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Bear Shake…

By Red, on February 25th, 2010

NO POST FRIDAY… NOTHING CHANGED!

NEXT POST SUNDAY NIGHT.

This is How I feel… Clueless!

yellow_guy_smiling_really_big_hg_wht

bears-in-a-tree

More bears were shook out the tree today as buy programs come to the bulls rescue once again.  Yes folks, we should have tanked again today, but the crooks at Goldman and the Government stopped the sell off with their computer program algorithm machines.

It’s just another way of shaking more shorts out of their positions.  You sell off one day, get the bears to go short at the low, rally back up the rest of the day to squeeze them out.  Then sell off again the next day, get a second round of bears to go short at the low, and rally back up again… squeezing once again.  Is tomorrow is the third time?  Or, will it sell off for real this time?  I doubt it.  If it sells off tomorrow, I’d expect at least one more rally back up to shake the last bear out the tree.

Then, release some bad news over the weekend and gap down on Monday with no bears in the market.  Wouldn’t that be UN-expected?  When is the last time you seen a negative Monday?  It’s been too long to remember, so I’m certainly not going to predict that “this time will be different”, and Monday will be a big down day.  I don’t have a clue as to what will happen on Monday.

I can say that by all Technical Analysis, we should sell off again… but you know that’s not going to happen as long as Goldman runs the country.  On an even funnier note… Goldman is now to be investigated over the Greece issue.  And guess who they want to investigate them?  You guessed it… Ben Bernanke!  Yes folks, it’s time to appoint Al Capone as lead investigator into Mob Crime.  (ROFLMAO).

What a fraking joke?  Just line them all up and give me a high powered rifle.  I’ll put an end to it… once and for all!  That’s about the stupidest thing I’ve read today.  When will Americans wake up and go hang these crooks?  Let’s get a lynch gang, find the tallest tree, tie some electric cable too it, and hang and fry ‘em at the same time!

Anyway…

I’ve been around a lot lately, as I haven’t been working for the last few weeks.  As most of you know, I try… and the key word there is “try”, to swing trade, not day trade.  But, that’s been almost impossible lately with all the huge intraday moves back and forth.  Luckily, I’ve been around to save my bad trades (some of them at least).  But, next week, I’m back to work, and will be dropping in less as I get too busy to chat all day.  (But, feel free to continue chatting without me, as I post everyday on this blog for you guys and gals… and also as an outlet to “air out” my frustrations).

Now, as for tomorrow… well, most Friday’s are flat to up, with light volume as the traders leave early for the weekend.  That means we could drift up a little all day and end up closing flat.  Of course I posted yesterday that I thought today would be flat to up… and was dead wrong, so don’t expect Friday’s forecast too be any more accurate.  I guess I was right on the fact that we ended about flat for the day, but the way off on the intraday swings.

If I do start getting every call accurate, then you can assume that I just got a new job at Goldman Sachs… as they are the only ones’ that know where this market is going tomorrow.  Don’t worry though, I’ve bad mouthed them enough that they would never hire me anyway.

From a technical point of view (not that technicals actually work anymore), I’ll refer you to this chart by Cobra.  As you can see, today we had what is normally called a Hollow Reversal Candle.  In this case, it would be called a Bullish Reversal Candle… but, as Cobra points out, we are too close to the top, to reverse back up.  That means it could go either direction.

cobra's-daily-spy-chart

Hollow Reversal Candles work pretty well when they are at a top, or bottom… but not in the middle of a trend move.  You will also notice in the chart that we are still below the 50 dma, which is currently still holding the bulls back.  Unfortunately, the 20 dma also stopped the bears on today’s move down.

So, that leaves us with no clue about tomorrow… except the fake print at the close today, that showed the 109.20 spy area as a possible target for any sell off tomorrow.  But, it doesn’t have too go there tomorrow… it could be Monday, or never?  They have been quite accurate lately, but you never know when they will decide to stop it.

Anyway, I did take a small short position around 110.40, with a 109/104 put spread.  If we go down to that 109 area again tomorrow, I will close them out, as I’m not holding over the weekend into Bullish Monday (and that will of course be the day they gap down huge on, as that’s just my luck).

Red

Weekend Update...

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Leo's Den
  • bensjoyce

    Leo you said “Fake Print” at 109.20 on the SPY. What time frame. did it only show up at the end of the day?

    • http://www.reddragonleo.com Red Dragon Leo

      It showed up yesterday on the 10 minute chart, in my Ameritrade account. Anna seen it in her TOS account too. There were 3 fake prints, each with a different price, but all around 109.17 to 109.40 area.

  • Earl of

    Carl just now;

    March S&P E-mini Futures: Today's range estimate is 1095-1110. I think yesterday's afternoon rally means that the drop below the 1090 level was a terminal shakeout and that the market is headed higher. The 1130 level is the short term target and I expect the market to reach 1200 over the next three months.

