SPY Update

I'll look at the other averages and ES right after this, so far it's inline to negative

 SPY 1 min is in line thus far

 So is the 2 min

 The 5 min is in line, but a little deeper then price, so I would call it slightly leading negative. If I were to zoom out, it has been leading negative for a while.

Doctor Copper (?)

It's been a long standing relationship-Copper and the markets with copper leading the markets, thus called "Doctor Copper", however a recent article I read said that it's too widely known and too widely followed, anything that works too well for too long, eventually is plugged by the market. So is DR. Copper a correlation of the past? That's a question only the future can answer, but the newest correlation being hailed by hedge fund managers is "Doctor Lumber", unfortunately I don't know of any market tickers to follow lumber, if you do, please email me.

Here's an update for JJC-

 JJC vs the S&P (in red) shows copper has topped and bottomed at least 5 times in the last 2 years before the market.

 Here's the long term 3C 3 day chart showing distribution and what looks to be the end of the 2009 (MEGA Bear Market Rally).

 The daily 3C chart called the 2008 top, the 2009 bottom, the mini top associated with the end of QE 1, the bottom associated with the announcement of QE 2, the 2011 top and now a really nasty downside leading negative divergence making new lows...

 The 30 min 3C hart shows the accumulation in early october and the top of that move in copper, note copper is well on its way lower so if it is still Dr. Copper, you know what that means for the market.

 The 15 min 3C chart shows the same in more detail.

 As does the 10 min

1 min is trading roughly in line with the prie trend which is confirmation.

Again, if you know of a lumber index/ETF, please email me and we'll take a look.

URRE Update

URRE has long been a favorite trade here at WOWS, one that has been building a great base, but like SRS, it's been waiting for its moment. I've received at least a half dozen emails so I know many of you have been patiently waiting in the trade and have had faith in the 3C signal, the last few days and today, you are getting paid and you deserve it. Up as much as 35% today thus far and over 110% since the start of the month!!!

 I hope this post helps you make the most of the trade.

 Here's the long term bullish descending wedge with a daily 3C leading positive divergence. The prie pattern implied target is around $3.50 (it would take some time to get there, but  have provided you with stops that should help.

 My crossover system giving 2/3 signals, the 3rd will come probably today.

 So far excellent intraday trend confirmation.

 Here's the wide daily stop, this should allow URRE to hit the target.

 Here's a tighter hourly stop if you decide to take partial profits, which I like the idea of especially if you can take your original commitment off the table and let the profits run for a guaranteed big winner.

This is a tighter stop.

Note I have ADX in the bottom window for each, if you are going to take partial profits using my trend channel, don't only watch the channel for a stop point, but ADX on the appropriate timeframe for signs of a turn down.

If you have TeleChart, StockFinder or TC-2000, just email me for my proprietary Trend Channel code.

Stratfor Analysis of Greece/EU

I love Stratfor, I wish I could afford the membership (I had if for years and it's the best place for unbiased information about what's really going on in the world and any of George Friedman's books are a must read).

Here's their take on the crisis (thanks for the email George)

Another Example...

The Sewing Circle Rumors are in full swing, but this time I do believe the positive divergence was published in real time, BEFORE the catalyst for upside was released so you just saw real time, the insider information and once again, the sewing circle rumor mill that is called the EU.

From Reuters...

"German Bund futures erased losses and equities slipped further on Thursday after a newspaper report stating that the German government did not rule out the postponement of this weekend's crucial EU summit boosted safe haven demand."


There's the rumor...


Remember the positive divergence I published-the 1 min ES suggested upside that you may be able to trade...


minutes later...THE DENIAL

• Senior EU sources say unaware of any plan to postpone Sunday's EU leaders' summit
• Austria finance minister says dates of weekend EU summit fixed, unaware of any postponement

THE EFFECT?

THE SPY SURGES NEARLY A FULL POINT ON HEAVY VOLUME IN LESS THEN 1 MINUTE!

It would be laughable if it wasn't so damn corrupt and pervasive and annoying.

Here comes that move I mentioned...

From Last Night's Update

Take a look at this chart from the Overnight Trade

This is the first sign of a positive divergence that later developed in to a larger positive divergence and sent ES futures higher. This was captured around 1:30 a.m.

Sometime over night, the Troika report recommended paying Greece the next tranche, this is the first story I can find confirming that. That story was published about 2 hours ago.

Here's the current story from Business Week

" The European Commission recommended paying Greece the next installment of aid as “soon as possible” after Prime Minister George Papandreou secures parliamentary approval for new austerity measures."

The point?

I saw this positive divergence forming as early as 1:30 a.m., long before I can find any news published that the Troika recommended paying Greece, so as per usual, the inside information flows freely and the market buys based on this information and by the time it is released, they are selling the news to the greater fool.

