Going higher on lower volume

Today was almost a exact copy of yesterday. Choppy opening and then lower, followed by a trend higher albeit at a slower pace than the previous day. Today tech and small caps were actually lagging the Dow and S&P and they also printed possible hanging men (hammer-like candle after a couple of updays). That may indicate the end of this rally is near.

The rally came after the news that central banks would bring liquidity-providing operations to the markets (see article here). The economic data coming out before and just after the open, was not to bad. The focus was mainly on the jobs data and the Philly Fed number. Both were not meeting expectations, but stocks shrugged off the bad news.

5m-chart of the last 2 days in SPY, you can see momentum is waning a bit.

The next charts are DIA and QQQ. You can see QQQ (Nasdaq based ETF) clearly leading and breaking out today, but it's still in it's trading range.

Trades
I got stopped out of BAL (just above breakeven) and SGG (small profit). The only trade I have left, is an options play on the divergence between GLD (gold ETF) and GDX (goldminers ETF). I entered the trade on 08/23 on the divergence between gold and the goldminers. The goldminers were lagging gold action, so I wrote GLD-calls and bought GDX-calls (both March '12 calls). It's working great so far, already sold half the position and keeping the other half.

Nice rally but a weak close

Earlier today I posted we broke 2 trendlines. We had a nice rally that got us right at resistance for a couple of indices, including S&P (1200 was resistance). However, the close was weak, the bears really did their best in the last half hour. The breakout is still valid, but bulls will have to step up.

Tech (NASDAQ) looking much stronger than other indices. So if you feel the urge to trade this market environment, certainly don't forget to include some tech stocks. But this is our third consecutive upday. I would not risk going long right here...

Gold and silver only down moderately, while oil is up 1%, right under the 90-level. It figures the euro also rallied with the market, where as a weak dollar often coincides with strong equities.

Daily chart DIA:

Updated ES-futures hourly chart:

SPY 5m-chart, note the hugh volume on the reversal:

Trades
SGG closed the Monday-morning gap and then bounced hard, BAL still moving higher, so keeping both in my portfolio. Stop-losses are at breakeven for both.

Another volatile day

A difficult environment for the short-term (day)trader because of the (deeper) pullbacks. However, the bulls must be happy with this follow-thru day with indices closing near the highs. The best chart is probably Nasdaq, followed by the Russell2000-index. For now, the bearflag is still holding, so anything is still possible.

Almost everything moved in sync; equities, gold, silver, oil were all up. The dollar and treasuries went down.

Hereunder the 5m-chart for SPY; high volatility, especially towards the end of the session:

Daily chart for the DIA, volume is ok, but today's candle isn't really convincing. Still, as said, anything is possible.

No new or closed trades, BAL and SGG still in portfolio, both are consolidating.

More trouble from the Eurozone

Still a lot to do about the Eurozone-troubles and futures opened 1.5% lower. And while Obama is trying to get his job plans approved, Bank of America will cut 30,000 jobs. Ouch, not helping!

An early morning rally got stopped near Friday's close-level. From there on we chopped lower, forming a wedge. This wedge got broken on rumors that China would help Italy. There was a lot of unclarity if the news was false or not, so stocks dived down and later on spiked again, resulting in a very strong rally into the close.

5m-chart SPY:

Tech was performing better than the rest, creating a divergence between Nasdaq on one hand and other major indices on the other hand. Oil was rallying, but gold and silver got hit bad. While almost everything moved in sync today, gold and silver didn't move up as much as stocks did in the afternoon rally.

Indices still closing inside the presumed bearflag, but we went outside of it intraday. So tomorrow will be key, will we reverse or add to today's strength?!

Daily chart DIA:

Trades
My inverse ETF's went well and 1/3 was sold in pre-market. The balance was closed together with the ES-futures early in the session, basically breakeven. But I went long more ES-futures 5 minutes in the session (strong open on a big gap down after two downdays) and sold half an hour later for +10 points.
SGG and BAL doing just fine, so keeping them in my portfolio.

