Market TAO Fri 7-31-09

With the GDP news the ES Futures have sold off to multi week range.

US Dollar is A bit down

Crude / Gold is down


Spy will open gap down and most likely sell off till the European market close.


My plan will be to sell the gap at open and exit prior to close of Europe markets.

Market Tao Thurs 7-30-09

ES Futures are testing weekly highs overnight.

US Dollar is down

Crude up

Gold up

Asia / Euro stks up

News tape Bearish With declining earnings stories and increasing jobs losses.

Yesterday I could not get a clear signal what the market wants to do and this Am is more of the same.

Spy will gap up at open and My guess based on news tape it will begin to sell off by 10:30 AM et............ Neboxian says " If the way is not clear, the best action is no action."

for now I am Flat. (no positions.)


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10:45 et am.... Be careful chasing this sugar pop the Nyse Tick suggests there are no BIG Buyers moving in up here... I just entered an SPY PUT 9980

Market TAO Wed 7-29-09

Es Futures are trading down overnight

US Dollar is up

Crude /Gold down

NEws Tape Bearish

SPY will open down

Market TAO Tues 7-28-09

10:15 et am XL sectors are all turning down and US Dollar is starting to rally ....SPY moving to r1 and tick - 1000

Exit Spy Puts 9740


Here is chart of the QQQQ ETF
I traded today .

You can Follow My Trades Live on Twitter .. Click here and sign up
IT's Free !

I am long QQQQ 3914 strong tick + 900

Range day market this Am QQQQ 3900 to 3840.. sitting on lower "T" support tick is neutral to a bit bearish ,,

Big up spike in US Dollar ....this could be the catalyst to turn the overall market down..... my QQQQ play will stop out at 3880

I don't like Market action for this QQQQ long will exit on next up tick 3910 to upper teens ..sectors feel like they are ready to roll down.

nice up tick!.. i am out of QQQQ 3928

just went short QQQQ 3945

i will exit QQQQ on next tick down to 3920 ish

I am out of QQQQ 3929 ,,,,, that was 2 ok ScalpTrades today and a Spy PUT exit turned out to be a good day.

Pre Market TAO Mon 7-27-09

Es Futures over night traded sideways H 982 to L 875.

Spy looks set to open flat

US dollar is down

Gold / Oil up

Treasur yields up

75% SPX is above 200 MA

Tape Looks Mixed leaning Bearish On earnings reports which continue to show large declines BUT ! some how beat street expectations ...So I guess that is..... ok? I think this week will tell us which way MR. Market is going to take us. I think we may consolidate in this area for a few days.

I published an Article on Extreme Bollinger Band Deviations with Boston Wealth Management

take a look.

http://www.bostonwealth.net/2009/07/25/bollinger-band-third-rail-deviation-spx-analysis/

Market Tao Fri 7-24-09

ES Futures overnight did about what I expected and traded down toward the 950 to the Triangle Retracement ... It still has more to go to get there.

Spy Opened down and is trying to find balance and is now trending back down toward triangle support as well .


Nasdaq is selling off this am and is at the 10 day support trend line .


The XL'S are mixed

NYSE Tick is showing some selling pressure with - 1200 hits

With the addition of more Spy Put positions at yesterday high it looks like things are doing as expected.
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12:20 et pm..... Spy has reached what looks like the top of the Intraday Bear Flag at 9750
which has been building on decreasing volume and neutral to bearish NYSE Tick and has touched the 62% Fibonacci Retracement. I expect this next down leg will end around 9600 and I will be looking for the exit sign.
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1:05 et pm... Spy is breaking down slowly but the selling pressure has been light but steady.
Adding more Puts to the fire SPY 9740...
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Close .... This Market is amazing! The volume was dropping all day. The NYSE Tick was Bearish all day with no big buy ticks ...None ....Not One .....Nada! The tape was bearish from the get go
and we didn't even get a decent retracement started compared to the huge rocket propelled ride we have had....The Market continues to rise!

I Think the Day belongs to Billy- Bob Late to the Party Bulls (Amateurs) and the I-Bots.

The Biggest Problem I have with this latest rally 11 Days Parabolic, is if it goes up any straighter the charts will do a backwards Loop-D-Loop ..

All week long there was a plethora of huge gross revenue declines with very low expectations of any profits going into earning season. Every showcase company that is regularly touted before the public Beat The Street By a Penny or Two and the talking heads gasped in astonishment. The Government Reports are not much more reliable either. How is it, they all seem to have a feeling of being Fudged just enough to make them positive by .001%

Excuse me if I don't feel elated. I can't stand the oversell on the news shows try to feed us. This is all a little to orchestrated to me. I'm not a Perma Bear or Bull . I trade the market based on a blend of technical and fundamental analysis. As of lately, I really don't feel like we are getting a truthful picture of the nature of the economy or the corporate balance sheet.

OH ya... while I'm ranting and probably repeating myself here, the earnings reports continue to try and convince everyone things are getting better! Well you can't grow an economy on IBM government contracts , Obama jobs, Apple i-Phones and apps made in Asia, declining top line company revenues , depleting inventories, cutting jobs, raising taxes, printing currency to buy down debt or mandating everyone have health care.........AND! 550,000 job losses every month or week or what eaveeer. It doesn't matter what the number is, it's ...aheem... Less Bad......So that's Good?

Has any one caught on here? The only sector which hasn't participated in this huge surge, relatively speaking, are the Banks. I have two questions to ask here. Is the lack of interest based on the overall public sentiment or is it the banks (cough...GS, JPM, BAC) who have pushed this market around know something and have conveniently excluded themselves? They're definitely not buying each other, big tell, and they must report self purchase. These humongous pockets full of government money operations are the BUlls who push the market up and are or become the Bears when they think its time for the market to go down. This kind of duplicity is only eclipsed by the way they expanded and subsequently exploded the mortgage bubble. If your the one calling all the big moves it is easy to place oneself on the right side of the trade.

