3d squeeze

3d setup on the SPY today.
I entered long on the second up arrow with a stop at new lows (10-cent loss).
Entered long the second up arrow.  Exits at 132.14 & 132.40 with 1/4 position held overnight.

Here's a look at the SPY including the o/n range.  A simple breakout of the overhead trend line/channel

weekly signal

The SPY weekly may be setting up a 4d-4c sell continuation setup.  Price is inside the "window" (between the 20- & 50-MA's) and we have the 3/10macd slow line crossing zero (which often precedes a 20- & 50-MA crossover) and the fast line pulling into it (essentially a bear flag).  Price is at a critical juncture.  A move higher (thereby turning the fast line positive) would force a squeeze.  While a tick down in the fast line could initiate a bear flag sell-off (this would also trigger a first cross sell signal).

  A clue to what may develop on this weekly macd setup will be how the daily behaves.  A negative tick down in the fast line would be a potential sell signal (though I would prefer the fast line to set up an X-Y-Z pattern that looks like this

So, should we sell lower we could possibly anticipate buyers to step in around the $130 mark and maybe we get boost higher from there, at which time that fast line on the macd would set up the zig-zag pattern I mentioned above.

SPY week

Weekly overnight and regular trading hour ranges.
Monday:  Stayed within the overnight range

Tuesday:  Breakout of the overnight highs just after the open, extending out to the 100% projection

 
Wednesday:  FOMC day.  Overnight highs were contained, while the lows broke and extended to the 100% projection lower, finishing right at the o/n session's midpoint.

Thursday:  Big trend day down.  Notice how long price oscillated around the o/n_lows before breaking.

Friday:  For the most point held the midpoint before extending higher to the 50% projection.

Copper drip

As part of the great commodity unwind of 2012 Copper continues to drip lower.
The daily showing potential to continue its move lower towards the 100% price projection around $3.18

The weekly highlights the quite large Head & Shoulders pattern where a move to the neckline seems imminent.

Crude Crash

OK it's not crashing, but it's off 25% from 7-weeks ago and threatening a test of the 2011 lows.  The one technical possibility is the potential for a 3-pushes to a low pattern here as momentum wanes. The 3-push pattern can include a vicious sell-off followed by an equally vicious short-covering rally.

These weekly Fib. projections beneath the 2011 lows look towards the $71 mark and there is a confluence at the $57 level, but it can't go that low, can it?

this week in SPY

This week's trading in the SPY with pre-market activity.  Vertical blue dash line is the regular trading hour open, fuchsia horizontal lines are the overnight highs/lows.

Monday - Trend day from the beginning.  Notice how the first 5-minute bar cut right through the o/n_lows and didn't look back, making it difficult to enter if looking to short a pullback. 

Tuesday - A false breakdown of the o/n_lows leading to a squeeze in the other direction.  Support at the o/n_highs eventually holding and extending into the 150% projection.

Wednesday - Price holding the o/n_lows, attempting to break the o/n_highs and eventually selling off down to the 50% projection.

Thursday - A narrower o/n range with an early breakout to an eventual tag of the 100% projection.  Late afternoon pullback coming very close to the o/n_high and extending higher on extreme volatility.

Friday - o/n_lows hold and move higher throughout the day.

week ending 6_15

After spending all week inside of a range (besides the sold-off outlier which started the week) price began to work its way higher, closing the week almost to the penny where it started out.
In the chart below; For the most part all dips were bought (highlighted 2c-2d conditions).  There were 3 larger sell-off moves (one last week) which were all contained within range and the latter two giving a regular and a reverse divergence.

So, we have managed to creep ever higher into the resistance zone we were looking at going into last week. There doesn't seem to be a case for overall weakness these past two weeks (aside from the prevailing overhead supply).  Price hasn't pulled back much at all since the island reversal, and a strong follow-through day above the 50-day  MA may likely cause big money to chase (as we've seen that play out time and time again).  The 20- & 50-MA's on the weekly still have a bullish orientation to them after holding that 38.2% retrace.  However, maybe not seeing much of a pullback is reason to believe in possible exhaustion at the 50-day MA.

The QQQ held major support at the $60 level.  I've blogged frequently about the 2c-2d setup, and typically the entry to that setup is the 3d criteria on a faster time frame, which is what we see on the daily chart below.  Provided it can get through the resistance point formed on Monday ($63.38) our first target objective would be the 50% Fib. projection at $65.

Now for the ugly duckling.  The IWM certainly the weakest looking of the bunch, particularly with that higher time frame structural lower high looming overhead.  The daily still has room to move higher before getting tied up in the 50-day MA and overhead trend line.

The DIA is leading the charge here and may be our "tell" going forward.  There is nothing bearish about the higher time frame at this point.  A strong V-bottom followed by higher highs & lows.  It has yet to form a lower high yet (though one can argue the case of a double top), so what happens from here is critical for both bull & bear camp.   Either we break out to new highs or fail to (isn't that always the case?), in which case we get a lower high and a steeper slide may likely unfold.
Next week should be very telling.  Either price is rejected off of the 50-day Moving Average that it just happened to close right underneath of on Friday, or we get a gap and chase rally?  The reverse divergence in place here is a bit concerning though (if bullish) as it often portends a "too far too fast" corrective or consolidating move.
I drew the Fib. projections on the daily chart with the 6/08 day as my high (rather than the 06/11 high) as that had the lowest low and, therefore, the steepest correction to date.  This means the 50% projection target is just within reach.

