Hiatus

I'll be spending the next week or so moving, so blog posts will either be sporadic or non-existent. I've been living in Northern California now (via New Jersey) for just over 10 years and am now off to live in the mid-west with the wifey. It is a move with extremely mixed emotions, but when it comes down to it I most look forward to being in the Central time zone so I don't have to get up at ungodly early hours!! Well, that and the wife has family where we're going, so it's a win-win for us both!
Anyway, I'm anxious to get settled into Lincoln and back into the swing of things. We're hoping to leave either Tuesday or Wednesday next week and take about 2 days to drive the distance from here. So realistically I'll probably be back into things after Labor Day. Can't wait!!
Thanks so much to all the regulars that have been stopping by to read my opinions and observations. Look forward to hearing from you again once I'm settled.
cheers!!

early edition

Gotta scram for now. After we got a big gap down on very low momentum, the early market set up quite a beautiful triangle for a gap-fill. These OPEX weeks are a challenge and can chop you up.

nice chart

It doesn't take a genius to draw simple conclusions from this chart.

Tuesday grind

Got a little bounce today, but much the same drift after the initial move on this OPEX week. The SPY retraced 50% from the close on Friday to yesterday's low on low volume.
Price is just basing at previous support:We worked our way back to the Previous day's high this morning, based along that resistance and my pivot resistance level (red horizontal line) while our 5-min candles began closing at higher prices before breaking out. The rest of the day just drifted sideways on waning momentum.and while TICK and momentum were testing lower levels, the ship just wasn't sinking.
Tricky tape here and you just have to wait for the market to tip it's hand.

RIMM printed an abandoned baby candlestick pattern today, so I'll be watching for upside follow-through.
Also, watching XL for more upside, though the volume isn't very spectacular

Correction mode

The SPY gaped down (almost 2%), moved sideways ALL day long, and slipped a little lower towards the close.
The dollar gained more ground today:A shame we were given the shaft with such a steep gap down and no follow-through. A trend day down was apparently too much to ask.I don't really have much to say about today's session. I didn't take any trades today, options expiration is Friday, and I'm a bit preoccupied these days with the big move on the near horizon.

blah Friday

The dollar saw some buying activity, giving the markets a little sell-off.The morning sell-off put in a higher low, while momentum registered a lower low, so I was looking for a "Slingshot" setup.
The green arrow is where I considered buying (close above the 20-EMA). I didn't buy here because, well I guess I'm a dope. The stop would have been either below the lows of the day, or perhaps a bit higher. Either way, it would have given us a Risk:Reward of 2R.
The green horizontal line is my daily support pivot.

For some longer term perspective; the daily shows a somewhat range-bound market on decreasing volume and momentum. No surprises here.The Weekly is sporting three consecutive NR7 bars with the slightest of bearish momentum divergence.

good read

An interesting article regarding corporate debt and the continuing equities rally.

keeps going, and going, and...

The SPY closed on the highs of the day (highest close since Oct. 06, 2008!). Until the dollar can get it's footing, it looks like our lows will keep getting bought.Total NYSE volume today was the 2nd lowest it's been all year.These past two days in the SPY have left us with "P"-shaped profiles having single print buying tails, just enforcing how quickly the lows have been bought.
This morning the SPY gaped up, TICK was weak and getting weaker, price returned to the previous day's close (PDC) so a scalp short was in play.
The resistance pivot held pretty well throughout the day (red horizontal line), not sure what the 1p.m. fake-out was all about, but the momentum divergence paid off when price came back down under resistance. Later in the day the 3/10 oscillator recovered from it's bearish tone and momentum started working upwards.
The resistance pivot also worked extremely well with RIMM. After being rejected for the 3rd time, price stair-stepped back down to the lows of the day.While resistance for the day coincided with my pivot level, it also happened to be the 50-EMA on the 15-min chart (confluence of technical signals!!).

whatever

I'm not sure what sense it makes to have these FOMC minutes released during market hours. The bots own the tape after 2p.m. Anyway, we'll have to see follow-through tomorrow. Who cares about technical corrections at this point, right? We just keep pounding things higher...on lower and lower momentum.We congested a little around my resistance pivot and held it as support later in the day, but I'm not about to get involved with FED day unless I'm in SIM mode or trading 10-20 share lots.The 15-min chart did show a First Cross buy entry on the open this morning:Let's see what the reaction is tomorrow.

