Just one more chart...

The hourly chart for S&P-futures, trendline holding so far:

MERRY CHRISTMAS EVERYONE!

Intraday update

Like I said in my overnight post, it looks like a bearflag, but watch out for a break of either trendline.
We broke higher, successfully I might add. But right now, we're pulling back some. 1248-1250 is now first support.

Futures update

Looks like a successfull retest of the breakout, but 1250 is major resistance. More basing would be bullish!

S&P-futures possible bearflag

This looks like a giant bearflag is building on the ES-futures. But beware, market is there to take your money, so look for a break of either trendline. Sometimes breakouts are fakeouts. But if this one breaks lower, we're looking for a target under 1200.

And the gap is filled

Well, it happened again, it took only a day to fill yesterday's gap. An interesting fact is that tech is back (for today anyway), meaning it didn't underperform as it used to do lately. Also, small caps were lagging the market, their leadership didn't last long.

The market formed an intraday triangle in the first 3 hours of the session, which than broke to the downside. A quick trip to 1152 in ES-futures followed, that's where the bounce came. There was no real convinction or volume in the move, and a bearflag formed. It broke and soon we found ourselves at new lows for the day near the end of the session. Hereunder the 5m-chart for SPY:

Metals got hit again today, together with oil. Biggest loser once again was silver (over 6.5% down).

Below the daily charts for DIA and QQQ:

Another big gap... what's new pussycat?

We opened with a very big gap (almost 2%) and barely went lower in the morning. This means the Thursday-gap got filled, by means of another gap. It's the 7th big gap since the early August sell-off. Most of these gaps remained unfilled for at least 2-3 days...
Those who wanted to fade the gap, got fooled by Mr. Market (unless you had the patience to wait and pull the trigger in the last hour of the session). Not that we saw much conviction in today's action, it felt more like consolidation. Indices traded in a tight range until the last hour of the session. That's when price broke down for a quick drop (almost 20 points in S&P). However, the morning-gap didn't get filled, so bears not claiming victory yet. Hereunder the SPY 5m-chart:

As happened yesterday, tech was lagging the market (albeit only little). Small caps were actually leading today (for the first time in a while).

Gold and silver continued to move higher after yesterday's bounce. Oil joined the party (+4%).

Daily charts for DIA & QQQ below. DIA could just as well morph into a W-pattern or in other words, a double bottom. Time will tell... But it definitely takes a long time for this market to break down any further. If it happens, it should happen about now, before bulls get too confident.

Trades
I got rid of the SPY/ES-futures trade, basically for breakeven. Of course this was ridiculous, not having the guts to get rid of the SPY's at the right moment last week. But I did play some nice option trades of the open ES-position. Although I was too cautious, closing my last position yesterday. Holding overnight would have tripled or quadrupled my gains!
100% back to cash now and waiting for the next opportunity!

Divergence becoming undone? And indices about to fill a gap.

Home sales were beneath expectations, but influence on the market seemed minor since we were already travelling down and hit the morning low just little after numbers came out.

While tech was clearly leading the market the last few weeks, that picture changed somewhat today. The Dow was leading Nasdaq with 1.5%. So big caps are outperforming tech, thanks to the financials among others.

Metals were getting killed again overnight, but they bounced hard and made good effort to erase most of the losses. Volatility is enormous right now (see the wild swings on the chart below, and pre-market was even worse) and the market seems to trade from rumor to rumor. No real edge here, every new rumor can send the market in opposite direction. Only short-term (day-)traders can make money in these type of markets. For longer-term traders it's best to wait for more clarity about the Euro-situation.

SPY 5m-chart for the last 2 trading days:

Daily charts for DIA and QQQ. For DIA, a backtest of the broken trendline (and a gapfill) seems quite likely, we're almost there. Same gapfill expected for other indices, including tech.

Trades
With market putting in higher lows and higher highs in pre-market, I anticipated on a possible retest of the premarket high of 1150. So I shorted 1100 futures puts and went long the same amount of 1180 futures calls for a credit of $200 per pair. Expiration of the options, this week. And since I'm still short ES-futures, the only 'danger' is when futures fall below 1100 (this is the point where my profits will be limited). Per 1148, I took profit.

