10/04/2014 Weekend Update

[Cobra]

Smart money added more short instead of covering huge when the market went down, so probably not bottomed yet.

The institutional buying and selling chart (courtesy of stocktiming) shows huge distribution, despite the market hasn't down much. I read it as a bad sign.

[Cobra]

summary of the week's stock picks.
viewtopic.php?f=10&t=1438&p=172514#p172514

[cletus]

Smart money added more short instead of covering huge when the market went down, so probably not bottomed yet.

SmartMoney.png

I've always disagreed with the interpretation of this chart, so it's no surprise I read it differently. I suppose it's always possible there's another dip down coming but I see the shorting as very bullish. I mean, the whole time they've been shorting the NDX is going up. That's because you only short when you are institution looking to hedge (locking in the market gains on the way up). If the market is going down, the hedgers would get less short and may even flip long if the market sells off enough, because they are taking profits on their hedges.

The key is to realize it's a *hedging* chart. Therefore, you need to flip the thinking upside down. If they are shorting, that just means the market is going up and they are hedging, and if they are covering shorts they are simply taking their hedges off because the sell off they were hedging against transpired. Therefore, the greater likelihood is that the market is trending up because hedgers are shorting it.

Even though cobra is wrong about this, I've never seen him change his thinking. Haha. Stubborn, stubborn, stubborn.

[Cobra]

Smart money added more short instead of covering huge when the market went down, so probably not bottomed yet.

SmartMoney.png

I've always disagreed with the interpretation of this chart, so it's no surprise I read it differently. I suppose it's always possible there's another dip down coming but I see the shorting as very bullish. I mean, the whole time they've been shorting the NDX is going up. That's because you only short when you are institution looking to hedge (locking in the market gains on the way up). If the market is going down, the hedgers would get less short and may even flip long if the market sells off enough, because they are taking profits on their hedges.

The key is to realize it's a *hedging* chart. Therefore, you need to flip the thinking upside down. If they are shorting, that just means the market is going up and they are hedging, and if they are covering shorts they are simply taking their hedges off because the sell off they were hedging against transpired. Therefore, the greater likelihood is that the market is trending up because hedgers are shorting it.

Even though cobra is wrong about this, I've never seen him change his thinking. Haha. Stubborn, stubborn, stubborn.

I said many times, we have different time frame. For you, a 10% pullback still is uptrend because you look on weekly even monthly chart (please also check what I said on weekly chart, point out to me since when I said trend is down?!). For me a 2% pullback is already large enough. We have several of those pullbacks this year, Apr, Aug, and now, this chart had successfully called all those dips and bottoms! I think you're stubborn too. I'm talking about apple, you're talking about orange, we are not talking on the same thing.

This forum is never about long-term investment, it's called TRADER's lounge, not INVESTORS lounge. So frankly, if you only care about long-term on weekly or monthly chart, there's nothing to talk in this forum because on weekly and monthly chart, the trend is always up and up and up, no dips ever mattered since the year 2009, just buy the fxxx every dips and hold, who cares about 10% pullback?

[Cobra]

preview of the next week's stock picks.
viewtopic.php?f=10&t=1445&p=172519#p172519

[Cobra]

Smart money added more short instead of covering huge when the market went down, so probably not bottomed yet.

SmartMoney.png

I've always disagreed with the interpretation of this chart, so it's no surprise I read it differently. I suppose it's always possible there's another dip down coming but I see the shorting as very bullish. I mean, the whole time they've been shorting the NDX is going up. That's because you only short when you are institution looking to hedge (locking in the market gains on the way up). If the market is going down, the hedgers would get less short and may even flip long if the market sells off enough, because they are taking profits on their hedges.

The key is to realize it's a *hedging* chart. Therefore, you need to flip the thinking upside down. If they are shorting, that just means the market is going up and they are hedging, and if they are covering shorts they are simply taking their hedges off because the sell off they were hedging against transpired. Therefore, the greater likelihood is that the market is trending up because hedgers are shorting it.

Even though cobra is wrong about this, I've never seen him change his thinking. Haha. Stubborn, stubborn, stubborn.

Let me explain to you one last time how I use that 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. (of course you don't care about this 2% to 5% pullback, but once again I tell you, in my day trade, one tick failure sometimes would mean huge losses, so yes, I do care. I'm a trader. I do lots of my trades on 5 min chart, everyday).

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 down sharply.

Take nowadays for example: Market was down, if today I see this chart rising from low to very high value, then I know the bottom was in. But today's chart, instead of rising huge, it actually down, so this chart doesn't tell me the bottom was in. I don't mean the bottom wasn't in or indeed in. I only mean from this chart, it does not tell me the bottom was in.

I won't argue with you anymore. I'll from now on post how I use this chart every time I post it. Or I'd consider never ever post this chart anymore.

[fehro]

T2 indicators on SPX daily

[merryme]

Cobra, Thank you for explaining (in detail) your view of the charts and how they relate to the short term perspective.

