Apr 182014
 

Here’s some interesting time symmetry that I noticed while looking at the very long-term charts of the US markets. This is a 20-year chart of the $OEX (S&P 100 Index)*. I decided to use the $OEX vs. the $SPX on this chart mainly because at the end of the 2000-2002 bear market, the $SPX managed to eek out a marginal new low in Mid Oct 2002 following the Mid-July reaction low while the $OEX bottomed on that July low, ending the bear market and kicking off the 2002-2007 bull market. I drew a horizontal line from the beginning of the steep bull run that kicked off in Dec ’94, which defined the most powerful leg of the ’90-’07 secular bull market. That final 5.25 year run was essentially it’s own cyclical bull market that kicked off following a yearlong deer market. The line terminates at the end of that bull market in March 2000. I then copied two exact replicas of that line (which would be identical in time, of course) and placed those at the beginning of the ’02-’07 bull market and the ’09-current bull market.

$OEX Bull Market Durations

$OEX Bull Market Durations

Interesting to see that not only are these three bull markets defined by clear uptrend lines but the previous two were essentially identical in duration. If history were to repeat itself, this bull market would have about 5 more weeks before printing the final top. I will say that is not Continue reading »

Apr 172014
 

Not much new to report as the market continues to bounce after hitting the initial downside targets on the daily charts. With prices quickly approaching my second & preferred bounce target, I plan to book partial or possibly full profits on the long side hedges and possibly start strategically adding back short exposure. Although T2 (86.80) is my preferred bounce target, I am nearly as open to a continued move up to my 3rd and final bounce target (T3 at 87.60), although I would expect a decent reaction off the T2 level before we get there (assuming that we do). If & when prices manage to take out the T3 level by a decent margin, I will share my thoughts at that time.

QQQ 60 minute April 17th

QQQ 60 minute April 17th

For those with a long-term bullish view who added long exposure around the T4 level, consider raising or trailing stops in order to let your winners ride while protecting profits, as new highs in the market is certainly a possibility. For those who share my longer-term bearish outlook, there are plenty of Active Short Trades that will be offering objective short entries or add-ons to an existing position as they bounce back to resistance. Finally, for those not sure which way to be positioned during all this recent volatility, staying on the sidelines (in cash) is probably the best trade that you can make at this time.

Apr 162014
 

AUY (Yamana Gold Inc) will be added as an Active Long Trade & Long-term Trade idea around current levels (8.10ish). As this is an attempt to catch a bottom in the stock which has now fallen over 60% from its peak just over 6 months ago, AUY should be considered an aggressive trade. That, coupled with the inherent extreme volatility in the gold mining stocks, favors a downward adjustment in position sizing on this trade (as little as 1/2 – 1/4 my typical position size).

What I like about AUY, other than the fact that I continue to believe the gold mining sector may still likely be in the early stages of a new bull market that began in late December, is how the stock has broken below this key weekly support line. This breakdown may likely prove to be a bear-trap (i.e.- a false breakdown), with prices moving sharply higher if it does not stick. It could take a week or so for prices to close back above the weekly support line and if so, a higher probability, more conservative entry (or add-on to an initial position taken here) would be on a weekly close back above that level (roughly 8.40). Another technical development supporting the bullish case is the fact that we have positive divergence either in place or forming on the weekly, daily & 60 minute time frames.

Once again this is a potential high risk/high reward long-term trade idea. With the first target (T1) 24% overhead and the final target (T3) about 55% higher, one must factor in the total dollar loss if the trade does not work out. Using a preferred 3:1 R/R ratio, that would allow for a stop about 8% lower if targeting T1 and about 18% lower if targeting T2. Of course tighter stops can be used but when trading the mining stocks, I find that trading a smaller position size to accommodate for more liberal stops significantly reduces the chances of being prematurely stopped out on trades that go on to hit their profit targets as the daily price swings in the mining stocks are unusually large.

 

Apr 152014
 

Just to clarify or expand on the previous 60 minute QQQ chart & comments, we did get a 60 minute close below the recent lows in the Q’s but by the slightest margin. Much more importantly, the three broad US indices that I focus my analysis on; the $SPX, $NDX, & $RUT are all still sitting essentially on or above key support (my long-standing first downside targets on the daily charts). Of course support is support until broken and although I still favor prices ultimately breaking below these support levels, at this time I continue to favor a bounce off the initial tag of these levels. As I’ve also repeatedly stated over the last several trading sessions, my degree of confidence on the near-term directions of the markets (and hence, any possible bounce) is not very strong and so my preference remains to keep things light by hedging up close to a market neutral portfolio (taking some long exposure to offset a large number of swing short trades that have yet to hit my preferred targets).

