Tuesday, May 31, 2011

Equity Wrapup 5/31

Looking at the four equity markets (S&P, dow, nasdaq, and russell) we see that of these, only the russell actually broke a new major low peak (@813.4) in the last couple weeks, and the rest only seem to have made deep retracements. The russell is also the only one now that has firmly broken past the top level 61.8% retracement (@845) of this down move. The other three are either right at the top or still inside the major levels of the most recent move (all retracements shown in red on charts). It looks like barring a major reversal tomorrow (which is always possible), we are heading back to an uptrend in the equity market for the time being, with confirmation coming as all the markets break past 61.8% level or breaking new yearly highs. I'll go ahead and say it here that it might be time to BTFD if you haven't already.

Russell 2000 Index (TF) Last Hail Mary? 5/31

This is my last chance, bottom of the barrel, hail-mary, long shot, wish it would do it but probably won't final resort short opportunity on the russell 2000 index. We are getting strong divergence on the rally up from last night's greece bailout news on the hourly chart as highlighed in the yellow lines on the chart to the right. The daily chart shows us at the top of the retracement channel (shown in purple) for the full down move from its yearly highs. If this fails I feel we are into no trend or back to an uptrend.

Crude Oil (CL) Short opportunity 5/31

Dolemite posted earlier that crude was entering resistance and I also agree and further that this might be the time to sell. On the daily chart on the left hand side, we can see the yellow trend line that had been used as resistance and support multiple times is the high for today, we also run into the lowest retracement of the May sell off. Looking closer on the hour chart we are seeing strong divergence in the MACD, shown by the purple trend lines. We also have a nice shooting star at the top of the hour divergence, always good to have a candlestick signal before you take any divergence for entry. I like shorting it here and at least taking it down to 100, if not to the bottom of this channel (@96)

Natural Gas (NG) Daily 5/31

As a quick update to the trade idea presented originally to buy natural gas, and also to BTFD off a bearish number, it looks like its working out. It's time to start looking for a target on this trade and the previous peak (@4.729) or the 100% extension of the previous move (@4.827) are both good areas to exit this trade.

Interesting Volume Spike in SOXS (3x Bear Semiconductor ETF) 8:55AM CST 5/31

Interesting note:

SOXS, a 3x leveraged bearish semiconductor ETF, has done just under 100k contracts in volume already today (much of it at the lows near 54.50.

The daily average is 130k contracts a day. We are on pace to go way above that.

Is this the smart money making a bet that equities are poised to finally hold here and start to make a leg lower?

(UPDATE: 930AM CST - SNP500 is 50% from it's highs at 1337 and SOXS has now done 112k contracts 1 hour into the trading session we are 18k from daily volume avg.)

Crude Encountering Resistance? 5/31 8:20AM CST

(Chart 1 - WTI Crude Daily chart zoomed in)
(Chart 2 - WTI Crude Daily chart)

103.40-103.00 is very good resistance for WTI crude. We have a confluence of 2 Fibonacci levels here, as well as the top of the current bullish channel just a bit higher.

Monday, May 30, 2011

Short Entry on EUR/USD? 9:00PM CST 5/30

(Chart 1 - EURUSD 60 min chart zoomed)
(Chart 2 - EURUSD 60 min chart)
(Chart 3 - EURUSD Daily w/ minor MML drawn)
(Chart 4 - EURUSD Daily w MML drawn)

1.4400-1.4425 is very strong resistance in the EUR/USD both short term and intermediate term. This recent bailout news got us to 1.4415 and closed at 1.4398 on the 8-9PM hour bar. I like selling the open of the 9PM bar (1.4399) for a move down to 1.4075 and ultimately 1.3675.

Be conservative in your sizing and liberal in your stop. This trade might be subject to 1 or 2 lurches and shakeouts with new highs on low volume before it makes its move for those targets.
You can always sell more once its makes its move and has a pullback.