[Junior Buffett]

Cobra,

Why would you change your style based on some random comment from someone? There are enough members on this board who value your style and commentary.

[tsf]

Thanks, fehro.
Does your chart say: green shoot but not out of the woods yet, so just scale in?
Or does it say: wait, sit out for now ?

T2 indicators on SPX daily

[FlowerGirl]

Next week SPX will Target:
8961
391830
(+/- 3points)
If you can solve it...prize is your's to keep

[Al_Dente]

.... Haha. Stubborn, stubborn, stubborn.

Cletus:
DO NOT insult your host on this board.
Do you show up at a free dinner, enjoy the feast, and then start spitting on your host ?
Then act like a civilized person here, please.

You are free to continue your moon-cycle-analysis postings.
And we are free to continue blocking you.

Stockcharts members please vote here:
https://stockcharts.com/public/1684859

[Al_Dente]

15 days, sector %
Rotation is into defensive sectors

[jademann]

My master SPY chart:
http://stockcharts.com/h-sc/ui?s=$SPX&p ... 1334398268
My master VIX chart:
http://stockcharts.com/h-sc/ui?s=$VIX&p ... 2562907989
keep it simple?

[Al_Dente]

"The Astonishing Story of the Federal Reserve on 9-11"
http://www.dailykos.com/story/2014/09/1 ... ve-on-9-11#

[fehro]

Thanks, fehro.
Does your chart say: green shoot but not out of the woods yet, so just scale in?
Or does it say: wait, sit out for now ?

T2 indicators on SPX daily

Couple of things seem to say the possibility of short term bottom.. Put/Call Ratio spike into 1.25 range.. which is near the previous recent spike lows.. plus the divergence on the McClellan, higher lows as SPX makes lower lows. The over all bigger picture… shows divergence the two rounding highs on the SPX happened with lower and lower % of stocks >40d/200d.. plus the Cumulative Vol / 4 week New Hi-Low also made lower highs .. so longer term up trend could be under pressure. The nature of this bounce needs to be watched carefully, imho. Below is a look at Weekly, I'd look to the pull back in late summer/fall 2011 as comparison. Put/Call ratio increased above 1.25, McClellan went into the -400 range, also the two rounding highs SPX, only the Cumulative Vol showed divergence. So overall "seems" weaker at this stage… but could put in a lower high as it did in 2011 (also H&S).. so the bounce will need to be watched. I feel near term we may punch a lower low (than Aug).. say on weekly term into the elections, and possible into Thanksgiving time frame.. followed by a Christmas rally… which ultimately put in a lower high (very similar to 2011)... then next year you could see a substantial drop?.. All speculation.. at this point. And remember the market doesn't care what I think - "Markets are never wrong – opinions often are." - Jesse Livermore http://www.businessinsider.com/jesse-li ... les-2014-9

[fehro]

5y/10y/30y vs SPX vs USD - daily / weekly

[tsf]

Thank you very much, fehro ! Really appreciate you took the time to explain.

Thanks, fehro.
Does your chart say: green shoot but not out of the woods yet, so just scale in?
Or does it say: wait, sit out for now ?

T2 indicators on SPX daily

Couple of things seem to say the possibility of short term bottom.. Put/Call Ratio spike into 1.25 range.. which is near the previous recent spike lows.. plus the divergence on the McClellan, higher lows as SPX makes lower lows. The over all bigger picture… shows divergence the two rounding highs on the SPX happened with lower and lower % of stocks >40d/200d.. plus the Cumulative Vol / 4 week New Hi-Low also made lower highs .. so longer term up trend could be under pressure. The nature of this bounce needs to be watched carefully, imho. Below is a look at Weekly, I'd look to the pull back in late summer/fall 2011 as comparison. Put/Call ratio increased above 1.25, McClellan went into the -400 range, also the two rounding highs SPX, only the Cumulative Vol showed divergence. So overall "seems" weaker at this stage… but could put in a lower high as it did in 2011 (also H&S).. so the bounce will need to be watched. I feel near term we may punch a lower low (than Aug).. say on weekly term into the elections, and possible into Thanksgiving time frame.. followed by a Christmas rally… which ultimately put in a lower high (very similar to 2011)... then next year you could see a substantial drop?.. All speculation.. at this point. And remember the market doesn't care what I think - "Markets are never wrong – opinions often are." - Jesse Livermore http://www.businessinsider.com/jesse-li ... les-2014-9

[jademann]

the master key:
http://stockcharts.com/h-sc/ui?s=$VIX&p ... 9592622454

cost me a lot, but to you its free

[bertdanner]

Hi Cobra,

Please do not stop posting any chart that you think has value. And please do not feel any need to continue to explain yourself in response to comments like these.

Your readers trust your opinions and want YOUR conclusions and viewpoint. I recommend only those explanations you feel benefit all your readers. Responding to comments like these is a waste of your time and only serves to confuse.

Welcome constructive, courteous, and respectful comments and ignore one's like this one from such an obnoxious fellow.

Everyone has an opinion, but we value and are paying for yours !!!

All the best,
Bert