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Thursday, August 31, 2017

Market update 8/31/2017 - Tech breaks out to new highs

Giving the charts a workout this morning

The short sellers typically get squeezed at the top, and if you look at the long term trend on tech, that's exactly what looks like is happening. We haven't seen a pullback in tech in over a year. 

The big picture: The RSI, The MACD, and the Volume, have all rolled over, and volume typically precedes price movement. Could hold up for another few weeks... The upper blue channel line is your stop hunt, and key support on this chart is the previous high at 1150. 

Key support on the Dow is the 50 day moving average, which was back-tested again on Tuesday, where I called the reversal.

You would think it impossible, that the market would reverse to the downside here, and you'd probably be right, especially since the pro shorts are already on vacation. Never sell into a holiday, unless you see support breaking down. There is a slim chance that we'll see a run for the exits ahead of the long weekend, but odds are you won't...

 The Dow: See the 50 day ma: 

So there's the bullish view, "but wait there's more..."

 The NASDAQ has crawled back into its bullish channel, on decent volume. It didn't even bother back-testing the 50 day ma. This is all about squeezing the short sellers into another holiday as we've seen 100 times before.  

$SPX - if you look at the lower channel line you see the same thing... but is the correction complete?

The most recent pullback just seems a little too easy, and Money Managers would rather see the weak hands shaken out, before they're forced to chase performance in Sept. window dressing. Solution: shake out the weak hands, as soon as you return from vacation.

Possible catalysts are am Iranian torpedo boat, and Trump did promise to impose a hefty tax on hedge funds, and someone had to pay for tax cuts. 

This leads me to sine bearish patterns I've spotted on the short term $SPX, and the $NDX charts.

$SPX - looks like a broadening pattern, with an upside target of 2466.50 (depending on when it tops), and we could hang out in the top of this range for a few days, and retest the upper pattern line next week - in wave c of D (this straight shot looks like only wave a of D). The wave "E" target it off the chart, 40+ handles lower, and since wave E is a panic wave the sell-off should be swift. I'm thinking Sept 4th, or 5th (technical Tuesday).

$NDX (big tech) - looks like a suckers rally in wave 2. I'll probably have to raise my red resistance line this morning, but anything short of a new all time high points to a suckers rally... 

There's also a good possibility that we see our long awaited sector rotation, from tech into Oil and energy. If tech crashes into wave 3, watch for a sector rotation into energy, while few others are paying attention. Could see a nice short squeeze there.

$USO - watch the 9.25 target

I'm out of time, so watch my twitter feed... and please try to keep comments to a minimum, especially at the opening bell.

Thanks, AA


Wednesday, August 30, 2017

Best Trade of the Week - Market Update 8/30/2017

As we approach another holiday, we're already seeing volume dry up, and anyone who's been following me knows that most holidays bring with it, inexplicable market rallies, due to short covering...

I used to think holiday trading was unpredictable, but no... The $VIX typically remains low, and goes even lowers as volume drys up, and it's not a good time to be short any market.

Best trade of the week was yesterday - Tuesday - where we saw the $VIX whipsaw into the top of a broadening range, and the market trade back to the bottom of the range, just as I had predicted a day earlier. It wasn't a big move, but I suspect that is as good as it's going to get. 

If you're a bear, I think you take the rest of the week off, and next week, as well. If you're a trader, then just keep an eye on the $VIX, and rally back to the top of the range. 

I think there's a good chance gold, and gold miners reverse to the downside, but this trade has been harder to predict than most. I doubled down on DUST at yesterday's open, and took profits towards the end of the day, just to help cover some loses. I also think Copper is about to reverse, and we could see profit taking there, ahead of the holiday. For some reason commodities often see bigger moved around the holiday's, but also offer bigger risk.

If you're going to trade metals, then I'd also be watching a $USD ticker, because that is the Dollar (short) trade is probably the most crowded of all, and a short squeeze there should take care of the rest.

One more thing to mention about the gold trade, is that contracts expired yesterday, and this often works the same way as OPEX.... Gold is pumped into the expiration date for a reason. Because like every other market, it's rigged.

Speaking of Rigged you see the NASDAQ $VIX (the $VXN), being hammered down - by the powers that be - as Labor Day approaches. As long as they can continue to manipulate the $VIX, volatility, and fear is contained. This could continue into Sept window dressing season, I suppose, but we'll see what happens when traders return from their Summer break.

I prefer Canada's $TSX if you want to stay long. They don't celebrate Labor Day as far as I know.

