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For those that are here for Technical reasons, I would like some opinions on this chart. It is the SPX. I can see a weakness creeping in here by way of a higher high in price but a lower high on the TSV. Also a fading volume pattern is not a good sign. Price will break the yellow box one way or the other (my guess would be down) but where is this hidden strength coming from that is driving the market up since early May on weak volume?
Here is the chart and I would like to hear from Davidjohnhall Diceman and any others that want to share their opinions.
Thanks
Apsll.
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I just want to add that we have had a nice rally since March and a lot of stocks have enjoyed some very good run-ups, in some casses up to 400% or higher. We have to remember that we are still within the context of a Bear Market and this rally is not going to last forever.
Just my opinion but I think that we better dust off those invers ETF's...
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TA is difficult to use on this chart because government intervention was the reason for the rally. Things are very often not what they seem to be.
If you look deeper into this rally you will see that the banks earnings were supported by stronger balance sheets based on the government flooding them with huge amounts of money and AIG paying back loans to them with money received through the government.
The government has done an awesome job in stabilizing the banking system by printing money and flushing it into the system. When the trend changes the retracement will be quick deep and devastating to the market. Re inflating the Bubble is not going to bring the economy into equilibrium.
IMO Stay nimble and light and be prepared for volatility to return with a vengeance.
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Hey APSll,
My stance has always been not to argue with price. If price is rising I don't want to stand in it's way. I think it will Richard Dennis or one of those guys who proclaimed that counter trend trading (or picking tops and bottoms) was like trying to lift nickels from the path of a steam roller. You might do it once, twice, maybe even 10 times, but sooner or later you're going to slip and fall and get flattened. :)
I did, however, take a position in SRS this morning based on a signal I got from an intraday trend trading method I use. looks like it's going to end up a fakeout though after the rebound this afternoon. That's fine, I have no trouble trying 2 or 3 times to get a position right.
Regarding the bear market, at some point it will be over as well. Price doesn't have to keep going up here but it also doens't have to travel down to March lows or even pass them. As I always I will be trying NOT to let my mind get attached to either possibility.
I have noticed less and less participation in the leg of the up move. It certainly doesn't have the ferocity as the first leg.
David John Hall
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Thank you for your opinion Dryfess and David. I have studied a lot of Bear markets and although I am aware of the fact that this one is fueled by different forces I compare this current action to that of November 2002. Take a look at that price action. We could see something similar now unless as Dryfess has suggested that the undercurrents are shifting diferently than that scenario.
I would not trust SRS since it has droped from $250 to $7 in about 6 months. I agree with my friend WSE that some if not all these "ultra short ETF's" are decaying. I know that I suggested to dust some of them off but I would only trust them for a short time. I also agree that picking tops or bottoms is gambling I just remember back in September and October of 2007. We were all talking back then of weakness showing up in the Technicals.
Any way thank you both for your input.
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I've traded the ultra etfs going on a year or so and I have to say all has been fine.
As far as trust goes, a trend that goes from $250-$7 sounds like a great trade if you got it the right way. Right?
Anyway, my intraday trend trades last anywhere from between 1 and 7 days and the decay has never bothered me. And seeing as we're on this topic, doesn't it seem like "decay" is the new buzz word on these things? But honestly, I have never had trouble with them. I have traded the following regular and inverse leveraged ETFS and always position size based on volatility.
UYG
SKF
UYM
SMN
URE
SRS
DIG
DUG
I'm not a fan of the 3x ETFS, who knows why -- but the 2xs work fine.
Regarding the govt intervention, if it created the recent rally then I really can't complain. Just as when the market collapsed it also created a trend. I have to admit it took me awhile to catch on in 2008, but all ended well.
There have been rumors of manipulation and wrong doing in the markets since there have been markets. And whether or not there is a plunge protection team, or dark pools of money creating head fakes and anything else, I don't know, but I do kow that trend trading will usually get me on the right side of the wave.
The only thing it doesn't help with are whipsaws. Oh well.
Thanks for the discussion!
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I think these zones are the battlefield...
Also, the SPX has been holding the 20ema perfectly, and until it closes below if for more than a couple days, there's nothing much to worry about, in terms of general market direction.
I think the odds are now very high that the lows are in (at least for a while) but that a correction wil come eventually, and will possibly carve out a H&S bottom.
The market faced the abyss in March, and thats as low as it went, now the fundamentals are clearly showing an improving trend since then, so I don't know what it would take to make the market breach those lows. Fiscal and monetary policy can't be ignored.
