AMZN Update

Before I get to AMZN, just check out the ES (SPX futures) intraday chart, it need no annotations from me.

I still have the AMZN May 13th $250 calls as an open position and still like it, regardless of market expectations. AMZN has went from a downtrend-quite sharp, to a lateral trend, as you know I often say, "Reversals are a process, not an event"; this is largely because of the size of institutional positions and the time it takes for them to get a position together as they can't do it all in one order like we can becausew of the size. That being said, for a parabolic move down, even the movement today is about in line with what I'd expect from a reversal process.

Here are the updated charts...

 The intraday 2 min AMZN positive divergence...

The 3 min is seeing migration from the 2 min  so that's good and we have a leading positive divergence (the strongest kind).

The 10 min, as mentioned Friday, never confirmed the price low, it had more than enough time to do so and still won't. Also the rounding here is proportionate to even a dead cat bounce reversal space.

The 30 min chart isn't saying AMZN is a screaming buy, in fact you know I want to short it in to strength, but the recent drop is not confirmed here either, instead we have a relative positive divergence.

Even momentum is turning positive, the momentum indicator, RSI (setting6/1) , MACD (setting26/52/9) and Stochastics (setting 50/3)

Market Update

Although I think (as mentioned before), this is a tradable area to the downside, I'd prefer to wait for a stronger setup; that may be a quick bottom and upside move to finish this upside move we expected and got. However that is just a means to another end in getting set up on the short side in to price strength, as I showed last night and last week, the negative divergences are building faster than I would have thought so I don't think we are too far from that which is the real goal here.

As for intraday charts, they have gone more negative, CONTEXT for ES and SPY Arbitrage both look interesting, there are some currencies that seem a little hung up/stuck right now so after this I'm going to check the futures there as well as the Leading Indicators layout.

In any case, here are the intraday divergences for the averages, remember these started going negative last week so the intraday confirmation is more tactical than strategic (timing).
Speaking of timing, the head fake move is one of the best timing tools, for the SPX a move above $1592.64 would represent the head fake area, if I saw that coming and I were aggressive, the moment it crossed back below that level I'd be looking for intraday shorts, maybe a bit longer.

 ES intraday

NQ intraday

DIA intraday leading negative this morning like the futures above...

IWM 2 min deeply leading negative.

Same with the Q's

And the SPY

Another indication to watch for timing (although it has very little trend this morning which is telling in itself, is the NYSE intraday TICK, look for any change in character/trend as it usually is found there just before price moves.

Quick Update

Now that a.m. trade has burned off, we are getting ready to come down intraday, futures as well as the averages have gone deeply leading negative.

I'll be updating with charts next.

AAPL $390 Call P/L & AAPL Update

The AAPL May 3rd $390 calls expiring this week, I don't want to sit around when a pullback occurs, even if AAPL ends the week higher, the time decay on these calls is just too big a liability. This morning's momentum offered a nice exit just under 1.9% and thus far, a VERY timely one as upside momentum faded just as soon as we got a small lift from the swing down when I posted I was closing the position; it turns out waiting an extra minute or two allowed us to close in to upside momentum.

 At the fill above of $34.50, the AAPL calls made nearly +33%

As for AAPL near term and a bit longer term...

This intraday 1 min, along with the general market analysis was enough to convince me that the time decay at this point, with this gain in place on the day was going to be the main factor in influencing price and not for the better.

 A longer view of the trend of the same 1 min chart also confirms this as the highest near term probability.

Here's the 2 min chart's trend since accumulation and the move up

Here's the 2 min chart intraday with a relative negative divergence so the negative divergence was getting stronger as it migrated through longer timeframes, still this is short term action, but long enough to damage the profits in the calls.

AAPL 10 min looks like it could see a decent pullback at this level

The 15 min chart tells me (as of now), that AAPL has more gas in the tank, after a pullback, we should be able to ride AAPL higher, but I don't see a high probability set-up / timing for an entry for a put play, I'd prefer to wait for a pullback and look for accumulation in the pullback telling us AAPL is getting ready to make a run for a new high for this leg as the correction ends.

As for why, other than the overall market tone, AAPL is at a serious resistance area as well as resistance provided by a gap (yellow), this seems like the perfect area for AAPL to run in to congestion and move toward a pullback before it likely continues higher to a new high for this leg up, we'll likely be in on that trade so long as the probabilities look high and the risk low with good timing signals.

Closing AAPL May 3rd $390 Call, hopefully in to 1 more swing upward

Pre-Market Futures

It looks like we were right to hold still on Friday and await Monday for better opportunities and it looks like we were right on the near term (today) direction of the market, despite the pre-market futures, we have EXCELLENT signals confirming our expectations for today.

