Nemo's Findings week of 12/16/2012

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Just to let you know, no update next two weeks....gonna' be a bit screwy with the silly season upon us.  Longer term pivots will likely be ephemeral in effect.  If you're trading the daily pivots, and perhaps the weekly pivots will have some effect, but in the reduced volumes the probability of being algo bait is much greater.  Anyway, the week that was:

 

 

  

The "economic" news was, at worst positive, yet the market sold off after "The Bearded One"  announced the Fed would purchase additional MBS equal to the amount  of the terminating Operation Twist.  So we now have, in the parlance of @Shaq48 (the immortal trader...Jeff Davis)  The Buzz Lightyear Easing, "from infinity and beyond!"  The Fed will buy until they have met their new mandate of lower unemployment...this is big in Fed parlance folks.  The Fed was always pretty much only concerned with protecting the currency value...now, they are concerned with this new parameter.  This moves the Fed deeper into the web of the political equation, and frankly, may give politicians another party to blame for their folderol.

Anyway, the week that is: 

Nemo's Findings

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html  

Tuesday: Bad news on ISM and Construction spending.  So what did we do?  Well, after some obfuscatory price action, the IWM bolted higher, spy finished slightly red, financials green.  All in all, bad news was bought.

Notice on Tuesday to what levels the price action reacted...

IWM bottomed at the swing high top from August 7, which served as the top of the related fibonacci draw, to which that aqua line at the bottom belongs.  

SPY bottomed, close enough for government work, in the confluence of price action, the Weekly S1, and 38.2 retrace from the most recent swing high.  

FAS retested the low from the 31st, rose and then tested the WPP but could not hold below.  When financials are strong, equities can be strong.

TLT couldn't hold below the confluence of the 50SMA and the WPP.

Coincidences?   I think not...

Which brings us to the tight ranges on Wednesday....mmmmhhh Draghi, the  GS alum that he is, will have made pronouncements by the time the market opens on Wednesday...I'm on record in the trading room, given that GS finished the day at the top of it's range, that we're likely looking at a big gap up on Wednesday...am I full of Taurine Excrement?


Thursday:  And the winner is........me

Although the initial gap up was not as great as I thought, pre market action had IWM right up against that volume overhang in the 82.75 area.  After the open it was "Gap and Go," the market never looked back.

For Beau, here is a graphic of the FCX trade from that day:

I'm not sure it gets any simpler on a trade, or more text book.  The whole number is always a potential inflection level.  You can see the former resistance level at 35.96ish where the arrow points to the stop.

When price action pushed through 36 on high volume, it was immediately pushed back below 36 as signified by the tall wick on the candle.  

Well...Thursday was ridiculously strong, so I was expecting a rebid, that is for price to move back over 36, which it did.  That's where I got long (.03 I think).  Now, FCX was already up strong for the day, why did I think it would go further?  Well, pivot levels had R1 at 36.17, so it really wasn't extended from a pivot range point of view.  I think I even said in the room the break of .10 would be another entry, and then it was just trade management .

Friday:  More of the same...tighter range on the indexes, but there was a rotation where many stocks were up strong with spy breaking through the highs going into the close.


The week that was:

IWM:  Finished at the weekly R4, albeit in what was a reasonably tight range this week

SPY:  Finished at Monthly R1 and above R3...yeah, this was a strong week alright

FAS: topped out at the daily R2 today in between Monthly R1 and R2

TLT:  finished on the weekly S2 

I'm thinking we have further to go, 153 on the spy, but since we're in a gag....risk on...environment, IWM should be leading the way.  It hasn't surpassed the April 2011 high.  I think it likely get's there before we see a pullback.

Of course next week we have the German High Court ruling, so the action could go any number of ways, meander until the decision;  move euphorically higher, and then will it be buy the Euro party, or sell the news?  I'm on record saying they won't trash the whole enchilada...boy, what an epitaph that would make on their gravestones in the local Friedhof, and I'm sure the euro apparatchiks have already figured away around a negative decision.


Anyway....

The week that is:

In our "risk-on" (I want to find the guy who coined that and punch him in the nose) environment, IWM should be leading and it has shown relative strength.  On the chart you will see three dark red lines above the current price action.  Those represent previous swing-highs going back  as far as to 2011.  I would, barring "sell the news" on Wednesday, expect to see all of those eclipsed, with confluence resistance at the 2011 swing high and the WR2, and some at the WR1. 

