10-27-13 Weekly Recap & Outlook

     I am starting a new format today as far as the charts go.  It is just going to be daily and weekly charts unless the month closed during the prior week or during the weekend of the recaps.

Stock Index Futures:

       So picking up from last week, the range expansion led to a healthy consolidation pretty much over the entire week.  The bullish structure was definitely kept in place, especially on the S&P and the Russell gave some very clear breakout levels at $1120.  Like I said last week, I have no idea how long this one will last but all I do know is people were shorting the $1700 area and we have now left that range.  Those shorts will get squeezed as long as the bulls have the juice to do so, and gauging on the price action right now they do so long as they can get liftoff straight out of this mini pattern.  The only thing that concerns me is that this pattern looks exactly like the July top.  It is still a bullish pattern as it stands now, but just be aware it could change into a failure like July did.

Crude Oil:

     Well the breakdown target was achieved with ease last week and then gave some more.  It also broke through the $97.5 key level but found daily accumulation on the weekly long term trend support at $96.  So $95-$96 will be the area I will be watching for buy pressure and $97.5-$98.5 (200sma) will be two levels I’ll be watching for sell pressure or for bulls to reclaim.  As far as RSI analysis goes, bulls have an oversold reading to work with on the daily while at the same time being at known support on the weekly.  Keep in mind that the long term trend structure (weekly, monthly) is still place very much so, which means it is only natural for me to lean bullish but still be aware of the downside and trade it if need be.  Although where we stand now, between the weekly and daily there is just support all over the place.. literally at every round number except $93.

Gold:

     Gold has really washed up as a day trading instrument.  You never know if it’s going to have a nice trend day or just chop/algo spike all day like it does 9/10 days.  Algos have completely destroyed it, either that or the manipulation the suppress the price.  Anyway, even though it isn’t the ideal trading instrument right now there is still a very nice swing setup here to the $1380 area trend support on the daily.  I really like that setup, and plenty of room on the RSI to move.  Something else to be aware of is if gold can take out the higher high (HH) on the daily, that would officially be a classic reversal taking place.  It may be more clear on this weekly chart.  If I was deeply long in gold down here, that would really be giving me hope/optimism right now and may even drive new buyers to step in.

Euro Currency:

     Euro has really been working beautifully for me.  Sometime in the history of this blog (possibly around July-August) I made it official that I was long term bullish on the Euro, and at that point I started looking for reasons to confirm that.  Back in September, the V shape bounce worked perfectly.  Then early this month (October) I was talking about the buy signal at 1.3500 looking really good, you can check my stocktwits stream or twitter if you don’t believe me.  Anyway, buyers are really doing their job right now and they have gotten a little overheated on the RSI so if price confirms the overbought situation and starts slowing down I want to see it hold 1.3700.  If it can do that we can see 1.4000 then 1.4200 and eventually 1.4500.  That is a nice clean break on the weekly and it’s exactly what I was looking for.  Now just waiting for a large continuation of that.

Market Internals:

     Internals are definitely improving, but I just hope that VIX comes back up this week because it really killed off the good trading ranges last week.  Percent above 200sma is showing broadening participation across the market so that confirms a bullish outlook for now.  If that 60% level high made a while back cannot get taken out then it would just be the bull trap I was looking for before we broke out.  For now though we will just go with the trend until it fails.  I admit it is disappointing I was really hoping for a nice, big correction (10-20%) with expanding ranges (I mean real expansion) to trade for a new months.. I think most of the big money was too so they can have a real buying opportunity, but the date on that has been pushed back once again.  No reason to fight it.

Economic Releases:

BREAKING NEWS: Fed announcement comes in and there is NO TAPERING; I repeat NO TAPERING due to the government shutdown they said, data still too weak to pull back and it likely has something to do with the holiday shopping season…  That is what you are going to hear in the news media this Wednesday, so just prepare for that.  Obviously the Fed announcement is the highlight for the week.  It looks like we are getting some shutdown data this week, I‘m not sure but just assuming that because some of the releases already have “Report” tagged on them and that usually means it has already been released, but that is what they did during the shutdown.  It is a pretty packed board this week, so should be a good one.
Still working on that education piece on execution, should definitely be a good one and very helpful in building a trade plan and deciphering a trade plan from a trade strategy.
Trade well,
-Michael

Intraday Futures Trading Setup & Indicators

     I have had a lot of questions regarding my indicators and the setup I use for the intraday trading, so I am going to write this brief post explaining them so I can direct people here.

