AMD Warns

This has been the trend the last year or so in earnings and accelerating, pre-warning and AMD did just that taking the stock down 9+% today.

AMD warns...

"NEW YORK (AP) -- Shares of chipmaker Advanced Micro Devices Inc. hit a multi-year low Friday after it warned that sales in the latest quarter were well below its forecast.

THE SPARK: Late Thursday, AMD said third-quarter revenue will fall about 10 percent from the second quarter because of the sagging PC market. The Sunnyvale, Calif., company had said previously that it expected revenue would fall 1 percent, plus or minus 3 percent

THE ANALYSIS: AMD is Intel's only real competitor in processing chips for PCs, but only has about 20 percent of the market and has had a hard time keeping up with the bigger company's technological advances. AMD also makes graphics chips that go into high-end PCs."

 The AMD position now accounts for less than -1% of portfolio loss as it was a speculative position, although I won't sell it right here, but rather wait for a dead cat bounce.

 AMD looked like one of the cheap stocks that had been beaten up that was building a base as we have been seeing more and more of recently, today doesn't kill that base, but it will be at least several weeks before we see how the rapid discounting of the warning fits in with what smart money already discounted.

 AMD was looking better on a long term view (60 min) from distribution to a downtrend to the start of a base, it may very well continue as this move down is more likely retail than institutional money, they have a better idea of what was really going on at AMD and would have discounted it weeks and months ago.

 The near term, AMD's base area looked almost like a lot of tech stocks, the decline and a base building (10 min)

Here's today's 1 min chart, it looks like the sell-of is being accumulated by someone, whether short term traders or still part of a larger base is what remains to be seen, in any case, a dead cat bounce higher should be coming as it fills part or all of the gap, I'll wait for that and take a look at AMD and decide what to do with it then.

Sector Rotation

For years the market has been more and more correlated. Back during the 2000 Tech crash, commodities were an excellent investment where you could make money as the rest of the market went down, especially tech.

There was sector rotation during the 2003-2007 rally, but once the F_E_D stepped i with liquidity injecting operations (officially in 2008, but picked up in 2009), risk assets have become more and more correlated, every year in fact until the point in which it almost didn't matter what you bought, the market was either risk on or risk off and whatever you bought moved like that.

Since QE3 has been announced I've seen hints of it, but there wasn't enough information to overcomes years of high correlation. I've been noticing more and more recently that sector rotation as well as stock picking (AAPL vs RIMM for instance) has made a comeback although on the stock picking side, I'm not sure if it was for the right reasons or healthy market reasons.

In any case, this week I've really noticed it, first Oil and Energy were in rotation and we made some money long USO/UCO, but closed that trade down, expecting to re-open it on a pullback and I still do, Financials seem to be the next one moving out of rotation and Tech which was the first to move out is moving in to rotation.

I can't show you everything I've seen with 3 simple charts, but maybe it will give you some idea (also the rotational periods are very fast, typically days to a week).

 Energy went out early to mid week (when UCO was closed), but it starting to build a comeback.

 Financials have been out longer and are a bit slower in their comeback, but also a larger base, yesterday they had a negative signal late in the day and today they gap down.

Tech clearly is at the bottom of the rotation cycle and turning up or in the area for a turn up and to move in to solid rotation with by far the best looking 3C chart (after having been beaten up the most as well.)

In terms of the 10 industry groups actual price performance since QE3, it has ben the defensive sectors that led, Utilities, healthcare and staples, while the risk sectors declined.

I have no doubt this is all QE related, putting together the bigger picture though is where I'm at now. Looking at Tech alone, yes, it looks ready for rotation in to a risk on mode, but for a shakeout of shorts, not a true healthy move. So the rotation is actually a lot more complicated than it seems, but even to see it return after years of none is quite strange.

Keep an eye on AAPL

From yesterday's descending triangle, it made a move that is confirmation of the bearish price pattern where traders will act (shorts enter) and now it's moving to trap those shorts and create a short squeeze.

Calls were entered yesterday right around this price area for an expected move higher.

Euro-Dollar is the only overnight mover

As of the open, ES was nearly unchanged from yesterday's close, maybe 1/4 of a point lower, but the EUR/USD was up (bullish).

 ES choppy all night, the European open at the green arrow.

 Here's EUR/USD for the week with the Spanish downgrade at the red arrow.

 Here it is from yesterday's close and around the EU open today.

ES lost ground at 8 a.m., I can only assume due to JPM's earnings beat which saw nearly all revenue streams fall, but the beat came on accounting trickery of releasing loan loss reserves, I guess the market didn't buy it.

JPM gapped down pretty bad, but has jumped tight back up.

Silver

Long time member's know how I feel about silver/SLV or any derivative, I hate analyzing them because silver has been one of the most manipulated assets out there since 2008 when JP Morgan took over Bear Stearns and inherited their large short SLV/Silver position.

Since a long time member asked, I took a look and didn't like what I saw. As for SLV/Silver, the probabilities look solidly lined up against it, as for a trade, it's not in a great risk/reward area, maybe with a move in the right direction it would be worth it, but otherwise as it sits right now, it's not something I would pursue and I'll show you why.

