GLD/GDX Broad Update & Quick Market Update

I think I have time for this post, although I'm trying to keep a close eye on market action, I see we have a 5 min SPY positive finally.

I suspect I have enough time for this post because I suspect the market will likely look something like this ahead of tomorrow's F_E_D minutes...

What we are looking at on this QQQ 3 min chart is the "Reversal Process", the mechanics of it which we've talked about several times aren't really that important, but understanding that a reversal in any timeframe is almost always a process rather than an event is important. The 3C accumulation/positive divegrence is important to confirm what we are looking at.

I think I have time for this post because in looking at the 3 min chart, although it is leading positive in the white box, there is a small set of relative negative divergences in the white box. The Leading divergence is much stronger than the red arrows or relative divergences, but they are telling us something about intraday trade and I think that is that this process is not done and QQQ prices are likely to come down toward the bottom of the base. It's still a "W" shaped base, but larger.

Although I don't want to get too much in to the subject in this post, another thing I think we are looking at (unless the minutes are leaked and this is the set up for them which is entirely possible as we've caught the F_E_D red-handed leaking the minutes to 154 private equity and other large Wall St. firms a day in advance of their release) is that the Q's just moved to stage 4 like the IWM had on 3/26. Do you remember what happened? The same volatility shakeout concept we have for a H&S top when its neckline is first broken to the downside (another form of stage 4), the IWM ran the shakeout of new shorts and moved to a new lower low for the Feb. cycle. I think the Q's are moving toward the same as they have officially broken to stage 4 and this set up looks like a volatility shakeout- see the IWM for how it ends...

As far as GLD and GDX and why I closed them in the trading portfolio (so I can use the assets elsewhere for the time until it's time to re-enter them)...let me get this much out and then I'll put it in the next post.

Closing Both Trading Longs, NUGT and UGLD

Both have had a decent little move, it's not the move I anticipate, but for very short term purposes with some gaps and the correlation with the market on small cycle moves, I feel it's best to take the gains here and come back to these AFTER the market has launched this mini cycle and completed it.

I'll try to get some charts up soon, but the very short term 3C charts agree, the longer more important ones still say that these are both going higher, I think just not yet.

Our QQQ Intraday Pullback

 TICK breaks the channel...

Small intraday negative divegrence in the QQQ

Looking to Add to QQQ Calls

The QQQ Calls opened yesterday are already at a decent gain, I've heard from several of you who took gains this morning and are looking for a new entry.

I'd like to add a little bit to that position, but as mentioned yesterday, I'd like to add any subsequent contracts with a May (standard) expiration, probably around a strike of $85.

To me the Q's still look the best, the SPY doesn't have a 5 min positive divegrence like the other averages, but the Q's goes all the way out to 10 min.

 This is the QQQ 10 min leading positive divegrence, you can see the leading negative to the left and what that did to price and the leading positive to the right, we're still in a micro cycle stage 1 base while being in the short term cycle stage 4 decline and just entered the February cycle's stage 4 decline.

This is why the bulk of positions are leaning short heavily with only a few leveraged positions long like the QQQ calls.

Intraday the 1 min is in line after an earlier positive divegrence so I feel comfortable that there's still positive construction on this little micro base, but it's more than enough with the leverage of options, probably fine with leveraged ETFs too like QLD or TQQQ if you prefer.

 The 2 min chart is lagging a little and this makes me think an intraday pullback is possible if not likely, that's where I want to add to a QQQ Call position, on a pullback, the uglier the better.

If you're interested, other than setting alerts, you should keep an eye on the intraday NYSE TICK, I drew trendlines around the 1 min chart, a dip below the channel which looks like it will happen would also give some early warning on a pullback.

So that's what I'm looking for at the moment as well as just checking over the assets I'm interested in as far as longer term positions, likely primary trending positions and a few initial momentum swings (all shorts, but we're not there if we have a bounce coming).

There May Be "Some" Hope for the Yen Based Carry Trades

Overnight, between the PBoC (Chinese Central Bank) saying, "Anyone anticipating additional stimulus would be disappointed" and the head of the Bank of Japan, Kuroda saying, "No need for additional stimulus" the pair of comments were enough to break the Yen carry trades' collective backs with USD/JPY breaking the psychological level of $103, essentially a mass run on stops.

