Hungary to Defy the EU?

This is a subject close to my heart and something I know a little about being I'm married to a Hungarian and have travelled to Hungary at least 9 times and was even married there. I actually speak some Hungarian which is considered to be the 3rd hardest language in the world as there are 46 different ways to conjugate a verb and there are 3 different (I guess you might say forms) of each word (familiar, semi-formal and formal). However, I must be humble and say, Magyarom nem jo, de szeretem a nyelvet es Magyarorszag (I don't have the accents for the letters on my keyboard so it's a bit off), roughly translated as   the answer most give when asked if they speak Spanish, "Un pocito".


In any case, 3 days ago the EU Finance ministers decided they would punish Hungary, this was the EU finance Ministers saying they would not send development money to Hungary anymore unless Hungary did as they wanted with regard to their budget. It was seen as unfair because there are other countries with similar problems or worse, but the Finance Ministers only singled out Hungary.


Today we get news from the WSJ:

Hungary Has Sharp Words for EU

Speaking to a large crowd of supporters celebrating the anniversary of a 19th-century Hungarian revolt against Austrian rule, Prime Minister Viktor Orban said: "Hungarians will not live as foreigners dictate."


This may be the start of a revolt against the EU's intrusion in to sovereign counties' affairs. One thing you have to understand about Hungary is it is a proud nation that once threatened the very existence of the Roman Empire (Attila the Hun who was bribed by the Romans to keep his forces from invading Rome with lots of treasure). However, since, Hungary which use to be 2-3x larger then it is now, has been trampled underfoot by a series of foreign invaders, whether it was the Ottoman Turks who ruled most of Hungary for 150 years (Hungary was the DMZ between the Turks and Western Europe), the short lived but absolutely brutal Nazi occupation or the Soviet occupation just after, I have seen with my own eyes the former Nazi and KGB headquarters with their torture rooms, political prisoner torture cells (the cells they lived in where torture alone as one could not so much as turn around or sit, you could only stand while the cold air was pumped in to the cells which were kept half full with water).


The remnants of Soviet Realism architecture dot the landscape like a soar. These are people who just gained their freedom just a few short decades ago and I don't think they'll take well to the EU's demands.

Another Spike in SKEW

SKEW Spiked on 3/12 on a huge 1 day move, the next day the market was strong and SKEW fell (I assume hedges were taken off), today it's seen  another huge spike. According to the CBOE's white paper on SKEW, past tops it has called generally came within an average of about 4 days after a spike, which indicate to me that SKEW in the past did fall after the initial spike if 4 days passed from the spike.

In any case, I'm not making any predictions based on SKEW, but I thought you should know about this recent change.

WMT Update

Here is yesterday's update on the WMT Trade Idea in which we are still looking for an entry.

 The high volume and the doji candle in the white box suggested a reversal, which was a bear flag with a recent move above the bear flag, which seems to be a shakeout of the shorts in the bear flag based on technical analysis dogma. Today's daily candle is moving toward a Dark Cloud Cover reversal or maybe a full on bearish engulfing candle, both needed a gap higher to form these very bearish reversal patterns, but we'll have to see what it looks like near the close as volatility reigns king on op-ex.

 This steeper trendline is the shakeout above the bear flag, you can see the bear flag channel below. There were/are several short entry options, one could be up here on what looks to be a possible (near the close if the candle is deeper, WMT lost more ground then a probable) reversal candle. The other entries are more conservative, but higher probability at a break bak in to the bear flag or a break under the bear flag. The nice thing about an entry in this area is you are close to a natural stop above the recent highs.

 WMT hasn't changed at all for the better, the 60 min chart is about the same size negative divergence as the last one that sent WMT gapping lower.

 The 30 min chart has deteriorated as well, both these divergences started around the time of the shakeout move of the bear flag.

 Today we have an interesting head fake move in yellow, these are common before a reversal whether it's a daily, weekly, or 5 min chart.

 The 1 min chart at the head fake move...

 This is a close up of the 1 min chart, so there is the potential for more volatility and swings in WMT, that is why I'd like to see what the close is going to look like before getting too aggressive on a position.

One other metric would be a break of the 60 min Trend Channel that has held the entire shakeout move in WMT, the area is around $60.75, so that's a potential entry for those who are a little more aggressive, however what appears to be "aggressive" is often the safer entry as the stop is very close and you are getting better positioning rather then waiting for the bear flag to break down.

ABX and AGQ Trade Idea Follow Up

Yesterday I also posted ABX and AGQ long, both look decent this morning.

AGQ...

 This was yesterday's set up, I had set an alert for a pullback and waited for the short term 3C to respond favorably, indicating the pullback was likely ending.

 Here's the 2 min chart with a positive divergence this morning, so the 1 min early strength yesterday is migrating to the longer charts.

 It looks like AGQ has already been set up for a bounce higher and the short 3C timeframes were just the timing signals as the 15 min is positive and the 30 min is showing an excellent move today alone.