 Gold looks like it's whipsawed into a triangle, and thrust out the top. That would mean a serious reversal into a powerful wave C, but I'm not too sure on this.

The $GDX also seems to be whipsawing in a broadening pattern. That target would be the bottom of the pattern. I'm not sure on the EW count, but the pattern is clear.

The stop hunt on the $GLD looks like 124. See what looks like a wave B triangle.

Another think I'd want to sell here is 20 year treasuries. I think there is a leveraged Treasury bear (ETF), but I don't have time to check it out, or to see if it's liquid. Use limit orders!

Have a great Labor Day, and I'll see you on my Twitter @3Xtraders

Friday, August 18, 2017

Liberal Press Prays For Market Crash - Market Update 8/18/2017

I could have entitled this blog, "market sells of further than expected", and that's really what I want to talk about this morning, but apparently many main stream news organizations wish to take this market down, in an attempt to discredit Donald Trump. These are despicable people who would rather see millions of people lose there jobs, than to see Trump succeed, and to be honest, I think the news cycle raised my anxiety level into the red. I was unaware of the extent of which this story was being pushed, because I don't believe much of anything the MSM reports, and try to block most if it out. I don't even read the Wall Street Journal. Trading the news is for dummies, so you gotta figure some of the dumbest traders on Wall Street are shorting the market on these headlines, while the pro-shorts know when to take profits. Beware the short squeeze.

Seems like we keep seeing the same pattern. I call a market top, and then the market sells off further than expected, but calling accurate targets in a sideways pattern is always difficult. I've been calling this a wave 4 pullback for some time, and wave 4 is almost always an extended sideways triangle, or a complicated combination pattern. See what looks like wave A of 4 on the Dow chart below.

I'm not going to say, "I got yesterday wrong". Far from it!  I made it very clear that the rally which started August 11th was a sell on Wednesday, and called that top precisely. I also confirmed the reversal at yesterday's open, when support broke, and continued to break, as the $VIX continued to break out, and I called this in real time, which is no easy feat. I'm not documenting all this, just to blow my own horn, but to point out that when you see a reversal, and sell it you need to try to stick with the trade that's working, and I thought that was going to be a pullback, followed by a second snap-back rally, and I'll explain why that is when we get to the charts.
At yesterday's open; It also looked like the $SPX might just trade into a little bearish triangle, and snap back again, but when that pattern broke all bets were off, and I didn't take profits on my shorts until the bottom had dropped out. When a triangle pattern breaks down, you sell it, because it's more likely not a triangle at all, but a continuation pattern. It's talking me years to recognize this, and execute it successfully! I'm talking about trading it, not predicting the market correctly, but trading what ever comes next, and that comes down to recognizing false patterns, knowing where support is and selling when support breaks. Charting is only half the battle. Trading is different skill set entirely. Some people refer to this as "being nimble", but it's more than that. If you can recognize where support is breaking down, and pull the trigger simultaneously, you will win every time.   

For example: Key support levels on the Russell 2000 continued to break down last week, and you can see exactly where support was taken out. Unfortunately I has no idea the $RUT was selling off, because I wasn't running my tickers, or even watching the 60 min view on the $RUT. If one of my twitter followers had given me a heads up, that the $RUT was selling off, we might have done pretty well shorting it, but hindsight is 20/20. Still, there's a lot to be learned by studying the chart below.

Think it was Wed, I tried calling the bottom on the $RUT, and thought I had confirmed the reversal  yesterday morning, but then it sold off to a new recent low, and you can see where it broke my blue line. I can't say I would've sold it there; in fact I didn't sell. Beware the short squeeze; especially in a beaten down market.

I can't say the $RUT is that beaten down when you compare it to energy markets, but the $RUT has fallen pretty swiftly in a short amount of time. 

Getting back to why I was only looking for a pullback. 

The most recent rally on the $SPX looked like an impulse wave on the 1 min chart, and that is "always followed by a second impulse (usually in wave c), according to the Elliott Wave literature.

$SPX - looks like a 5 wave move to the upside, right? This has me still scratching my head, this morning, and I can't explain it, other than I was relying to heavily on a 1 min chart. This happens to the best of us; we become short sighted; and don't realize it until the short term chart falls apart. I think we're going to start relying less on very short term charts in the future, and especially when we get closer to a major reversal.   

 But when we look at the 30 min Dow chart we don't see a 5 wave impulse! 

The most recent rally is only a 3 wave move (labelled wave "b"), followed by a powerful wave c (of A). As you can see it's going to be quite a while before we can confirm a wave 4 sideways triangle.