The closed trades:
BGZ: +2.57%
EDZ: +3.72%
SKF: +1.78%
SPXU: +2.48%
FAZ: +2.81%
TZA: +1.88%
ES-futures: 'the hedge': -8.25 points, added morning trade: +10.75 points. All in all not a bad day!


An interesting article about volatility thru the years, spotted by The Reformed Broker, aka Joshua Brown.

Another gap and a trend down day

A rather strange day with stocks as well as gold (minimal), silver and oil declining. So were did the money go then? Well, the dollar keeps on rallying, also meaning the euro really gets hammered lately. Since the last trading day of August, the euro lost about 5%.

We had a trend day down, closing not too far from the low of day and near the bottom of the assumed bearflag. Indices went 2%-3% lower, mostly on Eurozone news and rumors of Greece defaulting. Let's see what the weekend has in store for us.

Trades
I went long the inverse ETF's I was stopped out earlier this week. I got a new buy signal this afternoon while the market was tanking.
BGZ: long 44.42 SL42.00
EDZ: long 23.98 SL22.70
SKF: long 80.45 SL76.70
SPXU: long 19.88 SL18.85
TZA: long 48.61 SL45.45
FAZ: long 63.03 SL58.80
I also bought ES-futures as a hedge against the inverse ETF's, probably just for the weekend.

I was stopped out of the last half of MCP at breakeven (55.51). Still in BAL and SGG, they're still looking ok.

Before the US session opened, there was some important economic data to take into account: ECB left rates unchanged at 1.5%. As a reaction, indices came down about 1% in pre-market.
Jobless claims were weaker than the forecast, not helping the bulls.

Further interesting news comes from OECD Chief Economist Pier Carlo Padoan. He made the following statement: “Growth is turning out to be much slower than we thought three months ago, and the risk of hitting patches of negative growth going forward has gone up.”  In other words, a recession is nearby. Read the entire article here.

The morning open came with a rally towards the overnight highs, which remain resistance for now.
During the session, there were 2 important speeches, one from Obama and a second one from Bernanke.
While Obama suggests payroll tax cuts, Bernanke claims the Fed still has some tools left to save the economy but he admits problems are more than just temporary (and worse than they assumed). After that, the market tanked a quick 6-7 points to the pre-market lows (support). The bounce was rather small and soon we were back at the lows and now breaking them.

Consumer credit was very strong, $11.9 billion beating expectations of $6 billion. No real noticible reaction to the number, indices were still going down, just under the previous mentioned pre-market support. Bulls tried to stage a rally in the last hour, but bears fought back and we ended near the low of the day.

On the SPY-chart, we notice a diamond-top pattern on the 5min-chart:

An update of the DIA-chart, we're basically in the middle of the range.

Big divergences between the indices, small caps were underperforming, NASDAQ doing a bit better than S&P/DJIA.

Gold and silver rallied after yesterday's decline. The dollar is up from it's pullback yesterday, the euro is very weak and dropping further towards the July lows. Under those lows and the euro could travel much lower, possible target 1.30.

Trades
I took partial profits on MCP @56.94 and @58.50 (1R and 2R). Letting half my position run with SL at breakeven. BAL is moving nicely, SGG is holding up ok for now.

Trend day

Today was a nice trend day, with everything lining up: silver and gold down (gold lost big, -3.2%), dollar down, oil up +4% and treasuries down. A good day for the bulls, closing the S&P-futures near 1200, close to the next resistance-level and Friday-gap high. I expect some chopping around this level tomorrow. Interesting to see what happens after that. Here is the SPY 5m-chart:

Trades
As mentioned in the previous post, I got stopped out of the inverse ETF's.
I entered a few new trades:
Long MCP 55.49, SL54.00
Long BAL 68.50, SL65.00
Long SGG 97.20, SL92.00

Missed opportunity: APKT which knew a strong opening and I should've gone long near 48. Keeping my eye on this one in case it gives an opportunity to get in later.