Early Market Update

 non-confrmation on the 1 min is simply indicative of the pullback we are seeing.

 5 min is not in line, but moving toward it.

The 15 min chart is still the most important in a leading positive divergence, like I said, Wall Street will still play the game.

The Power of the Cycle

You've probably heard me say quite often, "Once Wall Street puts a cycle in to effect, there's not much that will stop it, not news, economic reports, nothing; all that will be discounted on the next reverse cycle."

As for this morning's reports, they come in the way of the continued PMI reports falling off a cliff. We have China's PMI at 50.7 on a continuing downtrend and inching closer to contraction, the E.U's PMI is at 50.4 a mere .4% away from contraction.

Today the U.S. will release it's ISM, it will be horrible, keep watching this week though as the market most likely shrugs off bad economic report after another until Wall Street has finished the cycle that has probably cost them close to a $200 billion to put together.

We've seen it many, many times.

One final word of caution, don't get complacent this week, Wall Street still has to play the game.

As Predicted earlier today

Asian Market Jump As Obama Announces U.S. Debt Deal from CNBC

And as predicted just in time for the Asian open.

With the S&P only loosing 55 points last week, but breaking major support levels triggering huge volume that can be accumulated by Wall Street and 3C showing at least 3 solid days of accumulation, you have to wonder when this deal was actually done and how much of what we saw last week was simply posturing for constituencies?

And from the WSJ, as of 27 minute ago, DOW Futures surged 187 points in screen trade!

I think 3C may have been the ONLY indicator predicting such an outcome and 4 days in advance! I hoped you used the signals to shift your portfolio for what looks to be a monster relief rally, we'll be watching for our short side entry, but if this rally does what I think, you might find yourself doubting any downside-DO NOT BE FOOLED, this is what  I have expected since July 25th.

Another thing to keep an eye on, Gold. Remember last week I posted "Gold Continues Lower, For Now..." on July 28th, with this 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 chart 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.


In this post later at 10:05 p.m. the same day I showed short term charts suggesting gold would move higher.


On Friday July 29th, GLD did move higher  , Here is the post....


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.


So the next day all 3C implications were fulfilled, the predicted move higher and the 15 min negative divergence on that move higher all played out exactly as each update implied! Now we have the typical 3C set up for a move lower in gold/GLD.

As of an hour ago,  Market Watch says gold is trading down $18.

As usual a lot can happen overnight and especially with the fluidity of the debt negotiations, but as of now, I find it interesting that 3C has called every major market move PERFECTLY since early June. These have not been easy calls to make. In June 3C started calling accumulation for a massive short squeeze, this while the market was still falling in one of the nastiest declines we have seen in awhile.  While 3C was calling for this rally, we had two weeks of accumulation; at any moment the market could have continued lower, we stuck with the 3C call and were rewarded on a nice short covering rally. This is what the market looked like.

 The June basing call and rally call

 3C short term signal for a decline to be accumulated

 Accumulation of the decline from the July 23 decline and a all for a short squeeze rally

 The short squeeze rally

3C calling accumulation on what should have been a nasty decline down with horrible economic news and a debt ceiling dispute that seemed to have no positive outcome. Last week's calls were the hardest, as 3C contradicted price, it was something that could have given me an ulcer but I owe my members the truth of the underlying action and if you acted on t, it seems you may be handsomely rewarded.

As for GLD...

 60 min. 3C chart starts calling for intermediate term weakness in GLD

 15 min 3C calls for a downside reversal in GLD, but warns that this does not appear to be the final reversal signal and says to watch for a new high before a real reversal takes place.

 Short term 3C charts call for a jump in GLD, at which time the 15 min 3C chart will have put in a second negative divergence and a more serous one regarding the GLD downside reversal.

GLD in fact does make a new high on a 15 min 3C negative divergence as predicted days earlier.

It's too early to do an end zone dance or take a victory lap, but so far as of tonight, all indications are that 3C has made near flawless calls in a very difficult environment, one that made last week a very stressful week for me personally to make such counter trend calls.



Should these calls play out tomorrow, color me relieved and very happy that I brought you this information first, last week was a gut-wrenching week for me to bring you this information in the face of such overwhelming odds going against the 3C calls.

Now, hopefully we are set up to make some good money, but don't forget, there are still massive problems with this market and while I will ride an uptrend and make the most of it, ultimately I'll be watching for the next negative divergence to enter, re-enter and add to short positions on what will likely be the second shoe to drop. As I have already said, should this rally play out as it seems it will as of tonight, be prepared for a rally that will test your bearish convictions. Wall Street has had the opportunity to accumulate a lot of shares on multiple breaks of important resistance on huge volume. They potentially have enough shares long to take this market to new highs and in a way that is very convincing. Also remember that to get longs to buy the rally, it MUST be overwhelmingly convincing.

