04/12/2014 Weekend Update

[Cobra]

I see nothing interesting from my routine weekend update, so it's just a new thread for those who'd like to spend the weekend here.

Nothing special on smart money, a little more cover, but not huge spike, so it might mean the low wasn't in yet.

The institutional buying and selling chart (courtesy of stocktiming) shows a little more distribution than accumulation now which is no surprise as the chart only reflects what is happening now.

inst b sell.png (18.07 KiB) Viewed 5294 times

I see nothing on AAII and II. I'd like to see extremely extreme, for now both are far from extreme.

[Cobra]

Summary of the week's stock picks: viewtopic.php?f=10&t=1262&p=159963#p159963

[tsf]

First of all, thank you Cobra for this forum, and thank you all boardies for your great information and insights!


I've been studying many posts by flumanchu, MrMiyagi, FlowerGirl, and DelGriffith to
try to wrap my head around their ideas:

1. POMO-based market direction forecasts by flumanchu, currently down bias
search.php?author_id=3067&sr=posts


2. p-bars up or down by MrMiyagi, which are eventually reached about 75% of the time.
The last p-bar is up to slightly above 187.
search.php?author_id=1936&sr=posts


3. interpretations of MrMiyagi's p-bars by FlowerGirl
I only have a very superficial understanding that there are green teams and red teams. "The Kids" could decipher Da Boyz messages by playing connect-the-dots with the extremities of the p-bars, then draw parallel lines, and arrive at possible ranges, trends or even targets. I don't have any fancy tools, so I just eyeballed some imaginary lines.

FlowerGirl probably humored us by mentioning that she applied tarot card reading to p-bars. Perhaps equally in jest,
let's say that she is giving me a clue. So I separate p-bars in 4 suits: green up, green down, red up, red down. Then I
visualized different layouts until I can read a possible story. I think that's what tarot card reading means?

search.php?author_id=2936&sr=posts


4. DelGriffith's observation about a SPY range of 184-189, before the current correction.


My newbie take-away:
Putting the above information together, I'm guessing that it means Del's range may be revised lower to 182-187, approximately.


Thank you in advance for any thoughtful and candid comments you may have.

[Cobra]

preview of the next week's stock picks: viewtopic.php?f=10&t=1269&p=159967#p159967

[Platy]

Gold has been rejected twice by Neptune resistance at 1325. It may make one more attempt on Monday but Pluto is turning retrograde so we should get a reversal.

[jademann]

end of year tax selling should be finished very soon. 15th is last day.

FWIW I am long and going longer xiv and upro.

[Al_Dente]

Hedge funds are near-record leveraged long
“…once the market starts to retreat, a potential rush by hedge funds to cut positions would strongly amplify the sell-off.”
http://www.reuters.com/article/2014/04/ ... YP20140404

[Al_Dente]

Interesting piece on Bill Gross:
His daily routine, his 4:30 a.m. wake-up call, the seven monitors he watches all day, the El-Arian fiasco, etc.
http://www.businessweek.com/articles/20 ... -departure

[xfradnex]

Hedge funds are near-record leveraged long
“…once the market starts to retreat, a potential rush by hedge funds to cut positions would strongly amplify the sell-off.”
http://www.reuters.com/article/2014/04/ ... YP20140404

Wait for 10% pullback and then Buy

[flumanchu]

.
WARNING --> Some people may construe this post as Conspiracy Related and might be offended. If so, sorry about that.

Here's POMO Projection for the next week:

Day date = = = = = = PROJECTION = = = = = = High Proj
Fri 4/11 = = = = = = 1818 = = = = = = 1848
Mon 4/14 = = = = = = 1822 = = = = = = 1852
Tue 4/15 = = = = = = 1814 = = = = = = 1844
Wed 4/16 = = = = = = 1816 = = = = = = 1846
Thu 4/17 = = = = = = 1809 = = = = = = 1839
Fri Good Friday = = = = = = 1809 = = = = = = 1839
Mon 4/21 = = = = = = 1791 = = = = = = 1821

Note - The High Proj is simply 30 points more than the Projected amount. Typically, the market doesn't get more than 30 points more than the Projected amount. If the market is closer to the High Proj amt, then funds are being borrowed from the future POMO amounts which will eventually cause a greater reaction.
Markets are closed on Friday and NO POMO from Thur 4/17 until Tue (4/21) - meaning the market will want to descend down toward 1791 in this timeframe. They might try to do this as part of OPEX.

April End of Month Projection is 1792.