Watch out below!

Wow, impressive downmove overnight, and a continuation of the slow but steady downslope throughout today's session. Indices dived another +3%, bringing us near the August lows for Dow, S&P and Russell. Only tech is still far from those lows, about 6-7%.
A short-lived spike up on news of bank recapitalization in Europe didn't help much, bears were just too strong at that moment. But in the last half hour, bulls managed a rally towards today's opening level.

I expect the August lows to hold for this week, but I'm definitely not betting the farm on that! Any unexpected news can send us down another 3-4% tomorrow.

Precious metals got hit hard, silver & copper down 9% intraday, but gold rather strong (compared with the other metals), down 'only' 2.5%.

Charts for DIA and QQQ below, DIA-chart acting according to expectations. It gives us a possible target of 94. But what will QQQ do, still in the flag here?

Trades
Unfortunately, with the FOMC-meeting yesterday, I didn't act like planned and I haven't peeled of any SPY's yet. Too bad, cause it would have made for a great winner. Still feeling to insecure in this market environment.
I did short an out of the money ES future option put. As long as S&P-futures keep above 1100, I'll keep the option premium.

Divergence between indices and overhead resistance, what now?

What a nice market rally half an hour into the session. It brought the S&P right under 1220 were it touched several times. There we stayed rangebound until an hour and a half before the close. That's where the bears took over, taking back all of the gains of the day. This creates several bearish candlepatterns on the major indices; inverted hammers on the Dow and S&P, an engulfing candle on the Russell2000 and a dark cloud cover on the Nasdaq.
Moreover, Dow and S&P are sitting close under resistance of their 50-day moving averages. Nasdaq is sitting above some major moving averages, but at the top it's trading range (see depicted chart of QQQ below).

Charts of DIA and QQQ hereunder, both have quite a bearish look.

Gold and oil were up +1%, silver only up just over breakeven.

The focus tomorrow will be on the FOMC-meeting. Interesting to see what will be said and how the market will react to that.

Trades
I closed my GLD- & GDX-calls for a nice gain ($237 per pair traded).
I also went short ES-futures today, 1207.50 on average. Taking a prudent stance for now by hedging the position with SPY-longs. I'll peel of the SPY's on further market-weakness. Something new I want to try, see if this works out or not.

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.

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.

High volatility, bearflag not broken yet

US-markets were closed due to Labor Day, but in Europe the action carried on. With lots of bad news out in the Eurozone, and US-data not that great either on Friday, futures travelled a lot lower between Sunday evening and Tuesday morning.

The indices came off the pre-market lows and spiked on the ISM-numbers, only to reverse at the opening level. The bounce brought us above the morning high and over pre-market highs, even taking a shot at Friday's lows.

Translated to the S&P-futures that gives: up 15 points, down 15 points and up 27 again... (see 5m ES-futures chart above) Volatile enough for ya? The big gap nearly closed and for now the lower trendline of the assumed bearflag, still holds (see depicted daily chart of DIA below).

Gold gapped higher but a strong intraday reversal followed. A double top is possible on the daily chart. Silver was acting much weaker than gold while oil moved almost parallel with the market for most of the time.
EUR/USD at 1.40 now, the dollar is moving strong in the last 4 sessions. The euro finally gets punished after all the bad news from the eurozone lately, even despite a sharp spike up on the CHF-news.

Trades
Despite being down quite some intraday, the inverse ETF's in my portfolio still ended up between 1% and 5% in the green. I moved up my stops, still leaving enough room for a pullback. I sold half of EDZ at 2R. All trades are now half the starting size, i'm looking to add bigger size when price/action/volume seems right.

