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Tuesday, November 30, 2010

Not enough time spent going down?

SPX made a LH and LL and closed in the negative that in itself is negative for the markets for tomorrow.  RUT also did the same.  SPX and RUT acted very similar today Very strongly opened lower and by 7 a.m. they were making lows of the day.  Slow and a grinding rally that spurted up around 11.30 and topped out for the day at 12.50 p.m. But both closed lower.  If one were to llok at the numbers only for the day and not the action they will see LH and LL and close in negative.  That is not very positive for tomorrow.  
 The chart on right is daily from March 09 low.  We are currently in a decline and this decline hasn't even given us a 12.5% or 1/8th decline.  I find it hard to fathom that we would not even get that.  That level is at 1157.  Last month's closing was at 1183.26.  Should we close below that this it would be first month after 2 positive months that spx close in red.  
The next chart is also daily spx I zoomed in from 1010 low.  1173 is 25% or 2/8th decline of the 217 point rally.  IMO spx is doing a little too much of this back and forth between the 1173 and 1200.  Sooner rather than later it will burst out of it.  Looking at the picture to me it appears that the decline hasn't spent enough time. It should get down to the 3/8th (compliment  of golden 5/8th) an that is at 1146.
The last of the spx chart is also daily and it is the rally from 1039 to 1227.  I would call this a C or a 3.  and current decline a 4 or 1.  Should spx break the 77 DOMA at 1146 that IMO would put this as 1.  The 50% point is at 1133.  It was my opinion before that we would go to this level and rally all the way to the close of the year as a 5.
Today's rally was IMO result of end of month window dressing.  But tomorrow is another story.  The two forces Tuesday opposite of Monday is positive and LH LL is negative.  I am leaning on the negative side. 
Thanks for visiting my blog and offering your encouragement.

Tuesday, November 23, 2010

Banks lagging behind

SPX made a LH and LL and closed in the negative that in itself is negative for the markets for tomorrow.  RUT on the other hand made a HH and HL and closed in the positive for the 4th day in a row that is positive for the RUT market.  This is a very good divergence but no need to jump to any quick conclusion.  The banks were noticeably weak.  I have four charts 

On left is FAZ hourly.  I haven't looked at this in a while but with the banks struggling it is worth looking into.  It is in a narrow channel inside a bigger declining channel.  This has happened before and the top is near 13.5.  However if FAZ blows the top line and burst out of it  then I would seriously think about  buying it.  But for now I am content watching it.  Should it mildly go out and come back into the channel ( This is what I think should happen) I will buy its evil twin FAS. 
The next is SPX hourly top right.  It is the same from yesterday but zoomed in. From the way spx ran up from 1184 looked like it found a bottom. If that truly is the case then it should see a big rally as a follow thru and close well above 1210.  This has some legs.  The third chart on left is TZA.  This caught my attention because of the nature of the decline today.  It hasn't caught any traction at all and keeps making LL.  Not a good sign.  On the complimentary side is TNA my next chart on the right.  I see this going well beyond 61 to may all the way to 64.5 in the next few days.  The move from 55.57 to 58.44 was quite impressive. Needless to say I am not bearish.  I am not trading this week but watch the markets when I can.  I am bullish
Thanks for visiting my blog and offering your encouragement.

Sunday, November 21, 2010

Season to be jolly

This week starts the beginning of holidays full of festive and cheerful mood across the nation.  People happy shopping smiling giving and a general sense of warmth and looking forward to a better year in 2011.  Historically markets have rallied  in November and December.  Even in the worst year these months have at worst seen only a mild decline.  Given that and also the fact the volume is low compared to other months and FED is bent on pumping money into the system "come what may"  I do not believe we will have a significant decline.  There was one chance for the markets to terminate at 1227 and start a good size quick decline to 1130 but we have missed that.  I believe we will see higher high for the spx in coming days.
  
The chart on the left is spx monthly.  This is an important chart in my books.  Clearly we are inside the blue channel.  Should line 1 be broken that will cause me good reasons to worry and the same time should line 3 be broken spx has a good chance to sprint up.  Around 2  I have marked a circle and there is congestion.  Line parallel to decline from March of 2000; the center line of the current upward channel; line from Oct. 2002 parallel to Aug. 1982 bottom to Oct. 2007 top and the bottom of EW (1) at 1257 all intersect.  This happens in January next year.  All this much action makes this chart an important one. 
The chart on the right is spx daily.  This has clearly defined channels and a median line.  I do not believe the rally from 1039 is over.  The last decline from 1227 to 1173 was 25% of the rally.  This one generates buy and sell signals based on very simple last two point trend line.  To short the spx should pass the trend line that is drawn from last two lows with the latest low higher than the first.  Currently it is the bottom line of the green channel should fall for me to short.  To go long the trend line joining the last two highs must be violated latest high lower than the previous high.  I have marked a few buys and shorts on the chart.  I find this to be good medium term signal.

