Monday Wrap Up

Today we saw some extremely strange readings on the Zero Lite:

In the early morning we got a monster signal but it started to degrade right after the first candle. I saw some divergences develop and tried three times to short the tape – I was lucky to get the timing right and got out with some small gains as we dropped a few points – factoring in the first two attempts I ended up modestly profitable. After that I left for breakfast and when I came back I saw the tape had pushed even higher, which was extremely strange. And that’s the theme we saw for the rest of the day – Zero Lite stayed more or less flat – especially compared with that early morning signal.

Some of the subscribers were wondering why the Zero didn’t like this rally. Pretty simple – it did like it this morning when we got those huge readings but after that the tape went ‘thin’. What do I mean by ‘thin’? Lack of participation – meaning the small specs at this point are driving the tape up, the big boys had their fun in the morning and are now waiting on the sidelines. There is something else going on though and it has to do with human perception. When we got that huge spike this morning it thwarted everything else we had seen in the past week or two, thus the indicator got scaled accordingly. After that all of our Zero Lite readings looked tiny. Now if we cut off the morning spike this is what our chart looks like:

So, I guess human perception does play a role here and we should not forget that indicators should be digested with some healthy amount of relativism. That said however – it still is quite a strong rally for such weak tape and I won’t debate that. I for one am glad that I stayed out for most of today as I’m not the gambling type.

If you took the early morning ETA/VTA and stuck it out then congrats to you. This obviously was a good day for the Primary Zero as the signal never even hit the zero mark until the closing bell – nice. The Lite didn’t know what to think of it and I wouldn’t be surprised to see a large pullback looming. Nevertheless, I would not recommend loading up on puts unless we see a clearer signal.

Cheers,

Mole

This entry was posted on Monday, March 23rd, 2009 at 3:24 pm and is filed under EOD Wrap Up, zero. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

OPTIONSBABE

ES- I planned my trade using your 1/26/2009 and sold my 760 calls way too early. I also began accumulating puts prior to breaking 810. I have revised my puts plan until the ES breaks 875. I anticipate that after today "the bottom" will have been called and crowd power will add at least another 100+ points to the ES. I can not believe how accurate the chart you posted is in the process..... Thanks again for all the work and analysis you have provided. Pretty soon, my account should have enough to begin getting the zero again. LOL
GMunni

Good review of the plan by Mish http://globaleconomicanalysis.blogspot.com/2009/03/geithners-galling-and-dangerous-plan.html

All I could think this morning after seeing the outline for the "plan" was how to short the taxpayer and go long the banks. The latter is pretty obvious but the former is less so right at the moment. I guess it will be to let the current rally run it's course and then short the hell out of the retailers and consumer discretionary sector.
de3600

9 Of Top 10 AIG Execs To Give Back Bonuses

How about them Cowboys
Lordted

This is what i am looking for : This leg from 666 to = Leg from November. Hopefuly this chart will attach. Maybe...

http://www.screencast.com/users/Plug21/folders/Jing/media/25dc8d85-3a90-4aff-81c4-e52f44b2fe69
C.C. Rider

100 percent cash right now . Best trade of the year on a one day trade, 4 bagger. I bought 3/31 SPX 800's on Friday for $9 and sold today for $34. My guess is we start showing some topping action over the next couple days. Phi Mate turn date on Thursday after the gap fills to 825-830 area. I will start re-shorting tomorrow gradually on any pop that that area or above. We close outside the Bollinger Bands so a higher open is a given. A buy inside the bands on close tomoorow would be a good short setup.
Jigsaw

Nice trade! I agree with your outlook, between Forkoholics chart http://forkoholic.com/images/spxfork031809.jpg and McHughs views, I'm thinking after sucking a few more bulls in a correction starts
CJ

If "Financials" was the theme to today's rally then why did most markets EXCEPT the financials put in higher highs?