Blood on the streets: another +4% downday

Worries about the global economy hit the market again today. Bank stocks in Europe took a beating and futures lost +2% overnight. Half an hour into the session, the Philadelphia Fed Manufacturing number was so bad (-30.7, consensus was +4.2), S&P-futures plunged almost 20 points to 1130 in under 10 minutes. Then we bounced but 1150 was resistance just as it was before on the recent low about a week ago. The morning low got tested in the afternoon and was slightly undercut. Bulls tried a late rally, but the bears definitely won the battle today.

In the mean time, gold is making new highs and silver is trying to keep up, but can't. The lack of volume in the last 5 sessions says it all. A big loser was oil, down almost 7%.

No trades today, although I was considering a short near 1161 (red arrow) on the break of that nice 1165 base. If only...
Missing yesterday's ideal short is my biggest regret. Today, I actually hoped for a bounce towards 1180, searching for a short-opportunity right there. But markets rarely do what you expect them to do and hope is not a good trading strategy!

False breakout and another move down to support

We started the day with a small gap up which held eventually. The 1200-resistance in the ES-mini's got taken out, but it appeared to be a false breakout. From there on we went down all the way towards the 1180-support level. Support held and a minor bounce followed. Intraday a head-and-shoulders pattern is forming in the charts, but the right shoulder does look a lot like a bearflag... (see picture below)
Most indices are forming spinning tops on the daily chart, more signs of indecisiveness.

Trades
In the beginning of the session, the market broke the 1200-barrier and then pulled back slightly. I bought some SPY's, but in hindsight, the pullback was too far away from the moving average (too shallow) and maybe we already ran up too much.

The better (best) trade would have been to short when a double top formed together with a big red engulfing candle on huge volume (red arrow). Unfortunately, I was still long biased and it felt like going against the (short-term) trend. When the 10.10 low got taken out, the downtrend was confirmed.
It brought us all the way down to the 1180-support in the ES-futures (as mentioned before). A huge volume spike marked the bottom (green arrow). I waited for a higher low and went in near 119.30. Market went up slowly and I got out, making just enough to compensate for my earlier loss.

If today I traded a little more on instinct, the missed short entry (red arrow) and earlier long entry (green arrow) would have made for a very nice gain instead of finishing the day just above breakeven.

Tuesday 08/16: Lots of volatility due to the Sarkozy-Merkel meeting

As stated in my previous post, I expected Monday's high to act as resistance and it did. Unfortunately, it was at that same time the Sarkozy-Merkel meeting took place. Their statements brought lots of volatility into the market. This ruined my setup since I wanted to wait for a down-bar (confirmation) with a low risk entry point. A 5 minute-bar with a spread of 10 points on the ES-futures isn't exactly low-risk, so I skipped the entry. Too bad, since we went straight down to support near the 1180-level, a swift 20 point fall.

We bounced on 1180 on rather good volume. The bounce ended in the last half hour near 1195-1196. Bears stepped back in to drive prices lower towards the close.
The indices are printing mostly doji's on the daily charts, indicating indicision. These candles are most often seen at tops and bottoms.

Panic attack

Boy, was I wrong yesterday, thinking we hit the bottom. Stocks reversed overnight and made a new low +2 hours in the session. Unfortunately I didn't sell my SPY-calls yesterday, so today I added to them to lower the average cost (normally I wouldn't average down on a loser, but I started small, in case more trouble was underway).
I tried some more bottom-picking with ES-futures (1230) and TNA (61.98). Both got stopped out resp. 1226 & 60) and I tried again when the market puked some more near 1212 on BIG volume. And yes, that was A low (though not THE low). In on 1214.75 and trying to hold on to this winner as long as possible. I was looking for 1240-1245 on this one, but was stopped out per 1219.25. Tried once more later on; long 1219.25, stopped out 1216.25. So only a dead cat bounce intraday and revisiting the lows in the afternoon.

Of course, with indices down about +4.5%, there was little green on the screens. In fact, silver and oil plunged big time (6-7% intraday). Gold fell back from it's highs, but was still looking ok.

We're now down about 150 points on the S&P500 in only 10 sessions. That's a 11% move. Impossible to predict where this will end, but I won't try anymore shorts here. My initial short on the futures worked well but I suffered a medium loss on the bottompicking longs. Closed my SPY-calls as well with a considerable loss. All out now and waiting for a shortable bounce with good risk-reward. Will probably take a couple of days/weeks.

