Thursday, June 25, 2009

Web of deceit

More shenanigans from the bulls today. Look at this chart from Karl Denninger:

"That's last night. Over 12,000 contracts traded in two five-minute periods, over 10,000 right up on the time of that spike. There was no news of any sort related to the US markets on the wire last night. Zero. None. I and many others were wondering what the heck caused that. This morning, the buying began in earnest at 8:30 Central, and then again at 10:00 Eastern - one hour in front of the "announcement", again on heavy volume. Where is the SEC?
"Where is the SEC's demand for trading records on these contracts, particularly the ones last night on Globex? That was a highly unusual trading pattern that strongly suggested that someone knew something and acted on it front of a news release. Well, now we have the news release. It sure wasn't the (bad) unemployment or (neutral) GDP numbers. So what's left?"

There is much to say about the ability of these markets to hold up in front of just plain horrible economics and now politics (Bernanke's grilling today by a Congressional Committee). What there is though can be said with these three charts:


SPX - Daily



BW triggered a buy signal on the Daily chart. Not enough to get me to go Long, but just enough to take off my intermediate term short, for now.


SPX -120 minute


Once again, Fibonacci levels down from last week's top. Still less then a 50% retracement of initial decline. I am ready to slap my shorts back on with any show of weakness.

SPX - Weekly


This is why, it's a Weekly chart suggesting the Wave 5 decline has begun and this week's rally is nothing more then a Wave 2 set-up for a third wave down.

I exited my short so as not to hold against a Blue Wave buy signal, rules are rules. There will be plenty of downside to come and I can jump back in faster then you can say, "The Bilderberg Depression."


A

24 comments:

Anonymous said...

how come everyone is dropping like flies

first, it is Ed McMahon

then, it is Farrah Fawcett

now, it is Michael Jackson

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20090625/michael_jackson_090625/20090625?hub=TopStories

Anonymous said...

Hi Allan,

I liked your comment on stops int he previous blog. At any rate, you have also mentioned the turtles trading system as a trend following system. It seems to be similar to Market Club except that instead of a 3 period, they use 10 period (day) highs or lows with ATR stops.

I have looked at the turtle system with a few equities and ETFs but there seems to be no large trend lately. With commodities like crude oil it has been a gem.

Is there a reason you prefer the three period market club over the turtles system?

Thanks

John

Anonymous said...

Hi Allan,

It is almost "end of 2nd quarter" for the big fundy guys. They need to show they have not missed this rally, since March. Lots of "window dressing stuff" going on this week, Lets fade it going into the July bear. We lost more than money today, but true wealth will live in the heart forever. Warmest regards from NYC, Joe

Anonymous said...

Allan:

These Daily/Weekly charts are great posting material to validate us all in the timeframe we all examine. I would like it (as I think others would too) if you would continue to do this. It gives a great historical perspective as well from where we've come. Great analysis!

Anonymous said...

Wow Allan...your CEP pick of 2 weeks ago has gotten KILLED!!! Down 40% since then..I thought that you felt a double or triple was a good possibility. What Happened?

Anonymous said...

OOPS...I mean CEP Down 50% in 2 weeks....Dropping like a Lead Balloon today...glad I sold at the 40% loss

Anonymous said...

CEP now down 55%................aagh

Allan said...

Re: CEP

If you are going to play this game, you must pay attention or this whole exercise will end badly, for you and even for me. This is exactly what I wrote about CEP on June 13:

"But the daily chart does provide an important piece of the puzzle, a stop. Blue Wave will turn bearish on this chart at the level of $3.81. Thus we have a risk:reward perspective. The risk is about $0.50, or about 12%."

Thus the loss on this play was 12% and we still have the remaining marbles to flit into the next one. Again, I remind you and everyone that with a 50% win ratio and a 1:3 or more risk:reward model, the gains will be outstanding. Nonetheless, half of the picks will be stopped out.....a cover charge for all the entertainment, lap dances and a trader's way of life.

Anonymous said...

on CEP....good time to get back in or stay away?

Lasertrader said...

Alan...what Denninger doesn't point out in that article about Globex is that by the time the big contract opened at 9:30 AM the futures were well below the price before that ramp even started. Any and all bought contracts were underwater so his basis for conspiracy is just plain wrong.

I have traded the eminis on and off for years and this isn't uncommon. The quants and their computers are always looking for imbalances and when a bunch of stops are built up at a given level they can calculate what it takes to take them out and how to make an easy profit when nobody is looking. Thats the only conspiracy with that move.

Of course later in the day those es levels were again regained and taken out but any buying at midnight resulted in a big loss by market open.

Bruce

Lasertrader said...

By the way...there is a saying.

Those that blame market moves on a conspiracy are often in a losing position.

Bruce

Anonymous said...

No Micheal Jackson song posts please!

Michael Lomker said...

>so his basis for conspiracy is just plain wrong.

Whether or not a manipulation works has nothing to do with whether it was legal activity.

I have no idea what caused the blip but I disagree with your logic.

Anonymous said...

cut it with your pumping of the market crash. If you weren't so goddamn optimistic in this view and your giddiness over the prospect of making tons of money from the short play, I wouldn't have lost my pants on FAZ. Today, I sincerely hate you.

baaaaaaaaaaa

ROB G said...

CXM NEW 52 WEEK HIGH

Lasertrader said...

Michael

Like it or not, the SEC allows the market makers to see all of our stop orders when standing. If you call that illegal that they make money off that then you shuld write the SEC. Until then I still stand by my comment that there was nothing illegal that went on.

Bruce

Lasertrader said...

In factr the author of that article is entirely misleading and dramatizing things to make up a story. If he was really showing the facts he would have shown the full chart up to the open. Then he wouldnt have a story because price dropped below the orginal base..hmmm

BUt since its an article posted by Allan I was expecting the Allanites to defend it. That article is plain misleading and drama.

Lasertrader said...

Here is the rest of the chart...would the author still have a story if he showed this?


http://i193.photobucket.com/albums/z283/lasertrader/overnight.jpg

Anonymous said...

Allan is a master manipulator. Where do I sign up for the class?

Lasertrader said...

Now getting back in theme in this Bear Cave, althought I use the SPX as a proxy to the market i am interested that this DOW Renko chart went on sell for the first time since the March low:

http://stockcharts.com/h-sc/ui?s=$INDU&p=D&st=2008-12-15&id=p29271801842&a=171181543

and I know how Allan likes mechanical system..check out this GDX Gold Miner 60 minute Renko chart. It went long a couple of days ago and has been an extremely good mechanical trade

http://premium.fileden.com/premium/2006/9/9/209573/gdxrenko2306.png

GOod Luck to all

Anonymous said...

For what it is worth I think "Joe" in a post way above this one, makes an EXCELLENT point.

He hit it right on the nose.

John K.

Anonymous said...

Someone wrote:

how come everyone is dropping like flies

first, it is Ed McMahon

then, it is Farrah Fawcett

now, it is Michael Jackson

I hope Allan is not the next celebrity to pass on. That would be a REAL disaster!

Allan, your health is excellent, right?

John K.

Michael Lomker said...

>that there was nothing illegal that went on.

You seem to have reading comprehension issues. I stated that I didn't know what the cause was (and I rather doubt that you do either) but that doesn't mean that people can't question what occurred.

Wayne said...

"Like it or not, the SEC allows the market makers to see all of our stop orders when standing"

Bruce, apparently on-line brokers are allowed to hide some types of stop orders from the market makers. I place stop limit orders all the time and the online broker (Scottrade or whatever) displays information to the effect of "we hold these orders in-house until the trigger is hit."

Wayne