UNG as a reminder

There are really only two asset classes or sub-industry groups that I lean bullish toward, I won't make the entire case as to why, but part of it has to do with new emission control laws that will make it virtually impossible to build any new power-plants in the US using coal, the natural beneficiaries are nuclear and Natural Gas. NG is one sub-industry group of energy that I favor as having the potential to start a new secular bull trend after having been beaten down badly. UNG performed well yesterday, today it's off to a good start as well.

 Volume alone on this 5 day chart shows a big change in character in UNG, especially recent volume.

After a nearly 4.75% gain yesterday, UNG is off to a good start today up over 2.4%

Gold Miners-GDX/GDXJ Update

This may be a bit of a hint, miners are not very well correlated to the market, they are better correlated to gold and gold is better correlated to the market, so in a round about kind of way, even though both gold and miners have been underperforming the market recently as the market has been toppy, this may be a bit of a hint to pay attention to. While I'm updating mostly GDX, GDXJ looks better than GDX in most timeframes, so whatever you see in GDX, you can safely assume GDXJ (Junior miners) look better.

 Let me start with the 5 day chart of GDX and make clear I am in no way bullish on miners when looking at the longer picture and trend, they look like they've topped and are already starting stage 4 decline, that being said, some of the sharpest rallies in the market occur during downtrends (bear market counter trend rallies).

 GDX broke below a bearish descending triangle, the question now is whether this break below is being used to set up shorts for a bear market rally/Short Squeeze. Today's early movement in GDX at +2.2% now on volume is impressive and as mentioned, if you follow the dots to gold and then to the market, this may be material in our short term analysis of market direction, while out long term analysis I feel is pretty solid.

 Intraday the volume is on track for a big volume surge.

 The 3 min trend reveals a very flat range yesterday, this is a typical area to see accumulation, smart money doesn't chase, they buy at lows in ranges or as the market moves lower and usually they are very quiet about it, the leading positive divergence from yesterday is pretty impressive and judging by today's move, was intentional, not coincidental.

 The 5 min is leading positive in a big way.

 The 15 min has shown several positive zones, in my view there's no reason to run a counter trend rally if it doesn't squeeze the shorts out.

 The 30 min chart has looked good for some time, it looks even better now.

 And the 60 min chart also looks string and this is an important timeframe.

 As mentioned, to squeeze shorts I would think that the descending bearish triangle would have to be taken out on the upside to make the move worthwhile.

 Here are just a few charts of GDXJ so you can see the strength there in 3C, 5 min

60 min.

We'll take a look at my two least favorite assets to analyze, GLD and SLV. GLD recently has shown some correlation to QE3 expectations or sentiment as gold would be one of the biggest beneficiaries of more money printing.

Example of the newly formed leading positive moves

Keeping in mind, this is still the whacky early morning trade, here are updated charts since the lat captures illustrating the leading positives that have developed. It is still very early, remember yesterday I warned it was very early and the market has exhibited a trend of not holding large morning losses and the market moved up yesterday from the a.m. lows, so that's been the trend, it will change at some point, but as of yesterday it was still holding.

Remember to compare where 3C is now vs earlier relative levels and where 3C was then earlier this morning.

 DIA 1 min

 IWM 1 min

 QQQ 1 min

SPY 1 min

Also keep in mind these are only 1 min divergences so far, we need to see if they bleed in to longer, more important timeframes

Early Market Update

I guess I can't really complain about the market direction, we saw this coming, planned for it and every position that was put together for the bigger picture in the equities only model portfolio is at a gain between +.50% on the low end to 14% on the high end with most gaining +6%-12% on a move in the market that hasn't really even started compared to big picture expectations. However I still want that chance to add to and initiate a few more positions on some market strength and the market has been stingy in giving it up.

Fundamental events are occurring that smart money for once, isn't ahead of the curve a they find out and react roughly the same time we do since the Greek elections specifically came as a surprise-why? I have no idea. I would have thought the painful austerity cuts in Greece would make election results clear and the ND and PASOK would clearly lose ground, so much for pre-eection polling, it was totally wrong.

As for the market update, we are still in the early, morning silly-time when stops and limit orders are being run and knocked out, but it's still worth an early look.

 The DIA knocked out yesterday's closing candle which was a hammer and created support at yesterday's lows, they were hit this morning (traditionally the morning's have been used to run stops), however there's some momentum to the upside after the stops were hit (which provides HFT and other trading firms volume rebates so it is profitable to run obvious stop level).

 You may recall the DIA was the worst looking of the averages yesterday, this a.m. we have several small negative divergences

 The IWM is one of the averages that actually did hold support

 The IWm had 1 small positive divergence and now a leading positive, this was the last chart captured so this leading positive divergence is a new element this morning and all of the averages are showing some version of a leading positive divergence although the IWM's is the strongest.

 Yesterday's IWM action (green is price confirmation, white is positive divergences, red is negative divergence at the close), but the point here is the 1 min chart did not move down all the way to confirm price and thus has a slightly positive tone to it.

 The QQQ also held yesterday's closing hammer support

 You can see the negative divergence on the open and an in line, now it is slightly leading positive.

 Again, compared to yesterday, 3C did not move low enough to confirm the price gap down and is in a slightly leading positive area, plus the intraday leading positive divergence developing now as the market is moving faster than I can capture the charts.

 Finally the SPY did just knock out yesterday's hammer support, volume jumped right below the support level as traders still don't understand support/resistance are areas, not exact levels, I suspect there were enough stop orders visible that it made it worthwhile to run those stops.

