Market Update

I have a feeling I think  know what this is all about. We have to go back to my market expectations posted over the last week or two. I expected the market to head down to suck in shorts, but ultimately, after that, I expected a "break neck" move back up on short covering. Then once we were back up, the market would start to distribute for the second shoe to drop. How long this part of the process takes depends on a lot, especially if the Fed announces some sort of QE3, it could be months. However, ultimately the second shoe to drop would be the BIG plunge. Remember, I said, "We have to watch THIS move down for accumulation", so as the shorts are being led back in to the market, we would also expect to see accumulation for a move much higher. So seeing accumulation even here, would make sense as the institutional money knows that the move up after this move down, will ultimately be much higher then positions accumulated even here. And also remember that accumulation occurs in to falling or flat prices.

We don't know how low the market has to go to gain the confidence of shorts, who will be extremely important in sending the market higher on the next cycle through a short squeeze. I just never expected that accumulation could start so soon, but with the NFP number as bad as it was, it's starting to make a little more sense.


Here's what the process looked like...

Here's the triangle that everyone is watching, the idea was a move into or below the triangle to suck in shorts, maybe even a new marginal low. Then a move significantly higher at the green arrow, I've speculated that it could hit the mid $130's, but it could even hit new highs, then the next red arrow=the SECOND SHOE to drop, or the BIG decline. So far I don't think we are in a technical spot to get the shorts back in the trade, but the NFP # being as bad as it was, may have done that work for us without there having to be a huge move down.

Here are the complete 3C chart updates.

 DIA 1 min-Here we have a positive leading divergence-accumulaton, there's a small distribution area as you can see.

  DIA 2 min A positive divergence off the open and a leading divergence-again a small area of distribution likely sending DIA lower intraday

  DIA 5 min a positive divergence on the open, sending DIA higher, it's basically turning negative intraday

  DIA 10 min a opening positive divergence and a leading positive divergence, also intraday is turning negative

  DIA 15 min in line on the open, but a small positive divergence that is leading.

  DIA 30 min Pretty much in line, but within a leading negative divergence-this chart would suggest to me that there is more downside expected, unless even the NFP number was way below Wall Street's expectations, but as I posted yesterday, the 3C action seemed to indicate Wall Street knew what the NFP would be, why else would they distribute so heavily into an unknown?

  DIA 60 min in line

 IWM 1 min a slight positive divergence on the open, the IWM looks the worst, now leading negative. SRTY and TZA should be good performers.

 IWM 5 min a opening positive divergence sending IWM off the opening lows with a leading positive divergence-although it has to be taken within the context of the larger picture which is still negative.

 IWM 10 min A leading negative divergence, but some hint of a bit of accumulation

 IWM 15 min A leading negative divergence, again with some hint of accumulaton-remember they have to do it quietly, they don't want anyone catching on to what they are doing so it will be in small pieces at a time to form a average position cost. I would trade the exact same way f it weren't for the commission costs, which are a non factor for institutional money.

 IWM 30 min this is a nasty leading negative nearly making new lows on the chart

 QQQ 1 min A positive divergence on the open, sending the market higher, now a slight negative leading divergence-the Q's are the second worst looking average, so tech should be a short that is working well.

 QQQ 5 min a positive divergence on the open and confirmation as of the time of the capture.

 QQQ 10 min the distribution that led to this sell-off, confirmation at the green arrow and some positive divergence, even though it is within a larger negative leading divergence context.

 QQQ 15 min A new low for the negative leading divergence

 QQQ 30 min the same for the 30 min

 QQQ 60 min and the same for the 60 min. This would lead me to believe that there will be more downside, but I believe they know that they can't go too far with this leg down without starting an avalanche, so t seems they have started to accumulate quickly already as they start to cover some shorts.

 SPY 1 min Confirmation and a slight leading positive, that has since gone a bit negative since the capture which was 45 mins ago-I had a lot to capture.

  SPY 2 min confirmation and a negative divergence, I just checked the action right now and ths negative divergence has led to lower prices as I would suspect.

  SPY 5 min the same more or less

  SPY 10 min some 10 min accumulation

  SPY 15 min a leading negative with a brief round of accumulation.

