seed waves

SPY
  3 bullish seed waves within each other.  All held (or are holding) their 50% retrace

Thu. 10_04

Gap up, consolidate, momentum, pull back, consolidate, close near highs.
Early morning ping-pong between the opening swing, which was also the midpoint of the overnight range.  Opening swing highs held support as did the overnight highs later in the afternoon.

A key for the above chart to define the horizontal lines and dots.  For further explanation, see this link:   

Advance/Decline started, and remained, high the entire day.  While Up/Down volume trended strongly higher all day.

15m and 5m with 3/10macd.  The fuchsia lines were left in to highlight how a symmetrical triangle morphs into an ascending triangle.  This looks ready to move higher in my opinion.

Butting up right against resistance

Today we achieved the 50% projection off of our most recent seed wave.

Mon. 4_15

Some setups from today.
Midday:
 NSC - Relative strength with a bull flag at previous day's resistance.  I missed the 1st up-arrow entry and entering up against the 50% projection (of the smaller seed wave) and so near the IB-high was a "short leash" trade.

Here is how it looked on a 3-time frame perspective.

NFLX - Seeing 3-pushes to a low on the 15-min and a small double-bottom on the 5-min at the IB-low the entry was long with a target of prior breakdown points that coincided with the 50% & 100% projections.  Got out too soon before price tagged the 100% projection

AMZN - into the close trade which didn't amount to much

I didn't take this SPY trade, but it fits a number of trading rule categories.
On Friday we broke down from a momentum bear flag and continued on that path today.  Price found support at the 50% projection (as well as various other technical price points) of that bear flag on a momentum buy divergence (15-min chart) with 3-pushes to a low (illustrated on the 5-min chart).  The 3-pushes formed an inverse H&S (or seed wave) and achieved the 50% projection, overshooting to tag the morning's breakdown point at $137.68.

wave 3

A seed wave is a momentum move that follows a down trend which forms its first higher low, sending prices higher.  Since the March '09 lows we have had 3 such seed waves.
The second seed wave coming off of the July 2010 lows has already run its course culminating at the 200% Fib. projection.  The other two, however, are still in play. 
Wave 1's 150% projection lines up with the Wave 3 50% projection around the $140 mark.  While the 200% projection of Wave 1 has a $154 target, nearly lining up with the 100% projection of Wave 3.

UCO

Unfortunately this is a "hard to borrow" issue on the short side, but it's the only thing I've found that closely reflects the movement of Crude Oil.  When a trend is strong (for my purposes the 15-minute chart with 20- & 50-MA's indicate trend direction and strength), and the trend in Crude has been bullish all week, you'll see these momentum sell-offs into support that are good buying opportunities. The momentum indicator sets up a reverse divergence ("Sling Buy") where there is a lower low in momentum and a higher low in price. The 5-minute chart demonstrates three pushes to a low forming an inverted Head & Shoulders. First target was the 100% projection which coincided with the price breakdown point. Position closed on price failing to hold the Open on waning momentum near the end of day.

seed waves

Setup this afternoon across many issues.  The importance is having reasonable targets in mind and knowing when you're wrong.
CLF - went long in a REALLY stupid entry ($68.85).  Sat through the adverse move with the opinion that if it held the 50% retrace I would wait it out, and so it did.  Exited the majority of the trade just above (got a lucky pop) the 50% projection ($69.36) for safety sake.  Stopped on the remaining 1/4 position just under $69.

A number of issues were setting up the same profile at the same time.  These 3d setups trigger on the 5-min chart with a fast line going positive.  But if a seed wave has yet to form then it's best to wait for that seed wave before just taking the trigger confirmation on the 3/10macd as you can likely get better Risk:Reward setup around the 50% retrace point (wait for green bar on 5-min at this 50% level).

AAPL

SPY - notice reverse divergence between previous day's low & today's afternoon low on 15-min chart

There were more, but you get the idea.

50%

Posted the other day was a chart of the SPY Fib. projections off of the lows.  It took a while (not really a sign of strength) to tag the 50% projection where it turned sharply lower (also, obviously, not a sign of encouraging strength).

SPY seed wave, it's a big'un

that was quick

AMZN long

AMZN long off of an inverted hammer bottoming seed wave.

On the faster time frame you can better see the bottoming pattern trace itself out.  It's a reliable pattern to watch for to trade a bottoming pattern intraday; kind of an inverse H & S with two heads; with either a slightly lower low as in this case or, just as valid, a slightly higher low

Look closer at the 15-min chart, it's tracing out the same chart pattern as the one outlined on the 3-min chart above.  Look to buy $214 on Monday if price holds that support, if it fails it, look to short $214 on retest.

continuation move

A continuation move, and on strong volume!  I thought price only went DOWN on volume in this market?  There is still a layer of resistance overhead, so we could still get a failure to break through, but this is a step in the right (bullish) direction.  A 50% projection target on this seed wave comes out to the $140 level.
This short squeeze game has been playing out for the past two years non-stop.  Today was yet another example of price gaping up and triggering short positions to be covered.  It would be critical for price not to close too bearish tomorrow (also through next week) as then there would still be hope (for bearish positions) for a double top type formation, around the $135.50 area or even the $137 level.

