Issue Advance : Volume Advance

woah, put your eye protection on. This one is wound up

Climbing the wall: GOOG

Preparing for the Tax avoidance Trade (ie the early Jan sell off)

There is no santa rally
There is no extra juice on the "end of year window dressing"

You want to know why the SPY has been up 27 of the past 29 Decembers in which the spy was up for that given year???  TAXES.  B/C people prefer to avoid them for 12 months and roll them over whenever possible. (they dont sell in Dec, unless they HAVE TO....its human nature to avoid giving money away till when you have too, especially if there is no interest on it).  Also pull up the chart and see how many of those 27 years we had a bullish START to Jan (its less than half, with an even stronger trend in the last few years, why??? my theory again, more people trade their own ports now than ever before. And i expect in its alot more than even last year, right Bernie)

I am ready..........for the New Year correction...I expect the first 1-2 weeks of Jan to be bearish.

finger on some SRS 7 calls......(plan to purchase at the very END of this trading week)

The fact is many more people trade their own account now, than they ever did before.
(and rightfully so Bernie...)

If Joe 6 pack is up big in 2009, (which he is) do you think he really wants to pay taxes on all of it right now?
.......OR............do you think he prefers to DELAY that nuissance by 12 months by simply waiting till AFTER the new years to sell a few shares.   I strongly guess the later.

USD trend change: When will it start dragging down the market?

$USD looks to be headed UP for the next many MONTHS (6-12 months is my time target for the trend), as I mentioned last week. Observe a weekly chart.

USD weekly breakout 11 Dec 09

But unless one is a currency trader, as HUGE as a key the USD is, it's not everything....
The USD is well off its 74.23 bottom, yet the market is still at it's highs. I also mentioned 2 weeks ago, that I suspect a rising USD will NOT put a damper on the stock market for the next couple weeks, due to it rolling into the Holiday anemic volume season here.

USD watch 6 Dec 09

I stick by my calls, that the dollar is headed up for the next several months, as well as the stock market will not sell off bigtime till 4 Jan 2009.

 - In regards to the USD, I mean the rubber band for now has popped. What more do they expect out of FOMC to get another dollar drop? These FOMC meetings, they have been telling us what they plan to do BEFORE the meetings. The meeting results are no "surprises" really here. They say 0 rate is the plan, and its working for now, etc etc. 

My point is, Tonight's futures, the USD is on rocking tonight, up .43 as a i type this. So the reaction from FOMC is dollar goes UP. Now, what else COULD they of really said, that would of made it dollar bearish today?  Short of "we will never ever ever increase rates, for 500 years!"...short of something "made up" like that, it just seems fully baked in here. Again, imo the 74.23 was a USD BOTTOM, for the next likely year ahead.

Yet i don't think the market "cracks" tommorow, even if the USD picks up more momentum tonight. Its expo week, then the next 2 weeks are lower volume, due to holidays, etc.

-Much more people today are managing and trading their own accounts than just a few years ago. It is my opinion of that. (no studies performed). It's also my opinion, and speculation that after the brutal 2008, the investors that manage their own accounts, and after having a great + year in 2009 they will choose to DELAY paying any income tax by 365 days, by simply waiting till after 1 jan to sell any stocks that were profitable in 2009. 

-That's my theory of why historically DEC is the most bullish month there is. No one wants to sell and pay tax, if they delay it by 12 months (up years, retail pulls the train).   Then in the down years, when some people might want to sell in dec, to get capital loss and get tax benefit like 2008, the fed steps in, and since its holiday volume it's easier for them. (down years, the ppt pulls the train).  Take alook at the dollar chart in Dec 2008. It's surprising the market was not up 15% for the month with that!!!!! So that's just why I think Dec are so historically bullish, fwiw.

The market does feel very heavy, likes its about to puke it up, it does, anyone can see/feel that. I agree 100% with the "Bernake: time magazine" indicator.  Good quick read here, how TIME magazine has been the best contrarian market signal for a little while now.

Man of the year: Time magazine = Kiss of Death


I stick to my thesis, that holidays=anemic volume
anemic volume=more bullish friendly.

If they keep this act up, (which i hope they do)...will be looking to get short heavy right at the close on 1 Jan 09
(friday's are also bullish freindly, and last year, i recall 1 Jan was a big up day, i just recall Dennis Kneale saying he would "dance a jig, if we broke 9000 or something", and every was talking about the great year ahead.  Remember last time, that the financials and reits were the 2 sectors that had HUGE spikes before the p3 crash.


disclosure: long exm, into years end, with finger on abort/sell button

Looking at the REITS

                      via SPY, IYR, and the 4 highest % reit stocks of the IYR etf

Thoughts:   SPG looks way ahead of itself in relation it's sector
                     (not saying it has already topped here).
                        - does that mean it is a leading indicator
                           and the rest will follow?
                        OR
                        - it is just far ahead of itself, and more likely
                           to come down harder than others at the next
                           downmove?
             
