US Dollar ETF UUP 10-22-09

This is the UUP

This is a double long ETF which tracks the US Dollar.

Here is the Ending Diagonal Elliot Wave 5... I am expecting the Down trend to reverse any time in the next 5-10 trading days.

Market TAO 10-22-09 Thurs

Reached top of Wedge and failed

Spy Target is 106 area

My plan today is to sell spy mid to low 108's .... and exit at or below 107 down to 106.25
With stop above yesterday high.

Polar Bear Comming to the Surface?

Lurking Just under the surface...

Market TAO Wed 10-21-09 Double Tops

These Two Key Indice leaders Dow Transport and Russell 2000 are now Showing a Flat Top formation in addition to the Double Top.

These market structures are always a sell signal... We where early on Monday but the formation is valid until there is a break above the yellow resistance line.

These Indices are the Market leaders
so I expect the SPX and Spy to follow.

My plan today is to Sell Spy at the high of day in the mid to low 109.00's
and exit at or below 108.09 down to 107.74

Market will open low109.00 and most likely rally up to 109.50-60 for first 30 min's then turn back down.

Is the Market Overvalued?

Picked this up from my friends at Slope of Hope blog sight via Zero Hedge.

*** Have you succumbed to the green shoots euphoria yet? We hope not. But if your trigger finger for stocks is getting restless, check out the following eleven reasons why chasing this rally could burn you.
These reasons put today's 60% surge into perspective by comparing it to an average of the same data points during the past five 60% rallies.

Rallies that occurred between May 1970 - August 1972, October 1974 - January 1976, August 1982 - April 1983, January 1990 - January 1994, March 2003 - January 2006.
The comparison below provides a stark reminder that government actions, not fundamentals, are driving this historic equity bubble. Understanding this difference might even save your retirement. You can thank us later. Data courtesy of Contrary Investor and Zero Hedge.

1.) Year over Year Retail Sales Growth: 9.3% average, 5.3% now
2.) Consumer Confidence: 95.5 average; 53.1 now
3.) Capacity Utilization: 79.9% average; 66.6% now
4.) Year over Year Industrial Production: 4.1% average; -10.7% now
5.) ISM: 53.9 average; 52.6 now
6.) Payroll employment gains over period: 2.2% average; -2.0% now
7.) Decline in continued unemployment claims from cycle peak: -26.3 average; -11.6% now
8.) Year over Year growth in total credit market debt: 9.3% average; 3.0% now
10.) Year over Year growth in household debt: 8.8% average; -0.1% now
11.) P/E Multiple: 16.8x average; 20.0x now

*** These facts tell you that the market fundamentals are rubbish and that the market is overpriced. Really, the only thing driving this rally is hot money created out of thin air by the Fed's money-printing policies.
Hot money can flood into assets quickly (taking the market up 60% since March). But this type of money can also flood out of assets just as fast.
It's because hot money is made up of traders trying to turn a quick profits. They hope to buy now and sell to a greater fool later on.
It's a recipe for disaster. When these traders think they've become the greater fool, they'll sell everything in the blink of an eye.

Market Tao Week Ahead 10-19-09

Trans Double Top



















NDX Double Top



















Monster Macd Divergence

With Earnings under way markets are resistant to any meaningful correction but the Ndx and Trans Are beginning to tell us a different story.

Markets look to be setting up for a turn down as soon as this week..... we may get a final blow off top spike up to 1120 but maybe not.... with AAPL reporting a/c today it could get choppy but I'm thinking price is baked in and will most likely selloff after report.

My Plan to day is to Sell the high 1090 and exit any where below 1079

Spy sell 109.00 and exit 108 or below

Stop Placement

Placing Stops is the harder skill to develop.

The market is dynamic so it it best to learn where to place a stop based on the price structure and risk/ reward.....not a fixed amount.... also adherence to time frame selection is critical.

Try placing your stop behind a previous support/resistance , break out line.or past consolidation area .... the skill is to determine where the price will least likely return to. Therefore,many times the distance to a previous stop target will show higher risk than the potential reward target..The question to ask your self is if the trade goes that far the wrong way , is that an acceptable loss?

The decisions to take a trade or not, will over time and many trades, determine your long term success. Remember, there are only two things you have control over.
1. Your entry point.
2. The amount you are willing to lose on each trade.

Where are the Bears?

Sending Goldilocks out to find some Bears...


Very little Institutional participation last two days... It is hard to imagine the market can continue to rally with out the big boys .....