(Note: If you see high volume doji and/or shooting stars in the 1.4400-1.4430 area on a small time frame chart, consider using that as your entry if you want to wait for one of those instead of just selling right here right now. Might not see one, but if you do, will be a much higher probability setup)

SnP Day Trader Road Map 7:45PM CST 5/30

(Chart 1 - Snp 60 min chart zoomed)
(Chart 2 - Snp 60 min chart)

I will be publishing a "Day trader road map" every evening for a few products. This should give key S/R levels on a more micro basis, as well as highlight possible plans for the days trading.

Here we have a 60 min chart of the SnP mini future (Jun11 contract) (NOTE: For all those who don't know what that is, consider it a fine proxy for the SnP index itself, or the .SPY ETF.)

For today's trading, 1335-1340 should provide resistance. Personally, I would fade this zone on the sell side, and take some down to 1329 with an ultimate target of 1321.
Combine that with that MACD divergence we have over the last 25-30 sixty minute bars, and I think strength can be sold with good confidence.

Should we get above 1340, the buy case most likely is in effect, but we will cross that bridge when we get there.

Russell 2k At Key Resistance. 5/30 7:00PM CST

(Chart 1 - Russell2k Daily Chart Zoom)
(Chart 2 - Russell2k Daily Chart)
(Chart 3 - Russell2k Weekly Chart)

8420 should provide very strong resistance and seal in the dead cat bounce of this previous week. We should be headed lower very soon.

There is the head and shoulders breakdown in this resistance cluster (8420-8780) of the daily chart.

There is also the weekly chart with its most recent large wick hammer. Normally those are very bullish. However, this one smells like a trap. Set upon the already bearish technical picture for the rus2k, we see a few key things about this hammer.
-We have had a large down push, a gravestone doji, and a spinning top, all on very good volume the 3 prior weeks which ultimately pushed us under the 8420 level. This last week we went much lower, but ultimately retraced it all and finished with a hammer high just under 8420. This hammer was on 527k contracts traded. The 3 selling weeks prior were on roughly 700k+ each. For such bold price action as this hammer showed, the volume suggests it is the last swan song of the BTFDers (buy the fucking dippers) as we head lower to 7820 and ultimately 6250.

Gold Going Higher? Daily Chart 5/30 6:45PM CST

(Chart 1 - Gold Daily Chart Zoom)
(Chart 2 - Gold Daily Chart)

If gold can get back down through the support zone that it just broke out of (1501-1464), then I think it will fall to 1350. If that fails it is headed to 1200.

However, I still think given the way it acted when in the 1501-1464 zone most recently, we are headed up. I think any test of the 1520-1480 area can be used to buy and accumulate a position for a scalp to 1560 and an ultimate target of 1615. You are wrong if it trades convincingly under 1464.

NZD/USD New all time highs 5/30

Gonna take a look at the NZD/USD here by request, and we have the monthly and daily charts as we are just passing new all time highs for the pair. As we can see in the monthly, when we reached our previous highs in mar/apr of 2008, we had strong divergence in the MACD on the monthly chart, leading to a huge sell off. Now it looks like we have a pretty healthy rally, with no real divergence forming. On the daily it looks like again, we had a healthy pullback on the move upwards with a retracement to the 38% level (@.775), and now we are looking to break our ceiling here. I think we break here and look to head up to .879-.88 area within a few weeks, and I would look to any small daily pullback to try to get in.

EDIT: Just to note, not a big fan of this trade unless we see a pullback to the .8 area, if so then I feel its buy buy buy.

Friday, May 27, 2011

Equities weekly wrap-up 5/27

I think since we've started this blog we have been advocating a short position in equities markets. While the last few days have not been kind after a good start to the week, I think there is strong evidence that there is nothing to panic about in all 4 markets. The retracements in yellow are the retracements of the last up move before the downtrend began, and all 4 markets broke below the lowest retracement level of these on Tuesday or Wednesday, indicating an end to the uptrend. We've also held the retracement for the most recent down move (in purple) in all 4 markets. As is the case most of the time, we leave into a long weekend with a lot of uncertainty sitting on important levels. All four markets sit at a confluence of retracements except the S&P. The Russell is the only one to break past the 38% retracement of the most recent downmove, but now sits at the 50% and also the most recent peak from last week. I think we look to continue the down swing on Tuesday, but any higher than we finished today and we might end up in a no trend area, which is always danger for swing traders.

