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Friday, December 31, 2010

Ideally.....


SPX made a LH and LL  and closed in the negative column that is negative. Range was almost 5 points.  The high of the day came at 6.45 and low came a little before 9.00.  Then a heartening rally of 75% of the range of the day failed at 12.30 and spx closed more near the low than high.  This is negative for tomorrow.  RUT on the right made the low of the day at open and HOD by 6.55 and a second top failure came around 11.30 and closed very close to the low of the day.  That is negative for RUT.  Putting both of this together there is good chance tomorrow would be a negative day.  
The chart on the left is TNA hourly.  It is clearly topping or topped.  Once it goes thru the DOMA 77 that would give a good confirmation.  In the last 5 sessions it has not gone any where.  I mentioned this in my blog a few sessions ago once the TNA rushes to the top line of the channel it just hovers around forming a top of distribution  That process is about to be complete.  The next phase is decline in an orderly fashion thru the DOMA to a rest area around the median line followed by a violent drop to the bottom of the channel.  I will be waching this very closely.  I am ready to short. 
The chart on the right is SPX daily.  There were 6  quality shorts (Red arrow) and 6 quality longs ( Green arrow).  This is what an ideal trader would have done.  My cuban friend tells me there is technique called the ideal trade technique.  If I look at a chart and mark what the ideal trade would have been  over and over I would be able to catch a  good portion of the middle span of the trade.  I believe he is right.  Ideally I would have gone long at 1173 and my next move would be to short.  The DOMA is 22 day simple moving average from one of this years best teachers I came across Adi.  SPX is being rejected by the median line.  Even though my preference would be rejection by top line median would work too. 
Lastly tomorrow is Dec 31st. a GANN 180 degree day.  Last few times it didn't do much. May be my starting date wasn't perfect.  I have been talking about this for a while.  Its here. I will watch it with interest.
Last day of the year is generally very mild day with less than 2 points up or a good size 8 pts or above hit. With year end, month end, and quarter end window dressing by the funds I am hoping we would see some action tomorrow.  
I am fully ready to go short but I am not short yet. 
I started this blog just for the heck of it and soon found it helps a few people and started putting more and more into it.  Actually the blog makes me stop and think and that makes me a better trader.  
Real thanks to all of you  for reading my blog and offering me encouragement.  

Wednesday, December 29, 2010

Interest rates went the other way!



SPX made a HH and HL  and closed in the plus column that is positive. This is what I called for yesterday.  Range was pathetic 3.82 again.  The low of the day came right at the open and high of the day came at 10.18 at 1262.60  then a second attempt at 11.14 fell short at 1262.56.  This is some thing I have noticed in many issues.  The second attempt fails by pennies and the isuue falls hard.  Very similar thing happens at the low where the second low is slightly higher and the issue take off.  The drop was quick and hard.  SPX lost 75% of today's range.  This exited many bears.  My view is  as SPX came close to the high of the day a sell program hit and prices had to fall.  The chart shows a few gaps on its way down, near the end of the day.  This kind of close usually causes a rally in the morning contrary to the beliefs of many who would call for a gap down opening in the morning because of the momentum.  This very similar to Low of the day close where the next day has a very high probability of closing in the plus.  RUT did very similar except the second high 791.57 was higher than the first 791.51.  None the less both SPX and RUT had a DKOD which is very positive.  I am bullish.  And I also think the end is near. 
TNA;TZA; FAS;FAZ all had an inside day.  What can be more pertinent.  The markets  have been having slow very shallow range days.  This also gives a good set up for an outside day.  
The story was on the interest rates.  Above is TYD.  This is Direxion's 10 YR notes bullish ETF.  Here the trade is for rates to go down.  The first high 68.51 and the second was 68.10. The two black arrows.  No doubt it fell.  Now to the two blue arrows.  The first low was 51.21 and second is  52.04.  Today was a big day. Very big one.  If this was the turn in interest rate no one is talking about it could be very positive for the for the markets.  I will pay a little bit more attention. 
I am still waiting for the indicators to turn within the next few days.  Then I wil short.

Thanks for reading my blog and offering me encouragement. 

Tuesday, December 28, 2010

Whats the Rush?