Did anyone notice that the USA was the largest consumer of China's products? So how is China going to save our economy? It's The copper play that will save us . But our Alaska And Arizona Mines have scaled back 50% ish . How about the teck play? That will for sure do it. We don't make the stuff. We buy it from them. Oh, then it has to be the Oil and energy play right? How dose oil pumped out othe ground in Brazil and shipped to china help the USA?
Well that's my long term view and really doesn't effect my day to day take on the market. Only the tape can guide us there...........Enuf pontification.

I made a nice profit exiting My Puts at 9685....
And I Am Short again Spy Puts going in to the weekend....... Average price 9790

Market TAO Thurs 7-23-09

ES Futures overnight gave us this Pattern.... an Ending Diagonal .....a Reversal Pattern.

These appear at the end of a very strong rally signaling a reversal.

It's not finished yet . Typically these patterns end with a spike over throw to the top and then fail that could happen today or tomorrow.

Still have my PUTS on from 2 days ago and will add more at the top op the spike.....use a tight stop because as
crazy as this market has been it could just keep on going up forever! :P


Apparently Mr Market decided this was an Ascending Triangle and we got a Big Breakout .

Usually a Triangle is a Wave 4 Structure and and the top of the wave 5 happens very fast.

It looks like this maybe the end of wave 5 .

Now we should see an ABC Retracement down to the Apex of the Triangle

Pre Market TAO Wed 07-22-09

ES Futures trading down overnight

Crude / Gold ....down

US Dollar UP

Asia flat

Euro Stks down

Earnings today WFC PFE GSK PEP LLY MO BK USB / bmo

QCOM ACL EBAY MOS TMX VMW TCK NE / amc


Spy Will open , 9450,

Have Put positions still in play.....
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Pre Market Tao Tues 7-21-09

ES traded up over night 954

Crude up
US Dollar flat
Asia / Euro stks up

Tape is bullish


Looks like Spy gaps up wet another day.

10:00 et am........Earnings are coming out better than expected but the bar was placed so low by the analysis's so I am not surprised.

The market gaped up at open and is now settling back down into yesterdays range..I am not a buyer up here but I am not a big seller either ....

I have not been impressed with the volume in this rally but I must respect the bullishness .
At this point I think the current lift of 10% is about out of steam but as long as the US Dollar is falling out every morning this will continue.

I still have on the Spy PUT I entered yesterday and added another at the open but it could all fall apart if the close is above this AM high. This market could take off to the up side quickly.

I expect a retracement back down to 9250 - 9150 zone before we turn and continue to the up side .....keep the stops up!

Neboxian's Day Trade Journal Mon 7-20-09

This looks like a good place to put some Spy Puts on .....9500 with stop above 9550.....ES Futures is selling off and the Xl's are all breaking down......

The Eaton Hal and Johnson reports were not good for the future guidance.

Top line Revenue continues to fall and just because they beat the street estimates doesn't mean that is is good in to the next quarter.

All the reports so far including the ones last week say the out look is foggy.
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12:50 et pm Not doing any big trading today mostly waiting for true market direction.... I don't think there will be much until aapl and cat report.

Pre Market TAO Mon 7-20-09

ES Futures traded up to 944.78 over night and is now back 942.50

Crude / Gold up

US dollar down and sitting on a key support line it could be setting up for a bounce . It needs to because bounce below that support is an abyss.

Hal/ jci/ etn/ has earnings b/o
txn/ LM / Bsx ............ a/c


Cit may get bailed out?

Hal/ Jci earnings down Big! Hasbro toys profit is up

Congress is now looking to a Rent to Own program to support the housing recovery.

Tyson and Sanderson just got cut down a notch.

Asia / Europe up

Spy looks to open flat to up

Today I am Neutral to Bearish ..........will watch first 30 min's

[tags]day trading Journal, hal,jci,etn,txn,lm,bsx,rent to own,tyson,sanderson,cti[/tags]

Questions from New Traders

This is one question many new traders have.

There are so many places to look, where do i start and what are the best moving averages and indicators to use?

I am an active trader and I have learned all this the hard way. Many years ago.

Most of the time I don't use any moving averages or indicators on my charts until the last stage of analysis.

I want to form my opinion first then use all the other tools to support or reject my thinking one step at a time.

The most common moving averages are 8, 20 , 50 , 200..........some like to use the 13 ema and 34 sma crossover as a buy sell signal . As far as the Indicators are concerned , the most used and reliable are the Macd , stocastic , and Rsi used together. However, these are not leading indicators and many traders make the mistake of trading solely on their movement.

There is an order of trade that most Professional traders follow .

First ........decide what time frame you will be trading in.......30 min, 1 hr , day ..... the higher time will dictate the overall trend.......ie:.. if you want to trade the 30 mjn chart look at the 1 hr chart to make sure the overall trend is in the same direction. But once you enter the trade don't switch times untill the trade is over. Because if you do ,you will get confused.

1. identify the trend ...up or down.

2. Then look at the volume. Volume is relative. ..... like the gass peddle (volume) on a car.......if the car is going up a hill and you push (increase volume) on the gass what dose the car do? ....it gose up the hill faster.......the same thing happens when the car is going down the hill and you push (increase volume) on the gass ........what dose it do? ... it gose down the hill faster + gravity.) The markets and stock prices do the same thing.


3. Look to the left of your chart for previous price support or resistance zones ( this is where price reversed direction or spent time going sideways) Step 1, 2 and 3 are the most important things to learn in trading. This is also where you develop your decision when price gets to XXX spot , you may act. Here are a series of charts from my sight on support and resistance zones. click here

4. Then start looking at moving averages...........do they look like they may respond to the support/ resistance zones and support your thinking?

