Showing Their Hands

 Here is today's Marketwatch front page

To bad it doesn't matter that much.  Since yesterday Obama came out and told everyone the numbers won't be good.

WASHINGTON (Reuters) - U.S. President Barack Obama braced the country for more bad economic news on Thursday, saying second-quarter GDP figures would show the economy contracted and job losses were still a "huge" problem.

So Obama is already releasing the GDP numbers to the public to try to clam the market down that the numbers might be bad.  This is the new strategy since the Lehman and Bear Sterns collaspes.  It is to realease data early since they know it would have a signficant effect on the market.   Therefore the news "get's baked in" 
Now that the market is expecting horrible numbers anything less the horrible should give the bulls the upper hand, and with futures up this morning it is possible that they already have the upper hand.  Or even the GDP report in hand.






Here is a great video from MarketTicker about the run up yesterday.

Dunked

The market climbed high and hard today but at the end of the day couldn't remain above some key longer-term resistance levels.  I've been trying to respect the longer-term trends and not use my short-term view to define the longer-term trends.  But it is nice when the short-term and long-term meet.
992 is a key resistance level I've been watching first is the 200EMA on the monthly SPX chart.  A close above that would be significantly bullish.  On the monthly chart it is now looking bullish having 5 months in a row, unless something crazy happens tomorrow.  Notice how the 2003 bear market ended, looks very similar tot his market move. 
But a 200EMA on the month chart holds siginficant resistance.

Combined that resistance with the weekly downtrend line and you have siginficant Long-term resistance.

Then looking at the daily, 995 was the completion of the bull flag and the 995 area was the 2008 highs. STOCH is also overbought and RSI, Stoch acutally crossed giving a sell signal.

 Then on the SPX hourly the market moved to those resistance levels and failed, but one thing to take note of is the MACD barely made a new high while the market did.

   Here is one thing to take note of the CPC was at .60 very low.

 I am holding some SDS from 46.40 with a stop at SPX 992. But before you start screaming SHORTTTTT!
Remember SPX broke out of a tight range and now has 980 as support, in-fact there is great support below this market 970-950-900-May lows.  Until the bears can get below a support level and defend it the trend is up.  The risky trade is trying to catch the top.   So I leave you with some words by Jesse Livermore

One of the most helpful things that anybody can learn is to give up trying to catch the last eighth—or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent

Home on the range

Update: 8:03 AM EST- XLF trading 12.70 above its 200EMA.

Financials is another sector stuck in a tight range. If this sector was to break out of its range first it may drive the SPX higher since it has been a lagger.
The key level to watch is the 16.64 or XLF's 200EMA.
XLF has formed 2 spinning top candles and each one has failed at the 200EMA(12.64) but stayed above its support at 12.50.

But if you break XLF down to different time frames you can see the tight range better.

But the resistance that was once at 12.64 seems to moved down to 12.60. This is seen on the 15 Min chart better

So now you have a warning sign if 12.60 can be broken it would be bullish, the range now becomes 12.60-12.64 a much tighter range.
Here is the Breadth of XLF from etfinvestmentoutlook.com

Stalling

A stall in an airplane is very easy to recover from, basically the plane loses it's lift and the nose drops.  To stop it, simply let the plane drop a little and level the plane off letting it regain lift.  Right now the market is simply stalling, the angle of attack is to high and right about now the pilot should be getting a Beeping sound in his plane. 

Look at the last two days the market has just stopped moving.  Today the market was in a really tight range.  This morning I mention to watch 970.  The bulls held this today successfully.  On the daily chart, RSI and CCI have moved to a possible sell signal.
The one thing that today did very nicely is on the hourly, it worked off through chop a very overbought market. Also at the EOD broke its down trendline and closed above its 20EMA, which was acting as resistance throughout the day. 

Do take notice of the increase in negative breadth though.  Here is the MEGA B hourly, there has been a steady climb in decliners and down volume during the move.

 RIFIN- shows even more indecsion and stalling:

There are two days left in the month, becareful of some nice window dressing to close out a nice month. 
There is also signicant economic news out tommorrw and Friday.  So we could be consolidating before a big move up or down.
But right now the market is just slowing down giving no clear signal and taking a position here is almost a gamble.  Short-term we may see another move to 980 to test the resistance again, but we have drifted lower the past two days making a lower low, which is bearish. The MEGA B chart from yesterday still is in play as well.
  I have a test position in SDS and covered the majority of my DUG. 

Tight Range

Futures are down slightly this morning after both Asia and Europe market's opened deep in the red.  But both markets rallied back from their lows.