SPX made a HH and HL  and closed in the plus   column that is positive. This is what I called for yesterday.  Range was pathetic 3.68 again.  It is not a DKOD today.  The high of the day came very late in the day. It opened at 2 pennies from hod and made low of the day very quickly a little later than 7 then a steady rally took it to high of the day ( by 2 pennies) around 12.30.  It lost 3/8th of the low to high range towards the close.  The range was only 3.68 the 3/8th is not much it is only 1.23. RUT had a tough time today.  It opened near the high of the day.  Reached the low of the day around 7. Barely made above yesterdays close during the rally from the low another negative sign. The rally was a little more than 60% of range of the day  and it lost 1/2 of that and closed at barely at 25% of the range.  The close was bearish. 

The chart on the left is TNA daily.  TNA is still on the median line.  It hasn't broken down.  The 84 day cycle seems to have held.  The chart on right is TNA hourly.  It is also hovering around the top line.  There is no breakdown below the DOMA.  Together it means no signal short for me.  While the movement was clearly negative none of my indicators were turned on for me to short.  
This chart on the left is FAS hourly.  The trend is still up.  Should we get a clear break in the channel my conclusions would be different. This tells me that the banks are still strong and I really doubt that we can have a market correction without the banks participating.  The interest rate situation got worse today.   20 yr did worse than 10 yr.  The rates rose on both.  Here is the issue I know this rise in interest in not a good thing by any account.  But the effects are never immediate.  The chart tells me we have a few more days to go.  My sense is we need to get a 48 font headline on news papers  before the market really takes  a hit. Something that will give a blow off top. 
I am content to wait.  End is really not that far. .
Needless to say I am bearish.


Thanks for reading my blog and offering me encouragement.

Monday, December 27, 2010

Ptience Iago Patience


SPX made a LH and LL  and closed in the plus   column that is positive. I have seen this before kind of few times lately.  Range was 7 better than the last few days.   It gapped down and made the low of the day by 9.35 and then there was no looking back.  It barely missed being a cloud walk day but it is a DKOD and at the very end of the day it lost about an 1/8th  of the low to high range.  All in all this spells not bearish sign with a big N.  RUT did very similar except it was not a DKOD.  RUT closed within 1/2 a point of the high of the day.  That is quite negative for RUT.  The probability is over 70% we will have a 8% decline during the day.  And that is a problem SPX says up RUT says down.  I am short TNA.

These 2 charts are of interest rates.  On left short 20 yr ultra meaning the trade is for the interest rates to go up on right is the opposite.  I saw the decline on the short side from 60 to 30 produced a rally of little over 11 points or 38% approx and the rally on the right from 66 to 105 produced a decline of 33 points which is more than 75%.  I know the 3 fers have decays built in them but this much one is down twice as much as the other one is up.  My conclusion is the optimal way to trade these is to short them both simultaneously.  Thanks to our YODA Anchak who put it in the right words.
The chart on the right is SPX hourly.  I believe we have a very few hours left for it to top.  As far as the points go there may be a one huge panic buying with SPX up 22 points to put an end to this run.  I have expanded the top channel by a 1/2 amount now it has 4 equal section.  1 went up 2 section so should 5 IMO.  So while we wait..  some bizarre end may be coming. 

The chart on left is FAZ. After a false bounce it has settled back to decline.  The bottom of the channel is at 9.17 and as I discussed yesterday the high on FAS for it to have resistance is 29 - 29.4 if it gets past the 50% point at 28.4.  As I see it all this could happen quite soon and FAZ should get a good bounce. 
I am still bearish just waiting for the roll over. 
Thanks for reading my blog and offering me encouragement.

Sunday, December 26, 2010

Waiting to sign in


SPX made a LH and LL  and closed in the minus  column that is negative. Range was only 4.50 points.  It gapped open down and topped out at 6.45 and then made low of the day by 11.30.  It then rallied a little over 60% but still closed the day in the negative.  RUT opened flat, made the high of the day by 6.45 and low of the day by 11.30 and had 50% of the range rally to close in the negative very near the low.  IMO thats not positive for the RUT.