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It's interesting that you mentioned the decay of the Ultra ETF's. I have noticed this also. One only needs to look at the charts to see it. I would think that it would hardly be noticeable trading on a time frame of 1-7 days.
I have not traded stocks or ETF's for some time now, but I still like to keep up on current affairs and watch the flow of the markets. It is also interesting to see what other traders are doing and I plan on dropping in from time to time. I promise to keep personal opinions to myself.
Thanks for sharing you thoughts.
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QUOTE (Apsll) For those that are here for Technical reasons, I would like some opinions on this chart. It is the SPX. I can see a weakness creeping in here by way of a higher high in price but a lower high on the TSV. Also a fading volume pattern is not a good sign. Price will break the yellow box one way or the other (my guess would be down) but where is this hidden strength coming from that is driving the market up since early May on weak volume?
Here is the chart and I would like to hear from Davidjohnhall Diceman and any others that want to share their opinions.
Thanks
Apsll.
you forget, very overbought.
in a nutshell, too early for shorts, too late for longs.
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QUOTE (funnymony)
you forget, very overbought.
in a nutshell, too early for shorts, too late for longs.
only if your long is the SPX. There's plenty of nice setups breaking out.
And this consolidation that we're in for the S&P is needed if the market is going to continue to advance.
So far, the volume profile of the market is just what you'd want. Low vol on the down days.
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a declining volume profile shows weakening momentum, and can breakout up or down.
the markets up 40% without a correction. and has an indecisive break above the 200 day ma.
not exactly what i'd want to see, other than the uptrend is still intact.
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Keep in mind that the markets can stay in the over-bought condition for an extended piriod of time. I noticed that you used the Stochastic indicator to make your point. In my chart you will see that this indicator can float in the overbought region for some time. I actually consider this a sign of strength. I do how ever agree Funnymony that the volume pattern is showing more weakness than strength.
One last point about your weekly chart is that I see a nice Bullish head & shoulder pattern. So yes the markets are ambiguous at this time. Thus my reasons for starting this thread. Thanks for your input Funnymony and Ben. All so far have made good points. Now we need to hear from Tobydad, Diceman, Mammon, Fpetry and more of you out there...
Bellow is my chart that demonstrates my point concerning the Stochastic and how (IMO) there is no such thing as over-bought
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[/QUOTE]
you forget, very overbought.
in a nutshell, too early for shorts, too late for longs.[/QUOTE]
This quote is perfect, mind if I use it? It's what i've been trying to say lately but end up being way too wordy.
I like it, "...too early for shorts, too late for longs."
Everybody, heads up, you just heard the state of the markets.
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QUOTE (Apsll) Keep in mind that the markets can stay in the over-bought condition for an extended piriod of time. I noticed that you used the Stochastic indicator to make your point. In my chart you will see that this indicator can float in the overbought region for some time. I actually consider this a sign of strength. I do how ever agree Funnymony that the volume pattern is showing more weakness than strength.
One last point about your weekly chart is that I see a nice Bullish head & shoulder pattern. So yes the markets are ambiguous at this time. Thus my reasons for starting this thread. Thanks for your input Funnymony and Ben. All so far have made good points. Now we need to hear from Tobydad, Diceman, Mammon, Fpetry and more of you out there...
Bellow is my chart that demonstrates my point concerning the Stochastic and how (IMO) there is no such thing as over-bought
true, nonetheless, the uptrend is still intact. we just know its overbought.
there is a possible rising wedge on the daily.
that inverse head and shoulders looks a little incomplete. that right shoulder looks a little too small, and volume pattern is declining, so its very possible the breakout fails, the markets corrects here, and form a right shoulder similiar to the left shoulder, or simply fails to test lows.
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The volumes are definately dropping off, this becomes especially clear when you look at the volume surge. Also, the DJ-30 is showing what appears to be a double doji on the daily. I see the wedge with the top being at 943.85 and it appears that there will be a breakout soon but, to re-quote a great quote, too early for shorts, to late for longs.
Disclaimer, I am short the DJ-30 (Long DXD) with October calls so we all know which side I hope this thing breaks out to.
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QUOTE (dryfess)
TA is difficult to use on this chart because government intervention was the reason for the rally. Things are very often not what they seem to be.
If you look deeper into this rally you will see that the banks earnings were supported by stronger balance sheets based on the government flooding them with huge amounts of money and AIG paying back loans to them with money received through the government.
The government has done an awesome job in stabilizing the banking system by printing money and flushing it into the system. When the trend changes the retracement will be quick deep and devastating to the market. Re inflating the Bubble is not going to bring the economy into equilibrium.
IMO Stay nimble and light and be prepared for volatility to return with a vengeance.