5. Last........ look at the indicators ..... This is where new traders really miss up and get into the wrong side of the trade...... do not try to trade both sides of the indicators.
If the trend is up only trade signals from the bottom of the indicators .......if the trend is down only trade signals from the top of the indicators.....most of the time the opposite side will give multiple false signals.....

You can also visit my blog at neboxian.blogspot.com

Head & Shoulders Fri 7-17-09... It Aint over Till it's Over the Head

SPY Daily

I know, we are all sick of IT!

BUT...

The upward sloping complex Head and Shoulders pattern tag is still in play as well as the MACD divergence. This is a Daily chart of SPY.

I believe the structure begins at the apex of the triangle on the left (the apex is the net retracement of a triangle pattern). Typical support is at the bottom of the first shoulder but this has not been a typical market.
Almost every pattern has been driven to extremes or doesn't follow through at all.

The robust nature of this last rally is no exception.

One would think if this is a failure of the pattern the volume would be through the roof! But this week volume was very low.

I think this was a brute force push by the big trading houses.

There have even been reports of short position blocking, tape manipulation, and forced short ticket cancellations from the guys at Zero Hedge.............

And the earnings reports continue to try and convince everyone that things are getting better! Well you can't grow an economy on IBM government contracts , Obama jobs, Apple iPhones and apps made in Asia, declining top line company revenues , depleting inventories, cutting jobs, raising taxes, printing currency to buy down debt or mandating everyone have health care.........OH ya ....Did anyone notice that the USA was the largest consumer of China's products? So how is China going to save our economy? Well that's my long term view and really doesn't effect my day to day take on the market. Only the tape can guide us there...........Enuf Ranting.

The pattern is now at the top of the 2nd right shoulder and the trade count is 25 days peak to peak from the head to the right and left side.

The valley count is 31 trade days from the apex to the center line of the head.
As you can see there is time left, 5 trading days to move back to the lower neck line.....

The candle pattern at the top of the right shoulder is two opposing dragonfly doji's which indicates an indecision in the market.

Based on this analysis I am more comfortable short , with a stop above the high of the head, than long. Next week the market could go to 1000 as easy as 800 so stay on your toes and keep your dukes up!

For more on head and shoulders , John Lansing has a great analysis as well as John Murphy

[tags][/tags]

Evening Star Candle Pattern

Spy 30 min chart

After a huge rally over the past 4 days it can take more than one reversal candle pattern to turn thing around..

Here there 3 patterns.


1 . Evening Star to stop the rally and send it sideways.

2. An Engulfing red candle to hold it down.

3. a Hammer with a red Dark cloud cover to knock it out!

All rapped up in a Keltner Channel
notice the extreme deviation of the evening star followed by the piercing and rejection of the hammer wick on the upper channel line.

As a day trade approach, candle formations are only reliable for 7 to 16 candles after the formation develops and it is necessary to remain on the same time frame. This one is a 30 min candle pattern

Pre Market TAO Fri 7-17-09

Over night Es trade range 940 - 929
Gold / crude down
Us Dollar up

reports

Housing starts 582k up

Earnings reports so far have been bullish for the markets .... but they all are showing profits by cutting (using and depleting) inventories , employees, and costs. this is ok short term but this is not a long term growth orientation.

Bac, C, Mat, Ge report b/o

If the Us Dollar can continue to rally this will be bearish for markets

Asia / Euro stks up 5 th day!

Overall the Tape looks bullish .

The charts show a key correction possibility after this huge 4 day rally but we may open flat and trend sideways today.

My plan today is to sell the high range at open up to 9450 and exit down to 9200

9:30 am et
the market is looking bullish in to open i will treat this corrective trade like a hot potato and very aggressive in profit taking
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11:25 am et............. Spy relative vol is down 15 m .....tick has been bearish all am......sectors are all trading to the median of yesterday range..... price is oscillating at pivot 9400.... so far a flat day...

Pre Market TAO Thur 7-16-09

We are in position to test the upper portion of the H&S pattern today ...if it fails they fail big.
if it breaks to the up side we are in for a very nice ride to the up side. the Spy had a 6% gain in the past 3 days. usually there will be a correction that follows.

ES futures traded overnight in a 932 -921 range and are in lower range
the markets are mixed this am

jobs claims are better than expected / tic flows were off a bit / Philly fed reports 30 min after open.

crude / gold /nat gas ...flat

Us Dollar is down.

Asian / Euro markets up

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10:55 et am ...the market looks like it has settled into a trade range day .
no strong tick and all the sectors are in top of or just above yesterday range oscillating down to range top and spy pivot 9282...relative vol is about average of past 2 days
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After a parabolic straight up move one would think the market is running on fumes ...the tape (news) is mixed but bearish so I am expecting a failure at this price level.
this entire 3 days feels like a Brute Force push buy a few big houses..
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11:35 et am....allt he sectors are starting to show signs of weakening and the tick is slowly drifting to the down side but no heavy neg hits...spy is headed back down to the pivot but the green break lights are coming on again. we bounce back up ..the last bounce up put in a lower high but i would have liked to see a lower low this time.
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12:30 et pm .....Very stubborn market today.....it is holding up very well considering all the bearish news bias......they just released the commercial bond news and that is falling on it's face as well ...... no market for commercial bonds...that's not good at all!
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1:00 et pm...Relative to last week , spy relative volume is not there from tues it is down 5m on the hr.
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2:00et pm ...the big boys just piled in an pushed spy to the day top.....and gaped 30 min chart up with big surge in tick and volume ....looks like my short is in trouble..... will wait for this candle to close could be a false break....interday gaps are usually exhaustion moves .....we wait 30 mins
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I use to short these types of gaps and do very well but this market dose not behave like a normal healthy market.....so i really cant say where we go from here ....it's hard to get a grip on this new normal....volume continues to surge and the tick is stuck in the + 1000 zone ...... looks like we call this trade a failure
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I am probably like most of the market traders today watching in a some amazement this market could rally this much in 4 days straight up on low volume in the middle of summer and at the beginning of earnings ...... but we trade what we get and to day is no exception. Right now this a critical point for the markets it must push up through and above the head to really take off or it will be facing a big down turn....