Yesterday's sell-off (execute by the powers that be and promoted by the Government Media Complex)  looks out of place on the $SPX chart, but looks perfect on the DOW chart.

In the previous update I stated that pros were behind this selling, and theorized that we might see stocks held down - going into OPEX - just as we saw tech held down last month, and here we are.

If support continues to break we'll sell it, but I see it trying to build a base, and the market trading in a sideways range, while the GOP continues to drag their feet...

As far as I'm concerned this sell-off is a big Psyop, designed to rattle the Trump administration, and possibly even cover their tracks on last weeks well organized Charlottesville event.

On a lighter not: I'll be away from the office on Monday, chasing the total eclipse in southern Illinois, and I could use a little getaway... I'll be streaming it in my twitter feed, around 1 PM, at it's peak. Follow my twitter @3XTraders, and have a great weekend, while summer lasts. 


Monday, August 14, 2017

Market Update 8/14/2017

 I don't have a lot of time to blog this morning, but I wanted to put out a warning that we're not out of the woods, yet...  this is no time to become complacent! 

The market built a base on Friday, as expected, but we're only seeing futures up marginally.

The bears don't like to sell-short into the weekend, and you typically see money put to work on Monday. We call this, "mutual fund Monday", in a bear market. I can't confirm a bear market on this 3 day pullback, but once we get into a bear market, you can expect to see many capitulation Friday's, followed by upside surprises on Monday's. Something to keep in mind.... 

The short term trend remains down, so we can't rule out a bear market. This may only be a suckers rally in wave c/ii of 2, and that points to a crash in wave iii of 3. I wouldn't be surprised to see the market rally into OPEX, and continue into the end of the 3rd quarter... just keep your guard up, until we get some distance off these lows. We're going to breakout back above the 50 day ma, this morning, and that's going to be the level to watch, $SPX 2448, and rising...  

The recent panic selling has to do with #Brexit, and the fact that the fake financial news isn't reporting it, is a big red flag. Everything else being reported, is a diversion.

 This is what the beginning of a prolonged bear market looks like.

Another thing worth mentioning is the fact that the $RUT has lead the declines, and that points to risk off. If you're trading the $RUT: expect this snapback rally, to last at least a couple days, but support on the fear gauge ($RVX) looks like 15.25.

 $VIX fell below the 16 level going into Friday's close, and that was a clear buy signal, and as long as that resistance holds, no fear.

If you're looking for something to sell, try Gold. The $GLD has traded into a right shoulder, on a bearish head and shoulders pattern.

If you trade currencies the $USD/YEN looks oversold - at support at the bottom of the channel - and has already bounced out of the hole this morning.

 I have several other projects I'm working to complete, before the end of the summer, but I'll continue to update this market, and call it as I see it, as time permits.
 GL this week, AA

Friday, August 11, 2017

Your Bullish Market Update for Friday 8/11/2017

In case you missed it: I've been calling for a market reversal, or pullback for some time, base on the ridiculously low $VIX, and the fact that Transports $TRAN were already leading the way down.

Of course the financial networks falsely reported that tech was leading the way down, and yesterday Bloomberg TV had some idiot on to try to tell investors that, "the $VIX isn't a fear gauge"! More miss information, disinformation, and false narratives; I think Bloomberg didn't make his billions of dollars being honest, so consider the source.

The $VIX certainly IS the fear gauge, and is commonly referred to as such. It measures the cost of downside protection, in the form of Put options, and it only makes sense, that investors would only be willing to pay more for put protection if one was fearful. 

Much of this buying protection is part of the rigged market. The gangsters who organized these kinds of sell-offs - in this case only one week ahead of OPEX - are only robbing investors blind. typically driving the price of Put protection off the chart, and then rallying the market into OPEX. We've witnessed this time and time again. I can tell this selling was orchestrated by the Pro's, by the way they hammered the market into yesterday's close, because this is most effective time to cause psychological angst. When the selling isn't orchestrated, you see short covering into the close, as we saw on Wed., although that rally was cut short. It's not bad enough that the crooks run this game, but then they're invited to come on Bloomberg, and talk about how the $VIX needs to go to 20... and the rest is history. The snare was set, and then they try to blame the President of the United States for standing up to the nuclear threat posed by North Korea, when it is entirely the Fed's comments that was the catalyst for this sell-off. They promised a 2% inflation (target), and failed to deliver, and now uncertainty. When the fed loses credibility, don't expect the banks who own the politicians, and the media to blame themselves. There's always a false narrative and a scapegoat.
Fear is the main driver of markets; fear of missing the next big move to the upside (if you're a Money Manager), and fear that the market is going to collapse, as we've watched it do more than once in the past 20 years. Fear of nuclear war; when it's been known for years, that North Korea has possessed the capability to miniaturize a nuclear warhead... but the networks report this as breaking news! The networks spin the narratives that drive markets, and popular opinion, and the banks are happy to loan us the money to build new weapons systems.   

