Nice move, but too much divergence?

What started like a possible break lower ended on the brink of new recent highs.
The market gapped lower and found support on the lows from the last 5 days. While the Dow made a higher low, the other indices all undercut the lows of the last 3 days. But nonetheless, a nice rally started, with a pullback after lunchtime and than a big rally in the last 45 minutes. A pullback in the last 5 minutes made small caps and tech end near yesterday's close, S&P and Dow up slightly. Still a nice move from today's lows and on rather good volume.

5m-chart SPY:

Daily charts DIA, QQQ and SMH:

Precious metals: while silver and copper were down a bit, gold went higher, but only slightly.
Oil: in between 100 and 101, still consolidating.
Euro: still at the 1.34-level, breakeven.

Trades
The stop in TZA held in pre-market and I added when price started to pullback near the morning low. But I went out of the position once the morning low was broken. I added @27.63 (first part long @27.16), out all @27.40, breakeven.

Indices consolidating sideways, expect make or break-action later this week

The market opened more or less where it ended yesterday and started trading sideways in a choppy way. Price started to coil and we had a first small breakout just after lunchtime. A second bigger breakout followed about 90 minutes before the end of the session. Interesting note, tech was lagging all day long. Dow (big caps) were leading, not a very bullish sign imho (sort of a safe haven compared to tech & small caps, normally not leading rallies).

In the last 45 minutes bears came back, and they managed to bring price back down near the morning high-level. The yellow trendline held all day (see SPY-chart below), except for a minor break in the very last minute of trading.

5m-chart SPY:

Daily charts DIA, QQQ and SMH:

Precious metals didn't move as a whole today. For instance, near the end of the session, copper was down 0.5%, gold was up 0.7% and silver was +3%.
Oil was trading about breakeven at 101. The euro also didn't move much, breakeven at the 1.34-level.

Trades
Still long TZA, stop is at 26.

S&P-rating agency bringing the market down - twice

Do I still mention gap ups/downs? Well, anyway, we had another gap up at the open. After price started to form a base, we broke higher but reversed quite early on (=> fake-out and creating a double top intraday). Shortly after, the S&P-rating agency announced it would put 6 triple A-rated EU countries on 'creditwatch negative'. Immediately market broke down overall.

After a small consolidation, it seemed we were going higher (possible intraday bearflag). But than S&P came with the news they would put all 17 EU-countries on creditwatch negative. And the market tanked again. So two fake-outs higher, both followed by a break lower. Bulls came in near the close and started buying, but on the daily chart, it looks more and more like we are near an intermediate or short-term top.

5m-chart SPY:

Daily charts DIA, QQQ and SMH:

Gold and silver going down (copper action slightly better) while stocks were rising (before the breakdown). Precious metals even lost more ground near the close of the session. Oil ending the day breakeven after being in the green for most of the day.
The euro tanked hard on the S&P-news but still ended breakeven.

Trades
I bought a small TZA-position on the S&P-news (long @27.16). Late entry, but ment as a swingtrade. Will add tomorrow when/if I find a good entry point.

Greece once again spoils the party

Greece's PM George Papandreou decided to call for a referendum on the fresh bailout plans. This led to fury among the European partners and lot's of red on the screens... Huge monster gaps were the result at the session opening.

At that point, lot's of buyers came in, pushing the price back up. The move ended halfway in between yesterday's close and the morning (and pre-market) lows. The reversal that followed, got us back near the morning lows. When price started to base at that level, it felt like trouble (another break lower) was coming. But then news came that the idea for a Greece referendum was dead and price spiked up big time. And so we raced back to the morning high (talking about volatility). That high held, so once again we reversed (sometimes people compare the stockmarket with a rollercoaster, I wonder why?!) And yes, in the last 15 minutes of the session we were back near the low of the day.

