7 years ago
Wednesday, July 13, 2011
Financials may be ready to rotate
Looking at the financial sector, there appears to be a possible rotation back in to the recently poorly performing group. Remember that the sector rotation layout I'm using is not showing anything other then a sector's "Relative Strength" vs. the S&P. Therefore it would be possible to see the sector actually decline, but still show stronger relative strength then the S&P. In any case, this appears to possibly be a short term move in financials, perhaps it may have something to do with options expiration and pinning the Puts as has been discussed this week.
Here the XLF (Financials) look like they have found some short term support.
FAS-the leveraged Bull Financials 3X ETF is showing a small 3 day base like formation with the breakout level around $25.50
Here FAZ, Financial Bear 3x ETF shows what appears to be a short term top or correction ready to take place.
Financials in dark green at the bottom have performed poorly on this daily chart, buy the last 3 days, they appear to be starting a new sector rotation, this may be short lived, but it does appear to be taking place.
Market Update
I'm trying to listen to Bernanke and figure out what s moving and changing the dynamics in the market.
As I said, the dollar seemed to be searching for a foothold, GLD is an example of that. So are the averages.
DIA 1 min looking pretty negative
The Q's have a negative divergence, but thus far look the strongest of the 3
And the SPY. We'll see if this can make it to the 5 min charts
As I said, the dollar seemed to be searching for a foothold, GLD is an example of that. So are the averages.
Bernanke Speaks, the Dollar Tanks
And here are some of the inverse correlations
UUP vs GLD
UUP vs USO
UUP vs SPY
UUP vs TLT-20 year treasuries and others going into the tank as Bernanke speaks to Congress
And Bernanke says the following about the possibility of QE3-one of the reasons the dollar in tanking,
"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate."
Read: We still have tons of ink and cotton linen paper
And Bernanke says the following about the possibility of QE3-one of the reasons the dollar in tanking,
"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate."
Read: We still have tons of ink and cotton linen paper
CNQR Follow Up
Yesterday I posted a follow up note on the CNQR (short) trade idea
This was my target zone for looking at a short position n CNQR, the 50-bar 60 min moving average, after looking at the action in CNQR and accumulation, I think that target zone needs to be adjusted higher.
The 15 min hart shows at least 2 full days of accumulation, that would suggest a move of more then 1 day (and today looks as if it may cross in to the target zone I put out yesterday).
The 10-min chart showed accumulation in to yesterday's late day decline in the market.
The 5 min chart also shows about 2 full days of accumulation like the 15 min chart. I think it s possible, although I can't be sure, that the short term base of two days has a breakout level that could be as high as $50.75, which is above the $50.50 target zone, this would imply a move as high as $51.75 based on the price pattern alone.
This is a healthy 3C chart in confirmation with price (confirming the strength).
The white box is my revised target zone, although I will monitor CNQR for any events that may alter this projection.
GLD Still suspicious
Yesterday I mentoned GLD's move higher and said I wouldn't chase it here and that it looked suspicious. There are still signs on non-confirmation that are showing up and thus in my opinion the move is still suspect.
With the strength of the price % gain yesterday and the volume (both of which look very bullish when viewed by themselves) there should be confirmation in 3C. This 15 min chart, which was not complete in it's move yesterday, has made a consolidation point now, it is not in line with price and therefore creates a negative divergence.
The 5 min chart should easily be able to confirm, yet it too has not confirmed price strength.
The 1 min chart showed a late day positive divergence, which would lead me to expect a gap higher or early strength, but even the 1 min chart cannot manage an "in-line" status.
If you are long GLD, I would suggest a trailing stop. If you are not, I would only consider entering on a pullback which shows some strength in the underlying action. Otherwise, I'd stay on the sideline until this non-confirmation resolves one way or the other.
If you are long GLD, I would suggest a trailing stop. If you are not, I would only consider entering on a pullback which shows some strength in the underlying action. Otherwise, I'd stay on the sideline until this non-confirmation resolves one way or the other.
Early Market Update
Even with yesterday's EOD shellacking the market took, the 5 min 3C charts have managed to stay in the positive, for today being the 3rd day so far.
DIA 5 min
IWM 5 min
QQQ 5 min
I still suspect that the market is being held in place to keep the PUT options selling and that it is likely that there will be a move higher before or on expiration this Friday to clean the clocks of the option buyers as the market is pinned, just where will it be pinned is the question in this scenario. We'll have to keep an eye on the volume and open interest to get a good idea. Last month we got the pin exactly, but that was on calls and a different environment. We'll be watching and updating any changes and try to get a target for Op-ex on Friday.
I still suspect that the market is being held in place to keep the PUT options selling and that it is likely that there will be a move higher before or on expiration this Friday to clean the clocks of the option buyers as the market is pinned, just where will it be pinned is the question in this scenario. We'll have to keep an eye on the volume and open interest to get a good idea. Last month we got the pin exactly, but that was on calls and a different environment. We'll be watching and updating any changes and try to get a target for Op-ex on Friday.
Tuesday, July 12, 2011
The Miners Trading System
Today DUST was left n the dust with a 6+% loss. The signal for tonight remains long DUST, how ever the 3% stop-loss should be considered as t is part of the system.
For system 1 entries, the stop-loss which would be executed at the open, is $40.62.
System 2 entreis have a stop loss of $40.87, the close was $40.65 so System 2 entries would (by the system rules) stop out on the open tomorrow and the trade would reman neutral or in cash. You may want to consider looking at what the open looks like it will be, if there's improvement and DUST will open higher, you might consider not stopping out on the open, but rather leaving to stop as an intraday stop.
I know from emails, many of you want to know what DUST looks like on the 3C charts. I'll compare GDX which is the equivalent of being long NUGT, to NUGT, to DUST for confirmation. For confirmation GDX and NUGT should give the same signals and DUST should give the exact opposite signal.
Hourly charts
DUST positive
GDX Negative
NUGT Negative
15 min charts
DUST positive
GDX negative
NUGT negative
1 Min Charts
DUST positive
GDX negative
NUGT negative
For system 1 entries, the stop-loss which would be executed at the open, is $40.62.
System 2 entreis have a stop loss of $40.87, the close was $40.65 so System 2 entries would (by the system rules) stop out on the open tomorrow and the trade would reman neutral or in cash. You may want to consider looking at what the open looks like it will be, if there's improvement and DUST will open higher, you might consider not stopping out on the open, but rather leaving to stop as an intraday stop.
I know from emails, many of you want to know what DUST looks like on the 3C charts. I'll compare GDX which is the equivalent of being long NUGT, to NUGT, to DUST for confirmation. For confirmation GDX and NUGT should give the same signals and DUST should give the exact opposite signal.
Hourly charts
15 min charts
1 Min Charts