10-20-13 Weekly Recap & Outlook

Stock Index Futures:

 
     Last week I was talking about the range expansion taking place in the stock indices, I didn’t think that would lead to more upside initially but about mid-week I realized we probably would blast off to the upside.  I posted about it on stock twits.  Now, from here I have no idea how far we will go.  Capitulation is the word you need to think of, bears are capitulating right now and bulls will wring their neck and squeeze them senseless for as long as they can. This chart is something I should have brought up last week, it is just a Russell 2000 weekly but using a line graph.  From that perspective it is much clearer which direction we were headed, but it can still be used to see the context of this range expansion to the upside.  Look at this NASDAQ monthly chart.  The ranges are easier to compare on a weekly but I can’t fit it into one chart clearly.  If this expansion to the upside continues, it is very possible we have something like the NASDAQ bubble of 2000 except this time it is going to be present in the Russell 2000 & S&P 500 as well.  Think about it, everything is set up for a nice classic bubble.  Yellen easy money forever and… well, I guess that’s all we need.  Now granted, this could very well be the start of a blow off top (short-term or not I don’t know) but there is a lot of euphoria in the market right now and I think bulls will jump all over this for as long as they can.. this market has not been loosing them money, so why would they stop?  So, I believe this is much different than the other rallies and if it keeps up we can see a lot higher as well as even more expansion.  I’ll leave you with an expanded view of this monthly Russell chart, monstrous.

Crude Oil:

     During the week I posted on stocktwits to watch the $100.5 level for a breakdown level, which worked but not like I was looking for.  The new breakdown level is now $100 which may work better as that is a psychological level to be breaking down.  If we do break down though I will still be watching that swing low from 9/30 at $101 for bulls to reclaim it which would be the first signs of bulls recovering.  $104 is still the ultimate threshold.  Breakdown target would likely be the 200sma and then I would be watching to see if price could reclaim the swing low, or at least attempt to.  Other than that, daily 20sma and $103 key level is resistance if price tries to immediately rally into the week  so watch that as well.

Gold:

     Gold had a very solid setup for another leg lower but sellers couldn’t capitalize on that, so that should tell you something right there.  Bulls aren’t in the clear until they reclaim $1350 like I have been saying for a while (can now accept $1340) and I also still say that below $1320 is bearish, but given the context of what happened last week if it can hold right at $1320 and consolidate that would be bullish and likely precede a break of those key levels.  Something I have been looking at on gold though is this may be building a possible bottoming pattern which would explain the resilience to another leg lower.  This two step bottom structure where price makes a higher low and would be confirmed when it takes out the $1400 high while continuing to make higher highs.  It is a very real possibility.  I’m not just throwing around theories here, I am aware of my parameters set by the daily structure, location and pressure along with the weekly trend resistance but the pattern remains the same.  If $1400 is taken out I can seriously consider a bottom has been put in.  Above $1340 key level, I would look for $1400 to be tested and below $1320 my hopes are not so good for bulls.

Market Internals:

     I included some new ones this week so you can see the level of overbought the market is in and compare this to how price reacts this week.  If price continues on with the action it is having now while these shorter term oscillators stay overbought, then we have a massive squeeze and big money buying everything in sight confirmed.  What should happen is we get some kind of pullback or pause to calm the overbought reading before surging higher again.  So use that as your baseline to compare the actual price action to.

