Santa or Benny Rally?

Hi,

From Chop Chop we got a bearish week behind us.  The Turkey gods did not help the bulls last week and the $ had to be brought down by Central bankers from all over the world.   Of course being a bull today felt good, but I still had the same sensation in my stomach as during the flash crash last year.  This whole intervention thing feels bad from multiple points of view but then again, what they are supposed to do, to let the whole house of cards just fall down ?

Think very hard about this, what are their choices?

Let’s go to charts:

USD 1D:

On dailies, the $ looks almost bearish but not yet:

• the osc is still high
• the sell volume bars were small
• sentiment is at 45
• MVO bull is eliminated

On 2D, the $ has the same problems. We need to wait a day or 2 before we will know if the oscillator volume accumulation will be eliminated or increased.

So, for the $, we may have a start of a bearish cycle but not quite there.

RUA 60 min:

On 60 min, the RUA is in a nice bull, once the MVO starts to fall, then we have our first warning.

RUA 1D:

As you can see, on dailies, the osc did not pass to the upside yet.  Maybe in a day or 2 we will have a better picture, but not yet.  WE have a start of a bullish cycle, based on buy volume and hist pass on ST and LT.

Gold 1D (HUI) :

Gold 1D (HUI) gives a better picture about the start of a new bull cycle. The buy volume bar today was good and the sentiment is pointing UP.

Gold 2D:

On 2D, HUI has a start of a new MVO bull, the hist looks like it wants to go towards the bull side. The sentiment points UP from oversold.

Gld, has almost the same structure as HUI.

My take is that we are close to the start of a new bull on RUA , gold and miners.  The only thing that is missing, the $ bear cycle is not clear yet.  The bulls have on their side the whole central bankers policy and seasonality.  The bears have on their side the stinky fundamentals.

Let’s not get carried away with politics and stick to the price and volumes.

Based on the intervention we should have a higher high than here and then maybe a clearer picture in a day or 2.  For spx, the 200MA is at 1265, close enough to have a run in the next days.

Can this rally be sustained until the end of December?  We dont know yet and for sure the volumes are not supporting this theory yet.  We have a start for a bull cycle today, but given the intervention and the last week pattern (with half days) the volumes may paint a picture not entirely true.

We got very high very fast, so a small correction is in the cards in about 1-2 days. This is what I expect. Then if the volumes suport, a new bull position may be started.

Stops: Gold, 1700, /es : 1205

For now I have gold and gold miners….

Good luck…

 

PS. : a nice regard to bxx, … 🙂

 

Chop – Chop

Hi there,

In the last few days we saw that the market is not safe.  It is in a chop chop zone, maybe because everybody including me is expecting the turkey to rally.  And we know the market does the most expected thing in the most unexpected way.

During the week, I watch Seinfeld during dinner time.   There is this episode where George decides to act contrary to his beliefs.  Meaning everything he thinks is right, it is wrong and viceversa.  And with this change, a lot of succesful and funny events happens to him.  Of course this is only a comedy show but my point is, when something in the market looks like it is easy or the right thing to happen, maybe one needs to be humble.   And we know when we need to be humble: when others cheer.  Is somebody cheering now?  It does not look like it, but there is nobody crying either. So chop – chop.

Charts please,

USD 2D:

• SOS the last 2D
• sentiment at 44 / RSI points down / momentum is negative
• buying volume elevated and selling volume points down
• the last 8 days, small volume bars, easier to manipulate
• the long hist is about to cross on the pozitive side

USD 1D:

• RSI UP / sentiment at 45 points UP
• buying vol higher than selling but selling elevated (somebody is selling in the background)
• accumulated buying vol on the long osc is decreasing
• long history about to cross over on the negative side

RUA 2D:

• MFI points UP, (somebody buying)
• selling volume elevated but not increasing, selling in the background ?
• momentum and McCellan vol osc are still high
• sentiment points down , it is at 49

Based on RUA2D and $ 1D and 2D, my take is that the market will make a small dip and a small rally will start.   The selling volume on 2D is still elevated but not increasing.  The history is about to cross over on the RUA2D. The last week support of 1225 or the 50DMA (I think these 2 will colide in the next day or 2) is still a good target to buy spx.

Let’s see gold:

The GLD 2D is still bullish, the only thing negative is the sentiment (chart not shown).

Look at the gold weekly chart (above).

The TL stopped the move every time in the past (well almost every time).  Look at the volume when that TL was hit.  The volume was huge, there was a lot of SOS. Now we dont have that yet.  So we are in a chop chop zone for now.  Even when we went over the TL, (to go to 2000) a huge volume was printed. I think for now, depending on the $ moves, we may have a dip, but based on volume analysis, the dip will be bought.  I am prepared to do so.

