Weak Internals and Weekly Candles
The market’s internals were so weak on Thursday that they almost have to improve today. The odds favor some sort of bounce, however it’s no slam dunk. The market can go sideways as the internals improve, and if it does so, then it may simply be consolidating the downtrend.
SPY, QQQQ, IWM, XLF, DIA, and XME are all drawing bearish Harami candles on their weekly charts so far. If they all stick, then the vote for a down week next week will be unanimous. USO agrees too.
Make Up Your Mind FOMC
Is it 0% as far as the eye can see, or is it tightening with “greater force than is customary?” according to Fed Head Warsh (in an otherwise boring and pointless piece):
“…I would hazard the view that prudent risk management indicates that policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary…”
SRT Alert
Now is a good time for shorts to go on Slow Rounding Turn alert. If the market starts to creep upward, no matter how feeble the move looks, you have to take it seriously because the SRT just might rip your face off. See SPY’s intra-day chart from September 1-3 for an example of an SRT.
Mr. Warsh shows an interesting contrast to Ben’s ‘I won’t be the man to raise rates too soon and bring on GD #2′
Everyone knows that since March you buy the dips, works until it doesn’t I guess.
RIMM, OIL, the proximity to SPX 1100, and the potential rally of the US $ are ominous in my view.
An SRT would be a great chance to ride the casino higher into early October.
Sold my last longs Friday. Starting mid October I may be back to selling the rips with tight stops. By then we will likely be at 52 week highs nearly every day for over a month!
Paula,
I loved your quote about accepting risk as a prerequisite to profits!
GLTA
String,
On Wednesday I had a stop in to go short if
the SPX went below Tuesday’s low. I went
200% short in Julia’s account and will ask
her 50% of the profits.
The most important SPX data you have is
yesterday’s open, high, low, and close. Since
the big boys play games during the day, we
do not pay a lot of attention to SPX intraday
patterns.
I know from your posts with George that you
will be a very successful trader.
Take care…and enjoy.
Paula,
Nice how the market dumped hard in the last 20 minutes, after going below the previous days low. I’ll have to watch for that pattern, thanks!
Do you use hard stops? If so it looks like you just missed being short in the morning prior to the 10 point spike. I presume you had your order filled in the last 20 minutes?
We appreciate your insightful inputs. Thanks again!
Paula, many thanks for the explanation… 15/16 – 1= 14
No certainty but I have not seen enough confirmation to toss it out of the window. Maybe this was the momentum high, price high to follow. If you are too early this time, you get stopped out at a profit for the next try. If not, your profit gets bigger. 
Larry, did you see my tanker link?
EOM and EOQ do bother me wrt action the next few days. The prelude to early September looks different to me than where we are at right now. I’d like to see any bounce not clear ~ 1073. UUP waves meet all of my criteria. Longer term charts of various indices look to be in the process of breaking. If I get my face ripped off, I may change my moniker to “Nameless” so I can be another nameless, faceless trader who is sick of the games. Tomorrow’s close will be important to the weekly charts. GL.
George, have a look at the futures since last mornings dump. All larger green candles happened when subsequently the 15/30/60 had the drop 15-16 candles back. It fell out of the calculation for the 14,3 which had to turn above 20… Might be a scalping strategy for ranging markets after a large drop. Stochs drive price in this case.
As the hourly is done with rising, and K’s target hit … red candles
Hank,
I didn’t note the time, but I think your’re right
about the 20 minutes. On Wednesday I used
a moving stop after getting a fill. The thing
you have to watch for which did not not
happen on Wednesday is if the SPX had
a succesful test of a prior low, the downtrend
is probably over and you need to tighten
your stop.
Wednesday was what is called a key reversal
day. The SPX made a new high and closed
below Tuesday’s close. In the old days you
would not have to worry about stops on a
key reversal day, but with today’s market
manipulation stops are super important after
getting a fill.
bear jumping on the break below dax 5600 got trapped. Do not disturb the toasts in Philadelphia.
Yerk, got it. Will read over weekend.
Yerk,
I like 50% corrections, but in the prior SPX weekly
move up the four week correction was about 1/3.
If we get the same correction this time, we will
look for a SPX weekly bottom in the 1010 area…
and then it’s off to new highs.
Your thoughts….
paula, apologies, have to run. will answer over the weekend. Safe trading.
paula:
11 week cycle is not out yet is it? If not, I’m looking for 10% down from that 1080 flag – with the prior cycle being 14 weeks with a 10% correction. I’m going to err on the less than 10% correction and give the run to here the benefit of the doubt. Along the way I’ll be trading some stocks as this is a market of stocks NOT a stock market . . . .
Ruth’s always end up doing ok in the end!
Bradley Turn dates. If you look at the chart for SPY and these dates they are amazingly close.
http://forbestadvice.com/Money/Gurus/DonaldBradley/BradleyTurnDates2009.html
TLT at approx. 97.30.
hrmm 1040.84 to 1038.65 really doesnt want to be broken in the S&P futures.
whoa what happened with RIMM
Smoke’m if you got’m. I don’t have any. Maybe some 10am oatmeal though.