    Note:
    1095-1110 Todays estimate
    1086-1100 Yesterdays estimate
    1103 right now

  • Earl of

    Carl: long one unit /ES at 1098.50

  • Earl of

    In TNA 43.21

  • http://www.reddragonleo.com Red Dragon Leo

    Looks like a pretty boring day today. I guess everyone is napping?

    • Earl of

      Red,

      Looks like nothing is happening.

      TNA off 15 cents, TZA up 3 cents.

      Seems like they might close flat today.

      Yawn

  • Earl of

    Out of TNA $43.86

  • Earl of

    Carl at days end:

    Estimated /ES range: 1095-1100 (15 point range)
    Actual /ES range: 1096.25-1106.50 (10.25 point range)

    Today stayed inside Carl's range.

    Carl's trading:
    long one unit /ES at 1098.50 (up 7 as I write this)
    Seems to be carrying it over the weekend.

    Grade I (incomplete)

  • Earl of

    TZA closed down 1.2% today.

    We have been in a New Moon Trade (favored TZA).
    [ After nine days, this trade was DOWN 11.4% ]

    TZA was down today and down in 12 of the past 13 days.

    The New Moon Trade has ended and it was a trading disaster.

    In the past, a horrible new moon trade has been followed by a successful full moon trade, both indicating a strong market.

    • http://dreadwinaard.livejournal.com/profile dreadwin

      I think that the new moon / full moon cycles have been completely out of whack since November.

      • http://www.reddragonleo.com Red Dragon Leo

        Every indicator or trading tools has been “out of whack” ever since March 6th, 2009 when the money spigot was turned on full blast.

        • http://dreadwinaard.livejournal.com/profile dreadwin

          Amen on that one. I don't even bother looking at monthly charts anymore. Rarely do I look at weekly charts. Daily and intra-day movements are king right now. Short term patterns seem to matter more than longer term ones.

      • Earl of

        Dreadwin,

        The moon's influence is gentle and consistent. Doesn't stand a chance against some of the forces in play.

  • moon

    thanks red have a good weekend…. good week made some coin.
    Dont think much juice in the tank

    • http://www.reddragonleo.com Red Dragon Leo

      Not too much upside left… I think? March should bring some more volume into the market, of which… most of it will be selling!

  • Earl of

    Market close today starts the Full Moon Trade, which favors TNA. The full moon is this Sunday.

    Volume today for TNA was roughly normal.

    $RVX (VIX for $RUT) closed 4.1% lower, favoring TNA.

    TNA has been up 11 of the past 13 days.

    Ultimate Oscillator for TNA peaked at 78 five trading days ago and has generally fallen since then but has remained above 50 and is currently 64. This indicates waning strength, favoring TNA for the time being. (Note: An Ultimate Oscillator reading of 80 is generally a top or a near top)

    Bollinger Bands for $RVX (VIX for $RUT): today’s red candle touched the bottom Bollinger band and closed near it. Tomorrow could see a bounce off that band, or $RVX and the bottom band could both drop. No clear direction here.

    Bollinger Bands for $RUT: $RUT dropped to the Bollinger mid point line and bounced to midway to the upper Bollinger band. The bands are getting narrow. No clear direction here.

    http://www.americanbulls.com had TNA as a BUY on Feb 9th, and a hold since then. After the close today, TNA was still a hold but also a possible SELL on Monday. TNA is available right now (after hours) for $43.81, so this trade will start with that price.

    Overall, it looks like TNA is moving horizontally, neither up nor down.

    • http://www.reddragonleo.com Red Dragon Leo

      Sounds like a top is almost in on the Russell, which means the rest of the market is soon to follow.

      Thanks for the updates. Although I don't trade the Russell, I'm sure others that read your posts might… so keep up the good work, and have a great weekend.

    • http://dreadwinaard.livejournal.com/profile dreadwin

      Re: TNA moving horizontally. That's what I predicted in my 2/23 TZA chart. TZA takes 5-8 days (recently) to bottom out. I think $RUT will make another thrust up, but it $RVX stochs cannot go much lower. One caveat: $RVX's bollinger band is *much lower* than it was earlier this week. You might have to endure some more pain in TZA.

      • Earl of

        Regarding Bollinger Bands for $RVX (VIX for $RUT) in my above post:

        In my head I still have a vivid image of that chart. Can't reproduce it, though, and now I wonder what chart I was looking at. Anyway, the chart I now see looks more like this:

        Bollinger Bands for $RVX (VIX for $RUT): today’s red candle moved toward the bottom Bollinger band, which itself moved lower. Tomorrow could see an even lower $RVX, which would be good for TNA.

        • http://dreadwinaard.livejournal.com/profile dreadwin

          Agreed. The lower BB on $RVX is moving down, as is the $VIX. We could creeping down on this trendline (shown in my chart for a while.

