Tuesday 4-27-09

Courtesy of subq

COT Data 4-27-09

This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A. If the current value is at a 12-month low, the cell will display a red/burgundy background. B. If the current value is at a 12-month high, the cell will display a green background. C. If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D. If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

Sunday eve/Monday market commentary

10:37A.M. Taking a look at the $SPX I see 2 potential H&S patterns. We could be forming now the right shoulder but we could also be forming the head of a new H&S. Only time will tell. H&S patterns have a high success rate, when the neckline is broken.



8:02A.M. A look at many of the signals generated by the VIX vs SPX. The VIX has been in some form of a triangle for the last 6-7 months. I will be watching this chart for any sign of direction, especially a break of the top of the triangle, that could signal the beginning of a major run down...of course it could be 1/2 over by the time we get confirmation....every-one's entry will be different so follow your rules and plan your trades!


Chart courtesy of StockTiming.com

7:50A.M. Market profile chart:


Courtesy of subq

6:00P.M.(Sunday) This is a 15 min chart, market hours only, that shows the resistance we ran into in the 870 area. First it is our highest high since the beginning of the year and it is also at a major 50% retirement, the target for that ambush short is 762, a 100 point move. I know I will be looking for bounces to add to shorts as long as we don't break 873 on a closing basis.



5:25P.M.(Sunday) Here is a look at the weekly 5,3,3 Stochasitc overlay. As you can see in the past it has been a pretty good indicator to show where tops and bottoms should occur, although it is not perfect it is fairly accurate. The hanging man candle we put in last week is also the signal of a top as well and many sentiment indicators showing extreme bullishness. All of those factors plus, NOW some in the mainstream media are declaring the bottom in or the recession over. I think there will be a week or two of consolidation as the public is panicking thinking they are missing something and the institutional crowd will be selling to them, then we should turn down and possibly break March lows.



4:50P.M(Sunday)The $BPNYA is registering an extreme level of bullishness and is coming close to matching the years highs of 67.90. We should see the market start to correct very soon...starting this week. It should be an interesting week, stay nimble.

Obama's Stealth Leap To Socialism

President Barack Obama showed his hand this week when The New York Times wrote that he is considering converting the stock the government owns in our country’s banks from preferred stock, which it now holds, to common stock.

This seemingly insignificant change is momentous. It means that the federal government will control all of the major banks and financial institutions in the nation. It means socialism.

The Times dutifully dressed up the Obama plan as a way to avoid asking Congress for more money for failing banks. But the implications of the proposal are obvious to anyone who cares to look.

When the TARP intervention was first outlined by the Bush administration, it did not call for any transfer of stock, of any sort, to the government. The Democrats demanded, as a price for their support, that the taxpayers “get something back” for the money they were lending to the banks. House Republicans, wise to what was going on, rejected the administration proposal and sought, instead, to provide insurance to banks rather than outright cash. Their plan would, of course, not involve any transfer of stock. But U.S. Sen. John McCain, R-Ariz., undercut his own party’s conservatives and went along with the Democratic plan, assuring its passage.

But to avoid the issue of a potential for government control of the banks, everybody agreed that the stock the feds would take back in return for their money would be preferred stock, not common stock. “Preferred” means that these stockholders get the first crack at dividends, but only common stockholders can actually vote on company management or policy. Now, by changing this fundamental element of the TARP plan, Mr. Obama will give Washington a voting majority among the common stockholders of these banks and other financial institutions.

The almost 500 companies receiving TARP money will be, in effect, run by Washington.

And whoever controls the banks controls the credit and, therefore, the economy. That’s called socialism.

Mr. Obama is dressing up the idea of the switch to common stock by noting that the conversion would provide the banks with capital they could use without a further taxpayer appropriation. While this is true, it flies in the face of the fact that an increasing number of big banks and brokerage houses are clamoring to give back the TARP money.

Goldman Sachs, for example, wants to buy back its freedom, as do many banks. Even AIG is selling off assets to dig its way out from under federal control. The reason, of course, is that company executives do not like the restrictions on executive pay and compensation that come with TARP money. It is for this reason that Chrysler Motors refused TARP funds.

