Weekend Watering

[99er]

Good Morning.

Equities are toast. Over coffee I had a look at some of the futures--ES, YM and NQ--and can only arrive at one conclusion: that we can put a fork in all of them. Take a look at the following four-hour charts and I will try to explain why.

ES http://99ercharts.blogspot.com/2011/11/es_19.html

While the AB=CD (purple) pattern forecasts a lower low ahead, the major argument for a top is the two-headed monster above a possible neck line (in gold). Note that the neck line has been broken and indeed has already back tested with prices now set to fall.

YM http://99ercharts.blogspot.com/2011/11/ym_19.html

Here, the Butterfly (in gold) alerts us to a directional change and the Wolfe Wave target (in purple) points to a price level that may turn out to be a future neck line, before forming a right shoulder. That H&S may prove to be a two-headed monster as well.

NQ http://99ercharts.blogspot.com/2011/11/nq_19.html

This chart, my personal favorite, includes a monster Butterfly (in gray) and two Wolfe Waves (purple and magenta) whose price targets are "off the charts." Here too we can note a smaller H&S with the neck line (in red) both broken and back tested. This rare overall pattern is the Drooling Bear formation where the "sell" signal is triggered when he begins to salivate.

Have a great weekend!

[ocassional observer]

here is an update to the weekly chart i posted 2 weeks ago:

it's now clear that the index made a goodbye kiss to the trendline 2 weeks ago and is now turning down again.

[noob]

Cobra, got a quick question for you. You've mentioned in trading signal that this doesn't look good for bulls, but the impulse system will try to buy this dip? Does it have anything to do with the potential holiday rally? Is the buying very short term in nature? Thanks.

[Cobra]

Cobra, got a quick question for you. You've mentioned in trading signal that this doesn't look good for bulls, but the impulse system will try to buy this dip? Does it have anything to do with the potential holiday rally? Is the buying very short term in nature? Thanks.

Impulse system does its own trade regardless what's happening around.

[mozart]

US Thanksgiving is on Thursday.
Traditionally the day before and day after market has been positive, 85% of time.
Monday is suppose to be small pullback, Tuesday slightly positive, Wed. and Friday very positive, following Monday deep negative.
But what will happen this week?

[cougar]

Good morning!
99er: very nice work! Your favorite chart is also mine…Really a rare occurrence!
As reflected in some previous posts, I was also concentrated this past week on the moves of the Qs. I will dwell upon this subject and also briefly discuss AAPL and AMZN, as very mobile components of $NDX.
The problem is that on my charts, all of them still could benefit of some sort of support, close to the present level, and bounce…
Let us start with QQQ daily, which, on this chart, has an immediate support ~55 (2x1 Gann Fan line and bottom of the Acceleration Band).
On the other hand, on the NDX Internals chart, while still “cycling”, the Empirical Mode is turning down, threatening to give yet another “sell mode” signal.

[trendfollower]

Article is a little late but still relevant and interesting.

"Is the S&P 500 Index Been Naughty or Nice?"

http://goo.gl/33q6U

[cougar]

Friday was an uneventful day for the Qs, but this means only one thing: THEY felt comfortable with a closing at this level, with both the Nov 55 puts and the Nov 56 calls expiring worthless…

[rhight]

Good morning Cobra and all the other contributors,

With reference to the SPX. It is my sense that this intermediate up trend is over after 5 weeks, and that a new intermediate downtrend has begun that is now about 2 weeks old. I have no idea how long it will last, but 3 or 4 weeks is fairly typical.

My 60 min. chart maps the reversal. A back test to the broken neckline, and the new down trend line may be expected. I do have my doubts about the short term bearish case. We are sitting on support at the 50 DMA and a 38.2% retrace of the October rally. The formation can be seen as corrective so far, with 3 waves down from the 10/27 1292 High, and the "c" wave from the 11/8 High also having 3 overlapping waves. Down volume has increased on a percentage basis, but not on an absolute basis. The market internals have turned down with room to roam on the down side before reaching oversold. But politics is crazy right now, seemingly obsessed with the market, and instead of a nice oversold downtrend to a good buying opportunity (from an intermediate term perspective), we could enter another meat grinder period, like from August to September. Right now, it looks like there would be considerable support in the 1190 area for a swing trade, for what it is worth. Many markets are sitting at critical support this weekend, do you expect them to break down without a fight? Maybe.

Volatility is still high, money can be made, and lost, quickly. Effective trade management is everything in this environment. Part of the problem with ZIRP, is that there is motivation to trade for profits rather than invest for income. But it is a zero sum game, and so my loss is your gain, and all that money sloshing around will continue to make for a volatile market.

[99er]

Thanks, cougar. Never as nice as yours (or Volpinacci's).

Updates

BKX http://99ercharts.blogspot.com/2011/11/bkx_19.html
VIX http://99ercharts.blogspot.com/2011/11/vix_19.html

More tomorrow. Have a good one!

[cougar]

AAPL 60 min is the chart that I played, when I entered long around 381and I set a target ~391.
As posted, I exited the trade there, but I did not turn around to short it…as I should have done…
Why not? Because the whole internet was full of reports about the Apple Stores going gangbusters... My own limited experience said the same thing…I was in Denver last week and in the “luxury” Cherry Creek Mall nobody cared about Burberry and Hermes while Apple packed them in…I thought that some “fundamental bounce” should have happened…But it didn’t!
Anyway …I shorted the Qs…where the risk of a major bounce was seriously diluted by so many “poor techs“…
In retrospect, AAPL shorts were much better performers…and hindsight is always 20/20...
AAPL 60 min update:

[BullBear52x]

Good morning weekenders,
Lets start with my analog

Here is FIb fan supports resistance

here is the second dome

with all that said here is my favorite yellow lines in the sand, short term if thing the same as it has a Gap Up set up is in the card, see my RSI and MACD in combination to yellow line support. unless this time is different then it will really be different, screaming sell if we fail the last support here. got to go

[cougar]

Thanks, cougar. Never as nice as yours (or Volpinacci's).