I’m late to the party today. SPY is being yanked all over the place but the 15min MACD has been positive since yesterday.
agreed george
So, TSO is on fire, literally and figuratively.
Mitch,
The current SPX cycle is not over until we
get the down cycle. I’m guessing it will
be four to five weeks ending around the
Oct Bradley turn date.
String,
I would love to see an outside down week, but
it means that the SPX would have to close under
1035 today and that would take an act of God.
String,
As you can see you need to pay attention to
the Bradley turn dates…and the turns get even
closer if you put in the window. Bradey experts
do not agree on how big the window should…
but I use a week.
Paula
My guess is your best hope is a Harami on the weekly. +DI is still well above -DI on the weekly. Maybe next week there will more downside, but I bet the shorts go to covering this afternoon. Don’t want to be exposed to some G20 announcement.
String
20EMA on daily SPX is at 1043 so should be interesting
String,
Forgot the word… be …in last post. Working
Julia’s account 24/6 has worn me out.
String,
Very good points.
futures trying to make 3rd test at 1040.84 (currently 1042)
isnt third time usually the charm?
http://3.bp.blogspot.com/_vIR9lEpVYYw/SrzRlSL7KzI/AAAAAAAAJjg/u0-WMSZakoc/s1600-h/sp500.png
http://www.zerohedge.com/sites/default/files/images/S%26P%20daily%209.25.09%20.jpg
String,
For the ADX I suggest you use 5 instead of 14.
If you use 5, you will see that the +DI and -DI
are almost ready to cross. I also use 5 for the
RSI.
RIFIN sporting a nice triangle with the A leg being ~ 3:10 pm high yesterday. Puts us near the end right now.
“potential” triangle… “nice” is always relative.
Paula
I have been using 5 and 13 on ADX. 5 as a length and 13 as smoothing. What are you suggesting the 5 on the length or smoothing. On the daily my DI lines look like they are on top of each other. If I look in my data window the +DI has fallen below the -DI in value. The weekly still looks seperated.
String
Market Changer?
Obama and world leaders hit on Irans nukes:
http://www.reuters.com/article/topNews/idUSSUM00011520090925
String,
5 on length…and your right…on the daily, the
+DI and -DI are almost on top of each other.
The 3X3 is on a sell signal, but the more
powerful 3 bar has not issued a sell signal
yet.
Trading the market is always a guessing game.
I know the SPX trend has changed. But I don’t
know if the trend change is a daily or the start
of a weekly. My guess is that it is the start of
a weekly and I went whole hog with S&P 500
futures contracts…will either make a small profit
or a big one.
George
The market changer will be when Israel gets a belly full of failed diplomacy.
String
SKF hit double top
Paula
The window for the Bradley being a week, do you give the front week more eye or the back week. I guess just knowing you are in the area is enough. You never have explained the 3X3 and 3 bar to me. I go with a 2MA crossing a 3,3MA which matches up with your 3/6. If I get MA crosses and DI crosses, and STO and MACD at the same time I am a happy camper.
String
Stringm,
I just read your post from yesterday about RSI2. I’ll take a look at that. Sorry, been occupied with contractors.
Israel is the kingpin.
I still can’t see how UYG at $5.65 can take a significant move down let alone another “crash”.
I thought wars and global conflict made the market go up because of the manufacturing revenue it generates. Or an excuse to jojo the market. Whatever… as long as it moves.
Waiting on a catalyst.
UUP almost hit the 50 Fib retrace, and has moved up again.
George,
you know hitting a nuke makes it explode don’t you? that’s bad for the world
HOLY SHIT. 1038.65 in futures broke…. I’m thinking we bounce 2-3 points here and retest it again
K:
I’m with you. Any word from the “little bear” Medvedev yet? He might have some input since Iran is a sister country.
K,
You’re right, it could explode. That would make oil skyrocket and a lot of U.S. companies would have govmint contracts to rebuild the place.
RIMM hit 69.69 haha oops so immature of me
While SPX action was hard to read, the RIFIN triangle told you we were going to break down. Go Bears!
we got 35 minutes to close above 1038.65 in the /ES currently at 1038 LOL
String,
I pay more attention to Bradley back week. I
think Julia went over the 3X3 and 3 bar with
you.
3X3—Look at the SPX 3DMA 3 days ago. Today
is Friday…look at Tuesday’s 3DMA. If the SPX closes
below Tuesday’s 3DMA, the SPX trend is down. If
it closes above, the SPX trend is up.
3 bar— Take the daily bar with the highest close
(bar 1). Go back 2 more daily bars…each bar must
have a lower high and lower lows which means you
may have to go back more than 2 bars to get it.
The 3 bar gives a sell signal when the SPX closes
below the low of the 3rd bar back. I took a very
quick look, and I think the SPX needs to close
below 1035 for the 3 bar to give a sell signal.
The 3 bar signal is more powerful than the 3X3.
For buy signals you start with the bar that has
the lowest daily low…go back 2 more bars…each
must have a higher high and a higher low. A buy
signal is given when the SPX closes above the high
of 3 bars back.
can options be played like stocks?