With bank profits up and financial institutions trying to give back their money, there is no need for the conversion of the government stock from preferred to common — except to advance the political socialist agenda of this administration.

Meanwhile, to keep its leverage over the economy intact, the Obama administration is refusing to let banks and other companies give back the TARP money until they pass a financial “stress test.”

Nominally, the government justifies this procedure by saying that it does not want companies to become fully private prematurely and then need more help later on. But don’t believe it. They want to keep the TARP money in the banks so they can have a reason and rationale to control them.

The Times story did not influence the dialogue of the day. People were much more concerned with the death of 21 horses at a polo match. Much as we will miss these noble animals, we will miss our economic freedom more.

Obama's Stealth Leap To Socialism - The Philadelphia Bulletin Archives
http://thebulletin.us/articles/2009/04/23/commentary/op-eds/doc49f02b854584d519659188.txt

$SPX

A possible scenario from a trader friend of mine DJ Wadholm...nice chart.

Market 4-22-09

Market Profile:


Courtesy of subq

8:14 A.M. We are trapped between 2 ambushes...the long at 824 and a short at yesterdays high. Not too much to d but to see who wins out...bulls or bears. I am bearish and short the market.

Big Picture

Here is a daily $INX chart. You can see our newest level of resistance at 875 and the support we bounced off of yesterday, the bottom of the channel and the 20 MA served as support. I think this is a minor setback for the bears. As you can see the 60 period Stochastics are overbought and we will chop around for a while before heading down to work off some of the overbought condition we are in now.

Market analysis 4/21/09

7:45 A.M. More weakness overnight. We rose to the pivot over night and fell back to new lows. Yesterday we broke out of the bearish rising wedge we had been forming for a couple weeks. Currently we are trading below the 20 MA and we may go as far down as the 50 MA on this correction. A 50% retrace of the whole move would take us down to 767, so keep that in mind in the coming days. Also look for the bottom of the channel we are in to provide some minor support, should we break through, this would signal further bearish sentiment. I will be looking for a bounce to short, and also be watching gold, it may have put in a double bottom but I don't believe it will hold .



Market Profile:


Courtesy of subq

AAII Investor Sentiment 4-20-09

COT Data 4-20-09

Commercial Net Tracker instructions
This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A. If the current value is at a 12-month low, the cell will display a red/burgundy background. B. If the current value is at a 12-month high, the cell will display a green background. C. If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D. If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

Market 4-20

9:13 A.M. As you can see the internals are showing us nothing bullish. $VOLSPDC is all red, $BANKX is breaking Fridays lows, we are taking out trendlines and support levels. I am not going to chase this, I will wait for a bit of a pullback to get in if at all. We blew through S1 and S2 in the first 30-45 min of trading...a bit over extended...possibly. Stay vigilant and good luck!




Courtesy of Subq

7:26 A.M.I was gone last week from Tuesday to Friday, working on a new business venture. But what I see is the channel we have been in since mid March and also a bearish rising wedge . A break of that lower wedge should take us lower. Look for the 20 and 50 MA as well as the 850 and 831 areas, also riding down the trend line is a possibility.

GDX_GLD ratio trading

Here is a very simple system for trading GDX. Using a ratio and a 7/21 EMA on that ratio, we generate buy and sell signals....as you can see from the chart this has worked very well. You can follow the crossovers, but I like to take 1/2 off when I get a good grip....personal preference. E-mail me if you have any questions about this system.

Tuesday 4-14

8:39 A.M. Looking for a gap fill to short again today. Looking at the daily ES with 5,3,3 Stochastics we are very overbought and we should start to work our way down for a retracement that can be bought for swing trades. I will be looking to buy some things on this pullback and am looking to get long SDS today.

Monday 4-13

11:30 A.M. We are stuck in a range. Good day so far if you bought 42's and sold 48's over and over. Looking for some resolution. Internals seem pretty muddled as far as giving any signals. Almost all sectors are red...we could be making a divergent high. Remember: Cash is a position too.




