For All You Silver Traders Out There!

Here is a look at the daily SLV chart...... it is setting up another classic short pattern.  I know that I have the Momentum Change indicators with a Buy signal... but this pattern has a strong track record of being a good place to enter short trades.

Not saying that is my recommendation.. just that if you own it you should have very tight stop loss orders entered, and if you are so inclined, it would be a good place to enter a short position with very tight stop loss orders entered.

Click to Enlarge

Just Say'n!  Be Careful.

Best To Your Trading!

Bill

A special recommendation!

I have just spent 1/2 hour reading and studying a report from a fellow named Paul Mylchreest who writes The Thunder Road Report.  I have seen some of his work previously, but I have had trouble linking to his posted reports.  I have been able to read him when when his work is posted by others, but I have been unable to get his format to work with Blogger.  I am still having the same problem, buy I have found a work-around and have been able to link to the actual report.

I am still trying to understand how the "Embed" function works.......for the time being it is still above my pay grade, but here is the link to the report.  I truly think everyone who wants to be informed about our economy and what may be lurking around the corner must spend a short time reading this well crafted story on inflation.  It spun my head around.

Thunder road report

Best To Your Trading!

Bill

What to Make of the Bailout of Greece.......Again!

Mr Market is off to the races this morning on news that Germany has relented its hard line against extending additional funding to Greece, assuring the Greek ability to pay its July bills. Excited investors drove the Dow up 135 points on the open, with most of the major indexes following suit, printing nearly 1% advances.  No word yet on whether or not this new credit extension will re-assure the bond markets that the Greek bonds are "money good".

But in any event, this action by the Germans has caused the inventor world to to assume that all is now well and it is Risk On again, and not to worry!  Of course, this news came prior to the open of the U.S. market, which is now in the process of digesting the Case Shiller  and the Chicago PMI report.  The headline of the Case Shiller report says pretty much all that needs to be said......"This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.".  On the other hand, the Chicago PMI was much more subtle....."Chicago PMI Plummets from 67.6 to 56.6, the Biggest Monthly Drop Since Lehman Bankruptcy". 

As the little birthday boy exclaimed......"there has to be a pony in here somewhere!"

The pony metaphor is explained by the fact that Mr Market has pulled back some 60 Dow points from its high, and is currently trading up 75.  The SPX is up 7.3 and the rest of the indexes are all higher, up around 0.50%, with the Transports lagging, up around 0.30%.  Oil opened higher, and is currently trading up 2.0 at 102.56, and Brent is also higher, trading up 1.5% at 116.38.  Gold is a few ticks higher, trading 1536.90 and Silver is trading higher at 38.47.  Copper is also higher, trading 4.20..  The soft commodities are mixed, with Coffee again leading the way, up1.12%

The Euro surged on news of the one hundred and first  Greek bailout, trading 0.75% higher at 1.438, while the Dollar continues to give up its recent gains, trading off 0.5% at 74.60.  U.S. Debt though does not seem to be signing onto the "Risk Off" strategy, . trading higher the morning with the Note at 3.06% and the Bond at 4.22%.  Anyone want to bet we see sub-3% 10 year paper this week?

Please note the 2 changes in the Momentum Change index indicators.  The Euro has flipped to a Buy as of 5/27  (they must have seen something coming last week), and the Dollar also changing direction, with a new Sell signal on 5/27.  Like always, these signals last until they change.

No new trade ideas.  Some of the indexes are at or are nearing neutral, with a possibility of a change this afternoon if the market continues its strength into the late afternoon.  There was increase interest in the buy side late last week as evidenced in the strength of the advance/decline action and up/down volume.

Click to Enlarge

However, that interest in the Bid has already begun to fade.  We will see how this plays out this afternoon.

In the meantime, the sidelines are the place to wait.

Best To Your Trading!

Bill

Thank You, Veterans!

It is nice to have a 3 day Holiday.. although it is even better when these National Holidays fall on a Friday so that we can enjoy a 4 day week end.... it is still nice to take a break.  I've always thought that the July 4th fireworks celebration was just as appropriate for Memorial Day as it was for Independence Day.  Maybe even more so as it could reinforce the actual drama experienced by our War Veterans, whether it be a war that had national participation, support and shared sacrifice, or ones today that are being fought by a professional Military, with little or no National participation, Support or Shared Sacrifice.  Regardless, it is important to remember their experiences, even if it is only to privately review what this National Holiday means.

Mr Market opened a little higher, after being marginally higher over night.  As this is written, the Dow is up 68 and the SPX is up 8.  The rest of the major indexes are nominally higher also.  Oil is trading at 100.45, up 22 ticks and the Brent is trading higher at 115.36  Gold and Silver and all the metals are higher, with Gold at 1532.90,. Silver at 37.95 and Copper at 4.17.  The food commodities are all higher except coffee, which is taking a slight break from its relentless advance.

The Euro is higher, up nearly 1% at 1.425 while the Dollar is taking it on the chin, down over 1 Cent in the last couple of days, trading at just over 75 at 75.04.  Yet evidence is that the risk trade is under pressure as the flight to the perceived quality and safe haven of  U.S. debt (ya, I know....but consider the alternatives and there are just not enough Swiss Francs for all those nervous traders).  The Note is at 3.06%, getting closer to the magical 3% and the Bond is at 4.236%

Note much in the news this morning, however the Realtors spin machine reports that pending sales are down unexpectedly, missing the anticipated small decline of 1% and printing off 11.6%.  After the revised print last month of plus 3%.  Also, the Michigan Confidence indicator printed 74.3 vs expectations at 72.4.  Apparently, the lower prices at the gas pump got everybody focused on how good the economy is getting.