The daily charts of the $NDX, $SPX & $RUT below show the $NDX basically still trading at my first target level with both the $SPX & $RUT still slightly above their respective first downside targets, which are likely to be tagged before any meaningful bounce. If that happens, the $NDX would likely go slightly lower & thereby overshooting this support level by a relatively small margin. Only a solid break below these target/support levels on all three indices would convince me to remove my long hedges as that would likely open the door to a move down to the next target levels. As always, the live links to these charts are accessible from both the sidebar on the Homepage as well as the Live Chart Links page.

Apr 152014
 

The Q’s continue to bounce along support with bullish divergences in place. Until/unless we get a solid break and 60 minute close below the recent lows, this is still an objective area to book some short-side profits and/or take some long exposure (pure-play or hedging).

QQQ 60 minute April 15th

QQQ 60 minute April 15th

Apr 142014
 

Based upon further review of the charts, I have made a slight adjustment to the profit target on the HIMX (Himax Technologies Inc) short trade. Although the actual support level comes in around 8.18, T1 has been changed from 8.20 to 8.30 in order to help increase the odds of a fill when covering this trade as the possibility of a powerful oversold bounce are rapidly increasing.

HIMX is trading down sharply today and is down about 30% since the last posted entry less than 3 weeks ago. Although I may still ad one or more additional downside targets to this trade, my preference will be to book full profits at T1 and possibly add HIMX back as a new short trade if we get a new objective short entry following a decent bounce off the 8.20ish level.

Click here to view the live daily chart of HIMX

HIMX daily April 14th

HIMX daily April 14th

Apr 142014
 

My 4th & final intermediate-term target was hit on Friday. That, coupled with the bullish divergences in place on the 60 minute time frame, means that the 1% gap up today was likely the beginning of a larger counter-trend rally. Blue horizontal lines mark my bounce targets with T2 (86.80) my preferred target at this time & T3 (87.60) my current final target. Only a move 1% or more below Friday’s lows will negate this scenario. Keep in mind that I took us a while to get down here and so it might take several days, possibly weeks, to retrace a third or half of the move down from the March 7th peak in the $NDX/QQQ (my 2nd & 3rd targets come in around the 38.2% & 50% Fibonacci retracement levels of the entire move off the highs). As such, the market updates might be light for a while unless anything significant develops.

QQQ 60 minute April 14th

QQQ 60 minute April 14th

Just to clarify, a preferred target on RSOTC is the profit target on a trade which hits the “sweet-spot” on the R/R curve whereas the final target is the level at which the R/R on the trade no longer remains clearly skewed in the direction of that move. Typically, but not always, the final target is the level at which I believe a trend reversal is likely as well. I will often book full or partial profits at my preferred target while I will always book full profits at my final target, assuming that I still hold some or all of the position.

 

 

Apr 142014
 

POWI looks to offer an objective short entry following the break below this beairsh rising wedge pattern. T2 is currently my preferred swing target with a suggested stop over 64.50 (lower if only targeting T1). Although my preference is to establish a short position here, an alternative entry would be on a possible bounce to backtest the wedge from below which is certainly a possibility although not my preferred scenario.

POWI daily April 14th

POWI daily April 14th

Apr 142014
 

As of now, I have two levels on the QQQ (Nasdaq 100) that I am targeting. My preferred bounce target is 86.80 with a minor resistance level at the 85.30-85.35ish level that may or may not come into play.  These targets are based upon several factors including horizontal resistance levels & Fibonacci clusters but I have to say that my degree of confidence in the near-term direction of the market is not high enough to warrant positioning aggressive long or short & therefore, I plan to keep most or all of the QQQ long hedges taken before the close on Friday until the 86.80 level is reached -OR- both the $SPX & $NDX make an impulsive break below Friday’s lows. That plan can change at any time but for now, I’d like to keep things light and just watch the market action as the dust settles from the recent sharp sell-off. I’ll post some updated index charts after the markets opens today.

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