11/01/2014 Weekend Update

[Cobra]

Smart money shorted a little bit but not huge as I'd like to see to clearly signal that a pullback is due, so not much use this week.


Since there're some arguments about how to read the chart, so it's necessary for me to explain here how I use this chart:

I don't care what's the logic behind the chart. I found it works in the following two cases:

When market up huge, if I see smart money huge short, best if new record short, then I know a short-term pullback is due soon.
When market down, if I see smart money suddenly rises from very negative to very positive value, then I know the pullback was over.

So I only use this chart for the above 2 cases. Besides those 2 cases, it means nothing to me. i.e. the absolute value of this chart means nothing to me, I only care if it rises sharply or drops sharply.

The institutional buying and selling chart (courtesy of stocktiming) shows more accumulation than distribution, also nothing of predictive value, it's just saying what's happening now.

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[Cobra]

summary of the week's stock picks.
viewtopic.php?f=10&t=1467&p=175268#p175268

[Al_Dente]

For your weekend-reading entertainment:
Regarding UBS healthcare banker poached by Jefferies in 2009, now Jefferies' Managing Director, Sage Kelly.
Plus cocaine, heroin, mushrooms, ecstasy, molly and kinky sex.
http://www.zerohedge.com/news/2014-10-2 ... -sage-kell

[Al_Dente]

There were 23 trading days in October
Of those 23 days, 16 days were triple-digit-dow days (7 were down triple digits; 9 were up)
By that measure alone, this was the most volatile month of 2014
Traders appreciate that kind of volatility
Week-to-date dow +584 points
Month-to-date dow +347 points

This table is month-to-date (October)
The surprise was what’s on top

“Do Financial Experts Make Better Decisions Than the Rest of Us?”
[Spoiler alert: No]
http://www.theatlantic.com/business/arc ... us/381902/

[Cobra]

preview of the next week's stock picks.
viewtopic.php?f=10&t=1474&p=175272#p175272

[daytradingES]

In Friday o/n we had the 30pt ramp from the Japanese QQE.
The vote was a narrow 5/4 for it.

I got to wondering - when was the vote taken?
Did insiders know before and had leaked the info?
Was the huge run-up in the USA market from this?

It seems like a shallow co-incidence that QE ends Wednesday and no FOMC news then Abenomics comes in right behind.
Perhaps coordinated with the US Fed?

The reason I'm thinking that perhaps the Japanese "news" was price in the previous week and a half was:
-the huge surge off the -10% with no news
- the lack of follow through on Friday RTH
(friday was a modest -10.75 ptd)

So perhaps
"buy on "rumour" (aka inside leak) and sell on news"

Over the weekend there are a few negative aspects
It will be interesting to see what happens Monday.

If there is profit taking by insider with a low gap down opening and then continue down we will have formed an island top.

[Mr. BachNut]

In Friday o/n we had the 30pt ramp from the Japanese QQE.
The vote was a narrow 5/4 for it.

I got to wondering - when was the vote taken?
Did insiders know before and had leaked the info?
Was the huge run-up in the USA market from this?

It seems like a shallow co-incidence that QE ends Wednesday and no FOMC news then Abenomics comes in right behind.
Perhaps coordinated with the US Fed?

The reason I'm thinking that perhaps the Japanese "news" was price in the previous week and a half was:
-the huge surge off the -10% with no news
- the lack of follow through on Friday RTH
(friday was a modest -10.75 ptd)

1st the signal, then the move, then the news.
I think our friend uempel posted this bit of wisdom once upon a time.

In a country that manages by consensus, the Japan surprise could not have been a surprise to all.
Those who knew acted in their best interest.
The market is a marvelous and sensitive machine that knows more than any one participant and responds to the actions of all.
The actions of a few can amplify to the actions of the many.
For all who spent two weeks scratching their heads over the unique intensity of this rally (VIX has never dropped so far, so fast ever), the riddle was answered Friday.
The table, however, was set awhile ago.

[Mr. BachNut]

The Yen doesn't care about the P/E Ratio...
As the Yen goes in the days ahead, so goes the S&P?

[Cobra]

In Friday o/n we had the 30pt ramp from the Japanese QQE.
The vote was a narrow 5/4 for it.

I got to wondering - when was the vote taken?
Did insiders know before and had leaked the info?
Was the huge run-up in the USA market from this?

It seems like a shallow co-incidence that QE ends Wednesday and no FOMC news then Abenomics comes in right behind.
Perhaps coordinated with the US Fed?

The reason I'm thinking that perhaps the Japanese "news" was price in the previous week and a half was:
-the huge surge off the -10% with no news
- the lack of follow through on Friday RTH
(friday was a modest -10.75 ptd)

So perhaps
"buy on "rumour" (aka inside leak) and sell on news"

Over the weekend there are a few negative aspects
It will be interesting to see what happens Monday.

If there is profit taking by insider with a low gap down opening and then continue down we will have formed an island top.

I have some thoughts, the rush up since 10/15 might be due to big guys know ahead of Japan QE, otherwise it's really strange, the market mood simply changed all of sudden. But trading wise, I don't generally expect the market to reverse down sharply all of sudden.