However....where the SPY and DIA have more of a bullish tone, the IWM & QQQ are lagging (non-confirmation?) and have more room for bearish supply coming into the market.
DIA - still room for a double-top

IWM - still plenty of room for error.  I can see it being a better setup if it came down slightly to put in a right shoulder to an inverted H&S

QQQ- plenty of room for a double top or failed breakout overhead

also, all four of these index ETF's are still within a Head & Shoulders formation on the weekly time frame (charts to those were posted yesterday).

same setups

Three trades, all of the same ilk. 
Counter-trend bottoming formations.
Seed wave patterns with a 50% correction forming the higher low.  Targets being the 50% & 100% projections.
SPY

GS - If you notice, the inverted hammer candlestick IS a seed wave unto itself.

FCX

seed wave

Two seed wave setups in the SPY today:
The first fell within a few cents of its 100% projection while the second was strong into the close.

The second seed wave later in the day I was anticipating because of a 3d setup on the 30-min chart. double bottom on solid support that closed above a resistance level that was tested all day long:

I'll Buy That

Green hammer on the 15-min chart, I'll buy it any day

5-min breaks down as such; entry off the break of the 15-min hammer bar's high, exit as resistance.  Second entry based on inverted H&S, exit at 100% projection of the initial wave

pre-FOMC

Most FOMC days have early opportunity before the markets go into a lull as the announcement approaches.
VXX long 3d setup (technically the criteria is 1d, but the strength of the setup is the trend of the slow line and the fast line correcting into it).  I mentioned the other day that the 3d setup occurs later in the day but can carry through into the next morning session.  It's integral to know where overhead resistance is so you can anticipate the dynamic move that comes from trailing stops and/or long positions being initiated.  The 5-min chart of the VXX has two arrows; the leftmost is where the trade technically triggered based on the 3/10 macd and the rightmost where the actual entry was as resistance was taken out (actual R:R was much better on the left arrow).  Fib. projections (15-min chart) based off of the previous day's seed wave.

Mentioned yesterday was to watch MEE and its developing H&S pattern.  This short setup was a breakdown out of a flag and a bounce at the H&S daily neckline:

SLV

The trend is up.
15-min chart the momentum push was the lowest reading in over a week while the swing low was higher than the previous day (just above the PDH).  It's a reverse divergence, but I believe LBR coined in a "Sling Buy" setup.  The 15-min hammer candle doesn't get any prettier.  While the 5-min trigger could have been a 3/10 macd Fast Line/Slow Line crossover, but a better entry was following the consolidation off the bottom as price formed the seed wave.
Half target was the 50% entension of the seed wave which coincided with the breakdown point of the selloff.
100% and 200% extensions of the seed wave were both met the next day.

more setups

XLE was a good 3d setup.  Price formed a cup w. handle pattern while the trigger came about at the end of the handle.  Two ways to measure for a target; measure A-to-B as indicated on the 15-min chart (correction; the 'A' should be 4 bars over, being that it's a double bottom the extension is the same).  The other measurement indicated on the 5-minute chart is a seed wave.  Otherwise the PDL was a realistic target without using Fib.s.

I traded BHI today very briefly, but not to the extent that it set up as indicated.  The gap down was a strong impulse that created a reverse divergence.  What followed was a seed wave where price succeeded in reaching a 100% extension.  The 5-min chart set up a First Cross long entry where the Slow line goes positive just as the fast line is correcting into it:

I'm not buying it, you buy it...

Following POT earnings we saw a price liftoff on strong volume, only to see the move faded once hitting that overhead supply range ($100-$101). Have we noticed a theme yet of beat earnings moves being faded??
At any rate, here's the overhead supply zone as posted last night:Following a failure test of the highs, price formed a seed wave, giving 2 primary targets. I'll post an end of day update on this chartIt's a funny thing to see strong buying (as evidenced by the green volume bars) into a move, but the overhead supply concept will win out every time (initially anyway, this could be a mechanism to flush out "weak" hands and we could base and consolidate between this $97-$100 range for a while longer, it just depends on how much demand there is).
...should have bought it...what a move!

Moving Forks

The moves with the most energy and probability for continuation behind them, often spring from a rejection test beyond support (or resistance), where (considering a down trend in place) a Lower Low (or equal Low) is made followed by the "first" Higher Low.
Once price gets into an area where traders think a Higher Low may take shape (likely a Fib. level), one of two things can happen:
- Continue lower and test the lows, nullifying a presumption that price was making a higher low.
- Move higher to test the previous swing high and see if there is enough demand to make a new higher high.
Should the latter be true, we then have our "seed wave" in place. Given the speed at which this "wave" forms will determine how high and tight it's trajectory may be. Using the pitchfork helps in visualizing this concept:Once this first Median Line is no longer in play we can start using the most recent pivots to give perspective to the trajectory, speed, and energy of price.
Currently POT is in a position where price may be putting in a bottom of some sort:
The most recent pitchfork becomes a process of elimination:This process can also help you to look a little closer at what price is doingEventually the energy will tire once a level is reached where buyers are collectively interested. Until then, you keep moving the Lower Median Line down until the first seed wave holds and the highs above bring demand rather than supply.
Currently the Higher Low in POT stands around $94 (right around the 78.6% retracement), so a test lower and it would seem we could keeping testing lower (even if for just an instant, a new seed wave would then take shape) until volume comes in to support a price. If $94 holds as the Higher Low, $98 followed by $104 can be in play.There is now a Longer-term pitchfork in play, adjusting as our lows are made, and shorter time frame pitchforks to gauge your trading time frame potential setups.
In this image above the purple pitchfork is nullified. The yellow pitchfork shows price pulling back to the Lower Median Line (LML) that also happens to be the LML of our longer term pitchfork (red). Price showing support at $96 could be a good entry long (as a day trade) imo.