First Cross study revisited

As pre-FOMC chop unwinds I am updating my results from a previous post involving the First Cross method. If you prefer not to go back and read the previous post, the rules are:
A First Cross signal on a 10-min chart of the SPY that coincides with a close outside of a 2-bar price channel with a stop above/below the previous bar's high/low.
Here's an example where the green vertical line represents a signal that played out and the red vertical line represents a signal where you would have been stopped out based on the simple rules.Keep in mind, these are strictly mechanical signals. There are many ways in which you could use your own style and discretion while incorporating this system (whether it be to gain a short-term bias to the market and trade other issues, using shorter time frames to either scalp, or even widening your stops for swing trades).
So, going back to the beginning of the year you would have had 108 signals. 25 would have resulted in being stopped out (based on the rules established), while 15 could have been viewed as scratch trades (and for the sake of curve-fitting, I'll include the "scratch trades" as signals that didn't work out, so that's 108 positive signals, and 40 negative). So, out of 108 trades 62.9% year to date have resulted in "winning" signals.
Keep in mind, these signals are entry only, and rely on your discretion to raise stops to lock in winners or close out a position when you might sense that the market is turning. Nonetheless, it has the potential to give you a general short term bias to the market.

1000 test rejected

The S&P fell under the 1000 mark, tested it later in the day and was rejected.
We continued making lower lows through the morning in the SPY on a bullish momentum divergence. The easy plays were in the early sell-off, while trying to play a counter-trend recovery got very choppy. The testing of $100 was met with a bearish momentum divergence, where we got three pushes to test this level, but couldn't close above it.
I mentioned yesterday the 60-min chart that was setting up to either correct lower or push higher based on the 3/10 macd. Here's where you see the example of how the fast line corrected off of the slow line as price sold lower. Meanwhile, the slow line is back to negative territory and setting up for a "First Cross" sell signal.

Monday 08/10

Got a little selling today, still nothing decisive. On the 60-min chart below we see momentum continue to work lower. The ellipse on the 3/10 oscillator highlights whether we'll see the fast line correct off of the slow line in the coming future, or perhaps we'll get a fresh momentum push higher from here.
The SPY gaped down into my support pivot this morning and eventually filled the down-gap forming a bear flag. The three red arrows represent good shorting opportunities. The first two worked well, while the third didn't follow-through. Notice how the momentum oscillator was bearish (negative slope) for the first two arrows/pullbacks, but for the third one the 3/10 was leaning bullish and "recovering" the slow line, a subtly worth paying attention to.
RIMM traded beautifully today and perfectly highlights the concept of consolidation preceding expansion. If you can draw a horizontal line that touches most of the price action you can easily see that you're in a consolidating range. The longer the time spent in consolidation, the better is the likely expansion out of that range.
My blog upkeep may get a little sloppy for the next few weeks as I get closer to moving. So a combination of packing and socializing may occupy more of my time for now. You can always keep up with me on twitter though :)

