close lower to engulf the previous day's candle as I've drawn in under today's candle in red, it would be a bearish engulfing pattern which is a reversal pattern. Also remember that reversal doesn't always mean down, GLD can go in the 3rd direction which would be sideways, but given the fact that it's been trading for 3 days above the consolidation triangle, I'd view any failure as a likely false breakout. When 3C is back up I'll confirm.

Still Waiting on RealTime.

In any case, I'm looking at a TOS chart for the first time ever.

So far, no big surprises in the market today, 3C was indicating yesterday toward the close as I pointed out last night, we'd see some strength early this morning, which I find interesting because late last night Futures were down, yet it seems insiders were buying yesterday afternoon.

I'll let you come to your own conclusions on that one, you know why the market is up this a.m., just pointing it out. We're also trading in the pin zone level for Op-ex, as I mentioned yesterday-the mid $132's on the SPY and here we are again.

Hopefully we'll be up soon, they usually aren't down this long when a real time problem crops up, but they are pretty good about getting it resolved quickly.

Worden Realtime Down

I just got an update from customer service, we should be up in a few minutes. If you re using Worden charts, know that it's across all of their platforms (TC, TC2000, StockFinder).

As for the market...

I showed you most of the 3C charts, the only thing of note toward the close was a 1 min positive 3C divergence in the SPY, a 1 and 5 min positive divergence in the DIA and a pretty nice looking 1 min positive divergence in the Q's that lasted for about 3 hours, all of which suggest some early strength tomorrow.

You saw the options chain and know my opinion as far as the rest of the week goes going in to Op-Ex on Friday.

As for Price/Volume relationships today, there was no single dominant relationship n the NYSE, however the Dow,  the S&P-500 and the NASDAQ 100 all had a dominant P/V relationship, it was Close Up/Volume down (16, 45 and 214 stocks respectively) and of course that's out of the 4 possible combinations. Close Up/ Volume Down is considered to be the most bearish of the 4 relationships, even though price closes up. It generally tells us that traders are backing away from higher prices, that was evident today by looking at a hart of the SPY.

Traders weren't keen on chasing prices higher. You know my opinion for the rest of the week and what I think comes after Op-Ex.

I think VXX pulls back earlier tomorrow, but I think it will present an opportunity, options would probably be my choice on VXX, although I haven't looked at the chain. We'll watch for a pullback and a positive divergence.

If we do get a pin on Friday, I would suspect we are probably in for some volatile chop tomorrow, so I'd be looking to use strength to short into in your favorite short positions. FSIN is definitely n the right area price wise, I'll be watching for the entry on that one.

The one thing that is playing the role of Monkey Wrench s the debt celling talks and the associated musings out of the ratings agencies-China's just put the US on a negative watch. I would think though that the opportunity to pin the market on OP-EX would be a strong incentive to keep the SPY around the $132-$132.50 mark at least by Friday's close.

Keep an eye on gold, the warning I gave on Tuesday showed some teeth today on an intraday basis.

Bonds To Pullback?

Take a look at TLT...

 Here's the very typical bullish descending wedge that move into a lateral base, other examples can be found in DUG, EDZ, FXP just to name a few, but it's been a pretty common occurrence.  Here we see price approach the breakout level of the base in May/June, note the problems with RSI from late May to early June and then again after the DIP (RSI after the dip is lower then it was at resistance through June. A pullback from the initial contact with resistance isn't rare, but the volume on the advance after the pullback should have picked up substantially.

 A look with the 50 sma. If you look at this as a rounding bottom, the problems with volume right now are obvious.

 TLT (Bonds) largely have an inverse relationship with the market, typically they are a flight to safety play. You can see the relationship though is not on a 1:1 raton as the SPY (red) would be down around the red trendlne.

 The daily chart shows the negative divergence at the 2010 top and the positive divergence at the bottom, this is a long term base with good 3C support.

 However, the 60 min chart reveals some relative weakness, you can see distribution at resistance and on a relative basis, 3C is lower now then t should be compared to the white box at the left.

 The 15 min chart shows more detail and you can see the negative divergence that caused the dip and a current negative divergence at resistance.

The 1 min chart shows detail of the last few days, a negative divergence at resistance and several on attempted moves higher on the way down. Currently TLT is in a negative divergence. Taken with the 15 min divergent, this looks to be a pretty good timing signal, the only other  thing we could ask for as far as timing signals go would be an upside false breakout.

The obvious play here would be TBT (Ultrashort 20 year). As of now, I view this as more of a swing trade then a long term trend problem, but we'll see how it plays out.