Right now the SPX has been in a tight range between  970 and 980.
SPX should open around 970 today right around an area that has provided some support lately.  Watch for this level to see if the market bounces.  The longer the market stays within this range the more it can work off its overbought condition without a decline.  A break above 980 would be bullish for the index

Showing a chance of a pull back

MEGA B charts have given a signal that a pull back may be likely at these levels.
Right now the NYDVN and NYDEC moving average is at a level that usually provides the market with a signal that a pull back is coming. 
Here is the most updated chart:  When the down volume reaches the green line the market has pulled back from it's highs.  Notice on the chart the decliners is also at it's yellow line this, signals a pull back may be likely.  Notice in January of 09, there was 4 sell signals.  Right now we only have 2.

The pullbacks here are very sharp and strong.  But there are times when the pullback has been shallow, especially when the market is in strong up-trends.  Here is the remaining times  when the NYDVN has hit the green line.  First chart is 2003-2005, the signal was not given again till 2008.
You can see the sharp moves are when the market was in a bear market.

 Here is 2000-2002:  Notice again the shallow declines in a Bull Market

 
It will be interesting to see if how the market pulls back or if it does.  There have been times when the market has pullback a little and ran up. All these times have been when the market was above its 200EMA which is the case now and was in a Bull Market.  So depending on how the market reacts it could be a signal if in fact the market has entered a Bull Market.

Looking toppy

Here is an lunch time chart for you.
SPXA50 is looking top heavy and with 431 of the 500 S&P stocks above their 50EMA. Notice when it is at these levels declines in the market have occured.

XLF lagging

Remember in June when the SPX was making highs and Financial's weren't. This was foreshadowing the decline to the May lows. Well here we are again, SPX making new highs even getting above its 200EMA, while XLF and other financial indexes are failing to make new highs and get above their 200EMA's

Here is XLF notice how it has not made a new high even after Goldman's and JPM great earnings that meant the world was saved.

Here is RIFIN- FAZ and FAS index, no new high.

Now here is SPX making new highs and above its 200EMA.

Much of this move started when the Financials had great earnings. Since then the move in this sector has slowed. Much of the S&P has been lifted by Energy and other companies beating earnings(these earnings were set so low, anyone could be them).
So keep an eye on the financials, if they can rally the market may move up more. But chances are they could be showing signs of weakness, since they weren't able to rally to new highs on great earnings great trading earnings, or rally to new highs with the market. Also remember what else foreshadowed the move to the May lows, Oil and energy falling first. Based on my post last night this could be happening.

Is the Oil well is drying up

The move up in oil/ energy looks to be stalling now. There a few charts showing this.
First is oil it's self $WTIC:
Notice the doji today that formed, showing a lack of in decision or slowing of the advance. The price action has formed at the bearish reverse triangle. There is also horizontal resistance at 69-70.

$DJUSEN which DUG and DIG follow is looking heavily overbought on the STOCH and price action failed to get above 460 today which is a resistance level. This index also formed a doji indicating either stalling or indecesion.

DUG is looking maybe forming a bottom. Notice the doji today as well signaling a slowing of the selling. But more importantly is the prior support at these levels.

The doji's on the charts could just mean a rest period before a move back up so keep your stop tights. For me its a close above 460 or an intraday move to 470.

Of course it's starting Hurrican Season so a small rain storm can develop 5,000 miles off the coast the Florida and CNBC will hype the shit out of it.

New Week without blinders

With the blinders off let's see if we can't take a fresh perspective of this market. 
Fact- trend is up.
Support is beneath the market. 
From the daily chart the market is overbought and the next resistance is 992-1000. 

 

One thing to think about here is the possiblity of the market chopping around to 970-950 to work off the overbought conditions. 
With the longer-term taking precedents over the short-term, there is significant resistance on the weekly chart around 1000-1100, the weekly is not overbought and can run up more to that resistance level.

Now of course we cannot forget the short-term.  The key now is not to have the short-term mixing with the longer-term and holding more power over the longer-term play. 
Hourly SPX, is acutally not overbought in my terms.  I consider the blue line on the STOCH overbought, RSI is below 70 and most of the CCI's are below 100.  So there is still some possible momentum to the upside.

On good indicator for getting short is the BPSPX- when it is above 68 the market begins to get a little toppy.  Above 75 and the market usually pulls back. 

There is also a lot of chatter about the greenback and it's decline providing fuel for this rally.  Looking at /DX there is the possibility that it may find support soon.  A break of that level and the dollar will likely fall further, possible extending the rally. 

So the market does have some room to run and is finally coming up to some resistance but the key will be if this resistance can hold, so if you want to short wait for the market to come to that resistance.  If you want to get long wait for some support.  The market is in a nice no-mans land right now.


Here are two low risk plays I am looking at.

URRE- Bull flag forming and support around .99.  It's a cheap stock but I like the formation

SONS- Low risk, stop is at 1.49

Please remove your blinders.

Charts and Coffee had a great post today. If you haven't read it check it out. He hit on something I was thinking all week. To sum up his post, a lot of people were using bearish long-term to trade short-term moves. He wrote " Applying a strategy from a long term time frame across a short term or intermediate term time frame does not work."