Fri. 08/07

So, Friday gave us an emotion-charged rally. Momentum still continues to waiver. I mentioned on Thursday how the slow line in the following 60-min chart went negative. Well, it has recovered to go positive but notice how tired that slow line looks.
So, price gaped up to previous highs (corresponding with my resistance pivot and retraced back towards the 20-ema before heading higher on the day. Some things to notice in the following 5-min chart include:
-The gap up sold off into a bear flag pattern that concluded it's measured move in an nr7 hammer candle (purple candlestick).
-Price put in a higher low, while momentum dragged down into a lower low as price ever so slightly tagged the 20-ema continuing higher in a suspected "Slingshot" setup.
- Price shifted from bullish to bearish around the 11 a.m. hour (Pacific Time). The shift is suspect once price closed under the 20-ema and the fast line can't recover the slow line on the 3/10 macd. Notice inside the ellipse on the chart below, how the fast line crosses under the slow line, corrects back into it, but just can't recover above that slow line. Momentum and price then continue lower.The momentum shift I just mentioned using the 3/10 macd could also have been witnessed in the TICK behavior. In the chart below we see how the zero line was acting as support along the highs of the day, but once price closed under it's 20-ema the zero-line was now acting as resistance. Also worth noting during the early hours how steep the pullbacks in TICK were. Typically on solid trend days you'll see TICK pull back to the zer0-line on corrective moves, not all the way down to -600 and a nearly -800 reading.
Well, the sell-off brought price back down to previous "single print" levels.OK, this rally has reached an apex, right?! There's zero upside momentum left on the daily.
So far the weekly 38.2% Fib. retracement level has held as resistance. A gap-fill and 50% retracement would be the ultimate victory in the next few months though.

enter sellers

SPY gaped up on relatively weak +TICK (which coincided with a long-term level of resistance; see daily chart in previous day's post). Price then returned to the previous day's close, where I have before discussed a scalp short entry. Sometimes you get a little, sometimes you get a lot.The 5-min shows a couple of things; (1) price came within pennies of our resistance pivot, while our support pivot held for most of the day. Price did break down from that support (cha-ching!) but ended up returning to close right back at that level. (2) some momentum divergences. I have two vertical dash lines that indicate where the buy divergence would be initiated (based on a tick up in the macd histogram). The first one was on a dragonfly doji candle that barely tested the lower keltner channel and closed right on top of support. The second on a long hammer candle that closed inside the keltner channel after a long wash-out move. I'm not just looking for a tick up in a histogram, I'm looking for this confluence of technicals to show themselves (i.e. candle patterns, price relative to other values, etc.).A couple of observations about today:
- First, on this 60-min chart below we have the "Slow Line" of the macd (also known as the "stability of trend" line) crossing negative. The last time it did that (green up arrow) we had a snap back rally, but the previous three times it did this (3 red down arrows) price corrected lower. (Sorry, I included the wrong 60-min chart, so the one below doesn't contain the arrows where the slow line crosses zero).
- Next, A seminar I once attended lent the idea of observing the total nyse volume in the first half-hour of the day, to get an idea of "higher time frame" participation. In other words, the participation of institutions, and deep-pocket swing/position traders entering the market. Today's first 30-min volume was indeed high, and what followed? Selling!
On the volume chart above I also circled the most recent previously large 30-min bars, and below on the SPY daily chart the vertical dash lines highlight those days with "higher time frame" involvement, and you can see how price reacted.Finally, there's the market profile. Today's profile gives us a "b" shape, which simply highlights the rejection of value at a higher level. Up to this point we have had "fat" profile bodies, building value at higher levels. Now we see value working lower.

Wed. 08/05

We ended the day on a hanging man type candle, while we're also at a long term resistance level on the SPY:A very slight gap up this morning with a very brief test of our previous day's highs, all on relative weak TICK. The lows of the day were formed on a TICK divergence at the 10:45 hour as well as on the 1:00 hour.Here's the 5-min chart; the green horizontal line being my support pivot for the day that acted as resistance for most of the morning. Also marked are the momentum divergences present today.
I was watching FCX today as the dollar continued to weaken. Price failed my support pivot but again found support at the Monday gap-up low. Once price recovered and tested the support level, I entered a very small position to target the highs of the day.
I was looking for some sort of move in RIMM today, instead it just based around my resistance pivot.

Big mover of the day was AIG, playing on sympathy with Radian Group's reporting. Though I didn't make a trade in it, it still presents a beautiful portrait of a perfect trend with perfect setups, the ideal time to get aggressive.