Economic data didn't help the bulls this morning (see table below)

5m-chart SPY:

Daily charts DIA, QQQ and SMH:

Gold gapped down huge as well, but rallied nicely during the morning. In the afternoon, gold was back to breakeven. Silver however opened even lower, and just like copper, suffered substantial losses. Same story for oil; a bounce together with stocks, back down and up again.

The euro was down for the second day in a row (third if you would count Sunday evening as well). It bounced on the Greece referendum news, but not that much...

Trades
Although it was just a small positon, I sold half my TZA in pre-market and the other half in the first minutes of the session. I also took profits in EUO.
TZA: long 29.80, out 33.80 and 33.17.
EUO: long 17.89, sold 1/4 @18.28 and 1/4 @18.13. Holding the rest and moved SL to 17.99.

I scaled in TZA again after it sold off in the first hour.
TZA: long 32.50 and 32.18, SL31.00 (2/5 position now, would have scaled in some more at lower prices, but that didn't happen). I sold @32.97 when the market spiked up with the euro (damn, that went up fast!). I wanted to go long SPY, but I didn't fancy the risk/reward when price kept going higher - too fast to execute my order.

With all these news-related spikes and price changes in the market, it's extemely difficult to swingtrade. I prefer daytrading at this level, and often with smaller positions. Patience is needed, but someday all these problems (and crises) will be solved. In the meantime, we'll have to be satisfied with smaller gains...

An interesting read about volatility: All or nothing days.

Is this the (intermediate) top?

We gapped lower at the open, but stayed in a range for most of the day. One failed break lower near lunch time was the first mentionable action we got. After the failed break, the high of the day got retested and held. In the last hour, we went to new lows for the S&P500 and Dow. Later on Nasdaq and Russell2000 followed. The market tanked hard in the last minutes of the session, we're finally seeing some distribution.
5m-chart SPY below in the 'Trades'-section of the post.

Daily charts DIA, QQQ and SMH:

Precious metals performed even worse than indices, oil was down moderately. The euro lost >2% and in the meantime the yen lost big against the dollar when Japan intervened to lower the worth of the yen. The currency is too strong, hurting the Japanese export, hence the intervention.

Trades
I tried two trades in SPY today. The break below the morning low near lunch time (failed) and than the break of the diagonal trendline which stopped at the day's high. So two losers (the second out at adjusted stop-loss), I'll let the chart below do the rest of the talking.

The euro tanked hard today and it broke the trendline of the last 4 weeks. So I went long EUO in the last hour, in with a wide stop here.
Anticipating lower stockprices (due to being oversold and also with the euro tanking), I went long a small position in TZA.

Recap:
SPY (daytrade): short 126.55, out 126.82.
SPY (daytrade): long 127.00, out 126.86.
EUO (swing): long 17.89, SL17.50.
TZA (swing): long 29.80, SL28.50.

Up, down, up...

We opened with a big gap up that got faded at the open. We even undercut yesterday's low. A small bounce brought us back near those lows and just when it seemed that the market would turn down again, the reversal came. And what a reversal it was! After news came out that China would invest in the euro bailout fund (EFSF), we went about 1% higher in no time, bringing us back to the morning highs.

5m-chart SPY hereunder. Brake lower of the yellow trendline wasn't that successfull. Brake higher of the white trendline however...

Daily charts DIA, QQQ and SMH:

Gold and silver went moderately higher, while oil was one of the losers today. Copper gave back some of it's morning gains, but it's still up nicely. The euro of course rebounded on the China-bailout news.

Trades
My TZA-position opened yesterday, hit it's stop in premarket (see here).