The chart on left is my hourly spx.  The channel construction lines were drawn in this order 1 2 3 then 4 6 5.  It also has my DOMA 77.  This is my short term trading chart and I look at it a thousand times a day.  The top happened at the intersection of slow and fast channels and so did the bottom.  The best place to short when spx came to the under side of DOMA 77.  Now if spx clears the DOMA 77 again to the upside (my belief is it will) that would be a signal to go long.  There are other things I watch for short term such as my DMRM and 10x20 cross etc.  This is a primary short term chart for me.

I am bullish at this point because of holidays and the fact we are only a few points from last high.  Next few days volume would be low and beginning of new option month.  We will see price movement but not any volume to accompany it.  I will not be trading this week. 
Thanks for visiting my blog and offering your encouragement.  Happy holidays!

Friday, November 19, 2010

Very boring Opex Friday tomorrow

SPX made a HH and HL today.  That by itself is bullish for tomorrow.   SPX sprinted out of the gates up 5 points and by 7 it was 14 by 8 it was up 22 points and it stayed like that all day.  A small decline started after 12 noon and spx closed 4 points from the high at 1196.  The range was very good at 17 points.  The two reasons were GM's IPO and Philly index jumped to 22.5 from 1 the biggest number in 2010.  Here is a good link http://www.dailyfinance.com/story/philly-fed-index-jumps-manufacturing-best-2010/19723785/ for Philly's index. It was a perfect cloud day.  It was DKOD day on any and all bullish ETFs.  With the holidays approaching all in all the model is predicting a continued movement on the plus side. To me it appeared we have not completed the hit yesterday but hey with this kind of movement and if we have a follow thru tomorrow I would be hard pressed to hang to the bearish stance.  This is opex and the markets effectively killed the calls yesterday and the puts today.  Having done that tomorrow it can drift nowhere with a slight positive bias and close the options.  Option fridays are notorious for inaction. 

The chart on the left is dow daily.  This is the count that is currently being used by the bulls. That we are in a 4 of  3 of 1 of  P3.  I don't use EW that much for it is hard for me to trade with that. I do watch the 3s and we should be coming close to ending 3 of 1.
The next four charts show the Dow rallies and corrections from March 09 low.  The circles are potential equivalent of 4 of 3 in each of the upward waves.  A minor hit happens at end of each wave that is at least one parallel channel line lower and 25% or more of the rally from previous bottom.  From the end of iv to top of wave is usually drifting and not much of point gain. My main reason in looking at this was to gain some insight into where we are in terms of EW (big) If I follow the bullish counts.  Clearly we have a long way to go.  From my trading point of view I just keep this in the back of my mind. I will be watching my DMRM signals, my KOD flags , 10/20 cross on the hourly and HH and LLs on the dailies.  I really like the double top I posted yesterday.  Currently everything is bullish. Today's rally is back testing the top of the channel line.  I may not trade till  29th for volume should be getting low and tomorrow IMO should be boring.
Thanks for visiting my blog and offering your encouragement.

Wednesday, November 17, 2010

Even in Florida it is not sunny everyday

SPX made a LH and HL today.  It is an inside day.  These are pauses in the continuation of a trend.  This is forecasting a continued decline tomorrow.  The range was pathetic 8 point.  SPX made a low of 1176.5 early in the morning and the high a little after 7.30 at 1183.5.  Serious decline started at 10.30 and ended at 12.30 with 1175.82. A small rally to close and SPX ended the day at 1178.59 up 0.25.  Not particularly easy day to make money.  Option did get clobbered.  Calls lost more than puts.  All this move today, tomorrow and Friday is about option closing to find a point of optimal minimal losses for pros.  I always find the stocks slowly drift towards specific price targets to close.  Like AAPL  to  300.  Money is made by gorilla tactic of quick in and out for a few bucks.  
The chart on the left is a must have chart.  Its daily SPX.  Line (1) was drawn first.  Line(1) also is the 45 degree line.  The 1219 and 1227 can be considered as a double top and I am in that camp.  The drop then is to the amplitude which is at 806.  Ouch!  The current drop has been very different form previous drops.  For one we have a lot more inside days after a big down days as if to allow the food to settle down before we go and attack the buffet again.  Looking between the lines we are at the middle of the middle.  Last time spx did this ( black arrows) it hung out at the middle line for a couple of days going nowhere and whamo.. it got hit big.  Time to watch it closely for me.  
This chart on the right is RUT weekly.  There two distinct Gann angles drawn one sloping down sloping from 2007 and one sloping up from 2009.  There are a lot of lines on this chart.  Of immediate concern is the 1x1 line.  Currently the support point is around 650.  That is the point we don't ( or we do) want to break.  The line (1) black arrow is resistance trend line from last two highs from 762 on Sep15th 2008 to 746 on April 26th 2010.  To me the most important trend line is the line that joins the last two highs second one lower than the first and this has to be broken for the rally to continue.  OR  the last two lows where the second low is higher than the first low and this has to be broken for the decline to continue. 
I don't have it marked on the chart for 1x1 line is of higher importance.
My current opinion is we are about to get hit and hit hard.  I am bearish and will follow the signals. 
and one more thing Thanks for visiting my blog and giving your support.

