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Monday, August 30, 2010

Russell 2000 to lead the way?


SPX opened today mildly down tp 1060 and then a half hearted rally to 1064 and it was down hill after that closing at almost low of the day at 1048.92.  TZA made early morning lows at 6.42 and re-visted the lows at 7.08 and never looked back. It closed at 38.30 3 pennies shy of high of the day.  My trend line from yester day held and spx did not make 1068.  How ever things for tomorrow are very different.  1.   Tomorrow is the last day of the month any left over window dressing should be completed tomorrow.  Thats positive and I would expect a rally sometime during the day.  2.  Today was an inside day and as such means it is pause.  Yesterday being a intra day reversal day to the plus side indicates it is a positive for the market.  3.  Today's close is near the low of the day within 50 cents implying a positive period shortly may be as early as tomorrow thats also a positive for the markets.  4.  There is the usual Tuesday being opposite of monday thats a positive for the market.  5.  TZA isat the upper end of the trend thats a positive for the market.  
1.  SPX closed below 1050 an important support level thats a negative.  2.  SPX got rejected near the 77 DOMA on the hourly thats a negative.
3.  Magellan summation index failed again to give any turn thats a negative for the market. 4.  Any move below 1043 would be below the 77 DOMA on the weekly that is quite negative.
Russell is negative either way.  If we do not get a lower low for the month below 587.67 then we will have an inside month and since last  month had a LH and LL the trend would still be down.  If we do go below 587.67 thats a lower low and lower high again and a continuation of down trend.  Unless we get a humongo rally and Russell closes above 650 its all bad for Russell. 
With equal number of positives and negatives I would not be surprised if the market satisfies both sides instead of none or one.  IMO we should get a rally followed by a decline by the end of day for we all should be getting ready for the dreaded September Halloween.   I think it is going to get a little scary here soon if not immediately.  I will again depend on DMRM for my trading.

Sunday, August 29, 2010

Winodw dressing?

On July 20th we had an intra day reversal that ended on 9th Aug. Bottoms are generally not made on intra day reversal.
Before July 20th 2010  IntraD reversal was in May 2009.
IMO while everything looked peachy on Fri. but we should have more down side. Window dressing for end of month was/is underway.  This is probably the only chance the floor is going to get to

establish some heavy shorts for the next to worst month for stocks.  Many are expecting spx to turn back at 1070 it is just for that reason I think we won't make it there. My third chart is an hourly chart of the SPX and I have drawn the controlling resistance line in maroon.  IMO SPX is ready to be turned back right here.   The confirmation is in the TNA/TZA charts.TZA has risen from 28.78 to 41.67.  The 50% correction on that is at 35.2  2 I can't categorically say thats where the bounce will be from  but that is not a bad a place to come back to and go up from.  On my chart I have some very good trend lines that should be adhered to particularly TAZ.  The TNA chart is on the expanded line from Andew's fork and should act as resistance.  All in all I am bearish but would let DMRM guide my next move which should be a big down.

Thursday, August 26, 2010

EOD tomorrow will clear many cloudy issues.







On wed. 8/25 SPX made a LH and LL and the market closed positive 3.4 and today 8/26 SPX made a HH and HL and it closed down 8.1.  I would surmise the trend is up because HH HL but I am very iffy about that.  Gann date of 8/26 was rather mild.  SPX opened nicely up but was in a rush to make the high of the day early in the morning  at 7.45 after that it  was all down hill.  An attempt was made at 12 noon that lasted till 12.45 and then tomorrow's GDP fear set in and SPX sank under its own weight  in a rain drop fashion to colse down 8 points.  1039 to 1061 was a nice 22 point rally and great place to short at or near 1060 with a cover at 1063.  This market I believe is in serious jeopardy of making a intra month reversal below 1010 and raindrops will turn into water fall.  The very first chart is the rally from 666 to 1220 and the drop since then.  The previous bottoms very seldom act as support.  It is the previous tops on its rally from 666 to 1220 that should be watched.  IMO the first good size stop is around 945 then 875 ,835 and 803.  The red trend line is the controlling line when it breaks there could be some fire works.  The point that I am most impressed with is that we have only had 38% decline of the rally from 666 to 1220. 
The next chart is  blow up of the decline from 1220 to 1010 and the rally back to 1129 about 58% But the fact that we are back hovering near the 1040 lows is bothersome.  The third chart is an important one.  At 1025 SPX would have lost 7/8 of the rally from 1010 to 1129 and is a very good place for it to show some bounce. The last chart is TZA the blue trendline was the first one I drew.  The rest are parallel lines.  This is showing a slightly different picture.  If it moves up to 41.8 and reverses that is potential triple top. If it goes below 37.6 that could be a Gann 4 and and TZA could lose some ground fast and markets rally.   TZA has rallied back after losing only 3/8th of the rally from 28.8 to 41.8.  I like this chart.  I will be watching this closely.  I still use DMRM 10/20 cross and D2PL as my main tool.  My black book says to stay short or find good place to short. 