 SPY 30 min this long term chart is at a new leading low, so I do think there's more downside, but we should expect to see bouts of accumulation in to lower prices.

I think the original theory was correct.

RIMM Update

This is the post that shows my longer term expectations for RIMM

This is the post that deals with the current expectations for a RIMM pullback

Even with the downside right now, I don't think the bigger picture for RIMM has changed.

 This is the day trading range that is so pivotal to RMMS longer or intermediate term outlook and the head fakes caused by movements through this range.

 The daily 3C chart still suggests that RIMM will head higher after this move down is complete. The target in unknown, but I'm guessing it hits at least the mid-to high $30's before RMM becomes a long term short.

 As you can see, and as noted n the post above, we were expecting RIMM to pullback, I put several targets in the post linked above.

There's a slight 1 min positive divergence in RIMM now, but this has ZERO to do with the longer term expectations for RIMM.

DTO -USO Update

As you know, between emails, watching the market and capturing, annotating and updating posts, it an take a little time. In the post I just put out, I talked about re-entering my Crude oil short via DTO, I think I will re-enter that position.

 DTO showing a 1 min positive divergence-it may be a bot early, but with risk management, it's a trade off I'm willing to take.

The USO 5 min chart is also showing a slight negative divergence, this could be a consolidation, but again, it's a chance I'm willing to take. There could also be more then 1 negative divergence before t turns.

USO/XLE Update

The first thing to understand is USO is an ETF tied directly to crude oil, XLE is the energy sector and there's a difference as the energy sector is much more broad and includes service industries and other forms of energy rather then just crude, so there can be and are differences between them.

Yesterday I was short cruse using DTO, I've sold that position this morning but may re-enter. Crude moves the most over 2 issues, 1) the value of the $USD since almost all crude is traded in US dollars, except a small outpost the Iranians have set up. The second thing that will move crude in an instant and we saw that this week is trouble between Israel and their neighbors. Crude shot up on news this week that Israel sent two more warships to the area of conflict with Egypt. I won't get in to the geopolitics of t all right now, but long term members know what my position is.

Here's USO

 USO 30 min looks like there's more downside in USO when looking at the bigger picture as we have a leading negative divergence in place on a 30 min chart.

 The 15 min chart is almost in exact confirmation.

 The 10 min chart also has a leading negative divergence and is one of the reasons I may re-open my DTO short on USO after this bounce or if this bounce completes.

 The 5 min chart which shows more detail, shows recent distribution and current confirmation.

 The 1 min chart is starting to show a negative divergence, this could be a consolidation or the start to the end of the bounce. I'm not surprised t has bounced a bit as the sell-off compared to the price of the dollar was a bit extreme.

XLE

 XLE has a 15 min leading negative divergence and this is one reason I'm sticking out my short here.

 The 10 min chart confirms.

 The 5 min chart was in confirmation and then a slight leading divergence on the bounce.

Again, it looks like the bounce will ether consolidate or turn down. I'll update as the 5 min harts develop.

The $USD/UUP an interesting part of the mystery...

I suppose I should be happy that 3C's analysis was correct and the market did what was expected, even the jobs number was something I mentioned as being connected with the Philly Fed Index and was likely to be a disaster. However, something still bothers me and we can never be complacent for even a few minutes to bask n the glory of a great call, lest we lose everything we worked so hard to achieve. Don't forget that after this downturn, I'm expecting quite a big rally up to set up the next huge leg down.

 Here's UUP, the proxy for the intraday Dollar Index. It is up, but not huge (+.24%), this may explain some of the treasury action I was concerned about.

 As you can see, the 15 min chart did confirm the move up this morning, so the 15 min hart is capable of doing such, but there's a slight negative right now.

 UUP showed some accumulation yesterday (remember it has an inverse relationship to the market largely), but again the 10 min chart shows a negative divergence right now.

 The 5 min chart confirmed, although the move in UUP wasn't huge so confirmation wasn't that far of a stregth, but again there's that negative divergence.

 The 1 min chart is out of sync totally.

 As for FXE, it is showing a positive divergence, which means the Euro would be expected to be accumulating to move up, which sends the dollar down.

 Same with the 5 min chart...