   (I think the later, as it also dropped the most in 08-early09,
    meaning its the higher beta. Trying put more emphasis on IYR
    to watch, than 1 individual stock)

   IYR looks like it may want to tag 48.57 (61.8% fib)

Dollar Weekly (update: breakout confirmed)

http://erikmarketview.blogspot.com/2009/12/watch-that-dollar-weekly.html

Well, There she goes. Looks like time to buy the dips now
(dollar dips that is)

It broke out clean, on the WEEKLY as of Friday (intermediate term direction now appears UP)

Personally, I am looking for a pullback on the daily chart (short term), to enter some inverse dollar swing trades.
  - even the weekly chart now can pull back some and still land above prior resistance as new found support.

Not thinking to attempting to pinpoint estimate/guess the height or length of this move, however looking at the USD weekly chart and its past trends and durations for the past 20 years. (39mo, 36 mo, 18mo, 14mo)

Even the monthly chart is bouncing where the support level is.
From a technical perspective, the USD looks as 74.23 was a solid intermediate bottom, and the trend is now up till the chart says it's not. (for the next 6-12 months)


disclosure: long exm into years end

GOOG (patience)...............

http://erikmarketview.blogspot.com/2009/08/goog-i-will-be-waiting-for-you-when.html

not yet....................................................
but its getting very close, so I mention the set up again, which is......

Waiting for the weekly rsi / macd trend breakdown for short signal.

Update from my original post (above)





disclosure: long exm

Watch that Dollar (weekly)

Remember a weekly chart ALWAYS trumps a daily.

Friday's usd move was a monster
- the daily chart looks like a breakout
- however the weekly is right at major resistance now

I would like to see it pull back and consolidate, to then look to go short names like FCX
(which trade almost totally inverse to the dollar)

I still believe that in Dec the market will "float" higher due to the anemic volume.
stocks like goog, amzn, aapl with less correlation to the dollar to lead the way. Even though the dollar was strong Friday, the market however was up. With the NASDAQ leading the way. (makes sense, again as it is the lowest USD correlation, yet commodity stocks, such as FCX were hammered)

Bottom line: I am watching the USD weekly chart to break out of its rsi channel before a trend change to be confirmed.

- also, with the low holiday volume, I would not be surprised to see stocks stay afloat and strong even WITH a confirmed USD reversal.

- If so, will wait to after the USD weekly breakout AND after Jan 1st to short this casino.

Disclosure: 100% cash

Follow the Leader, wait who is the leader?

............your guess is as good as mine which that is......

sometimes I do have a pretty good track on who is running in front.

http://erikmarketview.blogspot.com/2009/10/index-comparing-watch-dow-ndxtran-have.html

So the dow continues to have the lead torch, till it doesn't. However, the amount of time between tops and the expanding differance in the tops has grown fairly larger (ie look at the RUT!). So if i was to lean bullish, i would lean more on the RUT if i did. The divergance is pretty large now, and its chart pattern is actually set up much better than lets say the TRAN (which is in pure wait and see mode for breakout or triple top)

...but that's IF i was trading it long, which im not.

but here now, it looks dark as mud
market just looks undecisive here.....short term.

I still favor the bulls until the 2009 clock is ticking, per my below posts rationale...

.....not trading w/ em though....

random: Windows 7 is a step up and them some from the that vista

Cant stop the dollar drop

see below chart, for a technical STRONG signal of something to look for when a bottom and reversal are CONFIRMED. Until that line gets broke, there are sharks in the water.

maybe it reverses tomorrow? (i have not a clue, however i doubt it)
- which is why I will just sit and wait for it reverse and confirm prior.

Take a look at the USD performance last DEC, they tanked it hard. Worst month for the USD for the year in 2008. (no wonder dec 08 was mildly bullish huh?)

Too scary and high in the clouds to go long here.
No reason to short the market going into the holidays, the chances are NOT favorable.
- besides all the window, eoy theories...a known fact is that Holidays=anemic volume
- another known fact is anemic volume = bullish (in case you haven't noticed the past 10 months)

Ideally, to me the best swing trade plan/scenario is float and grind higher all the way up into years end, then buy vix calls on the last day of the year. The anemic volume can bring the vix lower than it intends to be. Perhaps im bias, because last year the vix calls when 400% in a week to start the new year.

I don't see the market falling too much until 2010 get's here, imo. Mainly due to the closer we get to 2010, and the holidays the lower the volume......

EDIT (add): here is a little historical data on December
Is is sell in May and go away.....or Buy in October and get yourself sober?

http://www.bespokeinvest.com/bespoke/2009/11/whats-in-store-for-december.html

The continuing watch for the USD intermediate to major bottom/reversal signal.

The blue line annotated to be broken/taken out, is the only ticket I see.