RIMM option was over $600 few days ago is now $42. down 89% for the day. do I take 69.69 as a sign to grab some land on sale?
RIFIN triangle target about 760.
Paula, great post. Thanks. I bagged that 3×3 but will start it up again. Combo with the 3 bar is something is good.
Ugh! Another editing error. That’s what I get for trading in the middle of the night!
COVERING shorts now…….
COEVER EM PHILLLLLLL
there’s still till october 1st for my SPX 1035 prediction to become true anyways.
phil,
Good timing. I’m waiting on BBT to set up for a nice counter.
bears too jovial here for my liking….
http://evilspeculator.com/wp-content/uploads/2009/09/mole-with-2-hot-girls.jpg
Correction…
In the 3 bar sell…bar 1 is the daily SPX bar with
the highest high…may not have the highest
close as I posted.
I think I got the 3 bar buy words correct.
Paula
Thanks for the 3 bar info. I do remember Julie going over that, and I had a hard time picking up what she was driving at. I have it this time. You either explained it real well, or my head cleared. Thanks.
String
15 mins to get 0.40 higher on the /ES
well futures didnt’s manage to close above my magic 100% retracement at 1038.65.. so that will either be a fakeout of we will head to 1031 next.
String,
Will we get the act of God???
JG:
May I ask what is rifin?
Paula
You might get there, wished I was short. Slow hand this go round. I was out for a walk, to work off frustration, on the reversal day. Snooze and lose.
You know I am obsessed with backtesting. I had backtested buying after several down days in a row and then a timed exit. So I tried your 3×3. If you BUY the close of the day that closes lower than the 3DMA 3 days ago, with the Bar being above the 200 DMA. Sell 3 days later. Since 2000 on the SPY 79W 69L 15% profit 2.11% annualized.
If on the other hand you drop the 200 DMA criteria and just buy the close of the day of the cross and sell 3 days later. 200W 176L 62.99% Profit 6.54 annualized.
Looks like that might be a better buy signal than a sell signal.
String
ohh ohh ohhh /ES back above 1038.65.. (currently 1039.25) hmm shorts covering now?
just lost 20 bucks in a blink of an eye. thanks RIMM!!
String,
The only backtesting I do is of myself. I try to
listen to the rhythm of the market. And if I
get it wrong, I try to discover what I missed
and should have been looking at.
1039.47 has still not been overlapped…..NEW HIGHS AHEAD
Paula
I should not be doing any either. I guess I am always trying to find a comfort zone. I should following what I see and not what I expect. Failure to act is my biggest flaw.
String
Phil,
new highs indeed.!
String,
The danger of backing a trading method is
that when the market changes its rhythm
your trading method no longer works. But
the thing that never changes is yesterday’s
high, low, and close. If I go short when the SPX
goes below yesterday’s low, I will make a few
dollars if I use stops. Will also make a few
dollars if I buy when the SPX goes above
yesterday’s high.
Most important SPX data—yesterday’s high, low, and
close.
Second most important data—SPX test results of
prior highs or lows.
Build your trading plan using the most important
data…limit your risk.
String,
Right now there are more up weeks than down
weeks in the SPX cycle. But that will change in
2010, and there will be more down weeks than
up weeks in the SPX cycle.
The cycle that took us to the March lows had
7 up weeks and 9 down weeks. We will see
that again…date TBD.
We’ll see what trend we’re in if SPY can break through the 15min 36MA. Or back off from here and continue down.
Mitch,
$RIFIN is the Russell 1000 Financial Services Index. FAS tracks it; FAZ is the inverse to it. The RIFIN acts pretty much the same as the $DJUSFN, so for longer term analysis, I use the DJUSFN as RIFIN isn’t that old.
Like a dog comes to its master, so shall price come back to the MAs.
Paula
BTW, thanks for adopting me. If I knew how to get there I would buy you a beer.
String
DOW starting to look impulsive to upside….i want to buy DDM but not just yet…..
once the turn is confirmed 10000 should be a gimme
futures got served at 5min intervals. new lows ahead
phil,
Is that a turn on the daily?
String,
Thanks. Have a great weekend…enjoy.
9629.37 cannot be overlapped if 10000 is coming soon
george…on daily u would need above 9807….yesterdays high…
i only see 3 waves up from low today…i cant buy with that
may have to wait till monday
hmmm
http://seekingalpha.com/article/163382-e-trade-expect-a-takeover-any-day-now?source=yahoo
ETFC possibly being taken over? Well am buying an option at the minimum.
SLOWLY I TURN…..step by step ..closer and closer……anybody remember abbot and costello??
UPWARD ACCELERATION would make this so much easier
go green baby
Okay, tks phil
This could be a SPY Humpty-Dumbty?
XLF forming mini bull flag.
I still see red unless futures can clear 1048 and close above it today.
JG, thanks. I’ll be ready next time.
if we have turned it better move up fast now
phil:
There seems to be a lot of mass to clear in the market.
mitch…did you see tlt hit 98?
phil yes. I have to respect that.
i would sell but i want my dividend…..maybe next week
crapping out
mitch if stocks falter…looks like bonds win….fine by me…let them crash