173 replies to this topic

[diogenes227]

Got a bit tricky in the chop at the end but finally like clockwork once again, give or take a few days.

No one with a swing-trade time frame should have been long today, only short or in cash.

So what are we looking for now? Once again, the low above the low on the NYMO (like those green circles back in Nov and Feb), which would be an aggressive traders buy, followed by the upturn in the NYSI for the body of the next rally. Shorts might want to sit on the edge of their seats or tighten up their stops to lock in profits in the next few days, or if this is to be a sustained bear move (the price action will tell that story), the next couple of weeks...

TZA is up 18 percent since the NYSI's April 30th sell. Nice.

Good trading to everyone.


http://stockcharts.c...1656&r=1587.png

[diogenes227]

Just an update... All sell signals remain on this pullback. It can go down more, of course, a lot more for that matter. But this decline in the NYSI is more than three weeks old, about the same time-wise as the Jan-Feb decline and about the same as initial drop back in Oct-Nov. The NYMO is looking ripe for an upturn, and if it comes now it will be a low above a low, and the VIX looks just as ripe for a downturn, which would be a high below a high. Not saying that's going to happen right now but... The basket of leveraged short ETFs I follow -- TZA, BGZ, TWM, SPXU, QID, FAZ and VXX -- is once again up 19 percent since the April 30th NYSI sell. SPXU (up 15 percent), FAZ (up 22 percent) and VXX (up a whopping 40 percent) are the highlights on this swing. Might be a good time to tighten stops to lock in profits...

Edited by diogenes227, 19 May 2010 - 08:05 PM.

[diogenes227]

Wow! Once again WOW!

The basket of leveraged short ETFs I follow -- TZA, BGZ, TWM, SPXU, QID, FAZ and VXX -- is up 32 percent at this moment since the April 30th NYSI sell with VXX up 62 percent (taking that off the table ).

http://stockcharts.c...1497&r=6666.png

[diogenes227]

Sure would have been nice if the market had stayed down yesterday. That would have set up a big fat low above a low on the NYMO. As it is there is a little skinny low above a low on today's NYMO follow-through instead. Life is hard, and then you wonder what the hell is going on...

Anyway, this decline has been over long and volatility (look a the RVX level) has been the stuff of bottom-making so that little low above a low is probably the best an aggressive trader may get. This market could rally like mad on that. If it doesn't, it may take more chop before it rallies like mad.

At the close today the short leverage ETF basket noted above was still up 30 percent since the April 30th NYSI sell even with the recent volatility. It will close out when the NYSI goes positive which is what to look for now.

Good trading to everyone.

http://stockcharts.c...1656&r=9047.png

[inamosa]

Your experience with the MCO precedes me. I'd like to ask you about the current positive divergence we have on the MCO. The divergence is not as visible or "W-like" as in past intermediate-term bottoms. Based on your experience, is the current level of positive divergence enough to accept the idea that an intermediate-term bottom has been made? I understand you will wait for the $NYSI to confirm, but what are your thoughts here, diogenes? Thanks.

[diogenes227]

ST,

I'd much rather see a big fat "W-like" in the NYMO, as in February's bottom, instead of the little dip we had last week.

That was like two-bits in Trade Station -- yuck. Any yet, TNA, for instance, is up nearly five percent at the moment if one wanted to take that aggressive buy and that would warrant at least a break-even stop.

But as to an intermediate term McClellan bottom, I think the verdict is still out on that given downside velocity of the recent sell-off. However, given where the NYMO is in relation to its depth at the momentum low, and given where the RVX is in relation to its momentum high, and given how long this decline has gone on, I think the bears are going to have do some serious selling right now or we're going to see that bottom and a pretty obvious "W-like" bottom in the NYMO soon.

NYSI, of course, is still on a sell and that is the more conservative read.

Good trading to you.

http://stockcharts.com/c-sc/sc?s=$RUT&p=D&yr=0&mn=6&dy=0&i=p27446769839&a=183121219&r=4677.png

[diogenes227]

To state the obvious, the previous post immediately above is playing out as expected so far. The NYMO is stair-stepping to the zero line -- two lows above lows, although the first one was skinny, and now the one today is fat, quite fat. The NYSI is still on a sell so all is not totally well in the bull ring, but if today's rally can follow through and turn up the NYSI tomorrow or Friday...well, the bulls are gonna rock and the bears are gonna roll.

[diogenes227]

The NYSI turned up today, giving a buy signal. The context for the market is long until it isn't anymore. For the record, the basket of short leverage ETFs -- TZA, BGZ, TWM, SPXU, QID, FAZ and VXX -- closed out with a 17 percent profit, with VXX the highlight up nearly 34 percent, on the April 30th NYSI sell signal. The basket was up nearly 40 percent during the trade, and the VXX 60 percent -- it's tough being a bear in this market, but 17 percent and 34 percent gains in a little over a month ain't bad. In fact, they're NYSI.

[diogenes227]

The NYSI turned up today, giving a buy signal. The context for the market is long until it isn't anymore.

..."until it isn't anymore." Which is now.

Brutal gap and drop Friday on the employment news. Turned the NYSI down for a sell after only one day up.

I've posted a similar chart in the past to one below but this is what I use for a stop on disastrous days like Friday. On TNA, which is my core favorite for long trades, if it is not above its open 15 minutes on a gap against me, I start closing it out; or, as on Friday, if it rises on the open, I would hold in the hope the position may recover from the opening volatility but if it comes back through the open with volume (see the chart), that's the stop, the time to give up all hope for the day.

On Friday, that loss was seven percent and change. TNA closed the day and finished out the NYSI's one-day buy signal with a loss of close to 14 percent. Pretty much as ugly as it gets.

[diogenes227]

Yup, it's up. The NYMO put in another low above a low, stair-stepping again to the zero line and a possible NYSI buy (see chart in post #66). This time with a divergence on most indexes. This is actually the third low above a low, so maybe the third time's the charm. Regardless, as long as this pattern keep building, eventually the indexes are going to follow to the upside. In the meantime, the NYSI remains on a sell.