MCRL -I Hope You Had Your Alerts Set

I covered MCRL earlier today, some of you entered the trade yesterday and should be up 4+% in a day. In any case, it showed good promise from the more important longer term charts, PLUS, the suggested stop for those of you using my Trend Channel was NEVER touched, but it would have made for an excellent low risk entry by watching price and the Trend Channel. If you don't have a system that allows you to set real time alerts, get in touch with me.

 Here's the "W" shaped pattern and today's breakout.

 Volume has been low so far today, but most of that has been on the consolidation, volume picked up on the move through resistance.

 The 10 min chart showed this as simply a consolidation.

 Here you can see the false breakout in the red box with a 3C negative divergence as well as a large period of accumulation with a positive leading divergence on the hourly chart, a very important timeframe.

Finally, the suggested stop using my Trend Channel, t was nowhere near being stopped out today, but the candlesticks along with the TC would have given you good placement with high probabilities (look at the hourly 3C chart) and low risk (see the above chart). I still think it's probably a decent buy even here, there was quite a large zone of accumulation.

GLD Update

've been warning now for several weeks that something was wrong with GLD, 3C wasn't keeping pace, there were multiple negative divergences, etc. In a post this week I asked, Is Something Broke In Gold ?

I also knew we had people with positions in DZZ and short silver as well as puts on GLD and wondered how some of our traders were doing, I got a response earlier today from one of our options traders, he's up  118% and 108% with puts on GLD. That's what I like to hear!

Here's GLD as of now...

 Here's the daily chart, talk about a bull trap, nearly two weeks of gold longs are underwater now. The red arrow shows a support zone that may see a consolidation in GLD, but I think it has further to go based on how bad many of the charts have looked and a few other reasons I will touch on.

 Here's the final 10 min distribution chart and reversal in GLD, currently confirming the downtrend.

Earlier the 5 min chart hit a relative positive divergence and we got a small consolidation from that, I believe that is in the history books now.

I would probably look to a trailing stop for partial profits and let the rest run, and adjust according to the signals that we get as we move forward.

The fact that margin has been increased twice this month in Shanghai and I believe through a few independent brokers, won't hep the gold longs. Also as I mentioned, Paulson's fund had it's 5 top holdings 4 of which were massive losers, I warned, the only long position he has to meet redemptions is GLD and if he starts selling, he can knock GLD down in a single day by 5% or more alone. We may be seeing that right now.

A Couple of Hints The Market May Stabilize

One hint is the TICK chart is moving out of the downtrend it's been in nearly all day. Here are the others.

 Energy is showing the start of a positive divergence

 So are financials

 The Euro looks like it's about to strengthen, which will put downside pressure on the dollar, which will alleviate pressure on equities.

Here's the dollar showing a negative divergence on a 1 min chart, these are just forming so t may take a bit more, but they all point to some stabilization for equities.

SLV Update

This entire Silver episode started last Wednesday August 18th with this post.


In the post I showed you a chart like this (except this one is up to date).

This is what we were looking at in the white box back then, I said in the above post,


"Here's an hourly chart of SLV in a bearish ascending wedge, most traders expect a straight drop down out of the wedge, because it is so obvious, it is likely to be gamed, so I would look for a breakout to the upside, maybe even a new local high and then a plunge in SLV, lifting ZSL. It shouldn't be long now that the wedge is so tight."


As you can see, because of the predictability of technical traders, all 3 things happened, the break out above the wedge, the breakout above local highs and the failure back below-this is a HEAD FAKE.


Yesterday in this update I showed you a chart like this.

These were the two areas of support to watch for and we had talked about a short on silver using ZSL.


Here are the current 3C charts, but now there's a head fake in place, it gives the downside more momentum as the longs are forced to sell or raise margin money.

 SLV 15 min 3C from a negative divergence to trading in line with price  or confirmation of the trend (green arrow=inline)

 SLV 5 min is more detailed, it shows the negative SLV divergence in red and confirmation in green

 The SLV 1 min chart shows a slight positive divergence, likely a slight intraday bounce or a consolidation.

 Here's the SLV short, ZSL on a 15 min timeframe showing distribution around 8/9 on a false upside breakout,  accumulation from 8/15-8/23 and is currently in a positive leading divergence-the strongest kind of divergence on an important timeframe.

 ZSL 10 min showing accumulation and trading in line with price

 ZSL 5 min with accumulation and a slight negative divergence, again indicating either a pullback or a consolidation.

The ZSL 1 min chart again showing the same. All in all, the longer timeframe charts look pretty good so I would expect more downside in SLV and upside in ZSL. GLD coming up.

Energy Update

Here's yesterday's update on Energy 


I want to specifically mention a couple of lines from yesterday's update


When looking at ERY (Energy Bear) there was a slight 1 min positive divergence, I had this to say about it,


"Here's 1 min chart confirmation  and a slight bump up in 3C, maybe we get a gap down in energy tomorrow"


When looking at ERX (Energy Bull) there was a slight negative divergence and I had this to say about it,


"And the 1 min chart, showing a little brief weakness going into the close, again hinting at a possible gap down in the sector tomorrow a.m. or some early weakness."


