Market Update

 DIA short term 1 min 3C chart, note there's a triangle consolidation sitting just above the breakout trendline, I would expect a false upside breakout from this triangle and then a move below the breakout trendline, probably on increased volume.

 The 5 min DIA chart suggesting the same

 However, the big picture, looking at the most important chart, the 30 min 3C chart of the DIA is not only positive, but in a leading positive divergence throughout the base, a very bullish signal.

 QQQ consolidation triangle this a.m.

 QQQ 1 min 3C chart

 SPY 5 min 3C chart suggesting, as  expect and expected early yesterday, a break below the base's breakout trendline.

However, once again the long term 30 min 3C chart is very bullish and in a leading positive divergence through the base.

The Process

Remember what I mentioned the last few days, bottoms/tops are not events (Like a "V" shaped reversal), especially not important bottoms or tops; they are a process.

I've been fooling around with some charts/indicators and collaborating on an indicator with another member.

Here's some interesting things I found. I've looked at a lot of bottoms with this set up and nearly all are exactly the same.

 First what you are looking at is a volatility indicator (red line in the price window, price has held below this indicator throughout the decline. The second thing in the price window is my Trend Channel (blue channel). Below is a 50 period Stochastics. The hash marks in the bottom of the price window are as follows, the lighter red indicates price is below the Volatility indicator, the pale green indicates price is above the volatility indicator, The darker green indicates Wilder's RSI (period 22) is above 50 and the darker red indicate RSI is below 50. This is a decline, bottoming process and reversal from July of 2010 in the SPY, but there are numerous examples I could have chosen.  During the period of decline, the red signals are uninterrupted and the decline is not in question, then we get the first hints of a bottom when the green hash marks show up, Stohastics starts moving up in to overbought territory, but this isn't representing overbought, it's representing strength, just as when it is in oversold territory it is indicating weakness. The trend Channel flattens and starts moving up, however there's still volatility as a base or a top tend to be very volatile. Then the second set of green hash marks usually indicate a reversal is at hand with Stohastics above 80. Notice that although there is up and down volatility, the trend channel holds all of the price action.

Now our current scenario, notice the similarities. Stochastics is moving above 80, RSI is positive. So we may see some continued price volatility, but the trend channel should hold any downside volatility as we get closer to what has been a pretty reliable process in the many bottoms I've looked at.

The bottom line, I still expect price volatility, but it seems by historical comparisons that we are entering the end of the basing process. 3C also has a large head start on many of the previous bottoms I looked at.

GLD Update

GLD continues its slide... GLD is now down about 3.5% in the last 2 days.

 The 15 min chart shows the bigger picture and was negative at GLD's highs.

However, the short term intraday picture on this 1 min chart suggests a bounce in GLD, which you may want to consider as an entry point for a position in something like DZZ, however, my preference would be to cautiously phase in to the position, adding as the trade moves in your favor.

The other averages

The other averages are confirming showing the same 1 min chart opening indications, of course it is very early and a lot can happen, I would change my expectation if the breakout level which you can see as a red trendline in most of the charts, were broken to the upside on increasing volume. Yesterday I expected there to be a head fake based on the bottoming pattern as t was too obvious, I believe this is it, with the market likely basing a bit more. However, the intermediate/long term charts continue to gain strength so short term moves don't effect my bigger picture outlook.

 DIA

 IWM

QQQ

Early market update

This is very early, but based on my expectations from yesterday, t seems to mkae sense here.

 Opening 3C suggests a pullback

The SPY daily at R1 which is resistance.

It makes sense to me that the market bases a bit longer here.

Closing Stats

Today was another WOW day and the pendulum continues to provide exceptional volatility. It wasn't too long ago that a 1.5% gain was a big move, now we have the last 4 days down 6.66%, up 4.74%, down 4.42% and today up 4.47%-that's extreme volatility.

As far a internals go, all 30 major Morningstar Groups closed green, of the 239 major and sub-industry groups only 1 closed in the red today, "Closed End Debt Funds".

Certainly CSCO was a major Catalyst as well as Initial Claims coming in better then expected, but I think this has more to do with a bottoming process.

Other Internals: The NYSE had a volume ratio of 5:1 up vs down volume. There were 5832 advancing issues and 1027 declining issues. What was most impressive was today's NYSE dominant Price Volume Relationship, it was Close Down Volume Down like all of the other averages, but in a close second was Close Up/Volume Up, the most bullish of the 4 relationships.

