Thursday, November 26, 2009


Tuesday, November 24, 2009

The "Other 1-2-3"

...also called the "exhaustion pattern", is differentiated from the classic trader Vic 2B pattern, but is an attempt at calling a top nonetheless.

Looks upward, but a bearish case could be made with some type of 1-2-3 "exhaustion" pattern, or what T.Lo calls the "other 1-2-3" since this does not follow the classic Trader Vic 2B pattern.

If this were the case, the short-sale would be entered here or at the LOD from yesterday (= 110.60) with yesterday's high (= 111.784) as the buy-stop. Of course, the risk is that we keep trying to call a top and keep getting stopped out and die the death of a thousand cuts.

It seems the "other 1-2-3" is really as much a sentiment call as a technical set-up.

Monday, November 23, 2009

EURUSD Rangebound

...with some bearish features. Above 1.50500, we could go much higher.

SPY: Where's the resistance?

Alright, Eric has pointed out that we have multiple levels of support, but where is the resistance?

1. Near term high (today) of 111.69
2. After that, we have 112 (the 50% retrace from Oct 07 highs to March lows).
3. Then we have the red bar high from Oct08, 2008: 119.34
4. Finally, the 61.8% Fib retrace: 122.41

SDS day trade [Updated]

Anatomy of a day trade. Big gap up today so looking for a short entry. Eric's pointer (from T.Lo) is to look for an inside bar on the 5-minute. Entered buy on SDS at 10:10 bar price 35.60.

Sell-stop is the previous bar low which is also low of day. Target is just below the biggest gap down bar or the 2-bar EMA, whichever comes first.

Sold half at 35.76 (below the 9:55am bar high) at 10:36am
Sold 1/4 at 35.85 (20-bar EMA) at 11:30am
Holding 1/4 for now.

Update 1700hrs 11/23

Sold remaining 1/4 near the close for $35.97

Sunday, November 22, 2009


SPY 135-minute charts show the beginning of a downslope with the 5-bar ema below the 20-bar ema. On shorter time-frame a bear flag has been forming (Wave B), but the tendency is for the trend be established with this 5/20 bar cross on the 135-minute chart. Any intra-day spikes above the 20-bar ema would be shorting opportunities. Be careful with shorts if the 5-bar rises above the 20-bar ema. As Eric has said, Monday may see a spike as part of the end of a Wave B, but the Wave C should follow shortly. MACD is bearish with negative divergence which, while not as reliable, corroborates a weak chart.

Likewise, the IWM (135-minute) has the 5-bar below the 20-bar ema. This chart looks weaker, having already made a lower high. Transports have not confirmed the recent high in large caps. T.Lo has pointed out that in the last gasps of a bull-run, the safe large caps tend to get the last buyers, so this could be a sign of weakness in the market.

Other charts to consider would be the dollar and Vix, whcih are both forming bottoming patterns.

Friday, November 20, 2009

AMAG: Holy Grail short sale

AMAG pharmaceuticals is in a down trend and recently made a lower high, so I am looking for a short set-up on a day trade.

On the 5-minute, we are looking for a strong tend as determined by an ADX > 25. The we wait for a retracement up to the 20-bar EMA for a short entry. Buy-stop is set at the resistance level as determined, in this case, by the top of the previous large red bar.

Target is above the low of day for a day-trade, but this one could go much lower on a mutlti-day time frame. (Disclosure: I'm short this stock from 41.01 and have cover 1/3 already.)

SDS scalp this morning

I'm pretty sure I did this wrong, but I got lucky for a small scalp. Using the 5-min chart at the open, we opened weak (strong on the SDS), so I waited for it to come back to support-- in this case the 20-bar EMA.

Once it hit that trigger, I waited for the buy entry at the previous swing high (36.92) to buy. The target for sell is resistance, in this case yesterday's HOD 37.10.

Sell-stop was previous bar's low and target sell was 37.08 to take profits. It worked for a 16 cent scalp.

Tuesday, November 17, 2009

XLF at critical level

Yellin: "Not massively overvalued."

Ah, the last time a Fed governor commented on the equity markets was 1996 when Uncle Alan Greenspan warned of "irrational exuberance." But we continued for another 4 years before the crash, and Al continued the easy money to get us there.

"Not massively overvalued" and Rosie is "Not massively obnoxious."

Friday, November 13, 2009

EURUSD acting bearish

which means strong dollar, which means...

stocks go down.

easy concept; watched by *everyone*.

No other chart necessary.

Wednesday, November 11, 2009

All about the dollar

With the UUP burping last week, the technical analysis is messed up. Now we are looking at EurUSD. This shows it coming back to trend support and it may fall thru, but there is massive support in the 1.495 level. And weakness in the EurUSD should be short-lived.

Friday, November 6, 2009

SPY: Bullish vs Bearish?

We've had 5 up days after falling below the 50-d MA and the general upward trend from March has been respected. The case can be made for a bearish scenario as well as a further bullish move.

Bullish indicators: SPY is still above the 50-d MA. The trend is upward with a higher low made last week. The previous uptrends were 7-9 days and we are currently on day 5 of this one.

Bearish case: The uptrend is decelerating as evidenced by negative divergence on MACD histogram. SPY is now below the 20-d MA. Today we continued the uptrend with a higher high and IF this is a right shoulder of a bearish H/S, then we need to have a red bar or two.

Tuesday, November 3, 2009

SPY: Bullish Wolfe Wave?

This is what keeps bears up at night: the appearance of a suspicious Wolfe Wave bullish pattern. I still remain net short, but this warrants close observation.

Monday, November 2, 2009

SPY: Falling through support

Let's look at the longer view on the weekly. Last week was a big red pepperoni and this looks like a subtle warning ala Mamis. Strength in the US dollar was required for such a move lower in the stock market, so we continue to watch the DXY to stay above $76.00 and preferably $76.30.

The chart is necessarily busy and shows Elliot wave 5 resolving the motive with last week's high. Also, both Fibonacci price retracements and time extensions are depicted. Eighteen weeks passed from the March low to the July low. The July low resolved upward after the fake out a-b-c reversal. November 13 will be exactly 18 weeks from the July lows, so following the Fib time extension, this should be a significant date.

In July, the pullback was less than 38% and this pullback should be in that neighborhood if we follow Fibonacci rules. That would give us a target of about $95 on November 13th, which sounds like an aggressive pullback. We'll see.

The dotted red trend line is from the March lows as is the solid red trend line.