Intraday update

Intraday it looks like we are going to get a downside correction, there's a chance it consolidates or instead it builds larger.

ES is negative, NQ is negative, DIA, SPY, QQQ and IWM are also all real negative on the intraday charts.

AAPL Update

This is an area I'd consider buying some AAPL shares, I'd probably go with the stock and about half size position,  I might even consider this a day trade, here's why...

 2 min chart going positive intraday

 3 min chart as well

And the 5 min.

For me the probabilities are not high enough for options, but with less risk on equity shares, I think it's worth considering if you are nimble. I'd also have a trailing stop until/unless it really makes a nice break to the upside.

UNG Follow Up

Yesterday I posted a pretty complete update of UNG, which is probably my favorite long term (long) position, one which I almost consider as more of an investment rather than a trade. I believe Natural Gas is going to enter a secular bull market regardless of what the broader market does. UNG is still within a base so it hasn't even broken out yet to stage 2 or mark up (what most people would call a bull market or trending trade).

I saw a good opportunity yesterday to possibly be able to buy UNG which is gathering strength, on a corrective pullback.

Today UNG is up and that is largely because of the EIA Natural gas report which looks like this on the face of it....

Released On 1/17/2013 10:30:00 AM For wk1/11, 2013

Prior Actual Weekly Change 201 bcf -148 bcf

Looking at this headline print we see a HUGE draw in Nat. Gas in storage which is VERY bullish, however this is the first time in the EIA reports that the report has broken down storage in both salt caverns and non-salt storage facilities, the salt cavern storage sites are typically much more volatile as far as injections and draws go. However cutting through all of that, Nat Gas still saw a 2.8% and 3.8% decline for salt and non-salt facilities respectively so either way it's bullish and UNG reacted to the report, I don't think it negatives yesterday's post and the opportunity though.

Here are the charts backing up my opinion.

 Here's a 1 min chart of UNG with the reaction to today's 10:30 a.m. EIA Natural Gas Report.

 The long term 4 hour chart (VERY influential) shows what I showed yesterday, the last breakout attempt was a purposeful head fake move (yellow) which at the time I suspected would be used to send UNG lower so it could be accumulated by smart money in size and at lower prices, I still think that's true, but we do have a large positive divergence with UNG know turning back to the upside.

To be clear, considering the longer term nature of UNG, I think it's a but anywhere in the area, whether today or on a pullback, it has tons of potential.

 This is an influential, but less powerful chart than the 4 hour above, this is 30 min and it suggests not only a positive trend in UNG, but also a corrective pullback which can be used to buy UNG at lower prices, the whole idea of yesterday's post.

 The intraday 1 min chart today is following price exactly or confirming price, however there's no sign of a positive divergence at all, so as far as I'm concerned, the pullback probability is still high.


Just to check, this is the 2 min chart, again nothing positive in the VERY short term, in fact it points to a corrective pullback, one which I'd like to be a buyer.

However as I said before, I wouldn't haggle over a few percent with UNG, I would save room to add on a pullback, but I'd want to have a position started in UNG by now.

Today's price action doesn't seem to change yesterday's analysis at all, it's just reactive action.

Full Index Update

There's still a lot to look at, especially Leading Indicators, but I wanted to give you a picture of where we are, which is right where we should be, right along the lines of what was said last night about a boring and dull market that lulls traders in to complacency, then gets exciting and moves traders to action, all the while setting the trap.

As I said last night,

"The market stays flat, middlemen fill and complete institutional orders in a stable VWAP environment and traders get bored and caught off guard before the market moves in a direction that gets traders' attention and calls them to action and then drops the floor out from under them-we've seen it too many times, but at this size it suggests quite a move to the downside."

Here are the charts, I'll be following them up with more information that gives us a better idea of where we are and whether it's time to start pushing some buttons.

(Sorry there are so many charts, but many of you know how to read them and can judge for yourself where we are-for the rest, it's a good view of the market in action)

QQQ

 Recently (last 2 days) the Q's have been strong intraday, just as with the NASDAQ futures, the 1 min QQQ chart is starting to deteriorate from its short term strength.

