Wednesday, June 30, 2010

No signal of buying institutional volume

We are in cash, so now we are free to observe: market lost it's ground.
Selling volume is weakening, but there is no institutional buy power.

I'll try to make some charts tomorrow morning.

As it was told yesterday, gold is in correction as well.

First result - 9 points loss

Yes,this trading system has a loss for now.
We made our first trade at 1049 now we made the liquidation at 1040.
9 points minus.

Yes, it can happen.
Volatility is too big for safe trading, we will see down and upswings.
That's not for us.

I'll try to make a chart today showing where are we now.

Tuesday, June 29, 2010


Major technical damage, buying volume did not move at all.
Liquidation level has been reached, we have nothing left just liquidate with no question.
Huge technical damage as well.

Confirmed bear market, VIX above 30, ichimoku gave clear bearish turn.
We protect our remaining wealth and waiting for a safe setup.

Saturday, June 26, 2010

Week-End Summary

We had a shortfall week. 4 red days in a row indicate clear bear market. Sentiment fell from highs to extra lows, some guys envision 3rd world war.
Others shout 'long and strong' with no explanation. Also there is a fear about magic 200/50 MA cross signaling end of the world as an absolute bearish signal. It's a false statement it can also lead to a longer-term side way move. Retail participants are confused and hesitate, or make risky buy-the dip jeopardizing their wealth. Having any kind of emotion is not professional.

So, now our task to put  our emotions aside and observe.
Market has no emotions, it has direction only. If we bet against it, we fail, if we ride it, we win.

Market status:

As it's shown above, SPX needs to push through on upper cloud straight, without any hesitation in order to reach safe bull zone. This situation is similar to 2005 may-july and 2006 jun-aug. Then market achieved success with  producing a small upper and a bigger, lower target cloud, finally resulted a lower-cloud push-through bear elimination. We don't have that  tolerance now.
We have a critical dow-theory signal at 1040 suggests and immediate bull liquidation with no further tolerance.

At least once a week we should set up mental stops, danger zones, targets and relief zones. This activity helps us to make main decision on busy weekdays. We will use the chart above for that purpose.

Market is in a danger zone. 1040 is an immediate liquidation point.
SPX should go above 1092 and should be kept as a support. That will signal us further chance for bull recovery. There is a high probability to reach that level next week.
In order to have a hope in a confirmed bull market, we should have SPX 1130. This is not a mission impossible scenario, it just happened a week before to have a 60+ more point gain. And now we are at 1076, so we need 54 points of advance.

Friday, June 25, 2010

Quick update

Update: Huge buying volume today on RUT, years ago there was no buy volume like this.

Large portion is concentrated to the last hour and there is a huge after-market buy volume waiting for price manifestation. All indexes had the similar effect, buy RUT counted the biggest buy insertion.
Lack of time, please find two charts. I promise I'll come back and explain.

First shows daily results:

Second shows volumes with after-market

Institutional money made a huge bull bet. The question is the effect in prices will manifest in few days, and it's contra-effect. These days are extreme.

Today I'd be still long on 1-day and there is more and more confirmation on bull side.
15 min gave a clear signal of market easing at 12:43 EST.
Chance for a big, long-term rally is low now, market is still uncertain. We need more confirmation to detect safe market.
I dont know the future, and I'd never bet a month in advance. This is a trader blog.
Personally I invest  in gold and goldmines or metals only.

We had a very interesting day today with extreme after-hours market internals. I will come back later or tomorrow morning and write a post with charts and detailed analysis.

Have a great week-end!

Thursday, June 24, 2010

On the edge

Yesterday I gave warning signal, today I say, if one is not a pro, then go to cash.
Market always have a next day, but our wealth is limited. The strategy I show here is only make trade in safe circumstances. We don't need to play every time. Sometimes we just sit on the bench and observe. This VIX level is very high and hard to trade. Be safe, we worked hard for our money.

We could see selling effect again, large upswings suggest participants are not convinced, contra forces are strong. There was stagnating advancing volume against constantly pulsing declining volumes.

US market, SPX:

Long-term volume signal (1day): Long with warning.

Further volume readings from other, non-public sources: Yesterday I wrote: 'Selling institutional volume is clearly declining, however signals show a small remaining power-upturn need to be eliminated in order to have safe upswing price effect.' As bull is stagnating, this small selling volume was enough to push prices hard down. Unfortunately declining volume shows small recovery while bullish volume is not advancing.

What is a relief, advancing volume is above critical level, while declining volume under signal means more probability for a longer-term bullish continuation.

Momentum is in slight negative area, meaning bearish turn is not confirmed yet.

Short-term volume signal (15 min): Cash out


As we can see, bearish volume is still in accumulation phase, internal signals show slow exhaustion. Short-term momentum is negative since 22-jun-2010 9.45 EST, short term volume sentiment is low.

Heavy fight

Today we could see the effect of yesterday's 15-min chart's aggregating selling power followed by a panic selling from retail had not too much effect on bearish volume exhaustion.

US market, SPX:

Long-term volume signal (1day): Long with warning.

Further volume readings from other, non-public sources: selling institutional volume is clearly declining, however signals show a small remaining power-upturn need to be eliminated in order to have safe upswing price effect. It gives some warning signal.
Advancing institutional volume turned down slightly, however it'still above a critical signal level.
We are still in a strong up volume oscillator setup gives much higher probability for bullish continuation.
Advancing momentum is still in positive area.

General reading : SPX is in consolidation before bullish turn. As it is shown, this consolidation effect can be observed pretty well on chart in the past.

Short-term volume signal (15 min):

Short term oscillator indicates a confirmed buy signal on 23-06-2010 12:15 .Oscillator also confirms a possible bull direction.
Further volume readings from other, non-public sources: Momentum is still in negative area, with a declining selling local peak. Small downward price effect is possible next trading day, followed by a positive price effect, as yesterday's buy volume will manifest.

Other observations:

Clear coil pattern can be observed on several indexes suggesting upswing in next days.
Low volume day again, with no major advancing/declining ratio.

Large SPY, C buy volumes suggest bullish market direction as well.

60-min Ichimoku analysis shows eligible support for a bullish change, current cloud need to be held or left up in order to have bull confirmation.

Wednesday, June 23, 2010

Light volume - strong price effect

US market, SPX:

Long-term volume signal (1day): Long

Further volume readings from other, non-public sources: selling institutional volume is clearly declining, however signals show a small remaining power need to be eliminated in order to have safe upswing price effect.
Advancing institutional volume shows flattening nature, it needs more addition to pull market up.

Institutional volume momentum is advancing.

Short-term volume signal (15 min): not safe to make buy yet, large buying power is aggregating.

Clear signal of large price effect with small selling volume, very effective correction day, also gives opportunity for bull entry.
Counting with struggling market tomorrow (23rd june) then up (as 1-day term suggests).

Further volume readings from my other, non-public sources:
Second selling-pressure attempt above signal is exhausting, however above critical signal level suggest growing negative price effect beginning on trading day of 23rd, then easing and up signals.

Institutional short-term volume momentum is in negative territory with an exhausting signal.
Volume Declining sentiment is low enough to result oversold market indicators will trigger upswing soon.

Other observations:

Daily SPX RSI does not show overbought status, volume growth shows slowly growing bull build-up.
22th of June had a light bear return with a minor volume, however, selling pressure went through very effectively as bull volume was too low. Institutional traders wait for selling pressure exhaustion.

Instead of the large price effect, force index shows minor negative effect as well.