SPY has been a bit of a relative laggard to IWM as would be expected.  No significant resistance, unless the upper channel trend holds it, until the 147.25-.45 area.

You can almost feel the building euphoria in the market.  Which reminds me, "You want to make the gods laugh?  Tell them your plans?"

Oh, oh...hearing voices in my head...."It's a long way, to the top if you want to Rock'n' Roll"

Nemo's Findings for 9/2

Monday that was:

   

I went back to the 15th on this so you could see the fibonacci draws. Looking on the far left at the circle, notice the confluence of the 38.2 up leg draw, and the 50% downleg draw.  Notice how those two levels coincide with the Monthly R1, which was also a failure at the 23rd late afternoon swing-high.  Notice the afternoon bottom after Vad's...er...how did he describe it...oh yeah..."cascading"...drop(had to be there). on IWM you had the 23.6 level.

While SPY showed an area confluence of the 61.8 downleg retrace and the swing high from the 23rd.  Again, at the bottom of the Vad-cascade, the confluence of two fib levels, as well as relative price support at 141.30ish.

Is there a conclusion to be drawn other than the multiple confluences in both indexes were a top for the day, which supports the overall confluence methodology? Dunno.  However, I find it interesting the relative exactitude of the price action/confluence level intersection on IWM relative to SPY 

The riskier instrument seemed to be the tell.  Anyway... 

The week that was:

As we can see for the indexes and the financials  it was a relatively rangebound week with, in the vein of "close enough for government work," IWM and FAS closed on the Weekly pivot. 

                    Nah....the markets ain't rigged.

SPY though not on the Weekly pivot had basically oscillated around it all week finishing Friday on VWAP and creating a doji for the daily and a relatively indeterminate doji-ish weekly candle. So, from the charts going forward, it looks like a "definite maybe."  Volume was actually rising the last two days.

We're moving sideways, which is one way to work off an overbought condition.  Imo, we stay above the 138.60 area, no immediate doom.

Bonds, on the other hand, have been on a steady rise   for the last two weeks

The dollar has been on a relatively steady decline since the end of July.  It's coming into fairly strong support area formed by the price action between the middle of January and the middle of May, so it may thrash around a bit in this area.

Of course, the impending decision on September 12th by the  Bundesverfassungsgericht (say that 3 times fast) hangs over Europe, with the Fed meeting the next day.  One could expect there to be significant dollar volatility.  

If the Germans nix the bailout....dollar should spike and the market should sell off. 

I doubt they'll nix the bailout....How would you like to be fingered as the group that puts a dagger in the Eurotopia experiment?   IMO, they cave outright or, marble-mouth their way around shooting it down.  Of course, that means printing ad-infinitum.  

Question in that situation...if they vote thumbs up, meaning printing, does the Euro strengthen out of euphoria causing the $ to weaken and the markets go up?  Or, does the Euro weaken because of all the printing?  Does Benny hop on the bandwagon to print to keep the $ from getting too strong?

Typical relationship is $ up,  Market Down.  $ down, Market UP


Not expecting big moves next week in the indexes because everybody likely won't come back until the second week, and of course, the aforementioned Deutschentscheidung.

Charts are bullish, but I would, as do others I read, expect a flush to shake out the longs after the German decision ....and then resume onward and upwards into the US presidential election.

                                       SPY 153 anybody?


The week that is (New Monthly levels):

Note the shaded boxes below the price action and the one above.  Those are price levels where heavy volume was done.  Going through either one points to more action in that direction.  However, on the downside the 50SMA is rising and waiting.  The IWM has been lagging the SPY a bit, expect this to lead in relative strength or weakness to indicate direction...my bet is up

Note the relative obedience to the drawn trend-line.  I have three trend lines drawn through the upper, lower, and middle price action from the middle of May and the low in June.  The drawn trend line is the median trend-line.  Notice the Weekly Pivot, is only a few cents different from last weeks.

This was the performance of the major World Indexes on Monday while the US was enjoying a long weekend.   