USDCHF Update 5/27

I discussed 4 days ago about the usd/chf downtrend looking to continue, and it doesn't look like I could have been much more right (not very common, so I must pat myself on the back a little). Its broken new yearly lows now and I would be pulling some of the trade off here and then looking to ultimately target the 100% level of the extension shown in yellow (@.8146).

Equities volume analysis 5/27

Here it is, my first ever blog posting as requested! :) Again the Delta Vol shows continue selling on both index. This is why I am still bearish from my inital positon on the russell at 838.40. Of course as everyone know, using vol analysis for your trading can change at anytime when supply and demand comes in. You do not know when but you need to be able to react to it quickly. As of right now, I am still bearish and think this morning was a mark up. Of course this can change if Vol picks up or the bears give up near end of day, but hints of it will show up in the chart. I hope this help. I'm just playing the odds and managing my risk with a trailing stops. FYI... i hate this market btw with the FED being involved. Its not the same anymore these day...... good luck!

PS: Since this is my first ever post, I had to remove some charting items for legal purpose. Just being truthful just in case one of you ask. :)

Nasdaq (NQ) Intra-day report 5/27

It looks like today will be the make or break for being short equities. As we watch the nasdaq break out of its downward trend, crack its first retracement and look to head north into a long weekend, there doesn't seem to be much hope. I think the only thing that would make me feel comfortable going into the weekend short would be an afternoon sell off that sees us below the purple trend line and the 38% retracement. There is a little hope of this as we can see some divergence with the MACD forming (highlighted by the yellow trendlines), which at this point if it did sell off would be triple divergence. Most likely I will be out of this trade by the end of the day for a small loss but will update at the end of the day.

WLT Walter Energy update 5/27

On 5/24 I offered Walter Energy (WLT) as a great trade opportunity as it formed a hammer on good volume off great support. So far if you got in this trade in the 115-120 level you have been rewarded the last three days as we push into the 125 level and its first real test to the upside. If you happen to load up then this is a good opportunity to maybe consider taking a small quantity off. Still feeling this ends up back in the 135-140 range, and have targeted my position as such.

Euro bumping on trendline 5/27

The dollar has been getting absolutely rocked, with only a small dead cat bounce yesterday off some support. With that comes the euro gaining quite a bit, and heading towards a forming trendline. I think at this point it might be ill advised to enter a short here unless you get some sort of candlestick formation or other signal that this trendline might hold. I think though you might be able to make a good play back to the trendline in yellow if you're scalping intra-day. Otherwise on a daily type position I think it would be wise to stand clear until this picks a direction and not enter anything heading into the long weekend ahead.

Edit: The awful housing number that just came out seems to have maybe given us an engulfing pattern to look into selling the euro here for at least a small gain.

Corn (ZC) Second opportunity? 5/27

After talking about corn earlier this week as a potential buy if we could see it pull back to the 717-715 level, it seems it decided to atleast for the moment bounce off the first retracement (@731). But with the shooting start formed yesterday, if we see a break of yesterdays lows I could see it heading right back towards my targeted entry aread over the next couple days. Otherwise if it doesn't, Tuesday might have been your best opportunity to get into this trade.

Thursday, May 26, 2011

Nasdaq Constant Volume Bar 8:15PM CST 5/26

If you follow this, you know I am bearish the Nasdaq. See any of my recent posts such as this one. I will be the first one to tell you when I am wrong on something I said. I post all my pukes and make no bones about any of it...

That being said, I am still short this fucker and still think it is ripe to fall. I sound like a broken record, but sometimes you have to trust what you know to be right. Lets go to this constant volume chart (which plots each bar as the range price traded in for 5,000 contracts).