Observation - This is just something I've noticed - I guess it's all about momentum:
----> If the market closes at a HIGH on OPEX day, the market normally continues higher for at least the next couple of weeks.
----> If the market closes at a LOW on OPEX day, the market normally continues lower for at least the next couple of weeks.

ok - what about the whole Fed Conspiracy stuff.
Here's the deal - I have the utmost respect for the FED. As I've said before, a Strong Market means a Strong USA. If the FED had not acted, the USA would have been vulnerable for some type of action.
So, saying that, I believe in the FED, and the power they have. There's a reason they say 'Don't fight the FED'.

So, how does this relate to POMO? The Fed has been deploying all kinds of extreme measures to help the economy. Through all the interest rate cuts, etc. the market still needed more money in order to come out of the abyss. That's where POMO comes in.

The example is that the Fed is piloting the market - just like flying a plane (btw I got my Private Pilot License back in 2000 and so there's the reason for the analogy). All the Fed has done (except POMO) was not enough to move the market up - just not enough thrust, there's still too much drag. By using POMO, the market has additional thrust. However, with so much drag, it takes a lot of thrust (x amt of POMO) just to keep the plane in level flight (market even). If more than x is used, then the market advances. If less than x, then the market declines.

So, the market naturally wants to go down to some equillibrium point without POMO. As long as x amt / month is deployed, the market stays even. If more than that, then the market goes up, if less the market goes down.

Pretend your flying a plane, there's a certain amount of thrust needed to keep the plane level. If you pull back on the throttle (not the stick), the plane will descend in a glide, if you increase the throttle, there's normally more than enough thrust to enable the plane to ascend. Each month, there's a certain amount of thrust (POMO) that's being used. Keep in mind though, there's only so much thrust that can be used in the month.

Extra thrust can be used some days, or withheld on some days. But, in the end, it all has to even out. So, extra POMO can be used on some days to just keep the market even, or more to push the market up - or withheld to be aved and used on future days, in which case drag causes the market to go down. At this point, the FED uses the lack of POMO as a brake. Just like on most small planes, there is no real brake in the air / flight. Thrust, lack of thrust, and gravity / drag pretty much does the rest (fyi slips and other measures can be used, but not pertinent in this analogy).

Hope this helps! Sorry for the rambling. If you don't like it, I'll edit and remove after this weekend.

Good luck to all!

.

[Al_Dente]

Inflation-adjusted margin debt
[source: Jeff Gundlach, DoubleLine]

[xfradnex]

Hedge funds are near-record leveraged long
“…once the market starts to retreat, a potential rush by hedge funds to cut positions would strongly amplify the sell-off.”
http://www.reuters.com/article/2014/04/ ... YP20140404

Wait for 10% pullback and then Buy

Related: http://blogs.marketwatch.com/thetell/20 ... ill-lynch/

[Cobra]

.
WARNING --> Some people may construe this post as Conspiracy Related and might be offended. If so, sorry about that.

Here's POMO Projection for the next week:

Day date = = = = = = PROJECTION = = = = = = High Proj
Fri 4/11 = = = = = = 1818 = = = = = = 1848
Mon 4/14 = = = = = = 1822 = = = = = = 1852
Tue 4/15 = = = = = = 1814 = = = = = = 1844
Wed 4/16 = = = = = = 1816 = = = = = = 1846
Thu 4/17 = = = = = = 1809 = = = = = = 1839
Fri Good Friday = = = = = = 1809 = = = = = = 1839
Mon 4/21 = = = = = = 1791 = = = = = = 1821

Note - The High Proj is simply 30 points more than the Projected amount. Typically, the market doesn't get more than 30 points more than the Projected amount. If the market is closer to the High Proj amt, then funds are being borrowed from the future POMO amounts which will eventually cause a greater reaction.
Markets are closed on Friday and NO POMO from Thur 4/17 until Tue (4/21) - meaning the market will want to descend down toward 1791 in this timeframe. They might try to do this as part of OPEX.

April End of Month Projection is 1792.

Observation - This is just something I've noticed - I guess it's all about momentum:
----> If the market closes at a HIGH on OPEX day, the market normally continues higher for at least the next couple of weeks.
----> If the market closes at a LOW on OPEX day, the market normally continues lower for at least the next couple of weeks.

ok - what about the whole Fed Conspiracy stuff.
Here's the deal - I have the utmost respect for the FED. As I've said before, a Strong Market means a Strong USA. If the FED had not acted, the USA would have been vulnerable for some type of action.
So, saying that, I believe in the FED, and the power they have. There's a reason they say 'Don't fight the FED'.