Index Comparing: Watch the DOW (ndx/tran have passed the torch)

the direction short term is DOWN.
(edit: intermediate term)

I was not expecting a Friday to be like that. I had said I think the GDP will be a sell the news event weeks ago, and elaborated 2 posts ago, in that the euphoric climax celebration will in term cause a great tradable market top.

Of course GS uses its will to make the same trade occur just the way they want it, extracting even more juice...

If you look back since March, you can see for yourself that the few and far between larger down days we have had, they are never on a Friday. (well until now!). I have begin a strong feeling that this is intentional for the "feel-good weekend" comfort to suck more money in the market.

Again, this is my opinion. However, with the exception of today, look back and see what most Friday's looked like for the past 8 months.

Without going too deep, we sold off more "after the event" than we rallied "off the event".
That alone is a pretty strong sign of what the direction is. (and remember, the event was mostly a gs induced short squeeze itself!!)

But does one CHASE this short right here? I had fully expected the market to WANT to go down today, yet i "thought" the ppt would do all they can to keep the "GDP fever" fresh in the mom n pops all weekend long to sip on and celebrate, as their was quite distribution today.

Again, if gs had not set that estimated "fear" number of 2.7, then we probably would of ended the week on about the same level, but the route getting there (ie wed/thurs/friday) would not have appeared as dramatic.

Bottom line is that the "2nd half recovery" that everyone has been talking about for over a YEAR now has occurred, and is now past tense. Earnings are also now getting into 2nd tier stocks.

the dollar, and economic data should rule here. So next week will be very telling w/ FOMC and unemployment.

my hunch is that 9.9 would not cause a sell off
but the psychological 10.0 level would however

FOMC, no clue, but the first reaction (ie 5 min bar) immediate after is usually the direction for the rest of that entire day...almost like an earnings reaction w/o the anemic ah volume to sort through.

technically, we (short term) look like we are due a bounce.

Daneric's last short term chart very feasable to to me. (bouce to 1060ish area, then call the life alert)

http://danericselliottwaves.blogspot.com/2009/10/bears-eager-to-jump-on-hold-on-sec.html

I actually bought a few DIA 98 calls at the close, yep diamonds..... (only looking to hold the first few days of next week). And I might be trying to get too cute w/ that. It was only a few. IF we get a bounce early next week, I will then cash out of them and then trade heavily w/ spy puts. But i want to see a bounce first. Just cant chase it short after today.

I really wanted to buy some CLNE calls at the close, I just hate those nickle/dime spreads.
...why CLNE?? Nothing extremely specific about it, however they do not report till 9 Nov, and "MOST" stocks do not crack before earnings. Basically any stock that reports in the next 10 trading days or so. (ideally more like 5) would be a safer long for a short term trade into next week. That way if you do NOT have the market direction correct, you still have the pre-earnings sentiment protection which is rarely more bearish than the broad market itself.


In regards to T/A, I have 1 observation (see chart)
Since the March lows, the NDX, along w/ TRAN have been the strongest indexes.
I mention this several times, that the NDX was also the ONLY index that made a higher low in March 09 (as compared to Nov 08). It is the leader, period. And when the NDX decides to pass off the leader torch, then the rally is likely over.

Do you remember that "Head and Shoulders" a couple months ago, you know the one that people in the barber shop were even talking about. The same one the spy, and especially the weak INDU had signaled. Yet that turned out to be one of the best intermediate term BUY signals in a long long time. ? Just food for thought here, but you can see the NDX actually never signaled, it landed smack dab on support.

The point being, if you LOOK for bullish or bearish signals, you can not use the weakest index only to look for bear signals OR the strongest index only to look for bull signals.

The NDX has been the best performing index since March
The INDU has been the worst performing index since March
....yet just a few days ago, they painted the dow's close, remember?

the INDU lagged the entire move up. Once could of been long the QQQQ and short the DIA as a pair trade and been lovin it since march, with very very little risk.
Now looking back in backazmith, what index is the LEAST off its highs? - the INDU

at any rate, the line in the sand to me is the INDU trend line that it closed immediately above. This looks identical to the NDX scenario head and shoulders trap. (at that time the NDX was the leader). Now, the leader is the INDU!! (well not actually a leader, just the least weak, or most propped. Hey, "dow 10,000 is catchy", ya want the retail to have that vision out there to sucker em in)

Looking for an early week bounce (led by the dow to tease the 10,000 level again)
....then another entry to short the spy (from around 1060). Just how im playing it.

3rd QTR Recovery "CONFIRMED"

Well its official now, USA is back to growth.
Yippie!

Haven't been posting much, and this will be short as well. Busy in transition.