C, BAC, GE, FAS, etc. all fell short of putting in higher highs above what was seen on the 19th.
roscoe_casita

Mole Feeding his rats:

http://www.coasttocoastam.com/timages/page/Nutria112707a.jpg

(Not to scale)
Mickmock

thinking out loud here, potential target areas are likely to be the the 877 area, the apex of the Triangle, then the next one after that is the previous 4th area of 942

again, depending on which camp you are in (the C wave from the Oct 07 top or as a wave V at the oct top,) denotes the particualr correction you will be taking

ie EWI are following a (2) others are the ABC counters, and following a B wave, with probable upside likely to be in the 950 area, perhaps a stab at 1008 if 877 is eventually taken out

It really depends on how we deal with 877, but after any pullback here the next move is likely a wave 3 or C wave into higher areas, the next pullback might also be the trade that you hold untill 942 comes along as a swing long trade its thats your style, as there is huge potential here with the next set up, once support can be found, and its to the upside, imo

We may actually be in the wave 3 count and started the 1st part starting from fridays low, if so i suspect a move back to 780-92 if a small degree wave ii needed, then it takes off,

its a potential surge if support can be found, above 750, but my guess is perhaps 750-61 or 780 caps the pullback for a decent sized rally, the real shocker would be a close below 750 and more so 734, but i guess we can work on that should we get a move lower

but this is looking a like a very bullish tape that could get legs after any correction, Shorts need to respect the tape, these past weeks we have had momentum changes, and trend changes, so its Buy the dips game untill its not unless you like getting your ass raped on moves like today

Cya
DoubleNaughtSpy

OK, I'm now an official EVIL DoubleNaughtSpy mwuuuaaahaaaahaaaa!!! I'm paying for Zero thanks to the end of day updates and fabulous commentary. Market domination here I come. ;-)
molecool

Welcome to the club DNS.
Laksh

Mole,

I can't comment on your zero and other trading systems but I don't accept the volume was light.

http://stockcharts.com/h-sc/ui?s=dji&p=D&yr=3&mn=0&dy=0&id=p95786003593

If you want, you can split the charts through the day/ intraday or weekly/ monthly. Volume is never light except few days in December ending.
JadedApprentice

Mole's point was that volume was EXTREMELY heavy from the opening bell but after hitting 800 the volume was substantially lighter from that point on
molecool

I never spoke about volume. I talked about the Zero reading.
BigHouse(Aka Mr Vix)

http://screencast.com/t/46kbDcow5H3

http://screencast.com/t/Ov58MwXI8z

http://screencast.com/t/X8gkcVru4W
Looks like a clear 5 waves up.Should see an a,b.c pull back.This should give bears their last chance to cover and join the bulls
Mr. L

You can expand the chart using the tool next to the pointer on the prophet charts. This makes it so you can put targets in a sensible time frame.
jacksoo

G'day all - just picking up on the news. Scaled out of most of my ES shorts before the open and went to bed. Heard on the radio that the DJI was up 400+ so expected some draw down on remaining ES BUT also expected some change in the $ so my currency x's wld be to the good. Really surprised that vol is not that great for such a big move day and the $ has shown no weakness, in fact it strengthened against position pre-open. Leaves me wondering a little about the validity of this push - -
Publius Federali

"It's just hard to argue that there isn't an improvement in economic activity on the horizon," said Jim Dunigan, executive vice president at PNC Wealth Management.

Well how can you argue with that?
katzo7

IMO
The charts are saying we are not finished yet on the downside
This is not finished on the upside yet (target 920 or maybe even 1000)
This is a media (and Fed.) hyped rally (aren't they the same???, think GE), they really do not like short players and are reaming them good
Once the public gets in, they will teach the public a final lesson
When this is finished, the public will not even want to hear the word STOCKS
This run up will have it's equal slope to the downside
I bought 1 k of FAZ @ just over 22 just in case (will buy more the higher we go, All big banks are toast
WTF does Mole live in LA??????
Publius Federali

Not sure when or where but I totally agree that this is an attempt to drag the last of the public money in before they steal that too. You might be on to something about the media as well. In order to get the last of that money in the market you need to convince people that things are really getting better, thus useful long only idiots like this guy. Wealth management? Wonder how he has manged the wealth of others?