Over the past 3 days of selling, we see the $VIX up over 60%, and I will tell you this; if the $VIX continues to breakout, you're going to see the panic selling accelerate, and the more it costs to buy protection, the more investor panic. It's a vicious circle. 

Happily, the $VIX fear is overdone, and the charts are working. This morning I'm seeing futures down only slightly, and looks like the market wants to build a base.

Firstly: The $VIX took out my upside target of $16. Here's the chart from earlier in the week.

 Here's the updated $VIX chart as of yesterday's close:

 $SPX - testing the bottom of the bullish channel this morning. Self explanatory.

NASDAQ - daily candlestick chart. The bullish trend remains intact.

The Trend on the Dow on a 10 min chart is still intact. Let's call support 21,827, at the bottom of the channel, to be precise. Pink lines are support, red lines are broken support.


The Biotech chart. It's pulled back to support in a little zigzag pattern. Looks like it wants to trade into a broadening top pattern, which would mean a re-test of the highs.

Tech, like biotech looks like it's found support, and could take out the previous high in a powerful wave C, at the top of the larger pattern.  

 $SOX isn't even broken:


Of course the NASDAQ should follow, and trading an index would present less risk, than a pure sector trade. Problem is I don't have a good handle on the NASDAQ chart.

 If you're looking for a safe trade I'd try Canada. $TSX

$Oil - caught a nice short trade in oil yesterday, but I'm expecting a sharp reversal out of wave E, as soon as this morning.

The $RUT: I think you have to buy it here at the bottom of the range.

That should keep you busy going into next week.

Follow my twitter feed for any new developments.

Thanks for your continued support, and have a great weekend! 


Monday, August 7, 2017

Market update 8/7/17

Had some trouble signing into blogger this morning, so I don't have as much time as I'd like...

We killed it again last week, nailing down Friday's sell target precisely.

Today's sell target is - again - the top of the range. I suspect the downside target is below the bottom of the range (the lower purple line).  

$SPX 1 min chart:

I like the bottom of the range on the 30 min chart - around 2465. If that breaks, 2454 is key support.

The Dow continues to close at slightly higher new highs, but what the fake news fails to report is that every rally is being sold.

We've also seen risk being taken off in the $RUT.

Perhaps the $RUT and the $SOX will bounce back, going into OPEX, but that remains to be seen.

More charts to follow @3xtraders



Wednesday, August 2, 2017

Market update 8/2/2017

Caught a nice reversal last week, although it only lasted a couple hours. If you blinked, you missed it. The financial fake news claimed, "tech was leading the declines, but it was actually Transportation getting hammered.

$TRAN leading the way down. Dow soon to follow...

The Dow has been presses higher every day, but these are tiny moves. 100 points on the Dow is only .50% with the Dow trading at 22k? The trend remains up, but only a few stocks being used to pump it higher. Yesterday Boeing, Tomorrow IBM, etc.The Dow doesn't even represent the broader market, but the retail investor isn't aware of that fact. They hear the fake news report "new market high", every day, and they believe it. 

$INDU - I identified this upturned channel on the Dow, on Friday, but I believe this is too aggressive.
 I believe we're about to see another pullback.

$SPX - the crazy target looks like 2483 - 2485 in an emotional wave e, of B. Looks like another head-fake rally.

It's possible we've already seen the top, and If the market sells off below the 1000 min average again, sell that. Downside target looks like 2462 (at my pink lines), and 2455 in a parallel channel (seen in purple, if support breaks.  

 May just chop sideways in this range. It's really too soon to make an accurate call, until the pattern is identified.

Tech seems to be finally bouncing back today, lead by $SOX, which looks like a possible Wave "D" target, in a broadening triangle.  1101.29 is first resistance. 1080 support. 

If you're looking to sell the $SPX keep an eye on the 10.25 level, for a possible breakout.

My best guess it we're going to see another little shakeout, ahead of OPEX, followed by another short squeeze, heading into the end of the fiscal year (Sept window dressing), but that date could be cut short, so I remain vigilant, going into the fall. 

Take Care, AA