We have a confluence of resistance at the 2330-2340 area:
-Top of current magenta dominant bearish channel
-Bottom of old dominant orange bearish channel
-38% shallow Fib from May 2 highs to recent May 24th lows

If we can get above both of the aforementioned channel lines, I will wave the white flag.
Until then, I am holding.

WTI Crude Between a Rock Support and a Hard Resistance 8:00PM CST 5/26

Using a "constant volume bar" study (which plots each bar as the range price traded in for 10,000 contracts to trade), we have the following chart. We can see that the midpoint of the blue bullish channel has been an important level. The top of the bearish magenta channel is also key. These 2 levels are colliding in the next few 10k trades. Just underneath is $100, which as you can see has been very important as well.

I scratched my sell at $100 and am waiting to see how price breaks out of the current triangle it is in. I am betting on supply coming in at the top of the triangle and crushing it through $100, but time will tell.

Equities moving up, Russell 2K leading way 5/26

It looks like the major equity indexes are making a move up today, with the Russell 2000 and Nasdaq leading the way. Both are coming upon critical levels here in the early afternoon, with Russell reaching the first level of the complete downmove's retracement (@827.6) along with the trendline in purple. The nasdaq is coming upon a confluence of retracements at the 2327-2332 level. While I've been recommending short equity indexes, Todays close and tomorrow will be important. Closes over these aforementioned levels in the Nasdaq and Russell would make me probably dump what I have going into the long weekend. But we've seen this multiple times now on this downtrend in all equities as they make new lows then pullback for a couple days. Don't be shocked if we finish at these levels today and then head south on Friday into the weekend.

Last Swan Song for Nasdaq Shorts.... 11:55AM CST 5/26

Still like being short (and still am), but it's now or never for them to work.
Price got back to the lows of the old bull channel (yellow)
We are also right back into the 50 (blue) and 100 (yellow) day VWAPs
Combine all this with 2327 being the 50% from May 19 high to yesterday's lows.

Sell right here, but a close over 2330-2335 and you should be out.

Ebay possible buy opportunity 5/26

Ebay is lining up for a good opportunity for entry here. It looks like yesterday was a nice hammer on higher than average volume which always says to me that its put a floor in on its price. I would wait for it to crack the high of yesterdays session (@30.9) to be on the safe side as this usually confirms a hammers worthiness, otherwise take a dip near its lows for a very low risk entry. I dont know if I would predict this making new highs, but the top of this retracement channel could be more than doable in the next week or so for a 1$ or more profit.

Stock Account? ETFs please

So in case you were reading our suggestions and thinking, well all I have is my TD Ameritrade account or whatnot, how am I supposed to be buying into all these markets? Well, ETFs to the rescue. From investopedia for those who dont know an ETF is:

"A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold. "

You can almost find an ETF for anything out there and etf stock encyclopedia is one of my favorite sites for this. Just beware that most ETFs slowly lose value over time and you should always research the exact holdings of what they invest in. So Goodluck trading.

Natural Gas (NG) Bearish Number BTFD? 5/26

 After a bearish number for the natural gas storage (more than expected in storage at 105B vs expected 93B), we saw a sharp sell off. I think its is a great opportunity to BTFD and get in on this trade suggested in an earlier post. We see on the daily chart the confluence of retracements at the 4.325-4.312 range. While currently its just under this, it has held its recent uptrend's retracement. I think this holds well and we see a move back to its hights today in the 4.45-4.48 area. Everything else about this trade still looks great and the initial entry signal was a good one so far. So I've said it once and ill say it again, by that fucking dip

EDIT: just in case you are wondering, you can play NG in the stock ticket UNG (United States Natural Gas Fund) or in Direxion Daily Natural Gas Related Bull 2x Shares ETF (FCGL)

Crude Oil (CL) Indecision continues. 5/26

After breaking out of the channel it had formed yesterday, it looks like oil held steady overnight with only a slight break in the Asian session. It is now quickly moving down towards the yellow trend line that had been formed. While I still have a bearish outlook for oil and feel this might have been a fakeout the whole time, I see a more than justified play of buying oil in the 99.5-100$ range which it looks like its in right now. But that being said I think there is a good bit of risk either way right now as we are in the middle of its range and I would hold tight until we get closer to the bottom (@96) or the top (@102) to make a play.

