P&D DAY 7?

The opening futures pop last night was followed up with guess what? Even more PUMP leading to the 7th consecutive day we have had at least the Pump part of the pump and dump which seems to be working for algos or Institutional money as Friday's Pump was faded in the SPX by 11 a.m. through the rest of the day.

Friday's P&D, ramped until 11 a.m. and then faded the rest of the day

Because price is unpredictable over the weekend, we look at 3C signal;s the end of day Friday as they almost always pick up where they left off and once again Friday I posted Monday with the bottom line...

" my first inclination is another PUMP and DUMP Monday morning."

We'll see about the dump, but it makes some sense if we are moving to a downside pivot (Distribution)...

Even though USD/JPY led the pump on horrible Industrial Production and PMI prints, I don't think it was so much the prints with the market expecting more stimulus from the failed Abenomics/BOJ policy as the Yen destruction has ramped inflation, I think this is a 7-day pattern that was going to happen no matter what and we had signs of that late Friday.

USD/JPY is the clear leader of Index futures, but was it because of Japan or bound to happen anyway? I think the later.

 ES as of last night on the Sunday open, the 1 min chart (as I said I don't trust a signal to hold overnight and this one didn't as a few hours later it went positive (accumulation) and then...

ES this morning ramping around 6 a.m.

We'll watch for confirmation, but also watch for VXX accumulation, that is KEY, that' is what we have been waiting for for the 4th consecutive week now as a timing signal that we are going to pivot to the downside in  a primary trend move, not just a correction.

Sunday Night Open

As of the 3C indications the last two hours of Friday after the op-ex pin was lifted, I suspected we'd see another pump and dump which seems to be an algo program that is working for now and as long as it works, they'll keep running it.

Friday in the closing post I wrote,

"...my first inclination is another PUMP and DUMP Monday morning."


So far opening prices for the Index futures are higher, here's ES (SPX E- mini futures) ...

ES 1 min chart Sunday opening gap higher.

There's a 1 min negative 3C divergence, but I don't trust the 1 min charts to hold up overnight, still the point is a pump and dump seems to be the most likely outcome for early action tomorrow morning.

ALSO HIGHER... Remember our UGLD (3x long gold) position and GDX / NUGT (3x long gold miners)?

Gold has also opened higher in initial opening trade. We also opened an XLE April $90 Put and guess what, CL (Brent Crude Futures) are trading lower.

 YG (gold futures) higher in opening trade for the new week, again we have a min negative 3C divergence, but I also don't trust these to hold up overnight.

The more important 30 min chart has a very nice positive leading divergence.

 YG 30 min 3C leading positive.

Here are Brent Crude futures and as you can see they have been on a downward trajectory since late last week, thus the XLE Put position, even though oil is only 1 component of "Energy".

All of the carry pairs opened a bit higher, some look better than others, AUD/JPY looks better on a 3C chart, USD/JPY is about in line, but the 1 min EUR/JPY looks a bit weaker than the others, in fact quite a bit, but again it's only a 1 min chart at this point.

I suspect this week we will finish the work started Friday with HYG still getting torn up with distribution and VXX FINALLY putting in those flying divergences, something I've been waiting for about 3 weeks now, perhaps a bit more... this is important because VIX futures need to pull back to be accumulated and once they are, they can break out to the upside giving us a clean timing indication for a move down in the market, but not just a pullback... Since early February we expected the Feb. rally and the next trend we expected  was an even bigger Primary downtrend and a lower low that at least hits the SPX's 200-day (at the time), I suspect lower now.

 HYG distribution

VXX accumulation.


I expect this trend to continue and build until VXX looks like it's about to bust at the seems which can happen very quickly as we saw Friday, that should be a good marker for a market pivot to the downside.

I'll see you ion a few hours. Have a great week.

MCP Update

I know there's a lot of excitement about MCP because I probably get more emails about this one than any other and I understand why, with a large stage 1 base with a 3C chart like this...

MCP 60 min, I don't want to miss this either , although we've had plenty of decent little trades here.

 With this descending triangle I asked the question earlier this week, "What is most probable?" and a lot of you knew a head fake move below support. Once we had that in place, I asked again yesterday, "What's most probable?"

And that's a reversal process. I can't give you a formula for what "Proportional" looks like, but to me, this isn't a proportional reversal process, I drew in a wider base in yellow and a guestimate of price, making a "W" that makes a lower low than the low of the 27th as we get head fakes on all timeframes before a reversal, to me... that's more reasonable.

So unless 3C charts were flying, I'm inclined to be patient even with a hammer in place on the daily, it's missing the volume though.

The 15 min chart since the move below support is in line, to me this needs to go positive.

There was some positive work accomplished today, the problem is it is off that same small 1-day 5 min positive yesterday that was market wide, even though the closing chart today looks better than most so I'd give this one the nod on the day, but I wouldn't jump in with both feet and if not with both feet, why jump in at all?

When looking at intraday action, this is what I call, "Scribble", there's no real trend there and as a short term timing chart, I didn't feel any pressure to open a long position here.