The Index Futures...

 ES (SPX Futures) ran higher at 2 a.m., the same time the EUR/USD did, to the left is the Friday 4 p.m. closing level, we're not too far above that, but we have a nice negative divergence going in to regular hours trade.

NQ (NASDAQ 100 futures) showed an earlier positive divergence last night, we have in line trade at the green arrow and a negative divergence in to the open of regular hours as expected.

TF (Russell 2000 futures) saw a positive divergence at midnight and in premarket have a huge leading negative divergence.

Currency Futures...

 The EUR/USD headed north at 2 a.m. this morning, however the negative divergence started last night is 4 times as large going in to regular hours, the implications are not good for the market and therefore confirm our Index signals above, at least short term (where we may find some nice opportunities).

 Even the EUR/USD 5 min chart is in a negative divergence-green arrow represents the open of FX trade for the new week .

The single currency Euro futures have an enormous leading negative divergence, it's little wonder the EUR/USD looks so bad. I think FXE short might even be a trade worth looking in to if you can day trade.

 EUR/JPY carry pair saw no positive divergence last night, they just followed the Euro and Yen, here we also have a huge leading negative pre-market divergence (again not good for the market).

And as seen last night, the $USDX ($US Dollar Index futures) have an enormous leading positive divergence, confirming the EUR/USD signals and being bad for all risk assets, the market included-EVERY chart confirms each other.

As for Gold and Silver, interesting too and just as we expected late last week when we took our 1-day 93% and 95% profits in GLD and SLV calls...MORE OPPORTUNITY at the right time!

 GOLD futures 1 min with a leading negative divergence in to the open

Even more ominous, gold's 5 min chart with a deep leading negative divergence as seen last week.

Silver futures have the same leading negative divergence. I think any of these can be played intraday, but we are really looking for the set up as 3C tells us when we have arrived at a bottom (which may be today) for short term option trades or leveraged ETFs.

Gold...

We have had some fantastic trades in the precious metals, just this week we had a 1-day 93% and 95% trade in gold and silver respectively, we have had great signals and these are my least favorite assets to trade.

After hearing JPM accounted for 99% of all gold selling on the COMEX over the last 3 months, this email response made PERFECT sense.

This is the actual response to a member's email question about gold.

"Nothing drives the market more than what the market "THINKS" about what the Central bank will do next or what they think the market will do next, it's called sentiment and it's more powerful than what the market is doing right now.

As for GLD, it seems to be a little short term toppy, a little H&S-type top the last few days since it gapped up, gaps are almost always filled now unlike the past.

The first gold chart is a 2 min 3C chart, it's short term moves in gold over a day or a few days, sometimes the same day. At the green arrow 3C is moving up with GLD, that's 3C/price trend confirmation, basically all is fine with the trend in that timeframe. The red arrow is why I closed the positions, with options even a short term pullback of a day or two can lead to a situation in which you never get to that level of gains again, even if gold moves significantly higher, unlike holding the stock. The negative divergence at that level also went leading negative in the red box, that's not good short term. The yellow box is the gap up and the white box is the area where price is making a small Head and Shoulders top, filling the gap becomes very likely, I'd rather take profits now and open a new position after the pullback is ending at lower prices and make the profits all over again rather than lose the profits from the trade just closed. That's what I see near term and why I closed the GLD options.

Chart 2 is pretty self-explanatory, but it is a 10 min chart, the difference between a 2 min chart (chart 1) and a 10 min chart is huge, the 2 min chart doesn't show as strong of a flow of funds and typically not institutional size funds on a short term basis, although the 2 min trend can show that over a longer term chart. A 10 min chart is very serious, it can effect trade with its signals for weeks, I don't like this most recent negative divergence although it's not horrible yet, it's not something that was there before.

Chart 3 is a 60 min chart, this is a huge timeframe, VERY important in telling you what smart money has been doing. There's a huge leading positive divergence in white, just look at the flow of funds (following that positive divergence) and compare the amount of institutional activity at Point A (compare where 3C is and price) vs point "B". 3C shows a lot more institutional money flowing in at point B even though prices were higher at point "A", although this is a very long term chart, the signals here tell you the trend, but they are not fast enough to tell you where to get in or out. If I were an investor rather than a trader and wanted to buy and not look at it again for several months, this chart would tell me to buy, of course price will go up and down, but if that chart holds up, the overall trend will be up and 3 months or 6 months from now GLD will be much higher.

