week ending 3_15

A quick recap
Crude Oil - Daily remains flagging.  Support was quickly bought and closed at the top of its channel (flag).  Weekly 20- & 50-period moving averages recently crossed bullish.  As stated last week $110 is significant resistance

Copper -Still basing under that $3.95-$4 level.  Remains in constructive consolidation mode

The U.S.Dollar Index saw rejection above $80.50 and if it can't get any further upside momentum going looks like it could set up a bearish 2b pattern

The EURUSD pair is oscillating within a down sloping channel.  Above the trendline (weekly) could see a bullish breakout, obviously a break below 1.265 would be bearish, but a higher low can be forming here (currently holding a 50% retrace of the most recent bullish momentum, not shown).

Gold - It would be interesting to see a move to $1600 to gauge buyer interest.  Either way, so long as this higher low (weekly chart) is defended an inverse head & shoulders is in play should price work its way back up to the neckline.

botched 3d

Here's an example of a 3d setup trade taken in GS yesterday.  Poor execution led to a small loss, however, my original stop loss (had I let it reach that point) would have been hit by that high wave doji on the 5-minute.  The second up arrow shows a possible second entry which I didn't take.  Going into Monday I'd like to take a stab at buying price should it trade within the "Resistance zone" highlighted.

SPY setups

Two setups in the SPY today going in both directions.
2d long setup: reverse divergence in a bullish trend where on the faster time frame we see a double bottom (or 3-push, or bear trap) for a move back to previous supply levels.

It may not seem like much as the first target was only 12-cents from entry (with an 8-cent stop) but take into consideration that 500 SPY shares equates to 1 ES contract and 1 ES point equates to $0.10 on the SPY.  So it seems best to trade this on the ES with at least 2, maybe 4,  contracts and scale out at each Fib projection target.  While with the SPY you can scale out in different proportions.  At any rate, this setup rolled over hard once returning to the previous supply level, $140.30 level.  Up arrow is entry, down arrow exits.

Price rolling over set up the 2b criteria which I brought up in a post earlier today.  As price hit the 50% projection the faster time frame registered a buy divergence and when it started selling towards the 100% projection and snapped back it formed a triple divergence, which was a warning sign to put a stop in place above that green inside reversal candle on the 5-minute chart. Down arrows are entry, up arrows exits.

2b short setup

A good example of the 2b short setup today in BIDU.  Considering I racked up some losses in a long position late in the day yesterday it became evident that the failure to break out strongly above the $140 mark seemed to mean there was a lot of supply being unloaded.
The 2b short setup is where the 3/10macd is showing a positive slow line trending down and approaching zero with a fast line positive and moving down as well.  However, being that the predominant trend is typically bullish it is important to see weakness being confirmed; in this case, failed breakout of resistance, and a support level being taken out ($139.39 which also happened to be today's Open).  I like to see the 3/10macd slow line close to the zero line this way I am anticipating it crossing zero, which as I have said before often precedes a 20- & 50-Moving Average crossover.  It is also encouraging to see price inside "the window" which means that price is inside my 20- & 50-Moving Average, again anticipating a bearish cross of these two moving averages.
On the right side 5-minute chart below, the moving averages reflect the 15-minute 20- & 50-MA's.

A problem with this particular trade was the lack of wave structure to measure for targets/exits.  In which case you can take the closest thing you can see in the form of momentum and look to see if your Fib. projections line up with areas of support, as is the case below at the 100% & 200% projections

commodities

An update on some commodities following this week.
Gold - Showing technical weakness.  $1800 remains the number to overcome with $1600 to support it below

But in the context of the longer-term trend Gold has always taken its time within consolidation phases

Silver - continues to fail $35 with $29-30 support below

Copper - forming a narrow channel below $3.90 and above $3.70.  Has a bit of a cup with handle look to it on the weekly

Crude Oil - Still has room to move before running into the $116 resistance mark.  $110 proved to be resistance last week and if price breaks out of the daily bull flag it has formed a re-test of that mark looks likely.

