Count-a-lishious

My apologies for being MIA most of this trading session but I have been working. Today’s tape has kept us in the sideways grind we’ve been enduring for weeks now. A hard run up followed by a sell off, followed by sideways action and as I’m typing this the tape is pushing back up again hard. Seems any remaining fear among investors has quickly dissipated – plus poor ole’ bucky just keeps asking for punishment. Time for a wave count:

What’s mostly important about this chart is that we have remained below the lower boundary of that channel going back to early August. Should we drop from here (orange) a lot of support awaits around the 1050 mark. Let’s zoom into this a bit:

Quite frankly – things are a bit messy right now. The best way to count it at this early stage is that we are either in some Frankenstein triangle (greeen) or we are whipsawing around on our way down to shake out the weak hands (orange).

I’m a bit split right now actually. My daily RSI_EMA suggests that we are on our way down and that we should continue until we reach the 20-30 cluster which would also coincide with the SPX 1050 support zone shown above. However, we seem to be consolidating and the dip buyers are already swarming in. NYSE A/D ratio is currently at 0.94, which is mildly bearish and I just can’t shake that inkling that another ramp attempt is in the works. Supporting that suspicion is also the Zero Lite which is completely flat at this point.

So, be on guard – the odds for trading these gyrations are horrible at the current time. Since we heading into X-Mas season liquidity will start draining quickly after the final EOM rush. So, anything could happen and unless the bears are able to finally gain some ground this might be nothing but some sideways consolidation before a final push higher. When it breaks it will break – and as of the final day of November the bears yet have to force the hand of the bulls since the beginning of March – the onus is on the market to confirm a trend change. But for the record – on a more long term basis this market is rolling over and it’s only a matter of time until we see a fast break of the eternal stair step pattern to the upside. But it might not happen until January, be prepared to roll your December and even your January puts into more longer term ones unless we see some downside soon. And even then it might be good medicine to buy yourself more time.

Finally, if you haven’t had a chance – please check out my weekend post – some very important long term charts in there.

DISQUS UPDATE: I just received this from disqus support:

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If any of you continue to have problems posting here please email me [admin at evilspeculator dot com] and don’t forget to include your disqus ID.

Living Inside a Broken Clock – Monday, Nov. 30, 2009.

Japan has decided to make public that they MIGHT try Quantitative Easing again. China is hitting back verbally at the world which wants China to stop their “beggar thy neighbour” policy (weak currency and economic growth from resulting exports). Creditors everywhere assume that Abu Dhabi will underpin Dubai’s financial debt (although Dubai gov’t will NOT back the Dubai World debt).  US Treasuries are still seen as a safe haven, and the USD continues to be kicked while it’s down. Is this a fair assessment of the situation?

I see trade wars brewing, a race to the hyperinflationary finish line, a weaker USD – and yet GOLD falls as well. Welcome to the Broken Clock.

There is so much uncertainty and SPX does not really have a good entry point, IMHO. With the USD down so much since the peak on Friday, ES is effectively flat. The usual correlations do not seem to apply at the present time. Even though SPX put a pin (above) through an area of support roughly estimated by the dashed green line, that support is still holding on an inter-day basis.  I would expect SPX to re-test ULTRAVIOLET (the violet line that runs through the top of the last bar), yet again.

If I wanted to do this re-test short-term play, I would put my stop below the low of Friday – 1083.74 – which gives about  6 points of risk (or more). The upside is to the ULTRAVIOLET trend line – 1105.47  – which gives about 17 points of upside. This sounds like a good risk /reward ratio, but I don’t see a lot of supporting TA. TD Pressure is in transition and could head up or down. I think it all comes down to whether or not you believe that the USD /SPX correlation will reassert itself.

 

Going short here for a quick scalp is feasible – if one ignores the trend TA.  ES is running into resistance at the neutral pivot at 1089.25, and the next support is at the pivot at 1067.25; The recent high resistance is around 1098 - 1100. TD has a resistance level at about 1092.25 (it is the dashed green line at the right of the chart, just above the dotted orange line) and above this would be a good level for a stop.  That gives about 6 points of risk for almost 20 points of possible gain. However, the TA does not provide any clues as to direction here.

Typically, the ES and SPX are pulled by the USD and one would expect SPX and ES to head up today – but this isn’t showing up on the tape.

EQUITY

NorthAM was red on Friday on very low volume and a short day. Asia was green overnight, but Europe opened red.

 

The DAX isn’t looking very good with almost all sectors down.

 

DAX has been weak since the open – but looking at 5 days, it still needs to breach short term support around 5600.  Meanwhile, it appears that there is resistance at 5700ish. Going into the NY open, I favour shorting ES over going long due to the behaviour of the DAX, and the risk /reward mentioned above for ES. However, I woud keep my tight stop at the TD risk level mentioned (above 1092.25).

FX

USD is down. It seems that sales were lined up against EUR for squaring of month end acount. Therefore, the weakness may not last.  CAD, EUR, GBP, and JPY are all moderately stronger - but weaker than earlier.  DXY put in a higher high on Friday (see the wide white horizontal lines for “high” levels).  You’lnotice that DXY is clawing it’s way above the pivot at 74.642 but that the dashed green line at 75.036 is the critical resistance level from a TD point of view. If DXY can get there, then we would have a higher low following the higher high - and hope would still burn eternal.