So, how does this relate to POMO? The Fed has been deploying all kinds of extreme measures to help the economy. Through all the interest rate cuts, etc. the market still needed more money in order to come out of the abyss. That's where POMO comes in.

The example is that the Fed is piloting the market - just like flying a plane (btw I got my Private Pilot License back in 2000 and so there's the reason for the analogy). All the Fed has done (except POMO) was not enough to move the market up - just not enough thrust, there's still too much drag. By using POMO, the market has additional thrust. However, with so much drag, it takes a lot of thrust (x amt of POMO) just to keep the plane in level flight (market even). If more than x is used, then the market advances. If less than x, then the market declines.

So, the market naturally wants to go down to some equillibrium point without POMO. As long as x amt / month is deployed, the market stays even. If more than that, then the market goes up, if less the market goes down.

Pretend your flying a plane, there's a certain amount of thrust needed to keep the plane level. If you pull back on the throttle (not the stick), the plane will descend in a glide, if you increase the throttle, there's normally more than enough thrust to enable the plane to ascend. Each month, there's a certain amount of thrust (POMO) that's being used. Keep in mind though, there's only so much thrust that can be used in the month.

Extra thrust can be used some days, or withheld on some days. But, in the end, it all has to even out. So, extra POMO can be used on some days to just keep the market even, or more to push the market up - or withheld to be aved and used on future days, in which case drag causes the market to go down. At this point, the FED uses the lack of POMO as a brake. Just like on most small planes, there is no real brake in the air / flight. Thrust, lack of thrust, and gravity / drag pretty much does the rest (fyi slips and other measures can be used, but not pertinent in this analogy).

Hope this helps! Sorry for the rambling. If you don't like it, I'll edit and remove after this weekend.

Good luck to all!

.

thank you, I like it and I do believe POMO is the major force to keep this market float. Keep up good work!

[Al_Dente]

Related: http://blogs.marketwatch.com/thetell/20 ... ill-lynch/

Hi X: thanks
Here I’m eyeballing one-year daily, Shorty McShorts

The VIX curve went into backwardation yesterday/Friday.
If (IF) that continues, then VXX is a contender.
http://vixcentral.com/

[daytradingES]

.
WARNING --> Some people may construe this post as Conspiracy Related and might be offended. If so, sorry about that.
Good luck to all!

.

Hi Flumanchu,

I like seeing your posts and projections and understand them as just that.
You plane theory is apt.

Re conspiracy theory.
In this case the is no theory - the Fed has stated they are manipulating the market. They actually take credit for it in their "wealth effect" lingo. However, most people do not realize that the Fed is owned more than 50% by the big banks which is why they pump money into the banks instead of the economy. It is not a true central bank regardless of MSM chanting.

Also there is a little known act that allows the US govt to directly prop up the market anytime is is politically expedient.

This board is known for being open and tolerant and I feel it survives by people not attacking others, so if some are taking objection to a new idea - don't let it bother you. Personally I put them on my ignore list

Please keep posting.

[Zane]

.
WARNING --> Some people may construe this post as Conspiracy Related and might be offended. If so, sorry about that.

Here's POMO Projection for the next week:

Day date = = = = = = PROJECTION = = = = = = High Proj
Fri 4/11 = = = = = = 1818 = = = = = = 1848
Mon 4/14 = = = = = = 1822 = = = = = = 1852
Tue 4/15 = = = = = = 1814 = = = = = = 1844
Wed 4/16 = = = = = = 1816 = = = = = = 1846
Thu 4/17 = = = = = = 1809 = = = = = = 1839
Fri Good Friday = = = = = = 1809 = = = = = = 1839
Mon 4/21 = = = = = = 1791 = = = = = = 1821

Note - The High Proj is simply 30 points more than the Projected amount. Typically, the market doesn't get more than 30 points more than the Projected amount. If the market is closer to the High Proj amt, then funds are being borrowed from the future POMO amounts which will eventually cause a greater reaction.
Markets are closed on Friday and NO POMO from Thur 4/17 until Tue (4/21) - meaning the market will want to descend down toward 1791 in this timeframe. They might try to do this as part of OPEX.

April End of Month Projection is 1792.

