Long before the SPX formed the 20/50-trap, most stocks formed what I call the “20/50-day churn” which is essentially the same thing except that we do not know if the SPX will churn. The only way to tell is if a lower high is made, and that is yet to be seen.
The trap is basically when a stock or the market tests the 50-day and then test the 20-day MA’s, creating the possibility of continued narrow-ranged consolidation. The trap the turns into the churn if the range cannot be broken in it’s entirety.
In the case of the SPX, a churn is bearish as it cannot form a higher high. If the SPX can bust through the 20-day and flag, it is likely going to make the attempt to test the high of the rally. I am and have remained mostly neutral on my stand on market direction.
On the char below marks the 20/50-day MA’s. Also noe that we are forming an ascending broadening wedge within a larger rising wedge. In the first two corrections, the market was able to successfully bounce without the need for the 50-day. The past correction in the beginning of Oct required the 50-day. This correction needed further room lower. Make note of this trend as a mark of weakness.
I am still looking at my standard names such as AIG, but am also looking at CAR, NANO, NVTL, CROX, DAN, PVTB, CNXT for major reversals/continuations. I will mark trades if I take them. That is, if I make to campus before the open.
Thanks very much for the observations CA!
short $AIG 35.47
$CNXT broke through initial day’s high consolidation
Been very busy lately.
Forget all this shit about watching AAPL or GS.
Watch the /DX !!!!!!!!!!!!!
Pull a 1 hour chart and add the downward channel from 5/18 (the bottom trendline starts on 8/3). It’s not a perfect channel – could be argued that it is a sloppy wedge. Either way, a break through the top will be a powerful short signal for the markets and oil.
Now pull a 1 hour chart. You will have 2 upward support lines (starting 10/22 through 10/26 and continuing to today (it’s trying really hard to hold with a lot of churn).
The second trendline was 10/27 to 10/29 – the recent downtrend with a nice clean break yesterday after GDP.
My take is this – the USD short trade is crowded and it didn’t take much to snap. GDP saved the day. A break from the upper line will cause panic to cover and will bring a nice 2-3 day (minimum) rally. Short the fuck out of oil, the Euro, and the SPX if that happens.
A couple of traders I know are starting a trading room (a local physical place to go and trade) and I’ve been helping them get set up for a couple weeks. I want nothing to do with it after it’s done but I’m investing a little into their operation. Anybody know of other places like this? If you’ve been there – any suggestions?
I know it is local so it’s no threat to IBC but will NOT give out any information – I don’t want it to be a conflict.
I actually thought about starting fund that trades the inverse of all trades in the room – a lot of the traders so far look a bit lost.
I assume you mean a rally in the USD, not the SPX?
yes – not saying it will break – but IF it does – chaos & mayhem
will watch /DX thank you retox
Hey retox is the first chart noted actually a daily?
76.64 level to break
yes – sorry – 1 day chart
thx retox– been following the dollar via other charts– your take and advice is really helpful
lol out $AIG 35.45. class
Thanks CA.
i have to take care of some univ stuff. ill be back soon.
poss mkt reversal – oil & spx coming
here we go – with hesitation and tight stops- could fail with drama
maybe this time
back.
Short $AIG 34.92/93/94
half cover $AIG 34.73
covered 1/4 $AIG 34.869
last 1/4 $AIG covered 34.89
Stick sandwich time
Short $AIG 34.59
Out $AIG 34.65
missing a lot of stuff
other things you’re seeing we should take a look at during our class today?
Because i know everybody is curious… i’m in pretty much 100% cash, singing along with my iTunes… “It’s the end of the world as we know it”
Booo… happy halloween you goonies
P.s. i’m dressing up as Bernie Madoff
Thanks for the reminder–I’m going to break into the halloween candy. Not much else to do.
Nice post.
Glad to see your back on top of your game.
regards
chuck
CA, as much as I am not a short term trader. I think as a trader I have the upt most respect for you. Reason being is that you stick to your system of trading and not to others. When opportunity is not there you do not force the trade. A very key trait to a good trader. While I have no clue yet as to what the sell off means, I think as someone short from 1090, I would not be surprised with a move to 1050. That being said I just wanted to not say my views but rather great job as a trader. The best traders can establish different situations and sitout when it is not there. Great job.
i think we get a bounce Monday. Today was confirmation. One more bounce, and then I’m starting up the swing trading.
Agreed.
Euro closing right at the lower uptrend line from March 4th on a 1 day chart (rising wedge).
A bounce in equities will take us back up over Euro 1.4800 and toward the1.4900 area. I would look to close the position at 1.4800 area – you can’t be greedy here!
Buying a little at 1.4704 with plans to ADD some if it breaks down to the 50 DMA (1.4650 area) which should hold at least once… I would then plan to liquidate on a bounce back to the lower trendline with a small profit.
If the 50 DMA breaks down – then 1.4450 would be a reasonable expectation.
The /DX is closing with some upside potential (bad for this trade). I do believe the upside will be somewhat limited given the upper trendline on the 1 day chart. If the /DX makes it to the line, this should sync with a Euro move to the 50 DMA. THAT is where I think we hold. Like I said above, if it breaks the line, we have a strong short signal in equities, oil, gold, and commodities. Too many people are either still short or will get short at the line – they will cover like mad if it gives.
I know I forex you bitches to boredom sometimes but the correlation has been getting Obama-like coverage lately which tells me it will unwind in the next few months.
As old man Cashin says, the forex has been leader for equities of late but TODAY was an exception. The equity markets flat-out pushed forex around almost all day.
It head-faked me into taking some long scalps that ended up with very small profits or BE.
I see this as a possible signal that the equity move today was to be taken with a little skepticism.
Count one who is not at all bored, but in total awe of what you do (and missed you this last little while – glad to see you’re back!). I would post responses but am a total newbie and have nothing to offer – yet.
buying 1 /CL @ 76.94
Monday target 77.95
All I should need here is a 10 point move up on the SPX.
No retox, your posts are not boring. I would like to see you keep posting as long as you want to.
What I get from your stuff is the real time minding of correlations, between interrelated markets, in whatever time frame is necessary. If that observation is really basic- sorry, I’m a newbie
*next bounce has to be about half what yesterday did
I was mildly impressed that the SPX didn’t fully extend its losses today, instead it chopped above and below Wednesday’s low all afternoon.
Yea, I just want a bounce. sooner the better.
this chart got my attention. http://chart.ly/mrsxfh
he the AH trading has 77% accuracy in past 9 days to show where we’re going. Looks like that bounce is coming.
It is important to note that today’s move, though convincing, does not mark a lower swing high on the daily chart of SPY. For a swing high to be valid it is required to have an up leg followed by a down leg. One bar does not constitute a “leg” on any time frame. We did break through some major support, so I expect more downside from here. I am willing to call a top for 2009 at this point (at 1099.93 on the SPX).
CA-thanks for your tip on following the 100 DMA, I did just that with EDC yesterday at 115 and change and hanging in there, great etf to trade.