9:41 A.M. We have filled 1/2 the gap but we have formed a small H&S pattern and if we break that neckline I don't think we will fill the gap. If you look on a larger scale, the 2584 tick chart, you can see us possibly forming a larger H&S. My bias is to the short side. I am waiting for a gull gap fill...if we fill the gap I will be looking to get short. We have been fighting with the VWAP and PP all morning... we should see some resolution soon. Remember....stay nimble!



7:55 A.M. Looks like we have a gap to fill. If you remember my post from Thursday, statistically today is usually a down day. So I will be looking for a gap fill or half gap fill to sell into..provided we don't get too much upward momentum. You can also see that the overnight high is very close to the pivot so that should act as resistance. Then beyond that we have Thursdays high of 854.50 that will also serve as stiff resistance.

Economic data for this week 4-13 to 4-17

Trading checklist

A few things to consider before entering a trade.

A-B-C Pattern study

Quick case study of the United States Oil Fund ETF (USO)
I often use this simple/basic trading pattern called the ABC set up (you can call it 123).
I am not a big fan of complex chart tools you often find ; Why ? Worked long enough in the Hedge Fund industry to see how many Phds in Math failed to design "great trading system".
You often find many companies selling so called "amazing trading systems" ; forget it, save your money and spend more time just starring at charts for several months/years, then you'll notice basic set ups.
What is the ABC set up ?
It occurs this way ;
1) Have a simple moving average you see that sticks to the stock, ETF, forex .... your are following.
2) A quick "burst" above that moving average tells you that "new info" just change the price pattern ; we have a clear information inbalance (usually you'll see a gap with it). That will create your level "A".
3) When the info is digested by the usual suspects (analysts, the press, the bloggers ....), the stock/ETF will pull back to find some support level ; call it "B"
4) New info comes in ; confirms the first good info ; so now the non beleivers are really convinced the info was for real, and by fear of missing the train, they jump in, usually right above the "A" level ; that is what I call "C" ; a break out !!! usually with increased volume.
Voilà ..... was that simple ? You just saved thousands of $$$ (by not buying useless softwares)

Posted by Moise Levi at 10:19 AM
Labels: United States Oil Fund ETF (USO)
Reprinted with permission from: http://gicharts.blogspot.com/

Thursday 4-9-09

12:57 P.M. Looks like a complex inverted head and shoulders pattern...if we break the neckline I think we will rally hard. If we fail to break the necline we sould come down for a half gap fill at least. I am off to work with a local hedge fund manager for the rest of the day. I will try to check back in before the close. If not HAPPY EASTER to everyone and thank you for following my blog, I hope it helps and hope you enjoy.



11:22A.M. Despite pulling back below the overnight low the internals paint a pretty strong picture. I will keep watching $VOLSPDC and the $TICK for clues of a reversal but so far all looks bullish. There is potential for a gap fill, there is a double top forming and could be an omen for the week ahead unless we break 848 I will be looking for short entries possibly today but definitely on Monday per the stats stated earlier.



8:14A.M. Here is the daily @ES with stochastic overlay. Looks like we made a little hook and are now turning back up to go to overbought territory again. The 20 MA served as support on our last move down as well as the bottom of the channel we have formed. For resistance..well....we are at it...this down trend line is huge resistance and the pressure is on the bulls to take this level out and close above it. The target for that ambush long hit on Tuesday is 864 area. Statistically today is usually a bullish day but the Monday after Easter is usually a red one but Tuesday brings an average gain of 0.6% for the day. We will see...remember to stay nimble.



7:45 A.M. Market profile chart for the day


Courtesy of subq

Some Stats

The $20 billion drop in monthly retail sales is far more severe than recent recessions (since 1980). Resultant layoffs feed the negative cycle, making the economy unresponsive to stimulus attempts.



Job losses are the core of the problem. Contracting incomes translate into declining consumer spending, but the heightened uncertainty affects all consumers, prompting them to pay off debt and increase savings — and magnify the fall in consumer spending and employment. Official unemployment is close to 9.0 percent, and likely to get worse before it improves. But unemployment figures understate the magnitude of the problem because they exclude those not actively seeking work. If we look at actual job losses, the contraction in employment is the highest in 50 years, far exceeding the troughs of 1975 and 1982.