 The 2 min QQQ was as far as the recent QQQ strength went, it's starting to fade, the worse the 1 min chart gets, the worse this one gets.

 As mentioned there wasn't any strength beyond the 2 min chart recently, the 3 min chart above reflects this and as you can see the pop above today, talked about last night and also yesterday specifically in reference to the Q's as they needed the most relative strength to make it up to this area (although they are the only average not to cross it as of yet which has me cautious on timing) , is showing the kind of negative divergence we want to see, essentially as retail buys the break out in most of the market, smart money is selling to them and remember short selling comes across the tape as a sale just the same.

There is a slight intraday anomaly that needs to be watched, not in terms of anything more than tactical.

 The 5 min QQQ showing in line status and a leading negative divergence at today's move- another good sign for today's price move.

QQQ 10 min from a pretty large positive divergence to a leading negative divergence, this is smart money buying, sending prices higher and selling in to those higher prices.

SPY

 The 1 min chart is showing some heavy intraday selling as it leads negative here, remember it takes some time to capture, upload and post these charts so timeframes  like the 1 min will certainly look different by the time they are posted, I wouldn't trade off this timeframe unless you have a very recent update.

 2 min SPY leading negative at the move above the range just as we want to see. A 2 min chart could have EASILY confirmed price by earlier this morning if it was there, it isn't.


 The 2 min chart is migrating through the 5 min chart, so the divergence is stronger or gaining momentum and this is the perfect area for that to happen.

 The 15 min chart with a leading negative posture as soon as Trend #1 started with the pop to the upside. The white arrow is 11/16/2012 when this cycle started, I expect trend 2 to cross significantly below the 11/16 lows. If you look at the 15 min chart today you can see even though it's in a deep leading negative divergence, intraday it's pointing up, we want to se that point down and the next chart should help.

The 10 min chart is going negative, it is being fueled by the 5 min chart's negative and it should migrate to the 15 min above and send that pointing down.

IWM

 15 min IWM above the range (yellow) and the 15 min chart's long term and near term stance is clearly negative, I'd like to see a new leading negative low as well, that's just a bonus at this point.

 Starting from the faster end, the 1 min has a long term trend you can't see that is very negative, the move up today was not confirmed in even the 1 min chart.

 The 2 min with strength from earlier in the week as you may recall has shifted to a very negative posture and especially above resistance or the range.


 The 3 min chart and several others looks strange yesterday, almost doing nothing and there's still an element of that, although it is negative on this move in price.

 The 5 min which I told you Monday was strong and would lead to price strength Tuesday has obviously gone negative and even more so in to today's price. I suspect just like the Q's, the IWM needed this brief positive support to get it in line with the move above resistance, the Q's were by far the furthest away. After weeks of a flat range don't you find it strange that almost all the averages break above the same day and not on any news, but on overnight futures trade based on FX manipulation of the EUR/USD?

Remember I said I wanted to see the 15 min IWM (first IWM chart above) to hit a new leading negative low? This 10 min's weakness should migrate and help the 15 min chart do that.

DIA

 DIA 15 min hitting a new leading negative divergence on today's move above the range.

 The DIA has had the most consistent 3C confirmation trade of all the averages all week, you can see it here on the 1 min chart, but also note today's clear change in character, it actually started yesterday, but today is worse as price is higher.


 3 min leading negative, showing some extreme downside momentum.


 Hopefully that will continue over to the 5 min chart which is already negative *Note how all of the charts and timeframes are seeing negative divergences above the range, not 1 is in line). 

And the 10 min chart, the worse this gets, the worse the 15 min gets.

So far so good here.

Quick Futures Update

While I finish capturing the charts for the market update, the futures charts should give you an idea of what near term trade looks like.

 S&P futures are looking worse than earlier in pre-market, which is a good sign, we wanted to see the pop up as I wrote last night, it gets the bulls moving after a long funk, but it seems the underlying trade is moving the opposite direction of price so the bulls are being set up in a trap, exactly what I said last night and just republished this morning. This is exactly what we want to see.

The NASDAQ futures have held up much better, but even they are seeing their first negative divergence since going positive (3C charts)  Tuesday.

