Daily Archives: July 6, 2010

Happy (belated) 4th of July (by Nathaniel Goodwin)

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Saturday night Stun Gun Jones drunkenly broke into my apartment thinking it was his box. It scared the crap out of me; but I was also enjoying some libations that night, and the liquid courage gave me the strength to grab my shurikens and wail them at the dark figure as he stumbled around my room. Luckily I missed him and they buried themselves in the wall. The sound of the shurikens hitting the wall awakened the colonel, and he busted into the my room with roman candles ablaze in both hands. Colorful balls of fire were exploding all around Stun Gun and myself, melting polyester pajamas to my flesh. It sobered both Stun Gun and myself up quick.

Those little balls of fire hurt, they sort of bury themselves into your flesh and just burn. Speaking of pain, today sort of sucked for both bears and bulls. I was positioned bullish going into today and got stopped out around midday after most of my gains disappeared. I’m still in the camp of seeing some sort of more significant bounce soon.


Here is a chart of Zweig Breadth Thrust, which triggers when we go from 40 to 61.5 in 10 days from oversold to very bullish. It doesn’t happen very often and many find it useless, but some use it as an overbought/oversold indicator to look for divergences.



BT
 
Before Stun Gun  left, he told me the one year anniversary of the July 8th 2009 failed head and shoulders is coming up. "Always watch those anniversary dates!" he spoke as he gently fell down in the gutter and went back to sleep.

How I Spent My Morning

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Pretty simple………….two activities:

(1) Dumping my 25 longs

(2) Shorting like there's no tomorrow (and there isn't)

All my longs basically looked like this:

0706-bid 

That is, badly battered stocks that were bouncing. I think stocks like this have a chance of more recovery over the next week or two, but the general trend is down, and I'm not about to let a ridiculous 150+ rise with no basis in reality stop me from shorting more. Indeed, it's a great opportunity.

At the moment, the S&P is up 0.87% while my portfolio is down 0.42% in spite of being over 100% invested. The reason? A combination of the fact I had longs earlier and entered shorts at favorable prices. Being as bearish as I am, having a loss that's less than half of the day's gain is a marvelous success. I'm delighted with the day so far.

Charts From The Comments (Monday)

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A few charts from the excellent chartists that contribute to SOH's comment section.

springheel_jack posted two looks at the EURUSD (here and here) along with this GBPUSD chart:

My personal favorite though, the GBPUSD rising channel. I've taken 425
pips out of this since last Thursday and I'm hoping to double that by
the end of this week:

GBPUSD

Click for bigger

jesterx posted:

I was staring at the market today and trying to make sense of it, but
with this holiday here, sometimes the market can play up a bit. I will
not be trading today, but I found something with the RUSSELL 2000. Chart
below for those interested.

Jesterx

Click for bigger

morrise posted a round-up of the VIX including a Point & Figure, Weekly and this Daily:

We are a good deal oversold which often precipitates counter rallies. (link to spreadsheet) How about volatility with the VIX?

Vix

Click for bigger

morrise also posted a great break down of his thoughts on the SPX. Along with the daily chart below, he posted a 3-box reversal Point & Figure chart, a Weekly look and a look at the S&P500 Bullish Percent Chart. He also looked at a couple Moving Average studies on the NYSE Comp. (NYA).

Spx

Click for bigger

facesincabs posted:

fwiw … China was the first world market to resume its bear market
(noted by its 20% decline off highs several weeks ago) … in the last
two years it appears to bottom and top ahead of the domestic markets …

SSEC

Click for bigger

facesincabs also breaks down the Russell ($RUT) with three charts including this weekly look:

Weakness abounds in small cap's after the last week …

Rut_week

Click for bigger

That's it for now. Thanks to all the people posting charts in the comment sections. I'll leave you with this potential long term Head & Shoulders pattern on the Monthly DOW chart. The right shoulder needs work so tell your friends to sell and sell often.

Dow_monthly_hs

=^.^=

ES Interim Low Probably In – Good Bounce Plays (by Springheel Jack)

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I was expecting that we would make a low on ES early this week, and I
think we made it overnight at 1003 as a significant declining resistance
trendline was broken after that low:

100706 ES 60min Declining Channel Break

I'm not absolutely certain that the interim low is in, and looking at
EURUSD particularly I had expected to see a bit more downside first, but
looking at quite a few charts this morning I think that most likely
that won't now happen.

I've marked in my expectations for a bounce target on the ES daily chart
and, though I haven't marked it in on this chart, the low point on SPX
was almost exactly at the 38.2% fib retracement of the move up since
March 2009, which was interesting. On the ES daily chart there was a
touch of the RSI 30 oversold level, with some positive divergence on
MACD, and the lower trendline of the (sloppy) declining channel was hit
on Friday:

100706_ES_Daily_Declining_Channel

For promising bounce plays I'd highlight oil and copper, both on the
September futures. Oil on the 60min chart has broken up through a
significant declining resistance trendline and has a good chance of
making it back up to $78 IMO to hit the upper trendline of what appears
to be a broadening descending wedge:

100706_Oil_Sept_60min_BD_Wedge

The copper broken rising wedge that I posted the other day appears to
have been a diagonal slice of a previously unrevealed rising channel.
Both rising and falling wedges frequently develop into channels which is
always something to bear in mind when trading them. Copper also appears
to have formed a small IHS indicating to the $307 area, though my
target is the top of the rising channel in the $315 area:

100706_Copper_Sept_Rising_Channel_and_IHS

I'm expecting a bounce here rather than a longer term bottom, though if
strong declining resistance on ES/SPX and EURUSD is broken that could
still go the other way. At the moment however the SMA 50 & 200 death
cross is being made on the  SPX daily chart, and also the EMA 13 &
34 cross on the weekly chart, both very bearish indicators for the rest
of the summer.

It would be nice to get a hindenburg omen as well of course, but one of
the preconditions for that is that the NYSE ten week simple moving
average must be rising, and that looks unlikely in the near future
without a major bull break up, which would then make it hard to get the
number of new yearly lows required to trigger an omen. Wikipedia have
an excellent page on this indicator for anyone interested in how it
triggers.