 Here's the big silver manipulation of 2011 led by Max Kieser, "BREAK JPM'S SILVER SHORT". The line in the sand for JPM was supposed to be $32, above that they were underwater on their short, but who knows. We just know that SLV broke a certain level and took off for a 57% gain in two months, then the COMEX stepped in and hiked margins several days consecutively, some with a day inbetween, but even after the move in silver was killed, the COMEX still hiked margin requirements to make sure silver was dead. Why? I think JPM did the F_E_D and Hank a big favor when they took Bear Stearns, it seemed to me that these big institutions didn't want to see JPM hurt for helping them out, and thus SLV fell 30% in 2 weeks.
 
 There's a daily Bollinger Band Squeeze and it looks like SLV will soon make a highly directional move, which way though?

 This is my Demark inspired indicator, it has called tops and bottoms in SLV and right now it's calling a large top.

 Embedded Stochastics are fine with me, it's a sign of strength, but when they start to turn down, it's a change in character, also note RSI in a negative divergence.

 The X-Over Screen isn't quite there yet, but it is moving closer to a sell/short signal.

 My Trend Channel on a 2-day setting shows where the short starts at the left, where it ends at the red arrow in the middle, and where the long stop is now, around $32. The blue indicator shows where SLV has closed within the daily range which is interesting information.

Here's the 1 day TC for a tighter stop...

As for this move that has held the bulk of the uptrend, it's already stopped out. i find after the Trend Channel stops out, there's just volatility, there's usually not much hope for further gains. The Custom "Close Within Range" indicator also shows the daily closing action in SLV turning bearish.

 The 4 hour chart is negative

The hourly chart is negative.

 The 30 min is negative, that's enough confirmation for me to not trade this long.

I also wouldn't trade it short unless it gave a price concession and lowered the risk on the short, I'd need to see prices around $33.50 to $34 or greater before entering a short in SLV. That's my take.

UNG @ New Recovery High

And not only that, it's looking to close near that high on volume, stage 2... Here we come!!!!

While the rest of the market sits around indecisive "looking" near the close, UNG is decisive.

 That's a new daily closing high and the candle looks to close near or at the high of the day on a nearly 5% gain with rising volume.

 UNG 30 min through most of the base, nice confirmation now...

However that last pullback seemed to be very important, it sent a 4 hour chart to a new leading high and right after, UNG followed. Smart money was at work right before the breakout.

GDX-Miners

If you have been paying attention to the South African gold and other metals, miners' strike which I haven't followed as closely as I should recently, I know the first company's negotiations ended up giving miners' who were striking about a 22% pay increase, of course other mines went on strike looking for the same treatment, I know at least one told their employees to go take a long walk off a short pier.

The point is, gold miners "USE" to lead the actual metal, not anymore. When putting together an automated trading system the two biggest factors were the price of oil (for operations) and the currency exchange rate as the fluctuations may make their wages very high vs the gold's value very low or the other way around.

In any case, we need to look more closely at miners, but a quick look at DUST, the Bear 3X Gold Miners or GDX, looks pretty solid as a long which wouldn't be good for GDX/miners.

Here's a sneak peak of a long term chart and the trend of a short term chart.

 This is the trend (5000 bars) of the 3 min chart, an obvious huge positive divergence meaning DUST is looking good as a long, although it seems to be building a base to launch that move from.

Longer term the 30 min. chart shows where DUST went negative and the confirmation of the move down, also a positive divergence (rather a series of them) at the same place the 3 min trend is showing them.

Something bad is happening to miners which is good for DUST longs.

How Fast Things Change

 This was the NASDAQ intraday futures just 30 minutes ago in this post 

 This is the NASDAQ 1 min intraday futures 5 minutes ago, they're even higher now.

That last post-ooohhh!!!

I'm not a told you so kind of guy, but the market has behaviors that you'll notice if you watch it often enough. In this case, this is nearly a century of price pattern conditioning of Technical Traders, Wall Street figured out what Technical traders will do when confronted with these price patterns a long time ago, around the time the Internet, cheap online brokers and everyone switching to Technical Analysis so they could trade their own portfolios. After that, slowly and surely these patterns were used more and more often against technical traders, they are too predictable and haven't changed or adapted, which makes Wall Street's response predictable, which is an edge.

In the last post I showed you the same pattern, the confirmation of it and as soon as it's posted, take a look....

Note the volume pick up in AAPL as the bearish price pattern, a descending triangle is broken to the downside by a few cents, VOLUME SURGES as the shorts step in on "Confirmation".

Now the second half of the story, "The bear trap". On a reversal, just as AAPL saw on the open above resistance where retail would have bought on a breakout move, once prices move against the shorts that just entered, their covering creates the demand that kick starts the move higher, the higher it goes, the more shorts covering at a loss and the more demand sending it even higher. THIS IS EXACTLY WHY FAILED MOVES ARE SUCH FAST REVERSALS.

Where Have I seen this before-AAPL/SPY

 AAPL intraday with a very familiar bearish descending triangle which is a consolidation/continuation pattern, any technical trader who has read a few hours of a TA price pattern handbook knows this pattern and well, often shorting inside the pattern, but most wait for confirmation which is the break below the pattern, sometimes it comes, sometimes it doesn't. However the larger point is the more obvious the pattern, the more likely it gets manipulated or was set up as a manipulation. It reminds me of another descending triangle we saw with a positive divergence going in to it.

IT was in the SPY on a longer timeframe, but the markets are fractal, we already knew the bearish continuation pattern had a positive divergence and thus we'd be seeing a move to the upside, the break below the pattern (confirmation) where the shorts jumped in is where we added a bunch of leveraged longs as hedges to core short positions.

What happened next?

That was the June 4th low, the market rallied ever since, well recently it's been a little "ify"