NeboXian's Butterfly Chart Pattern

Spx chart

Seriously, I have never heard of or found a butterfly pattern in the books.
But it is interesting.

My take on this.
There is an asymmetrical triangle on the left and an expanding triangle on the right .

Bulkowski's sight explains expanding T's.
Both are continuation patterns but expanding T's can also be reversals.

The asymmetrical triangle on the left is a continuation to the up side.

The expanding triangle on the right looks to me like it could be a continuation to the up side or a reversal to the down side.

I don't really have a firm opinion here.
I just thought it was interesting and gave it a name NeboXian's Butterfly and wanted to share it with you.

Vix 5 yr Trend Bottom?

Here is a 5 yr chart of the $vix...
this is at a key support trend line.
notice the rsi ...the most oversold in 5 years... this suggests that Market Fear will soon be back on the rise.

Pre Market TAO Wed 7-15-09

Es Futures took a good move to the up side over night.
US Dollar is at bottom of multi week channel and pointing down.
Crude / Gold is up


The H&S neckline has been broken back to the up side and will be considered by most as a failure of the formation .....but dont get in a big hurry there ......the real test is coming up today or tomorrow. the top of the right shoulder... if this is violated then this H&S pattern is nullified.

Spy will gap up to 9125 area at open ......my plan is to watch the open and wait 30 min's

The market is very over bought as of yesterday but it could remain that way as long as the US Dollar remains weak.

You can expect the big boys will start to pull off at 5% gain from Mon. about spy 9150 to 9200 to 9300.

This Whole move has been a BIG short squeeze. .... low volume big divergence ......
Here is My plan for the next few days.... good trading!
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11et am.....relative volume is down on this am rally 61 M vs 53 m.... Short Squeeze
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1:15 et pm Divergence is building this could be It relative vol is still down 96m vs 91m..
this looks to be top of wave 5 .
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2:23 et pm The market has the buyers all worked up in to a frenzie .... this is not the place to buy..... the broker banks are pumping it hard.
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3:00 pm really pouring on the coals volume has heated up! Above relative vol 126m vs 141m
this is the final spike of an extended w5 or the breakout move above H&S upper neck
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3:30 That is 6% run in 3 days.... wow! There should be profit takers over the next week.
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3:50 et pmlooks like we may be turning here .... so Im short at spy 9330 with a stop above todays high... this is a swing trade .... I expect to hold for several days.

Pre Market TAO Tues 7-14-09

ES Futures are flat 902 -891
usd bottom of multiweek range
gold flat
crude up a bit
Asia/ Europe up

Spy looks to open flat
Today is the critical day based on the post i did over the weekend. The RED dot
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There are days where there is no trade . Spy dropped briefly into yesterday range ( failed break out down) and pop back up to the open range and twiddled around Banging up against the 60 min 200ema all day. and closed at bottom of day range. we will keep an eye on the overnight es and the usd.

NYSE Tick Strong Up Trend Day Mon 7-13-09

A Strong up trend day will stay in the upper range of the Nyse Tick chart ..This is a one day 2 min time frame. Notice how the bulk of the trading is above the red zero line . And particularly notice the 9 big buyer spikes above the +1000 line.

XLF Divergence Mon 7-13-09

Pre Market TAO Mon 7-13-09

ES Futures are testing their 881 high resistance area ...
gold / crude down . Us Dollar flat to up.
At the open SPY gaped up and has quickly sold off down to Friday lows so .
tick is neg -800 ..
Sectors are mixed.
I f this low holds we may see another range day.
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10:44 et am .......back at top of range entered short spy 8850
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1:49 et pm ....nice bounce off the bottom ...I have to confess I was not properly prepared to trade this am....had internet trouble and finally got it up 15 min before open.... this trade goes to show if you're not repaired.....don't trade!......I missed the double bottom the ES futures put in over nite and hadn't looked hard at the US Dollar activity overnight either. If i had invested a little more time in analysis, I would have caught it . On top of that, my Nyse feed was not streaming in properly. But i assumed the day would be a range . BOY ! did I screw up! So this trade turned in to a loser so far. Sectors have traded uo into last weeks upper range but are starting to build divergence . xlf has been the big leader today but on ever decreasing volume from open . half the sectors are starting to show signs of over bought as well... this looks like a C wave 138% of A wave but if it gets above 162% it is most likely a wave 3 to the up side. So we wait .
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close.... Well I have to say I completely missed the buss on today's session.. but as i have said before trading is all about managing risk (hiding behind good market structures for stops is one key protection strategy ) and appropriate size trade position amounts. I have been trading with a (1 size / 2 X / 3 X) scale in approach with a stop above the closest structure I don't think the market will go beyond that day.

Today was no different except at the top of the daily range 8850 with a stop above 8900, I took a 1 position thinking we had a range day. To my disappointment it moved against me. Abruptly!

The market moved quickly to the stop and it looked to be a reversal point so i took a 2 position thinking we have a range top of Friday . The next stop point 9011 is the last week high and the top of a very extended wave C. Could price go there? In a down trend not so likely. So in I jump in deeper.

At the close, Spy is at the top of last weeks high and the top of a very extended wave C almost ready to be a wave 3 .. today was a big day. Could it go higher? Yes It can but every sector now looks very over bought and extended for today ... It looks like we will get a turn down in the AM so I decided to move in with the 3 position and a stop just above the close 9010 .... so if the market opens up with a gap up then I'm stopped out at an average account loss. But if the market opens down and follows through , the loss will be less or even to break even.

Complex Head and Shoulder Pattern

Complex Head and Shoulder patterns are rare but when they happen it takes every one buy surprise.