Observation - This is just something I've noticed - I guess it's all about momentum:
----> If the market closes at a HIGH on OPEX day, the market normally continues higher for at least the next couple of weeks.
----> If the market closes at a LOW on OPEX day, the market normally continues lower for at least the next couple of weeks.

ok - what about the whole Fed Conspiracy stuff.
Here's the deal - I have the utmost respect for the FED. As I've said before, a Strong Market means a Strong USA. If the FED had not acted, the USA would have been vulnerable for some type of action.
So, saying that, I believe in the FED, and the power they have. There's a reason they say 'Don't fight the FED'.

So, how does this relate to POMO? The Fed has been deploying all kinds of extreme measures to help the economy. Through all the interest rate cuts, etc. the market still needed more money in order to come out of the abyss. That's where POMO comes in.

The example is that the Fed is piloting the market - just like flying a plane (btw I got my Private Pilot License back in 2000 and so there's the reason for the analogy). All the Fed has done (except POMO) was not enough to move the market up - just not enough thrust, there's still too much drag. By using POMO, the market has additional thrust. However, with so much drag, it takes a lot of thrust (x amt of POMO) just to keep the plane in level flight (market even). If more than x is used, then the market advances. If less than x, then the market declines.

So, the market naturally wants to go down to some equillibrium point without POMO. As long as x amt / month is deployed, the market stays even. If more than that, then the market goes up, if less the market goes down.

Pretend your flying a plane, there's a certain amount of thrust needed to keep the plane level. If you pull back on the throttle (not the stick), the plane will descend in a glide, if you increase the throttle, there's normally more than enough thrust to enable the plane to ascend. Each month, there's a certain amount of thrust (POMO) that's being used. Keep in mind though, there's only so much thrust that can be used in the month.

Extra thrust can be used some days, or withheld on some days. But, in the end, it all has to even out. So, extra POMO can be used on some days to just keep the market even, or more to push the market up - or withheld to be aved and used on future days, in which case drag causes the market to go down. At this point, the FED uses the lack of POMO as a brake. Just like on most small planes, there is no real brake in the air / flight. Thrust, lack of thrust, and gravity / drag pretty much does the rest (fyi slips and other measures can be used, but not pertinent in this analogy).

Hope this helps! Sorry for the rambling. If you don't like it, I'll edit and remove after this weekend.

Good luck to all!

.

what is your projection for the month of may and june ?

[daytradingES]

Last weekend I said I thought we were going down and would not be able to form a bottom until 0% of the PC which was 1834 area which we hit in only two days. Friday was a big down in o/n and Thursday was a "wack" day.
Come from "wack-a-mole" game. Flat top and lower lower low - very unusual and the last one was Wednesday Jan 8, 5TD after the 31 Dec high and it continued to fall for 3 more TD to 1809.50 on 13-Jan-14

We then went up for 2 days (+36.25) and then slid -minus -113.75 pts (14TD and 21 CD) being the net move to 1732.
The same rhythm would be up 2 days to Wed and then fall for 3 weeks to about 1730 (about 7 May).

Good luck to all - back to doing taxes
(I hope you don't get hit with heartbleed - backdoor in the open SSL code).

Video explains the attachments:
http://screencast.com/t/eBGnBHhXKi

[flumanchu]

.
WARNING --> Some people may construe this post as Conspiracy Related and might be offended. If so, sorry about that.

Here's POMO Projection for the next week:

Day date = = = = = = PROJECTION = = = = = = High Proj
Fri 4/11 = = = = = = 1818 = = = = = = 1848
Mon 4/14 = = = = = = 1822 = = = = = = 1852
Tue 4/15 = = = = = = 1814 = = = = = = 1844
Wed 4/16 = = = = = = 1816 = = = = = = 1846
Thu 4/17 = = = = = = 1809 = = = = = = 1839
Fri Good Friday = = = = = = 1809 = = = = = = 1839
Mon 4/21 = = = = = = 1791 = = = = = = 1821

Note - The High Proj is simply 30 points more than the Projected amount. Typically, the market doesn't get more than 30 points more than the Projected amount. If the market is closer to the High Proj amt, then funds are being borrowed from the future POMO amounts which will eventually cause a greater reaction.
Markets are closed on Friday and NO POMO from Thur 4/17 until Tue (4/21) - meaning the market will want to descend down toward 1791 in this timeframe. They might try to do this as part of OPEX.

April End of Month Projection is 1792.

