The Power of Contradiction

Contradiction is usually a word with negative connotations, but in Technical Analysis, it can be a sign of things to come. 3C is an indicator with the power to contradict prices, which means to show us the underlying action in price. We've all seen the positive divergences of the last 3 days now and after the news on GDP and the drama in Washington, it's kind of hard to believe the averages are trading in the green right now.

This power of contradiction also has the power to give me an ulcer, as I've said, t's difficult to show you these charts in the price environment we are in, but these are your edge and part of your decision making process.

So below are some of the more significant charts in the majors.

 DIA 15 min

 IWM 2 min

 IWM 15 min

 IWM 30 min.

 QQQ 15 min.

 SPY 1 min.

 SPY 5 min.

SPY 15 min.

USO Update

I've been very consistent on what  expect from USO based on the 3C charts.

 Here is the bull flag type pattern in USO, there was a 4-day breakout in which I have maintained that I did not believe this breakout would hold. My opinion has consistently been that USO looks good for the intermediate term, but first it will need to pullback into the flag and undergo accumulation to make a second and real breakout of the flag. The last 3 days, USO has pulled back into the flag.

 Here's 15 min 3C accumulation

 10 min 3C accumulation

 5 min leading positive divergence/accumulation

And the same on the 1 min.

I can't say for sure this is enough to effect a true breakout, USO may need to spend some more time accumulating a larger position, but I do see what I have expected. I would like to see a test of today's lows or perhaps a bit lower with an even stronger 3C 15 min positive divergence, at that point I would be very confident in a solid move up.

As for the dollar/Oil relationship, I stated about a week ago that I thought we were going to see some breakup of the normal, historical dollar correlations.

I haven't done an exhaustive study of the correlations, and this would be a new trend, but there are some recent indications that the inverse correlations are not as strong.

USO in green/ UUP in white

GLD Update

Earlier I mentioned the update from yesterday in which I expected GLD to rise and I would be looking for a 15 min negative divergence which has not been present thus far.. Well on today's move up, we got exactly what I was looking for. This is bearish for GLD for the short-intermediate term.

As suspected, there it is, played out exactly as posted-a bit quicker the I expected, but there it is.

CSE Short Trade Idea update

I posted a follow up on CSE on 7/21 in that follow up I said, "I would have liked to see a target around $6.40-$6.50, maybe we still will, but the charts are falling apart."


As the market would have it, CSE ht that target zone this morning. Here's a look at today's charts.

 Here's the weekly chart, CSE gained about 700% since the 2009 bottom, note the recent red volume in the top area.

 Here's a look at the daily chart and the target zone I was looking for to enter the short.

 This is the 5 min chart of today's intraday action thus far.

 The daily 3C chart seems to be calling this a top with multiple negative divergences including today's.

 You can see the negative divergences on the hourly chart during past attempts to clear the top's resistance level.

 The 15 min chart is negative right now as well.

 And the 1 min chart is negative on the open.

While you could try a trade in this area with a stop of your choosing, I would prefer to see the 15 min hart look a lot worse before entering here unless you are aware you are taking a more speculative trade and have planned for that. The highest probability entry is on a break back below the tops support/neckline. If I see the 15 min chart deteriorate more, I'll post another update.

UUP/$USD Update

This is yesterday's UUP update from 10:30 a.m.

As early as 10:30 yesterday we had negative divergences in the 1/15 min charts.

The bottom line from yesterday's update: " I suspect UUP will pullback which will have effects on correlated assets, but considering the longer view, I think there's something bigger brewing in the $USD/Dollar index that will play out soon."


Here are the updated UUP charts...

 A positive 1 min opening chart.

 A positive 10 min opening chart

 This was the 15 min chart that warned of a pullback early yesterday.

And the hourly chart remains strong, as if someone knows something about the dollar that we don't.

Similar to the Lehman Affair

This story reminds me a lot of how Hank Paulson (former Secretary of the Treasury under GW Bush) called in the Wall Street heavy hitters over the Lehman collapse.

Full Story Here

Market Update

I don't like to update this early as 3C hasn't had time to adjust to any changes in the market, but I did find this chart interesting.

SPY opens on a positive divergence.

The DUST long Trade

As you know from last night, both system 1 and 2 in the Miners Trading System have given long DUST signals, the latest was to be bought on the open today. Despite the 5 min chart that looked problematic and indeed was yesterday as DUST gave up all of it's gains from the open, there was this 1 min positive chart posted last night.


From Last Nights Miners Trading System Update...

The 1 min chart showed very good improvement very late in the day today.



We'll have to keep an eye on DUST, or you can stick with the system as is and use the 3% stop-loss, for today's system 2 entry, the stop-loss is $38.35. If you bought near the open today on system 2, you should already have a gain of about 3% this morning.


So far the 1 min chart is trading in line/ confirmation of the price trend.

GLD Update

I had so many alerts trigger this is the first time I've been able to look at a hart, lets start with the GLD updates from yesterday. In the morning I posted this update with the following chart and commentary....

 However, as you know, our best divergence/reversals come when all timeframes are aligned, especially important is the 15 min chart seen above. There is no negative divergence present at this time, which makes me think GLD may attempt a rally close to the recent highs, that would give the 15 min hart a chance to go negative. The other possibility is that the 15 goes in to a leading divergence as GLD moves lower, but I think the first option is more likely. Reversals are rarely a clean U-turn.



The morning post was followed by some late day charts of GLD...

GLD 10 min 3C chart.

So now we have what I was looking for yesterday a.m., time to watch and see if we do get that signal. I suspect we will.

So far here's the 1 min chart, the 15 min will take some time to catch up.

I suspect a little pressure on the downside from the negative opening divergence..

Q2 GDP

As you are probably well aware, Q2 GDP came in at 1.3% and as predicted about a week ago when I said Q1 GDP s likely under 1%, it was revised down from 1.9% to a meager .4%. What will the Q2 GDP revision look like? Recessionary?