Tuesday, November 16, 2010

It never looks ugly till it gets ugly.

First things first.  Yesterday SPX closed 60 cents from the low and I thought that could be used as low closing and I expected a rally today.  But the study I had done before only looked at closing within 50 cents from the low to project a rally.  That was my bad.  However I wanted to short any way and I did and closed it before the end of day.  Yesterday's inside day did indeed forecast today's decline.   SPX opened with a 3 points gap and never really rallied It went down 22 points from the open to a low of 1173 at 3.20 p.m. and closed 5 points above the low at 1178. It recovered 25% of the loss from yesterday's close.  Bad day all around.  AAPL got clobbered to below 300. Bull ETFs got smashed and bear ETFs flew high.  We are in a decline BUT there will be a rally.  This is options week.  Puts have to be normalized meaning they have to lose value.  If there is a 12 point rally on SPX I plan to short. 
The chart on the left is   FAS the banking index bull ETF.  In the decline from 11/5 it has alreay lost 50% of the rally from 8/25 low.  That is a hit.  Banking and entire financial sector has been lagging for sometime and decline is rapid.  Markets do not rally to new high without the help of banking stocks and they look bad.
The chart on the right TNA hourly.  It is below the median red line (2) that is not a good sign.  I watch this closely.  It is already down nearly 3 steps.  Passing thru the green (5) would be a very good confirmation.  Also the nature of the decline line itself is very different from the previous pull backs.  To me it looks like it wants go down more in a jiffy. 
The chart on the left is SPX hourly.  1157 is roughly 38% decline and it is on the bottom of the channel.  Good place for support.  Notice the accuracy of 77 DOMA giving a  precise point to short at 1207.  On the daily chart 77 doma is around 1135 which is a 50%  pull back point.  All in all this is not adding up to be positive. Since today was a bad day if we get a continued decline then this would be real and may have to wait for indicators to improve to change to bullish stance. I will stay bearish and look for a rally to short.  
Thanks for visiting my blog and giving your support. Thanks

Monday, November 15, 2010

Not out of the woods yet

SPX had a LH and HL that is an inside day and normally should continue with the trend from day before which was bad day with SPX down 14 points.  Today's range was only 10 points.  But here is what got me all excited SPX closed very close to the low of the day.  This means we should have an up day tomorrow or at least intra day we should have a rally.  That would be cool because I plan to short if we have a 10 point SPX rally. All indices and ETFs also had an inside day and closed at or near the low of the day.  The rally from this morning was over by 9 a.m. and we churned and little after 10 a.m. the decline got a little acceleration and we closed not far from the lows

The chart on the left is SPX daily with Gann angles.  I was surprised when I found out a few days ago the 1039 bottom was actually on the 1x1 support angle.  This is an important line for Gannies should this break we will (no could or should) have serious problems in the markets.  I have also marked the 22 day mvg. avg.  This mvg. avg. has been very helpful in the past.  I plan to watch it closely.  Charts stood still today except there was deterioration in the indicators.  e.g. Magellan summation index took a major slide there was easing on RSI to 56  from 79.  These are not good news. Many will reject these as just easing the oversold condition but there is no evidence to that.  I plan on keeping an eye on everything
The chart on the right is my accordion chart and we moved one more parallel step down.  The bottom line is we are having a decline.  Nothing goes on for ever.  Everything moves up and down.  Straight downs or ups are rarity.  This is options week.  I wouldn't be surprised if we have a big plus day  just to shake the puts.  I am bearish and look for opportunities to short.
and just a little thing Thanks for visiting my blog and giving your support.