Observation - This is just something I've noticed - I guess it's all about momentum:
----> If the market closes at a HIGH on OPEX day, the market normally continues higher for at least the next couple of weeks.
----> If the market closes at a LOW on OPEX day, the market normally continues lower for at least the next couple of weeks.

ok - what about the whole Fed Conspiracy stuff.
Here's the deal - I have the utmost respect for the FED. As I've said before, a Strong Market means a Strong USA. If the FED had not acted, the USA would have been vulnerable for some type of action.
So, saying that, I believe in the FED, and the power they have. There's a reason they say 'Don't fight the FED'.

So, how does this relate to POMO? The Fed has been deploying all kinds of extreme measures to help the economy. Through all the interest rate cuts, etc. the market still needed more money in order to come out of the abyss. That's where POMO comes in.

The example is that the Fed is piloting the market - just like flying a plane (btw I got my Private Pilot License back in 2000 and so there's the reason for the analogy). All the Fed has done (except POMO) was not enough to move the market up - just not enough thrust, there's still too much drag. By using POMO, the market has additional thrust. However, with so much drag, it takes a lot of thrust (x amt of POMO) just to keep the plane in level flight (market even). If more than x is used, then the market advances. If less than x, then the market declines.

So, the market naturally wants to go down to some equillibrium point without POMO. As long as x amt / month is deployed, the market stays even. If more than that, then the market goes up, if less the market goes down.

Pretend your flying a plane, there's a certain amount of thrust needed to keep the plane level. If you pull back on the throttle (not the stick), the plane will descend in a glide, if you increase the throttle, there's normally more than enough thrust to enable the plane to ascend. Each month, there's a certain amount of thrust (POMO) that's being used. Keep in mind though, there's only so much thrust that can be used in the month.

Extra thrust can be used some days, or withheld on some days. But, in the end, it all has to even out. So, extra POMO can be used on some days to just keep the market even, or more to push the market up - or withheld to be aved and used on future days, in which case drag causes the market to go down. At this point, the FED uses the lack of POMO as a brake. Just like on most small planes, there is no real brake in the air / flight. Thrust, lack of thrust, and gravity / drag pretty much does the rest (fyi slips and other measures can be used, but not pertinent in this analogy).

Hope this helps! Sorry for the rambling. If you don't like it, I'll edit and remove after this weekend.

Good luck to all!

.

thank you, I like it and I do believe POMO is the major force to keep this market float. Keep up good work!

Thanks! You're opinion is really all that matters. I appreciate you having this board and all who contribute. The content is by far the best I've seen.

.

[Al_Dente]

We’ve had 5 decent pullbacks in the last year (not counting the current one).
The pullbacks retraced ROUGHLY 65% of the previous advance, on average.
Currently, we have now retraced 50% of the advance from Feb.
If we were to meet the AVERAGE retracement of ROUGHLY 65%, that would take SPX to ROUGHLY 1780-ish
This is based on an average of the fibonacci retracements and is a ROUGH estimate only.
Averages don’t mean much, they just put things in a different perspective.
[Someone with more time and more precision could clean this up considerably]

Bottom panel:
TA likes balanced H&S formations, meaning that we’ve arguably had two left shoulders and one right shoulder, so an eventual bounce up to form a second right shoulder would be “perfect” for bears…

Also, remember shite happens:
Since 1900, these are the rough stats on how frequently corrections occur on average:
5% market corrections: 3x per year.
10% market corrections: Once per year.
20% market corrections: Once every 3.5 years.

For reference: As of yesterday (Friday), the Dow is down -3.32% year-to-date

[flumanchu]

.

.

what is your projection for the month of may and june ?

Kind of difficult to project at this point. The next Fed meeting is end of this month (April 29?). If they keep it at $30 billion for May, then I see the $SPX dropping about 80 points by end of May, to around 1710. Won't know exactly until they publish next month's schedule (end of this month also).

However, 2 big points -
(1) the ECB might institue their own QE at the end of the month. They said they are waiting until after Easter to see the results. If the ECB does institue QE, this will change the rules quite dramatically. The ECB would be buying US Bonds to devalue their own currency to help their exports. If the ECB institues QE, then all bets are off and all this will have to be re-evaluated. The ECB QE would more than make up for the Fed's Taper and markets could take off again.
(2) If the ECB does not do their own QE, then I'm not sure the Fed will / can Taper again. It kind of depends on where they want the market to be. This is an important election year. Yellen will need to plot the course carefully leading up to the elections. However, if the Fed does Taper to $25 billion and no ECB QE, then I would expect the $SPX to be down 130 points to around 1660 at the end of May.

So, two things to watch for (1) ECB news on QE (2) the Fed POMO schedule released at the end of the month

.