Bounce?

The first 3 charts of 1 min positive divergence in 3C in all 3 averages using all 3 versions of 3C

This is a 15 min price/volume relationship custom indicator made on StockFinder. You can see a lot of strength behind the large green bars.

Here we see the exact same behavior as the last short loved bounce. The price volume relationships are the same and the candles are the same. This is a daily chart of the SPY.

So far I do not see any convincing reason to believe the bounce will not continue.

As I suspected, the DOW is out-performing the NASDAQ, read my past few posts as to why. New members should be using any strength to add to their short positions to get it up to a core position you are comfortable with. We are already past 50% and will add more to get to 75% by the time the SPY trigger is broken.

UNG

STILL BULLISH on UNG!

This is a simple pullback and if you missed the trade the first time, now is a good time to pick it up long or to add to your established long position. Like I said, the first pullback will be to the 10 day m.a. that's at $7.77, but I doubt it even goes down that far.

This is a nice looking long position that should have about a 40% gain at least in it.

Update 2

OK, we are seeing the start of the positive divergence, we should see a move up soon.

Update

So we got the bounce, it's in a pullback which seems to be forming a "W" bottom base with a breakout around $44.90-$45. There's no sign that the pullback is ending yet, but it should soon. The 5,10 min charts are still inline for a bounce so this is just temporary as far as I can tell.

Bounce

Check the charts at Trade Guild tonight.

As my late day update suggested, I would have been buying (as we were) leveraged long ETF's. There are individual stocks that can be played and if this bounce seems like it will turn nto an event rather than a quick distraction, then we'll use a laggard strategy which works well with trends that run a week or longer. We'll lso add any setups that are high probability. right now, the bounce itself and understanding that it is likely is the main advantage. The leveraged ETFs are an easy way to make some quick money without the hassle of individual stock picks which can be wrong or right, the ETFs will move with the bounce as long as it moves. This is why we are keeping 25% in cash and have not added the other 25% on the short positions as the SPY did not break our trigger today. So far so good with our plan. We are not closing shorts and being that we are loaded we don't need to add any. If you are a newcomer you should be considering two things, 1) playing the bounce and 2) adding shorts into higher prices, which is more or less a gift for you. We want to be at 50% before the SPY breaks through our trigger.

Do not panic, I talked about the chance we'd see this last night so it is not outside of our analysis and expectations, therefore it is nothing to panic over and at this point I would not be closing shorts, but I would ply this bounce with the long ETFs.

Here's a list if you didn't get in already, you'll want to get in early on the open, even if it's a gap down so long as it does not move below our trigger.

Financials: UYG FAS
Market exposure: QLD, TQQQ, UWM, URTY, UPRO, DDM, UDOW (I expect to see the down outperform the NASDAQ just to bring them all into line into roughly the same positioning when the market breaks so they all break the top at the same time which could not have happened today had the Dow broke the top, the NASDAQ still had too far to go on the downside before breaking the top and to get maximum panic, they all need to break the same day).

Semiconductors: SOXL

China: XPP, CZM

Technology: TYH

Small Caps: TNA

Large Cap: BGU (may be better than small caps)

Emerging markets: EDC

and....

JSDA (see the spread sheet for tonight)  looks like it's ready to fly. You may want to checkout the longs of 6/2 as well, any that were limit orders that did not trigger may be decent trades if they do trigger. Email for any updated stops or targets.

New people, I would use this gift as an opportunity to fill out you core/short position, it doesn't mean you can't participate in the bounce as well. In fact playing the bounce can't hurt as it hedges shorts and ultimately should be a bit of extra profit and if the bounce falls apart, you have time to close the positions as your shorts have hedged the longs. So long as you practice good risk management you can't really go wrong here.

This bounce was one of the possibilities that we were prepared to accept, it does not change anything with regard to our bearish posture. I am warning you now that the bounce "could" carry beyond the targets I laid out at Trade Guild. Think of the market as a pendulum, it swings too far one way and then too far the other. The levels I marked are typical technical levels therefore it would not be surprising to see Wall Street try to shake shorts out of their positions by scaring them and to do that they'd have to take the market much higher than we anticipated, this is a possibility, however nothing has changed in the 3C analysis. Do not let fear dictate your plan. If something changes I will let you know as soon as i see it, but I do not expect we will see anything bullish develop that is truly serious. the fact is this Broadening top has so much overhead volume, so many people trapped in long positions at higher levels, I just can't see there being enough demand to absorb all of that supply and smart money has bot been accumulating (other than today for a probable bounce), they have been distributing and going short in huge numbers.

Look again at the Dow chart now and that of 1929 if you need a little confidence boost.

If you have questions, feel free to email me any time. Now get out there and make some money off this bounce just like we did on the 25th of May when the market made new intraday lows and everyone else was selling, we were buying and made a nice profit in two days.

Keep an eye on the sites tomorrow, although I feel the probability for a bounce is good, our short trigger of < $104.38 takes precedence over everything. Do not be surprised to see a gap tomorrow and do not be afraid to buy it t market.

Now, go out and slaughter the sheep!

Bounce , Bounce, Bounce.....

It looks fairly sure we'll get a bounce here. You may want to buy some Ultralongs or FAS , UWM before the close. This could last several days possibly.

Not looking good for a bounce

The blue is a positive divergence on the 1-min DIA . The red arrow at the top is the failure of 3C to confirm the retest and the volume is kind of ugly. It doesn't mean it won't turn on a dime and bounce, but it's not looking great.

