Energy Update

Here's yesterday's update on Energy 


I want to specifically mention a couple of lines from yesterday's update


When looking at ERY (Energy Bear) there was a slight 1 min positive divergence, I had this to say about it,


"Here's 1 min chart confirmation  and a slight bump up in 3C, maybe we get a gap down in energy tomorrow"


When looking at ERX (Energy Bull) there was a slight negative divergence and I had this to say about it,


"And the 1 min chart, showing a little brief weakness going into the close, again hinting at a possible gap down in the sector tomorrow a.m. or some early weakness."


As we know, we are seeing the underlying action n price, or seeing a lot of what smart money is doing, but we don't always know why. We do know they are way ahead of us on the information curve as I have shown you many times. I believe Energy is partly under pressure because of the rising dollar today after the BOJ intervened in the currency markets last night again-an act that has almost no lasting meaning. In any case, the dollar is stronger against several currencies and this is what UUP looks like this morning vs XLE.

UUP (proxy for the Dollar Index) in green and XLE (Energy) in red. You can see XLE held up pretty well against the parabolic rise in UUP, as you know there's an inverse correlation between energy or oil more specifically and the dollar.


As for some Energy ETFs...

 XLE 15 min Leading positive divergence

 XLE 10 min leading positive divergence

 XLE 5 min leading positive divergence

 XLE 1 min, slight negative divergence

 USO 60 min leading positive divergence

 USO 30 min leading positive divergence

 USO 5 min trading in line with price

In the red square is the divergence I mentioned last night that would lead to early weakness today. There's also a slight positive 1 min divergence. For now I would consider this a consolidation pattern, I'm going to look at the Euro and the USD and see if anything looks like it's going to break one way or the other.

RIMM Update

There are plenty of RIMM updates out there, so this is just one of many. My larger perspective hasn't changed, it's just the voyage getting there is bumpy a I had thought it would be. Ultimately RIMM
is releasing some new handsets, but until they get their new operating system into their phones and on the market, these new phones are just a band-aide and they will likely continue to lose market share to Android devices and I-phones, when their new OS comes online, then RIMM might stand a chance at something more then a brief rally.

 Here's RIMM's daily chart/Trading range that was broken, note the positive divergence in RSI as well as the leading positive divergence in RSI now in the box.

 I had expected RIMM to test support at least one last time, right now it's bumping up against a resistance AREA-not a specific resistance point.

 The 1 min 3C chart shows RIMM hitting that resistance area this morning, so a pullback is in order.

 The 30 min chart has called just about every move in RIMM and while 3C hasn't turned down yet, it's still in a lagging position, so that pullback to support is NOT off the table.

Ultimately, this is what I would envision for RIMM, a breakout of the range, that will set short positions up and then a failure down through the range on the next major leg down.

SPY Update

It's still early in the morning and I don't put a lot of faith in early indications as it's usually just retail being run out of limit orders, etc.

However, here's a look at the SPY so far this a.m.

 The white arrow is the day I told you to expect a sharp sell-off, it came the next day and in to Op-Ex Friday. The red zone is heavy resistance as gap resistance is some of the best resistance (Daily Chart).

 Here's this morning's action, there was a relative negative divergence at the breakout level for the "W" bottom, since there's been a small positive divergence (white) on this 1 min chart.

 You can see the accumulation on the 5 min chart and this morning's relative negative divergence at the breakout level so a pullback or consolidation is natural here.

The 10 min chart is more important then the previous 2 and it is in a leading positive divergence. I say again though, this is a.m. trade and usually not too important to the bigger picture for the day.

Here's this am's sector rotation, as I thought yesterday, financials have come in to rotation, Industrials are strong, but both Energy and Tech have fallen off, I'll be keeping an eye on them.

MCRL Follow Up

Here's the original MCRL Trade Idea and here's the follow up yesterday.

Here's today's charts...

 This is a small "W" base or small double bottom on the daily chart.

 Here's a better look on an hourly chart.

 Yesterday near the close there was a brief breakout, 3C did not confirm it as you can see at the red arrow and MCRL has pulled back. Usually these bases will pull a move like this, pullback and gather some steam and then go for the breakout, look for an increase in volume on the next attempt.

I do think it will breakout because the long term hourly hart has such a positive disposition, there appears to be a lot of accumulation at the second low so keep this one on your radar, some of you might already be in it, I think it will be fine.

If you ever wondered what short covering looks like on a chart...