All of the recommended trades have now been stopped out with gains, with the single exception of the FXE, which lost $0.19.  There are a couple of new buy signals in the indexes followed, I think all in the commodity complex.  No changes in the Major Sell signal, which was first generated on 5/19

Have a great weekend, and Best To Your Trading!

Bill

GDP and Jobless Claims, Oh, My!

Where to start?  The second GDP revision printed at 1.8%, well below the expected 2.2%.  The even less encouraging info comes in the revisions to 1st quarter GDP, where we learn that the inventory numbers and consumer consumption were wildly wrong.  With the adjusted PCI  and ex the inventory build, 1st quarter was actually less than 1%  When the current inventory levels were reported earlier this week, we saw that Inventories were at record levels.  When manufacturers begin to reduce inventories, instead of adding to inventories, the economy will quickly slip into contraction.  Does that mean Stagflation as some are suggesting?  Or would it more properly be named Recession?  Or perhaps even Depression?  Will it even matter what it is called?

The other good news this morning was the BLS New Jobless Claims report.  The print came at 424,000, well above last weeks 404,000.  Of course it is only fair to note that last week was revised higher to 414,000.. a 10,000 lost-jobs miss.   More of the old same-old, same-old.

The market was slightly lower overnight, and opened flat to mixed.  As this is written, the Dow is off 21 and the SPX is off 0.72The other major indexes are mostly flat.  Oil  is trading down at 100.60 and Brent is also down, trading 114.30.  Gold is off 1/2% at 1519.30 and Silver is at 37.05  The remaining commodity complex is mixed with the biggest move in Wheat, up 2.25%.

The Euro surged overnight and gaped higher on the open, trading currently at 141.02, well off its high at 1.42.  It was a large enough move to stop me out of the FXE short.  The big surprise move was triggered by reports that China was a major buyer.  The Dollar is weak, trading at 75.76.  Bonds are mostly higher, with the Note at 3.07% and heading for sub 3% and the Bond is at 4.23%

We have now been stopped out of everything except the QID and the TLT   The stopped out trades were all profitable except the FXE, which lost 19 cents.  Depending on market action, I will be looking to re-enter the market. I have added the Shanghai index to the list of indexes and its Proprietary Momentum Change indicator.  I was going to only report the domestic indexes, but I have had requests for SSEC.  You will note that the Sell signal was first generated on 4/22/2001, and the SSEC is considered by many technicians to be a leading indicator for the domestic markets.

Also, note that the stop loss for QID has again been raised.

Best To Your Trading.

Bill

Durable Goods Printed What?

Big news this morning is the Durable Goods New Order report, which printed -3.6%, missing the estimate of -2.5% and fully 8% lower than the previous month.  Now that is a big swing!  Say hello to new 2nd quarter GDP estimates coming soon, likely below 2%. 

What was reported in the 3rd paragraph was the Inventory print.  After being up 16 straight months, reaching a new level of $350 Billion, which is the highest ever since the series was first established in 1992.  Lets see if I understand this..... New Orders for Durable Goods have plunged, now in negative territory, while Inventories of Manufactured Goods have increased to historic levels.  Does anyone remember what an Inventory Recession looks like?  Remember, at some point a whole bunch of cars, washing machines and Ipad wanna be's have to be sold....and that may take more time than expected.  That is why inventories have been built up.  As manufacturers cut back production, our economy begins to lose steam. Again.  Then it will drive a whole new set of quarterly earning reports, and a revision of Price/Earnings ratios.  Duh!

This morning Mr Market open down about 35 Dow points, after being off 100 points overnight.  Currently, the Dow is up 10 points, the SPX up 1.58 and the rest of the major indexes are also higher about 1/2%.  Oil is off a few ticks at 99.18 and Brent is higher a few ticks at 113.50.  Gold is trading up at 1526.10 and Silver is higher, trading at 37.31.  (Momentum Change indicators are very close to flipping to a buy, however, there is likely resistance at 28).  The rest of the commodity complex is higher across the board, with not a single Red arrow to ruin all the Green.

The Euro is off a couple of ticks at 1.407, while the Dollar has resumed it march higher, trading 75.94 after trading as high as 76.32 earlier.  Bond are off a little this morning, with the Note trading 3.119% and the Bond trading 4.26%.  The Note had gotten to 3.08% before weakening.  I think we will see sub-3% shortly.

Only change likely today is in Silver.  However, we do not have a recommended trade in that ETF.

Best To Your Trading!

Bill

Trading Alert.. New Stop Loss Prices

Update later this morning...but I wanted to get these new stop loss prices posted as early as possible.

Also, note the new Momentum Change Signal in the GDX.  This is new to the list, and changed 5/23 to a Buy at 55.40.  Also, please note that SLV is very close to flipping to a Buy.... and it could happen today.

Bil

Zzzzzzzzzz

If this day seems particularly boring, it is because it is particularly boring.  But not to worry.......Tim Knight has assured me that it is ok to short boring markets!.  I don't think we have moved 25 points in either direction from the close Monday.  But have no fear.. the Bulls really don't seem to have any confidence as they do not seem to be interested in the standard wisdom, ie: BTFD!

