EUR/USD Follow Up

 FXE 1 min-last night's positive divergence, right now we have confirmation and a leading positive divergence.

 FXE 15 min-a broader view

UUP/$USD 15 min, even on the 15 min chart this early, 3C has moved down.

Euro Update

Last night I posted this about the Euro/Dollar

Excerpt: "With what's coming out of Europe (and this is an extended news cycle, usually the Euro fears persist for 5 days and then take a back seat only to reemerge) its hard to see how the Euro could even manage a bounce, but much stranger things have happened."


I haven't seen any news out of Europe as of yet, but the Euro is moving up.

The red arrow is the market close as of yesterday, you can see we have had a sharp bounce this morning, a stronger Euro/weaker Dollar is generally equities positive.

Early Market Update

I usually don't like to update this early as there are a lot of market gimmicks, but here are the first signs of some short term stabilization.

 DIA 1 min

 IWM 1 min

QQQ 1min

My connection is lagging a bit because of the live speech.

Bernie K's Speech Live

Here's the link

Observations

Tonight we have a dominant price/volume relationship, Close Down/Volume up, by a wide margin, this typically leads to an oversold situation and an oversold bounce.

Further evidence of a VERY oversold situation is the 239 industry/subindustry groups, only 2 closed green today!

While we have plenty of relative positive divergences, I would like to see more of these turn in to leading poitive divergences like the 15 min SPY below.

Being the 15 min is already there, the 1, 5 and 10 min can make it to that position pretty quick, it would certainly be possible within a day as I have seen a 15 min timeframe achieve that in a day. When we have those kinds of divergences on multiple timeframes and averages, the probabilities of being at a turning point are very high.

False breaks/head fakes are also good timing indiations, I showed you on in AAPL earlier tonight and you an see how quickly it fell one the head fake is completed and the longs start losing money from buying the breakout. In an upside reversal, a break below important support leads to the head fake and it is completed when price rise above the breakdown level.

We saw several important breaks of support today, the most serious being the S&P-500. I wrote about two weeks ago that I thought we'd have one more rally, followed by a new low and a strong move up off the new low. Some of the indications were in last night's post, such as the breadth charts and the Zweig Breadth Thrust.

The volume on the break of both the closing low and intraday low was not as strong as  would have preferred to see, nor was the break as sharp as I would have preferred to see, we'll have to see if it was enough. Both MACD and RSI were positively divergent on today's move below the support levels.

The 3C depth charts are getting very low in their troughs, some at new lows compared to past accumulation areas.

 The DIA improved a lot today in this respect, but still is lagging the others. The two white boxes represent the past area that my "gut feeling post was based on, that more or less stated that I thought the last accumulation zone at the  Sept. 23rd area was going to look like the zone in the first white box, which in retrospect I don not view as two separate accumulation events, but as 1 event separated by a short bounce. Some other things they have in common include the fact that we didn't see the level of distribution at the bounce area that we saw at previous rallies. Here you can see there was no negative divergence on the hart , just a "V" shaped peak , whereas the other two rallies showed clear distribution.

 The IWM depth chart is at a new low, it too did not see negative divergences at the interrupting bounces. The depth harts shallow troughs would tend to indicate heavier zones of accumulation.

 The QQQ also saw a new low today on the depth chart, you can see clearly that the troughs have been areas of accumulation while the crests have been areas of distribution, ending bounces.

The SPY also hit a new low, again notice the white boxes on 3C are not showing negative divergences.

As for the Demark signal variant indicator, as mentioned earlier, all of the signals that were present Sunday night played out on the open today in the SPY, they probably did in the other averages as well, I just didn't check those.

 As of Sunday night, the longest timeframe we had signals on was about 30 minutes, tonight all have 60 min signals which have done a goo job at marking the lows that lead to rallies as you can see by the buy/sell signals on this SPY 60 min chart.

 DIA is the only one that is only to the 30 min, but with 2 consecutive signals, which we have seen at two previous bottoms that led to rallies.