          The price action in bonds (TLT and LQD) is making me nervous about equities right now.

          • Earl of

            Dreadwin,

            There is so much trickery going on, I dismissed any relationship between bonds and equities.

            What exactly are you seeing?

          • http://dreadwinaard.livejournal.com/profile dreadwin

            LQD's price has closed higher than the January closing high. It is outside the bollinger band. It hasn't done that since November.

            TLT gave a BB buy signal 7 trading days ago and is now flirting with the 200 day MA.

            The standard dogma is that investors flee to safety in bonds when they think equities are about to tank. Once the bond trade gets too crowded, equities get pumped up causing people to sell bonds and chase higher equity prices.

            It's a contrarian play. If you see everyone buying bonds, it might be a good time to get into equities.

        • Earl of

          FWIW

          Found the chart: a Bollinger 9.0 on IB
          Apparently IB Bollinger charts are sometimes 9.0, and sometimes 20.0.
          Should have used Stockcharts in the first place.

      • Earl of

        Dreadwin,

        You do a good job with those predictions :)

        • http://dreadwinaard.livejournal.com/profile dreadwin

          Since March, a fairly safe prediction is “market consolidates sideways or pushes higher” :)

          • Earl of

            Lately it's been:

            1) Horrid news, TNA tumbles
            2) buy some TNA
            3) wait in agony while it goes no where for hours
            4) TNA takes off!
            5) Sell TNA

            Can't always be like this, but it is nice.

          • http://www.reddragonleo.com Red Dragon Leo

            I need to buy me some TNA, as it's been awhile since I had any. LOL.

  • http://dreadwinaard.livejournal.com/profile dreadwin

    I've been taking a break from trading but I still do make some charts from time to time.

    These are some charts I made earlier in the week, so you can check my accuracy:

    This is a chart I made on the 23rd (Tuesday) because TZA is a fun bear ETF to play with:

    http://www.screencast.com/users/dreadwin/folder…

    The gist of my point was TZA never has a “V” shaped bottom, and that maybe eager bears should wait. It seems to take at least 5 days to bottom out.

    I made this chart of $RUT the same day.

    http://www.screencast.com/users/dreadwin/folder…

    As you know, I like fractals. Based on the September fractal, I made a prediction. Which didn't play out.

    Today's thoughts on $RUT:

    http://www.screencast.com/users/dreadwin/folder…

    On Feb. 19th (one week ago), I plotted a possible trendline for $RVX (the $VIX for Russell). The gist of things is that we would consolidate sideways for a while, despite all of the “P3 is here!” calls on various blogs.

    http://www.screencast.com/users/dreadwin/folder…

    • Earl of

      Dreadwin,

      Nice charts!

      Got to where I think any reasonable spot where P3 might start will see a rally.

      • http://dreadwinaard.livejournal.com/profile dreadwin

        When $RVX gets to an RSI of 30, there will be a tradeable move in TZA. Take that one and bank it.

        • Earl of

          Dreadwin,

          I'll take your word for it this time :)

          However, I pulled up the $RVX chart and the TZA chart and found Dec 21st:

          Started 4 days in a row with RSI < 30
          Not a good time to buy TZA

          Must not be a general truth.

          • http://dreadwinaard.livejournal.com/profile dreadwin

            The tradeable move in TZA during that time frame was to buy TZA at the close (9.41)on the 24th during the massive, ridiculous underthrow by $RVX. Sell on the 31st at the close (9.86). +4.5%

          • Earl of

            If I was using americanbulls logic, I would have seen the RSI < 30, but waited for a buy signal (a couple of days later), then would have been ok.

            That would work.

          • http://dreadwinaard.livejournal.com/profile dreadwin

            That particular set up was also a time when the standard RSI setting (14) works against you and keeps you from making a trade. On an RSI (10) it becomes more obvious.

    • monicadern

      Hysterical Dreadwin – love this chart! Shennanigans is my favorite word. I haven't had a chance to really read over all your emails but will do so this weekend.

      • http://dreadwinaard.livejournal.com/profile dreadwin

        Basically, the MACD on $RVX was setting up for another bump up, and it got whacked yesterday. Ben must have sent some mafia tough guys and twisted some arms. It just doesn't look natural.

        There is a fractal playing out here, looks like a wedge. Watch out for the underthrow — it will be rough for bears to swallow if we play a repeat of the December fractal.

    • gcocks83

      Dread, Nice Post, Your writing and charting is getting better everyday. Sittinn on the sidelines is not a bad move right now.

  • gcocks83

    Dread, Nice Post, Your writing and charting is getting better everyday. Sittinn on the sidelines is not a bad move right now.

  • Earl of

    FWIW

    Found the chart: a Bollinger 9.0 on IB
    Apparently IB Bollinger charts are sometimes 9.0, and sometimes 20.0.
    Should have used Stockcharts in the first place.

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