The reason is the bulls interpret the failure of the first right shoulder as a reason to get very bullish as the price starts to rise to the 2nd shoulder peak.

The bears who are very heavily short get squeezed out and start throwing their positions over board. The squeeze causes the price to spike higher and the bulls buy more .

Bang! Peak 2 rolls over and everyone gets beat up.

According to Bulkowski's book, on a scale of 1 to21 ( 1 being the best) this Pattern is a 3 and has a high potential of reaching the target zone.. once the neck line is broken.

This chart is a percent comparison of the three major markets Dow /Naz / S&P .
All three put in 2 left shoulders and a head. We are now waiting for their right 1st and 2nd to finish. As you can see, the 1st right shoulder is about to be or has completed in all three markets now we wait for the 2nd one to form.

Good chart patterns will always be well defined and have balanced appearance when completed . They are like anything beautiful. They look right and you just know it when you see it.

Based on this analysis, I expect to be long Spy Monday Am up to the top of range of the left shoulders. Then I will become a bear again Wed or Thurs.

Simplicity .......SPY Monthly 07-09

Simplicity

As a Day Trader it easy to get caught up in the microscopic fractal world of minutes and hours. But to observe a necessary law of nature, just simply go stand on the California cliffs and watch the sun go down. From this lofty vista, it is where you realize even the ocean waves have structure.

This a Monthly chart of SPY. Observe the peaks, they are fundamentally identical. I'm not going to tell you what I see because I believe you see the same thing.

NeboXian's Weekly Tao / SPX Hot Spot!

Something is going to happen on or after the 14Th . Every thing is converging on this Red hot spot... Harmonic trend lines, fib time series, fib fan, a concentration of 5 fib lines (not shown), support/ resistance zone. Not to mention all the planets in the solar system. All indicating what looks like a final peak of a complex H & S formation. Monday and Tuesday of OX week are usually bullish. This could be a 2 day rally up to the SPOT.

When the market gods hand out a gift this obvious, I have learned my lessons the hard way. So this week, I closed out all my positions and I am sitting on the side waiting for the next move. Besides the closest short stop loss hideout is 50 spx points above the red dot. And the best long stop is the abyss below.

I think I will take some of my SPY fish'n bait money I made last week and go to the lake and wait until lord market reveals his mighty hand.

Spy Head and Shoulder Patern 7-10-09

Here is a Head and Shoulders target zone chart .
This pattern has a 60% chance of reaching the red zone.
Valid price movement is when a candle is completed and there is an open and close at key levels...the wicks are important as well but the big money is more concerned with open and close price. Although price has broken neck line, today was the first significant open and close below neck.....now we need to see a big push to the down side with a big spike in volume to really get this pattern completion .

Pre Market TAO Friday 7-10-09

ES Futures overnight traded down 879 to 870 Morties W4 Bottom
US Dollar is up
10 yr Treasury / up
gold / crude/ nat gas / down
Asia / Euro stk /down

Spy will open large gap down to 87.75 ish

my plan is to trade the gap low and go long in the first 15 min ....if this don't work out, we can blame Mortie...heee heee..... the target will be m3 8850 -8875 area... above the pivot 8810.
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9:55 et am ....wow ...that was a fast gap recovery! I couldn't get on the Bus at the open but it looks like it is gona come back and get me ... got a long entry at 8790
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10:10 et am .... That Mich sentiment report was a sour note but what would we expect from Mich . Tick went bearish but price is holding so far...

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10 :16 am ....looks like teck xlk and xly are taking the lead this am but there is a split in the major mkts Naz is lead on the way up Dow and SP are lagging
Energy and financial's haven't moved up to fill gap yet.
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10:30 am et ..........a consolidation with a dec volume is a correction ....looks like a bull flag is forming on the 5 min spy
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10:40 et am I am not happy with what i am seeing in xle and xlf and the other sectors are starting to soften up as well.... the tick has been all over the map... and ES is bang'n it's head on yesterday's 879 resistance zone..... we could be in for another range day .
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11:20 et am ... I really think the market will rebound a bit once Europe is closed down .... but this don't look good for a + pivot move ...just broke and closed below gap low and sitting on m1...all sectors are weak and selling into yesterday low range....
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11:33 et am..... ES just tested it's overnight low 870 and spy is reversing maybe the sun will come out now. Looks like the ABC wave off of yesterday high is complete ...... lets hope this is not a 3rd wave impulse but it could be , cause it sure dosen't look corrective to me.. the next 30 min's will tell the truth.
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12:00et pm.....starting to see a pos divergence build in xle and xlf and xlk ....
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1:00 et pm...... Xle and Xlf are back up testing gap resistance and so far wave 1 is looking good with a interday trend break to the up side.
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1:30 et pm spy is testing yesterday 8805 support it needs to break thru here for any more up side ...... past support zones become future resistance .. for the past 90 min's the tick shows many more buyers than sellers a bullish bias.
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1:45 et pm ...all sectors just had a broad base up pulse . this may be a good sign...
whenever there is a break in a past support line the first thing that happens is a wave of bulls who got trapped will sell ( the get me out bunch) the tell is the strength of the pulse down ... this one was weak so the market maybe running out of sellers here. This is a very thin market today and any thing could happen into the close .... I want to be out by 3pm et...
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2:00 spy just broke and is testing yesterday range low support and is above the vwap. If it holds we could get more upside..
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2:55 et pm ..... big hitters step'n up to the plate here with some +1000 ticks..... let's see if there is any follow through...
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3:15 et pm Getting good pos ticks but price is not responding here so I am not gona stick around and watch the last hour ....closing out my long here at a break even ..... spy 8790.....we are under the vwap so the risk is to the down side from here on to the close.

Pre Market TAO Thurs 7-9-09

ES futures are trading back up in top of yesterday range ..US Dollar is down ....10 yr Treasury is up.