The bank's balance sheets were also helped a lot by the revised "mark to market" rules. Although a lot of people made a lot of money during this rally, I feel it was a false rally and I totally agree with dryfess's views. One of the better quotes that I have heard was that the feds are blowing air into a balloon that's already burst. I have a hard time believing the markets have defied gravity to these levels and for this long. The television taking heads are claiming that all the bad news is already baked into the markets so buy, buy, buy. Really? We will see. One thing I learned during the Nasdaq bubble (I know this is incredibly obvious) was that when everyone screems buy, buy, buy....it's time to sell, sell, sell.
(Sorry, not technical)
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With main stream finally saying the market is getting better and the news dropping the daily "we need a pullback" it might just be time for a correction. Institutions are selling banks over the last month and from what I understand they feel banks lead the way. I still stand by the idea the market inflicts the most pain on the most people so if the common word on the street is buy I am selling. I really thought yesterday was the turn for a correction as we head into summer and volume will naturally slow I am looking for shorts in stocks the institutions are selling and being very quick on the tight stops.
ScottyB
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Just my opinion/thoughts here, but I hear a lot about this rally being a "fake rally" or a "manipulated rally". It is my very humble opinion that the sooner the mind stops thinking of market rallys as fake, the clearer the mind will become.
If this is a fake rally, what is a real rally? And I am not joking. We know what fake diamonds are. Fake friends. Fake grass. But a fake rally? In my mind a rally, or a trend is when price trends from one point to another point for a certain amount of time.
This is what the market did.
Was it suported by fundamentals? Who knows. I'm a purely technical trader. And I have traded trends in stocks that were losing money hand over fist, swiming in debt, with lousy management and horrible business models. But price was moving. And lo and behold, a few weeks later they had some great announcement and that's why price was moving.
To go further into it, if the market is manipulated (like many believe it has been for a VERY long time (100 years or so)) then isn't this the reality we are trading in? And wouldn't a fake rally then be a non-manipulated rally?
If you don't make money on a rally or go the wrong way because you were trading counter trend and believed the rally had to correct, then it is easy to dismiss the rally as "fake", because this is what the ego wants -- to be right at all costs. Even if it means distorting reality. Believe me, I have distorted a LOT of realities in my time. But distorting reality does little to help you get a workable program to not miss the next rally.
And what about the sheer power of the rally, the across the board participation -- not only in the banks, but massive moves in all sectors. If the entire volume of the entire market can be bought and sold like that then I am amazed. But even if it can, you can still make money as it is bought and sold by much deeper pockets than ours. You do that by keeping your eye on the ball...
If you are a purely technical trader you are taking your cues from price and volume, and sometimes only price. It doesn't go up forever, and it doesn't go down forever. The market was never going to go down to $0 without a correction. That this correction has lasted longer and has been stronger than traders (myself included) imagined it could be is a great lesson in knowing that we cannot predict where the market is going, or how far it can travel.
Okay, I have rambled my thoughts long enough. Thanks for letting me work them out.
David John Hall
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I like the way you work things out. Keep doing it. I agree a trend is a trend. The stocks that gained 600% and the folks that profited form them care not wether this rally was real or fake. The $$$ that they deposit into their accounts are very real I can assure you. So bring on the fake rallies, bring on the real ones. Makes no difference to me. Like David I play what I see, not what I want to see....
Good post David.
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Bravo David! Well said.
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still in the range.
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I also have no idea what a fake rally is. They say there are two sides to everything, except in the market..there is only one side: the right side.
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the idea behind swing trading, is the smaller fish swimming with the bigger fish. whomever those bigger fish may be.
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"Just my opinion/thoughts here, but I hear a lot about this rally being a "fake rally" or a "manipulated rally". It is my very humble opinion that the sooner the mind stops thinking of market rallys as fake, the clearer the mind will become."
-------------------------------------------------------------------
If we get technical 2003 to 2007 was "fake".
Does that mean you couldn't make any money?
(heh,heh)
(By the way. There was a brief period from mid March
1942 to late April 1942 when everything was "true" and
"real" Everything since then has been fake!)
Thanks
diceman
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Well here we are another trading week behind us and still the Markets are not tipping their hand. It appears that we still have a Bullish chart pattern and yet the volume pattern is continuing to fade. On the 11th we seem to have broke out of the triangle to the up side but the Bullish euphoria was short lived as price retreated into the womb of the wedge.
What is next? I know that Options expiration is coming up. I have friends that tell me that the internals are weak, but they have been telling me that since April.
Anyway here is the recent chart if anymore would care to comment and give there view...