Chart 4 is a 2-day chart, this gives signals that are in the timeframe of primary trend or what you'd call a bull or bear market. At the green arrow there is 3C/price trend confirmation, at the orange arrow it loses momentum and tells us smart money is starting to sell shares in small pieces in to higher prices that they may have bought in 2005. I can send you our analysis from this time frame, but right around the white box/line in 2011 there was a large triangle top that I thought was either a primary top or at least an intermediate top, meaning the long term trend in GLD had changed, you can see the heavy selling/3C distribution in red and not too long after prices starting to fall on at least an intermediate timeframe and maybe a primary timeframe.

Finally chart 5 is a 2-day chart with a 75 bar moving average (150 days), notice how the moving average holds every pullback in price from 2009 through most of 2011 and then it starts failing right at the yellow arrow that shows a "Triangle Top", the same triangle that when we saw it in 2011, I thought it was one of the two tops mentioned above. So far it has turned out to be one of the two tops mentioned above.

We saw some of the strongest moves in gold while the longer term trend was turning bearish so there will be very strong shorter term moves up and down, but the longer term chart looks like gold is heading down on a primary trend basis, from a bull market to a top to the start of a bear market. However bear market rallies are some of the strongest rallies you will ever see as we already have recently in gold. So you have to look at each of those timeframes and react accordingly with regard to the trade you are making.

Very short term on chart 1 I think that gap gets filled below over the next week or so, the 60 min chart suggests we are in one of those very strong bear market rallies,  the fact that the 10 min chart is starting to look negative tends to confirm this. Divergences start on the fastest or shortest timeframes and if strong enough, move to longer timeframes so if that 10 min negative divergence gets worse it will move to the 60 min chart eventually.

This all makes sense, the primary trend is bearish, but this is over probably at least a year (GLD should be lower according to what we know now in a year), but that strong 60 min chart shows we are in the middle of a strong bear market rally, remember what I said about bear market rallies. The 10 min chart shows that the bear market rally is starting to see some weakness introduced, some institutional selling in to higher prices. My interpretation of those charts on different timeframes is that in the next few days/week, gold pulls back and probably shows some positive divergences in to the pullback and moves to a new high for this move up, as it does, the 10 min chart and eventually 60 min chart will turn more negative as smart money sells in to higher prices, this may take 2 weeks, it depends on how the 10-60 min charts progress, but at some point, the bear market rally ends and gold on a 1 or 2-day chart will make a lower low, continuing the newly started bear market. You just have to align your trades with the timeframe you are trading in, you don't take option trades based on the 2-day chart, you might take a long term IRA or 401 k trade that only allows you to trade 1 or 2 times a year and short gold and you should be fine, but if I were just to buy something for a swing trade of 2 weeks or so, I buy gold as or after it pulls back in the next few days and hold for a few weeks, there will be short term moves up and down, but at the end of 2 weeks gold should be higher.

This is all based on what we know right now, if Central bank policy changes or the Yen or Europe change, then the charts will change and we have to adjust because there's nothing alive that is more dynamic than the market, people who say, buy this or sell that and don't look at it for 5 years are foolish, things are changing every day now and fast, we are in a time like the world has never seen and what happens in Japan now has huge effects on what happens in Europe and the US. We make decisions based on what we know right now and adjust according to the charts.

Luckily smart money takes positions so large, it takes them time to do it and 3C can show us what they are doing before anyone else knows, before price itself even moves, allowing us to get in and get out at the most favorable areas."

Looking Ahead

Friday afternoon I basically summed up where I thought we were short term, that was to say. "I don't think there's any need to rush in to anything, I think we have time to let this play out and find the best positioning". As I often mention, I'd rather miss the trade than take a subpar, rushed position.

See the link above for the gist of how the market developed Friday.

Here's a possibility I see for the market (remember as of Friday my opinion was and still is that there's more room on the upside, but I think we get an interruption here. After that, the market looks a lot closer to some very bad downside a lot closer than I had previously though).

 Whether a H&S price pattern or possibly a broadening top, it appears the SPY is going to pullback to the gap in yellow.

 As for a H&S price pattern, this is a custom cumulative volume indicator, people often don't verify a H&S price pattern with volume which is crucial. With a H&S pattern, volume should fall in to rallies and build during declines. In the red boxes you see the custom volume indicator falling as price advances and the yellow arrows show volume rising as price decline. Although this is far from a textbook H&S pattern, it does have all of the components of a H&S short term top.

 According to the price pattern implied target, $150 is approximately the implied target based on the size of the price pattern. If 3C verifies this early this week, we may very well have some short term trading opportunities. Also note that this target isn't too far away from the gap pointed out earlier.

Looking at price alone, is the market capable of such a move in a short period of time? We have almost the exact same candlestick pattern before the last, volatile pullback. The next day we saw a 2.3% move down in a day, the market is doing nothing but getting even more volatile, it's very possible.