Gold / crude / nat gas all up

Asia mixed / Euro stks up

reports
jobs claims are less than expected 565 k vs 603 k

Earnings a/c cvx and infy

spy looks set to gap up at open in to heavy resistance ....could go both ways this am I will watch the first 30 min...
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10:00 et am........ sectors are split ....and Nyse Tick is neutral this may be a range day ..price gaped up and bounced on yesterday close .ES futures are trading down . spy is oscillating around pivot 8800 and vwap.
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10:15 et am .....entered short at spy 8850 ...stop above 8875.....target 8725

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The Spin machine is running full speed today here is an article from Hedge Accordingly. This expresses my thoughts very well . The media is not your friend! Be very careful about what kind of crap you let them dump into your head.
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11:02 et am ....spy is consolidating in a asymmetrical triangle.. and is at the apex ...we wait for a break.
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11:20 et am ....spy is morphing in to a bull flag? closed out my short at 8800 .. I am gona wait to let the market tell me what to do.
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12:04 et pm ....Neg divergence are building in xle / xlf / xli / xlb...we short the next up impulse
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12:30 et pm .....short spy 8855 ....... the xle is very extended ....the ole cvx pump and dump is in play... haven't turned on cnbc today but I'll bet they have been do'n the Dennis Kneale all day ...can't stand to listen to the constant over sell.
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1:50 et pm......... spy has worked hard to test the H&S neck line at 8880 ....xle continues to show divergence but now starting to roll over... This is clearly the leading sector up today but will it lead the the others down as well? We may have a bit of a drift sideways to the close.
The ES Futures has tested the 882 SIX times and failed ..How much more can it take?
-------------------------------------------------------------------------------------------------2:45 2:30 et pm ......spy 8888 Twin Double Hammer Doji's at top of range on 15 min chart ...that's got to be good for a reversal......
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The energy Bulls look like they are trying to buy everything that appears to be a dip...
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3:20 et pm .....the final hour of trade has perplexed me for the past few months....so I solve this buy asking my self " Would I want to be long or short here if i where to take the trade now?" Well I definitely would not want to be long.... today
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3:45 et pm .....closed out my short on that last pulse down 8820 for fish'n bait change. I think I would have had more fun if I had gone fish'n.

Pre Market TAO Wednesday 7-8-09

ES Futures overnight have traded up against the 882 resistance zone all night. Us dollar is up and Treasuries are up. Gold / Oats / Crude / all down .. And Nat Gas is very low ( UNG could be a buy down here)..... Asia down and Euro stks flat to down.....

Reports
Oil inventories 10:30 am et
10 yr Treasury Action 1200 noon
Consumer credit report at 3:00 pm et.....

PBG and FDO report earnings b/o .

Looks like the consumer will be the topic of the day.... Alcoa is reporting a/c . I think the bad news is all ready baked in the cake. We are looking for guidance.

The SPX Head and Shoulders is an all eyes event. So we watch as the Bulls blugen themselves against the ES Futures 882 resistance/support line...

Today I will be a Bear and sell rally's. The market has had 3 down days in row so we could see the bulls come out swing'n or at least give the bears a few infield flies to cram down their throats.

Spy looks to open flat around the 8850 Pivot .....
8900 - 8875 will be a good entry for a short position with a stop above 8925 ...... Target is 8750-8725
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9:05 et am ......first short spy 8874 entry
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10:40 et am.......looks like a range trade market so far Nyse tick is not showing any big buyers or sellers and XL's are split and look like they are moving to middle of yesterday range.
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11:00 et am looks like the teck and indus sector will hold the market down this am. Testing yesterday spy lows
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11;05 et am closed out spy short at 8809 .... tick is not showing big sellers down here ,,,oops! there it goes .... first big -1100 down tick at the break of yesterday close......now we wait for the next rally (pull back) to short again.....somewhere between the 20 and 50 sma on the 5 min chart.
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11:20 et am .....all the XL sectors are beginning to break down . ... Looks like the range trade is turning to a down trend . We don't chase this down. We wait for the pull back.... we could get a bounce at 8750
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12:15 et pm ES Futures is now testing the H&S neck line at 870 I dont think it will break just because everybody expects it to break .......I think it may bounce here.. the market gods don't like to give traders the easy call....
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12:45 et pm...... got an M1 ( mid level pivot line between s1 and s2) bounce spy 8715
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Looks like Treasury Note Auction was OK for Treasury buyers. The buyers got lower yields and and paid higher bond prices. This is not as attractive to investors. Lower yields will push cash into equities and commodities over time. Unless this is a resurgence of the safety play.
Inflation means the prices of equities and commodities go higher. This also Drives the US Dollar lower because foreign and domestic buyers are less inclined to buy these bonds in US Dollars = less demand for dollars. There are going to be many more of these auctions potentially pushing more demand or less demand for the dollar ie: more potential for inflation or deflation.
But Wait! It's Uncle Ben to the rescue! He'll just fire up the printing press and buy up the extra notes ... ie: monetizing the debt..... Oh MY Hero ! We are saved! I wish I could pay my bills like that.
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1:50 et pm ..........spy is moving up to a reload area 8800- 8825 is just above the 50%fib ...this little rally looks like a 3 wave push but cant tell until it is finished. Haven't touched the 50 sma or the vwap yet.
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3:25 et pm..... xl's and spy are showing signs of pos divergence ...This looks like a good place to short the close but not my preference. I just don't like to trade against rising price with rising volume and a Pos tick. Although price looks where it should to take a short, I think we are in a transition move for some up side into the close. I made good money on the first leg down today and I'm not going to risk giving it back.

Pre Market TAO Tuesday 7-7-09

With Earnings to begin this week I am not expecting any big moves in the next few days. Asia and Europe are trading relatively flat .5% range . ES futures overnight 898 to 889 and is trading in the high end of yesterday's range. US Dollar is flat to down a bit..Crude is down to flat. 10yr treasuries are flat to up. Today's Spy pivot will be around 8950 with a -+ 100 range .....My plan is to buy 8900 and exit at 9050 with a stop below 8875.