 QQQ

 IWM

IWM daily which has marked every bounce/rally

The VXX which trades opposite of the market has a daily sell signal.

They have been pretty reliable.

The reason I have felt for some time that we would see some good upside from the bear flag daily formation is the daily positive divergences, this is something I have talked about for awhile, not just recently.

 DIA daily leading

 IWM daily leading

SPY daily leading, even while price breaks to new lows.

So the Demark signals are in the right area, the daily charts suggest something has been cooking of a bigger nature, there were numerous signs in last night's post, the depth charts are now in an area in which a turn up would signal a tradable bottom and the 3C charts are almost universally showing relative positive divergences.

The only thing I would like to see at this point before issuing a screaming buy would be leading positive divergences pretty consistently.  Should that happen, I think we could see a rally bigger then anything we have seen in the past nearly 2 months. A flat trading zone would also be encouraging.

Tomorrow Bernie K speaks before Congress, I would doubt he would be making any policy statements there, but who knows what he might say and if the market will latch on to it. He's scheduled for 10 a.m., hopefully CSPAN will cover it so I can be spared CNBC.

Euro/Dollar

With what's coming out of Europe (and this is an extended news cycle, usually the Euro fears persist for 5 days and then take a back seat only to reemerge) its hard to see how the Euro could even manage a bounce, but much stranger things have happened. I love Goldman Sachs lowering their target on the Euro just a couple of, make that a month late.

In any case, I present it as it comes. And speaking of that, our favorite mass manipulator, the CME, just raised margin on copper and platinum, apparently some kind of political "gotcha" going on in Congress in their antagonizing of China over currency (the Senate just passed a China Currency bill by a wide margin on the vote), the CME action also being called a warning to silver and gold longs.

As for the Euro/Dollar

 FXE daily long signals, we have one developing today.

 FXE 15 min negative divergence and then down and now a 15 min positive divergence. Does someone know something we don't?

 The 3C depth chart on the 2 min scale has dropped to a very low reading, which has been seen in accumulation areas.

 UUP/$USD daily signals, a buy and a couple of sells, I'm really happy with the way this indicator has turned out. Anyway, we have a sell signal developing today.

 I tend to see the longer term charts give longer term signals so here's a 3 day chart, today would be th first sell signal on this timeframe since 2010.

 Long term UUP 60 min hart with positive and negative divergences, all produced moves in the anticipated direction and 60 min is a respectable timeframe, currently negative.

 UUP 1 min is leading negative, with such a nice move up the last few days, perhaps profits are being taken or perhaps again there's something we don't know about coming out soon.

 UUP 15 min hasn't confirmed the move up, unlike the earlier positive divergence in white when 3 moved up with UUP.

 Here's the 15 min 3C depth chart

And this really belongs at the top, but it is the new indicator on FXE, 1 day giving a buy signal, note the timeliness of the signals including the sell signal in orange.

Maybe something interesting is going on in the EU?

Chart Request AAPL

AAPL is always a good stock to keep your eye on, it is so heavily weighted on the NASDAQ, that it alone can often move the NASDAQ 100 intraday. Some days like earnings, it will be the fulcrum of the market, that one stock that can decide direction for the day.

Several months back NASDAQ re-weighted the NDX so I'm not sure what the weighting is now, by now it's probably on the internet somewhere or you can pat NASDAQ the $10,000 a year for their proprietary weighting schedule. Before they re-weighted, some math geniuses figured out the weight for AAPL on the NASDAQ 100, I can't remember if it was 19% or 22%, what I do remember is, if you added the weight of all of the bottom 50 NASDAQ components combined, that was the weight of AAPL. So hypothetically, if there were only those 50 stocks and AAPL and those 50 all closed down 1% and AAPL closed up 2%, the NASDAQ 100 would have closed in the green +1%.

That should get across the importance of AAPL.

 Here's my twist on the Demark indicator that you saw for the first time in it's new format last night. Just to show the uncanny accuracy, here's a 3 day chart, long signals are given in 2000 for a 5 month move of 67%, another in 2001 for a 6 month move of 70%, another in 2006 for a 6 month 63% move if you took the pullback signal in orange (it pulled back 12%), if you had thrown it in my Trend Channel you would have made 123%. Then there were the 2009 buy signals which if you took the first pullback signal, you made another 75% in 5 months, or in my Trend Channel about 150% in a year.

 On an hourly basis, it seems to be giving another buy signal in the area, you an see the last two and their respective sell signals. We are right in the area and with a larger signal then the last two.

 The 1 min chart, which has worked beautifully, especially if you were fast enough to scalp trade (by the way, the signals it gave last night were right on, they ended at the 30 min mark, which was the last time frame this morning that had the SPY in the green. In any case, there's a 1 min signal and not much else until that 60 min chart, which is similar to the market and would imply to me that we gap down in the a.m., however, there's still that 60 min buy signal which would put a buy around 10:30, which is interesting as Bernie K speaks at 10 a.m. tomorrow. The first and last time he spoke after the FOMC meeting, he hinted at further monetary easing, which many took to be a reference to QE3. The very next day another regional FAD president spoke and said nearly the same exact thing. Of course he is speaking before Congress so it would be a strange place for a policy announcement, but who knows what he'll say that the market may grab on to.

 AAPL 1 min is in a relative positive divergence and the depth indicator is extremely shallow. This is a relative positive divergence because 3C is at the same level when prices were about 28 points higher. We  expect 3C to confirm downtrends if they are healthy downtrends by making lower lows with price, that is not what has happened here.

 On the other hand, looking more closely at the 1 min chart end of day, we see a negative divergence around the $378 level which would not imply a gap up in the morning.

 The 2 min chart is not only relatively positive, but leading as well. I haven't been using the 2 min chart that long to know whether it could produce a gap up.

 A long term view of the 5 min chart shows it in a big leading positive divergence, the highest since before July.

 And a closer look at the 5 min chart today has both relative and leading positive divergences. 5 min harts can gap the market up, but I wouldn't make a wager on it, if all 3 (1,2,5 min ) looked like this, I would say there would be a high probability of a gap higher.

 The 15 min chart not only shows a relative positive divergence at the arrow (which is one reason as well as the depth chart below, that I suspected there's been accumulation going on throughout most of the move down sine last Tuesday. We also have a leading positive divergence.

 Looking at the daily chart, here's an example of a head fake before a reversal. Note my long version of MACD and RSI both called a top. Also remember that big volume is often a reversal signal as you can see at the first two red arrows, think of it as a type of churning. The green arrow shows increased volume on a strong candlestick on the breakout day. One hint this was a head fake was the fact there was no follow through on that healthy breakout. Volume spiked again on the fulfillment of the head fake with prices falling back below the breakout area. The yellow box is the head fake and then came the reversal, this is seen in downside reversals and upside, although an upside reversal head fake would break significant support like we saw today in the market.

3C and the depth indicator both clearly called the top in AAPL. However, getting a little myopic, if you look at today's low compared to a similar low marked by the white trendline, 3C is higher, as in not confirming today's low which is actually lowed then the previous. I don't know if it will mean much for the longer term trend implied by a daily hart, but I thought I would point it out.

GLD Update

GLD is up today, despite a stronger dollar, even though the correlation has weakened and GLD is now more of a flight to safety trade.

 GLD 1 min bouncing along the 150 day moving average as I suspected and hoped to see some consolidation along the average. Today's move up has a negative divergence, suggesting it'll likely mov down in the continued consolidation chop.

 The 2 mn chart shows the same

 As does the 5 min chart including the depth chart.

 The 10 min also is negative, these all look like the short term moves.

 The 15 min is leading positive, reflecting the longer term view, but also relative negative today

 The 30 min and the depth chart seem to show the longer term prospects for GLD which look good, despite short term choppiness.

The hourly chart is in agreement.

I think this not only says something about GLD, short and intermediate term, but the market as well, being a flight to safety trade.