08/11/2012 Weekend Update

[usctrojan99]

Hello all, here's from my corner since most of us already know where we are and where we're going. simple BB look here, short term bear still have a chance.

When you mean ST bear, I would agree if that means within the next week or so. Larger picture, I am bullish.

Let's be honest, nothing has really changed about the economy, the world, and fundamentals when we were at 1330 a few weeks ago. The only difference is that Bernanke and Draghi have assured markets that rates will be low and they will do whatever it takes. Yes, whatever it takes to avoid another calamity. Stop worrying about the fiscal cliff. The media has polluted the minds of everyone. As much as I enjoy Zero Hedge, I have to take into to context. With all this negative rhetoric, it's easy to be a bear. BUT - The equity market is officially decoupled from fundamentals and TA. People have been searching for a top for the last several trading sessions. TA, at this point, is effective if you're great at playing QB on Mondays. It might foretell a top (which could be 2 weeks away or 1 day away) but timing is extremely difficult and trying to front run the market will get you fleeced. I have tried front running in the past and have paid the price. I went long 3 weeks ago because I know people finding yield must put there money somewhere. A investment/hedge fund/mutual fund have to put money to work. That is why you have seen the dividend yield stocks take flight and the market keeps treading higher. This is the reason why the S&P and Dow are up. If anyone argues this, please do tell me otherwise.

One could argue the macro landscape is far worse than last summer. Italy and Spain have joined the Greece in the Euro debacle. More companies are guiding lower. Top line growth is de-accelerating. China and India are slowing down. High flying beta stocks as NFLX, CMG, and PCLN (for example) have taken it on the chin. I still can't believe NFLX was $300/share last year. Sorry I digress...Financials are roughly where they have been last year at this time. Yes, GOOG and AAPL (and its derivative plays) have markedly appreciated and they have carried the NASDAQ to near highs. But, we are 250 POINTS higher (on average) than last summer with respect to the S&P. You would think with all this deterioration, the market should be around 1200. So why? The market is trading on hope and relegation. Hope that easing will help provide a ST euphoria. Relegation in that the fund managers have no where to put there money and they have to make money for their clients. Why not shove those $$$ in AT&T, MO, KMB, BPT, VZ etc? The after tax yield beats Treasuries, and you're getting capital appreciation. Yes, we will probably see swings, but I don't see us getting below 1260 until 2014 when rates are supposedly going up. The great bull market are the dividend stocks. Fundamentally, these generate nice FCF and a safe haven.If the stock drops, why not buy some more at a better yield.

TA can be a good reference point for all in the context for a larger trading scheme, but the market has decoupled from the TA, as well. Yes, we will drop and this will get messy, but I think that is a year away. The market is enjoying the "easing drug" and just like crack all good things must come to an end. However, the end is not right now. As I said on the "Trading Signals" yesterday, 1500 is probably more likely than 1250. Yes, that is blasphemy to fundamentalists, but when the market is not trading on fundamentals, the mind has to adapt and trade the trend.

[Harapa]

For Dr. AL,
For further analysis.

For all others,
Green (buy)and red (sell) bars are derived from a momentum indicator applied to VIX/RVX/VXN. Idea here is to buy/sell when vixies say so;more they agree stronger is the message. Notice how they spoke before water fall decline of last year or at the bottom of 2008-2009 decline, or at the end of 2003-2007 bull market.

[Al_Dente]

Semiconductors showed ...blabla[/attachment]

are they include Samsung or Hynix? see INTC, MU, AMD they are American soul of Semi, well, equipment/tool makers like FEIC or KLAC always do good, AMAT got left behind it used to be high flyer of all CMP process.

Hi Baron: I have a really “narrow” view of the tech landscape. I show semis (30 days) outperformed all of the dow techs.
Only other tech better (in my very narrow window) was BIDU

Here’s SPY at the Olympics… http://screencast.com/t/pfIpFuHp5

And a song 2 calm u : http://www.youtube.com/watch?v=zaGUr6wzyT8

[Al_Dente]

PAGING HARAPA ONLY
TEST ONLY
Others please wait until we get a backtested/win thingie to blab about…….thanks
Harapa pls confirm that this is the same one, and that u can see it exactly the same as the pm
(I’m never sure exactly what non-subscriber can/cannot see)
Got to run, must study yr last board post later……….thx

[Al_Dente]

McClellan: “Open Interest Gives A ‘Tell’ For T-Bonds”
http://www.mcoscillator.com/learning_ce ... r_t-bonds/

[Harapa]

PAGING HARAPA ONLY
TEST ONLY
Others please wait until we get a backtested/win thingie to blab about…….thanks
Harapa pls confirm that this is the same one, and that u can see it exactly the same as the pm
(I’m never sure exactly what non-subscriber can/cannot see)
]

Yes it is.

[xfradnex]

Daily Elders. World 12 Blues out of 15 (3 greens Canada, Russell). Transition Green to Blue to Red? usually after a peak blue reading.

We are almost at the 4-2-12 high. Is this market the moth going to the flame? Is the world in better shape than then? No, but this does not seem to mean anything.

[esTrader]

Did some research on Wolfe waves and whether proportions have to be absolutely accurate or not. Firstly, on a daily chart, this pattern is not very common. I mean, once in 2 years or more. It is also more likely to occur in choppy patterns/corrective waves. We are in big choppy mess right now so it would be a great place for this pattern to materialize.

Let's look at the latest one which I believe is almost ripe.

The attachment ^SP500 (60 Min) 8_10_2012.jpg is no longer available

Here are some from the years before. Notice, in most cases, the market reverses at this point. So, if we dip now and touch the line, we may reverse and go on higher. What would cause that on a macro-economic level?