Market TAO Thurs 10-15-09

The Earnings season run up is reaching a fever pitch high..... will it go much higher? ...Maybe .

There hasn't been any support for the US Dollar and it continues to drop.

The earnings reports continue to show a profit on cost cutting and inventory reduction and job cuts.

Company's dependent on export trade are benefiting from the cheap Dollar for now but sales and top line revenues are not increasing.

We are still losing 500,000 more jobs this week.....

Treasuries are so crowded if there is a rush to exit the crush will be massive.

My weekly analysis remains intact Spx will continue to grind higher to 1120 over the next 5 to 7 trading days..

I have noticed the Large block + 1000 traders have been far and few suggesting a change in sentiment and wider market action is anticipating a directional change.

my safest trade today is to buy as close to Spy 108.00 as possible and exit above 109 up to 110.00

More Up to the Market Ahead

We are very close to a peak in this current leg. Spx 1120 area looks to be the target over the next 7-10 trading sessions.

The general optimism of earnings expectations will hold markets up for the next few weeks and bullish sentiment will continue to buoy prices.

Corrections develop two ways. A pull back in price or a sideways movement over time to absorb the momentum of the rally.

Every one is expecting a traditional retracement from the peak but there is much more misleading data today than the typical economic environments we have seen in the past.

Technically, the analysis suggests a near term turn to the down side. Traders are nervous and don't want to commit to the up side but are not eager to to sell . The Mutual fund managers are running out of gun powder as well. They got in late which explains the run up in the last leg and cant sell until the end of the year.

Foregoing a significant shock , less than luke warm earnings or disappointing guidance, I don't see enough bearishness or bearish media coverage to sustain any meaningful push down. Nor do I see any additional conviction of the buyers to move the the ball further up the hill.

I think the Market will move sideways in a range for the next quarter.
This level will present significant resistance over the next 3-4 months.
Ultimately investors will seriously begin to question and expect performance. When they realize true progress is not forthcoming the melt down will begin.

Market TAO Fib Study 10-08-09 Thurs

Once you learn to use Fibonacci Arks, Fans and Time studies , they help to identify when to expect a turn in the price action... Here we can see mirrored movement from the 1080 high to the low and back up.

Read up on these tools and take time to plot them correctly.

Today we are in a confluence of fibs and I expect we will see the red path to play out in the next 5 days....

I also plotted out the possible up side path in case price breaks above the high of today.

Market TAO Wed 10-07-09 Triangle Wave 4

We can expect a break out to up side. 3 targets or we noodle sideways or we break down hard after jobs report to bottom of expanding diagonal. Earnings season starts with Alcoa and and report is good so we will most likely wait for more reports to get more up side mojo next week. Pins and needles..... we wait till MR Market makes his move.

Tough 7 Months for the Bears May be Over

Trend Break and Backtest 10-06-09

This a beautiful sight to a bear.

Trend break and a Back Test to the bottom of the lower trend line.

2nd chart is the probable price action
we could see over the next few days.

Am action is key ... All indicators are mixed to flat so we will follow the opening mojo....

This could also be a Bull Flag....so if we get a break to the up side st the open then we could see a big move . ...play safe.

Pre Market TAO Tues 10-06-09

The US Dollar has been selling off all night.

We are expecting the SPX to gap up at open 1050

Spy gap up to 104.85

Fib time series suggests an inflection at 11:30 est so i expect a rally until then up to 105.72 then we should see a correction of this wave A..... to a B wave down to 104,00
I'm Calling it A because the price action from the 1080 high is turning out to be a series of ABC zig zag patterns which suggest a sideways consolidation pattern ...

Monsanto Head and Shoulders Pattern

Mos released earnings tonight and had a big miss. conference call in am.

It is best to Wait until a Daily close below dotted line and a giant volume spike before entry.

Market TAO EOD 10-05-09

This is a Fibonacci Time and Arc Study.

Looking for confluence of lines and found a correlation at the AM open Tuesday Am 9:30 est.

This would be the top of wave 4 .

But if this current wave continues higher then we are not in a w4 ....it is something else.
Possibly a sideways series of ABC Zig Zag pattern waves typical of a large consolidation structure.

So far the move down from the high of 1080 to the low of 1020 is a big ABC Zig Zag Pattern.

The current wave could be an "A" wave or a 4 wave either way we could see a move to the lower purple trend line where we could see one of two possibilities play out as illustrated on the chart.

A bounce or a pulse down to complete wave 5.