Click to Enlarge

Nothing much to report that has not already been on the cable news channels.  After a generally higher over night trading experience in the DOW, being up nearly 70 Dow points this morning at 8:00am, Mr Market open higher about 20 Dow points, and has been locked in a trading range of plus 20 to down 20.  The other major indexes are mixed.

As this is written.. (I have nothing else to do at 2:00pm....Zzzzzzz)  the Dow is down 18 points, the SPX is down 2 and the rest are mixed.  Oil is higher at 98.56, while Brent is higher at 111.52,  Gold is also higher at 1522.50 and Silver is higher at 36.01.  The rest of the commodity complex is mixed, and of course Coffee has taken its 0.01% breather in its climb to $10 per lb.

The Euro is up 0.43% at 1.41 and the Dollar is 0.25% lower at 75.92.  The Bond market, which I think is the best measure of the market outlook, is a little higher after the sell off yesterday, with the Note trading at 3.12% and the long Bond trading at 4.25%.  If the yield on the Note break the 3% level, I think we can say good-bye to the March 09 rally.

.Nothing to add... the position are unchanged.. and the stop prices are still in place.  I am hoping for some market movement that will give me a chance to tighten the stops, but not yet.

Best To Your Trading!

Bill

I Love It When A Plan Comes Together!

I took a break last evening in the middle of Jesse Stone and looked at the overnight futures market.. Yep, still falling and down 70.  The market didn't like the news out of the ECB any more than I liked that latest Jesse Stone saga.  By the end of the show, the Dow futures were down 92.  By the time the Morning Squawk was posted, the futures were down 165 Dow points.  Be still my beating heart!

Mr Market opened right around that level, and has bounced around that level since.  All major indexes are lower by 1.25 to 1.5%  All of the indexes, with the exception of the Transports, have now violated their short term uptrend lines, and have some room to decline further to more substantial support levels.  I hope to see a little more bouncing around today so I can get an idea of where to upgrade stop loss prices.  In the mean time, use the existing stop loss prices.

Oil is down 3.51 at 96.58 and Brent is down 3.14 at 109.25.  Gold is higher, printing new highs for the Euro conversion, trading in Dollars at 1511.10, while Silver is slightly lower at 34.85  Copper is also weak, trading 3.97.  The rest of the commodity complex is down with the exception of coffee which continues it climb higher.

The Euro is declining in line with the re-emerging debt problems faced by Greece, Spain, Ireland, Portugal land now rating reductions for Italian debt.  The local elections in Germany, Finland, Ireland and now in Portugal are offering little evidence that any solution short of some kind of restructuring is unlikely.  The Euro is trading off nearly 1% at 1.400 while the Dollar has surged nearly 1.25%, trading at 76.32.  The Dollar has now overthrown the downtrend line established since last June, and I would say overthrown it with confidence.  Given the huge Dollar short positions driven by the carry trade, it is entirely possible we may be on the verge of a Dollar short squeeze..  Man, talk about a liquidity issue!

The Bond market of course is responding to the unwinding for the risk trade, with a flight to safety in the U.S. bond market.  (yes, of course I know what Bill Gross has to say about bonds.  I also know what Rosie has to say about bonds)  The 10 year Note is again trading under 3.10%, and likely heading for sub 3% rates.  The long bond is up over 3/4 at 4.25%

No change today in the Momentum Change signals for the major indexes, however I have posted a new Buy signal for the GLD which was triggered on 5/19.  Momentum has definitely flipped to the up side, but I doubt it will be enough to trigger new highs... at least in the near term.

I will be posting new stop loss prices this afternoon after Mr Market has had a chance to move around a little.

Best to Your Trading!

Bill

OPEX day the way they used to be....Wild!

I  want to start out by recommending that every one take 10 minutes to read this post at ZeroHedge, an interview with Mark LaPolla by Kate Welling.  Every once in a while someone describes our circumstances in such a way that that all I can do is say "Amen".  It is in my opinion something that every informed adult has to consider.  Or, you can simply accept as gospel what a friend of mine said back in 2009, when investor concern about all the Federal stimulus and Fed QE was being debated.  He said to me....Bill, I don't care how much money they print, we are going to run out of money!"

Mr Market was traded lower over night, with the Dow down about 25 points.  We opened this morning soft, and as this is written, the Dow is off 92, the SPX off nearly 10 and all the major indexes are also down about 0.75%.  As I have written the last few days, the indexes have painted themselves into a corner, where down trend lines are intersecting with up trend lines, and the market has to make a decision which way it wants to go.. .there no room for any more indecision.  Which is what we are seeing this morning.  The indexes are breaking lower, and every index on my screen has broken down through the up trending support lines with the exception of the Transports, which are trading right on the up trend support line.

I assume nearly everyone reading this blog has access to a chart service, as I don't get any requests for posting charts to support my observations.  But if anyone wants to see those charts, I will be happy to post them.  I feel my contribution is my understanding of market direction, using my Proprietary Momentum Changes indicators.  And the history for past 2 years has been pretty good. A few small losses and numerous good gains.  But if you want to to see charts, just add a suggestion in the comments section.

Oil is lower this morning, trading 96.35, down 2.12% and Brent is at 109.56, off 1.67%.  Gold is off 0.11% at 1490.70 and Silver is 34.41, off 1.49%.  The rest of the commodity complex is mixed.

The Euro is off 1.07%, a sizable move, at 1.415, while the Dollar is up almost 1%, trading at 75.75.  The bonds are surprisingly not moving as much, with the Note up 1/8 at 3.16 and the long Bond is up 1/8 at 4.31.