Wednesday, August 25, 2010

Working towards intra month reversal ?

SPX and the markets did not behave right at all from the beginning.  There was not a hint of bullishness.  It started out down deep and after the Philly number made the low of the day at 7.03 and rallied till 11.43  followed by a decline till 1.56 and had a final rally till 3.26 and finally closed down 15.5 points at 1051.87.  I have given the times of day to get an idea of trading peaks during the day.  This 1051 is very close to an all important 1044 level where we  bottomed at the 5th of Feb. and at 1040 on 25th of May and at 1042 on 8th of June.  I have always felt market finds lows at previous tops and highs near previous lows.  Given that IMO the 1040 will be breached and quite soon.
The full moon today didn't do much for the markets.  The low of the day is not a next day phenomenon.  It simply points to the extreme condition that are prevailing in the market and a counter rally probability of higher prices in very near future at very high levels.  None the less todays performance was pitiful.  None of the reasons panned out to produce a plus result.  Simply put it was a wrong call. 



  The first chart is $rut.  These are Dino's high to low parallel lines.  So Far it is inside an outer channel.  If what we know is only 50% ( I believe that) the next 50% is the lower channel that would be quite horrific.  I said on Monday I expect serious declines to happen very shortly. The next is TNA and poor TNA can't get anything going any rally is crushed. The bottom of the lower channel is now around 27.  The third is SPX  and support is around 1032.  My sense is we will go much lower than that.  1010 was the low from July if that is taken out we would have our first intra month reversal to the downside since Jan 2009. Not a positive sign at all. The last chart is also SPX but over a longer time period horizon.  The red trendline was broken today that is definitely not a good thing.  The blue trendline is my D2PL and support on that line is at 1032.  SPX is not too far from that. Any rally at this point say 20 points on SPX should be treated as a opportunity to short.  The market is extremely week and gaps are appearing that may not be filled for a while.  The rain drops are showing next will be water fall.  I wasn't quite sure how today's full moon would work it didn't.  Next big day is Aug. 26th could be a temporary bottom.  I am bearish and this is no time to pussyfoot around. I will short judiciously.
 

Monday, August 23, 2010

A simple error can cause huge misrepresentation

SPX opened at 1073.36 and quickly reached 1081.4  at 6.52  and detoriated during the day to 1069.4  by 8.07. It then rallied to 1075.4 by 11.17 and closed at 1067.36.  The low of the day was at 1067.08 and high was 1081.4. It was a higher high and higher low day mildly bullish.  I ran a study some time ago on SPX closing within 50 cents from the low of the day and found 100% of the time there was an imminent rally to the upside.  Today is one such day and as such I expect a rally tomorrow.  Monday was down Tuesday has 66% probability of being an up day.  SPX has been down for 3 days in a row and could easily give a snap back rally.  The first 2 charts are TZA and TNA  hourly charts.  Upto 7 a.m is considered first hour and the next hours are at 8,9,10,11,12 and 1.  It shows the 10 point sma and the 20 point sma. The theory is same as death and golden mvg avg crosses when the faster one 10 sma crosses the 20 to the downside one shorts and when it crosses to the upside one goes long.  With a little tweaking for initiating a trade only when TNA/TZA  retests the mvg avgs the cross  works well.
The third chart in yellow is also hourly TNA with 10 and 20 point smas.  This is from Freestockcharts.  The 20 point sma is not calculated using the same methodology as the 10 point sma.  I would caution to check these mvg avg numbers with another source before using them.  Using the "correct" 10/20 cross from chart1 and chart2 look like the smas are about to cross.  That would also be positive for the markets.  I am bullish may be just for a couple days. 

Sunday, August 22, 2010

High beta stocks can easily beat triple ETFs

This was one of the better weeks from a traders point of view.  After a mild down open on Monday mkt rallied to give DKOD on Monday.  It then rallied big and barely made above 1100 before it corrected to 1185 It made yet another attempt on Wednesday but didn't even make it to 1100 and kind of fell apart finally bottoming at 1064 on Friday.  TNA went from 34.37 to 39.68 and back down to 33.90 and closed at 35.48.  Of course options expired this week and that had a lot to do with the moves.  None the less these were very good moves for a trader. 
The chart on the left is FAS daily.  It is on a very important trend line.  It could not clear X it broke thru Y in a big way and now is hanging on to dear life on line Z.  IMO this line will be broken in a big way very shortly that is because I think this market is going completely break down very shortly and in a big way.  Very few blogs and people are talking about a collapse and the markets losing say 20% in one month.  The 2  small things in the way are AUG. 24th full moon ( generally a market top) and then AUG. 26th another important Gann date but not as big as July 26th.   The next chart is TNA which is making new lower lows.  That always means the trend is down.  The next chart is SPX for a rally from 1010 to 1123.  SPX has just went thru the 50% point of advance that is also negative.  The last is a decline from 1220 to 1010.  By going to 1123 we rallied a little over 50% and got turned around now bouncing from 25%.  When everything is at higher end of percentages and we make higher high one has to surmise it is positive if not immediately at least in the short to intermediary time frame.  Conversely when everything is hovering at the low end, Hindenburg is turned on and no one is posting a rip roaring earning and above all we are entering the month of September I am not very or even mildly bullish.  The markets are about to get hit and get hit hard.  Exact timing is near impossible but a close second can still make a decent amount of money.  I will continue to employ DMRM, 10/20 cross ( which is negative as of Thu.) , D2PL trendlines and DOMA77.  I have been experimenting with individual stocks with high beta that can be margined and had better yield last week than TNA.  Just something I tried last week. I am bearish  overall

Sunday, August 15, 2010

A rally from current levels is probable

Except for the Monday when SPX went up 6 points it has been down rest of the week and finally ending the week at low day at 1079 but not at low of the week.  Friday was an inside day.  Many of the indicators have turned bearish and add to that the Hindenburg Omen also got turned on   Thursday.  It points out that the probability of a good size hit are much higher now than before. We had a positive DKOD on bullish ETFs on Thursday that has not matured yet and the closing at the low of the day on Friday is very positive. I have hourly, daily, weekly and monthly chars on SPX.  The hourly points that a parallel line support is very close.  While some percentage decline numbers are not exact they very close to short
term bottom. The daily chart has a 22 day cycle that is complete.  which is pointing to a bottom.  The low at 1079 is very close to a 42% decline for the rally from 1010 to 1129. The 50% mark is at 1070.
This may not be THE bottom pretty darn close to A bottom. Looking at the weekly chart the red trend line is parallel to the low 666 to 1220 hi line.  The low there also points to 1070 for support anything below will be a break to the down side.
The monthly chart so far shows a higher high and a higher low which is positive.  The trendline support is around 1035.  There 13 more trading days in the month. A lower low in the monthly will be an intra month reversal.  In the rally phase there are lots of intra month reversals to the upside  but once a decline starts they are very rare. The probability that we will see spx lower than 1010 is quite low for this month.
This is opex option expiration week.  The end of the week is opposite of beginning of week. Slightly over 55% probability.  
The TNA hourly chart is very close to the mid line of the Andrews fork. At 34.3 it will close to 88% decline of the rally from 32.5 to 47.8 that we found earlier was usually a good point to bounce. 
The TZA is bumping against the trendline resistance and is probable that could be turned back.   All in all I am bullish and will play the DMRM. My bull/bear ishnes is always short term.  I have a tough time forecasting any more than short term and as such I play short term only.

