Technicals (63)

Admin

Deflation or Recession?

Is that what the 10yr is signalling?1290684?profile=original  The EU doesn't have the mechanism to launch quantitative easing.  Raising rates would pressure their recovery.  Has Draghi painted himself into a corner? 

The U.S. is having to accept the "taper" while slow growth persists.  Maybe it's time to get back to reality and fundamentals.  Actually that works for me because I'd much rather buy stocks with S&P500 at the 100week than "here".  Only time will tell but hedging and shorts are (finally) working.

The 10yr is definitely not happy and is trying to bounce off of 2.6 but if that goes.........look out for more pain (for equities).  Seems as though sell in May was a good idea after all.

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Admin
If S&P 500 and DJIA follow NASDAQ’s lead lower and continue to track the midterm seasonal pattern, a meaningful move higher to new all-time highs will most likely not occur until later this year in the fourth quarter.

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Admin

Another Diamond In The Rough

Add XLB (basic materials) to the list of diamond top patterns.  But not all diamonds are tops. Some are "continuation" patterns as stocks take a breather before heading higher.  Coincidentally it appears MON (which is a component of XLB) could be forming a large HSB as well (right shoulder now).  Stop below $109.20 if you're daring or buy calls.  Hat tip to my daughter on that one!  *lol*  Yes, it runs in the family.

fwiw it appears $DJI broke to the upside yesterday and XLK is trying to break to the upside on it's diamond today..........ahead of FOMC minutes this afternoon.

1290606?profile=RESIZE_480x4801290634?profile=RESIZE_480x480

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Admin

Diamond Tops and Head and Shoulders

If there were ever tops, here's what they potentially resemble with heavy volume (distribution) accompanying.  As GT pointed out, the "megaphone" patterns also resemble "diamond tops" and take one guess which way these appear to be leaning? (click images to enlarge)   Trade the direction of the break, but it's ain't looking too pretty folks.  Stayed hedged or stay on the sidelines.1290603?profile=RESIZE_480x4801290643?profile=RESIZE_480x480

For what it's worth, here are four inverse, leveraged ETF's on my radar.   As with the tops shown above, nothing has broken out (yet).  Again click the image to enlarge.

1290659?profile=RESIZE_480x480

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Admin

Reasons the market looks ready to pull back May-July:

  1. Treasuries have a relentless bid recently, and as I have discussed recently there was major accumulation of 80,000 Treasury (TLT) July $113 calls. Although this is just one large position, action in the TLT has tended to be right, and can see my call from 2013 to short the TLT in the 120's before it crashed to below 105.
  2. Sector flows showing a flight to safety. The consumer staple names and large caps are starting to outperform, a risk-off market, and options action dictating the same with most of the sizable call buying occurring in boring large cap names like McDonald's, Wal-Mart, Pepsi, along with Energy.
  3. Seasonality - The market tends to struggle in the May-July period, and although I do not have the numbers on me, @RyanDetrick is always posting great data, and also aligns with the Presidential cycle.
  4. Price-Action in Momentum - I am watching a premiere growth name like Under Armour (UA) post a fantastic quarter and trade down 1

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Admin

The Correction Is Not Over

When Louise Yamada talks, I tend to listen.  We'll be watching closely the next few days as the market back fills and if individual names fail at their 200d and 50d.  Will more double tops form and still other head-and-shoulder tops fail as their neckline are tested?  Some still feel the market is fairly valued.  Some still feel the market has gotten ahead of EPS.........and earnings (expected to be very lackluster) have just begun.  Let us not forget "sell in May and go away" fast approaching and as Louise points out, distribution tops can take quite some time to develop and sell.  I'm tempted myself to hit the road.  Aruba is calling my name.  Wall of worry is one thing but low-to-no earnings is another.  Only time will tell.

In full disclosure, several members are scalping longs here common in USO, UNG, FB, FEYE, BAC, GILD, V, RHT (and various option plays), having bought on Mondays low but all seem to be expecting failure at one point.  If you cannot be nimble, you may want to sit

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Admin

Damn It Feels Good

1290533?profile=RESIZE_320x320It feels good to actually be making money on the short side for once and not struggling.  Yes, leadership has evaporated with utilities being the only real strength right now with head-and-shoulders tops and double tops as far as the eye can see.  Transports, financials and even oil/gas is seeing profit taking at this juncture.  The Nasdaq has lost it's 100d SMA which was historically great support.  Remain hedged; there will be more downside.  Whether we bounce a bit first (back and fill) to bring in more sellers is an unanswered question but don't buy the dip.............not yet.