The second hour of the session showed lots of strength in most inverse ETF's (big strong closing candles on good volume), so I waited for a pullback and opened small/half positions in TZA, FZA, SPXU, BGZ, EDZ and SKF. However, the news that China would invest in EFSF, made my stops pop one by one, except for EDZ and SKF. Those 2 followed a little later, so back to 100% cash.
TZA: long 34.86, out 33.90 (-2.75%)
FAZ: long 45.23, out 43.97 (-2.79%)
SPXU: long 15.45, out 14.99 (-2.98%)
BGZ: long 34.67, out 33.57 (-3.17%)
SKF: long 66.30, out 64.90 (-2.11%)
EDZ: long 21.04, out 20.28 (-3.61%)

No need in trying to trade longer-term, if even hourly charts don't work... Daytrading it is, I will settle for 5 minute SPY-charts from now on... untill this thing clears...
Here's how Barry Ritholtz sees the current trading environment.

Intraday update

Despite the rather bullish economic news (see below), market is tanking heavy since the opening gap up.

Copper is up 4% at this point and in the meantime, the euro is dropping fast after what seems to be a failed breakout from the last 3 days. Down >100 pips in just over an hour...

Trades
My remaining TZA hit the stoploss in pre-market, out 2/3 at 33.97 for minor profits. I regret I didn't take more profits (another 1/3) yesterday near the 35-level.

Erasing the gains of the last 2 days

We started the day with a gap down and a quick panic move lower on the news that the Ecofin meeting tomorrow would be cancelled. Some bad economic data didn't help either. Consumer confidence was way below expectations (39.8 vs 46).
We stayed within the range, created in the first 10 minutes of the session, building a big triangle during the day. A successfull breakdown, 2 hours before the end of the session, brought us back near the lows of the day. That low broke in the last 15 minutes of trading (for S&P). For S&P and Dow, this brings us back at the breakout-level from 2 days ago. This might be a retest or a false breakout. No need to be a hero now.

5m-chart SPY:

Daily charts DIA, QQQ and SMH:

Gold and silver both went ballistic 45 minutes into the session. A big move higher on great volume. They both broke out and I expect higher prices soon.
Meanwhile, oil keeps rising after successfully breaking out yesterday.

Trades
Two trades today, both in TZA. The first was a trigger-happy, emotional trade. No wonder that one didn't work out. I got in after the first pullback, volume seemed to come back in. But no follow-through and less than half an hour later, my stop got hit.
The second trade was still a bit early, break of the yellow trendline (in @33.79). The pattern morphed sligthly into another, bigger triangle. I kept my position in case the bigger triangle would brake, which luckily it did. Out 1/3 @34.50 and raising my stop above breakeven (34.00). Holding 2/3 and looking for a gap up tomorrow morning.

5m-chart TZA hereunder. Please ignore the pink line (last entry) and the horizontal line @34 (SL).

Support holding

We opened flat and about an hour and a half into the session, market started to drop. But after another two hours, we broke back higher untill the morning highs acted as resistance.
Still, just like yesterday, tech was lagging other indices. Let's see how that works out.
Back to SPY. 122 was support/resistance a few times the last couple of days. And today was no different, it acted as resistance after the midday turnaround rally.

SPY 5m-chart:

Daily charts for DIA, QQQ and SMH:

Precious metals had another bad day, but gold and silver only suffered minor losses compared with copper (-4 to -5%).

Trades
I was still long EUO and took 1/3 profits @18.40. Holding the rest as long as no higher highs are made (on the daily chart that is).

I went long EDZ and TZA when they broke the trendline formed on the hourly charts. EDZ long 25.23 with SL24.00 and TZA long 40.71 with SL38.72. EDZ seemed stronger and that proved to be right when I got stopped out of TZA and EDZ was still way above my stop. They were both ment as swingtrades.

When the market turned, I went long SPY as a daytrade (see first chart of today), which could also be interpreted as a hedge against the other positions. However, I saw strength; good price-behaviour and volume, so that was the main reason for going long SPY.
Long SPY 120.68, out 1/3 @121.10, 1/4 @121.70 and the rest @120.92 (once again I raised my stop too aggressively). The SPY-gains almost made up for the TZA-loss.

Tomorrow I will be away for a 3-day weekend in the Belgian Ardennes. That means no blog post tomorrow, the next post will probably be Monday.

