shenanigans

A typical lull-you-to-sleep market all day long, than BANG! If you caught the end-of-day move today, then good for you. It's soooo frustrating to suspect it might happen only to not be on board once it does...grrrr. Price came within a nickel of the highs, a 1.7% move within 10-minutes, WTF! Of course I wouldn't complain had I been in the move :)
I digress.popped right out of a consolidation range and sky-rocketed to the highs!Anyway...something to keep in mind when the market is chopping around all day. Look for stocks that are trending (scan for ADX > 30, with nice, orderly candles) and find a consolidation range to jump on board. Here were two nice ones, notice the "3 pushes" up; push, consolidate, push, consolidate, push:Well that last minute push in SPY put us right up against the 200-day Moving Average
and right at the top of our range...here's the weekly, looks solid doesn't it?

shake-out

Price was nice and orderly on the gap-up for the first 25-minutes as we went sideways along the pivot line, forming a small triangle. Failure led to a nice swift move down. I mentioned a couple of days ago a strategy to play off of a gapping open that worked nicely today (if price gaps up, and price comes back to the previous day's close then look to go short, the opposite being true for a gap-down coming up to PDC. Of course the size of the move back to PDC is going to be a factor in making the trade).
Being that keeping count of Elliott Waves just hurts my brain, I like to use a more simplistic approach in following price structure. A count known as the "ABC" Price Pulse which I learned about through a L.B.R. presentation.
It's simply a price impulse, followed by consolidation, followed then by another price pulse. The following chart of today's SPY on a 5-min basis was a perfect example of this concept.
I have also included numbers (1, 2, 3) which represent another concept (again, discussed in the above link's presentation) where a price impulse tends to have 3 pushes to them. Also, take note that the "B" wave is a construct of a flag pattern. Allow the chart to illustrate, hopefully it's not too confusing.Conceptually, it goes something like this; The A-wave is where volume/size comes in and moves the market after being in a sideways/indecisive/equilibrium level. The B-wave follows where the early-birds distribute (take profits) on part (or all) of their position, while late-comers join in and the additional volume brings price down in the final C-wave.

Anyway, there were a couple of things tipping off a potential bottom in today's early morning sell-off; a TICK divergence (also notice that the TICK didn't get overly bearish, even at it's lowest level), which also appeared on the 15-min chart as a momentum divergence, and to a lesser extent, the resilience of this lower channel line which given support on two other occasions (yellow support line within the 15-min chart).
Speaking of shake-out, here's a trade I got shaken out of today because (1) I didn't give it ample wiggle room, and (2) I was distracted with a 1-minute chart (hence the shakeout) , while I should have kept focus on the larger time-frame (5-min) and my strategy behind the trade. Why I didn't get back in is beyond me. The strategy behind it was a simple gap-fill, with confirmation given in the form of an ascending triangle and price basing at previous support.

Wed 05_27

Quite a move there today. There was one head-fake breakout in the early morning before we settled into a range. The break of that range was ultimately quite fierce. Some things to point out; for most of the day we had a strong positive TICK bias while price bounced around in a range (perhaps a signal that "momentum" was unable to move price higher?).
Price basically chopped around within an upward sloping channel ever since yesterday's impulse move to the upside. After consolidating that upward impulse move, our next momentum push up was exhausted (momentum oscillator registered a tiny push up mid-way through the day). Curiously we find ourselves back to that lower channel line.Here's how things played out; The initial "First Cross" entry (green dot in sub-plot) that was triggered was nauseating to sit through (the second green dot was a way of saying hold on a little longer). The first short entry (red dot in sub-plot) was golden, as it triggered an entry at the very beginning of the move down.It's pretty amazing how quickly we've gone from one consolidation zone to another. Check out this 30-min chart where I have levels of consolidation highlighted.Today was a perfect representation of a flag setup. First, we had a low-volatility range (which can be reflected in an ADX below 30, not shown). We had our impulse move (lays the foundation of the flag's "pole"), followed by consolidation (the flag itself), culminating in a continuation move. These continuation moves tend to carry some of the highest probabilities of playing out as we have to remember, everyone is watching and waiting for that flag to break-down, it's a self-fulfilling pattern.
So, the big question is....are we putting in a top, or was today simply a method of shaking out the carpet to see what falls out? Oh yeah, there's that Treasuries dislocation.
Here's a curious look at the SPY 60-min chart with nothing but 3-moving averages plotted, the 20- & 50- EMA's and a 200-Simple MA. Kinda looks like a pennant huh?