If the gold volume increases in the next 2-3 days or next week, we will need to see what the volumes are telling us, but for now gold looks like it is playing with time.

Miners, we know are between RUA and Gold, so we may have a fast dip based on the RUA, but if the Gold does not fall, the miners are still a good bet on the UPside.

Hold your positions or do some position management.

Good luck.

Back to work

Hi everybody,

I left the blogging scene in June because I felt I need to, not only to learn, but to internalize this type of analysis.  Salad wanted to help me but I felt nobody can help me on the market, but me.

He already gave us the tools, our job is to learn how to use them.  Besides trying to help, Salad asked me to do 2 things:

• open a paper account, do trading there and no money trading until comfortable with trading related to volume analysis.
• learn to trust volumes.

I did this and after a few days it hit me: all this time I was trading with the fear that I will lose the train. So I stopped any type of real money trading.

I started paper trading and after 2-3 weeks , even on paper, the loses started to accumulate, not many but hey, it is paper, how can I lose even on paper?

So, I started thinking about how to trade, risk management and what to trade.

I reset the account (on paper you can reset the account and start again, lol) , I started again from scratch and I told myself , no trades until the market is safe.

( I will continue with my journey in a future post)

Market safety gets me to today’s post:

Somebody at work told me it is easy to make money in the market, all you need to do is buy low and sell high.   I almost died of laughing.   Imagine the irony, buy low and sell high, this guy knew the secret to success.

But think about it, besides the irony of somebody with no clue about trading to tell you this big secret.

How can you buy low and sell high?

Is there such a thing? Or is this a joke?

No, it is not a joke, it can be done but it is psychological hard .  Basically we need to buy when nobody wants to buy, and sell, when, as Salad puts it,

people cheer.  Think long and hard about this…

Let’s see about Miss Market today :

As anybody knows by now, gold is in bull market, oil looks like it is in a second bull, stocks are somehow in a bear market but with Benny on the helm, we may be in a bull or in a bear market. As for the economy, we are in a low tide environment.

Let’s look at charts:

Rua 2d:

Unsafe teritory:

• sell volume start to elevate
• history crossed over
• MFI down
• long history close to cross over
• selling volume bars (red at the top side) are higher than green volume bars

Rua 1D:

On the 1D:

• sell and buy volume elevated, somebody is still buying right here
• the hist and osc are red but very small, no presure on the downside
• sentiment is at 62
• momentum is still green

USD 2D:

USD 2D:

• buy volume started 2 days ago to elevate
• long term buy/sell volume, buy volume started to elevate
• hist is about to cross on the upside
• MFI is UP
• sentiment is in the middle
• green volume bars are way higher than red volume bars for this cycle

USD 1D:

As you can see in the chart, we are ready to start a new bull cycle on the 1D chart:

• buy volume turned back UP
• sentiment UP

Gold 2D:

Gold 2D is in a bull, but a small bull compared with the last bull cycle:

• compare the 2 zones encircled
• the buy volume is up, the sell volume is at O,
• the RSI is still in the higher zone
• sentiment is at 40

So, by looking at the charts above we can say this:

The stock market is not safe, if you are long, you should have trimmed positions today or maybe tomorrow.  We saw on the 1D chart, somebody is still buying, so you may be lucky.  But if luck is needed, then think long and hard about your attitude.

The $, is close to start a new bull cycle on the 1D and on 2D. If this happens, presure will be on stocks to the downside. On the same time, it may happen that the $ cannot go over 79, so we may stay in a range.

Gold is still in a bull, but it takes nerves to stay turkey. One has to make a decision about this…

Now, we go back to our main decision: is this the time to buy, because nobody wants to buy or is it time to sell?

For this you need to look at the market levels:

The above chart is spx daily with ichimoku cloud. If you do not know about ichimoku, this is another thing to learn.  Now for levels you can use MAs or fibonacci.  Anything is good , if you do your own analysis.

But let’s look at the above chart:

we see under 1225 spx, the presure starts to accumulate on the downside.  Where was the low in the last 2 days ? 1225 on spx. The red side on the ichimoku shows the huge pressure on the downside once the price will go under 1225.

So, in the end now is it time to do position or trading or risk management and trim some of the positions if you are long in the stock market.

My take is that the market is not safe , and unless you know how to deal with risk, market is unsafe for stocks.

For gold and miners, it is still a bull.

In my personal positions, I trimmed the miners this morning and I still have gold and miners.  Let’s say I trimmed 35% overall.

To end this first post after so many months, some questions that bothered me for a while:

Are you greedy or fearful? and why?

Is there a train you are afraid to lose?

What is your weakness and/or quality when you look at the market?

If you go on a trading forum, I hope you don’t do that until you are ready, can you tell who knows what they are doing and who does not?

Buy low and sell high, LOL….