The Momentum Change indicators are still on the Sell signal first generated 5/13, although some of the individual indexes have been on a Sell signal longer.  The charts do show some potential support at nominally lower levels, so I will be watching to see how the various indexes respond to expected support.  But unless the market gets hammered today, those levels are not likely to be reached today.  We should see enough movement today to give us some higher stops which will allow us to protect our expected gains.


Best To Your Trading!.

Bill

OK... Here we go again!

Earlier this afternoon, the Philly Fed released their manufacturing report for May.  The consensus was looking for an increase from the April 18.5 to 20 and compared to a March print of 43.  Well, welcome to the  world of Economic Recovery.  The Philly Fed, instead of the expected 20, offers us a print of 3.9.  Bam!

Of course, with that good news, Mr Market continued it rally for the day, up 62 as this is written.

The major indexes (or representative ETF's ) continue to bang up against resistance, and appear to have gotten themselves into a very tight corner. Please note the new trades to the right........ I will post very tight stops.

Let's try this again.

Best To Your Trading!

Bill

Trading in Real Time!

Mr Market opened strong this morning, after being higher overnight about 20 Dow points.  At 8:30am, the new jobless claims were reported at 409,000, an improvement over last week which printed at an upwardly revised 438,000.  Yet, with a print above 400,000 lost jobs, it means the economy continues to lose jobs, not gain jobs.  But Mr Market liked the report, and promptly jumped another 20 Dow points, and opened nearly 50 Dow points higher than it had closed on Wed.

After a careful review this morning, even with the strong opening, the Proprietary Momentum Changes indicators are still as they were on 5/13. Meaning the major indexes are still on Sell signals, with the exception of the correlated Buy signals in the Dollar and the Bonds.  Many people offering trading ideas like to point to the buy and sell signals as the the measure of their strategy, but I live in the real world, and limiting losses is my strategy to long term success.  As of this morning, all of the trading ideas have been stopped out.  I will be watching for an opportunity to re-establish new positions, or watching for a new Buy signal.

I will have some market comments later this morning.

Best To Your Trading!

Bill

Here we are......U pays your money, U takes your chances

Here is the 11 year history of the Bernaks' favorite measure of success.  It is the Russell 2000, and below is the record of its performance for the past 11 years.  The "Power of the Pattern" resolves 2/3 of the time to the downs side.  But if it breaks out to the high side, it would be important to have very tight stops.

Which we have.. note the sell stop prices on the levered, Bearish, ETF's  to the right.

Click to Enlarge

Best To Your Trading!

Bill

Custer has circled the Wagons!

The Bulls are making a stand at 1320-133 level in the SPY  ...I could see it in the series of failed auctions in the 30 minute and in the hourly.  After opening weak, the Dow is now up 0.14% and the SPX is up 0.41%.  The only major index not trading higher at this hour is the financials, with the XLF off 0.06%.

My commodity screen is all green, with Oil at 99.64, up 1.67% Brent trading 111.83, up 1.67%, Gold higher at 1498.20 up 1.23% and Silver trading 35.24, up 5.24%.  The rest of the complex is all green.

The Euro higher at 1.4242 while the Dollar, after being higher over night and at the open has traded lower and is now off 1 tick.  The 10 Year Note has temporarily abandoned its trek to sub 3%, trading down a little on the day at 3.15% up 3/8 and the long Bond is also lower, trading at 4.26%, down nearly 3/4 on the day.

Not much news on the Econ today.  Zerohedge has 2 interesting (ok, most of their stuff is interesting, but these 2 are really interesting) stories this morning.  This one reviews the long term history of a Worlds Reserve Currency and the other reviews the likely end to the Dollar as the Worlds Reserve Currency.

No change in the Momentum Change indicators as listed to the right.

Best To Your Trading!

Bill

Come on Train!

There is a great joke about 2 boys sitting on a log beside the train track.  Mommy called and said "boys... get off that log.  A train will come along and suck you off"...............

Here comes the train.  As this is written at 11:30am, the Dow is off 130 and the SPX is off 6.40  All the major indexes are off except the XLF, which is up 0.06%   The charts of the IWM, the SPY, the QQQ, and the DIA all look about alike.  They are breaking, or have broken both short term up trending and longer term up trending lines.  Momentum has flipped both short term and intermediate to the Sell side.  At least for the short term, the longs are making a decision to unload risk.

I really have no idea how low it can go on this move.....I have become a proponent of using trailing stops to establish sell points, rather than assuming I am smart enough to know where the bottom (or the top) is before I see it.  This move could last 4 or 5 days, or it could last 4 or 5 weeks.  I will let the market tell me when it triggers my stops.  Then I will look around for another set-up that meets my criteria. 

I have added sell stop prices at the right side of the blog.  Don't forget to enter your Sell Stop GTC, and be ready to update those stop prices as this move unfolds.

More later this afternoon.

Best To Your Trading!

Bill

Have We Seen The Top?

I wish I knew...... my Crystal Ball is still not working.  But the Proprietary Momentum Changes indicators say the direction has changed.  And because this is a binary system, the next signal will be a Buy signal.  I just don't know where it will be.

I have made some changes to the blog, hopefully making more useful information available in addition to the singular direction signal.  These last few weeks have been very noisy... and full of potential whipsaws.  Personally, I don't like whipsaws. They tend to damage my confidence.  But other traders are not so tender.  So I thought it would be helpful to offer the signals I get in in the individual indexes or the tracking ETF's.  You will note that in several cases, I prefer to use the ETF's SPY and IWM and QQQ and XLF instead of the actual index, the reason is that there are more data points available than for the actual indexes.