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10:30 et am ....spy looks like it is setting up for a bounce at 8925......the xlp and xlf are moving and holding the top of range while the other xl's testing the bottom of the range....this type of divergence is a wait for the test to complete before you jump in ... there is a line in the sand in this area. watch the xl's in their lower daily range xli/ xlb / xlk for a move to the up side..
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10:45 et am ....took a position at 8910 long with a stop below 8875 ....target is 9025
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11:20 et am......... starting to see positive divergence on 30 min Macd in the lower ranging XL's.
as well as a interday trend break in Spy. Nyse Tick is neutral but with a bearish bias so far.
selling pressure is declining along with the decreasing volume all AM
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11:55 et am .....Teck xlk is testing the May high support / resistance ....this can be Pucker time for this sector.
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12:00 et pm .......with the big interday gap down in the ES futures i elected to close out my long position at 8899.....very small loss....will wait to see if we get another trade opportunity today
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1:42 et pm ....tick and xl's are starting to rebound ..reentered long at 8910
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2:00et pm ........this feels like a market of reluctant buyers rather than aggressive sellers, never the less, it makes for a difficult market to read.
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2:30 et pm.......the spy has been trading below the Vwap (volume weighted moving avg ) all day .
if we don't get a decisive tick to the up side on this next up impulse , spy will probably not get one and after 3:00 pm, the risk will be more to the down side.. any up tick will be my cue to call it a day.....
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3:00 et pm ......closed out long trade at 8905 ....very small loss..... If you're not careful, this market can carve you up like Grand Ma's Christmas Turkey..........In this trading environment, I use half my usual position and will not let my loss get very far from the entry point......
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I was really expecting a final Bull defiance bounce today but they wimped out! With a break and retest of the Institutional Index Xii Head and shoulders lower nick line, I don't see the any more Dip buying in store for me. Sell rally will be the theme from here....
At least until Spy 8200 and the ES Futures 800......

Pre Market TAO Monday 7-6-09

The overnight markets have been selling off in Asia and Europe. The US Dollar is gaining strength.
Gold/ Crude/ down....Es Futures are at their lows 882.25 and is on a key support zone...I expect Spy to Gap down at open and run to 8900 support and bounce to the up side....this would be a low risk entry with a stop at 8875 ...my plan would be to enter after the test of the that bounce. the target will be 9100-9125.
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10:00 et am.... Tick is not showing any buy commitment.....sectors are starting to move sideways ..the utilities and staples are in a rally and indicates a safety rotation. the US Dollar gaped up at open and experienced a stiff sell resistance....we may be in a holding pattern until Dollar shows us which way it wants to go.
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10:30 et am ....so far the bulls haven't put up much of a fight ......I entered the Spy at 8900 and price is now sitting on s2 support 8884 ........and is just above my stop ....geees!
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12:00 et pm.....have seen some buying pressure but the big hitters haven't shown up yet....looks like the bears might try to sell this am rally.
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3:52 et pm .....slow day.... closed out long at 8975 that was 75 points to the good... it was ok

ProphetCharts: $COMPQ

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Weekly Naz 7-5-09 Comparison

Above is a weekly (look at the Earth from high altitude) zone and Harmonic trend analysis. I see is the Turtle and the Hare story unfolding.The Naz jumped out ahead of the S&P and Dow as much as 10% in May and June. Also notice the similar Market structures in Oct- Nov 07 and May - Aug 08...This all agrees with Mr.Trader's analysis of AAPL Boston Wealth Management.com. I am expecting a 2.5 to 4% decline in the Naz to Equalize the market over the next 4-6 weeks. Be sure to look at the hourlys to find a good interday rally to sell.

ProphetCharts: $INDU

This is a Support/resistance Zone Study for the past Quarter of the Dow (white)/ Naz (blu) / S&P (green) percent comparison.
What we are seeing here is the Dow has droped back down into the April Range on Thursday for the 7th time and is headed to the lower Fib fan line. The S&P is in the caution zone and headed to the lower end of the caution zone and lower prespective fan line. The Naz is holding up above the safe zone and sitting on it's fib line. The momentum and weight of the Dow and S&P need to reverse to the up side next week or all three markets could end up below the support zone buy the end of July

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ProphetCharts: ESU9

Next week I am going to take all my buy and sell signals for the SPY from the ES futures S & P 500 mini .This is my own brand of harmonic trend analysis with key support and resistance zones. all this works if the Monday buy is at the green dot with a stop below 889 . If ES Futures gets a bounce Monday, this should set up a 3 wave push in the SPY over next week before the big down trend resumes . These corrective moves are real zig zaggy and it's a real dog fight all the way up. this is where you hold your nose with one eye open and push the buy button then watch it all unfold. Also I am only going to use half my regular position size. This is the Bulls last stand so I think they will be out in full force. Besides, I want a little money on the table just in case they succeed.
Keep a sharp eye on the US Dollar. I expect it to show some weakness after it's big run Thursday.
Update: Check Out Morties Secret analysis for Monday and Tuesday 7-6-09

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ProphetCharts: SPY

Well Spy kinda played the way I thought it would ...I thought the Bulls would have put up more of a fight. I had hopes of reloading at the "b" retrace and short again.... But i will not be suprised to see the bulls push back on Monday.

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ProphetCharts: FXE

The Euro/USD pair looks to be running on fumes....this last June up swing shows all the signs of a bear flag....riseing price,flat upward sloping MACD and declining volume. Noticed how it squeeked out a third touch of the top of the triangle with gaps on both sides. A close look will show an abandond Doji simular to a shooting star without the long upper wick. This action suggest the pair cross is rolling over. ie: a stronger US Dollar or a Weaker Euro Dollar. What this all means is if the Dollar is getting stronger, commodities and equities will trend lower thru the summer.