No sense in listing the pivots – you can see them on the chart and in the legend. IF DXY can get above 75.463 (which is a pivot and resistance level of IMPORT), then 75.88 is the next high that needs to be cleared – thankfully below the next resistance pivot up at 75.929.

NEWS

A picture is worth a thousand words:

 

 

DATA

And here:

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

SUMMARY

The short on ES right now has the better risk /reward with a stop above 1092.25 (how far above depending on your risk appetite and general volatility of the future right now). Target is  1067.25 which is the S1 pivot.

 

Cheers.

Slippery Slope (snowpack list of eligible shorts)

Michael Davey (CD) here…

The UAE has saved the planet this weekend, coming to the aid of a troubled Dubai World (pictured above).

I for one am really pleased, since I couldn’t understand how such a distant, seemingly insignificant default in the Mideast could ski-rope the global markets by the neck and pull it off the mountain.

Ha!

Personally, I don’t care in hoot’s hell what the catalyst is. If I sneeze and my arm falls off, then I know I’m coming down with a cold, sure. But that’s got to be the good news, right?

Futures are higher tonight and the potential for a reasonable gap-up for equities is strong. My eyes are burning from screening a couple thousand charts the last 48 hours, but I’m emerging finally now with my new go-to list of eligible shorts.

You’ll cruise the list and go away, which suits me fine. Myself, I’ll key on this as an attack-list throughout the week and key the groups especially which lead us lower on any given session. I’m not trying to short the strongest names in the market. Some of these still show reasonable, overall relative strength (RS), but those few are exhibiting some other negative divergence (and all of the the groups below declining notably in RS for the previous 1-to-6 weeks).

Why am I getting short this market? Do I see the next shoe dropping for the markets?

Ha and Ha! I’m getting short for a variety of technical and psychological indicators (and a hint of fundamentals, but fundamentals have been mostly negative for some time already; you knew that – which is why you were either on the sideline or else getting short some many months ago…let’s not go there for your sake).

Severe downside? Oh sure, most definitely most maybe, it will perhaps be serious.

Or not. That’s not my game this decade. This is the decade to let the market define the terms. I’m just a  trader with smugs and few hugs (I sense you noticed I was getting snarky just now) and why the devil should I pretend to know how this chess board is going to play out six and sixty moves from now?

You keep me posted on that and we’ll stay friends, okay?

Anyway, as always, this is not a list of here-and-now shorts, but an eligible list of my personal candidates. This week’s screen is focused on the industry groups, both highly and poorly ranked, which have been dropping notably in terms of relative strength (RS). My selection process beyond that is based on divergences, liquidity and more.

Good trading – should be another fun weak(sic!)…

Banks-Money Center:
UBS
BK
HBC
C
MS
BAC
BCS
WFC
JPM
LYG
GS
DB

Finance-Investmnt Brokers:
RJF
IBKR (thin)
LAB (thin)
OXPS
SCHW
MF
NITE
BGCP
CS
BPSG

Finance-REITs:
KIM
LXP
PCL
IRET
FSP
REG
CUZ
DCT
CSE
ANH
UDR
CPT
AMB
DRE
WRE
MPG
FR
RYN
MFA
BXP
VNO
LRY
WRI
BMR
SPG
BDN

Finance-Mortgage Related:
FNM
FRE
OCN

Electronic-Semiconductor Equip:
WFR
ATMI (thin)
MKSI (thin)
FORM
AMAT
VRGY
LRCX
BRKS
KLAC
AEIS
CYMI
NVLS
VSEA

Electronic-Semiconductor Mfg:
ZRAN
IDTI
SIGM
CY
MCHP
XLNX
SPIL
IRF
CRUS
SMTC
NSM
ISIL
AMTL
HIMX
MCRL
ANAD
BRCM
LLTC
STM
DIOD
VLTR
STEC
ONNN
PMCS
TQNT
SLAB
TSRA
SNDK

Telecom-Wireless Equip:
NVTL
ERIC
CMTL
NOK
TRMB
QCOM
RIMM
HSTX
GRMN

Telecom-Svcs:

CBEY
ALSK
LVLT (penny stock)
TNDM

Elec-Component Connector:
MOLX
TNL
IIVI
VSH

Computer-Software Security:
VRSN
SYMC
MFE

Computer-Networking:
ELON
RVSN
PLCM
JNPR
CSCO
BRCD
RVBD

Internet-Software:

RNWK
GIGM
WBSN
ARBA

Commcl Svcs-Schools:
LRN
COCO
APOL
APEI
ESI
STRA
DV
LINC

Apparel-Clothing Mfg:
CRI
TRLG
ZQK (penny stock)
COLM
LIZ
UA

Retail-Clothing/Shoe:
HOTT
BEBE
WTSLA
JOSB
FL
CWTR
ZUMZ
PSUN
NWY
PLCE
SSI
BKE
LTD
ARO
SMRT

Oil/Gas Field Svcs:
NR
WEL
ALY
TRMA
DVR
HOS
TDW
SLB
KEG
HAL
HLX
GLBL
CLB
MDR

Oil/Gas Intl-Exploration:
EGY
NXY
TLM

Metal Ores-Gold/Silver:
AEM
JAG

Machinery-Metal Hdlg/Automation:

HURC
CASC
KTEC
PRCP

Funeral Svcs & Related:

STEI

Medical-Biomed/Biotech:
ITMN
RIGL
CYPB
ALTH
MDCO
VPHM
ALNY
PDLI
GERN
CRXL
ARNA
MATK
REGN
AOB
AMAG
ALKS
BIIB





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