Searching for the bottom

I'm not really into bottom-picking or knive-catching, but after such a huge plunge, one is inclined to look for a nice buying opportunity. So when the markets went south once more in the first hour, I added to my SPY-calls bought yesterday, lowering my initial cost. The S&P-futures hit 1230 (I was still short from 1272.25) and bounced hard. I held on to the short future position, now hedged by the SPY-calls, looking to sell the latter on strength.

Market formed a triangle from which it broke out. Right after the breakout, volume started pouring in.
After a pullback, we went up again, respecting the rising trendline and closing at the high of day, which also was the pre-market high. A strong day for the bulls, we seem to have our bounce.

In the mean time gold and silver are making new highs, while oil keeps dropping.
The EUR/USD is still very choppy, no real edge here since we're rangebound from May on. A big wedge seems to be forming on the daily chart.

Another huge range day on the indices

The debt ceiling story is finally over, the Senate passed it and Obama signed it. But we didn't get the effect most people apparantly were expecting (many people on Twitter expected a bounce).

After a rather small gap down, we ran up into resistance, being yesterday's close. From there on, it mostly went down. There was some basing near pre-market lows, but once that broke (half an hour before the vote) the bears were in control.
Bulls gave it three weak shots to stop the bleeding, but to no avail. The last hour downfall was very impressive, about 15 points straight down on the S&P. Indices dived between 2.2% and 2.9%.

So we closed near the lows on major volume. This was the second day in a row that we've seen a huge range on indices.Chances for a bounce are increasing, since most indices are sitting at some sort of support (plus the fact that we've seen about 7 straight down days in a row). Two questions remain, when will the bounce come, and how far up will it get us?

One can say, things have changed recently. We're sitting under the 200 day movering average on the indices, we're printing lower lows and the dips are not bought (yet). Obviously it's too late for shorts here, but a bounce for 2-3 days could bring some nice setups.

Trades
I tried a long in LULU early on, since the stock moved up on good volume, trying to break a 10-day trendline. The trendline actually proved to be resistance once more and I got stopped out on a new low of day.

A little later, the S&P made a new low and I shorted the ES-futures (E-mini S&P500) at 1272.25.
I'm still in the trade after a nice +20-point run, giving it some room here. Bought some SPY-calls at the close in case we turn here.


Edit: one more thing. Despite the huge drop on increasing volume, VIX (the 'fear'-index) didn't go that much higher. Actually, the intraday-highs of the past 2 days exceeded the high for today. This divergence with the market could point to a coming bounce.

Friday: The only way is up...

...or so it seems. Well, this shows us the power of the bulls. The markets keeps ripping higher, getting overbought at this point. But there will always be some kind of catalyst that triggers a correction/pullback. The question is, when will this happen and will it be a sideways correction (in time), or a real pullback?

One concern for the silver bulls: gold rallied higher on Friday, but silver actually went lower. That must be the first time silver is not leading gold. Also the reason why I bought some ZSL-calls and looking at the futures this Monday-morning, they're probably going to pay off nicely.

Swingtrades
Despite my words on Thursday (I'll wait for a pullback before buying stocks), I went long BIDU and SINA. Both stocks seemed to bounce on support.
Like stated above, I bought ZSL-calls and I also went long some VIX-calls. The VIX is near it's lowest point since June 2007. That doesn't mean it can't get any lower, but I expect at least a temporary bounce higher in the coming week.

Daytrades
I went long the E-mini futures in pre-market for a small gain. Raised my stop up aggessively at one point, which stopped me out. Of course my target was met afterwards. Next time I'll use 'set and forget'-orders and leave my computer for at least half an hour. That should work.

One other daytrade, SIMO. Long at 12.87 but we went down soon, thru my stop of 12.65. I pulled the buy-trigger way too fast on this one. It might be a good idea to stop daytrading for a while and focus more on futures and swingtrading.