SPY over resistance on decreasing volume
7 years ago
Thursday, November 3, 2011
SPY Update
PEIX-A Cats and Dogs Trade
PEIX was one we use to follow a lot bak when the C&D trades were popping like popcorn. This current move is very hard to buy, but PEIX (as a speculative trade because of price) should absolutely be put on a watchlist for a pullback entry, it looks like it has a LOT of upside left, in fact it looks like it has only just started.
PEIX is a mature version of UNG, all the same dynamics are in play in both. Look at the recent volume, that is not smart money investing, that is smart money telling the technical traders that PEIX is in play as the stock moves from stage 1 accumulation to stage 2 mark up and the best way to make that advertisement has always been to send a Technial trader's "Volume Surge Scan" in to overdrive as they still believe this is smart money buying.
Like URRE and currently UNG, the accumulation started month ago, it isn't easy to move a daily chart in to a leading positive divergence, contradicting price, without a lot of accumulation.
Here's the rough daily range, much like UNG now, except a bit more mature. The volume spikes aren't hard to create for a skilled market maker, especially in a cheap stock like this-these huge green bars are an advertisement to Technical Traders.
As you can see my crossover screen gave a false crossover which was not confirmed at the red arrows, a more recent one was confirmed at the white arrows. The yellow 10-day moving average will move up pretty fast, but that is where the first pullback should occur and that's where PEIX is worth a look as a long trade. The price pattern implied target is $8.00 so a speculative buy around the 10-day moving average looks pretty good.
Like URRE and currently UNG, the accumulation started month ago, it isn't easy to move a daily chart in to a leading positive divergence, contradicting price, without a lot of accumulation.
As you can see my crossover screen gave a false crossover which was not confirmed at the red arrows, a more recent one was confirmed at the white arrows. The yellow 10-day moving average will move up pretty fast, but that is where the first pullback should occur and that's where PEIX is worth a look as a long trade. The price pattern implied target is $8.00 so a speculative buy around the 10-day moving average looks pretty good.
No Changes in ES
When I first showed you 3C on ES I warned there would be a learning curve, but I quickly realized that the 1 min hart at least, has been very reliable.
Here's the current ES
The run up premarket saw a negative divergence sending ES lower in to the a.m. lows, there was a positive divergence at those lows (not marked) and since a long running negative divergence that is now leading negative, I would expect the ES (S&P E-Mini Futures Contracts) to lead the market and continue with the high degree of accuracy that they have shown.
Here's the current ES
What the Failure f MF Global Means for Jefferies and other financial institutions
Just like Bear Stearns and Lehman Brothers, once there is blood in the water, Wall Street feeds on it's own in the quest for profits. It doesn't matter that Corzine was a governor or Goldman Alumni or one of Wall Street's biggest supporters of the current administration, blood in the water rarely has a happy ending and to that extent, Jefferies is bleeding in the water.
The price action over this year has shown there to be a problem, the price action the last week has shown that they are 90% likely to be the next failure, but what is truly disturbing is that the shocks from Europe or the ripples as we have yet to see the Tsunami, are already reaching our shores. Potentially 2 of our largest financial institutions in one week, that's faster then 2008, except at the end game of Lehman when everything was about ready to collapse. However, we, the general public never understood how dire things REALLY were until years later. It makes one wonder how dire things are RIGHT NOW?
Egan Jones was the first and as far as I know, the only timely downgrade of MF Global while all last week CNBC paraded pundit after pundit talking about how the 200 year old firm will be fine, many of the same said the same of Lehman just days before their collapse.
Jefferies has the equivalent of 77% of shareholder (or did ) tied up in sovereign debt, just like MF Global (albeit MF was a larger scale). As Jefferies price falls and margin calls come in, they must be met or they can't do business. MF Global went the route of illegally using customers money, to the tune of up to $1.5 billion dollars, and nearly $700 billion of customers funds is still unaccounted for.
This creates a crisis of confidence, just like the Lehman era, no one in the Financial sector knew what their counter party risk was and every financial company lied about their own risk, only to write down more and more every quarter.
It's like a bank run, but right now it's hitting the medium size Brokers. It's still up in the air as to whether the MF Global customers (who's finds were supposed to be insured against this kind of loss) will actually be protected because of the illegal things that happened at MF Global. This makes the crisis of confidence even worse and we may not know it, but there could be a liquidity run on all the brokers right now-even CME/ICE.