Why does anyone live in LA?????
katzo7

Your posted video was clairvoyant. Now I know what is up. I cannot thank you enough for that.
+1

And, I have talked with these blokes. They promise you like 3% on your money. They are the pros and cannot do better than that? Sad. I bet Mole le cool could promise one at least 10% and do it when he was sleeping.LOL
Publius Federali

That video has freaked me out for the last few days. I could not be farther from a conspiracy theorist, but every new thing we see each day supports their argument.

You are right, GE is the perfect example. Defense, energy, media, financial, CEO tied in to President.

1984
T. Waffle

The best part of that video is how USA is planning the base around USSR. That shit is scary; I think we all will witness WW-III
Publius Federali

How about war in Africa with China over the resources there. Could that be why Obama is not withdrawing troops for another year and a half, leaving 50k men in Iraq and just added another 20k in Afghanistan? Why a ship of ours was charting their coastal waters recently?

I too am worried war is coming.
T. Waffle

Yes that part is also amazing. Must give props to all the people and their research.

Simply out of this world.
katzo7

You do ok today TW?
T. Waffle

Did great today! I was heavily short on Gold. Closed my Gold short and now bought very very small position of FAZ.
katzo7

I bought some FAZ also as a hedge, 1 k shares. Nice job TW. That other site
must be unfortunately hurting. I do not like to see people in pain.
Will you be able to trade as much when you are in your new job?
T. Waffle

Initially I don’t think so as I have to go under certain training but once I
get the pace I will be back in full force.

People on other site are in pain because they follow their Guru without
thinking or understanding his views. I love his market views but I don’t
trade with him. I listen to what he has to say and use that for my IT
positions.
roncofooddehydrator

I got violated by at least a herd of bulls today, if not more... I'm holding a substantial amount of FAZ at around $40. Knowing that this thing can double at the drop of a hat, I don't doubt we'll get back to at least $33-35 sometime soon and I'll consider taking the loss then.

On the other hand, if we never get back to those levels, the economy will be saved, my house will have appreciated again, and everything will be bright and cheery in the world.

So despite the massive dump that was laid on me today, this is really a win win situation.
MyLifeMyTrade

LOL.. that makes a case to be short always
Lordted

There is a gap back around 666 But i don't think we'll be seing that just yet.

You can't make money spotting divergence. This thing is slicing through everyhting that says it should fall... Only had two real down days since 666 low. Not unlike March 2003.

I'll say again DOW 8000 or just over and the gap just ahead of us on S&P500.

Until then I'm positioned in cash - thanks for that advice Moley
roscoe_casita

Gap on FEB 17th, If we gap up in the morning to over 830ish, We complete a 'island bottom': http://thepatternsite.com/islandrev.html

Look at that indicator: 23 of 23 and 21 of 21, just noticed that lol! (Dead last)
Mr. L

Yeah, I just went back to check how that last bottom played out. We retrace heavy, it would seem. A large amount of investor/forecasters are seeing 30-50% rallies in the fold.
MyLifeMyTrade

We've already come up 23% from 666.
Mr. L

There's still some breadth, what are you targeting as the next move after we get to 830-850? I'm seeing a retracement into the 770-780, and then another big push up.
MyLifeMyTrade

Same here... some more upside left.. We might gap down a bit tomorrow.. but we do get to 850 or little below before retracement. After which, comes another massive push up.

________________________________
Blind_Squirrel

http://news.morningstar.com/articlenet/article.aspx?id=271892

ETF's
Chi-Town Deadhead

Another good article on the 2x & 3x ETf's squirrel.