 And the 10 min

And the 15 min.

So while the charts of the averages are pretty far gone and suggest we have some substantial downside left, there are hints that I'm concerned about.

GLD-The other safe haven trade...

Well my curiosity has been somewhat satisfied as to whether GLD would disconnect with it's correlation as a safe haven trade, but there's been something bothering me about the market all this morning and maybe it's simply a continuation of my paranoia from last night, but I have to watch over the Wolf Pack and if something doesn't look the way I expect it to look, I want to know why.

Any way, here's GLD, just adding to the mystery...

 We have a 2.67% pop-not huge, but enough to how some flight to safety. Volume on the open was excellent, although kind of knee-jerk-ish.

 Maybe it's too early to expect confirmation from GLD, maybe not. There was certainly a small positive divergence late yesterday to be expected, but the lack of confirmation seems like a lack of follow through.

 The 5 min chart also showed some accumulation late yesterday, THIS CHART SHOULD BE IN CONFIRMATION BY NOW.

 Only the 2 min chart which is available on StockFinder shows confirmation as I would expect it.

Even the 1 min chart hasn't confirmed, this should have happened nearly off the open. With the large volume this a.m., it tells me this is retail going in to GLD and maybe not Institutional money. There' a slight positive divergence now.

So maybe the question of real safe haven status is not answered as I really don't care too much about what retail does, it's the big boys that I want to follow and t seems they are missing from the trade.

TMF Follow Up/ Request

This was one of my picks for my portfolio as well, I believe I listed it with a bunch of inverse ETFs 3 days ago. It's puled back a bit, but still at a 5.5% gain. It looks like Treasuries were the safe haven trade...

However, something is not sitting right with this trade....

 This is the head fake at the yellow arrow I pointed out last night that was accumulated on a 15 min chart and it's in line, so everything looks good here...

 However from the 10 min chart down, there's a lack of confirmation.

5 min 3C.

I'm not sure what's putting pressure on the trade or what may be slightly hurting treasuries in general today, but if this keeps up, I may let go of the trade, t depends on how the market reacts and if it may be foreshadowing an intraday move in the market.

Market Update

This looks like it might be our first signifiant bounce..

SPY 5 min.

Daily Wrap

I'll keep it short, basically the dominant P/V relationship was overwhelming and it was Price Down/Volume Down, this is the hallmark of a bear market. September isn't usually a great month historically, but we have better reasons to look for poor performance on its way.

Take a look at the important sectors today.

Financials, Tech and Industrials all took it on the chin, only energy was in rotation.

Here are the 15 min 3C charts for the major sectors

 XLE-Energy-leading negative

 XLK-Tech new low in a leading negative

 XLI Industrials, new low in a leading negative

XLF approaching a new low in a leading negative

The Daily BB's for the SPY, it seems the top band has acted as resistance, typically we can look for a move toward the lower band.

You've seen how bad the averages look so I won't repeat those captures.

Tomorrow will be about jobs, but whatever the outcome, these charts are too far gone to not move lower.

Transports were doing well, today they underperformed the Industrials and quickly fell off a cliff in the last two days.

DJ-20

Traditional safe haven trade, the Swiss Franc has been creeping up the last two days and it's 3C chart looks like preparations have been made to send money from equities into the SF.

The Swiss Franc is up 3.26% in the last two days while the S&P-500 s down about .70%, so t seem there's even a little jumping the gun there.

Treasuries, the other safe haven trade struggled yesterday, which made me wonder if they'd fall out of the safe haven correlation...

 TLT did not struggle today.

Furthermore, yesterday's weakness was accumulates and looks a whole lot like a head fake move to set up accumulation.

So do I think we are close to a reversal? I think we are at a reversal, just remember that typically there are more or just as many up days in a downtrend as down days, just the down days are a lot worse, so it won't be a straight line down in my opinion, just keep your eye on the bigger picture and not the intraday and daily gyrations.

Lastly, my crossover screen which worked well with the uptrend, now has 2/3 signals for a downtrend.

One more cross in the middle window and we have a confirmed crossover to the downside and that's almost there.

Luckily 3C has given us days if not a week's notice to put our portfolios together and in line with the trend. Now lets see where it goes.