The main point I think is the pace of acceleration, many thought the US would not be impacted unless the EU went in to recession or saw defaults on the sovereign level, it's happening a lot sooner and a lot faster.
Remember as always, keep your eye on the trend, not just the day to day or the intraday action, the trend is more likely to tell you what is really going on then anything else you have available at your disposal.
The price action over this year has shown there to be a problem, the price action the last week has shown that they are 90% likely to be the next failure, but what is truly disturbing is that the shocks from Europe or the ripples as we have yet to see the Tsunami, are already reaching our shores. Potentially 2 of our largest financial institutions in one week, that's faster then 2008, except at the end game of Lehman when everything was about ready to collapse. However, we, the general public never understood how dire things REALLY were until years later. It makes one wonder how dire things are RIGHT NOW?
Egan Jones was the first and as far as I know, the only timely downgrade of MF Global while all last week CNBC paraded pundit after pundit talking about how the 200 year old firm will be fine, many of the same said the same of Lehman just days before their collapse.
Jefferies has the equivalent of 77% of shareholder (or did ) tied up in sovereign debt, just like MF Global (albeit MF was a larger scale). As Jefferies price falls and margin calls come in, they must be met or they can't do business. MF Global went the route of illegally using customers money, to the tune of up to $1.5 billion dollars, and nearly $700 billion of customers funds is still unaccounted for.
This creates a crisis of confidence, just like the Lehman era, no one in the Financial sector knew what their counter party risk was and every financial company lied about their own risk, only to write down more and more every quarter.
It's like a bank run, but right now it's hitting the medium size Brokers. It's still up in the air as to whether the MF Global customers (who's finds were supposed to be insured against this kind of loss) will actually be protected because of the illegal things that happened at MF Global. This makes the crisis of confidence even worse and we may not know it, but there could be a liquidity run on all the brokers right now-even CME/ICE.
The main point I think is the pace of acceleration, many thought the US would not be impacted unless the EU went in to recession or saw defaults on the sovereign level, it's happening a lot sooner and a lot faster.
Remember as always, keep your eye on the trend, not just the day to day or the intraday action, the trend is more likely to tell you what is really going on then anything else you have available at your disposal.
USO Update
The 1 min chart has leaked, as it should, to the next timeframe, the 2 min and it is showing the same characteristics.
Nothing has changed on the 30/60 min charts which are very negative.
Financials
I went looking at Financials expecting to find trouble and did.
Another simple attempt to fill the gap, like I mentioned several times, if the middle men were caught on Monday with long inventory at Friday's levels, they'll try to fill the gap as much as they can. XLF... Almost, but still leaves a sort of Island top.
Here's today's action almost filling the gap. Note recent volume.
Recent volume and recent 3C makes sense. 1 min
XLF 2 min
The MF Global event and it looks a lot like Jefferies is next, Wall Street smalls blood in the water, could very well be precipitating that Lehman 2008 environment I've mentioned so many times this week. One moment they are here, a week or so of rumors float, the stock crashes and before you know it they are gone.
I really didn't expect Europe to hit the US financial system this fast.
The MF Global event and it looks a lot like Jefferies is next, Wall Street smalls blood in the water, could very well be precipitating that Lehman 2008 environment I've mentioned so many times this week. One moment they are here, a week or so of rumors float, the stock crashes and before you know it they are gone.
I really didn't expect Europe to hit the US financial system this fast.
Looks like that Gap Area was the target
It's very early to be making definitive statements, but...
You can see how the SPY ran ahead of the FXE/Euro to hit the gap area as the FXE would not make a higher high.
Gap Resistance Target
That's what it looks like..
SPY 10 min chart showing the last 3 days, it looks like the a.m. highs around the gap is the target.
Not much has changed, SPY 1 min
SPY 2 min
SPY 5 min
Market Update
The QQQ looks the same and I don't dare go above 5 mins at this point.
I think the REAL NEWS that is ACTUALLY happening and should be of concern, especially after MF Global is Jefferies.
Remember when I said it was only Monday?
That was just a few short days ago and I felt like my head was going to explode watching the market chase 1 rumor after another. This morning has been hard to even take seriously, morning trade is usually whacky any way, but this takes the cake. I'm going to try to update before the next bit of news come out of Europe and makes everything irrelevant.