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ProphetCharts: SPY

Spy has retraced to the 61.8 fib . this is usualy the max for leg "A"....I expect a move sideways to up 9200 zone befor resuming the down leg...

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Pre Market TAO Thursday 7-2-09

9:16 ET AM..........The jobs report was not a good omen as the non farm loses where much higher than expected . This puts us very close to the 10% rate. Es Futures have dropped overnight to a low of 905/US Dollar is up / gold is down / corn took a big hit but oats had a huge pop / crude is down 68.16 / Nat gas down 3.72.

Today I expect SPY to gap down at open and run to last weeks range at least until Europe closes.
I will close out my short position and call it a week . These holiday markets can turn quickly so don't hesitate to take your profit.

Looks like all this indigestion will give the markets ....Green Poops

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9:40 am et...Broad market sell off all sectors are participating Spy cut down thru S3 9049 and headed to MOO (half way to s4) .....starting to see a few green lights though...
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10:10 et am...... Ok! I closed my short at 9028 ..... all xl sectors are at or around 62% fib and that is the average fib retracement for the "A" leg. Most likely Spy will trade sideways to up for the rest of the day.
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10:32 et am .....looks like spy has a little more downside I think we are waiting for the other sectors to catch up ....looks like a balancing is occurring around the 50 to 62% fib to correlate all XL sectors then we should see a move up to test or fill the gap.
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10:50 et am....... The utility, financial and staple sectors are showing some resistance to this sell off. I have noticed the utilities have been lately among the first to rally and the least to fall. I think this maybe a possible rotation to dividends and a play for higher yields than treasuries . This can draw money away from equities as well.
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12:00 et pm......looks like sectors have found there footing and are equalizing . I don't see much more downside today Europe is closed and the Spy will most likely bounce around the 9020 to 9050 range .
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2:00 et pm..... Looking at the US Dollar, this is the first week in the last 4 weeks it has traded to the top of the range. This could follow through with the safety bias the markets are starting to exhibit. Oil has moved down to the bottom of it's support zone and if it cracks next week the rest of the markets could follow. I would not be a buyer here. I am more inclined to be a seller of rally's. Moreover, I am out of the market until we see a little more direction.

ProphetCharts: CDNS

Here is a Teck long play to put on your upside break out list next week

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ProphetCharts: MOO

Here is another AG Etf idea ....this looks like a bear flag ....the best low risk entry would be any decreasing volume rally on a 5 min chart up to 3550 and exit any where below 3150 to 3000 place stop above 3575

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ProphetCharts: FEED

With the over abundance of the corn supply this year the ag feed play may be one to look at....this asymetrical triangle could go either way so wait for the break out and be ready for the possible whip back in the other direction.....my best guess is the ultimate price target will be in the 4.00 zone

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ProphetCharts: SPY

Spy game plan for Thursday 7-2-09
Following this 5 wave push I expect a reversal pattern to develop
down to 8950 area..also notice the Negative MACD divergence

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Pre Market TAO Wednesday 7-1-09

ES Futures moved back up into the support / resistance zone that started in May ......the Jobs report was worse than expected and there is a parade of reports this AM......10am ism /oil inventories/ construction spending / pending home sales and at 2PM auto sales........with the beginning of a new month and quarter compounded with a Holiday schedule it is difficult to determine how the next two days will go.....the market is resilient to decline and dosen't act like it wants to go down......there is a bit of confusion coupled with weak volumes.......I am inclined to go to cash and wait till Monday........I do expect Spy to gap up and sell off down to yesterday lows ...
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9:58 et AM....a lot of front running into the reports release ......there must be a bucch of confidence the news will be gooder than bad.-
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of all the years I have followed the markets, I still find it near impossible to Quantify Bad news and some how construe it to be good.......there is not one single good thing about the news releases this AM and a .01% increase in pending home sales is B.S.! .........that is not even a usable number when you dont know how many of those possible sales will ever turn into a completed mortgage contract..-

Best Quote of the day!

“Less-worse isn’t the same as better,” said Barry Ritholtz, chief executive of FusionIQ, a research firm. “We want to see ‘good.’ In order to grow profits, in order for earnings to increase, in order for corporate America to start hiring and spending, we need to see greener shoots. So far that hasn’t really happened.”

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10:45 et am... price is working its way above the 200 day sma.....and this is a significant move and this attempt to push above this level and hold will most likely ignore any news event today...the market just has to go there. But if the bulls can't hold this price level then price will drop sharply.
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11:30 et am..... There is not enough volume to sustain this rally and only half the sectors are participating.....energy / financial / industrial are all remaining in yesterday range ...the big mover is the staples .......protection play.... I smell Bull trap up here....
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2: 10 et pm....Spy is continuing to sell off .....and the Xle / xlf / xlk have moved down and remain in yesterday range....but not seeing real sell commitment in nyse tick or relative volume .
$xii institutional index has touched the head and shoulders upper neck line and moving to lower neck line in fact it looks like all sectors are rolling to the down side but I expect to find support/ resistance at the opening gap....
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3:15 et pm.....well it maybe a sign of things to come when Cheerios and Hambuger Helper lifts the market and holds it in a bullish bias all day long.........and what is with the 50 cent interday ES futures gap down?...on the 60 min chart............ Spy has been slowly bleeding off all afternoon and has found support at the 38% and 50% fib .... the tick looks to be ramping up for the end of day run..
i was short yesterday at close and have not gotten an opportunity to close profitably .....i dont like to add to losing trades so i didnt add to my short at 9300 .....i only add to a trade once it starts to go positive........so it looks like i will be forced to carry trade over nite .....why dose it allways feel like walking into a dark ally? well you never know what the Asians or the Europeans will do over night......but think there will be a sell off in the AM session ....i know I wouldn't want to be long over the week end......
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In to the close the daily Spy looks like a grave stone Doji .....very bearish for tomorrow