The shellacking in the carry pairs, especially USD/JPY as that's the one I'm most focussed on right now, didn't translate in to the dump that would normally occur in ES/SPX futures...

 USD/JPY in red/green bars vs ES in purple, note the overnight action in the white box, ES didn't respond as badly, not nearly as badly and this with the USD/JPY hitting the stops at $103.

 I suspect part of the reason if not the entire reason is this little reversal process or "W" shaped base we've been looking for since Friday.

I've said it a few times before because it is my experience, "Once Wall Street invests in a cycle, no matter how small, they are going to see it through", that should tell you that these aren't just oversold bounces or overbought pullbacks, there's a purpose to everything they do whether we understand it at the time or not.

I happen to think this is VERY VIX related, but what's important thus far is what we can observe and thus far all of the averages at least confirmed the open or better.

Here's the 3 min SPY leading positive divegrence, it's the only average to halt at 3 min with no 5 min positive, the other averages have 5 min positives, thus the reason the call positions are open in the IWM and Q's rather than SPY.

You can also see the "W" pattern we were anticipating forming up.

This is the 3C chart (5 min) of USD/JPY, note the positive divegrence, I suspect we get at least a bounce and > $103 would be my guess, how long that takes is another story, but it looks like work is already underway.

This is the same USD/JPY, just 1 min with a positive divegrence. FX pairs just like equities also need a reversal process which seems to be starting as downside has halted and giving way to a more lateral trend.

 The single currency Yen Futures on a 5 min chart are in leading negative position...

$USDX is not, it's in line, but the Yen moving would be enough to move the pair (falling Yen=rising USD/JPY).

This is the 1 min $USDX with a positive in place, when this moves up, it should lift the carry pair.

And the 1 min Yen, when this moves down as an intraday negative divegrence is starting, the pair should lift.

Although the algos didn't take ES futures down like the carry pairs the futures usually follow (I think because they already started a cycle in the equity markets, a micro one, but one nonetheless) you can be pretty sure any upside in the carry pairs will lift the Index futures, that's the point of this post.

Market Update

So far, everything is going just about EXACTLY to plans or expectations. From last Friday after the max-pain pin was lifted (when we get our best signals), Looking Forward to Next Week ...

"...we have positive divergences this afternoon, the chances are VERY high that we'll have positive price activity early in the week (next)....I'm not sold on an immediate move Monday morning, the reversal process in the averages to me looks incomplete, a pop higher immediately would look a little premature so I wouldn't be surprised if there was a little more lateral/sideways work done in the major averages, but that's an opinion, the most important thing for near term trade is there are positive divergences.

Also remember that no matter how far they may have reached, like the IWM out to 10 mins intraday today, it's still only 1 day of positive signals meaning it's a small base/foot print and the best analogy I have is if you put 1 gallon of gas in your car, don't expect to be driving across the state.

As I said, I'm still leaning VERY clearly net short, I'm not worried about a bounce, but if you can hitch hike a little ride and make some extra cheese, why not. The VXX/VIX futures are still KEY to timing our downside pivot."

As for the charts, I didn't include the longer term (which I'm thinking should be around mid-week) negatives that a bounce sets up because I included those in previous posts already today, we're just looking at the immediate future for a short duration bounce and possibly a little stronger head fake move as the one from April 2-4 was very weak. 

I didn't notate most of the charts because the divergences are so clean and clear, this is a great time to learn divergence analysis if you haven't already and I don't want to crowd the charts, just remember we were looking for higher 3C signals in to either sideways or lower prices and we want to see some reversal process (sideways movement).

 DIA 1 min

DIA 2 min

DIA 3 min

DIA 5 min... The first thing that is obvious is the migration of the divegrence through multiple timeframes, each looks as it should so we have a solid divegrence, it's not huge, but it will move.

IWM 1 min

IWM 2 min

IWM 3 min

IWM 5 min

 SPY 1 min

SPY 3 min

The SPY 5 min was my least favorite Friday, it did not make it to the 5 min chart, thus the call positions that are open are in the IWM and the QQQ.

What you should notice now is that there's migration of the divergence in ALL of the averages, all 4 averages confirm each other.

The VXX (Short Term VIX Futures) "Should" have nearly the exact opposite 3C signals although there is a bias toward accumulation in VIX overall, however negative signals in VXX would confirm the averages above.