Consumer confidence as measured by the Conference Board is at an all-time low since the start of the series in 1997. Consumer sentiment is approaching its 1980 low of 50. This illustrates how deeply the financial crisis has shaken consumer faith in the economy and how difficult it will be to regain that trust. Unfortunately this unleashes a self-reinforcing cycle, with low confidence levels leading to increased savings and debt reduction — which in turn leads to lower consumer spending and further job losses.



Source: www.incrediblecharts.com

Market profile

Courtesy of subq

Wednesday 4-8-09

12:26P.M. We hit a major ambush short at 825 if we break above that it will be very bullish..otherwise the target for it is 791. Also looks like an inverted H&S pattern on the 2584 tick chart, the AS is at the same level of the neckline. Lets see if it is contained or if it rips out...and remember FOMC minutes out today 2:00EST



10:02 A.M. Internals exploding....just look at the chart....not certain we will stay this way...bias still seems down. Anything can happen so stay nimble!I will be watching to see if we hold the pivot and if the $BANKX can break above its previous lows of the day.



8:52A.M Looks like yesterdays high is resistance...watch for a gap fill to 815 area.



7:33A.M. It looks like we may start the New York open on a bullish note...we seem to have crept up to the PP (815.50)and also the ON high. The PP and ON high should serve as resistance but this is a strong showing by the bulls to take it higher. Lets see where we open, and how it plays out. Best of luck today all!



7:21A.M.Looks line in the overnight session we broke out of the bearish rising wedge and bounced back in. Is this a sign that we are going to bounce from here? Who knows!?! The market is dynamic and is always going to do what IT wants...and only sometimes what YOU want it to do. Now it looks as though we are going to make another run at that down trend line from all the way back in October. If we can break through it we should see continued strength. But this pattern is a bearish one and besides being one of my favorite to play it also has a high success rate, just something to keep in mind.

AAII Investor Sentiment

HELP!!!

The picture you see is me and Billy. My girlfriend and I volunteer at the Humane Society 3 days a week. Billy is a 3 month old lab/mix and he has parvo, a deadly disease for puppies. The humane society is starting a fund raiser for the operation/medication, the cost is $1,000.00 or more. So if you would like to help you can write a check to :The Billy Foundation c/o FMHS, in the memo please put "Trader donation" I am going to try to raise 1/2 the $ myself and want to keep track, you can mail it to :
FM Humane Society
c/o Jeremy Veum
1201 28th Ave N
Fargo, ND 58102
or you can call 701-293-0077 for further information.

Thank you in advance.

Tuesday 4-7-09

3:18P.M We ripped above the 89 line, it ended up being a bull trap and turned right around at 819.50. We seem to be in a bearish rising wedge on the daily chart, as well as the stochastics coming out of overbought territory. I have a feeling we are going to work our way down to a decent retracement that could be bought, if one were bullish. If this pattern breaks I will be getting crazy short.
The second chart shows how we were contained by tomorrows pivot in the final minutes of futures trading. This is bearish and I may be looking to sell the pivot. What gives me pause is that the bulls did hold Mondays lows of 810.75, but if we break that we will also be breaking out of the wedge...either way it looks bearish for right now.





2:38 P.M. the Main 89 line (yellow line) has pretty much contained price for the entire session. We have been trading between the main and exponential (white dotted line)MA's for a while now. If we can break that and get some traction as well as stay above tomorrows pivot (est 816.50) things will look bullish.



1:28P.M. Gotta love those 15 min ambushes. The purple lines are the ambushes, I drew them last Thursday and they have been spot on! For more information on how to trade "ambushes" go to www.eminiaddict.com nothing else on the net compares. Also check out www.esecfutures.com another great site!



8:00 A.M. Market profile chart...courtesy of subq.Still watching yesterdays lows to see if we can break through and get that 1/2 gap fill I am looking for after the open. I will be looking to short that...be ware there is a long term AL @ 813.75 <779 - 848> that may offer some support.



7:02 A.M. We have fallen in overnight session below the previous days low. This should act as resistance. I will be looking for a 1/2 gap fill as an opportunity to get short, if we pass 1/2 gap fill look to the PP for resistance. Watch 834 for short covering if we get there.