GLD Part 2

To save some time, here are the charts for GLD from yesterday including gold futures.

I liked GLD enough that I put it in as a trading position in the trading tracking portfolio, which I'm still experimenting with, but so far is up +11% and hasn't been open for more than a week and this doesn't count some of the more aggressive positions like the ones I wanted to take yesterday for today and there are no options either, just equity positions.

I added UGLD yesterday because of the charts above, I held NUGT which was the only position of 7 in the red.

Obviously I'm not going to be opening anymore positions in either, but I wanted to show you what's going on as you may be interested.

Since yesterday with GLD/gold...

First I consider GLD to be under the head fake area so it has not completed a head fake move, that's where the momentum comes in.

 Here's the initial second touch of support to create what I suspected would be a larger "W" base, good for gold longer term, the base looks complete so a head fake move right before a reversal is the norm, you can see stops were hit and volume increased, part of the reason for these moves as institutional money trades in size and needs 2 things in this situation, supply and lower prices, a break through an obvious stop level provides them with both. Watch how 3C reacts below this level.

In white is yesterday's UGLD position opening in the trading tracking portfolio, again, another buy right at the very bottom.. We have a move through a second break that I didn't expect, but it was short lived and provided a better entry with less risk.

 This is the "W" base, the first half to the left, then some distribution to knock prices back down and the second to the right followed by the stop run, that's where 3C sees the strongest divergence as it is where the most supply at the best prices is to be found.

 Since late yesterday, look at this insane, nearly vertical divergence and on a longer 10 min chart, this is really impressive and it's no surprise we saw a move like today's, but ultimately this is pointing to a much bigger move.

The 5 min is at a new leading positive high so near term action looks healthy.


I'd rather buy a pullback, but I think anywhere below the red trendline is ultimately a very good price.

The 2 min is quick to reflect the market and it looks healthy

The 1 min is in perfect confirmation so I am really happy with yesterday's choice and I continue to like the asset, I just prefer not to chase as you know.

Gold Futures

Look at the accumulation (extra) at yesterday's dip, that's important and I wouldn't have entered gold unless I saw signals like that.

GLD & GDX

I'm glad I held NUGT (GDX-Gold miners 3x long ETF) and opened a 3x long gold ETF yesterday, both are looking good and both still look like they are under their head fake areas so while I wouldn't want to chase them, I do think overall they are in a decent area. I'll try to get some charts up soon, it seems like a lot of things are starting to happen  at once.

XLK (Tech Sector)

XLK did not participate in yesterday's intraday positive divegrence which it appears we found out at 10 a.m. why it was set up.

Take a look at what XLK was doing and is doing.

 Almost all charts were positive to the 3 min timeframe, XLK never got close to a positive divergence and on this morning's pop, it went leading negative, but it's the stabbing moves that have been successful lately, we saw them in VXX and had nearly a double on VXX calls yesterday (December).

 This 30 min chart stabbing is a leading negative divegrence in 2-days only, that's fast and that's the reason XLK couldn't participate yesterday, it's hard to accumulate while your distributing.

This is the top of the 10/9 cycle .

Now the intraday 2 min is stabbing as well, you saw the 3 min so that migrated form this 2 min chart, profits or price gains seem to be aggressively under distribution.

I've been waiting for XLK to show fierce signals like this as VXX and XLF have (both market negative).

I still have an open TECS 3x leveraged short TEC ETF position open, I'll let you know when I would consider adding to it or establishing a new one.

Opportunities

I just heard from one of our members who took this post from yesterday seriously. He bought IWM weekly calls yesterday and cashed out this morning with a +70% gain.

I'm not sying to take risk like that, if I had opened positions yesterday I probably would have gone for monthly or leveraged ETFs, but there are opportunities to make money all around.

In any case, I'm going to update again very soon because the VXX calls closed yesterday in anticipation of today did very well and it's looking better and better.

Also there's some interesting movement in Tech which is now starting to catch down to Financials.

I still like Gold/GLD, still like USO (both long).

Market Update

This is will way early to make any kind of assumptions, but these charts shouldn't look like this. I'll give you several examples, but there are a lot more.

 IWM 1 min had the longest divergence, yes this morning it's not confirming the move, but rather starting a slight negative.

There's not much of a divergence there in total, it only goes out about to this 3 min chart, I'd like to see some other charts like 2 min go negative as well before I made a decision to take action.

The Q's with yesterday's small accumulation zone and today a small negative divergence, but they always start small.

The SPY has a larger intraday negative so far this a.m., I'd like to see if it migrates to the 2 min chart.

 All Index futures have similar divergences as this 1 min ES/SPX futures

 That's not good, it fell real quick.

As I said, VXX is starting to go positive now, this is what I'm looking for to replace yesterday's closed position.

 And HYG was there for support yesterday, but today just collapsed.

The TICK is pretty weak as far as intraday breadth goes, barely +1000

I said 3 things about the spot VIX Bollinger Band Squeeze 1) it would be a highly directional breakout, 2) it would likely be to the upside and 3) that price often loiters around the breakout area initially, sometimes even head fakes.

What we are seeing today is that loitering.

This doesn't usually last long, but it is something I told you about 3 or 4 days before we even had a hint of a breakout.

Changes Already... ?

Yesterday I posted this, "For a Quick Trade"...

"I think (and was thinking about it, but decided not to just because of confusion it may generate) you can make a quick buck with a 3x leveraged long ETF like URTY or TQQQ, I prefer to focus on the IWM and QQQ.