As we know, we are seeing the underlying action n price, or seeing a lot of what smart money is doing, but we don't always know why. We do know they are way ahead of us on the information curve as I have shown you many times. I believe Energy is partly under pressure because of the rising dollar today after the BOJ intervened in the currency markets last night again-an act that has almost no lasting meaning. In any case, the dollar is stronger against several currencies and this is what UUP looks like this morning vs XLE.

UUP (proxy for the Dollar Index) in green and XLE (Energy) in red. You can see XLE held up pretty well against the parabolic rise in UUP, as you know there's an inverse correlation between energy or oil more specifically and the dollar.


As for some Energy ETFs...

 XLE 15 min Leading positive divergence

 XLE 10 min leading positive divergence

 XLE 5 min leading positive divergence

 XLE 1 min, slight negative divergence

 USO 60 min leading positive divergence

 USO 30 min leading positive divergence

 USO 5 min trading in line with price

In the red square is the divergence I mentioned last night that would lead to early weakness today. There's also a slight positive 1 min divergence. For now I would consider this a consolidation pattern, I'm going to look at the Euro and the USD and see if anything looks like it's going to break one way or the other.

RIMM Update

There are plenty of RIMM updates out there, so this is just one of many. My larger perspective hasn't changed, it's just the voyage getting there is bumpy a I had thought it would be. Ultimately RIMM
is releasing some new handsets, but until they get their new operating system into their phones and on the market, these new phones are just a band-aide and they will likely continue to lose market share to Android devices and I-phones, when their new OS comes online, then RIMM might stand a chance at something more then a brief rally.

 Here's RIMM's daily chart/Trading range that was broken, note the positive divergence in RSI as well as the leading positive divergence in RSI now in the box.

 I had expected RIMM to test support at least one last time, right now it's bumping up against a resistance AREA-not a specific resistance point.

 The 1 min 3C chart shows RIMM hitting that resistance area this morning, so a pullback is in order.

 The 30 min chart has called just about every move in RIMM and while 3C hasn't turned down yet, it's still in a lagging position, so that pullback to support is NOT off the table.

Ultimately, this is what I would envision for RIMM, a breakout of the range, that will set short positions up and then a failure down through the range on the next major leg down.

SPY Update

It's still early in the morning and I don't put a lot of faith in early indications as it's usually just retail being run out of limit orders, etc.

However, here's a look at the SPY so far this a.m.

 The white arrow is the day I told you to expect a sharp sell-off, it came the next day and in to Op-Ex Friday. The red zone is heavy resistance as gap resistance is some of the best resistance (Daily Chart).

 Here's this morning's action, there was a relative negative divergence at the breakout level for the "W" bottom, since there's been a small positive divergence (white) on this 1 min chart.

 You can see the accumulation on the 5 min chart and this morning's relative negative divergence at the breakout level so a pullback or consolidation is natural here.

The 10 min chart is more important then the previous 2 and it is in a leading positive divergence. I say again though, this is a.m. trade and usually not too important to the bigger picture for the day.

Here's this am's sector rotation, as I thought yesterday, financials have come in to rotation, Industrials are strong, but both Energy and Tech have fallen off, I'll be keeping an eye on them.

MCRL Follow Up

Here's the original MCRL Trade Idea and here's the follow up yesterday.

Here's today's charts...

 This is a small "W" base or small double bottom on the daily chart.

 Here's a better look on an hourly chart.

 Yesterday near the close there was a brief breakout, 3C did not confirm it as you can see at the red arrow and MCRL has pulled back. Usually these bases will pull a move like this, pullback and gather some steam and then go for the breakout, look for an increase in volume on the next attempt.

I do think it will breakout because the long term hourly hart has such a positive disposition, there appears to be a lot of accumulation at the second low so keep this one on your radar, some of you might already be in it, I think it will be fine.

If you ever wondered what short covering looks like on a chart...

This nearly straight line in BAC with few if any pullbacks. This is the point of a head fake and it's made possible because technical traders are so predictable.

BAC Follow Up

Monday the accumulation was there, but BAC was too close to support, as I talked about in this post  yesterday, I felt BAC had been head faked and we almost always see that right before a reversal. As I also talked about last night, Financials were the only big sector we needed to move the market that were dragging, I put up a bunch of financials harts that all looked like they were ready to move into rotation.

So take a look at BAC this morning.

 Here's the head fake from late Monday through yesterday, today it's right back through resistance. The parabolic rise this morning IS the point of the headfake.

On this hourly chart we see BAC wasn't head faked once, but twice. First the above intraday chart, but as I talked about with double bottoms, the second bottom almost always makes a lower low and create what appears to be a failed pattern, drawing in shorts, when BAC moved back above resistance, those short started covering adding fuel to the fire. We especially know it's a head fake when we have a positive 60 min 3C divergence.