AAPL Calls Closed at +31%

Yesterday's Calls were closed at a gain of 39.7%, today's at 31% and the position is closed.

AAPL Decision

I decided, I took a quick look at the Q's and while it's way too early to say that they are done for today (I'm not even implying that), I don't see the near term objective data RIGHT NOW that would cause me to open a new AAPL call option right now, so why would I hold one?

The position can always be opened again, even  15 minutes from now.

AAPL Update

I'm considering whether or not to close the rest of the AAPL Feb $485 call position, it's not that I don't think AAPL is done, it's just options have different mechanics that effect value than say a long position in the stock, there's volatility, time decay, etc. I typically use options for very high probability, but short term pushes and I'm wondering whether this push has had enough for the time being (I want to be out of options before a consolidation or correction-I can always start a new position at a better cost basis after the correction is complete).

Yesterday part of the position was closed for a 40% gain, some members playing weeklies had over 300% gains and left a lot more on the table.

I'll present the charts, but I also want to look at the market and the NDX specifically before deciding.

 The longer term and more important 15 min chart is still intact, still looking good and suggesting AAPL has more upside to come, that's not the issue, the issue is near term upside and volatility.

 On the intraday 1 min chart, AS USUAL, AAPL'S GAP THIS MORNING WAS SOLD IMMEDIATELY, this has been a trend with AAPL that has been mentioned many times, it's about as predictable as anything in the market could be.

The 2 min chart also shows the gap up being sold in to this morning right on the open and there's a slight leading negative position, if this migrates to a longer timeframe or gets worse, I'd really not want to be in calls.

 The 5 min timeframe is still ok, so again I think longer term AAPL is fine if you were long say, the stock itself and it may be fine for certain option positions and for the tolerance of certain option traders, this is more my preference and what has worked for me.

After the market update I'll likely decide.

Quick Review of Last Night's Wrap

This is from last night's market wrap... Seemingly pretty timely

"Tonight futures have lost a little ground, but nothing that seems noteworthy.  It wasn't, what was noteworthy was the 100 pip EUR/USD rally that drug futures higher.

I think the tight ranges of the last week (or even longer) looks exactly like what 3C has been telling us since before the move higher that we were expecting , started on 12/31/12-these flat ranges are most often associated with distribution or accumulation if it was after a downtrend. The market stays flat, middlemen fill and complete institutional orders in a stable VWAP environment and traders get bored and caught off guard before the market moves in a direction that gets traders' attention and calls them to action and then drops the floor out from under them-we've seen it too many times, but at this size it suggests quite a move to the downside....

Other than that, I would just continue to look at your shopping list, any quick spring cleaning you might have to do on a moment's notice and above all, be patient. I suspect AMZN will be a decent example of why we are patient."

This is not an analytical post, it's just to drive home the importance of not only understanding why the market behaves as it does, there is a method to the madness, but to use your edge over Wall Street which is patience.

 The SPY (whole market really) does just as mentioned last night, bores traders to death, then starts up with some action on a new breakout. Stay tuned.

Patience! I like AMZN short, that doesn't mean it's the best time as I posted yesterday, "I'd rather wait a bit more" and for good reason, this is where the update was posted (yellow) and this is where AMZN is now.

Opening Indications coming up

Pre-Market

Good morning.

All of those ranges / resistance I talked about last night are going to be broken on the open as the futures ramped up overnight on an ER/USD 100 pip tally just after the European markets opened, this is actually good, it needs to happen as I mentioned last night as being part of the process.

 EUR/USD, the green arrow is the European open, note the 100 pip rally. Interesting.

 ES had a positive divergence around midnight EDT and it looks like that has seen some selling in to the move thus far.

NASDAQ Futures saw the same positive divergence around the same time, although they only have a minor negative divergence right now, again I think AAPL is to blame or credit.

So finally we are getting some movement, this is what I was talking about last night, please review the post if you haven't already.

Obviously the 3C charts above the range will be crucial, but I'm pretty sure I know where they are going, it's just timing which i suspect may turn quickly. Credit is the other main indicator we want to keep an eye on, hopefully it diverges to the downside.