GS controlled that one as well.
Lowering the bar the day prior, then CNBC announces how "ironic" they have been on point of late and they "better not be" this time.
GS didn't think GDP would be 2.7, GS did that b/c they traded that both ways. (short wed, then switched to long 1 min before the close)...GS made that call b/c they were trading the same news they produced. (imo)

I was actually short spy Mon-Wed, Once I saw they were NOT ramping up the market into the gdp, starting Monday, which i suspected they would I got short. Once i saw gs revise the est down the day PRIOR, after 4 consecitive red days..... it smelled way too fishy, so I went back into cash yesterday, and was wary of the pop today. (didn't play it long)

I had assumed it would be a buy the hype, sell the news. However since the market was in pullback mode, gs just simply extended it into a short the news, cover the event scenario, as they rocked the house both ways on this one. It was beutifull too how they operate. Within 3 minutes after their "revised" numbers, CNBC made sure to broadcast how very accurate they have been with these calls. The market would of probably been GREEN on wed, if gs had said nothing. Just as the market would of been probably flat today, as well. But hey, there is alot more money to be made by whipsawing it and frontrunning the same calls your making.

Will be going back in short Friday (tommorow) at the close, more than likely.
If you look back at the performace of Friday's since March, you can see it has the highest percentage of up days. And of all the larger down days we have had over the past few months, (-2oo) type. I don't believe any have happened on a Friday. (i dont have all this written down...so do your own dd). However, I have noticed that Friday's lean bullish on the most consistant basis.

Next week we have FOMC and unemployment. FOMC's historically are common pivot days, and recall the last FOMC, it was no different. Everyone one and their mother expects rates to stay at zero and it to be assured they will for a long time. Hence anything LESS than this, imo will cause a dollar rally. Again, remember the last FOMC, that's when the dollar started to show life, and the SPX moved from 1080 to 1019.

yea, the DOW is back within an earmark of the 10k level again. (great mom/pop headline catcher)...but look at the RUT and the NDX, they are no where near their tops. The NDX is the major leading index too.

I think Friday will be a small UP day....1080 tops (small: after a large move it then tends to be consolidation and UP b/c of Friday's history), then starting Monday we to resume the larger short term trend back down and revisit 1042 or 1019.

Earnings vrs GDP "hype" magnet. + a look back at the 2007 "top"

seems as if someone has rattled the market's cage here (october)
...as in the moves we are getting here are swing friendly, ie BIG (finally....!)

It was mentioned to me, that in regards to my postings, that I utilize information (perhaps too much) from others free insight.
- well i sure hope that i do! as that is what it is for...if i was better than everyone else at predicting the market, i would not read anyone else. (which is why i do, b/c im not. That's the whole purpose of blogging/message boards, isn't it?)

example, waxie was very emphatic that this post window dressing was a high probability sell off, and I shared that view. Market dropped 240pts the first day of oct. (thank ya $$)

then ya read some retail message boards and some are surprised the market went up even on Monday??? why? we had a huge sell off thurs/fri, that WAS the "post-window dressing" that was it, came and went. it's over. was very nice tho, (even tho it was short lived)...if using front month options. Short bounces / Buy dips (not chase)

that is what blogs are for, (at least to me they are)...after reading enough of them you can notice WHAT certain peoples strengths and weakness are. In regards to if there will or will not be a window dressing pre or post, or a santa rally....waxie is the best for that, hands down. imo

in regards to short term cycles and turning points, to me...inthemoneystocks has been by far the most on point (they are calling for a short term reversal of trend to the down side starting tommorow fyi)

in regards to interpreting news and how it will affect a stock...johnwelschphd is my fav source

in regards to awareness of extrinsic factors that I at times forget about (beyond charts)..i read kliguy38's blog

Tommorow, based on daily CPCE there is a 68% chance the market is RED (ie...read Cobra's blog to the right)

etc, etc...list goes on and on....

all input it compiled and used as adjunts to mine to form a gameplan.

just as important to notice what certain traders SUCK at, hence to not use that information. (again...everyone has strength's and weakness)


at any rate, as far as the market....post window dressing was great thus/fri, got in short wed at close, rang the register mid day friday......

went back short today at the open, (ouch) yet my P/L is actually flat. (great feeling after a big up day)
- short cme and goog (offset each other today)

I think that wed/thurs are down, and friday is flat, and monday is down
yep....that's my call, as deviated from all beneficial sources.

Friday's have not been deep red in a LONG time (market wants people to "feel good" for the weekend to spend more money?)

Monday's have been large moves, both ways, next is due down. (if we do happen to sell off hard to end this week tho, i then wont bet on it though)

my gut is mixed on time intervals, but it tells me:

Short Term: pull back over next 4 trading days (till end of monday only, but spx 1000 will hold short term)

Intermediate term: I have a strange (yet stong) feeling that the "announcement of 3rd qtr GDP" is perhaps "THE" BULLISH magnet that we are being pulled upward by. A major buy the hype, sell the news such event. What phrase have you heard on the financial news media more than "second half recovery", ya haven't. It's been pumped to the hills. I have NO IDEA, nor will i even begin to speculate how it will go down. However, if it goes down in a specific way, just as the close of Sept 30 (window dress final)..i will trade it heavy. That is this.
- imo, we are rallying INTO the announcement of 3rd qtr GDP. It should be positive, and i have a hunch that IF we rally hard the days leading up to it, that it very well might be one of the best "sell the news" short terms trades, since...ohhhh 1 oct. The bulls (bernake, cramer, maybe even Obama)...can then say "see you stupid bears, its confirmed now, we won". Which will then create a sentiment so lopsided that it can not go anymore, b/c its full tilt.