Updates

BKX http://99ercharts.blogspot.com/2011/11/bkx_19.html
VIX http://99ercharts.blogspot.com/2011/11/vix_19.html

More tomorrow. Have a good one!

Well, Volpinacci, who is making now espresso “à la Gannoise”, says that AAPL just closed under the 5/8 MM support…and that one should watch more lower levels. Among them, he prefers the blue line (~366.6) = SMA(165) which has an excellent historical track record as a STRONG support.

[noob]

Cool thanks!

Cobra, got a quick question for you. You've mentioned in trading signal that this doesn't look good for bulls, but the impulse system will try to buy this dip? Does it have anything to do with the potential holiday rally? Is the buying very short term in nature? Thanks.

Impulse system does its own trader regardless what's happening around.

[Al_Dente]

I find it interesting that there have been no/very few violent short-squeeze elevators in the last couple of weeks. What does this mean? IMHO: the bears are getting very comfortable (too comfortable??), and are in no rush to cover, meaning more bear to come. However consider the reverse: it may take perhaps just a strong whiff of “good” news to propel the dow higher.
I’m watching my “trend follower” charts carefully, to see what the “herd” might be up to. I surmise that the trendies and the MFs etc are all chomping at the bit to go long, as soon as they glimpse a planetary “fix,” and they will follow any substantial short squeeze with a vengeance.

Here’s a “trend following” chart. I ran out of real estate again (lacking the 5ema on compq).
The strategy summarized: Go long today’s close if both the 5 and 10ema cross above the 20ema.
Exit today’s close when both the 5 and 10ema cross below the 20ema. Over the years SPX, DOW and COMPQ have been variously used, but the original strategy insisted on $TRAN confirmation. The gold/black dotted lines are the uber-popular “golden cross” 50/200sma for comparison. Note in August how the 5/10/20 strategy was superior/earlier in calling bear, compared to 50/200 which was late, as usual.

What does this 5/10/20 cross chart say today? The SPX and COMPQ are just minutes/days away from crossing to bear, while the trannies are still in bull mode. (Remember this is a “following” not a leading strategy).
http://stockcharts.com/h-sc/ui?s=$SPX&p ... listNum=15

Here is a MEDIOCRE article on this strategy. The strategy is a “revised” version of an uncredited Gerald Appel strategy. (Appel is the guy who “invented” the MACD, but even Appel himself didn’t recommend using standard macd, and it has substantially underperformed other “signal” indicators in various backtests. Appel instead devised proprietary and more complex signals which he offered “for sale”….that’s another story…).
Anyway, the 5/10/20 is a trendie favorite, as it is long only, and keeps the sheeple in the market only 60% of the time (Appel’s original numbers were closer to 50%), hence less risk-exposure, also it offers a low portfolio-turnover rate, appealing to the buy-and-hold folks who nonetheless want to avoid the big drawdowns experienced in bear markets.
http://marketsci.wordpress.com/2008/12/ ... -strategy/
Please Note: I DO NOT RECOMMEND following this strategy. I only recommend doing yr own homework and following the King Cobra.

[cougar]

On a daily AAPL chart, the FORK has pivot and reversal levels analogous to MM, and which tuned out to work reasonably well.
We are now close to the support/reversal 2/8 level, which happened to mark the previous reversal UP ( 10/04/11)

[Al_Dente]

A note on $TRAN confirmation. It was never an idle concept. When we were an industrial nation, the DOW measured the health (or lack thereof) of industrial production (steel, heavy industry etc). But that measure wasn’t good enough for Charles Dow, he wanted to make sure the “industrial goods” were proceeding along the production/consumption channel, and that they arrived at the end user/consumer. What better way to confirm that channel than insist on verification that the railroads etc were delivering the goods to the consumer. If the trannies did not confirm, that was a neg signal that the goods were perhaps being stashed in inventory or whatever.
As we moved away from industrial production, updating was overdue. In 1979, IBM became the first “information/computer” company to enter the Dow 30… many others followed… now some suggest that the tran confirmation is outdated…. I disagree…. today the UPSs and FEDEXs and planes and rails still carry goods to the end user… and the retail sector indices help tell us if the consumers are consuming or sleeping…. in a similar step-by-step progression.

“I think there is a world market for maybe five computers." [Thomas Watson, Chairman of IBM, 1943]

[cougar]

Nice commentary on $TRAN, Dr. AL!
I agree with your view!

[cougar]

There is a popular view, according to which AMZN is badly oversold.
On my daily chart, it is at a 2x support level and the Empirical Mode signals a possible reversal. But, IF it falls under this support level…imagine the drop…
===========
I did not play AMZN recently and do not have any AMZN position now.

[cougar]

Although the recent drop in the indices seemed, to some people, “excessive”, I think that it was well controlled by several Market Forces, essentially concentrated on the US$:
1.The European banks were trying to sell their US$ denominated assets whenever it seemed profitable, and in such moments this took the US$ down and the Euro up.
2. The Swiss Federal Bank, having recently “loosely pegged” the CHF to the US$, wanted to depreciate them both…
3. Our own and well known friends Tim & Ben whose actions are also possible, any time…
4. The Bank of Japan that has opposite interests to the ones mentioned above and might just buy the US$ when it is too cheap…
==============

Timely interventions resulted in the US$ closing during the last 3 days under the resistance zone (see $DXY Gann square).

The most powerful and successful interventions happened on 11/17... And probably had a significant role in cooling the selling pressure on various indices (see $DXY 5 min, 24 hr chart)