Really Liking BIDU Long

I wasn't able to get those BIDU calls Friday, I'm willing to go after them today even though Friday was better.

There's a chance intraday BIDU pulls back a bit, but I think this may be the last chance to get BIDU calls at a decent Risk:Reward ratio without chasing them. I'll be putting the charts together and positing it next.

Market Update- Technology

Earlier today I mentioned a gut feeling that today might be the perfect time to launch this move, you may recall on Friday in the earlier part of the day we saw momentum to the upside and I WAS NOT comfortable with it, later in the day things looked more like they should, but so far today things look pretty good for this move to finally get kicked off.

We looked at Energy, Financials so we might as well throw Technology in there.

First the Tech Sector (XLK)...

 We'll start with the big picture-30 min chart, this isn't a big enough divergence to create a primary bull trend, but it's more than enough to shake the shorts out and then some. While a move up from here may look like an abrupt turn, there's an entire process that we've seen time after time and every element of that process is on this chart, this is what helps us identify areas where we want to phase in or out of positions or add to positions or take profits. The point is there's a pattern visible on this entire chart that repeats over and over in every timeframe, if you understand the pattern, you understand a lot more about the market, how traders are taken advantage of, how Technical Analysis is used against you and how the market really works and most importantly, WHY it works that way.


 A 10 min chart just before the break below the range area with a leading positive divergence as we've been down here.

 Looking from the other end, the  intraday timeframes, he 1 min is leading positive as of this capture, the open had a small negative divergence.

 The 2 min chart leading positive-again all of the signals we've been seeing in other groups and the market all make sense with what we are seeing here.

 Leading positive 3 min chart and in a big way, very quickly.

 The entire process from the trend of the 3 min chart.

The 5 min chart with the downside reversal, the range, the head fake move below the range and a huge leading positive divergence.

This is TECL the 3x leveraged Tech ETF and my choice for Tech exposure, again if I could have add I would, but I'm pretty much all set and positioned already.

 1 min leading positive.

 2 min


 3 min

 10 min

 And 15 min with the entire process, remember it all started with, "We are very unlikely to see a V shaped upside reversal, reversals are a process not an event" and that's what the process looks like, each a little different but all of the components are there.

 The 30 min chart, leading positive.

I'm not including all of the timeframes as it's a waste, but a few important ones in TECS-the 3x leveraged short Tech ETF-the signals should be opposite of the ones above.

 2 min intraday today leading negative

 15 min leading negative

30 min leading negative.

FAS- 3x Leveraged Long Financials

FAS (Financials) is looking interesting here as well, as you know I consider Tech, Financials and Energy the 3 groups of the 10 major S&P groups that are necessary to maintain a rally of any importance.

Recently we've been seeing some very fast (1- 2 days) rotation between Tech and Financials so Tech has been looking pretty good recently, Financials are looking pretty good here and I already covered Energy earlier.

If I had room and wouldn't violate risk management rules (including having a portfolio that has more long exposure than short exposure when my bigger picture view is very bearish). I still think the long positions can be profitable in getting to where we'd like to be-selling price strength short.

In any case, if I had the room to add to Financial longs like FAS here,  I would. I consider the charts to look appropriate to start or add a speculative long position and I prefer the leveraged ETFs for this particular phase.

Here are the FAS charts (Long Financials 3x)

 First I want to start with one of the longer charts, a 30 min that shows the range and a relative positive divergence, the negative divergence right before FAS broke under the range in what I believe to be a head fake move and the positive divergence (leading) in the head fake move area, which would suggest FAS is/was accumulated at lower prices where supply from longs being stopped out would be available.

 Short term the 2 min chart is shaping up this afternoon as it moves to a leading positive divergence.

 This is the same chart, just zoomed out a bit further so you can see the longer trend, note the negative divergences right before the break below the range and the positive divergence at the break below the range.

 This is also the same timeframe, just zoomed out even further to encompass the entire event since the mid-October reversal lower (that week we were long FAS until Wednesday and then long FAZ after until we expected a range to form). You can see the overall positive and leading positive divergence through this process.


FAS 10 min also with a negative divergence just before the break below the range and a leading positive divergence leading at a new local high on the chart as FAS broke below the range.

Market Update

The intraday charts are coming along, most opened with a slight negative divergence but haven't been doing much, now there's some consistiency through the averages in the intraday timeframes, I'd like to see that migrate out to more timeframes within the intraday periods.

 DIA 3 min starting to lead positive

 ES has been in leading positive position (1 min)

 IWM 1 min leading positive

NQ (NASDAQ futures) 1 min in a strong leading positive divergence.

 QQQ 2 min leading positive

SPY 2 min leading positive

USO and Energy

Here are some charts for both USO (oil) and Energy (a broader group)...

USO 2 min intraday with a negative at the 11/6 highs and positive at the 11/7-11/8 lows and currently a consolidation.