10/18 - Intraday update

This morning was a good one for financials. Although GS reported a big loss, BAC saved the day, reporting a $6.2 billion profit. That seemed to lift the market, together with good economic data (see below).

More to come after the market close.

Trades
I took some profits in BGZ yesterday after-hours and other today in pre-market: FAZ, SKF, EDZ. All 1/3 position, just like TZA yesterday. When the indices started rising in the first hour of the session, I got stopped out of FAZ, SKF, BGZ and TZA (all stops were raised, some over breakeven), all for small or mediocre gains.

Results of the jury:
SKF: +0.56%
FAZ: +0.92%
BGZ: +2.04%
TZA: +2.49%

Still in EDZ, it survived the opening...

Looking to reposition in these ETF's should we go lower later this week.

Bears finally win one

Today started with a premarket rally to 1230 in S&P-futures. That was the turning point, indices started grinding their way lower. No panic selling, but a slow and steady ride south. 6 hours and almost 30 points later (/lower), first big support came in near 1203. We bounced, only to go through the level an hour later.

Next up was 1195 where price bounced again, an hour before the end of the session. That number coincided with 120 in SPY, both held perfectly. Bears still tried to get new lows in the last half hour, but bulls defended the spot well at first. A big fight followed between the 120 and the 120.70 level (for SPY). But in the end, the bears won with a close near the lows. SPY 5m-chart:

Daily charts for DIA, QQQ and SMH:

Trades

After a few triggerhappy early attempts last week, I got in TZA again. This time only after it broke a trendline on the hourly chart. Volume could have been better, but other inverse ETF's looked similar attractive in set-up so I went long. I also bought some other ETF's, an overview:

TZA: long 37.94, SL37.23 and sold 1/3 at 39.00 (moved SL up @37.75)

BGZ: long 36.76, SL35.90

EDZ: long 23.62, SL22.70

SKF: long 74.88, SL73.04

FAZ: long 54.68, SL52.66

All ETF's closed near their highs on good volume, so expecting at least some follow-through tomorrow.

Gaps, resistance, tech...

We had another gap up this morning, helped by great Google-earnings. This made tech-stocks to gap over resistance. The market tried to fill the gap, which didn't happen. After slowly going lower in the morning, indices reversed after lunch and even rallied to new highs in the last half hour. See 5m-chart for SPY below:

Daily charts for DIA and QQQ:

Semi's keep rising, but move is very extended/overbought:

Not much happening in gold and silver, they were up with the market, but no extreme moves. Copper on the other hand made a +3% move, just like oil.

Trades
I added another 1/4-position to TZA, for a total 50% position, average at 37.94 with stop at 37. Got stopped out one hour before the end of the session. I was too early with the testers, will need to have more patience. Luckily I used small positions, so losses are kept minimal. I better stop picking bottoms and only buy TZA on strength instead. No need to fight the trend. As they say: the market can stay irrational much longer than you can stay solvent.

Still undecided

We started with a gap down and indices slowly moved lower. But halfway through the session, price broke the intraday trendline (see SPY-chart below) and went for the gap fill. That was exactly the level where the 'rally' stalled and suddenly reversed with over half an hour to go before end of session. Bulls didn't want to give up the fight and fought back in the last minutes of trading. However, the volume today was below recent averages, lacking conviction. I highly doubt we will see new highs in the next days. We need consolidation or a pullback to digeste the big move made since 10/4.

Tech once again led the market, about 1% difference with Dow and S&P. Copper and silver were losing >2%, gold and oil kept losses smaller.

SPY-chart 5m-chart:

Below the daily charts for DIA and QQQ:

Amazing how resilient tech is, especially semiconductors, hereunder the daily chart for the semi's-ETF:

Trades

One small tester with TZA long, out for a small loss. I expect a move down one of the following days. Will go long TZA again when the action/price/volume looks right. Edit: long 1/4 position TZA near the gap-fill-fail (is that a word?)

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.