Economic Releases:

     This week we will see a lot of numbers that weren’t released during the shut down.  Some maybe have not been announced yet so we don’t know the date.  But we do have employment numbers on Tuesday for September so that will definitely be the highlight of the week.  Since it is on a Tuesday that may really bring out the volatility because typically jobs number Friday is a dull way to end the week, but this time around it is an exciting way to start the week.  Also crude numbers on Monday.  Existing Home Sales on Monday, Durable Goods on Friday, New Home Sales on Thursday.
     On a side note, I have started on the next education piece regarding execution and building the trade plan (“Probabilities, Risk/Reward, & Trade Management”).  It is going to be a long one because of it’s importance and likely take me a bit to write it but I have started working on it and am mostly finished with the first section being “Probabilities”.
Trade well,
-Michael

10-13-13 Weekly Recap & Outlook

Stock Index Futures:

 
     Well everything went according to plan after the Russell broke down from the level mentioned and the S&P failed to hold above $1700.  So we got the sell off, and after that, to my surprise we got the biggest 2 day rally this year.  Now, obviously that is a huge change of pace from the kind of rallies we have been having this year.  That kind being dead, choppy, gap up days.  I am thinking that this isn’t necessarily the start of a new move to the upside, but possible the start to some volatility.  Of course I am biased to always crave the volatility, but I just explained the rationale.  The Russell weekly 20ema was held, again, for the fourth time this year.  I’m asking myself how many times is this thing going to hold.  Even so, like I said last week there is sell pressure above $1080.  So even if we do break above and make new highs there is a high probability sellers are waiting up there, unless we are just going to go parabolic for no reason.  I won’t say it’s not possible.  Bears capitulate, bulls step in hardcore, and off she goes.  Anyway, $1700 will be the level I am watching as a line in the sand for bulls and bears.  Above $1700, watch how bulls are composing themselves.  Is there conviction or sell pressure?  How is the price structure looking?  That level for the Russell will be $1080.  I won’t sit here and lie and act like the bulls didn’t set themselves up nicely with that weekly candle.  Bears also still have a nice setup from the $1720 distribution weekly candle, so they are going to have to duke it out.  Let’s all pray for a very volatile week while bulls and bears fight each other.

Crude Oil:

     Crude bulls did not do well this week.  As we sit right here, that is bearish price structure.  The $103-$104 key levels turned into resistance as well as the 20ema and trend channel.  RSI is below 50.  I’m not blind to that, but I’m also not blind to that fact of marking up that $101 swing low from 9/30 and watching that as an important level for bulls to reclaim if it is broken.  Weekly chart we just bounced off of the midpoint of the channel just the slightest bit, that is probably why we came so far off the lows on Friday which was something I wasn’t expecting because of the structure.  I am willing to say $99-$98 is in the cards if $101 is broken and not reclaimed.  Threshold to get aggressively bullish again is still $104 which was never reclaimed either.  Under Friday’s lows I will be trading aggressively bearish if the right setups come along on intraday, and that’s about it.

Gold:

     Like I said last week, gold was and is the easiest read out of all the instruments.  Bearish is the name of the game here.  Price held below $1320 which was a sign of weakness and then cracked $1280 which is a sign of watch out below.  I am looking for new lows.  You can say what you want about physical and fed printing or whatever and I agree with you.  But I won’t put my money on that, I will bet my money on what price action tells me.  What the market tells me.  I mean look at that weekly chart, you cannot honestly tell me that is bullish in the slightest bit as it stands right now.  The monthly too, that thing is broken.  It is that simple, you have a weekly and monthly that is broken so you look for triggers on the daily, and $1280 was that trigger.  Bulls would have to completely turn the tables on this to make a difference, meaning structure on monthly, weekly, and daily charts; getting past all the resistance through the time frames; turning the trend support around on the weekly and daily.  Just things that don’t happen until the market is ready for them to happen.  So watch for more downside, leave your emotions at the door, and trade smart.  Long term (monthly chart) you can start looking for real buy pressure in the $1100-$1000 zone.

Treasuries:

     I think bonds are toast.  Bearish reactions on the weekly and daily charts.  Weekly at 20ema and daily at trend support.  I am still willing to give it to 125’0 for an official breakdown level because of my analysis on rates but still I just don’t see any conviction from the bulls on this one.  Weekly chart is under all of the trend supports and getting bearish reactions from it as well as the daily.  Things aren’t looking good for bonds, and that will impact the entire country and the federal government if this keeps up. 