There are many strategies used to gain an advantage in the markets, and I have used a number of them.  I am familiar with and follow many more than I have actually used.  I am convinced that there is no one single strategy that is 100%, but there are many that are generally more accurate than they are inaccurate. Many traders attempt to anticipate a buy point or a sell point, based on charts, and I have studied many strategies that claim success most of the time, and I in fact use them myself.  The one strategy that I have studied and used and no longer use is a fundamental approach to investing.  And let me assure you I am well schooled in fundamental analysis.

However, after many years of actual experience in the markets, I have come to understand that individual personality has as much, if not more, effect on actual results than the strategy used.  I have known many participants in the markets who made a great deal of money in the markets.  However, I have known very few who have been capable of keeping it.  The very successful who have been able to keep most of what they have made are those who are not always the best buyers, rather they are consistently and persistently the most disciplined sellers, avoiding any serious loss, unwilling to let a trade move against them without taking action to limit losses.

There may well come again an investment climate where the Bull can run for a number of years with out serious corrections, but most of us don't have the time to wait for it.  If we are committed to increasing wealth, and or income, or are content just to maintain our principle, we must be prepared to follow that direction the market taking, being prepared constantly to move to limit losses, and to be emotionally prepared to change direction.

And that is the hard part.

Best To Your Trading.

Bill

For the times, they are a chang'n!

Blogger was down this morning.... came back up about 1:00pm... just in time for an afternoon update.

The proprietary Momentum Changes indicators have been sorting themselves out the past few days and have gotten beyond the violent price changes that have caused so much confusion the past 2 weeks.  With the mess the market has created, the only people with any idea of what to do have been the day traders..... for a day trader, 10 minutes can be a trend they consider tradeable.

I am going to make some changes in this blog that I hope you will find useful.  I spend most of my time working with the major indexes, as it seems there is more useful data generated for the widely followed indexes, as compared to the data generated for individual stocks.  What I mean is that the Momentum Change signals generated in the indexes and the ETF's tracking the indexes are more reliable.  The indicator system also works with individual stocks, but the best information is only available in the most widely traded companies, like AAPL or GS or XOM.

I have also found that it is preferred to track momentum in the un-leveraged ETF's like SPY and DIA and QQQ as opposed to the 2 and 3 times levered ETF's like TZA or SDS or QID.  So I will report on the Momentum Change signals for the ETF's tracking the indexes, and not the momentum for the levered ETF's.  I will report the current signals for the ETF's tracking the indexes in a separate widget, and then trade recommendations in another widget.  Hopefully, you will find the information more useful.  I will have these new widgets completed this week-end and they will be up and running by Sunday.

For the past 2-3 days, the indicators have been smoothing out, and I think they have caught up with the current trends in the market.  As you might guess, the signals have turned, or are turning Bearish.  At the end of today's trading, I feel confident that I will have enough data to again make some trading recommendations.  But I want to re-enforce the practice of always using Stop Loss orders to protect capital.  Stop Loss prices will be set sufficiently close to an entry point to protect against any large loss, while at the same time, allowing a small margin to give the trade a little room to work out.

I am looking forward to getting back into the action next week with renewed confidence and direction.

Best To Your Trading!

Bill

Is it the Commodities, or is it the Dollar?

It's only 1:30pm and already this has been a wild day!  The market opened lower, with the Dow trading off about 70 and the SPX off about 6.5, and then, after a New Jobless Claims print at 434,000, an above-expectations PPI report, and a Retail Sales miss, the market decided it had all information that it needed to rally, the SPY caught a bid at the 50 SMA and is now trading higher, with the Dow plus 65 and the SPX plus 6.50.  The good news is that the market is not closed yet for the day, and anything can happen.  And probably will!

Oil, Gold, Silver and Copper all traded down hard at the open, and now are well off the lows for the day.  Oil is currently at 98.38, after being as low as 95.25 and recently as high as 99.72.  Gold sold down to 1477.60 and has recently traded as high as 1506, currently trading at 1499.  Silver opened weak, trading as low as 32.30, and has recently traded as high as 35.89, currently trading at 34.74.  The rest of the commodity complex is mixed.

The Euro has had a similar trip, trading as low as 1.41 and recently as high as 1.43, currently trading at 1.426.  The Dollar, which I today think is driving these markets, has been as high this morning at 75.65, and recently as low as 75.11 is currently trading at 75.12, off on the day from the previous close.  If the Dollar can continue to trade above the 75 level, I suspect that Mr Market will continue to have problems moving much higher.  But then, what the Heck do I know.

The Bond market is been under pressure most of the day, with both the 10 year Note and the long Bond selling off.  The Note is currently trading at 3.22% and the Bond at 4.35%  The ETF that  best tracks the bond market  (in my opinion of course) is the TLT, which is generating an interesting candle today, with a Bearish Engulfing candle taking out the last 2 days.  As the TLT has been correcting for the past 5 days, this is likely pointing to another run to the up side.  I did not offer a buy recommendation when TLT generated a Buy signal on 4/13 as I was focused on the equity market.  I also did not offer a buy recommendation when the UUP, the Dollar ETF, generated a Buy signal on 5/5 for the same reason.  But these two ETF may well be pointing us to a new trend in the equities markets.  If the Dollar wants to trade higher, which it is telling us that it wants to, and if the Bonds can trade higher, as the TLT is telling us it wants to, then all that is left for us to do is watch for the Sell signal that is surely coming for the DOW and the SPX and the rest of the equity indexes.