This nearly straight line in BAC with few if any pullbacks. This is the point of a head fake and it's made possible because technical traders are so predictable.

BAC Follow Up

Monday the accumulation was there, but BAC was too close to support, as I talked about in this post  yesterday, I felt BAC had been head faked and we almost always see that right before a reversal. As I also talked about last night, Financials were the only big sector we needed to move the market that were dragging, I put up a bunch of financials harts that all looked like they were ready to move into rotation.

So take a look at BAC this morning.

 Here's the head fake from late Monday through yesterday, today it's right back through resistance. The parabolic rise this morning IS the point of the headfake.

On this hourly chart we see BAC wasn't head faked once, but twice. First the above intraday chart, but as I talked about with double bottoms, the second bottom almost always makes a lower low and create what appears to be a failed pattern, drawing in shorts, when BAC moved back above resistance, those short started covering adding fuel to the fire. We especially know it's a head fake when we have a positive 60 min 3C divergence.

A Surprise

I was surprised, really nearly shocked when I ran my scan and looked at the Price/Volume relationships. Remember, there are 4 and it's only meaningful if there is a dominant theme. Take a look at these and see if you can spot the dominant theme.

The Dow -30

 The NASDAQ 100

 All NYSE Stocks

 The Russell 2000

The S&P-500


It shouldn't have been too hard, yes it was Price Up/Volume Up. This is not only the dominant theme, but VERY dominant. This theme also happens to be the most bullish of the 4 price/volume relationships in just about any market. This shows there was appetite for risk, traders were willing to bid up stocks and didn't back away from higher prices, of course this all has more to do with Wall Street then anything.

It's also an interesting relationship considering where we are right now. Remember earlier today I mentioned we are still in a lateral range and it is in lateral ranges we most often see accumulation and distribution.

We are also near the breakout point of that range...

And all of this despite bad economic news today in the Richmond Fed Survey and New Home Sales. This is the kind of market action, ignoring the news, that is typical of Wall Street running a play as I speculated about last week.

Here's a look at the influential sectors needed to move the market higher.

We can see Industrials, Tech and Energy are strong, only Financials needs to pick up some steam.

Here's a look at some various Financials

 XLF 15 min 3C

 FAZ (BEAR Financials) 10 min 3C

 IYF 5 min 3C

 IYF 1 min 3C

 FAS 1 min 3C

 FAS 2 min 3C

UYG 2 min 3C

The recent 3C strength in a spectrum of financial ETFs seems to be suggesting financials will be in rotation shortly.

I'm off to look at more charts.

Energy...

Last week we were in the ERY trade, however  warned almost every time I posted on it that it would be a short lived trade. I think everyone who was in the trade was able to get out in time, at least most of you who email me frequently.

So I'll show you both ERY (Energy Bear leveraged EFT) and ERX (Energy Bull leveraged ETF) to give you some idea of what I was talking about with Energy looking better ( believe I posted XLE charts earlier today as well).

ERY-Energy Bear

 The 15 min 3C chart shows the the end of the previous cycle and the start and stage 3/4 of the current cycle (stage 3=distribution/stage 4=decline). We wanted to be out at the second red arrow.

 Here's the 10 min chart confirming distribution

 The 5 min chart shows more detail INCLUDING a head fake new high n the red box with a deeper 3C negative divergence. You hear me talk about head fakes a lot, it' because they happen a lot and as you can see, they tend to happen right at the point of reversal.

 Here's 1 min chart confirmation  and a slight bump up in 3C, maybe we get a gap down in energy tomorrow, which should be a good place to look at buying if you want exposure to this industry group.

ERX Energy Bull

 The hourly chart is very bullish

 As is the 30 min 3C chart


 There's more detail on this 15 minute chart of ERX showing another negative divergence with a head fake making new local highs before reversing down.

 The 5 min hart and the typical lateral range that accumulation occurs within so frequently, also a leading positive divergence.

And the 1 min chart, showing a little brief weakness going into the close, again hinting at a possible gap down in the sector tomorrow a.m. or some early weakness.

All in all, Energy looks to be coming together well.

Closing Market Update

It looks like the averages will pullback and maybe open lower tomorrow, GLD and SLV look ready to rise at the EOD trade.

 DIA looks set to pullback

 GLD looks set to bounce a bit intraday

 The Q's are set for a pullback

 SLV is set to bounce a bit.

SPY is set for a pullback.