Just another example of how far behind the information curve we really are and how corrupt this market is through and through.

Still may be an opening day trade

 ES 1 min shows a positive divergence if it can hold, which should cause some early a.m. bounce

The ES 5 min is negative and should kill any bounce in the a.m. that may materialize.

You'd have to be nimble, but it's possible

Fade the gap?

Not anymore.

I was preparing a post to "Fade the gap up" because 3C as well as FX markets were showing it wasn't going to hold, unfortunately that little trade was wiped off the table when ES destroyed the gap before I could even capture and post the charts...

 Here's the 5 min ES which shows a positive divergence overnight which led to what looked like it was going to be a higher open, but a negative divergence erased it quickly.

 No doubt in part because of a rapidly falling Euro

 Here's the SPY extended hours since the close with the EOD positive divergence and the same negative divergence this a.m.

So a larger gap worth fading turned in to a lost opportunity.

Overnight Trade

 ES Futures shows the closing EOD positive divergence on the 1 min chart. That lifted futures a bit above the New York 4 p.m. close, a negative divergence set in  and the futures have dropped off since.

 ES 1 min closer look at overnight. The negative divergence on the overnight rally and the subsequent fall into negative territory, currently trading in line.

 ES 5 min shows pretty much the same, except a positive divergence currently, we'll see if it holds overnight.

 ES 15 min shows a number of positive and negative divergences, currently there's a small relative positive divergence overnight, again we'll see if it holds throughout the night.

 Here's a look at international futures with the US in the red box as of about 1 a.m., there's a lot of red there.

 Here's FX trade-EUR/USD since the close, a slight rally followed by a move down. This hart depicts a downtrend with lower lows/lower highs.

Here's the long term pair on a 60 min chart for the entire rally. You can clearly see the top I mentioned as forming yesterday, it looks like a H&S top and at the purple arrows it is making lower lows/lower highs and approaching the neckline support.

 This is the Euro/FXE long term 3C chart-30 mins in a leading negative divergence.

Here's the big picture since the August fall, currently the 60 min is leading negative and this looks like a downtrend with Sept/Oct. acting as a consolidation within that downtrend.


As for Wednesday's news...


Business Week
"European banks, assuring investors they can weather the sovereign debt crisis by selling assets and reducing lending, may not be able to raise money fast enough to prevent government-forced recapitalizations."


I think this weekend's post about the Euro in a closed loop system was right on and the last thing the EU wants to hear are the two words, "reduced lending". This isn't good news for the EU economy considering how much businesses in the EU lean on banks for operating capital-80%.


From Reuters:


" Germany saw poor demand for its 10-year bonds at an auction on Wednesday "


This is the second failed bond auction for Germany in a week. Being the strongest of the EU, the fact Germany has now seen two auctions fail to cover the issuance is proof that contagion has spread from the PIIGS countries right to the heart of the Core. We talked a lot this weekend about what has been happening in France where the bond vigilantes are now targeting France the same as they did with Greece, Ireland, Portugal, Italy and Spain. This was what the German/French led bailouts were trying to avoid, contagion spreading to the core-it's there right now. 


MS reported earnings and they have resorted to the same accounting gimmicks as the other banks. When compared, apples to apples, $1.12 of their $1.14 EPS is chalked up to accounting gimmicks.


As for the G20 ultimatum...
"France's Sarkozy says Euro zone deal talks stuck over relations between EFSF and ECB according to centre right legislators"


No new news there.


As for AH earnings, both American Express and Ebay miss, down -1.33% and -3.86% respectively.


From FAZ


Any decisions regarding leveraging the EFSF made by Chancellor Merkel, will have to be authorized by the Bundestag as was already decided by the German constitutional court, so already deep divisions between Merkel and Sarkozy will be that much deeper when Merkel's hands are possibly tied by the Bundestag. Needless to say, dreams by the G20 of a quick resolution to the EU crisis are fading rapidly.
  
From the FT
Apparently whatever the final size of the EFSF, whether the current $440 bb Euro or the dreams of leveraging it up to 1 trillion, the banks are going to face a major shortfall. Apparently there's about $100 bb available for EU bank re-caps and a probable shortfall of up to $1 trillion dollars which means to save countries, banks will be the last one standing without a chair when the music stops. If it were that simple! By now and after going through this in the US, we should all know that the Toe bone is connected to the Foot bone, the Foot bone is connected to the Ankle bone, the Ankle Bone is connected to the Leg bone and so on. If one fails, the other won't be far behind.


There's a lot more, not much of it is good. This is starting to feel like 2008 on steroids. The market won't be able to bury its head in the sand on this one, the pendulum always swings back-overshooting the middle ground by an amount that we rarely can imagine.


See you in a few hours...