GDX Charts

 5 day chart and the 4 cycles, accumulation, mark up, distribution/top and decline, GDX is in the middle of a long term start of stage 4, but remember this is a 5 day chart so a lot can happen in the interim.

 Daily chart and break below the support of the 5-day chart top, the yellow box looks to be the bear trap.

 Since then (this is the reason I never take long term short position on the first break of support, I may take them at significantly higher prices, but no long term positions on the first break of support because of the volatility shakeout as we see here and likely will continue to see in the future.)

 60 min chart showing GDX looking very strong, this suggests that there's more upside in GDX and I'd expect it to break back above resistance eventually, however a pullback in the near term looks likely first.

 The 15 min chart in the triangle, this is difficult with a triangle this big, but recent action looks more like it wants to pullback than try to break through major resistance at this point.

 5 min chart, not terribly negative, I don't see this as a large distribution event, but large enough to effect a pullback in GDX/Gold miners. Keep in mind, F_E_D easing could significantly change the outlook for GLD and miners as gold is one of the primary beneficiaries and we have the F_O_M_C policy statement tomorrow, it's a wild card so I'd advise some caution and not go swinging for the fences here.

The 2 min chart also looks like we'll see a pullback in GDX soon.

It's difficult to say how large it will be, it's impossible to say what will come from the F_E_D tomorrow, but based on what we know right now, it looks like a pullback in to positive divergences/accumulation and then a run to make a move higher through major resistance.

Here's NUGT which is the 3x leveraged long for GDX. The 30, 15 and 5 min charts below seem to confirm what we are seeing in GDX.

GDX Part 1

I'm going to post the charts, but basically it looks like a near term pullback in GDX, perhaps a little base building and another move higher.

ES Update

I have a lot of emails as you can imagine, I'm trying to get to them, several on GDX/miners so I'll update those next, for now, ES....

We saw a nice short squeeze in to the Guardian article, it moved ES up and changed the scaling, but the first area was already leading negative (1 min), now it's a bit worse, actually quite a bit worse. I think on a short term basis I may not have been the only one thinking that story was a quick gift.

AAPL Follow Up

I still like AAPL, however I see a rumor like the one that the Guardian published as a gift. I'm certainly open to adding the calls back on a pullback.

Rumors in the EU tend to be thrown up and shot down pretty quick, so I thought now might be a good time to make that adjustment.

 Holding the $550's as they have more breathing room

 Closed the $555's

Closed the $560's

We'll see if there's a counter-rumor/denial, but I view that move as a gift.

Selling AAPL $555 & $560 Calls, Keeping $550's

Interesting timing

The Merkel news just posted came our just before LCH raised margin on Spanish bonds. Raising the margin means more collateral will have to be put up by the banks that own the bonds and any new purchases will need higher levels of margin, essentially this alone would drive Spanish yields which are already over 7%, even higher.

Was the Merkel announcement timed to dull the effect of the LCH margin hike? The timing is certainly odd and so is Germany's about face on the subject. OF course this is now a matter of survival for not only Spain, but Italy, the rest of the PIIGS and the EU itself, so I imagine Merkel will say, float rumors and/or eventually do whatever has to be done to keep Spanish yields from exploding any higher.

I also have to wonder if this is in any way connected to the F_O_M_C policy statement tomorrow?

Here it is... A New Bailout Mechanism Rumor

From the Guardian...

Germany set to allow eurozone bailout fund to buy troubled countries' debt

Angela Merkel poised to remove opposition to direct lending by rescue fund in move seen as step towards sharing debt burden

Angela Merkel is poised to allow the eurozone's €750bn bailout fund to buy up the bonds of crisis-hit governments in a desperate effort to drive down borrowing costs for Spain and Italy and prevent the single currency from imploding.

Germany has long opposed allowing the eurozone's rescue fund, the European Financial Stability Facility, to lend directly to troubled eurozone countries, fearing that Berlin would end up paying the bill, and the beneficiaries would escape the strict conditions imposed on Greece, Portugal and Ireland.

But Merkel has come under intense pressure as financial markets have pushed up borrowing costs for Spain to levels that many analysts see as unsustainable.

Analysts are likely to see the decision as the first step towards sharing the burden of troubled countries' debts across the single currency's 17 members, though it falls short of the "eurobonds" proposed by the European commission president José Manuel Barroso.

G20 officials believe an announcement could be made by the leaders of the eurozone in the next few days, but stressed they remained unclear as to timing and precise content.