The attachment ^SP500 (Daily) 12_10_1999 - 5_2_2000.png is no longer available

The attachment ^SP500 (Daily) 8_27_1998 - 10_27_1998.png is no longer available

The attachment ^SP500 (Daily) 2_10_1988 - 4_11_1988.png is no longer available

The attachment ^SP500 (Daily) 3_19_1986 - 9_29_1986.png is no longer available

The attachment ^SP500 (Daily) 12_31_1992 - 3_9_1993.png is no longer available

The attachment ^SP500 (Daily) 1_29_1992 - 5_22_1992.png is no longer available

How about double WOLFE waves on SPX? The top was already in on 08/08. There is an expanded flat (a-b-c) for wave 2. SPX is going to plunge on Monday with a gap down.

[BullBear52x]

Fibocombo sine June low. some thing for evening beers.

[nightlyhawk]

Market thrust for next Monday seems to be bullish. Not sure how high up it can go since blue line is sitting on the ceiling.

[TradingJackal]

Did some research on Wolfe waves and whether proportions have to be absolutely accurate or not. Firstly, on a daily chart, this pattern is not very common. I mean, once in 2 years or more. It is also more likely to occur in choppy patterns/corrective waves. We are in big choppy mess right now so it would be a great place for this pattern to materialize.

Let's look at the latest one which I believe is almost ripe.

^SP500 (60 Min) 8_10_2012.jpg

Here are some from the years before. Notice, in most cases, the market reverses at this point. So, if we dip now and touch the line, we may reverse and go on higher. What would cause that on a macro-economic level?

^SP500 (Daily) 12_10_1999 - 5_2_2000.png

^SP500 (Daily) 8_27_1998 - 10_27_1998.png

^SP500 (Daily) 2_10_1988 - 4_11_1988.png

^SP500 (Daily) 3_19_1986 - 9_29_1986.png

^SP500 (Daily) 12_31_1992 - 3_9_1993.png

^SP500 (Daily) 1_29_1992 - 5_22_1992.png

How about double WOLFE waves on SPX? The top was already in on 08/08. There is an expanded flat (a-b-c) for wave 2. SPX is going to plunge on Monday with a gap down.

Agreed about the smaller Wolfe as the ratios are close (but not as tight as I would like them to be). Basically, 3 should be 127% of 1 and 5 should be 127% of 2-3. The other fib is 162 which I see is very rare based on the sample I posted earlier. The problem with the bigger Wolfe wave is the proportions are no where near the ideal. It may turn out like a Wolfe wave but I am not betting money on it. I will be betting some on the smaller Wolfe wave as there is a chance (albeit a smaller one as I am not impressed by its proportions either).

BTW, w.r.t the expanded flat, somehow I am having difficulty calling the wave 1 down a 5-waver. Maybe I need to look at a minute chart. The last three waves are definitely 3 waves each (as of Friday) with Friday's wave possibly completing a 4 and 5 on Monday to become a 5 waver in which case you call of expanded flat (3-3-5) would be accurate and we can begin going down in wave 3 in earnest sometime on Monday or early Tuesday.

[Al_Dente]

Latest NYSE Short Interest Report
http://online.wsj.com/mdc/public/page/2 ... tml#shortD

[Xian]

USCTrojanman gave a bunch of reasons to be long. I'll give one - team, Mitt Romney & Paul Ryan. I can't wait for regime change in the US.

It's a well-known fact that stock market does better with a Democrat in White House. You must be short.

[nightlyhawk]

The bottom indicator is also reliable to pick out buy/sell signal. When blue line crossing above black line, as seen in green circles, market is more likely on the bull side.

[Mr. BachNut]

Just a reminder that this week is opex. After last week's sleeper market, there will be action next week as the professionals will stress at least one side and probably both sides of the open interest. Given that last week formed a rectangle, there ought to be stops available for running above and below. So, I am inclined to anticipate two way trade for the week.

There are a few interesting scenarios, the imagination can play with here.

[KENA]

I posted this chart on Fri and here is an up date showing now we have high res..My thoughts are the mkt will try to break out to the up side since we are only a few points away from the hi..We have had a sideways mkt for a while and there is a need to get rid of some shorts so a break out up is a good guess.The next area of res is the 1420 area and is an extreamly tough one to break..My shorts and longs have not done much but looking for a push up to to trade out of longs then the shorts come into play..The mkt will do what it wants to do and a lot of traders are are thinking dn so we my see just the opposite..Lets see what happens.

spx1min81212.png (7.81 KiB) Viewed 3195 times

[KENA]

Non't let anything distract you from your trading like this "CAT".(i just thought this was funny)

[Al_Dente]

TWO POINTS
That’s about all it will take to beat the March SPY high
How hard can that be?
Sure we need a pullback, but don’t rule out the possibility that SPY could just zoom up to double top the March high with another “narrow based” rally/squeeze, on no volume and/or unpredictable news.
Then while up there, she might want to take out all the stops, which I’m guessing might be just above the highs.
Anything can happen.

$VIX fell to 14.73 intraday Friday, its lowest level since 3/30/12.
All the VIX ratios are still bullish.
Chart: strong XIV breakout with SPY in purple behind.

[Al_Dente]

“Stall in Jobs is Largely Seasonal” [Source: Argus]
http://screencast.com/t/bNm5vIA6

[Al_Dente]

Follow up on my previous blabla regarding tech:

Current sector weighting of the SPX:
Information technology 20%
Financials 14%
Health care 12%
Consumer discretionary 11%
Consumer staples 11%
Energy 11%
Industrials 11%
Materials 3%
Telecom 3%
Utilities 4%