Nemo's Findings (or whatever Vad is calling it now)

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html

The week that was:

• So whereas I expected a gap and go last Monday, we got it on Tuesday, which ended up being the highs for the week.
• Notice how IWM just about touched the Weekly R1 (82.75 would have been the daily R4)
• Notice how SPY just went through the Weekly R1 (143.26 was daily R4)
• Funny coincidence, huh?
• Notice how the price action interacted with the designated longer-term pivot levels
• Funny how spy basically closed on the weekly pivot.
• The daily pivot levels embedded in the graph are for Friday only
• Notice how Friday morning IWM bottomed basically at S1 on the daily pivots
• Notice how Friday morning SPY bottomed in the vicinity of S1 on the daily pivots, a 38.2 fib retracement and a turquoise colored line.  I use that color to denote price levels of multiple confluence.
• The confluence this time was:  1) a fib retracement,  2) price support on the daily, 3) a daily Pivot support level (S1).  
• Now this pivot support only comes in play this day, so the question becomes, is it the daily pivot level to which it reacted, the fib, or the price support?

• That's not really the point.  What's important is that it is an area of confluence for 3 different methods of technical analysis, that means 3 different types of traders (or algos) will be looking at the same level.  The more forms of analysis that identify the same levels, the greater the likelihood that level becomes significant. Which should raise the probability of that level being a point of inflection, especially when one takes into account that IWM hit S1 on the daily pivot at the same time.  (Folks...this ain't rocket science)
• Both IWM and SPY basically closed their gaps from the Thursday downdraft with Friday's action
• IMO if on Monday we open above the last swing high on Wednesday and then are able to hold above the gaps, we test those last Tuesday highs perhaps on Monday. 
• Worth noting, if financials (represented by FAS) are not going up, more than likely equities won't be either
• And of course, usually, if people are buying bonds (TLT) they ain't buying equities.
• O.K. now this week is going to be slow....real slow volume-wise.  Not that the indexes or stocks won't move, but the Germans are finishing up their month long vacations on the Costa Brava and Mikonos probably for the last time (because the Spanish and the Greeks are gonna' hate them as the Fall progresses).  The traders and computers are off to the Hamptons.
• Unless you are like a couple of traders I know (their names rhyme with Cipher and Dino) you likely don't have that esp that tells you stocks are gonna' suddenly move in the direction you want them to.  Only THE best setups this week and smaller size with a little bigger stop. (Now, if I can only take my own advice)

The week that is:

• SPY: Actually have a fair amount of long-term resistance still between 143-143.30 or so.  Break through that no confluence resistance to 147.25.  Rising 50 SMA at 137.25 near WS3 will likely be the floor...imho
• IWM: No heavy resistance until the 84.50 area with the 200SMA and 50 SMA between 78.25 and 79.00 and rising.
• QQQ: 69.60 area strong resistance no real multi-time frame support confluence until the 64ish level with the 50 SMA at 64.90.  MPP and QPP between 64.00-64.25

It's the last week of the month, will we see some window dressing?  Another month until the end of the quarter, but it might be worth doing a scan on best performing equities the last coupla' months, they might be in play this week...still think the direction is up, given the trend, as I said, not rocket science.

Nemo's Findings week of 8/4/2012

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html 

The week that was:

I left the the pivot points in, which only count for the most recent day,  to show the relatively extreme range for Friday. 

Notice how in IWM the range was coralled by the Quarterly and Monthly Pivot above the daily R3

In SPY the daily R3 served as the roof for the day with the upper channel trend line overhead near 140.

I joked in the trading room in the middle of the day on Thursday how  the IWM was forming a "stilleto heel" chart formation.  What you may notice is it does form a perfect Adam & Eve bottom, which gave an inkling, if you had the intestinal fortitude to go long, as to what portended for Friday. By the close of action on the 15 min chart, it had formed a reasonable Cup and Handle.

The gap up Friday was triggered by: 1) a parsing of Draghi's pronouncement that  supposedly gave specific requirements for target nations to receive the benefit of the printing press, and 2)  the perceived beat of the jobs report.

Did you notice how many stocks that have been announcing earnings and selling off immediately after are subsequently being bought recovering their range?  That's strength folks.

The week that is:

It's a reasonable assumption that, as earnings season winds down, and August progresses, volume will shrink, and prices will be moved by the news, primarily that out of Europe.  Intra-day plays become more dicey as reduced volume makes for erratic action.  Draghi has seemingly made his pronouncement, now the world waits for the edict of the German Supreme Court on (well near)  the Ides of September (12th actually) with the Fed meeting on the 13th....funny coincidence.

If the German Supreme Court says "Nein" then the structure of the EU and the Euro come into question...well as if they aren't now, but, that does make the situation more dire,. Basically, we are on hold until that time, so a rangebound market would seem to be the highest probability.