A classic buy the hype, short the news trade set up Oct 29th

http://www.bea.gov/newsreleases/news_release_sort_national.htm

- my plan: Sure Not going to put the cart infront of the horse, as it's conditional... IF we rally the preceeding days before GDP, and when it is announced as "positive", IF the market flattens or leans down, immediatly after it's initial impulse on that announcement...I will short it with 2 fists (so its conditional on the set up). And i will likely only play that for 2 days only, but heavy, again IF it sets up.

Long term: bear market

Disclosure: (short till monday's close, stop is if the spx looks like it will CLOSE > 1050)
goog nov 470 puts (11.20)
cme oct 280 puts (5.00)

Note: the reason such a super tight stop, if we do not pull back right here starting Wed,..then to me maybe it's voodoo but this looks alot like the 2007 "top" right before p1, which we had a lower high, lower low, as it looked like trend was reversed, then we had one last large spasm breakout up, before the fat lady sang. (if they do happen to take out spx 1050 on a CLOSE, i think we could and perhaps WILL make new highs in a blow off top). There is No reason it should look like 07, however, I am wary/cautious that it might. Another thing, "time frame" wise, that could very well if the pattern repeats itself be again the 3rd qtr GDP top theory, which preliminary is 29 Oct (bulls cigar smoking party lol), so that coincides also.

I think we pull back here for a few days..........but that's what having plans/stops are for.

Window Dressing

could be whats holding the market up here ??
..........well that and the ever crumbling USD!

- preface what I am saying by first making it aware that I am NOT watching tape every 10 minutes of the day intraday currently.
Nor am I trading it currently. Just doing market watching at the end of each day, looking at the longer term trends.

See all the top callers are lining up to get sliced one by one, yet still.

- remember Doug Kass, the one that got "all the fame" for calling the bottom to a T.
,well he has been calling for large down moves and yes a "top" since about spx 900!!!!
That is no knock on Kass. The point is simply........

Ya know how it goes: The market can stay irrational, longer than you can stay solvent.

Take home message: calling and trying to TRADE tops and bottoms is a fools game.
-better to miss the "turn" yet get all the meat and potatoes, than to pass it up, by "trying" to be cute and catch it. etc. I myself don't always abide by all my own rules 100% of the time. But that doesn't mean it's the "right" thing to do.


This current "short dollar / Long commodities" is about the most lopsided trade we might have seen here, since ohhhhh "short the financials right after LEH". Dunno, but I have to agree w/ Waxie, that come the very start of OCT we are likely to see a monster short squeeze in the dollar, come POST window dressing.

Today, USD was down 1%, yet market was only up .5%.
That is not bullish/healthy. I mean the correlation was only 1:2, that's not good.
That means the buy h hold american investor LOST wealth today being long. *yes lost*

That being said, it sure does NOT mean its time to short the market yet however.
Heck I have NO CLUE....

Daytraders, gap-faders, scalpers, news based intraday traders should continue to crush the market w/ good discipline.

Swing traders: well for myself, no clue. Way to over-extended to go long, yet NOT enough conformation to go short. If we have a few more days like today (relative weakness. ie spy/usd) etc, and push even higher, then on OCT 1st (post window dressing)...I will look to take an another entry swing to the short side. But that's conditional on how it plays out from now till then also.

Weekly momo stocks charts fwiw
- goog
- gs
- fcx

Defeat the Debt.com

interesting

And the bulls go marching on.....+ (GOOG update)

Trying to time this market on a short term swing (overnight) basis is beyond my imagination.

...
- all you intra-day scalpers, and news based 20 min duration traders, ya should continue to crush it.

..

That's the only way here to rock it consistantly, cash in and OUT before the end of the day. (or at least that is what I observe from reading numerous traders and observing the trend that ONLY that group is in the high percentage zone)
........
Hopefully my PCU oct puts (which I do still like alot) will make up for the qqqq sept's (which have rapidly evaporated into thin air)

- the fact that Copper is failing to make new highs while the market did, and the USD made new

lows, is to me a sign that copper is trading very heavily)
.............
Here is an update on GOOG as posted before, still "waiting".....no signal.
- which will most likely be the next trade I do make, when it finally comes.

http://erikmarketview.blogspot.com/2009/08/goog-i-will-be-waiting-for-you-when.html

Copper looks very toppy

My call: PCU will be trading at 23.00 within 4 weeks.

(don't follow me on this trade, do all your own dd X 10, b/c its a nasty market. But I have to go w/ my gut and the charts on this one)

.........

Disclosure: qqqq sep 39 puts @ .31

+ buying pcu oct 25 puts in the AM

Watch the $TRAN this coming week. (edit)

All Candlesticks compared.
It appears to hold the key here, for the immediate short term.

(IF) we push higher, it will be the likely first to break out.


I think that we are going to pullback to the short term support lines of all these this coming week. However I will watch the $TRAN for a leading breakout short term.

best of luck, enjoy Labor day.......

Disclosure: qqqq sep 39 puts @ .31

edit: new chart, had the ndx on logarithmic and others at linear

(all are now set at linear)

The Major lines in the sand ($NDX)

My last post is just that "speculative", I am not saying the market is going to follow that pattern over the next several months.
(although would not be shocked if it did)




I do strongly believe that the $NDX (NOT the comp, rut, indu, tran, spx) is the clear market leader for many reasons. (2 links below w/ rationale as to why)


- the spx head and shoulders "failed" break down was also a simultaneous clear BUY signal for
the NDX
- the ndx was the ONLY index that made a higher low in March 09, compared to Nov 08
- the ndx is the only index ALREADY back at "pre-lehman" levels here

http://erikmarketview.blogspot.com/2009/09/closer-look-at-leader-ndx-and-why-last.html

http://erikmarketview.blogspot.com/2009/07/nasdaq-100-ndx-gets-no-respect.html

I am short the NDX (via QQQQ) here into major confluence of resistance, for a short term trade
(target of 1595):
(chart above, as it has the cleanest support/resistance lines compared to other indexes)

- IF the NDX can break 1668.57, the next resistance up is at 1790
- IF the NDX can break 1790, the next lines appears to be not till 1995
- IF the NDX can break 1995, it looks to be destined for 2055.82

And those are the key levels I am watching to see the duration, and magnitude of this rally. The NDX performance as the leading index has proved itself over and over again all the way since from the bottom.

Shall see, I have no CLUE where the market will be in 2,6,12 months. My gut says lower
The only thing I can do, is play the chart, by scalping at key levels, with pre-defined stops, for quick swing trades.

The bearish "speculative" head n shoulders play-out for 2009-10

...continuation from last post. Cleaner chart.

- Fall from here to 880-920est over Sept to early Oct establishing the neckline on right, as the volume returns to the market and the manipulation takes a vacation (1 of p3)

- bounce to 960est, kick-started first by the "positive gdp of the 3rd qtr, announced in late Oct" and then lastly maintained by the seasonal anemic Dec holiday volume, establishing the complete right shoulder (2 of p3)

- the crash......starting in Jan 2010, and the "hype of the 3rd qtr recovery is now past tense, as well as the holiday anemic volume, collapsing through the main right shoulder

(3 of P3)

Disclosure: QQQQ sept 39 puts @ 0.31

A closer look at the Leader ($NDX) and why the last head n shoulders went wrong.

My Thoughts on why the $NDX is the real leader (link)

http://erikmarketview.blogspot.com/2009/07/nasdaq-100-ndx-gets-no-respect.html

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Why did that Head n Shoulders fail back in June..????

Besides "too many people were looking at it".....

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- The last head n shoulders failed, b/c it was ONLY the spx (well the INDU too)

However, not the NDX (which is the leader) (see large chart)

- The same reason the Nasdaq had given an EWT signal that P1 was over, and that P2 was

underway WELL before the spx had. (which dano called back well before the spx rule

violation)

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Lesson Learned:

- When noticing a bullish signal, ensure the weakest of index's is also forming it as well

- When noticing a bearish signal, ensure the strongest of index's is also forming it as well

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On a side note, It's tempting to speculate here, that in addition to this possibly forming out a short term head and shoulders right now, we may also being forming a larger head and shoulders (with the failed spx mini that occurred in June...being the left shoulder, and right now being the head) That would also fit it the scenario of many EWT's who say P3 is underway. If this is wave 1 of p3, then wave 2 of P3 would be the formation of the right shoulder, with 3 of p3 being the break of the neck line running from June. (hmmmmmm)

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At any rate, I am short as of the close Friday, with target being the current neck-line: ie NDX 1595ish (one thing at a time)

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Disclosure: QQQQ Sept 39 puts @ .31

The head n shoulders part 2 marches on....

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spare the love (hate) goldbugs, I don't wanna hear it. That's WHY i sold all my DZZ (and EEV) on Monday. (and w/ profits too....for the DZZ portion it was almost even enough to to fill up my gas tank once, after the commission fees). I feel bad for anyone who was short gold after Monday. When things don't feel "right" at all....how does the saying go? "when in doubt, stay out"

Well, It saved by butt this time, by abiding by it. No reason to "fall in love" with a trade if your sentiment decreases while the trade hovers at nuetral.

http://erikmarketview.blogspot.com/2009/08/twilight-zone-bear-etf-crack-down.html

That is exactly why I went in all cash.

