We were busy with work all day and sadly had no time to trade or watch the tape except at the end of day.
Recap & Stance:
The pullback doesn't seem finished. We may have to revisit the scheme of things if SPX closes above today's high (~810). Until then, we are at ease with labeling this as a Wave b rally in a Wave 2 move => we still are rooting for 760 on the SPX . We may get some continued strength tomorrow morning, but we expect wave 'c' down to kick in shortly either tomorrow or on thursday.
Intermediate term, we are still watching for our turndate, the 8th of April (+/-).
Silver seems to have painted a nice long tailed candle. Gold painted a doji, so it appears the bears are unable to push this lower. The rest of the week will give a vital clue if we need to cover our short positions in the precious metals. As of now, we are just lowering our buy stops on slv.
Tuesday, March 31, 2009
Monday, March 30, 2009
Pullback continues
Recap & Stance:
We got a nice sell-off today and there was not even a hint of resistance by the bulls. However volume still remains relatively light, which is a good thing for the intermediate term bullish scenario.
As for our stance, we are still short term bears. The move down doesn't appear to be complete. We need some more time. As we mentioned in our previous posts, the area surrounding 760 remains our target. Infact, we would "ideally" like for the price to drop below the 20d moving average. This would drag quite a few bears on board and act like a false breakout on the downside. Note that this mere speculation on our part. Markets will act as they want. Our strategy is to start layering from around 760.
Trades:
We did not trade today, since we were busy. Gold broke beneath the bevy of moving averages. It would be bearish for GLD (and good for us) if we get a confirmation red candle close below the moving averages tomorrow. The encouraging thing for precious metal (PM) bears is the volume is increasing on the downside. Silver is still sitting on these averages - so we may see another bounce tomorrow. Eitherways, we still think PMs have 2-3 months atleast before the underlying bull market from 2000 re-asserts itself, which could propel gold towards 2000.
We got a nice sell-off today and there was not even a hint of resistance by the bulls. However volume still remains relatively light, which is a good thing for the intermediate term bullish scenario.
As for our stance, we are still short term bears. The move down doesn't appear to be complete. We need some more time. As we mentioned in our previous posts, the area surrounding 760 remains our target. Infact, we would "ideally" like for the price to drop below the 20d moving average. This would drag quite a few bears on board and act like a false breakout on the downside. Note that this mere speculation on our part. Markets will act as they want. Our strategy is to start layering from around 760.
Trades:
We did not trade today, since we were busy. Gold broke beneath the bevy of moving averages. It would be bearish for GLD (and good for us) if we get a confirmation red candle close below the moving averages tomorrow. The encouraging thing for precious metal (PM) bears is the volume is increasing on the downside. Silver is still sitting on these averages - so we may see another bounce tomorrow. Eitherways, we still think PMs have 2-3 months atleast before the underlying bull market from 2000 re-asserts itself, which could propel gold towards 2000.
Friday, March 27, 2009
Pullback begins
[Will add a charts and some calculations tonight]
Recap & Stance:
We finally started seeing the pullback today, though volume remains light which is a good sign for the intermediate term bullish case. As has been our stance since the past couple of days, 27(+/-) turned out to be a cycle high and today we got a close (the first one, since 16th) below the hourly 20MA, first signs of that a 5-10% decline is in the works. Our next cycle turndate is around Apr8-10.
Trades:
As we wrote in our posts yesterday, we bought some TZA yesterday. We are out of the trade today by the close today for an ~8% gain, though we believe this market has more downside to travel in the next week. The 760 region should be a good first target. We must include a note of caution here - as per our ew labeling now, we could get a sharp (yes *sharper* than the last 2 weeks) of rise out of the next low. So, it would rather be advisable to not get caught with shorts positions.
We put on a silver and gold short trades, last week and are still holding it. Gold seems weaker than silver (a bit of a surprise to us), but nonetheless the next 2 weeks should be key in giving us a concrete direction, for the price is on the crux of so many moving average, 20, 50, 200 - you name it. We are still rooting for a quick burst to the down side.
Recap & Stance:
We finally started seeing the pullback today, though volume remains light which is a good sign for the intermediate term bullish case. As has been our stance since the past couple of days, 27(+/-) turned out to be a cycle high and today we got a close (the first one, since 16th) below the hourly 20MA, first signs of that a 5-10% decline is in the works. Our next cycle turndate is around Apr8-10.
Trades:
As we wrote in our posts yesterday, we bought some TZA yesterday. We are out of the trade today by the close today for an ~8% gain, though we believe this market has more downside to travel in the next week. The 760 region should be a good first target. We must include a note of caution here - as per our ew labeling now, we could get a sharp (yes *sharper* than the last 2 weeks) of rise out of the next low. So, it would rather be advisable to not get caught with shorts positions.