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Admin

Historic SPX Supports - And Past Crashes

This weekend I focused on the LARGER, long-term picture of the stock market to make it overall easier for my brain to comprehend. 

  1. Merely when "what" moving average crossed what moving average (on a monthly, not daily or weekly chart) would be a decent indicator of trend?   I wasn't going for exact science here but more a common sense approach when it comes to the long haul.  Just "when" should I bail and sit on my hands with my IRA?  *This" unfortuantey is a topic for another conversation.
  2. The BIGGER question was at what point do I really want to jump back in and "buy on the cheap"?  

I should explain that I trade based on 80% technicals (fibonacci combined with chart patterns) and only about 20% fundamentals but my trading style is to buy at a support rather than a breakout.  This became my personal preference after having been "shook out" of breakouts once too many times over the years.  This style is not for everyone but buying at support, I feel my downside risk is more c

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Admin

The $KING Top

1290495?profile=RESIZE_320x320Merely a thought but could the IPO of gamer $KING have been the top for the much heralded Nasdaq?  After $FB $TWTR $ZNGA and now $KING, maybe the market held out just long enough for the $KING IPO before ringing the register.  Maybe the market has decided enough is enough when Farm Heroes pulls a $20/share price and a $6 billion market cap.   Just sayin'.  It's not a "thing".  They don't produce a product.  It's.......a.......website.  

Many in the twittersphere have already commented that this strangely feels like the 2000 top and when growth names like $AMZN and $NFLX can't get any loving, maybe they're right.  Maybe the $KING IPO was the top.  If so, they'll be doomed to the OTC graveyard faster than Jimmy Johns can deliver your lunchtime fare.

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Admin

The VIX In An Age Of Major Poltical Risk

1290472?profile=RESIZE_480x480Many eyes are watching the VIX as it has not decayed recently and made another new low.  This holding pattern could be due to concerns over Russia possibly invading the Ukraine (who believes them when they say "nyet"), concerns over lackluster earnings, the dreaded "taper", fear of rising rates and a long-in-the-tooth bull run. 

Looking back over recent history, the VIX did a similar basing in the Spring/Summer of 2013 when each month, there seemed to be a "fear" the Fed would announce removing their foot from the QE gas pedal during their FOMC meeting.  18 Italian banks being downgraded just poured more fuel on that short term fire spiking it even higher.  Of course, the market recovered but there seems to be much more going on behind the curtain at this point.1290549?profile=RESIZE_320x320

To quote Marvin Zonis from last weeks CBOE Risk Management Conference, "“We are in the age of major, major political risk.”  Not only is taper on people's minds, but larger geo-political concerns are out there as well such as

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Admin

Negative January Effect. Real or Mumbo Jumbo?

1290377?profile=RESIZE_180x180Last week BTIG's Dan Greenhaus tried to dismiss the talk of the January effect (calm investors) stating “Normal corrections” tend to be anywhere from 5-8%, which is basically what we had/are having. If that’s the case, and our underlying fundamental views have not shifted (they have not), then stepping into markets down more than 5% should prove rewarding over time.  Of course me, being a skeptic of MSM (and everything out there for that matter), caught the last two words "over time" and raised an eyebrow.  Seriously?  Over time?  Most small investors won't risk more than 10% of any position.  Many only $100 if possible and this prompted me to poke around a little further on this January effect *thang*

The Street seems to buy the theory "When the first five trading days of the new year are positive, the month of January ends positive 76% of the time. When the month of January is positive to start the year, the stock market finishes the year positive 82% of the time."   While Barry Rit

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Admin

1290437?profile=RESIZE_320x320"When E.F. Hutton talks, people listen" was the mantra in the 1970's and 80's where commercials typically featured an business man at a holiday party or casual get together and when asked what his broker, E.F. Hutton said, everyone in the room froze, heads turned..........hanging on his every word.   Nowadays there's no doubt in my mind that when Art Cashin, the seasoned, ice cube-marinating stock market veteran talks, Chicago traders such as myself listen.  

Bull markets have a maximum shelf life of five years, and Wall Street may soon approach the end of this one, UBS' Art Cashin told CNBC on Friday.  If the S&P 500 drops below 1,770, he added, the markets could see a wave of secondary selling.

"It's a little bit of catch-up for 2013," he said on "Squawk on the Street." "We've gone for an awfully long time without a correction. Bull markets tend to have a maximum life of five years. We're getting awfully close to that."

What do your tea leaves tell you?  Is it time for some s

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