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looking at some of the indexes on the 60min charts, the current consolidation is looking more like a broadening formation, especially on th q's.
breadth indicators are diverging negatively from price.
elliot wavers think the current rally can go to @9700. seems we need a correction, or B wave, first.
we've yet to see the big downs days that precede a trend change, yet though. so chop chop chop along for now. the opportunities seem to be day trading for now. particularly in the last hour.
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I think funnymony has nailed it, no need for add'l comment from me other than to cast my vote that I suspect some down side and soon.
Swing traders: I suggest keep a very close eye on your positions, take profits without hesitation and accept a small loss if your position gives you the slightest reason to be suspect.. I'm seeing patterns that could lead to explosive upside in the VIX chart.
We could see some air gaps down that way we saw when this whole bear market thing was preparing to pounce upon us.
all the best
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Good stuff here, this is what I wanted; friendly "smart" debate. I too see that the Nasdaq (QQQQ) on the intraday charts have made a new swing low and that the breadth indicators are reacting Bearish. One indicator in Telechart that I follow is the T2108 (% of stocks above the 40 day pma) and this indicator is turning Bearish. Although I have mentioned in other places that I am still seeing strong charts that have out-performed this market consolidation (such as -
ATHR
BID
AFFX
DXCM
WFT
RVBD*
I do believe that we are in for some down side action. Will it be the Techs that lead the way? I am currently Day Trading, as Funnymony has suggested; it is not wise to hold over night.
Lets hear some more opinions on what you think about the state of all this. I have read back to some earlier posts by some of us back in late 2007 when the first signs of this Bear market were forming. Interesting stuff.
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i guess the caution on swing longs was warranted.
the broadening formation on the q's was broken to the downside with a "breakaway" gap.
i'm sure a day trading long will be along shortly, if you missed shorting the gap down.
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I actually had a great trade long this morning as documented live on my trading group. The ticker was JAZZ and it is still holding its own. Once I made 20% off the trade then I was out.
It just goes to show that there are stocks moving out there. A friend of mine noticed it moving in the pre-markets and we watched it together from the bell... Trading does not have to be a lnoely game...
Apsll.
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Correction (Trading does not have to be a lonely game).....
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my ben franklins keep me company.
couple of bounce candidates:
mrvl
zeus
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One of my friends is in ZEUS. I told them that it looks like a Bonanza Bottom if ever I saw one. My new view of what a bonanza bottom actually looks like now would be a mix of my old theories on the subject and my VSA observations. ZEUS is a good candidate for this. I agree with you Funnymony that some positive action is on the horizon. The looming market decline might temporarily interfere with this but I believe in this chart pattern.
Good eye. I like MRVL but the volume pattern looks more impresive with ZEUS (IMO)...
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For now, I see the S$P retesting the 875 area in the near future. Then possible consolidation or a run up to 930 to complete the Head and Shoulders pattern. We shall see.
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ZEUS is still holding support. I have the line drawn at 23.99 with the 1/6 peak a near miss. I see a 10/14....11/4 double top that was breached on 6/10. A solid hold above 23.99 and a close above 27.25 could easily see a run to the 38.00 range. Techinally speaking, of course.
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The markets did their thing durring the first part of the week and were running Bear. Now it looks like we have been given some room to the upside (not much) but I do not expect to make a new high. If we do then 1,000 on the SPX is more than likely the next level.
I will be away for the next couple of weeks (Business and another vacation). Say hi to my friend if he finds a way back in this week end.
Enjoy the Markets...See you all soon.
Apsll.
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seeing quite a few wedge looking formations on the hourly charts.
time for caution on new longs.
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Well we did not make the new high (Yet). Maybe we will and maybe we will not. I have a lot of friends telling me that Bullish days are ahead. I say that we will head down.. There analysis is just as sound as mine and thus we are trading in complicated times. The VIX shows us that Volatility is low and I know those that say that the market internals are Bullish. It is hard for me to day trade without the volatility, so I am scaling into certain Bear ETF's that I feel are being accumulated. Then the market screws with my head and kisses the June highs. So is this a double top? should I sell my positions and go Bullish?
I do not have these answers. If someone does than please let me know.
Bellow is a chart from January 2002. The markets were looking sort of like they do now. Of course they were no where near the bottom yet, so this could be a lesson. Do not think that for one moment that you have it all figured out. When in doubt then go all cash and draw your trend lines. Play what you know and not what you think. It is better to not make any $$$ then it is to lose it...
Happy trading
Apsll.
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the $64.000 question remains. can the market break decisively, through the june highs on expanding volume? or will a diamond or complex head and shoulders develop? only time will tell.
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