Mon. 01_07

today's trade

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

First trade basically a scratch. Second trade (short) I took some off but then added back (two down arrows). The up-arrow with an "x" under it reflects a long entry that I considered, but didn't take. Final trade (long) was scaled out of in 4 parts, the final exit was based on the overnight highs at $146.04.

The higher time frame you can perhaps argue the presence of a head & shoulders pattern (65min chart).  I'll be watching the 3/10macd on that time frame to see if it goes green (and has a fast line/slow line cross) or if it ticks back down.  Essentially under $145.50's bearish and over $146.25s bullish.

Interesting to note the severe lack of negative TICK readings so far this year (the sub-graph in the chart below is a smoothed version of the TICK)

Mon. 10_01

Gap nearly above previous day, "news driven" momentum, all erased by the close.
Pretty decent negative TICK compared to what we've been seeing.

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

Advance/Decline came back to the zero-line.

15m &5m with 3/10macd.  2c-2d criteria into the Open, also anticipated around noon, except price rolled-over.  

Two more views of the SPY;
zoomed-out of the above chart:

A 30-minute chart which was posted last week.  "BD" = BreakDown, "T2R" = Tried to Recover.  Black moving average is the 10-day, green moving average is the 20-day MA.

Below is the Daily with 130-minute.  So far a failed attempt to continue the trend progression.  Daily showing 2c-2d criteria (though the "higher" momentum reading as seen through the fast line is happening under negative price development, and a fresh momentum low followed by price weakness isn't very positive).  It looked like the faster time frame was setting up to go higher, but price couldn't overcome the $145.50 breakdown point.  

just charts

Looking at the weekly SPY;  A head & shoulders pattern stands out (mirror image pattern as that of the bottoming pattern from the flash crash recovery (April through September of 2010).  It appears that the market bulls are at a critical juncture if prices cant begin to follow through from the momentum candle 3-weeks ago.
While the daily chart shows we had a strong selling binge from May through most of June wherein we corrected over 75% of that move on a strong squeeze which ended in an evening star pattern.  The 3/10macd may be setting up a 2a/2b criteria which often results in a good shorting opportunity.  I think a strong close at/above $134 may invigorate another bullish advance, but also feel that the overhead gap zone will see heavy supply come in.

This is what I'm looking at in terms of S/R

Meanwhile, the QQQ is interesting;  The weekly also looking like a topping pattern. The most recent move up registered a reverse divergence (higher momentum reading on a lower high) which would trigger on a tick down in the histogram.
The daily nearly printed a dark cloud cover pattern ("nearly" in that technically it is supposed to close at least 50% of the previous green bar, but fell shy of that). Also setting up that 2a-to-2b short setup. 

Here's an example of that 2a-to-2b short setup on the IWM weekly.  The idea is that the 3/10macd slow line is trending down as the fast line corrects into it, and it is triggered by a tick down in the histogram (indicated with blue arrows.  There was one instance that turned out to be a less than stellar trigger, but the others worked quite well (on a return to support-test basis).  However, the slow line now seems to be at a crossroads; it can turn up with added upside momentum, or it can lose its positive slope and continue negative.
The daily chart of the IWM is hinting at more immediate upside and if that's the case the strength of the upside test will have to prove itself on a closing basis, otherwise it looks to possibly trigger a 2a-to-2b short signal.

One other intriguing chart is that of the SMH.
The weekly is triggering (should the week close with the histogram ticking down as it currently is, but that IF remains) a 4c-to-4d short entry.  While the daily is waiting on the very same setup to trigger.  The chart had a few reverse divergences to work off, but what gives a bearish lean to this chart is how quickly the large green weekly bar 3-weeks ago was quickly wiped out.  A tell would be to see how successful price is in testing the overhead gap left from July 12th.

opposite of yesterday

Going into yesterday's close there were a number of stocks that I watch setting up the 2b criteria.  The exact opposite of the 3d criteria.  It is what it is.  If you're confused and care to dig deeper, all of the documents in the sidebar to the right explain my approach, particularly regarding the 3/10 MACD oscillator.
So, like yesterday, being that the gap down was pretty steep the 2b criteria was pretty much complete with the opening gap down.  So, there will either be a pullback that is shorted or a rally that will cause dip buyers to come in later in the morning.  In terms of the 3/10macd, what set up this morning was the 4c to 4d continuation short which triggers on the 5-minute chart as the 4c criteria.