Sunday, November 14, 2010

Slow churn

SPX had a LH and LL that in itself is negative for markets for tomorrow.   SPX opened lower with a gap of 4 points at 1209 made a early morning low of 1205 rallied up to 1210 by 7 a.m.  What happened needs to be understood.  The floor guys were not interested in accumulating even though the price was 8 points lower from yesterday's close.  Whatever they had to buy it was quickly distributed and further shorts were put in by 7 a.m.   Had they wanted to go long we would have seen the 1213 taken out.  SPX eventually made the low of the day at 1194 at 10 a.m.  SPX made a feeble attempt to rally and didn't even get to the 38% level fell short at 35% and closed at 1199.  1199 is actually bullish in my calculations. 1200 is a round number and any close below round number upto 3 points is bullish and anything over upto 3 points is bearish.  Tomorrow we could see a very short term rally. Looking at this the other way IF there is a rally I would short for I do not think this hit is over.  I know/think  the decline has started  and it should take at least 50% pull back to 1133. How we get there is immaterial.   On very long term IMO we have finished 4 at 1237 having completed 3 at 666.  This decline then should be a 5 and it should be slow and laborious making every one guess and second guess.  This is options week and close to holidays.  As the week wanes the participation will get lower and volume should drop.  That is really not great condition for rally.  
The chart on the left is SPX on the hourly. It is my accordion chart.  I am beginning to like it a lot.  Red lines are main channels.  Blues are 1/2 and greens are 1/4 channel.  Spx is at the blue and its a good place to bounce.  Thats why I think we should get a rally on Mon.
The chart on right SPX daily.  It has completed the reverse H&S and is declining .  The moving average is 22 days.  I use this some times.  My preferrred is 77 on the hourly.  SPX is bouncing exactly from this mvg. avg. line That is generally bullish. 
Bottom line IMO we should have a rally on Monday and the rest I will wait and see how Mon unfolds.  
and Thanks for visiting my blog and giving your support.

Tuesday, November 9, 2010

Wrong way soon after the start

SPX had a HH and LL that is an intra day reversal to the negative side this in itself is negative for markets for tomorrow.   SPX opened slightly higher and made the high of the day by 7.30 am and it was nothing but downside after that.  The slide caught momentum a few minutes after 10 am as the boys came back from lunch and dumped stocks.  The range was 18 points and we closed 5 points from the bottom and lost about 10.  The interesting part was everything had an intra day reversal.  RUT, AAPL, TNA and many others.  There is a way to play these reversals when they occur.  For a day like today after the HH when TNA starts coming down and passes yesterday's low signaling a Intra day reversal I would short.  If the shorting point was 20 points from the top then I would cover at 20 points from the short.  Thats an exaggeration to prove a point. Today it was 2 in TNA.  61 to 59 short to 57 to cover. 
The markets are clearly breaking down. Correction , Big P3 or just a pull back who cares its come down.  The chart on the right is my accordion chart of spx hourly. 1,3,5.. are the main channels and 2,4,6.. are the median lines.  SPX has broken thru the bottom of main 5 and is on its way to the next main 7 (not marked)  thru 6. But thats only 25% I believe we will get a full 50% correction that will take to 1135 or so. Not early in the morning but quite rapidly.
On similar lines the chart on left is TNA hourly after a small throw over it is back inside the channel.  Its my opinion we would get to the 50% point around 48. Well with that kind of belief I am not looking to go long.  I know a couple of blogs ago I sounded bullish now I am bearish.  That is the beauty of it when I was bullish money was on the bullish side and now the money is on the bearish side.  I am not out to get a Phd I just want some coffee money.
Now a word of caution again on these $30 a monthers did they give a stop loss point. No.  Did they give when and what price to get on. No.
Did they tell you what their percentage of success is. No.  Then why follow them.  Ask them for specific data on what is the percentage rate of return;   Not a guestimate but real time tabulation.  And ask yourself this big question  If you had a good method of making even 5% a month or 60% a year would you give that to some one for just $30 a month? That all I have to say on that tonight.
One more little thing thanks for reading my blog on your way out would you please just click on one of the ads ..that gives me a few cents.