The Dow 30 saw all 30 stocks close GREEN!
The NASDAQ 100 saw all 100 stocks close GREEN
The Russell 2k saw 1862 stocks close green and only 94 close down
The S&P 500 only had 3 decliners!

Of my 5% or greater list, 1920 on the close as for -5%, 127 mostly inverse ETFs.

By most measures exceptionally strong internals.

Also noteworthy were the declines in the safe haven trades, Gold declined over 2%, TLT (Treasuries) lost over 5%. The Swiss Franc closed down 4.69%, but part of that was on talk of a Franc/Euro Peg.

As I expected since the early morning, the inverse H&S seen in all of the major averages broke out and then was gamed in the last 15 minutes to fall below the breakout line. This gives me a gut feeling that we are not done consolidating and Friday wouldn't be the best day to launch a rally, so I'm okay with that, but expect more volatility as  suspect they'll try to lock in short sellers. However, as usual, we'll let 3C and price tell us where this is gong, that's just my gut feeling as I explained late in the day. However I will say the last few day's internals have been very bullish-we just need some volume and that will come when they are ready to kick the market in to stage 2, mark up.

The VIX did close down today, a bullish sign, one more consecutive day down and we would likely see a sharp rally.

I'll be listing quite a few long positions to take a look at buying on a pullback, there are a lot of charts shaping up. I also get a gut feeling that we are in for some market positive news and I feel that when/if we rally as 3C is suggesting, it's not going to be just a bounce but a spectacular move. After that move, I think it'll be the last before the bottom really falls out and makes the last few weeks look like a walk in the park. All of this equals OPPORTUNITY! Just keep your eye on the forest, not the trees. Volatility should remain obnoxiously high so initial stops should be wide, to honor the 2% rule, that means fewer shares, but one a position moves in your favor, stops can be tightened and the position can be added to.

Again, keep your eye on the Forest, not the trees. I see 1100 as important support on the S&P, whether it's tested, who knows, but if it is, I suspect it will be part of the Wall Street gaming and wouldn't jump to bearish conclusions too quickly. Heck, we might even be surprised and just see the market take off from here.

Perhaps above all, use your edge over Wall Street and be patient, I smell incredible opportunities brewing.

EXACTLY AS EXPECTED

Early this morning I pointed out the inverse H&S pattern and said it was too obvious, Wall Street has to game it, although I wasn't sure how, a new low could have been 1 way, but this makes more sense. Technical traders are taught, "If a pattern fails, it fails and you should take the other side of the trade".

We didn't have much time at the close for the pattern to fail with the market already up significantly through the breakout point, but this made the most sense and as expected, even though it didn't look likely, Wall Street managed to game the base.

 Here are the closing harts and the red trendline represents the breakout point, the close below it represents the head fake. DIA

 QQQ

SPY

However, Technical Traders only see price and lagging indicators based on price, 3C is not such an indicator and remans stubbornly bullish and positive. Therefore I believe this is as we always see, the head fake before a significant move. I expect some wild volatility tomorrow, but ultimately the path of least resistance according to 3C remains up and all is falling in to place as we have seen so many times before.

Trade Idea SOL (long)

This is a mover, but with a decent pullback, it looks like a high probability trade with reasonable risk.

 A nice 23% gain today

My crossover system giving a long signal. If SOL can pullback to the $3.60 area, a stop can be put in around $3.40 with about 3% risk, that's a decent R:R trade.

LDK long trade follow up

Earlier today I said I'd take profits in LDK and look for another long entry on a pullback.

This $6.00 area is where I'd like to consider a long trade and re-evaluate the entry. If you exited at my post, you missed out on  1.6% of further gain, had you sold at the exact top, but you still made 6+% in less then a day.

Trade Idea RIMM (long)

 Ultimately this is a short term trade idea, RIMM is a ways away from being competitive in handsets. I visualize this trade as breaking above the trading range and the 50 sma, at that point, I'd start looking for a short entry, but the ride should be worth close to 10 points.

Notice this is the first confirmed crossover on my screen. I'd like to enter the trade on a pullback, which I think we will get, to the $23 area, risk is lower there as well with a stop just below $22