I am again today cautious... waiting to see what develops.  This volatility and choppy trading in the markets has often marked market tops.  With the end of QE2, a crumbling housing market, New Jobless claims again raising, 3,700,000 mortgages 90 days or more in arrears, and food and energy prices continuing to climb, I think Mr Market is facing increasing  head winds.

And I think some point in the near future, the impact of this St. Louis Fed Chart is going to be felt.

Click to Enlarge.

And this little display of the national employment picture.

Click to Enlarge

Stay Strong!... the next trade is coming our way.

Best To Your Trading!

Bill

Commodities lead the way, Part Duex!

Commodities are doing it again, only they are doing it the other way. (Does that sound a little off-color?)  After leading the markets higher yesterday, the commodities are leading the way to the down side.  Oil is off 4.55 at 99.33 and Brent is off 4.82 at 112.82.  Gold is off 15.90 at 1501 and Silver is again lower, off 3.35 at 35.13, and Copper continues it losing ways, trading 3.91  The rest of the commodity complex is lower, with the single exception of Feed Cattle.

The Euro has fallen out of bed, trading at 1.417, off nearly 900 ticks in 1 week.  The Dollar, is now trying to break out to the upside, trading right on the down trend resistance line at 75.40.  If the Dollar can break higher with authority, we can wave bye-bye to the March 09 rally.

The Bond market continues to demonstrate that the investor class is concerned about deflation going forward, at least for the short term, with the 10 year Note trading up 1/2 at 3.16%, and the long Bond trading nearly 1 point higher at 4.30%.  It is being reported that the 10 year auction priced at 3.21%... someone please tell me how that happened, with the Note in the market trading at 3.16.

The Dow is up 170 as this is written, nearly the worst levels of the day, and the SPX is off 16.90.  So, here we are again... violent swings in the indexes that make any pretense of known which way the market is leaning nearly meaningless.  I accept that the Proprietary Momentum Change indicators have little value in this kind of very choppy market........I find I am leaning on my old chart reading skills to give me some confidence about what positions to take, and those old skills keep telling me to "hold on to the cash.. this will sort its self out shortly".    As my old friend and manager, Captain Gatorbait, used to say... Bill, you do not have to be in the market every day.  There will be a new trade coming shortly"

Market timing tools and cycle studies are telling me that a major top is near... and they are also telling me that a push higher is possible, if not necessarily probable.  My Killer Instinct keeps telling me.. :"Do Something"  while my aged and wise old gray-haired rational head keeps telling me...."Naahh!"

One of the reasons I am staying out of the market is the realization that stop loss orders are nearly useless when these reverses are occurring with big gap opens.. guaranteeing that a bad gamble will feel a lot worse when I get the fill.

Best To Your Trading!

Bill

Commodities again lead the way.

After being higher overnight, the market opened up about 12 Dow points, and is currently trading up 51 Dow points.  The SPX is up 7, and the rest of the major indexes are all also higher.  Oil has regained it footing, even after the margin hikes and is trading at 103.28, while Brent is higher at 117.31.  Gold is higher at 1516.20 and Silver is also higher at 38.46, as is Copper.  The Euro has firmed, trading at 1.437, the Yen is weaker against the Dollar while the Dollar is consolidating its gains of the past week, trading lower at 74.75.  The 10 year Note is down a couple of ticks at 3.169% and the long bond is also down a couple of ticks, trading at 4.315%

The "Risk Off" trade in commodities may be reviving but it does not appear the investor class is ready to abandon the safe havens of the U.S. Treasury market.

Chris Kimble at Kimble Charting has been pointing to the long term SPX chart, noting the significant long term trend support line.  Here is the chart, starting 1985

Click to Enlarge

Here is the 5 year chart, again showing the important trend support and resistance lines.

Click To Enlarge

It is clear that Mr Market has painted himself into a corner.. and until a Breakout or a Breakdown can be described, I believe trading here is merely gambling.


I found this report on the  web this morning, offered by Bloomberg BusinessWeek, addressing the lack of accurate financial information and unreported market exposure as a primary cause of the financial crisis.  The report can be found here.  Thanks and a tip of the hat to Danielle Park at JugglingDynamite.com.  It is a little long, but is worth the read.

The Proprietary Momentum Changes Indicators are still on the Buy signal first generated on 4/20, although I do not feel this is the time to chase the market.  It has always been my experience that the best gains are established when action is taken when a signal is first generated.  I have been staring at charts now since last week, trying to make sense of what is going on  in the markets, and the only clear trend that I see is in the debt markets, and especially U.S. Treasuries. I especially like the TLT, which has broken out of the IHS and looks like it wants to go higher.  However, it likely that it could retreat back to the neck line at around 93.5.

Still sitting on the sidelines.. Best To Your Trading!

Bill

Uh.......This does not feel right!

I have been waiting for some clue today as to direction.. and after a flat open, at 2:00pm, the Dow is up 65 points and the SPX is up 7.50.  The Commodity complex is generally higher, with the PM's and Oil leading the way, while the bond market is mixed and the Dollar is lower after trading above 75 over night.  The Euro lower also.  But here is the problem... there is no volume anywhere.  Even SLV, the Silver ETF that traded its entire float twice over in 2 days last week, is trading on 1/3 the volume.