 This is today's action as of the capture, however as mentioned at last check this has started moving in to a leading positive divergence.

Again 3C didn't move low enough to confirm the move lower today and thus remained in leading positive territory.

European Sentiment

As we have known for months, the major problem in the markets has been Europe and until Greece recently, which may end the Euro-zone and the French elections, it has been all about Spain. Today is no different as Spanish 10 year yields have crossed above the unsustainable 6% zone which is the same yield that sent all previous PIIGS looking for a bailout, Spain is simply too large to bailout.

The proposed bailout of the Spanish Banking sector, like all other EU rescue plan was good news for about a day, until the world figured out they simply can't afford it, cue the bond vigilantes and a 6+% yield in Spain overnight. Word is out this morning that Spain will nationalize Bankia later today (meaning the bank has failed and is coming under the protection of the Spanish government, if that is not an oxy-moron.

In some potentially worse news, Bank of America's analysis of the Greek situation is looking for a second vote, this time the second place Syriza anti-bailout party is expected to win. This may be good for Greece, to leave the Euro-zone and dump all of their bad debt on hundreds of European banks, but it is about the worst thing that could happen to the EU member states and could bring about their collapse.

Germany has recognized this as the most likely outcome and is now making plans for a orderly departure of Greece from the Euro-zone, but not the European Union (the difference is whether the member countries use the Euro or not). The German leadership is losing support from the German people as Germany has the most invested in Greece and the European Union exists almost solely to facilitate German exports in a free trade zone.

In addition, overnight the Troika cancelled their May meeting in Greece regarding the last bailout, citing political instability, an understatement if there ever was one.

The rest of the day the market will be looking to Greece, even as Spain and Italy now start to regain the spotlight, for any hints of whether the Greek International bonds will be paid, whether new elections look likely and any talk from the ND or Syrzia.

The only thing the market has going for it this morning are these two charts...

 The market has opened and thus far held support from yesterday's hammer.

And there's a potential positive divergence in ES.

Overnight Market

 This was last night's divergence in ES, it managed to send ES up about 7 points around the European open, an hour later, ES resumed its move down and has lost 14 points since the 4 p.m. close yesterday.

The Euro made one more attempt at resistance and the $1.30 area before failing and seeing a quick drop this morning.

We'll have more information when the market opens.

Euro breaks $1.30 again

I don't think there's any Greek news catalyst behind this latest move as Europe opens in about 2.5 hours.

 Here's the earlier break above the downtrend line, since the close the Euro has been dropping and the important $1.30 level has been breached, naturally taking ES down.

We have some initial positive divergences coming in to play in the area, there were several negatives right after the NY close. We'll see what happens when Europe opens and if the mystery supporter of Euro $1.30 shows up.

If the market does take a nose dive tomorrow, don't forget to consider PCLN, they have earnings tomorrow so we'll want to watch it carefully, but that could be just the event we need to get good positioning in PCLN, thus far it worked well for AAPL.

We still have a long night to go though.

PCLN Looks VERY Weak

It' ironic that PCLN has held up better than a lot of tech stocks that look like they have a decent chance to bounce, yet the underlying trade is worse than all of those stocks. PCLN is looking very much like a decent short idea.

 PCLN's volume starts to show the weakness in the stock, on this 5 day chart the parabolic move is nearly almost always a sign of the end.

 These have been the best two places to short PCLN, if the tech sector rallies, PCLN could put in a new high, I would be looking to add on any such move, but rally any strength back toward those two area would interest me.

 Even on a short term basis, PCLN's 1 min chart doesn't look nearly as good as many others.

 The 2 min chart never even went positive, it was just in line and saw a negative divergence at the EOD.

 The same story with the 3 min chart, except the negative divergence was worse.

 Even the 5 min chart is the same, no signs of intraday accumulation.

 The 15 min chart is leading negative, it looks really bad compared to the rest of the market, yet price wise PCLN has held up better than the rest of the market. I would guess there's a decent market maker filling sell/short orders for some large funds.

 The 30 min chart looks worse than some other 30 min charts that already look bad, like AAPL.

And the 60 min chart is horrendous.

I have PCLN near the top of my list of shorts I want to add to, it's in decent position to add or initiate a position right here if you left enough room in your risk management to account for a move higher which looks like would only occur if PCLN floated with a strong tech move.

BIDU Update

 I already have a short in BIDU, but would like to add to it on strength. The price pattern in late April suggested BIDU move lower, it did, this could be a head fake move to draw shorts in and then squeeze them, I'd like to add around the $145 level.

 Many of the charts incl. the 1 min have a positive divergence, but go slightly negative right at the gap fill area, this may be to keep shorts in place.

 The same is seen on the 2 min chart

 Even the 5 min chart starts to bend down at EOD and the gap fill.

The 15 min chart in BIDU would normally suggest to me the move below that small April consolidation was indeed a head fake move to trap shorts for a squeeze, since I feel confident in the long term assessment of BIDU, I will not be trying to trade around and instead hold my position and look to add to it on strength.

Lots of Hammers in the averages

A Candlestcick Hammer is a bullish reversal pattern, it shows lower prices were tested and rejected, it look like we'll close with these hammers, many after having taken out support levels making them higher probability and if the move comes off, more explosive as shorts would be squeezed.

 QQQ hammer after taking out major support and closing above it (thus far).

 DIA, a VERY long legged hammer on increasing volume

 SPY hammer and some former hammers, this one took out support and closed back above it.

IWM hammer, again took out support and closed back above it, this in its simplest form is a rejection of lower prices and a new support level.