Look to breakout points and what price does when it returns to those points for clues.
Speaking of 2b short setup.  It was triggered a while ago on the SPY weekly chart

Two more 4d short setups.  The 4c condition exists, so you're anticipating 4d to trigger by watching the 5-minute 3/10 macd to turn bearish. 

and

another

yes, another 3d setup.
Endured a lot of chop, but entry was good enough to take some heat.  Target was the previous day's breakout point.  Breakout points tend to be LVN's to target (as mentioned in previous post).  However, it was helpful (psychologically so) that the 100% Fib. projection aligned with this area as well.

A closer look:

No perhaps not all breakout points are LVN's, but it's a reasonably reliable indicator of such.

Much like yesterday's SPY setup, there's the 4d setup today in VXX.  The 3/10 is just there to help take away some of the noise of price charts.  Often-times these setups just highlight an A-B-C wave (bull/bear flag).

Oh, and where did price come back to test?
Previous breakout points:

bear flag

A 4d setup (4d anticipate 4c continuation) on the SPY from yesterday.  Actually it happened across the board on a lot of stocks:

shorts mostly

FCX
  Reverse divergence short (higher time frame failed pennant breakout) on the bearish engulfing candle (6th bar) on the 15-min bar.  Cover on the momentum div.   Short again on the 2d criteria setup cover end of day

GS inverted cup w. handle breakdown corresponding with a 4d short setup.

JCP long based on a 3d setup.  With this much weakness my initial target for half was the PDL, while the other half was stopped out at b/e.  Always look to reverse when the 3d pattern fails.

AMZN ascending triangle breakout (3a long entry) turned fakeout.  Was a nice bear flag pattern into the close but I didn't revisit

Trade setups week of 3/14

What needs to be explained about how I see trades is that I use the 3/10 macd as my seeing eye dog, which just helps me to pick up on the stability and direction of the short-term trend I'm attempting to trade.  Essentially it's just a tool that helps me to pick out mostly lower highs to enter short or higher lows to go long.  Something else that has helped me was to categorize where price is in the short-term trend by determining the 3/10macd criteria that is present at that time.  I wrote a blog post that introduces the concept here and laid out a spreadsheet regarding it here.
  The concept is simple; price follows a path of least resistance, and as such will often continue in the direction of the established trend (regardless of time frame).  So, you just need some context and a way to define trend for your objectives.  I use the 3/10 macd as a way to anticipate what price may do based on the pre-determined "trend".   So what I see on the 15-min 3/10 macd is a criteria (from the above linked spreadsheet) which matches a good probability setup.

Monday morning CSX short based on the 2c criteria and looking for a shortable pullback on the 5-min.

Later that day a long entry was taken based on the 3d criteria (highlighted on the 15-min chart in a rectangle):

Here was another 3d entry in ADM where the target was simply the PDL.  I have found that 3d setups typically occur as a short-covering phenomenon later in the afternoon which can run into the following morning, but it is critical to know where realistic resistance is and whether price is increasing to test resistance or if it has broken out of it (leading to more short-covering).

A 3a setup often provides good long entry opportunity, buy pullbacks on the 5-min:

A 1a setup can also provide good long entry opportunity.  Looking to buy a pullback with help from the 5-min 3/10 macd to anticipate that pullback:

Another 1a:

This one had great opportunity but lousy execution and I missed the re-entry :(

2c short in the SPY

4d short, was simply entering in a pullback of previous momentum