Market Internals:

     Market internals are trying to make a bounce back but still aren’t even close to bullish territory.  What they are trying to do is attempt to get into bullish territory.  Percent above 200sma is in a big wedge pattern that I will be following, haven’t seen something like this in a while.  Summation is trying to do some kind of head and shoulders thing, but I am still focusing on the fact that it is below 0.  VIX fell hard this week and raising hard, hopefully that keeps up.  Meaning both the rising and falling, indicating volatility and wide ranges. 

Economic Releases:

     I don’t know what is going to be released and what isn’t.  It looks like they have already knocked out Industrial Production and the EIA reports as N/A.  Assuming we get housing starts that is the highlight of the week.  The real highlight though is this whole debt ceiling debacle.  I love it.  The ‘deadline’ is this Thursday and with the president threatening default (debt ceiling doesn’t equate to default) the volatility may be present this week.
Trade well,
-Michael

10-06-13 Weekly Recap & Outlook

Stock Index Futures:

 
S&P and Russell are giving huge divergences.  Russell being the stronger of the two.  The month closed last week though, S&P closed with distribution on the monthly, and Russell closed a big green bar.  Look at that pattern that the Russell has been putting in though; one month green, one month red.  It is crazy.  What else am I to expect this month than a red monthly bar?  Weekly chart on the Russell is showing some distribution though, a small amount but still some.  Daily chart is what is making me ponder some short term upside though.  It is just a nice clean, consolidation, actually textbook bull flag.  On the flip side of things, there is more sell pressure than before one of these other runs the Russell has been making and I feel like if we did break out again (like on Tuesday) sellers would be waiting somewhere close to smack it down again.  Levels I’ll be watching are; holding above Tuesday’s high or getting below Monday’s low.  Any breakdown I would be looking toward the weekly 20ema as a target which coincides with the blue trend support on the daily.  S&P is in a much different spot, two monthly distribution bars, weekly distribution and RSI divergence, bearish engulfing pattern (engulfed the distribution), and failure patterns everywhere.  For any upside, it needs to get and hold above $1700.  If It can’t do that I’ll be looking for the weekly 20ema to break and $1625 to be tested.  **Note: The S&P & Dow Jones could very much cause the Russell and NASDAQ to break down**

Crude Oil:

Like I said last week crude may need to pull down to $101 trend support to find some better footing and that is exactly what it did.  It got some great accumulation off of that trend support and that is exactly the kind of stuff I look for.  It is currently back above the blue trend support, next objective is to get through the 20ema and channel on the daily.  If it can get going short term target is still $107-$108 area.  Weekly and monthly aren’t looking like they will pose any problems for another big run.  First signs that it isn’t ready to break through the 20ema will be failure on an intraday basis at those levels, either $104 support or the 20ema itself.  If it comes off significantly (breaking $103), it may need to come back for another round of accumulation around the $101 support.  So obviously $103 will be the key level I am watching this week for either continuation or more accumulation.

Gold:

Gold is definitely the easiest read out of all of them right now.  Below $1320 is the weakness and breaking $1280 is the trigger.  Everyone in the world is watching that $1280 level and if it cracks stops are going to be triggered, people are going to be bailing, shorts will be shorting, etc.  Because everyone knows breaking that level could lead to new lows.  I mean look at that weekly and monthly, those babies are ready for some downside action.  The only way gold is going to redeem itself to me is getting and holding above $1350 like I said last week.  I am more excited about downside though. 

Market Internals:

I posted this on Stocktwits.  McClellan Summation Index looks the worst and could reassure the other internals to continue into bearish territory.  If it gets that crossover to the downside while being below 0, I would not even touch any fresh breakout on the Russell or NASDAQ because there is such a high probability they will fail.  Especially with the percent of stocks above 200sma about to fall below 50% WHILE Russell is gearing up for a break.  Nope, that smells like a retail trap and it smells like a place where the smart money is going to be unloading as they have been.

Economic Releases:

Highlight of the week is FOMC minutes from the “no taper” meeting.  I am sure that will be exciting.  I don’t even know what other releases are going to make it out with the shutdown.
Trade well,
-Michael