[Mr. BachNut]

Last week I posted a few scenarios suggested by NYMO behavior. The first of them assumed no start of a down cycle and went as follows:

"1. If instead of starting an earnest NYMO down cycle, it bobbles around the red line staying above zero while price makes higher highs (either in a choppy way or through an upward biased consolidation type trade), we have begun an important new uptrend that should be a goer. The correction over scenario."

Mr. Market naturally did something different.
I would not call last week's NYMO action a bobble around the red line. It was quite strong and consistently so. We did get a goer.
If one now looks for precedents, there aren't really good ones in my opinion.
March '09 and October '11 could be comparable, but these were markets coming out of very deep corrections/bear markets.
Perhaps July '09 works, but this NYMO is considerably stronger.

In any case, this kind of NYMO action is the sort that occurs at the initiation of significant bull moves. (Pretty wild this far into a mature bull market.)
In addition, levels this high usually precede some corrective action (if not a down cycle).

Given the above, I am inclined to anticipate higher highs and generally higher volatility ahead.
So, Cobra's thoughts on broader channels and green coupons for bulls seem agreeable to me.
If there is a caveat, it is the lack of similar patterns in the past. So, Mr. Market could throw another curve ball.

The trend is up.

[ocassional observer]

I wanted to point you to this guy:
http://www.advisorperspectives.com/comm ... 110214.php
He has an excellent weekly summary, and his research argues for limited upside from here until the end of the year.

[Al_Dente]

IWM has pierced its upper bolinger band 4 days in a row.
That’s unusually strong.
In the last two years it has typically pierced 1-3 times in a row, then pulled back.
Only once in the last two years, in Nov 2013, did it breach 5 days before a pullback
[best to double check my counts].
Also, Friday’s candle was a “hanging man” near double-top resistance.
So I’m expecting a pullback soon, not a crash, a pullback. As it’s still on a short/mid-term long signal, the pullbacks will be bought.

[BullBear52x]

Overbought overbought overbought overboughtoverbought

This is all that bear camp can talk about for counter trend bears there's hope with a prayer

[Al_Dente]

Someone here recently posted that his friend said IWM was the best short out there, and asked what he should do now.
Tiho here blogs about how he handled his IWM short, and it might be helpful.
(dated 10/29/14)
http://shortsideoflong.com/2014/10/one-better-trades/

“After all, the job of the market is to thieve and steal as much money as possible, from as many participants as possible, in as many occasions as possible.”

[daytradingES]

I have some thoughts, the rush up since 10/15 might be due to big guys know ahead of Japan QE, otherwise it's really strange, the market mood simply changed all of sudden.

But trading wise, I don't generally expect the market to reverse down sharply all of sudden.

Yes that's what I'm getting at. That the big guys knew of J QE well in advance.

Of course what happens next is a big question mark.

[Trades with cats]

IWM

There is a website that gets linked here regularly. This week they flashed the Bloomberg Chart for their "Most Shorted Stocks" index and had IWM on as well. It was a great proxie. It was also clear that last week was like so many other 'rally's' we have seen the last couple of years, a short covering dash for trash as the big boys ride the highest beta on the up elevator.

Friday was different. It is a full out attempt to export deflation to Japan's trading partners. The Yen carry trade will go into high gear. I only wish I could play. The US market could (according to some) defie gravity as Asian and European surplus capital looks for a safe haven. Unfortunately the analog is 1927-1928 with the same tragic ending. This is all about capital flows not income streams.

You can see that coming with the Yen. Soaring cost of living and an aging population means that investments and savings accounts are being cashed in for rice and fuel. We saw last year that the huge pension savings operation was flipping over to net distribution. With Albert Edwards at SoGen predicting 135 to the buck all estimates of withdrawal rates for savings are worthless. When the largest holders of stocks and bonds start relentless liquidation we will see how high the Nikki soars.

But that won't happen this week!

[ALdaytrade]

I have some thoughts, the rush up since 10/15 might be due to big guys know ahead of Japan QE, otherwise it's really strange, the market mood simply changed all of sudden.

But trading wise, I don't generally expect the market to reverse down sharply all of sudden.

Yes that's what I'm getting at. That the big guys knew of J QE well in advance.

Of course what happens next is a big question mark.

Well, something happened here as a last resort!

http://www.zerohedge.com/news/2014-10-1 ... -abenomics

[Cobra]

I have some thoughts, the rush up since 10/15 might be due to big guys know ahead of Japan QE, otherwise it's really strange, the market mood simply changed all of sudden.

But trading wise, I don't generally expect the market to reverse down sharply all of sudden.

Yes that's what I'm getting at. That the big guys knew of J QE well in advance.

Of course what happens next is a big question mark.

Well, something happened here as a last resort!

http://www.zerohedge.com/news/2014-10-1 ... -abenomics

Don't understand, this is Oct 17 news, very old now.

[DellGriffith]

[gappy]

http://www.youtube.com/watch?v=7jzx664u5DA Sunday edition "best fit fib". For fun only. Weekly.

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Last week's SOMA.

soma.PNG

Vote Cobra. glta