The chart on the left is FAS hourly.  This has gone from the slow channel to a fast channel.  It made a low at the intersection of bottom of the fast channel and median line of the slow channel.  This happens a lot.  The median line of the fast channel intersects withe the top line of the slow channel near 29.5.  I would pay real close attention to it. The chart on the right is FAS Daily.  The 50% point is at 28.4.  The median line is a little over 29. Putting those together I would take a short  when it gets there to the median line.
The chart above is TNA daily.  The first decline was 84 days from high to low and on the 84th day from the low of 31.5 on 24th Aug. TNA made the high.  It has now been down for 2 days in a row.  These are flashing top signals. On the hourly SPX hourly it has spent 137 hours since the last low at 1173.  By comparing it to the length of wave 1 rally of 180 hours SPX has 42 hours to top.  Gann date is on DEC 31st.   Put it all together and what do we get very near the top. 
There are other indicators like put to call ratios, EW and Fib. ratios, MACD rolling over, etc. are all flashing top signals.  But I do not want to front run this shorting.  I am going to wait for my indicators DOMA, DMRM, 10/20 cross and SPX down 2% or more etc. before I jump in.  We are not getting there we are there just need to sign in.
I am bearish and will initiate trade shortly.
Thanks for reading my blog and offering me encouragement.

Wednesday, December 22, 2010

Nearing an end?

SPX made a HH and HL  and SPX closed in the plus column that is positive   Range was only 4.45 points.  It gapped open up and topped out at 9.30 and then lost 50% of the day's low to high by 11.00 Then it rallied little erratically to close very close to the high.  This is bullish for SPX.  RUT had a totally different story.  It opened .05 lower It made low of the day a little before 8 and high of the day around 9.30.  May be there was a buy program that ended at 9.30 for both RUT and SPX. It RUT then lost all of its gain by 11 and rallied only 50% range and close almost even.  But then RUT had a lot of resistance to deal with around 790.  The range was less than 4 points.  It was very tough day to make a good trade.

The chart on the left is FAS hourly.  Banks had a great day today.  FAS has made a new trading high.  It is above the median line and looks like it wants to go to the top line of the channel around $30.  Is it going to make it there or could something stop it?  That would be FAZ on right.  The reconstructed channel is giving a high probability of a bounce about to happen from the bottom of the channel.  Some of this is pure Santa rally to re balance the portfolio as interest rate instruments are dumped and equities are bought.  If I couple that with what happened between 8 and 9.30 in RUT and SPX  I have to conclude there was some big  guy buying that went on today.  
This market is not too far from a top. May (BIG) be 20-30 points from where it is.  IMO It is too late to buy and too early to short.  This too will end and give a clean nice short.  There is no need to rush.  I will just wait it out.  Before jumping in anticipation.  I have short that I will I unwind.  I shorted TNA because the odds are 18% that RUT will be up 6th day given that it is already up 5 days in a row.
 My next blog will be on Sunday night.  I am not going to initiate a new trade tomorrow.
Thanks for reading my blog and offering encouragement

Gaps everyday


SPX made a HH and HL  and SPX closed in the plus column that is positive   Range was only 6  points.  It was a mini version of a cloud walk.  Usually SPX is up about 20 points on a cloud walk but this one was tame.  SPX made the low of the day a few minutes after 6.30 early in the morning and there was no turning back. The charts are 1 minute  for the day. SPX is on the left and RUT on the right. 
The chart on the left is Best buy.  It was pummeled 6 days ago for reporting bad earnings.  It opened $6 dollars lower.  It was a news story and most of us were spectators of the action.  But when I look at the action few days continuing the stock keeps loosing ground.  My sense is even if initial drop is not caught there plenty of meat for the next few days. The chart on the right is ANF retailer.   It is reverse of BBY.  This stock ANF gapped up on three different occasions and has paid good returns after each one of them.  My take away is gaps work.  If there is an intra day reversal on a gap stock (it happens) then it is better to get out try another day another stock.  The biggest secret is there is one that happens every day. 
The is SPX daily.  It is hitting the median line and looks like we are at the end of 1 of 3.  I am of the opinion we should see some declines now.  A good 2 correction needs to take spx to little lower than 1200.  The timing is a little off.  To catch on time SPX may just ride the median line until the time is consumed without  going much higher.  
This is RUT weekly.  The 790 is the last line in sand.  There are no credible resistance lines that can be drawn once it is busted.  All others have been.  Is this one going to stop the rally? I look at it this way if not now when if not this line then what line?.  If I see a 795 on rut then I will hop in on the train.
This has been a traders nightmare of a market.  When it goes one way it isn't worth while to trade.  Profits made on one side are lost by going  to the other side. I may skip a few days.
I am having a tough time being bearish.  I am not planning on trading till monday maybe.
Thanks for reading my blog and offering encouragement

Monday, December 20, 2010

Always important 50%

SPX made a HH and HL  and SPX closed in the plus column that is positive   Range was 9  points.  SPX made the low of the day a few minutes after 8 and high of the day at few minutes after 11.  It then lost 40% of today's low to high near the close.  SPX finally closed at 1247.08 only 0.33 from the decline low.  The rally from low to high was impressive and gradual.  RUT was similar HH , HL and closed positive.   RUT had  High 785.86 , Low 778.79  and close of 782.3 That was exactly 50% of the low to high range. 