 USO 5 min in a leading positive divergence, this is a timeframe just beyond intraday and therefore much more important in its signals. Note there is no negative divergence at the 11/6 highs on this timeframe as it was not strong enough to migrate to this longer chart.


 USO 15 min is a very important timeframe, note 3C has been in confirmation of USO's downtrend since QE3 was announced on the 13th with the highs at the 14th of Sept., this is the first real positive divergence on this timeframe since then.

 USO 60 min  shows some interesting trends, especially the negative at the QE3 announcement, but now we have our largest positive divergence since QE3 was announced on a very important timeframe.

 XLE has many of the same features as the market averages, went negative on October 17th, created a range from the 22nd on, also has what appears to be a head fake move below the range with a leading positive divergence in to the move.

 Energy intraday 1 min showing that leading positive divergence I mentioned in the last post (Energy looking interesting this a.m.).

 A leading positive on the 2 min

As well as the 5 min.

Energy Looks Interesting

This may be somewhat of a leading indicator.

The Euro and $USD usually move opposite each other; the Euro accounts for 50% of the US Dollar Index.

This morning the Euro is just about break even, at least FXE is at unchanged, the USD (UUP) is up .05%. A stronger Euro and weaker dollar are supportive of the market.

What I find interesting about Energy is there are early positive divergences in Energy broadly and Oil more narrowly, this would suggest either event risk or as I suspect, a change in the EUR/USD as a lower $USD would send the energy sector higher.


Just something to keep an eye on, I do like ERX as a play on stronger Energy for shorter term moves.

Market Opinion

Friday, especially after the afternoon TICK update I started getting a gut feeling that this was a good place to stage a reversal. For one, the size of the range through October/November was large enough to give us the kind of upside reversal that would be necessary as Wall Street doesn't run any cycle without a good reason, in this case it would be to chase out new shorts and they'd need to move the market convincingly and overwhelm emotions on the short side so they over-take rationale.

The area where the suspected head fake appeared, the time and events it appeared after and the size of it are just about right when considering the scale of the range that preceded it.

Today a low volume ramp would be easily dismissible with the bond markets closed, but price is price, a loss is a loss and a margin call is a margin call; after all the entire 2009-2012 rally was a low volume ramp.

Dismissing any move up today on the account of volume and markets would be a potentially very dangerous mistake, especially considering the probability that the head fake move is in and those tend to be the last event in the chain of events leading to a reversal.

So far this a.m., even the dump from 10:43 still has failed to move the TICK in to any extreme territory.

This may be an interesting day, not much is expected from the Euro-Group Fin-Min meeting anyway.

Very Quiet Thus Far- TICK

The TICK chart so far reveals a very uniform, very quiet market in an incredibly thin range with no trend having developed yet, this is not uncommon for a low volume market day such as this, but neither is extreme volatility. Price action thus far doesn't mean much to me at all, especially with a TICK chart this quiet.

The SPY has shown much more movement than the TICK, thus far I don't put any real value on the price chart with the TICK this flat, in addition you know how I feel about the value of early trade for analytical purposes.

Keep GOOG on the Radar

This is a summary post of the game plan for GOOG, both the short term long position and what should be  longer term short position (many of us already have a short position established and are looking to add to it).

Some of us also have short term leveraged long positions in GOOG as a move up is part of what we are looking for in the bigger picture, Friday I was trying to decide whether to keep the calls opened the day before open as they were at a 15% profit in a day, but were opened more as a hedge against the short position in the short term so I left them open, today they are up over +20%.

The area where GOOG can gain some momentum is approaching, this however would just be the start of what we are looking for.

This is the same concept as mentioned last night, a range, a head fake below the range and a bear trap is set which can send GOOG and others in this situation moving up quickly on short squeeze momentum.

China Mixed, Japan Misses, the EuroGroup Meets and the US is Quiet

Overnight Chinese exports were higher than projected in October's Trade Balance. On the other side of the coin, Chinese Credit Growth for October came in lower than consensus by about -15%. Japan's GDP came in at a disappointing -3.5% for Q3 on an annualized basis due to falling exports and consumer spending.

In Europe, the EuroGroup Finance Minisiters' meeting is being held today, of course last week Germany's Finance Ministry said and the EuroGroup reiterated that a decision of the disbursement of the next tranche of Greek aide is not likely to be reached today (one reason was the German Lower House would not be able to consider and/or pass the request before today) as the Troika report on Greece still has not been made avaiable despite the Greek ruling coalition, that is quickly falling apart, having passed the Austerity measures demanded by the Troika as a nessecity before any more aide can be disbursed to Greece.

Israel's "Limited" response from a Syrian shell falling in the Golan Heights has continued today with an Israeli rocket striking a Syrian factory.


The US session is light as there are few macro economic events and yesterday's Veteran's Day is officially observed today, closing the bond markets with only the US Equity markets open-could be interesting and volatile.

 ES (SPX futures) overnight with the European open at the green arrow; $1374.75 was the 4 p.m. level  Friday.

The EUR/USD since FX trade opened yesterday.