This is something I was thinking about all week. Mainly because I anticipated this run up.
Here are 2 post I made anticipating the run up. I also never expect such a straight run-up.

Post#1: On 7/11 I noted the bullish divergence on NYMO and TICK.

Post #2:Made note of the 2nd lowest $NYDVN:$NYTV and what happens when this occurs. I even called for a move to 1000 or more and the possibility for a new bull market.

Now the reason I posted those is not because I was right, in fact the way I traded it was DEAD WRONG. I only went long in my long-term account.

Instead of seeing the bullish indications, I noted above and my analysis to get long. I played it to the short side. I let my short-term view of the market negate any bullish analysis I had. I kept seeing the market as overbought and in-need of a pull-back. That pull back never came and the market went up.

Another reason I was so wrong with this trade was I let my longer-term bearish view of the economy blind any bullishness that was out there.

Dr. Brett has a post about this as well.

This is why trading is almost all a mental game. I basically convince myself to not look at what was in-front of me. This is why you have to take some of the emotion out of trading. Had I looked at SPX and was completely neutral to the economic conditions or my own bearish views. I would have made the correct trade.
I've learned from this and it has been noted, my blinders are off and I hope to trade what I see, not what I feel.

AMD Short-term break out

AMD which was mention on Wedensday as well.  Has made a short-term break out on the 60 min chart.  3.60 was former resistance and should provide some strong support.

Clean trade with a clean out. 3.59 is your out.  I'm waiting for it to pull back a little bit, also I am still holding from my 3.53 entry. I didn't use my stop on the run down on Thursday, I was holding QID and wanted to hedge it if tech started to rip up so I kept AMD.

A market on roids

Another day of a ripping up market.  It could have been worse for me but stops are important.  I was out of my shorts at 962.  Saved my ass.
The bulls have complete control of this market, going net short is not the smart play at this point.  I still think the move up in completely irrational but that market will do what it wants.
The only real resistance right now is around 991-1000.  This is the monthly 200EMA and the highs from October 08.  

Here is the 991-1000 resistance on other time frames.
Weekly:

Monthly:

Yesterdays move was on decent volume and positive market breadth. More importantly it looks like up-volume may be turning up

Other indicators are showing signs the market still has room to run up.
One bright side was LCC which I mentioned  on Wedendsay:

 I am looking for a target of $3.00 and my out is still 1.96

You have the memory of a gold fish

Hey people!!!!!! Remember in March you guys did this!  Guess what Dummies!  Unemployment was better then, then it is now!

 Remember the tea parties: Well those were effective! Good job, I can put Tea Parties right next to Pogs for worst fades in America.

Remember this outrage over the AIG bonuses that were so wrong.  Goldman is paying out billions in bonuses.

Where is that anger now?
Have you seriously sold out for a few percentage point gains in your 401k. 
Looks like you have. 

So cheer the that stock market is doing great because at this point the stock market does not equal the economy. 

Charts to come later.

Hitting the wall? or Ready to run more

In long distance running  there is a point during the run where your body just wants to stop.  It is the  "WALL" runners speak of.  It takes everything to get through it but once you get through it your ready to run some more. But unless you hate your self enough to keep going, your going to stop the wall is to strong. 

Right now the market is close to this "WALL". 

The big move up started on the 13th and hasn't looked back.  But now the market has climbed into overbought territory and the last two days has made indecision candlestick patterns.  Also take note that the MACD has not really broke out as the market has made new high, showing some divergence.

One thing to notice is if the bulls were to extend this market even more and break above 960-970.  There is no resistance to the 1200 level.  Look at the Volume above 980, there is none.

The hourly SPX is showing some strong divergence.  Since about the 19th the market has climbed while the MACD has moved down steadily.

Also (I will post the chart when Stockcharts fixes their problem) this last move up on the hourly chart has seen less advancers and significantly less up volume.


My chips are in for some pullback from here.  Only the market will tell us if I am right or wrong. 

Chart for the day look for some patterns

Now discuss

Planes and Chips

Here are two longs I entered yesterday based on the charts.
LCC- this is a low risk trade, stop at 1.96. 
It has formed a good base at this level and and may break out of its down trend.

AMD- Played this during AH, earnings came out and the stock got crushed down to 3.53 at its lowest. It should open up today and fill the gap, a clean stop is at 3.50

DUG

$DJUSEN has had a great run up the past few days. It just keeps rising and rising. But in the words of Wreckx-n-Effect "What goes up must come down, Easy come Easy go"

Looking at $DJUSEN you can see it is starting to meet some resistance levels at 448-456. 448 being a HL and 450 being the 200EMA.

It is also now considered overbought by STOCH.
DUG the 2X inverse of $DJUSEN looks good at these levels, notice the Bullish divergence on the MACD hourly chart, also price has failed to make a lower low and has a small uptrend going.

DUG on the daily chart is nearing support as well and could provide an area for it to bounce.

My out will be a close above the 200EMA on $DJUSEN.