The chart above is my hourly SPX.  I have posted this chart many times.  The thing I am watching are 64 hours left on this up move ; DOMA 77 ; and break of the top line.  I saw a small crack in SPX today.  A little pull back to the 1223 area would put it at the median line.  
The chart on the left is FAZ.  This is a difficult one to read.  It is riding on the median line it hasn't crossed DOMA 77 to the upside. FAS its compliment is struggling.  A little lively action would make it more definite to make a call.  I want to be bullish on it but I will wait until everything is in place.  A break above the top line of the channel would be a clear signal but that is at 12.2.  
The chart on the right is TNA hourly.  I have readjusted the channel to accommodate today's high.  This is the one that showed most promise to the down side.  When (not an if anymore) there is pull back  it will have support at 68.  Below the DOMA 77 is where I would short with convivtion.
I am expecting the next few days to be boring as more people pay attention to other more important things like Christmas. It is better not to trade as the returns are hard fought.  
I am bearish for tomorrow for 2 reasons one Tuesday opposite of Monday and both RUT and SPX have been up for 3 days in a row.  
Thanks for reading my blog and offering me encouragement.

Sunday, December 19, 2010

Some of it.

SPX made a HH and HL  and spx closed in the plus column that is positive   Range was only 6 points.  SPX made the low of the day a few minutes before 8 and high of the day at few minutes before 11.  It then lost 50% of today's low to high by 12.45.  A small rally into close put spx in the plus column.  It was a lackluster day.  For the week the high of week came on Monday at 12 and low of the week on Thursday at 7. It was an options week.  

The two charts are of FAS.  On the left is hourly.  It tracks the retracement from the recent highs.  After dropping nearly 38% it has rallied to 25% I don't think we are out of the trouble yet.  Until it clearly busts thru the DOMA and the 12.5% at 26.56 the current rally may be just a counter to the drop.  On a longer term the chart on the right is daily.  44.1% ( 1/2 of 88.2%) is proving out to be a tough resistance.  Here too unless we break thru the 50% at 28.6 and above the top line FAS would be considered still not in a bull trend.  However the chart pattern is bullish.  There has been a decline 40 to 17 and an accumulation for 3 months from 7/1 to 10/1 the next stage is rally followed by distribution.  Another important issue is banks and FAS are no where near new highs while the rest of the markets are at new highs  that is bothersome.  I want to be bullish on FAS but I do not have all the i's dotted and t's crossed yet. 
The chart on left is TNA daily.  TNA is on the median line of the uptrending channel I believe this line will be broken and TNA would proceed to the top line of channel. It is at 87 or slightly higher.  I find it hard to look at this chart and say that the rally is over or to say we are going to fall apart.  Should TNA proceed to the top line of the channel the current 72 level will become a strong support.  It will be a major concern only if the bottom of the channel is pierced.  The blue green chart on left is RUT daily.  What is worthwhile noting is while RUT has made higher high than the one on April 26th at 745 TNA hasn't.  That is the price erosion in 3fer ETFs.  It amounts to $10 in 7 months on a $72 ETF.  My sense is TNA has some catching up to do. 
The table on the left is monthly open, Hi, Low and close of TNA.  I have marked on the table cells in reverse color (blue fill with white letters) to mark which came first hi or the low.  Yellow fills are intermediate highs and lows.  Its some thing I keep. Make it easy to anticipate whats next.  Last was a 31.5 low the next coming up is a high.  Not a trading tool something that tells me TNA is due a high soon. TNA also shows more than $10 range in every and some very big months of $25 or more.  I only need some of it.
On the right is Gann emblem.  With July 1st low this chart shows a 180 degree day coming up on Dec 31st.  The 180 is IMO a very critical point lots of turns have happened here.  I would be watching it and paying attention to it. 
All in all I am not bearish.  This rally has few more steps to do before the dance is over.  I will continue to play the long side. 
Thanks for reading my blog and offering your encouragement.