Lets see what happens tomorrow.

Debt Resolution

I would think they are gong to want to get this done before Asia opens, certainly before the
US opens.

However just think about the signals we've been getting the last week or so and think about the useless puppet show in the House in which they schedule a vote, reschedule t and finally take a vote that they already know has ZERO chance of being taken up by the Senate. In the end it appears that we are right back to where we were last weekend with the only thing separating the House and Senate being the method of enforcement of cuts. It seems to me this whole thing was most likely worked out earlier this week and the week has been used for political posturing to play up to constituencies.

I'll predict this right now, if the Republicans don't get behind Ron Paul in 2012, which I think they likely will not, look for Paul to head to the Tea Party and the Tea Party to break ranks with the Republicans, starting a 3rd and viable party.

If you look at this deal, one thing s for sure, they are laying all of the burden at the feet of those n office in 2012, the most likely candidate to  deal with this is Ron Paul and I think Americans will see this. Usually members of Congress make poor candidates as they simply have too many votes out there and many are votes they would have supported, if it were not for a poison pill, but in the age of 30 second soundbites, it's hard to defend against, "He didn't vote to support the troops", when in actuality there was a poison pill in the legislation.

Ron Paul is one Congressman who has shown remarkable consistency over the years. Look for hm to be a major player in 2012. As for Congress' solution, it's typical, let the people in charge in 2012 make the hard decisions because this Congress is NOT making them, it's called kick the can down the road and Obama has done a fabulous job at it, making sure this debt dilemma will not come up again before the 2012 elections.

Here are two interesting charts for you that I got from ZeroHedge, if you wonder why I'm bearish and leaning toward a secular bear market in equities, you don't have to look much further then this.

They should also see this. We will shortly update where this chart will be by the 2012 election, somewhere around 120% of GDP.

And for those requesting it, here again is the log scale chart.

Source: NYT

Oh, that had to hurt

Talk about volume rebates! Any longs in there were taken out, shorts who jumped in where taken out on the upside move, longs who came back in where crushed again and any shorts who entered on the last move, may very well be crushed early next week.

Could they put their stop at a more obvious level? Heck, I can see the book for several levels, W.S. has the entire book, they (Wall Street) would be fired for not hitting those stops and generating the volume rebates that probably just added up to millions of dollars just in the last 10 minutes.

Stop Being Hit

Volume surges right on the break of intraday support. This is why traders shouldn't put their stops on the books where they are visible.

TICK

The TICK chart is getting stronger in to the close.

 The intraday NYSE Tick chart

Even sector rotation is getting stronger toward the lose in many groups, financials, Energy, Health Care, Industrials and Discretionary being key.

Interesting for such a bearish market.

GLD EOD Post

 The 5 min chart has shown improvement today, suggesting on the open next week we see some strength, I expect it will be short lived.

Here's the more important 15 min divergence, in this post "Gold Continues Lower, For now..." 
I said that the GLD decline wasn't going to last because a good reversal needs a 15 min negative divergence. I fully expected GLD to test the 7/27 highs or exceed them and at that point, I expected a 15 min negative divergence. I posted this just yesterday and today those expectations played out, from higher GLD to the 15 min negative divergence. I think any strength in GLD can be used for a swing trade down. It might develop in to more, but one bridge at a time.

URRE Long Trade #2

We did pretty good with the last URRE trade, although they have been on a swing basis. From what I see and from the fundamentals of a supply squeeze, I think URRE is putting in a long term base and still working on it so we've been swing trading it. I stated at the end of the last long trade that URRE will pullback and almost certainly be under accumulation during the pullback, it seems that is the case.

 Here's the long term bullish pattern, a descending wedge, they are counterintuitive patterns, but they tend to be pretty successful. The rule of thumb is "a wedge retraces its base", putting an eventual upside target around $3.50.

 Here's the 30 min negative divergence that ended the last long trade, note the accumulation.

 The 15 min chart shows the same.

 as does the 10 min chart

And the 5 min chart.

I would not be surprised to see URRE head a bt lower and put in a more powerful 15 min positive divergence, it should be watched, but t seems it's getting lose to its next swing leg up.

Market Update

 It looks like the IWM hit some intraday resistance, you can see the small negative divergence (red), but note the relative position of 3C from the resistance level formed this morning and now (compare 3C at the white arrows)

The 15 min chart provides an interesting similar relative comparison.

The same comparison on the DIA 15 min hart.

 On the QQQ 5 min chart

And the 15 min comparison on the SPY chart.