+1
Mr. L

Yup, I was seeing these numbers a while back. I think Oxyinvestor did a little study on these. Short both, profit in long run, but better to play puts on these.
MyLifeMyTrade

Intermediate parabolic move in either might hit you with a margin call..
Mr. L

So you make sure you have a 30% backstop of cash when you take out the position. If you have a margin account, this has to go pretty wrong to not work out.

http://www.screencast.com/t/0qy8NlTJBfJ

Yes, it is a risk, but 130% backstop isn't bad for the move. It netted about 50% ROE (after figuring in the backstop) since November. You get hit with an early negative parabolic shift, but that parabola returns. As someone who is usually a longer term trader/investor, who is learning how to play the shorter term shifts, I like this as my spigot for trading funds.
Mr. L

What is more of the problem is locating the shares to short, but if you keep on top of it, it's doable.
oxyinvestor

WMT & MS:

http://www.oxyinvestor.com/2009/03/added-wmt-ms-calls.html
v8muscle

I really really really understand the value of a well placed stop today. Got stopped out at breakeven around 807, it would have been bloody if I hadnt had that in. Looking at the money flows, the rally looks to be headed for a pullback pretty soon. Big time selling of JPM, XOM, WFC, T, and GE. I'll buy the dip because the next resistance is 860 and this rally is stupid but i wont fight it.

Summary of today: Fuck Tim Geitner!
T. Waffle

+1 for the summary
BigHouse(Aka Mr Vix)

I expect the gap today to be filled sometime this week. So if any shorts are worried we should at least go back there. From there you will have to decide what you want to do.
katzo7

BHAMV,
I don't think the gap will be filled anytime soon.
newbear

Mole, it was a great Zero day for me, bought UYG @2.70 and rode it to the EOD. Zero did not give a sell so I just stayed in the trade. Hoping to cash out tomorrow. For anyone who has not subscribed you have no idea what you are missing. It will (should) pay for itself on the 1rst or 2nd day.
Count_de_Monee

Well I, for one, couldn't resist dipping my toe in the water with a small short on ES and oil.

Like Mole said, that divergence on the Lite tells me the big momentum was in the morning. The afternoon was most probably retail traders (aka bag holders).

Now this rally may still have room to run, but there's too much complacency and we're way overbought, so I think the risk/reward is good at this level.
SnPMonster

Mole is probably right.....try looking at this. Im staying cautious from here

http://snpmonster.blogspot.com/2009/03/not-pretty-sight-up-there-march-24-2009.html
Implicit Trader

All I can say is thank buddha I played the tape both ways (like a freshman sorority girl looking to experiment - hehe). I'm holding onto an ES short that I entered per RL. Currently I'm nicely(sic) upside down (-12pts) BUT since I was hedged out the wazoo and quickly added to the bullish side during this mornings line drive, I'm happily in the green. Now, if we can just get people to take profits on the ES, I'd be happy (My plan it to just hold onto it and keep adding offsetting positions - Once we get a pull back, I'll be able to get out with a much milder loss, if any, "decreasing my cost of doing business" or i.e. hedging).

Though, when the pull back does occur, I'll the problem of having to hedge my hedge...... "and the beat goes on..."
katzo7

Ohhh, you met that freshman sorority girl also BalaB?
Implicit Trader

No...But I did see her on Girls Gone Wild

I'm sure you're surrounded by them! Lucky Bastard!
Squidman

I think on a trending day the zero grande should keep you in the game, or butt you out. Thanks again Mole--paid for the subscription for the next quarter today. I was looking for a base hit today after last week being a total waste of time. Between grande and lite it seems we have an edge and I'll be playing for some doubles and triples next.
anotherone

There are some interesting channels developing on the /ES, SPX and SPY daily charts. Top of channel is defined by the highs at the last of Oct and today.
Bottom defined at the lows on 10/13 and 11/21.
EDC

REPOST
how was the VOLUME of this rally?

I know AD were off the chain but was this a suckers retail "odd lot" rally?
JohnyWalker

Volume was light but i take that as a bullish sign , as to me it means supply and or bears are not willing to enter the market.

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