My position is the same today as late last week.. sit on the sidelines while this mess gets sorted out.  The last Momentum Change indicator is still the April 20 Buy signal.... and as of this afternoon, the indicators are mixed but still leaning Bullish.  The extreme volatility is impossible to trade.  My guess as of this afternoon is that the market sustained heavy damage last week with the crash of the Euro, the crash of the PM's, Oil and the commodity markets in general.  The best indicator of the caution in the markets is reflected in the Bond markets, with the 10 year Note trading up at 3.14% land the long Bond trading higher at 4.29%

In addition, the Dollar, although off the level achieved over the week above 75. is still trading at 74.75, 2 1/2  cents above the level reached last week prior to the crash.  And as we have learned for the past year, the markets, either equities or commodities, are not going anywhere in the face of a strong move higher in the Dollar.

There is no economic news today, but there is a lot of noise in the business press regarding Greece, Portugal, and the rating agencies.  JPM has offer a story on Brent, looking for 130 by the 3rd quarter, and Iran says they have proof OBL died some time ago.  Now there is a source you can believe!

The only report worth recommending is a story at Zerohedge regarding the Reuters report on what they think caused the Oil and PM crash last week.  And the suggestion that a lot of money was lost.

While the Momentum Changes indicators are still on the last Buy signal, there has been deterioration in some of the other timing tools, suggesting that a severe decline is possible.  As I don't yet have a sell signal, and being aware that this volatility in the markets has rendered the Momentum Change signals suspect until a trend can again be identified, I will remain on the sideline.

Best To Your Trading!

Bill

Good Morning, Whipsaw City!

Holy Flash-crash Batman.......what happened?  The last hour yesterday, as demonstrated by the hourly SPY chart, show an implosion in price  (it declined) and an explosion in volume (it blew up).  There are as many explanations are there were trades that last hour.  Gold was down 50, Silver down another 2.5, Oil was down 9.5, the whole commodity complex was down hard, the Euro was down 350 basis points, the Dollar was up135 basis points...almost 1.5% and the bond market was strong, with both the 10 year Note and the long Bond breaking through down trend resistance with authority.  In other words, it was Risk Trade Off, Inflation Expectation dead, and Deflation straight ahead.

Of course, this morning, all of that is reversed, with the Dow, SPX and all other major indexes up over 1%, Commodity prices trending higher, the Dollar is flat and the Euro is bouncing, and the bond market gives back a little of yesterdays gains.  I don't know how to spell schizophrenic, but if I did, it would be a great word to describe the markets..

The world of Momentum Changes has gotten a little confused, with the violent changes making it difficult to make sense of the indicators, which can't keep up with the price changes occurring in such a short period of time.  That does not mean that they don't work, only that in a periods like the last 2 weeks with such violent changes in direction, it can become very confusing.  It takes longer for the momentum measure to catch up with price changes, and by the time they catch up, the direction has again changed.

All of the last paragraph means only that it is imperative that stop loss orders be employed, both to prevent actual capital losses and to direct the harvesting of gains as they occur.  No method of measuring the market is 100% accurate, 100% of the time.  But we can keep on with the experience, realizing that even with the very quick loss yesterday that the traders of the past 2 weeks are still net very profitable.

Rob wrote yesterday, asking what "momentum change" had occurred to trigger the trades on Wednesday.  The answer is that there was no Momentum Change... the last change was the Buy signal generated on 4/20.  I reported the change 4/20 but I did not make any trade recommendations.  I have trained myself to be very conservative, trying to trade only when the signals make sense in context with other measure of the market, and frankly, I did not like the market at that time.  I wrote that if the resistance line and the IHS neck was broken to the up side, that there would be an opportunity to get into the market after a pull back. 

Many technical manuals demonstrate that a stock or a market will often re-test a break out.. it is called "returning to Ice".  Meaning that the stock or market will return to the break out point, and then resume that break-out direction with a successful test.  It looked Wednesday that in fact the test occurred, and the shorter term charts showed a successful test, and I made the buy recommendations in the afternoon.  Every trade closed Wed with a profit, and until about Mid-night when I closed the computer, the futures were trading up 30 points.  I went to bed very satisfied.

By morning, the futures had pulled back to flat, and then the New Jobless claims printed with a big surprise on the up side, and with the higher margins in the Silver market, and other weakness in commodities, a comment from the ECB that a rate increase was unlikely in June, the whole investor-world tried to get out at the same time, and my stops were triggered on the open.  Except for the QLD.  Now this morning, it looks like Mr market wants to go higher again, the the Dow up 170 as this is written. Unfortunately, I don't have a technical rule about how to trade with this kind of action, so I will again wait until a new set-up presents its self on the upside, or I will watch for a new Sell signal.  (which did not occur yesterday... but it was close)

I will mention that one of the old technical rules about trading the market is that violent swings after a big move higher often signify a topping process, and that historical observation is the context in which I am measuring this market.

Best To Your Trading!

Bill

                                                                                                                                                                                                                                                               

OOUCH!

Well, that sure did not take long!  Stopped out of all trades except the QLD.  Gap openings are always the unknown when dealing with stop loss orders.  It seems the last 3 series of trades have seen stops triggered on the open, with prices received lower than the stop price.  I guess nothing is perfect.

With the weakness this morning, it is possible that the Momentum Changes indicators may flip to the Sell side.  Just as the 4/20 Buy signal was a surprise, so this would be a surprise also as there has been little evidence of a change until Tuesday, and even then, the signals had merely moved to neutral.