Wednesday, August 11, 2010

Everything has probability




The markets really did a number this week.  A well thought out trap was set on Friday and rally began Friday afternoon that ended on Monday. Tuesday was FOMC minutes and a great day to trade.  Dino's rule o three applied nicely. First move isthe right one Second is false and third is profit zone.  After the release market went 1 up (ignore) , 2 down (buy) 3 up (sell).  I took advantage of the market mechanics and bought on two and sold on three.  Late Tuesday and today have been nothing but bloody murder.  TZA which was left for dead in the water came to life from the low of 30.06 and closed at 35.75. 10/20 cross that I have been high on did an about face and went from down signal to up signal.  That usually causes a 20% reversal  On TNA that comes to 33.  SPX is very close to its support around 1088 next point is 1075.  Those horizontal lines are drawn at every eighth from high to low.  In FreeStockCharts one can set these horizontal lines to screen position and when one moves the time, the highs and lows are always divided into eighth.  My buddy Sylvanus pointed out when TZA/TNA  or FAS/FAZ declines 7/8th of the previous rally there is a new rally.  The daily TZA shows that.  By that token TZA may move up to 39.5.  The last chart is SPX daily.  Applying the 7/8 to the rally from 666 to 1220 brings it to 735.  That is scary situation.  These horizontal lines give a very good perspective and I use them a lot.  The Market is in a decline and there will be a rally I will use DMRM to hop on when the rally comes. I do not want to pick a point as a low for the probability is plainly put against it. My twitter updates are thru Dino_007.

Sunday, August 8, 2010

Trucking along


The next big day in the market was Aug. 6th which was on Fri.  We hit a low of 1107 on the spx and a double bottom low of 40.8 on the TNA and took off.  The closing was almost positive.  The decline from 1128 to 1107 is not big it didn't even meet the minimum 2% required to be called a decline. After the 46.19 high on Monday TNA has had a lower high all the five days of the week and with the exception of WED which was an inside day TNA has also had a lower low.  The trend is not really screaming up.  If stock values are based on future economic activity and hence profits the news wasn't all that great and GS lowered their estimate of future GDP.  Day to day markets shrug off most of these and are reactionary none the less it is a good idea to keep the relevant data.  I have a simple calculation for spx which is bullish: 666 to 1220 is 560; 1220 to 1010 is 210; which is (210/560) or 3/8th or 38% decline.  Here is the kicker 1010 plus 560 is 1570 which is old high on SPX.  Not counting anything out this may be the plan.  I have added three charts SPX weekly, SPX hourly and TNA hourly to follow the markets.
I am into 10/20 sma crossing , and DMRM  and D2PL for my trading. 

Monday, August 2, 2010

Sooner the better

This was a very big day in the markets.  There was overall rally in every sector.  Heck even companies that did not report great earnings were up today.  DMRM worked very nicely today.  Next important Gann date is August 6th.  I am very aware
that people who are semi permanently locked into bear positions and are short the market seem to come up with the same reason our US's balance sheet is loaded with debt and this balloon could burst any minute.   The second common talk is about a P3 decline that will take us to new lows less than 666 on spx and there will be utter chaos.  This talk is becoming less common though.  And then there are the strict Elliot Wavers some are very good they seem to catch the up as well as the down moves.  In our CIL ( click at the big blue box at the bottom) we have Gann analyst, some that do Andew's fork,  and people with very sophisticated set of indicators that takes them from bearish to bullish in stages of 25%,50%,75% and 100%   and vice versa.  I have my own like many.  Currently my focus is on 10/20 sma cross, DMRM and D2PL trend line.  IMO we are going up.
Bottom line you have to get on the right side and  sooner the better.
My twitter updates are sent as warranted by the market as Dino_007