Monday, November 8, 2010

Both eyes open

SPX had a LH and LL this in itself is negative for markets for tomorrow.   Markets opened slightly lower and made the low of the day by 8 am next 4 1/2 hours spx rallied 6 ponts and closed .01 above the open at 1223.25.  The range was only 7 points.  Some guys play the close below the open is negative for next day and close above the open is positive for next day.  Like over/under in football.  Even that is tough to navigate when you only have .01 to watch.  RUT also had a LH and LL but closed in the positive and above the opening.  
The chart on the left is hourly spx. It is at the median line.  A turn here would be appropriate to trace out a 4 having finished a 3.  The only condition is if we have a decline it shouldn't go below 1130.  Am I getting ahead of myself.  Perhaps.  3-4 days ago I found a few bears and a lot of bulls in the blogospehere.  Today and Fri. It is mostly bulls a very few bears.  While we are in a bullish trend it is probable that we get a good hit to 1207.  I would be watching the trend lines closely.
The chart on the right is SPX daily.The H&S seems complete.  The trend line is resistance.  The angle of ascend is little too steep and has to correct.  To me it looks bearish.
I would lean on the bear side but as with other things I will play the signals.  
I big word of caution.  Myself and some of my friends like EW trends and charts and others write these blogs to express our opinion.  In the process if you pick up a pointer or two great.  We do not charge any monthly fee and that leaves us to be very objective.  Many charge you 30 - 50 bucks a month and give you advice without any formal training or license.  I would really ask you think twice before investing $100k based on some ones advice for $1 a day especially when they claim they are now sensei of EW. IMO some blog advisers are no better than cabbies of Manhattan.   As the market goes higher it is not uncommon for few ill trained folks show up and claim exorbitant returns.  It is time time keep both eyes open. Just a thought

Thursday, November 4, 2010

Easy to remember spx 1200 and republicans take congress

SPX had a HH and LL and made a intraday reversal.  Yesterday was  barely HH and HL and the day before was another outside day.  This is definitely some kind of a distribution or high level accumulation.  SPX was in a very narrow trading range contrary to what the after hour trading was telling. Election did not have an effect on the markets today.  After the FOMC and fed announcement of 600 billion of more buying of our own debt the markets had its usual fits and ended the day up.  
Whatever the reason TNA and SPX broke thru some major resistance lines.  I have looked at all angles ,all trend lines ,and all indicators there is nothing that is jumping out and saying its a top like they did a few days ago.  The resistance have been busted and we have to assume we are going up. I wanted this market to come down it looked so ripe but if it doesn't then it doesn't.  I am bullish   
The chart on the right is hourly spx and I have redrawn the channels to show the bullish side. Unless something significant happens and we see spx drift towards the bottom my  forecast will be for spx to go and hit the top line of the channel and that is some where around 1300.

The chart on the left is daily spx.  Here I see a reverse head and shoulders and the top on that I project to be around 1230.  I know it doesn't much to forecast a 30 points higher from where we are but that may be the point where we take a breather before marching towards the 1300. 
I feel like an independent who voted republican because he couldn't stand the democrats this go around. On the same lines I am very reluctantly bullish and will tune myself to play the long side.  Its still with the signals.  I lost some money this week.

Monday, November 1, 2010

Newton's first law : Without external force everything stays the same

SPX had a HH and LL and made a intraday reversal.  This was expected as Friday was an inside day.  Markets opened with a bang but a little after 7.00 am lost all the steam and started coming down for the rest of the day.  A few minutes after 12 noon SPX reached the lowest point and made a half hearted rally to close at 1184. It was 11 points from the top and 7 from the bottom.  Not particularly a bullish close but enough to scare the shorts.  Now we have 2 big events back to back. Election tomorrow the markets should be dead and FOMC and election results on Wednesday.
Very probable tomorrow we will get a inside day after today's outside day. Wed. could be highly active day. My speculation for wed is FOMC should nullify whatever effect market is having because of election results.  If it was positive because of election FOMC will be negative. or vice versa.  
The chart on the left is hourly SPX.  The accordion type parallel lines have not completely broken down yet but spx keeps hitting at the lower lines of the channels and sooner than later the green line support is going to vanish and it will be on the blue line, only to proceed to a undrawn red line. Currently 1117 is at the 50% retractiobn level. IMO thats where its going and that is not making me bullish.

The chart on the right is TNA hourly a proxy for RUT.  It has clearly broken down  and is on its way to 45.  The median line generally a support has given away and we should see a little more momentum towards at least 45.  It is also customary to backtest the median line.
IMO we should go a little lower than 49.80 old low back test fail and rush to 45 or lower.  This is from previous observation and not predicting or wishful thinking.  Heck if that doesn't happen and TNA turns around completely and makes a new high our signals would say so and I will be on the long side.
I am very bearish and the interpretation of the election results may be negative.