Patience...

Monday

From the 3C charts of the averages themselves (which were working on 1 min intraday positives that I said were likely going to fire in to the close), those 1 min charts are positive or more positive and some have reached 2 min positive, NONE are at 3 min positive, so my first inclination is another PUMP and DUMP Monday morning.

We'll see what else there is when I can dig in to the internals.

FXP Looking Good

Earlier today I detailed exactly what I was looking for from FXP, the 3C charts are in good shape so I'm not even going to cover those right now.

This is from the earlier post today

 I drew in the closing daily candlestick I'd like to see and the increasing volume above yesterday's...

Right now....

Look at that hammer, nearly EXACTLY what I drew and check volume, beautiful.

Opening XLE April (Standard monthly) $90 Put

I'm more looking for initial momentum on this one, but if it gives more, I won't look a gift horse in the mouth.

Market Update

Yesterday at toward the EOD in a Market Update I posted the following...

"So after a week of divergences that were in place for 2-3 days, but none beyond 2-3 mins., today we transform from a slow signal environment to a suddenly increased signal environment in which we have many market averages with at least 5 min positives and some even with 10  min positives, yet I have not been running around crazy throwing positions out there... I did close a some that I felt were not going to gain any more or not much more that would make the risk I'd face a reasonable proposition.

So why not add long positions like 3x leveraged ETFs or Call options?

Remember the market is not controlled by supply and demand, they are a function of price discovery and in some instances they seem to rule price discovery, but what really moves the market are emotions, FEAR and GREED with fear being the stronger of the two....

So I conquered my fear in many ways, probably not all, but in many.

THE SECOND EMOTION IS GREED, while not as strong as fear, it can be a close second.

On a day like today with divergences building and some building to quite long timeframes, it's hard to keep your finger off the trigger, but just like I had to conquer fear, I've learned over the years, "IT'S OK IF YOU MISS A TRADE, THERE'S ANOTHER BUS COMING". 

If I don't feel that the situation is as favorable as I can get, sometimes I'd rather let go of greed, take a chance and possibly miss the trade, I think it's far better than taking what might be considered a sub-optimal trade."

With what I'm seeing today, I'm happy I closed the XLF Put position and protected that gain. I'm also happy that I wasn't throwing leveraged longs out there and kept both the core net short bias and trading portfolio net short bias.

Yesterday's divergences were fast and apparently they were meant for today (I'm assuming op-ex max-pain pin), but the footprint just wasn't big enough.

From what I see, it's still time for patience, there aren't too many assets screaming buy, sell, short, etc. In fact since the open with HYG's distribution on the gap up, things really haven't been that impressive. The minor divergences that looked like we'd lose upside momentum set in and worked as they should have, now we have some other signals and they just aren't at a place in which I'm in any rush to enter new positions or to change the net directional positioning of the tracking portfolios (net short). I think you'll understand after looking at the charts below.

"If you don't know what your edge is, you don't have one"... ANYTIME your money is in the market, no matter how low the beta or how safe it might seem it is at risk and to put your hard earned money at risk, you better know what your edge is (I bet MBS sounded like a rock solid, safe investment when being pitched, "Backed by a diverse portfolio of tangible property, housing boom, etc, etc..." but it was far from safe). 

 SPY 1 min has deteriorated all day, but looks like it may try to bounce in to the close.

The 2 min went positive fast yesterday, actually out to 5 min, but I couldn't pull the trigger with 1-day of accumulation in front of op-ex, the foot print was too small to lead to anything significant in my view.

Now the 2 min is in line so the 1 min positive looks (if it holds) like an EOD bounce only at best.

Remember the 5 min charts going positive in a single day when we had a week of 1 and 2 min charts positive, but nothing beyond 2 min? It seemed like a stronger day and maybe it puts in a "W" base and accumulates a larger footprint, but we make decisions with the information we have now and what I'm seeing is nothing better than in line and there's no edge there.

However the 60 min chart has a very clear edge, this is why the trading portfolio and the core/trend position tracking portfolios are all positioned net short, this is the largest edge/probability, this market IS coming down and the VIX is key to the timing of that, that's why it has been so important for me the last 3 weeks to see it accumulated on a decline with those flying leading positive divergences we JUST started seeing today.

Honestly... Would you have wanted to take the risk of being long a 3x leveraged ETF like UPRO today for this?

 IWM 1 min also looks like a possible EOD bounce...

But not much more as the 2 min is in line only from a positive yesterday.

As I said, this may develop in to a "W" base and a broader foot print and stronger divergences, but that's a bet, we don't have objective data telling us that yet and I don't bet in the market.

 The stunning 5 min positives from yesterday are no more than in line today.

However the IWM long term chart has a clear edge doesn't it and right at a flat trading range that is in stage 3 position or better known as a top.

That's an edge I'll trade.

 QQQ 1 min intraday is perfectly in line.

The 3 min positive from yesterday is now in line, lost all of that.

However once again, the long term, strongest underlying trade has a clear edge, THIS IS WHY PORTFOLIOS ARE POSITIONED NET SHORT.