Again, what i would "like" to see, is a pump job up on anemic volume tomorrow from some fabricated jobs numbers. That would be awesome. (if we got that, I would strongly think of buying some puts before the close, actually I know I would, on the market, not gold)

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-BLK puts to be specific, is one that I am looking at very closely and if it moves up tomorrow AM, I will be buying puts on it for a short swing. (unlike the intact spy wedge from 666, blk juuuust broke from its own) . I think BLK is as overvalued as they get. However I also thought sbux was overvalued 25% ago, and I still do. So i could be dead wrong. (that's what i get for gaming earnings) But if we get a pumpty pump tommorow, blk puts are getting some of my attention.

Hopefully, after this holiday weekend ahead of us, the SEASONAL volume starts to increase as it typically does for September, thus making it more difficult to manipulate the markets, and the 20 min prior to close "pump jobs", wont be as effective. But again, that's just bearish speculation. The main point is that more volume makes it easier to identify trends, be it in either direction and LESS prone to drastic moves by 1-2 players.

VIX leads, Gold follows

Breakouts: Tue....Wed

SPX: Looks time for a retracement move back up here is due to correct some of the down move from this week

.

VIX: has still plenty of room to digest its breakout, yet still be

above the wedge line.

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Gold: same story as the VIX, just 1 day behind it on the pattern, appears off to the races.

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USD: Coinflip, lines in the sand are clear and identified as well as narrowing.

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Disclosure: 100% cash

Twilight Zone & Bear ETF crack down?

I "think" that tomorrow is an up-day............
-Auto Sales data and ISM is on the docket tomorrow, and if "Cash for Clunkers" did anything, it will be or should be reflected in the data Tue.

As I posted yesterday, (see chart) today's move COULD be signaling that 988 is the next intermediate target. As this is a mirror of the the past set up, with the R shoulder being 10pts higher than the left last time, hence the 988 intermediate target here. I still don't think it happens in a straight line, as i cashed in my two small short plays for zero exposure tomorrow.

Case anyone missed here is a 40 minute interview w/ Robert Prechter talking about social moods......and his latest on the market.

http://pragcap.com/robert-prechter-the-rally-is-over


Disclosure: 100% cash
Sold all my EEV (7% gain in 1 week)
Sold all my DZZ (1% gain in 3 weeks)
Sold all my DBA, covered all my GLD short (pair: 5% gain in 5 months)

.....obviously not any homeruns here. As the quicker strike plays that I have gone for over the past 2 months are hitting about 40% accuracy, hence I am not too giddy to jump into those currently.

Something does not feel "right" here, and IMO the market is going to go much lower, but when??? no clue when. And even if now is when it should. It does not earn extra cash points to "catch the top". I would prefer to wait till its obvious the trend is back down, then just wait for a BOUNCE to short, than to play it heavy up here in the turbulence zone.

http://slopeofhope.com/2009/08/and-so-it-begins.html

That is an example of what I mean. Jim Cramer hard at work? trying to BAN the bear ETF's?
That is to me, yet another sign that we are VERY near a top. However that could also cause another final spasm to the upside as well. (remember when they banned shorting the financials, oh yea, they had a lil pop from that, off an initial knee jerk reaction, yet also in retrospect recall how GREAT of an entry that gave to buy puts on them or go long SKF? any time there is a forced one sided trade, it just opens the door for a basically "gimme" reverse side trade immediatly after. 100% bulls and 0% bears = go short. Well, this bear ETF kinda noise smells like that to me. How far will they take this? No clue. However the further they do, the better future short it sets up. So heck, I hope they ban ALL short etf's tommorow and have forced liquidation. Because one the market starts to stall AFTER the initial pop it get's from that, well its as good of a short entry as their is. Whomever is in charge of these kinda decisions just must be out to lunch. Bears get all the blame for hurting the market, yet NONE of the credit for when it goes up. You want to know one of the reasons that the market has rallied so much? B/C bears keep trying to short it!!! (trust me, i know! lol) If they want to get rid of the bears here and now, then so be it. But the bears are the main reason the market remains in an uptrend.

This kinda action in regards to that e-mail about the bear ETF's reminds me alot of when they banned shorting the financials.

However as a bear, even though the charts appear to be signaling a move down, and 988 seems like a good target, I am cautious of TUE's data (car sales), and also of Friday's data (jobs)

2 Must Watch items this week (Head n Shoulders & Jobs data surprise)

1) Developing Head n Shoulders Pattern
(see chart, this looks identical to the formation of the prior head)

2) Unemployment "up-side" surprise caution on Friday
http://erikmarketview.blogspot.com/2009/08/unemployment-up-side-surprise-curve.html (this explains how we are NOW entering the curve where a very large portion of people are now running OUT of benefits, hence the "monthly reportable numbers" may very well surprise even more over these next couple months)


1) Speculation here, but you can not deny the move up here is identical to the last formation of the previous head.

IF the black support line of this consolidation breaks, THEN look for:
Pullback to 988 (neckline)
Bounce to 1018 (right shoulder)??
Pullback again to 990 (neckline)???