This has all happened before...

...it will all happen again.
Just worth noticing the similarities which occur after sizable distribution phases.  In my opinion we're in the Gap Trap phase at this point.  Bullish or bearish is less relevant at this point.  For a sustained move in either direction it will take time before institutions collect their inventory based on where they see the market going.   If this is a consolidation before lower lows it should take time before that happens.  If this is consolidation before new highs, it should take time before that happens.  In the meantime, we should cycle within a range.

AAPL setup

The AAPL setup mentioned last week looks like it has potential to roll-over.  Clearly rejected in the resistance zone and at the 50-day MA.

resistance resists

Price made a go of it, gaping above resistance but was aggressively faded.  With the SPY (below) there still remains the opportunity of putting in a higher low with some likely support around $130 initially.

And, for all intents and purposes, putting in a higher low is much more constructive in terms of price discovery.  The Moving Averages say bearish, so rips are getting faded until the tide changes.  Speaking of which, here's a look at the SPY with just the 20- & 50-day Moving Averages (the "tide").  While bulls can consider a lower high from here on out to be constructive, the bears can consider higher price discovery to be desirable.  If price moves higher, say to the 50-day MA, that would give the Moving Averages a chance to form a similar wave pattern as the ones highlighted below.  Either way it will take some time, maybe things will be clearer by month end.

The U.S.Dollar index had a strong day, still waiting on a follow-through day though

Treasuries a similar story as the dollar above

While Crude Oil remains to be getting crushed (here represented by USO).  Approaching lows not seen since last October (of which, last October they weren't seen since '09).  At least with these pesky speculators getting crushed (even though there are two sides to every trade) gas prices will be plummeting any day now, right? hmmm

This USO has to be due for a dead-cat bounce soon I would think, no?

spy o/n

Meant to post over the weekend the SPY weekly trading ranges; premarket and regular trading hours.  Blue vertical dash line is the market open, fuchsia horizontal line is the overnight high/low.
Monday:

Tuesday:

Wednesday:

Thursday:

Friday:

SPY going forward

The SPY weekly is setting up what I call the 2c-2d setup (basically a reverse divergence in a bullish trend, as indicated by the 20- & 50-MA's).  So, when identifying a 2c-2d setup, I look to the faster time frame (in this case the daily) for an entry which usually comes in the form of the 3d criteria, and low and behold, that's what we have:

Some notes:
   -The weekly came into a support zone in the form of the 38.2% retracement that also happened to be the 50-week moving average.
  - When noticing the 3d criteria I look to the left, identify a 3a, and that gives me my resistance zone; or where price may likely encounter, well, resistance.  This is indicated on the daily chart, and happens to line up with the 50% Fib. retracement as drawn between recent lows and the May highs.
 
  After identifying this setup I look for a price pattern that looks like 3-pushes to a low or an inverse Head & Shoulders.  From there I then draw a Fib. projection off of the seed wave to attain price targets.  The seed wave will likely be the low of the inverse H&S's head to the high preceding the most recent higher low, make sense?  This seed wave is only a potentiality because we don't know yet whether the lows are in, but that is what gives us our Risk:Reward profile.
  So, here is a closer look at the Daily chart

The rounding aspect of price can be highlighted by tracing out these symmetrical cycles a-la John R. Stevenson

Wed. 6_6

SPY trend day with the pre-market price action.
Fuchsia horizontal lines are the overnight high & low.  Blue vertical dash line is the RTH Open.  Fib projections based on the o/n range.

AAPL potential

Just food for thought regarding AAPL
The weekly (right chart) bounced off a 38.2% Fib. retracement with a stark reverse divergence (2c-2d setup).  What is transpiring on the daily chart (left) is the potential 3d criteria which sets up the higher time frame follow-through.
Points for consideration:
  - Price holding the 50% retrace (roughly $555)
  - A breakout above the overhead down trend line leading to the $581 resistance mark.
  - First Fib. target of a 50% projection near the $608 level.

Tues. 6_05

Just a look at the last two sessions in SPY and the pre-market (overnight) session.  (Blue dash vertical line represents the Open while the purple horizontal lines indicate the o/n highs and lows).
Monday:
   Fairly wide o/n range.  A false breakout to the upside and a return all the way back to the o/n-lows.  Price chopped around gaining support for another round-trip back to test the o/n-high.

Tuesday:
     The o/n-low was within a penny of yesterday's o/n-low.  The opening drive breakout tagged the 50% projection of the o/n-range before pulling back and holding the o/n-high as support.  Ultimately the 100% projection of the o/n-range was achieved late in the day.

Today's regular trading hours (RTH) had a bullish (relief rally) tone to them.  The early morning setup was a bull flag continuation of yesterday's late afternoon action.  The ensuing pullback into the 11CST period (holding the o/n-highs as previously illustrated in the chart above) can also be considered the 2c-2d long setup.  The previous day's bull flag achieved the 50% projection which lined up closely with the 50% projection of this afternoon's higher low wave (the structure formed between 11-12:30CST).