Meanwhile, the U.S. Dollar Index had a bullish end to the week.  It continues to traverse its weekly channel and an $80.50 resistance test could give clues to strength/weakness going forward.

SPY similarities

Taking a look at the SPY and to say this current price trend has all happened before is an understatement.
Here is a daily chart comparison of the recent (since Dec.) price action (right) compared to that of Sept. - Nov. 2010 (left), where in both instances the first bit of negative momentum was bought.

The Q4 2010 trend led to a constructive consolidation pullback which came in to test the 50-day Moving Average, after which time a measured move stretched into February 2011

These price trend similarities can be seen going back to July of 2009.  Below is a weekly chart starting from the March '09 lows where we have seen these price trends repeat themselves.

Thurs. 03_08

Two examples of higher time frame setups that I have had my eye on for the past 2-3 days.  First an explanation:
As a matter of personal preference I like to set up my two time frames so that my "trigger chart" is 3-times faster than the "setup chart".  Most of the chart examples shown on this blog for instance are of a 15-minute paired with a 5-minute chart.  Beyond a 15-minute chart (which contains 26 15-minute bars) I also like to use a 39-minute (10 39-minute bars per day), 65-minute (6-bars/day), and 130-minute (3-bars/day).  The way I trade I essentially use the faster time frame and it's 3/10-macd as a timing mechanism for entering the higher time frame setup.  So, with that said, here are two higher time frame setups I was stalking the past few days which set up today.

LNKD -  The daily was showing a 2c-2d setup which boils down to a trending issue that registers a momentum reverse divergence.  I then look for a 3d setup on the faster time frame, in this case the 130-minute chart on the right:

So the 130-min had the 3d criteria going into the close yesterday, but so did the 15-minute chart (left chart in the set below) so I was looking to buy a pullback in the 5-minute fast line which presented itself in the form of a pennant or ascending wedge breakout at around 9:30 

KSS - My attention was drawn to this issue based on the 3d criteria on the 65-min chart.  When I see a 3d setup I look for the level of resistance which I feel needs to be taken out for a follow-through move higher to occur.    A helpful way of identifying this resistance is by looking to the 3a criteria which preceded the 3d.  In the chart below the 3a criteria showed resistance to be at the $48.55 level (thick blue line).

So this 3d setup was triggered before the close yesterday but today came the $48.55 test which was taken out 20-minutes into the day.  The 50% and 100% projection targets weren't large winners, but the important lesson for me is to be consistent with familiar setups.

50% retrace

The major (cash) indices all finished the day with harami candle patterns and the QQQ showed a morning star candle pattern.  Nothing to get bullish about at this point as all we have done is retrace about 50% of the previous downward momentum, but it leaves a bullish scenario on the table.

The QQQ filled yesterday's gap which coincided to a 50% retrace of last Friday's high to yesterday's low.  A bullish scenario would see price go above $64.40, while a bearish scenario would be to see price sell below $63.75.  Currently we can view this chart as having a potential inverse Head & Shoulders setup:

Here's the Dow Jones spot market showing a 50% retrace of the previous momentum

The SPY has a bit of a rising wedge look to it as price came close to a 50% retrace of yesterday's gap

and the IWM held its 50-day MA and retraced back to the previous day's open where price looks to have a cup w/ handle pattern look to it

Tues. 3_06

And so we get our pullback.
Starting with the market leading QQQ landing right on the 20-day Moving Average and not going much further than that

This was the steepest correction we have seen since last year, showing up as a reverse divergence on most momentum indicators.  This particular move is what I've referred to in this blog as the 2c-2d setup.  In the chart below on the right is the higher time frame (reverse divergence) while on the left is the faster time frame where we would wait to enter on the fast line turning green (which it is about to) OR the 3d setup (a pullback of bullish momentum).