Dolemite Pre-Open Position Update

I resold EuroUSD as posted here.

I am still short my 2 packages of semi conductor stocks (long SOXS) as a way to play being short Nasdaq. The reasons are here

I am still short crude (though I am white knuckleing it a bit)
High today was 101.90. If we crack 102 I am out and will look to resell at 103-104
You can read our recent crude thoughts here.

Good Entry to Sell Euro? 8:00 AM CST 5/26

After being wrong about selling 1.41, I am going to put my hand to the stove again. I sold after the 15 minute bar from 7:45-8 AM CST formed that shooting star. The MACD also had divergence(yellow lines). Combine this with this shooting star forming at the 62% fib level of the most recent real down move and I think this is a low risk entry. A real move over 1.42 changes my thesis.

30 Yr. Treasury Future To Resume Uptrend?

Having broken through the Fibbonacci zone at 12416-124-20, it will now provide good support, as the long bond tries to complete it's move to the top of it's bullish channel near 126 and ultimately to the Fibbonacci resistance just under 127. As evidenced by the May 19th daily chart hammer, a support zone has been established at 12416-12420. The overnight action of today's session confirmed this. Dips into this area can be bought.

Wednesday, May 25, 2011

Dollar Index (DX) Possible Trend Change 5/25

The dollar index has been comfortably trending upwards for the last couple weeks, but after a couple straight down sessions, tonights Asian session has started off with a sharp loss for the dollar. It looks like its best chance of finding support will be in the 75.64 area where there was previous peaks made on last Wednesday and Thursday along with its 62% retracement from its last up move. A slip further than that and we could see the dollar start heading back south, sending just about every other market back on its way up.

Crude Oil (CL) End of Day Report 5/25

I said in an earlier post this was gonna be the day to see where crude was headed, and it looks like it might have decided its to the upside. I still hold out some hope after seeing multiple shooting star candles being formed off the previous peak @ 101.45 that this may be headed downwards, however I feel much less certain. Again, if you've held on to a short this long, I don't think there is any reason to dump till we see it break into the 102 area, but be ready to pull the trigger. At this point though, if you have been looking to get long oil, this might just be that opportunity, especially if we get any downward movement to the 100-99.5 area during tomorrows session.

Euro End of Day report 5/25

I suggested in an earlier post that there might of been an opportunity to sell the euro on its retest of the 1.41 level, and it looks like you might of been able to be slightly profitable on that trade, but the pairs direction is starting to look muddled at the close. While were still under 1.41-1.4125 area, which lines up with the purple retracement and the yellow support / resistance line, it looks as though were forming an upward sloping trend line to the south. Usually this type of formation indicates an eventual breakout to the flat side of the triangle. I think there is still more money and less risk to the short side, but I'm not touching this.

Nasdaq Mini Future End Of Day Macro Charts 5/25

Yesterday, I said the 2320 level would be significant resistance. Today's short covering melt up in the afternoon stalled in the very same area and came off it pretty good. I was scared a little bit watching my shorts get hammered today, especially when I added to them at 2307, but the last hour of the session calmed me down. Looking at it now, today was a proverbial dead cat bounce. Sell the pops, Nasdaq is headed to at least it's previous support of 2280, and most likely lower, to the bottom of the bearish magenta channel. If the Nasdaq can close back into the old bullish channels above it (blue and light blue) I will change my tune. Until then... STFP (sell the fucking pop)

SnP Mini Future End Of Day Macro Charts 5/25

Wow.... what a session. After a complete meltdown during the Asian hrs, we retraced it all the way and ended up pushing new highs for much of the day. High of the day stalled at the 50% retrace (1325) from the highs of May 19th, to the lows of today. This is also the 38% from the Japan lows to the May 2nd highs which was good support, and is now resistance.

As long as we don't penetrate today's high, I still feel rallies can be sold for an eventual test of the 1290-1300 support area. Any close over 1325 and all bets are off.....