However, based on some of the short term charts that you can see from the post linked above (
from Friday), there's a decent chance we see a short term pullback to $157.70 area, this seems more plausible for a quick short term move down, finish the short term move up and then move toward the bigger, longer term move down. I think 3C will give us a good idea if we see positive divergences as with price pulling back, again, that offers more short term trade opportunities, we'll just have to let the market tell us where the probabilities and trades are.

This is an excellent example of the short term action, the possible area of where price may pullback to, finishing the rest of the short term move before we reverse to the downside in a much bigger way.

This is where I see the short term positive divergence and a possible pullback to this area around $157.70, if we finish our short term move higher off this level, we will know early on as the market pulls back toward that level whether 3C is confirming by showing short term positive divergences like the one we see in white or not.

As to futures tonight... I don't see anything of interest as far as our short term indications go, which is usually what I'm looking for Sunday night, however as far as the bigger, NEGATIVE move I feel there's some very clear evidence.

 ES 30 min leading negative divergence, also note how volume has declined in to the advance, this is very bad news for any bullish sentiment.

NQ (NASDAQ 100 Futures) daily chart to give some longer perspective...
From a chart with pretty good confirmation to a deep leading negative divergence this entire year.

TF (Russell 2000 Futures) 30 min also showing a very negative divergence, this is part of the reason I think the downside move is very close.

As for currencies, the Euro and the EUR/USD both look like they are going to see downside based on 3C negative divergences, this would be a market negative move in the currencies which fits our short term market outlook for earlier this week.

 A negative divergence in the EUR/USD, this implies a move down in the FX pair, this would be market negative.


The Euro futures alone also have a negative divergence, it started right on the open of FX trade for this week, sending the Euro lower and has a new leading negative divergence right now.


The $USD is confirming by showing a strong 15 min positive divergence (this supports the idea of the EUR/USD moving down), this is a market negative, in fact negative for almost every risk asset.

$USDX 15 min leading positive divergence.

Then Yen has opened this week's trade by moving higher, I wrote about this 3 weeks ago as something I thought was very likely, although it goes against conventional wisdom when a central bank like Japan's BOJ took such aggressive easing steps, this is one of the potential black swans I think few people understand or will see coming until its too late, I will keep an eye on it, but just as I showed Friday, there's a strong leading positive divergence suggesting the Yen moves higher and that is exactly what it is doing, this is market negative and if it moves as sharply and as high as 3C seems to suggest, this could be the cause of a market collapse.

So tomorrow we'll see what 3C tells us and take new trading positions based on that message of the market, which we'll have a line of long before anyone sees anything reflected in price, giving us a very sharp edge.

In addition, I want to touch on gold tonight, but I'm going to post an email response I sent with the charts as it explains everything with GLD and longer term members will remember everything I mentioned, I say this now as information breaks that JPM has been responsible for 99% of all gold sales on the COMEX over the last 3 months, my email response was before I heard about this, but it makes perfect sense as far as what we are seeing on the 3C charts and as I said, longer term members will remember when we found a triangle top in GLD in 2011 and I suggested it is at least an intermediate trend top, if not a primary trend (bull/bear market), that post is coming next.

What a Week!

This has been an absolutely crazy couple of weeks, our return and ranking on the options tracking portfolio is insane and we've been using more options lately than normal because of how choppy the market has been; you can have a great signal, but if the profit potential isn't there, then it's not worth risking the money in the market.

However what has been the greatest thing I've seen more and more every day, every week, every month is how many emails I have received from members that are doing fantastic and most of you I have known since the start so I remember where you were and where you are now. I never wanted Wolf on Wall Street to be a follow-along trade idea service, those are a dime a dozen. I wanted it to be something for traders who really want to become better, not rely on someone else. I want to provide you explanations and concepts that you can use to supplement your own trading style and experience with, to offer different ideas and concepts that you just don't come across unless you are watching the market every minute of the week. To bring and share (together) concepts, ideas and tools you can make your own and I see that you are doing exactly that.

I'm really proud and VERY happy to hear about your successes, so many of you thank me or compliment me, but these are not easy trades to take emotionally or otherwise. You know we do things a bit different than the crowd.

The point is, I can't take the trade for you, I can't manage it, I can't set up the risk management and I can't decide when and where you should exit so in essence, you are giving me credit for something that you did, I'm just providing information and concepts, some ideas, etc, but you are the ones making them work, that's everything I wanted this site to be and I'm really proud of all of you, you've all come so far and I often find I'm the one learning from your ideas, thoughts, questions, comments and your own trading styles.

Great trading everyone, enjoy your weekend-I'm pretty darn sure you earned it. I'll have a post or a few out over the weekend; I think I've got a handle on what's going on so we should have some insane opportunities next week as well.

Again, GREAT JOB!

Not taking any positions, will be patient