 30 min

 As for stops, you can email me for updates any time you need them, often a 22 bar average is close to my trend channel, but I would prefer to give you updates of the Trend Channel as needed. The 30 min just about guarantees a break even trade and gives plenty of space for consolidations, it will move up and lock in gains with price, but slower then some of the other timeframes.

 I prefer the 15 min as it has held former trends in AGQ very well, it guarantees a break even trade and will lock in gains faster and still allow for moderate corrections.

ABX...

 This was yesterday's bullish triangle and this is what I said yesterday, "Intraday on a 10 min chart you can see a bullish ascending triangle taking shape with correct volume, you always have to be aware of a shakeout in well formed continuation patterns like this."
And it looks like that is what we have seen thus far, I personally would not want to see ABX make a move lower then the intraday lows from today at the red trendline, 1 shakeout should be enough.

 The 2 min chart still looks like ABX wants to breakout, it has even improved on this mornings shakeout of the triangle.

For now, I would use the 60 min trend channel which places the stop around the same area mentioned above. If ABX gets moving to the upside then we will tighten up the stop.

APKT Follow Up

Late yesterday I featured APKT as a trade idea (short term long position)

Thus far (after the volatile morning trade) it's off to a good start... Up +2.5% Today and more since the idea yesterday. While I expect it to be a shorter term trade, whatever the market gives is what I want to take so lets look at some potential stops and remember you can always phase out of the trade.

 Here's the triangle on the intraday chart, I said it would likely see a shakeout and it saw 3, one above yesterday, 1 below yesterday and 1 below today, this is why I ignore morning trade for the most part, its noisy and has little to do with the trend and more to do with taking advantage of pre-market orders- Look at AAPL right now, remember all that sell side volume on the open and I said it is likely that will be faded, that's what AAPL is doing right now.

 Yesterday's 3C showing the triangle getting ready to breakout on accumulation. Trade today has been in line with price.

 One potential tight stop is a solid break below the blue 22 bar moving average on a 1 min chart, but this should only be used early in the day, as the 5 min chart and moving average catch up, I would switch to a wider 5 min and as the 10/15 min catch up (providing we are still in the trade), I would consecutively add wider stops.

 After this morning's shakeout, the 1 min trend channel is holding the trend, this will guarantee a profit, but is a bit too tight for my taste, although if you are using options and have a decent profit you may want to protect it.

 The 5 min version is wider around $27.70 right now, it will continue to move higher and guarantees at least a marginally profitable trade.

 I prefer the 5 min first, and then move to the 15 min which at this point guarantees at least a break even/slightly profitable trade, but if there's a longer trend, this will allow for pullbacks.

Ultimately if APKT cooperates, I want to move to the 60 min trend channel which held the downtrend very well, right now this would be a slight loss and thus I wouldn't use it yet, but as it catches up, I would like to get to this timeframe for a trailing stop. Remember you can mix and match/phase out of the trade as well. It all depends on what type of position you took and what your risk tolerance is.

FXP Update

I last updated FXP Wednesday at $22.92

Thus far I like what I see although there is a little resistance in the area.

In the latest news or bad news out of China (and this may effect FXP directly as a short on the China 25 Index), China Daily reports that,

China 'wealth exodus' underestimated

If you are in FXP, you may find this article very interesting...

ES Update

Since the last ES post just before the open, here's what ES has done...

This is a great example of what 3C confirmation should look like at the green arrow with the negative divergence sending ES plummeting on the open. The 9:45 Industrial Production report didn't help either...

The SPX's Relative Weakness

It's interesting the SPX is so weak this morning considering the Financials aren't that far off thus far.

 SPY open

XLF

Time to do some investigating...

AAPL OPEN NOT PRETTY

We all know AAPL can move around a lot today based on yesterday alone, but the open thus far hasn't been pretty. Judging by the opening volume, it looks like a lot of market sell orders were in place, I would expect those to be faded at some point in the a.m. trade.

FOLLOW UP ON THE VIX BUY SIGNAL

Just to br clear, a VIX buy signal is an equities sell signal as the two trade inversely. Thursday I saw what I thought might turn in to a VIX buy signal and posted it.  This may be the strongest VIX buy signal in many years, the VIX hit 5 year lows this week, that is part of why this signal is strong.

Here's the chain of events that must unfold to see a VIX buy signal...

Just use standard 20/20 Bollinger Bands seen here in dark blue, the First thing is a close outside of the Bollinger bands, this is showing an extreme move in the VIX and the reason this signal is even stronger is because that extreme move outside the bands was also a 5 year low, pretty extreme. The second thing you need is a close back inside the bands. 3) You need a higher close then 2, something that also makes this signal stronger is that the VIX closed green on the same day the market closed green which makes for a stronger signal.

Today's option expiration day, there's usually a pin, so I'm not sure what to think about today, but any day in which a reversal starts, it's best to start with a gap up, all of the strongest reversal confirmations need a gap up to start, whether Dark Cloud Cover or a Bearish Engulfing Candle, they all need a gap up.

ES looks like it will be heading down in to the open, but it shouldn't threaten the gap up.

ES