Should the German court say "Ja Wohl!" then that means the printing presses will be unleashed....If the Euro strengthens massively ($ falls) on the news, under the belief the Euro and thus the EU-is saved (or at least the can is kicked further down the road), the equity market likely explode (oh the hyperbole). But if the Euro weakens significantly should the honeymoon wane, can Bernanke afford to let American exports become uncompetitive because of $ strength? Does he then have to open the printing presses to maintain competitive relative currency strength?  What happens to basic materials and oil?

Just a few of the questions.  Oh, yeah...San Bernadino, CA filed for bankruptcy this week.  This is becoming a regular occurence.  Do state and municipal financing become the next crisis?

Nemo's Fndings 7/1/2012

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html 

Had a brainfart...no week that was...I immediately got to work on the level change overs since we changed weekly, monthly, quarterly and semesterly levels.

Without further adieu:

 

If you haven't noticed, I usually provide images that encompass the weekly levels because we don't often trade beyond that.  Now that I've said that, watch this be the week.  

Trading volumes will likely be light, so it will be relatively easy to push the price action around.  It also could be relatively easy to get jerked around by the algo's.  Buy support and sell resistance.  Then again, I'm not a fan of breakouts...I feel like the whack-a-mole.

With the big reset in so many levels this week, SPY now has 4 pivot points and the 50 day SMA  basically within 1 US dollar of each other.  As we stretch in either direction I would expect that range to be a magnet around which price action oscillates, barring exogenous (read:  European) news.  Note on the SPY chart the concentration of levels between 142.80 and 143.45.  That will be strong resistance, which I suppose is not really all that astute of an observation, considering reaching the bottom of that range puts us at new highs for the year and on this bull run from 3/2009, which would then make those pivot points extremely strong support.

Also, pay attention  should the price action return to that 130.80 level.  That was previously a Quarterly support level, it does have 3 fib retracement levels which will likely act as support, plus the rising 200 SMA.

If all else fails, try throwing darts while blindfolded...I've only hit my nephew a coupla' times.

Nemo's week of 6/24

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html  

 IWM SPY-the week that was:

The week that is:

A video review of what I saw and what I see:

http://youtu.be/iYOb-yMWOpA

Nemo's Findings week of 10-17-2012

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html  

The week that was:

As we can see the expected gap up on Monday basically started at the Monthly Pivot of both the IWM and SPY...(well, close enough for government work) and proceeded to sell off and then recovering the entire range to basically start where we began, bookended by Spain news on one end, and what will be the Greek election on the other.  Gotta' love the symmetry...

As we can see the gentle sloping rise from the bottom: does it imply strength or a bear flag?

Let's look at the 30 minute chart for some inkling as to what the future may present:

The Inverse Head and Shoulders (or is that a cup and handle?) is obvious with a measured move to the 141 area, but rarely do we find such predictability, otherwise, we'd all be billionaires.  (I'll just have to settle for handsome and witty).  So, with a Greek weekend coming, (and we're not talking Bachanalian debauchery at a fraternity house)...oh the pain of memory, as silly optimistic humans, the market may paint it optimistically and gap up.  Being the eternal cynic, (H.L. Mencken was my hero) I lean towards that.  Notice the "volume at price" gap between the monthly pivot point and the 50SMA and WR1-that could be easily traversed.  Should we open above and it holds we can see a strong confluence at the QPP/WR2 which also contains the 27.2 fib extension.

Should it not, and it falls below the MPP, look for a return to the WPP.  Of course, anything can happen, but it is likely that the 200 SMA will provide some supportn not only because of what it is, but because of the left side of the Inverse Head and Shoulders.  Also, notice the exactitude with which price action bottomed at the MS1...so we're likely safe until the 4th of July weekend....mmmhhh, symmetry rears it's ugly head again...will the holiday presage market fireworks as well?  I wonder if the heavy hitters are wondering if they'll be able to summer in the Hamptons.

Looking at IWM:

Same relative chart, although a tad weaker this week then the SPY.  I guess risk-on tempered itself into the weekend election festivities.  The MPP and 50SMA are a bit farther away but could easily be breached.   same resistance and support dynamics as spy.  Same exactitude at the bottom with MS1, with the one variance of both the SPP and YPP in that area.  Anyway...

Here are the remaining charts for next week: