Wolf on Wall Street

Tuesday, June 4, 2013

XLE Speculative Long

Energy broadly speaking looks like it can put n a pop tpo the upside, this is a short term trade and speculative.

SCO worked out, but there was no decent set up that was low risk so I just stuck with the open position rather than add, however XLE is the Energy sector, not just oil, it's made a head fake move, it's going positive, it looks decent for either a long leveraged ETF or a call.

MORE so than EVER, speculative positions.

Market Update

I expected that because smart money didn't sell off positions Friday or in to yesterday's strength, that they wouldn't need to and wouldn't want to do much more accumulating for the same reason I didn't, I don't want to be too top heavy on the long side when the music stops and it's time to tact the boat.

That makes it REALLY difficult to judge the reversal point as they aren't going to sink much in ($ I mean), but rather let retail do the work. Still they need some arbitrage assets to spark the move.

The USD/JPY on the upside is one, it hasn't been giving any signals other than in line, but the $USDX is giving a stronger positive, the JPY looks like it "could" be setting up for a negative.

HYG as I showed earlier looked like it was used real quick along with TLT to turn the SPY back down as it was starting to run up a bit too high and no wonder, look at the orders they hit on that run.

HYG is starting what looks like it "could" be a strong divergence, but it looks like it needs at least a couple of swings sideways, TLT is relative negative up to 5 min and both TLT and VXX didn't respond to the upside anything like they should have with the SPX move like that.

I think watching the NYSE 1-5 min TICK chart's trend will be important (draw trenlines around the channel for today) and look for a stronger TICK move above that channel-

It actually looks like USD/JPY may FINALLY be giving a positive signal instead of inline as it has been all day.

Breaking my Rules...Adding to NFLX

Way too big and if I get crushed on the trade, it's my fault, but adding to the calls.

Believe it or not, GS Spec Long Looks Decent

Yesterday it was being sold in to strength, today it looks like it's seeing accumulation in to weakness, this could be market makers trying to fill a GS sell/short order and they need prices higher, but it may make for a VERY speculative, short lasting long trade.

URTY / NFLX Long

As a Spec / quick trade is starting to look interesting. NFLX is looking more interesting,, but where one goes the other should follow.

VXX and TLT Are Really Telegraphing

Look how weak the reaction from TLT and VXX is on this move, it wasn't 10 mins ago I said "Watch for an extreme move that will pull in the shorts and boost volume".

With that kind of move, TLT and VXX should be flying, they aren't.

This looks like the head fake, I'm not entering anything though unless I see a great set up, great confirmation, just sticking with what I have.

And There it is

The SPY making the new low, the increase in volume I was thinking would be there as shorts jump in, this is going pretty darn good so far.

I'm going to look and see if anything looks really attractive, but this is probably pretty close to a reversal area.

This is Great

First off, the SPY is showing some positive divergences, but I think they (the Cyborgs) want that lower low I mentioned because shortly after the SPY went slightly positive, HYG went slightly negative and TLT went slightly positive, it seems both were all of the sudden being used to try to pull the SPY back down and make that final lower low I mentioned.

ES is also positive, I didn't check the other two.

SPY starting to go positive and bouncing a bit...

HYG is still relative positive, but there was some extra pressure put on it to reign in the SPY I believe as the timing is right.

The opposite was done with TLT as it accomplishes the same goal, reign in the SPY.

This part is the best, you know the scenario I described yesterday? Here's today's recap.

This chart was sent to me by a member who snatched it off Stocktwits, this is exactly how I described retail's reaction YESTERDAY, this chart if from today.

Yep- Getting Close- May be There

Not only are HYG, TLT and VXX (to a lesser degree, but still there) all moving in the right direction to reverse the market, the Bellwethers I looked at like GOOG, APPL, NFLX, etc are also building positive, amazing isn't it how smart money just work like the "Borg" or the "Collective" for you Star Trek fans, or like ants coordinating something, like a bridge? You ever see those leaf cutter ants in the AMazon actually make a bridge for their co-workers to traverse a span? Yep, there's that communication, the market code and it's showing up in other assets so I doubt we have much longer.

Remember the concepts are the concepts, they work in all timeframes because humans and their emotions are trading in all timeframes so that being said, some sort of last minute big head fake before a reversal is likely-I'd be on the look out for anything that would really entice the bears.