Dow vs. The NASDAQ

The Dow is inline to bounce off the support of this hammer, if not it will be the first average to break the top. However, the downdraft created by the false breakout in the NASDAQ family of two is a strong gravitational pull down and usually the market herds together. It's worth watching because if it doesn't bounce then a very ugly day it could be indeed!

If the Dow breaks, the S&P won't be far behind. Remember, watch the SPY for a break of $104.35, it's your cue to quickly add the last 25% (then you should have 25% in cash) to your shorts.

Today could be the day, or we could get a bounce which would be great for all the newcomers to get their core position setup.

Sitting Still Can Be Profitable

All the newcomers, get your core short position together. We are over 50% of portfolio short, only UNG long, and 25% will remain in cash. The other 25% will be added as/if the SPY breaks below the $104.40 area. You can use the shorts I listed of actual companies, be aware that if they have a dividend and you are short when the go ex-div, you will be responsible for paying that quarters dividend which usually is not a big concern of mine.

I still prefer using the ETF UltraShort/3x Bear, but make sure your risk management accounts for the leverage.

If you are new to the site, this is the plan so make sure you have a decent short position in place because the break  of $104.40 could come very soon. Look at these two charts of the DOW

See any similarities? Look at the dates at the bottom of the charts, they are both the Dow-30

With all of this in mind I thought I'd share a little of tonight's Worden Report with you,

"Strong, Purposeful Selling

With fear of holding over weekends, Fridays have suffered the frequent effects of trader trepidation, with Mondays providing bounces. Friday last was a horrendous day. Bulls and bears alike probably expected today would be a bouncing Monday.
       However, it was not to be. There is too much shell-shock underlying the action, and the market was in the midst of a downside resolution on Friday. Today, we got a continuation of the slide, although the market may be ready for a mini-bounce before the end of the week."

I don't think I could have said it any better. If you are in position, then you need to just be patient and let your positions work for you. If you are new, you need to look at the ETF's I have on June's list and consider spreading some funds around in each of them, that will give you broad market coverage.

When we come to support at $104.40 a few things could happen, we could see some consolidation before slicing through it, the market may just make a huge move down on big volume through it, we could see a bounce before seeing downside below the level or least likely, the market could set off another rally from there and form a right shoulder in a H&S top formation, in which case we will take action to hedge shorts, jump into longs and wait for the final reversal. However, I'm thinking we will see a repeat of 1929 as posted above. The downdraft after the break of support on the 1929 chart is not visible, but it moved down 30% within a few weeks and within the next couple of years dropped another approximately 85%. Read my post at Trade-Guild, "How to make more than 100% in a Short"

I don't know where we are headed but I have maintained for over a year that this market will see new lows. If you are new and need help or have questions, let me know and I'll answer ASAP.

I listed a few decent shorts tonight. Most of these are pretty far from the stops on purpose, it's in case we get a bounce to resistance, then they all would be excellent add-to candidates.

When looking at the spread sheet remember I list the trades and put in the entry prices, I do not follow up after that. For instance, the trades of 6/2, a few made money, most didn't trigger, but the post for that night says specifically the are 1-2 day trades so whatever gains or losses they show now are irrelevant. *I CANT KEEP UP WITH EVERY TRADE I LIST, IT IS YOUR RESPONSIBILITY TO EMAIL ME IF YOU NEED CURRENT INFORMATION ON ANY TRADE YOU TAKE WHICH WOULD INCLUDE AN UPDATED STOP AND TARGET. I OFFER YOU THIS AS PART OF THE SERVICE FOR FREE SO TAKE ADVANTAGE OF IT AND EMAIL ME. I HAVE OBJECTIVE STOP SYSTEMS THAT WILL TAKE THE MOST OUT OF THE TRADE AS POSSIBLE.

ABOVE ALL, IF YOU DON'T UNDERSTAND OUR RISK MANAGEMENT PLAN, AND IT IS POSTED BELOW A FEW DAYS BACK, THEN LET ME KNOW AND I'LL HELP YOU.

Update

Well it looks like the false breakout repercussions in the NASDAQ took precedence over anything in the SPY.

I hope you newcomers took my advice last night and got your short positions together.

Here's why the NASDAQ situation exerts such a strong downward gravitational pull. When a stock or an average makes a breakout of a consolidation pattern, all eyes have been on the support and resistance level of that consolidation pattern, a breakout is considered by many to be a bullish even and it used to be a fairly reliable bullish event. Now that Technical Analysis is so mainstream, Wall Street knows exactly what everyone is looking at as well. It's like playing cards, but Wall Street can see yours.

So the average or stock breaks out, a lot of buy orders are triggered and a sense of "I don't want to be left behind" becomes overwhelming to many, so like sheep they follow and chase the breakout, this is why breakouts generally see high volume, not because Wall Street was doing a lot of buying. In fact they were more likely doing a lot of selling to those who were buying. A day or two above former resistance (now support) and it's time to let it fall and become a failed breakout, we see them now more than ever, but traditional technicians keep buying them making it an easy poach for Wall Street.

When prices fall below the breakout level, all that volume that represented buyers, now represents holders at a loss so a few with risk management plans start to sell, that creates downward pressure, which makes more sell as their losses mount and before you know it, you have a snowball effect. This is why false breakouts fail hard and fast.

Now things get much more unpredictable, which is why I had you get into your shorts a little at a time a while back. The market's volatility could bounce us, but we just saw a decent divergence fail, that's why I didn't say but, I said buy at trigger "A" and/or "B". However, now everyone expects volatility so maybe the market throws us a curve ball and just slices through all resistance. YOU KNOW WHAT TO DO THEN

The SPY's relative strength vs the QQQQ