Friday, December 17, 2010

Quadruple witching = nada day

SPX made a LH and LL  and closed in the positive.  SPX again  did the same thing two days ago the effect was negative the next day.  SPX did the LH and LL close positive 4 ays ago and the effect was positive.  The thing I noticed is it all depends on is the close near the high or low.  Close near the high next day is positive and close near the low next day negative.  Today's range was 11 points.  Today was first day positive.  IMO first day positive leads to 2 day positive and 3 day positive and so on.. 
SPX opened flat and made its low of the day of 1233 around 7 and rallied to high of 1244 at 11.  It then lost a little over 25% of low to high gain and a final rally to 1243 closed it  near the high.  I was impressed that SPX showed strength and did not fall apart.  SPX has recovered over 75% of the decline from 1247 to 1233 and that is bullish.  BY EW count SPX may still  get a smacked down as a final down but I am beginning to doubt it.  
The chart  on left is TNA hourly.  As mentioned before TNA is now riding on the top line of the channel.  A tiny pull back hit the 77 DOMA and TNA jumped right back to the top.  How convincingly it breaks the channel remain to be seen.  After the initial top TNA has given one false down signal.  I am yet to determine if this rally from 67.96 is good or not.  It is jumping after touching DOMA which is always positive.  I am not overy bearish yet.
The chart on right is FAS hourly and it is the most bothersome of all the ETFs.  Since Benny appeared on 60 minutes banks have not been rallying a whole lot.  FAS is very close to touching the 38% loss mark of the gain from 21.07 to 27.34.  It is close to the bottom of the channel.  If it doesn't rally here and instead  breaks own then that would be quite negative for the banks and the markets.  With everything else near the top some thing usually gives first and others follow.  Banks are flashing yellow light.
Tomorrow is OPEX quadruple witching hour.  I do not expect any moves at all.  It should be a  "lets watch the paint dry"  day.  Many watch dog agency will have their radar on the markets to catch any misbehavior.  Everyone will be at their best  conduct  like the way we drive when we spot a policeman. 
I am not bearish
Thanks for reading my blog an offering me encouragement.

Thursday, December 16, 2010

SNDK, AAPL and SPX

SPX made a LH and LL  and closed in the negative.  The range was 10 points and spx closed 1.25 from the bottom.  After being up for 6 days days in a row this was to be expected  but what was not expected was the way it came down.  SPX opened flat and a few minutes before 8 it made the high of the day and down hill after that finally bottoming at 12 noon. It made 50% recovery rally that fizzled and closed not too far from the bottom.  The reason I put the time frames for highs and lows of the day so I can note a pattern if one exists.  Second GANN 50% plays in so many time frames by watching the repetition I am learning to catch it when it happens.  For today the rally from 12 noon at 1234  to 12.40  at 1239.  Today was a pre cursor to options expiration.  IMO it was the negative day to reset the calls tomorrow odds favor an up day to reset the puts and hence a rally is to be expected.  RUT was down for the third day in a row.  The odds are a little over 51% that tomorrow will be a negative day.  
These two charts are SNDK.  The chart on the left is hourly and the one on the right is daily.  SNDK has very clearly defined channels.  In drawing channels what I have learned is  the channel that  can easily be seen and drawn first is only half the story.  I make it a point to draw a channel of equal width above or below and to follow the second one that is entered into. Currently SNDK is on the median line of the upper hourly channel and mid point line is around 45.  The mid point of the bottom channel on the daily is also around 45.  IMO SNDK first would  easily get to this point and bounce from here with the rest of the market.   I will be a buyer at 45 for the top line of the daily channel is at 60.  
The chart on the left is AAPL hourly.  This is another stock I trade from time to time.  It is excellent for option play.  It is on the bottom line of the bottom channel and should be bounce point.  However it clearly looks like some kind of distribution is occurring between the black parallel lines.  I see a very orderly retreat to previous lows that were made on its way up.  I also see a small H&S.  All in all I could easily understand if it were to fall to 311 as satisfying the H&S target and yet another previous low.  The open interest on AAPL for Dec. ( 2 days to go) expiration is even at 320.  But 310 is the point where most open interest  will pay the least.  I plan on trading this.
I am bullish because of the positive leaning during December option expiration.
Thanks for reading my blog and offering me encouragement.