We put on a silver and gold short trades, last week and are still holding it. Gold seems weaker than silver (a bit of a surprise to us), but nonetheless the next 2 weeks should be key in giving us a concrete direction, for the price is on the crux of so many moving average, 20, 50, 200 - you name it. We are still rooting for a quick burst to the down side.
Thursday, March 26, 2009
Bulls on steroids
Recap & Stance:
Another bullish day, with another whipsaw and another round of pain for the bears.
We will be the first to admit, we were wrong in looking for a cycle low around Mar 27th (+/-).
Instead it most certainly looks like it will be a cycle high. Cycle inversions happen sometimes in our model of calculating cycle turndates (and again we will be the first to admit, our cycle model needs more work).
What the market has done is actually tag the 20Weekly moving average. It is a tag after a long time. The market will face resistance here. The daily SPY is wedging - the internals advances/declines, momentum, mclellan oscillators etc. are calling for a sharp pullback ( probably a DOW -400 tomorrow??). We like the odds of a nice sell-off/correction here.
Trades:
We did not trade intra day, but when we saw the SPY tag the 20Week moving average late in the day, it opened the window for a disciplined "easy" trade in terms of risk-reward. We entered a small position on TZA (3x short russell) @ 44.5. The plan is simple - a daily close above the 20Week moving average + 1%, (around 835) and we close our trade for a loss. The reward side - our target is the 5Week Moving average, around 760.
Our next cycle turn is Apr 8th (+/-). Maybe Wave 3 starts then??
Wednesday, March 25, 2009
Another Whipsaw wednesday
(A pithy) Recap, Stance, trades:
Nothing much to add, since there is not much change yet in the intermediate term outlook.
No trades today.
Nothing much to add, since there is not much change yet in the intermediate term outlook.
No trades today.
Tuesday, March 24, 2009
Sentiment
There is a "lurking" feeling deep inside us somewhere that we may get another shake out. This has not been translated into the charts yet, but some of the sentiment indicators we are watching are really bullish.
1) The chart above is the nasdaq daily sentiment is almost even at bulls/bear
2) The put call ratio is hovering around 0.75 - we would like to see it above 1.1 or so
While it can be that this bullish sentiment acts as a tailwind for the rally. But...
Bottomline: We will continue to watch these sentiment indices. A "reset" of the sentiment would be a really help fuel the rally with lots of force.
Addendum Rant (feel free to ignore): Was just watching a few archived analyst interviews on TV today. Got to give it to Robert Prechter!
You cannot argue with his timing and conviction - it is a dream trade, the perfect one.
Wave 2 Chop Shop
Recap & stance:
Nothing much to add today. We chopped around. Volume was light. Thus far, everything is as expected. We are tentatively labeling this as a wave '2' pullback.
Lets look at some timing here. Wave '1' lasted roughly 10-11 days. If indeed, this is wave 2 and lasts a fibonacci .38, 0.5, 0.618 ratio for an appropriate price correction,
we could see the short term bottom around March 27th or Apr 1, thereabouts. If you traded last year, April 1 was a record breaker then. If my memory serves me right, we had a mammoth rally on April 1. So seasonals are also positive. What I mean is the stars all look lined up.
I would like to add a note of caution here - fibonacci time series estimations are just a guess. FWIW, they should not be a primary reason to buy. It should only serve as a wake up call, that the time may be near.
Positions:
No trades today. Our precious metals shorts went green, so lowered the buy stops - atleast we will be assured of profits, unless ofcourse there is a big gap up.
Nothing much to add today. We chopped around. Volume was light. Thus far, everything is as expected. We are tentatively labeling this as a wave '2' pullback.
Lets look at some timing here. Wave '1' lasted roughly 10-11 days. If indeed, this is wave 2 and lasts a fibonacci .38, 0.5, 0.618 ratio for an appropriate price correction,
we could see the short term bottom around March 27th or Apr 1, thereabouts. If you traded last year, April 1 was a record breaker then. If my memory serves me right, we had a mammoth rally on April 1. So seasonals are also positive. What I mean is the stars all look lined up.
I would like to add a note of caution here - fibonacci time series estimations are just a guess. FWIW, they should not be a primary reason to buy. It should only serve as a wake up call, that the time may be near.
Positions:
No trades today. Our precious metals shorts went green, so lowered the buy stops - atleast we will be assured of profits, unless ofcourse there is a big gap up.
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