elephant in the room

It's the 200 period Moving Average, and it's looming over every index. It has to be tested (yeah, yeah, there are no "have-to's" but just go with it) and if it holds shouldn't that open a floodgate of investors/traders with all sorts of time frames? An orderly break of the 200-MA, combined with a re-test holding as support, should bring out swing traders, hedge funds, buy-and-hold investors (whether they're looking to double up or not be left behind), not to mention cheerleaders on the boob-tube. Which should in turn give this bull run another strong push up. We should be on guard, however, for any sort of shooting star/climax move.
The laggard DJIA
S&P500Nasdaq Composite leading the wayRussell2000For the sake of inclusion, the DJ TransportsAnd the DJ Utilities

waiting

This chop/indecision should be expected as we look at our leading indicators:
QQQQ
IWMGSOne more, just to highlight the expected congestion area

squeezed

A gap down on the open, right into S1 where price quickly recovered in the first 15-minutes. TICK was mildly weak.From the previous close to this morning's open we had a subtle momentum divergence, warning of a possible gap-fill (at least). As pivot gave a touch of resistance a huge volume surge came in at the 10:00a.m. hour. I was listening to an audio presentation recently given by Linda Rashcke, where she discusses volatility/impulse breakouts. A concept she brings up is one of the opening gap and describes that essentially in these scenario's one side of the market is trapped.
Typically, on a gap-down those that are long are "trapped" in their positions, forcing them to sell, in turn dragging prices further down ("A gap is a form of Impulse"). However, this morning we saw those who were short were trapped when price recovered, thereby forcing shorts to cover while also bringing long positions into the market, leading to a squeeze.
(She also mentions a strategy wherein you buy the issue (on a gap down) if price returns back to the previous day's close, food for thought).
Anyway, Nice how price came right down to that previous level of support where we had that gap-up on May 4th (30-min. chart below). We also got that momentum divergence I mentioned last week where this morning's momentum low was minuscule compared to the previous swing low momentum reading. Therefore, we were looking for a gap-fill from the gap-down on May 21st, who could have guessed we would have gotten that gap-fill in one fell swoop!?
Also notice the highest momentum high since that May 4th gap-up (momentum precedes price...unless it's capitulation ;)
Some sort of retracement was suspect (for me) given the shooting star candles here on the 15-min chart (1-1.5-hours into the day). But when I think about it, given the volume that came into this move, a retracement was less of a probability.
15-min chart
Q's recovered the 200MA and registered green on our momentum oscillator. Not to mention today's session engulfed the previous 6 candle bodies.Dow Transports set up a momentum divergence on lows that have now been tested 5 times.Gold showed strength after a weak open, while the Dollar started off strong and then fell apart.Treasuries fell apart in concert with the above (Gold & Dollar) activity.

reveal

I posted two charts this weekend without identifying them, and so here's the reveal.
The first is what looks, to me, like an inverted Head & Shoulders pattern in the daily chart of USO.The neckline was broken at the start of May and a measured move could give a price projection in the $44-range (which coincides with the 200-MA area and a resistance level).
The second chart was (as revealed in the comments section) a 60-min chart of SRS, which appears to be giving us a Rounding Bottom pattern.As our beloved rally has relentlessly climbed, SRS seems to have frustrated holders into giving up on catching this falling knife. We can see that price seems to have stabilized after losing over 70% of it's value since March.
It looks like a base has been built and may be breaking out of it's established range.
Looks like a double-bottom recently. While the most recent test of the lows was on lower momentum, leading to a "Slingshot" setup.

S&P so far

The S&P500 going back to April 2007. Percentage changes based on swing highs/lows on a closing basis.

another poll

Here's another one for you:
Does anyone see a rounding bottom taking place?Any guesses on what chart this is?

poll

Does anyone else see an inverted Head & Shoulders in the chart below?
I'll divulge the issue sometime tomorrow if I get any responses (let's face it, this isn't the most popular blog on the net). Perhaps you don't even need me to divulge what this is a chart of, any guesses?

pre-Memorial Day wknd

Can we really count today's activity within the context of how things may play out come next week? Volume was minuscule and we're sitting on a level of support that can make for a good entry to go long OR short, so it should get interesting next week.
As price hoovered around the 50-EMA most of the day (on the 15-min chart), it looked to me to be taking the shape of an inverted roof. The measured move played out nicely. Take note of the 3/10-indicator; how the slope of the slow line is negative, while the fast line comes in and corrects off of it before continuing lower and below the zero-line; something I've become accustomed to pay attention to.
Here's a closer look within the 5-minute chart. If you don't agree with the subjective interpretation of an inverted roof, than perhaps you can see a bear flag set up after the first two wide range bars (that break out of the inverted roof). If that's the case, then you still get a measured move that puts you into a similar target range (in this case, our pivot point). Drawing a regression channel that starts at the beginning of this move and connected to the swing low of May14th, price sits right at the channel's lower boundary.Here's the current range on a 30-minute chart. A number of consolidation ranges; today's was the $89.50-$90 level. We're now at the lower channel, do we break down from here or go back to the highs. If we break down and don't get a new momentum low then we'll be looking out for a momentum divergence to play off of. If we go higher we could suspect a gap-fill from the 05/20-05/21 close-to-open. At any rate, volume was absent and we're right where we started the previous day. The momentum oscillator looks like it wants to bleed lower, but we'll have to wait for evidence.On the weekly chart, we're within a tight range; a break in either direction could lead to a great deal of momentum.

Thurs. 05_21

SPY gapped-down 1.15% this morning and consolidated before creeping lower. The opening range low acted as resistance throughout the day, even towards the end of the day rally/short-covering. Very large momentum divergence brought price back up to the 20-EMA. Price was very extended below it's Moving Averages today, more so than I've seen in a while for the bearish side.The lows of the day nailed the gap from May 4th before turning around. Price sitting on it's 20-EMA