Here's what I have

The SPY only put in 1-2 min negative divergences at resistance, smart money was going to make sure that happened as I said yesterday to give retail what they were expecting, other than that, I don't see any signs here and I'm not sure I'd expect to. I didn't see smart money dropping any of their positions Friday or yesterday, just like me, I wouldn't think they'd want any more than they already have unless it was really tempting as there's likely to be a pretty quick turn around time once above the triangle.

I don't think we'll see a reversal process and therefore no real 3C signals on the SPY, but where you would see them and a more effective way of squeezing the shorts is for a "V" reversal, not to give them time to think about it, would be in the Arbitrage levers.

In HYG it's already starting to go positive and didn't lose much ground-that is positive for the SPY.

TLT saw a pretty nasty divergence really quick, not huge, but I doubt it needs to be, I think fast is the key to an effective short squeeze.

VXX is moving along with the market, but any downside movement is positive for the market,

The longer term TICK for today is probably a good indication to watch for that channel to be broken to the upside.

I'd think we'd get at least one more lower low, hopefully really pick up some volume, it's right there to be had.

The USD/JPY isn't giving away anything, but the $USD itself looks positive

And the JPY is in line, that's close enough to a positive leaning in the pair, so that's a market positive as well.

I suspect we are probably getting close.

3C Quick Start

Many of the charts you see here at WOWS are my proprietary indicator 3C which reveals underlying institutional money movements and often contradicts price. To understand the annotations made on charts, you must first understand that 3C has no numerical value, it is a pure divergence indicator. Positive divergences represent accumulation by smart money, negative divergences represent distribution by smart money and when 3C trades with price, that is trend confirmation.

The chart annotation system is simple; white arrows represent relative positive divergences, red arrows represent relative negative divergences and green arrows represent trend confirmation. When 3C is in a white or red box, that represents a leading positive or negative divergence, leading divergences are the most powerful.

We analyse 3C in multiple timeframes, the longer the timeframe the stronger the accumulation. 1-2 min timeframes represent intraday moves, a 5 min timeframe can represent a day or two and 15 min timeframes average trends of a swing trade nature. 30 and 60 min charts can move the market for a month or more and daily charts can be over a year.

You'll get use to seeing the charts and understanding how the multiple timeframe analysis works and works well.

Welcome to Wolf on Wall Street.

The trades featured here are meant to maximize returns with the least risk and highest probabilities. Unless otherwise mentioned, all trades are meant to be executed at market. I prefer long-term trending trades which perform well in rising markets, but really stand out in declining markets. However, we get occasional one day gifts 30,40,60% 1-day gains. I'd urge you to consider taking some or all off the table in such cases, the markets don't give gifts like that often or for very long. Most of the returns that make the system outperform so well come in short-entry trades. If you are opposed to short trades, this is not the system for you, unless you are ok with buying an inverse ETF. If you would like more information about the truth about shorting stocks, just email me.

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Each trader is different and must determine their own level of comfort with risk. I do have a channel stop which I provide to TeleChart/StockFinder users for automated stops, I appreciate you using my links to sign up if you do. The Trend Channel catches trends and works well as it automatically adjusts for each stock's volatility. Arbitrary exits based on nervousness about the markets WILL decrease the portfolio performance dramatically. This system will not ever get you in at market bottoms or tops. The recent 1 year performance against the Russell 2k buy and hold had the system beating it by 3:1. Ultimately it is up to you as to how you proceed, but I'm always available to help you determine what might work best for you.

I do use other scans and systems when market conditions warrant their use and may change strategy with market conditions.

The MOST IMPORTANT tool you have to bring you long term success is RISK MANAGEMENT. There are plenty of articles linked at Trade-Guild.net on Risk Management. We can be wrong 75% of the time and still outperform the market with solid, consistent risk management.

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The position sizes noted in the positions @ 2% risk of portfolio are based on a $20,000 portfolio-adjust as needed. Due to tight stops, there is the possibility, even probability that one position could take up the entire portfolio. You need to decide how many positions you want to trade and reduce the position size according to that. For instance, if you want to trade 5 positions in a $20,000 portfolio, no one position should be valued at more than $4,000-not risk money or 2% rule, but share price entry x shares.