To review some other markets and how they fared today:
Copper had another strong selling day, bringing it right into its 50-day Moving Average.  Should it slip further there is some support which coincides with a trend line around the $3.64 area.

Crude oil pulled into its 20-day MA.  Further downside would have support which coincides with the 50-day MA and may set up a buy divergence

The SPY of course fell out of its tight channel and has the 50-day MA below as support which also coincides with trend line support

As far as the IWM goes, depending on how you draw your trend line you can argue that trend line support came into play today and is showing a potential buy divergence

Now, the sector which started its correction two weeks ago appears to be coming into solid support between the $89-90 level.  Should price slip lower from here the $89 support level coincides with its 200-day Moving Average.

week ending 03_02

Taking a look at some weekly charts.
Starting with the elephant in the room, the laggard IWM
Showing a third weekly lower high, however, this "lower high" wouldn't technically confirm unless it took out the $70's.  Still plenty of room (and time) for a constructive pullback with solid support at $75

But first there could be "dip-buyer" support at the 50-day Moving Average, coinciding with a gap-fill

Following that up with the leader of this market, the QQQ which is in breakout mode and running into a supply level not seen since 2001 (February coincidentally).  There are 3 Fibonacci levels drawn on the chart below and there's a confluence of resistance at the $70 mark.  $70 turns out to be the 50% retracement off of the 2000 high to 2002 low (1-2), while there's also a 50% projection off of the c-d wave at the $70 area, AND the upper median line to the Andrew's pitchfork.  Not to say we'll get there in a straight line (though you never know), rather just something to keep in mind.

The SPY came within pennies of reaching a 100% Fib. projection this past week off of the Nov./Dec (c-d) wave:

While the SPY weekly chart continues to show a divergence in momentum with the ever so slight higher high achieved this week

The Dow Jones (DIA below) is also showing a bearish divergence at the higher high while price is getting awfully thin and looking to be falling out of this rising wedge.

As the XLF attempts to break out further it appears to be having difficulty as it pushes into the $15 mark (on waning momentum) a pullback to the apex of the "W-bottom" (inverse Head & Shoulders) would be constructive.

JPM is leading the charge on the XLF front but a move into $42 could see some profit-taking where there is a confluence of resistance in the form of a 50% Fib. projection, a throw-back to a previous trend line and a prior supply level.

Still watching Copper base under previous supply level.  You could see potential for this to be a cup with handle pattern if it consolidates constructively under that $3.95 mark without giving up much below the $3.70's

Given the large move in Gold this week, there is still the possibility that we see a higher low and therefore an inverse Head & Shoulders pattern.  Gold is no stranger to long-lasting consolidation patterns

Silver remains within a channel, again, not so uncommon following that shock-to-the-system selling back in May of last year.  Strength would be to see this bounce at around $30 and re-test the upper channel line.  A break of $30 could signal a sharper move to the lower channel line.

While Crude Oil has shown a lot of strength these past few weeks, notice how it interacted with the supply zone beginning at $110, nearly retracing the previous week's range entirely.

The  $110 area was faded to start last week and pulled back mildly.  On news of the Saudi oil pipeline explosion price rallied hard into the $110 mark and was sold quite decisively.  Watching that $105-$105.75 support area

 Finally, there's the U.S. Dollar, putting in it's first strong week in some time.  It will be worth keeping a close watch for further strength and the possible correlations it will have with equity/commodity prices.

What sell-off?

That didn't take long.  The previous day's "sell-off" was all but erased today.  The ES closing 1.5-points from the prior highs.  

Following yesterday's rout in Gold/Silver it is interesting to note that Copper has rebounded moderately as well and never printed a lower swing low, giving us a reverse divergence.

Following the news regarding Saudi Arabia and the pipeline attack we got the Crude oil ramp up, but then afterwards it printed this long rejection candle.  Will be interesting to watch how this resolves itself, as it stands now it just appears to be a throw-back to that steep trend line.