The weakness is across all asset classes except the Bonds, which continue to perform well, especially the intermediate U.S. Treasuries.  Check out the TLT

Click to Enlarge

Is this THE TOP? That remains to be seen, especially since it seems a little early based on several timing tools.  The Commodities are getting hit, with Oil down to 105.39 and Brent down to 116.66.  The soft commodities are down across the board, with only the meats higher in the commodity complex.  Gold is off again today at 1510 and off 70 points from its high, while Silver continues its correction, trading at 37.67.  ( I hope all those Silver Bulls didn't forget to sell...... big gains mean nothing if you can't take them)

The Euro is selling off as the ECB has stopped talking about a June rate increase, and in fact have begun to soften their hard line position.  It does not look like raising rates will be helpful, now that Germany has taken a serious hit to its GDP growth, coming in negative for April after printing a 4% gain in March.  The Yen continues to strengthen, trading below 80, while the Dollar has caught a bid, trading up an unbelievable 1% at 73.79.  As everyone who follows these markets knows, Mr Market will have a hard time advancing if the Dollar decides it wants to trade higher.

The big news this morning is the surge in new jobless claims, printing 474,000 on expectations of 410,000.  This print is setting up a major surprise for tomorrow's NFP report, which is increasingly looking like it will not be a positive report for the economy.

If there is any change in the Momentum Changes indicators that is sufficient to flip back to a Sell signal, I will post it before 3:30pm, to give you time to make any switch that you would want to make.  It may be time to bone up on the names of some of those short-equivalent ETF's.

Best To Your Trading!

Bill

Trading Alert.. New Trades

It looks like the 38.2 Fib is going to hold, at least for the time being.

I am entering the following trades

Buy TNA at84.60
Buy QLD at 92.71
Buy SPY at 134.68
Buy UWM 48,25
Buy RSP at 51.15

Stop loss price will follow shortly

Best To Your Trading

Trading Alert

The market opened flat and promptly began a sell off that continues at this time, with the Dow down 130, and the SPX down 14.5. All of the rest of the major indexes are also down at 12:30pm 

 Commodities are getting hit, with Gold off 16.7 at 1523.70 and Silver off 1.04 at 40.15.  Oil is also fading, trading 109.54, off 1.51 and Brent trading at 121.41, off 1.04.  The rest of the commodity complex is also off, with red arrows in every name except live cattle.  It looks like the risk trade is off again, at least for the day.

The Euro is a little higher at 1.484 while the Dollar is off again at 73.04.  The debt market continue to act very well, with the Note trading 1/4 higher at 3.218% and the Long Bond trading 1/2 higher at 4.327%.

Signs continue to grow that the economy is slowing.  This morning the ADP payrolls report printed at 179,000 against the expected 195,000 and the revised 207,000 in March.  This ADP report is notorious for being inaccurate, but it does raise issues about the NFP due on Friday that many now think may be very disappointing.  IN addition, the ISM Services report dropped to 52.8, down from 57.5 last month, and only 2.8 points from the magic number 50, and anything below 50 signals contraction of the economy.  All of the rest of the survey indexes included in the report demonstrate continued but slowing growth.  The only survey to show improvement were imports and supplier deliveries.

The SPX is trading back down at 1342.6, very close to the to the neck line of the IHS that propelled the advance and is trading right at the 38.2 Fib retracement line of the move from the April lows to the May 2 highs.  This a very likely place to see some support and a reverse of this current decline.  I am watching for close at the short term trading to see if I can't see a reversal at this level.  I will be offering trading ideas, perhaps as early as this afternoon.

Best To Your Trading!

Bill 

Getting Back to the New Normal

4 days of big stuff.... Royal Weddings, Silver crashes, Terrorist Hunting, Birth Certificate Finding and and the Magic lost in the first round.  Phoooy!  Oh ya, and the US Department of Energy's Energy Information Agency (EIA) has de-funded the office that collects data on oil production outside the USA - that is, in places like Saudi Arabia, Nigeria, Venezuela, Mexico, et. al.,.  Better not to know than to spend anytime worrying!

I spent most of Monday on the phone with a couple of English speaking technicians from India, trying to solve a network and software issue.... They say it is complicated  (Duh!) and they will have a work-around by Thursday.  I hope.

Apparently, the disposal of OBL has not worked to quiet tensions in the MENA, as the price of oil slide only a few cents, with oil trading slightly lower this morning at 112.43 and Brent lower at 123.77.  Gold is getting hit again today, trading down at 1539, while Silver is trading off at 43.30.  Copper is also lower, and trading below resistance.  The rest of the commodity complex is mixed, with Sugar leading on the upside and Soybeans leading the decliners.

The Euro is off a little bit, trading 1.481 while the Dollar enjoys a little rally, trading 73.09. I noticed the Yen was very strong this morning against the Dollar, trading 80.85.  That is near the level achieved upon the chaos after the Nuke plant catastrophe, yet I have not seen any comment about it at the compilers that I read.

The debt market continues to perform well, with the 10 year Note 1/8 higher at 3.262 and the long Bond 1/4 higher at 4.366.  The bond market continues to warn that Mr Market may be heading for a dip.

The Proprietary Momentum Change indicators continue to hold the Buy signal generated 4/20.  In my caution, I missed the first leg of this rally, but now with the pull back occurring today, and any weakness in the next day or two should give me an opportunity get long somewhere around the neck line of the much discussed IHS.

Best To Your Trading!

Bill