That said, I'd make sure you are nimble.

You might get some traction out of XIV as well, although that's my least favorite."

What I was saying yesterday was that I thought about making a quick long trade yesterday with a 3x long IWM or QQQ (any of the averages), but I didn't because often when I do it confuses some members as to where I stand, but I suggested that some of you who are nimble might want to do so and this is exactly why.

However, if I had taken that long yesterday, I'd have it wrapped up already, especially if I used options.

There's a hint now in VXX of a small positive just starting there, it shouldn't be there right now, it's still very early, but this may have been the reason for yesterday's intraday positive.

I'll keep you informed.

More on ISM

This ISM is services and as we were just talking about with regard to Dow Theory "Confirmation " between Industrials and Transports being an antiquated idea, because the US is more of a services economy now than manufacturing. What I suspected sent the market popping is not just the headline miss that is still in growth territory, but the sub-index of employment which fell to 6 month lows, that's what it's all about in front of Non-Farm Payrolls, if the NFP wasn't this Friday, the knee jerk effect would still be there, but the further we were from NFP, the less effect it would have, being we are only 2 days from it (Friday), any hint at what NFP might come in at is basically betting the farm on QE taper or not.


Glad I closed the VXX calls yesterday.

The question still remains, whether late afternoon accumulation, as you saw from 3C and VWAP, around 1:30-2:30 was on a leak or not. BLS data gets leaked, that's why they're building a new media center and have admited that's the reasons, I don't see why ISM couldn't be leaked just as easily.

As I said last night, if any of yesterday's POMO was a part of this...

" I'm not saying the POMO money did or did not end up in the market, but if it did, then it's another change of character as it is being used to set up brief fade trades, the same kind I would have taken by selling the VXX calls and buying IWM puts today for a 1-day trade."
 (from last night's Daily Wrap...ironic)

ISM MISS

I'm guessing this is what all the hoopla is about...

at 10 a.m. ISM was released


More in a moment.

Released On 12/4/2013 10:00:00 AM For Nov, 2013

Prior Consensus Consensus Range Actual Composite Index - Level 55.4  55.5  53.0  to 57.0  53.9  That's a pretty decent miss, I haven't seen the nuts and bolts yet, just the headline miss. The market sure responded to it though. Hmm... Afternoon accumulation, a pop on ISM, if I didn't believe in free and fair markets I might think someone was leaking to flush the banks full of cash before the Volcker rule kicks in. More in a moment

Early Market Situation

Yesterday I closed the VXX Dec. $45 call position and I'm ok with that, it wouldn't be worth any more today and it was a nice gain of +31% and +90+%, but I held the UVXY long because it's not going to face the same drawn down pressure and at this stage in the game, a divergence that is on intraday charts can get run over pretty easy (that AAPL lesson is still fresh), especially on something as big as a sudden shift in the BOJ's jawboning from more QE a week ago or less to backing away from that stance when it's already priced in.

So looking at the market this morning, this is what we have...

 The SPY 3 min representing the intraday divergences formed yesterday, you might recall my ES VWAP chart last night showing where most of the buying would have been done, 1:30-2:30, but HYG was supporting the market well before that.

The point is, this is either going to build on the discount this morning or get run over. Either way, it's not meant to last long.

 This is HYG which is part of the SPY arb. which was being set up to support a bounce, they don't buy HYG for any other reason these days. So what happens here today will be an early clue.

 The VXX calls did so well because this bottom is ready to pop to stage 2, note how small yesterday's divergence is (red as VXX trades opposite the market).

So we may see it here or in FX or in Bellwethers like AAPL, MMM, IBM, stocks with weight on their averages.

However the clock is running out, this VIX Bollinger Band Squeeze is just about at the point where the cat is out of the bag and there won't be putting it back in, that's not going to be helpful for the market.

The biggest event though is the NFP Friday.

Considering the way the F_E_D is ignoring the real unemployment data as a million people fall off Extended Benefits and off the work force, of course the Unemployment rate shrinks, you have a million less people in the labor pool, however the F_E_D isn't accounting for that, they are content going along with BLS numbers which are quite arbitrary at times, I think the F_E_D wants out and Obama doesn't want his presidency to end with high UE, etc.

My guess is the market doesn't have much time here, but with a bounce the size of what has been put in place, we're not even talking about that in this case, that's just normal market jiggles.

A.M. Observations

Overnight and where ES/SPX futures are now are pretty easy things to explain, we don't have to go in to Services ISM in China or Europe or even anything going on down under, although there are things happening, it's as simple as this.... The Japanese/BOJ are backing away from all of their recent QE chatter, putting some distance between their recent words and where they stand now.

The EUR/JPY has already discounted more BOJ QE so it has to be unwound and ES is in lock-step with the EUR/JPY...

ES vs EUR/JPY (purple) 1 min overnight.

See what I mean?

So it may be that those signals I showed yesterday of the single currency futures are quite correct, the longer ones and someone had a head's up before the BOJ backed off.

In any case, we still have the other levers from yesterday set up, I'd like to see yesterday's divergence run over, the ADP employment report coming in strong didn't help as the biggest factor for the F_E_D and tapering QE3 soon will be this Friday's non-farm payrolls and the ADP report was good news which is bad news for the market and although it is noisy ands I don't like it, the market doesn't like it beating so close to the NFP this Friday.