Week Ahead 10-05-09

This looks like a 4 wave retracement that started Friday it clearly acted corrective. we could see a pulse down wave 5 to a test of the long term bear wedge trend line. we will need to see how wave 4 finishes.

Market Tao Thurs 10-01-09

SPX 500

Well I expected a bit of a sell off today but I didn't expect the Bulls to run out the door screaming like a bunch of little girls!

The News wasn't all that bad.

This looks like a Down C wave and stopped right on the 138 fib extention SPX 1030.

I was expecting a bounce off the 1041 and retest the wedge trend line but it cut through the 1040 like the bulls weren't even looking behind themselves as they where all bunched up to get out the door trying to get away from all the blind two fisted buying they did all summer.

I got stopped out today as well because I was playing the bounce plan at 1042

The market is off 4 % from it's high of 1080 and that is about where the bulls jumped in last time . We will see after the jobs report in the morning if they stay in the tall grass or jump out and mug the bears.

I'm not sure if there are enough bears or bearish sentement to push this market down to far... unless they are the same bulls that pushed this market up to here.

Actually this sell off was reasonably orderly in 5 measured waves .

The bulls need to push this back above 1040 or this could get down to 1026 -17 area.. that would be 5% off the top.

Day Trading is All About The First 90 Min's

I don't want to read about how the banks are fudging the earnings reports. I don't care if AIG can pay back the government. Who gives a Rats A$%% if Bernanke Prints another Brazillion Dollars over the weekend. Conspiracy and market manipulation theories are just a huge distraction and entertaining them is a big waste of time and emotional capital. As a Day Trader, all I want to know is what will happen in the next 6 hours or actually, The First 90 Minutes at the market open and the last 2 hours into the close.

Oh I agree, being aware of the big picture is a good thing to know. Trading the momentum of the open and into the close is less of a fundamental play and more of a Live Pin Ball type of analysis. The Morning action is off Asian and European moves bouncing off Fib's, Support, Resistance, and catalyst such as earnings or critical news release events into or just after the open.

As a Trader, you must isolate your mind from any Emotional Bias. You can't let the long term Time Frame or the parade of talking heads and esoteric columnists cloud the short term trading action of a few hours in a day.
Remember, the time horizons of the these many experts opinions range from 3 months to 3 years. A Day Trader has a much shorter time frame more like 15 min's to 2 Hrs.

If you want to be a happy successful Day Trader, learn to push those long term thoughts to the side and concentrate on what only effects the first 2 hours of the trading day. Long Range opinions of what may happen two weeks or two months or two years from now are most likely all ready priced into the market and not necessarily relevant to the next 90 min trading session.

This is my daily AM Routine

• Day Traders do not hold positions overnight. Having a position will bias the outcome of your analysis and it will be hard to be objective.
• Do your home work and big picture Technical , Fundamental Analysis on the weekend.
• Then do the Small time frame studies the night before.
  Try to identify 3 different what if possibilities for the first 2 hours of trade and how you would handle each one. Include the best entry and exit points along with the best position to place your stop. I usually want to be out of the AM trade about the close of the European session 12:00 EST. And I will not carry a trade over night.
• Then write down all 3 of your plans. Arrange them into order from most likely to least likely.
• Get up early with a fresh mind and scan the business news headlines. Do the Joe Friday bit. "Just the Facts Please." Are they overall Bullish or Bearish?
• Try not to read the opinion articles or listen to Market opinion TV commentary before the open. Rick Santelli and Art Cashin are the only exceptions. Save the rest till after the close.
• Then Look at what Asia and Europe are doing over night.
  Are they in a rally or selling off?
• Then look at the US Dollar.
  From yesterday is it trending up or down?
  For now the US Dollar and Equities are inverse.
  Dollar up / Equities down.
• The price of Oil.
  From yesterday is it trending up or down?
  For now Oil and Equities are trending together.
• Then finally look at the S&P 500 Futures. Traders call it the "ES".
  Based on yesterdays ES and overnight 24 hour range High and Low, how is it trending and trading in relation to the close of the $SPX.
  The ES direction will most times carry over to the equities market open.
  The overall momentum of all these combined will most times determine the direction of the first 90 min's.
• As you work through this Pre Market check list , Weigh the 3 probabilities of your previous night's home work.
• Finally check for key reports or news scheduled to be released like GDP,CPI, Jobs, Earnings, Sentiment, ect.
• When the Bell rings you are ready to put your plan into action.