....have a feeling IF this plays out, bears wont go bonkers at a "break of the neckline" nearly as much this time. Heck due to recent memory, I would not be surprised to see people buy it! (of out fear?) again, this is speculative for the overall playout here. However a break of the support line from it's current consolidation it is in now, looks like a short trigger w/ a target of 988 to me.

2) In regards to Friday's unemployment data, there are 2 things that I think are worth sharing.

....
a) last month, on Aug 7th, we had a nice pop from a "better than expected Unemployment number".
(read the link posted above, for why we should EXPECT a better than expected "reportable" number, yet things are not actually getting better)

b) last month, on Aug 7th, that very same mini-euphoric pop was also a very nice swing entry for a short trade for 3 days.
(see chart)

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Another opinion of mine why this potential pullback here (988 target), is just a short term one and NOT a load the boat short scenario is this:

On a fundamental (my personal hunch) side of the house, I do have a strong feeling that the "3rd qtr GDP" is something that many bulls have on their calender and are front running here. And with the bigger picture, even though some are suggesting that we might have the "top" here and now. Even if that holds to be true, I have a feeling that we would then even yet make a "double top", around the announcement of the 3rd qtr GDP. Many people (smart), are watching sentiment here, AAII, BPSPX, etc, and everyone is looking for a "euphoric climax". Which makes total sense, as Prechter pointed out, there were only "3% bulls at the march lows". When sentiment becomes THAT one-sided, so does the trade.

So what kind of catalyst could give us "ultimate bullish euphoria" causing a one-sided trade?
- well the conformation and complete media blasting of a "Confirmed 3rd qtr recovery, POSITIVE GROWTH IS BACK!, GDP in the GREEN AGAIN BABY!" is my #1 guess.

My speculation is that the 3rd qtr gdp will be in the GREEN, and that may very well the euphoric climax the bulls have all been salivating for. (how the GDP gets there with the internal numbers, I am sure that Denninger and every other economic bear will be able to elaborate on that.) However Joe Blow, the common man of the US, he just wants to hear "positive 0.1" and he jumps for joy. Keeping things simple, as the powers that be have him fooled.

I can not think of any cliche or phrase that I have heard or read more often than "positive growth in the 3rd qtr". I swear I must have heard or read that 10,000 times over the past 6-12 months. So that alone, for the bigger picture, is why I think it has potential for being a large longer term buy the hype, sell the news and that if we do get a 988 pullback here, that is likely a short term move only for now.

Best of luck this week.

Disclosure: Long DZZ, Long EEV (will look to exit both early this week for a small profit, then wait for Friday's "potential of a surprise", for a potential better re-entry point)

Weekend Reads

The 5 stages of panic buying
http://thereformedbroker.com/2009/08/27/the-five-stages-of-panic-buying/

Doug Kass: Market has topped
http://www.thestreet.com/story/10590765/1/kass-market-has-likely-topped.html

Individual Investors, not as bullish as the Pro's
http://bespokeinvest.typepad.com/bespoke/2009/08/individual-investors-not-as-bullish-as-the-pros.html

The biggest 2 risks to the bull market
http://pragcap.com/the-2-biggest-risks-to-the-bull-market

Disclosure: Long DZZ, Long EEV

GOOG: I will be Waiting for you, when the levy breaks.

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When the Levy (RSI) breaks.....
If ya want an EW count, look no further..... (thanks as always Dano)
http://danericselliottwaves.blogspot.com/2009/08/google-upgraded-rejoice.html


Upgraded today, by the same idiots who Downgraded it at the friggin bottom?? LOL
(ya just gotta love it when those kinda signals come.... :o)
......not saying its there yet, (actionable RSI trigger per chart: self-explanatory)....but GOOG appears to be getting close to putting in a top, for a long long time. (497?)

Just a few charts to watch short term

The charts on these look to offer some clean set ups, or are positioning themselves to be setting up for for that possibility.

XOM: looks like a nice short w/ a predefined stop right here, OR a waiting to trigger breakout long (preferance, short)

ETFC: looks to be consolidating to tip its hand very soon whether its a breakout long or short
(preferance, long...only IF it triggers first)

FEED: IF it is digests its gains from today.....ie pulls backs a lil...and THEN breaks >50RSI, its looks like a conditional long trigger.

DZZ: the rsi already looks good here, but the PRICE has yet to still breakout. Could be very soon, or a failed attempt here.
(I am long @ 20.15)

EEM: neg divergence on a double top, looks like a nice short w/ a defined stop, OR a waiting to trigger breakout long.
(preferance, short)

..

Disclosure: I only own DZZ, and my stops are at entry. I am not trading these short term, nor do I intend to either. However if i had the ample free time to trade short term, these would be some that I would be watching. Just happened to notice these from my watchlist, as some of the "cleaner appearing" setups fwiw.

Hitler Capitulates