As for HYG, as I've been saying, other than some quick 1-day accumulation yesterday to get the algos following and buying the averages for the pump, Credit is being distributed and if the guys in credit are running for the hills, I'm right behind them.

And those signals we have been waiting at least 3 weeks for in VIX futures (VXX) , here they are finally, not where they can be and should be yet, but that's just a matter of time.

3 min flying divergence

The 5 min was already there and as mentioned the longer charts were already there like...

This 15 min.

That should explain why I'm not looking to throw out a bunch of short term trades right now because the edge isn't there, but as far as the shorts I'm holding open, there's a clear edge there.

We'll see what the last hour gives us, I'm going to check Leading Indicators too.

GLD / UGLD / GDX / NUGT Reiteration

I can't add any more to the trading positions in UGLD (3x long Gold) and NUGT (3x long gold miners).

If I had the room I'd add to NUGT today despite it being up a bit. UGLD I'd certainly add to today as well.

I like both of these as swing type trades (long)

FXP Update

As you know I've been watching FXP for an opening as a short play on China all year and it wasn't giving much until recently. Yesterday I put out this trade idea for FXP (long)  and I opened it in the trading tracking portfolio.

I may very well add to the FXP long at some point not too far off today.

Here's where we stand and what I'm looking for as it starts to move a bit faster.

*In fact things started moving so quickly, the things I was looking for to add or start a new long position here were already developing before I could even get these charts loaded for the post.

 This is the daily chart, all of 2014 we didn't get a single deep pullback until recently as China is in big trouble, FXP is one way to play that, but despite what the PBoC has already made very clear, "Do not expect stimulus", the market expects it any way and FXP fell below the 2014 trendline which made for an interesting long pick-up to play China short on what thus far is just market fantasy. 

You have to realize that the F_E_D's timeframe for policy action may be a year out or so, China and the PBoC think in terms of decades with policy actions, it's much, much different than most other economic policy across the world. Thus... FXP makes a lot of sense as a long and the recent discount on the break of the trendline is what I've spent 2014 waiting for.

*This chart was captured BEFORE the FXP long/add to post, what I was going to say I'd be looking for today on the daily is for the bearish candle to turn in to a bullish hammer with prices lifting intraday to expose a longer lower wick and a bullish upside reversal candle and the other thing was increased volume, above yesterday's as that makes the reversal candle 2x more effective.  Before I could get this post together, those things started happening.


Yesterday I mentioned that FXP is a Channel Buster of sorts...

This is not the best example of the Channel Buster concept, but the idea is shorts entering on the break of the trendline are going to place their stops just inside the channel and above the former support trendline. We typically get a reversal on the Channel break (either way, in a descending or ascending channel), so the first move is akin to a head fake and when prices move back up toward the bottom trendline (former support, now resistance), technical traders are going to look for price to fail there and sometimes Wall St. will let it fail there at first to draw in more shorts, but then it crosses back in to the channel, hits the Buy to Cover stops and squeezes sending price above the channel in many instances, so as always, PRICE IS DECEIVING.

 This 15 min chart shows the long term trendline as well as a flat range where we often see underlying trade increase, but what I failed to consider was the obvious support level which makes a head fake move all the more probable and I believe that's exactly what we got today, likely getting shorts to chase it lower.

This was the original chart BEFORE I put out the FXP Add-To post, what I was going to say was I'd be looking for a rounding/reversal process intraday and increasing volume and I drew in yellow what I'd be looking for which would give us the Daily Hammer candlestick I wanted to see as mentioned above.

Since then...

The rounding bottom taking shape as 3C charts suggested it would and higher volume picking up, that gives me the candlestick/volume combo on the daily chart that is very effective as a reversal signal.

Here's the 3 min chart of FXP (intraday), we have a long relative positive which is interesting, but needs to see migration of the divergence from stronger shorter timeframe 3C charts.

Now the same chart since then which was only 30 mins. ago...

And just like that the 3 min is leading positive as I expected it would be based on shorter intraday charts, I just didn't think it would move this fast which tells me today's move down most likely is a head fake move, thus it makes for an excellent entry (lower prices and lower risk with higher probabilities and timing).

This was the 1 min chart as of about 30 mins ago, it was leading positive and I thought, "This should migrate out to longer timeframes, I'm interested in this and I better get the post out quickly".

So now we are heading in the right direction, we have the deep discount on the trendline break, we have the high probability Channel Buster move, we have a head fake move today on a stop run or limit tag and the 3C charts to verify it all, thus I increased position size there to full size position, but I can't go any further.

I also have JJC (copper) which has been hammered in China as banks make cash calls and the physical commodities that secured the loans are being sold hand over fist,  but I figured JJC was due for a bounce and the PBoC rumors didn't hurt. I need to take a look at that position which is in the green and see if it is still viable.

Trade Idea/Management : FXP (long)

I'll follow up with charts, but right now I'm going to add to the FXP long position as much as I can within my position size rules.

I'll have charts out shortly