Short Covering

This is a glimpse of the snow ball effect from the bull trap head fake to the move above major resistance, this is what short covering looks like. I'll have to check the news as the only significant level I can see thus far that has been broken is just an intraday level and the move look like it has more to do with something else than just intraday resistance.

FB Update

The most addictive social site on the web yet the most hated stock. Our man on the street who keeps me informed of dumb money sentiment (via the sites he visits and the Twitter/StockTwits Stream) has shared some good ones with me recently about FB-many have been shorting it, comments from last week included:

"would not touch it with a bar or soap. The current recent trouble spells it out pretty clearly...."leave...the...phuck....alone" This IPO is gunna crash and burn.... while it will not happen today or tomorrow....just wait and see. LOL. Most people should have learned with the DOT.COM boom and bust!!"

That's all well and good, but in the mean time, there's money to be made, I have no problem shorting FB if the probabilities say it's a good trade, I probably will at some point, but obviously just about every member I know of has already made money in FB while the crowd continues to talk.

To be clear, I'm not in love with the stock, I don't even like it, but I also don't understand why people get so emotional about a stock, this is a business and if FB is offering upside, I'll take what the market offers.

After selling Call contracts at a decent profit (not nearly as large as it could have been, but I don't kick myself about decisions like that as you can only make a decision with what you know at the time), I've been looking forward to a pullback in FB to add some longer dated calls as I feel there's more upside than just the 23% we have seen over the last 10 days (many members have made multiples of that with calls/leverage).

Here's where we stand on the stock that inspires so much hatred...

 FB since we first noticed an opportunity on the long side.

 The opportunity in the form of a 60 min leading positive divergence.

 FB levels of resistance, the next at the $34 area looks like a Stage 2 mark up area.

 FB has formed a bull flag/pennant, this is a bullish consolidation/continuation pattern, while I'm not sure how many people are buying FB, obviously some are so there's a chance for a head fake move on this price pattern as price now is right around yesterday's resistance. I'm almost tempted to take a position here, but I'd rather be patient and buy in to a pullback. If I were to take a position here, it would either be a straight stock purchase (taking leverage out of the equation as I still suspect a pullback) or using very long dated calls, but in either scenario, it would be a partial position looking for a pullback to add in to. Whenever partial positions are entered, I always suggest you figure out the rik management before entering any partial position so you are not caught averaging down which is much different than planning ahead of time to leave room in your risk management to add to the position at better prices. The advantage to this strategy is you have long coverage, you have room to add on a pullback and you don't have excessive risk. In addition, all long positions at this point are still counter trend to the primary trend and as such I consider them to be speculative, which means I lower my risk; perhaps instead of 2% of portfolio risk, maybe consider 1%.

 FB over the last two days in the bull pennant.

 The 30 min. Bollinger Bands look like FB is getting ready to make a highly directional move, a pullback can still fit in this scenario.

 The 1 min chart still suggests a pullback, of course as mentioned many times before a 1 min negative divergence can also lead to a consolidation as we are seeing.

 However in FB's case, the 5 min chart which was confirming the upside very well is also in a leading negative divergence, that's not a positive divergence today, that's in line movement intraday

Even the 15 min chart is showing a small leading negative, this suggests to me a pullback is much more likely than just a consolidation. The strength of the 60 min chart makes me believe that we will see positive divergences in to any potential pullback, making that an ideal entry as the trade comes to you on your terms with high probabilities and lower risk.

Finally, the Trend Channel as a functioning stop for those who want to use it.

Just last week the Trend Channel had a stop below $26 and now it is at $31 and has allowed FB to consolidate without stopping out the trend once.

I suppose that's the area I might looks for a pb, although as I have stated, I'd prefer a wider stop on the Trend Channel, there just isn't enough data to construct a wider daily TC stop.

ES Update

Just as a quick update as the charts changed a little as it took time to put together the last post.

 ES since just before the 9:30 open to present, the negative divergence is still there, but remember this is a 1 min chart, usually it moves price intraday and that's about it.

 ES with VWAP applied, note the strength or momentum as ES walks the upper standard deviation (2) of the VWAP, also note how momentum has dies off since the negative intraday divergence as ES has backed off "Walking the upper band", which shows strong momentum when a market average or something like ES does that.

 CONTEXT for ES has improved since yesterday, I'll be interested in the Risk Asset layout indications.

CONTEXT for SPY shows that the model and SPY are converging as the model earlier was pointing to higher prices for the SPY, it's now at about fair value from an arbitrage point of view, which is in line with the 1 - 3 min negative divergences, as is ES's fading momentum.