 VXX 1 min

VXX 2 min

VXX 3 min

As far as the flying, leading positive divergences we are looking for in VXX to signal a downside turning point in the market of some real importance, this 15 min chart is showing the collective accumulation in VXX, it needed to be sent lower again into the accumulation zone for the divergences to continue to build, but compare the 15 min VXX leading positive above and now check out the SPY's 15 min chart (it should be nearly the mirror opposite and this represents the larger move...

This is the SPY 15 min with the entire February cycle which started with accumulation on Jan 27th through Feb5/6 and then stage 3 distribution (top) and the leading negative tells us all we need to know, use price strength to short in to.

VXX reamins the timing indication, but they aren't going to chase prices north to accumulate a large position so this market move to me seems to be more about the VXX than a head fake move or bull trap, although they could kill two birds with one stone.

And we are off.

I checked GLD/GDX/NUGT and they are remarkably quiet today, very much in line so as far as I'm concerned, I have no reason to move those positions (UGLD/NUGT long) and they'll remain in place.

Just going to check leading indicators to see if there's anything of interest.

At this point you should already be set for the move so it's just about managing the positions, maybe some opportunities here or there, but the next task will be looking for the end of this move, I'm thinking around the F_E_D Minutes mid-week, and watching VXX for more signals like the 15 min, then moving in to whatever short positions you may still be interested in, although I think most of us have already made those preparations.

We Should be Launching Soon

I'll have charts up in just a couple of minutes, the VIX futures look right, the market averages look right.

QQQ Charts

This one is looking interesting as well, somewhat similar to the early stage 4 volatility shakeout we saw from the IWM last week (staging relative to the February 5/6th rally).

 Note the initial signal that I was looking for after 2 p.m. on Friday as the 3C signals almost always pick up where they left off the next trading day, even if it's a long 3-day weekend.

You can see the initial positive divegrence Friday afternoon starting around 1 p.m., but picking up in to the 2 pm hour through the close, this is what this entire post was about on Friday...Looking Forward to Next Week and these signals have been very accurate for us, calling the accumulation before the Feb. rally, the head fake move before the rally setting up more accumulation, calling the rally and stage 3/top as well as today's action almost if not, perfectly.

Here's the 2 min chart, the reason I suspected and wanted to see a lower low below Friday's afternoon lows is because it hits stops and triggers short orders, boith of which create supply that can be easily accumulated by institutional money, that gives us higher probabilities, better entries, less risk and a strong timing signal as head fake moves (scaled appropriately for the timeframe you are looking at or trading) are excellent timing markers as they occur just before a reversal in most cases.

 The 3 min chart continuing to build a larger positive divegrence, this is still small in the scheme of things and speculative. It doesn't matter if the reversal process is a "W" or a "U" shape, just as long as there's some lateral movement creating a reversal process as they tend to be a process, not an event.

Here we have a solid leading negative signal on a 5 min chart taking the Q's lower and a solid 5 min leading positive, this should take the QQQ calls higher.

We even have 10 min signals with a recent positive, so the Q's have a fairly strong (for the short duration of this micro stage)  signal and thus are attractive over several other assets.

You also have the benefit of liquidity in the leveraged ETF products like QLD or TQQQ if you prefer to stick with equities.

I need not remind you that any upside is speculative, it's just a hitch-hiking trade and the real probabilities remain with charts like this 4 hour which is clearly showing massive distribution and particularly so at the Feb rally's stage 3 area.

Going to Close Out the XLE Puts to Open QQQ Calls

Trade Ideas: BIDU & QQQ Long

These are still short duration, SPECULATIVE  trade ideas. BIDU looks pretty decent for a bounce, I think it needs some leverage, I'll try to get some charts up. I think most everything that has been beaten up lately is going to see some upside action, FB was another I was looking at.

However, if I had to pick just one (that's not already out), I really like the way the QQQ looks right now, I think it's very close to moving with excellent signals. I will get some charts for the Q's out.

I think you could go with something like QLD (2x long QQQ), TQQQ (3x long QQQ) ETFs or a call position in which case I prefer more time than I think I'll need, I'd probably prefer May expiration (standard monthly), although I think April standard calls would work fine as well...I prefer them slightly in the money.