Friday Doldrum

It turned out to be a boring day.  SPY didn't go above the Open Range and so today's trading plan didn't materialize.  After the green gap fill and bounce, it just stagnated till the close.

The up trend is still intact in all time frames while the daily MACD continues to erode.  No wonder VXX is going no where.  The path of least resistance is to consolidate around 140.   I'm still sitting on 1/3 of my original inverse ETF's.  Hopefully I get to close it on better prices than 2 days ago.  AAPL has been weak and gone orthogonal with the market in the last 2 days.  That's could be a red herring for next week.

One order that got filled today was YELP's backtest at 26, as per yesterday's post.  So I picked up 1/3 of my position there.

SPY - Intraday Target

The circled area on the SPY 5 minute chart below represents a confluence of resistance, and thus possible target if today's HOD is broken.

SBUX - Sky Has Limit?

Starbucks has reached exactly the 150% Fib extension this week after going parabolic this month.  This is a major milestone, representing halfway to the full target of 106.  Time to cool down with Frappuccino?  I would take profit if I were long.  If I did better so far this year, I might have some courage to short.  It's amazing in just over 3 years, SBUX can return over 700%!   No positions.

ZNGA - Channel

Just like the case for TVIX, the upper trend line for ZNGA was redrawn, resulting a better fitting channel.  (See the old channel here.)

YELP - What's Next?

My exits weren't perfect but at least I had good reasons at time of the exits.  20 more minutes left but what big doji's 2 days in a row!  It's hard to be bullish with the candles in the past 2 days, but there's only one thing I am sure:  I will buy at 26 and 24.50 if it gets there.

UNG - Buy Target Reached

UNG has been unbelievably weak.  It's reached my second buy point...

Market Most Often Does The Opposite

It's indisputable that market wants to do the opposite of what you want, and most of the time it gets its way.  That's why we have the contrarian indicators such as the bull-bear sentiment spread, max pain in options open interests, put-call ratios, and so forth.  You can also add me to the list as I often spell out what I look for in the market. lol.

Even in the everyday trading, you can't deny witnessing it.  The moment you sold, the stock starts to go up.  Your stop loss got triggered during a stop run.  You want the market to bounce on a support, but it cuts straight through.  You throw in small token shares, and that stock goes up 20% in a day.  You oversize a stock because all fundamental and technical analyses look good, but that stock keeps going down for no apparent reason.  You capitulate during an exhaustion candle as you come to your sense on the magnitude of your loss.  And so forth.  May be it's just my own personal experience which I often attribute to jinx, and you're all spared from such taunting by the market.  Congratulations!

This is a perenial phenomenon. What triggered me to write about this topic is TVIX.  I went out of sync with it. I was lucky I missed the biggest drop due to the news from Credit Suisse.  I got it on possible support on lower channel line. The next morning it gapped down and ran. The next day it backtested the lower channel line and I cut loss. Yet the next day (yesterday) it gapped up and ran but ended in shooting star doji.  So I look for second leg down for a potential double bottom.  Guess what, this morning it gapped up instead.  Wild goose chase.  Catching a moving target.  Whipsaw.  Whatever.  What's particular about TVIX is its recent moves are violent, double digital percent moves up and down.  So it magnifies every emotion and psychology on the trades.  This morning I found had I used the alternative upper channel line, the TVIX prospects would have looked much different 2 days ago.

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What are some attempts to counter the market?  Try your luck with the following:

• Think like a crook.  Put your shoes in the wicked greedy financial institutions and do what you think they would do.  Think window dressing. Think boom bust cycles.  Think political cronyism.
• Don't do the right thing.  America is bankrupt, and the rest of the world is in recession.  But don't get out of the equities, because the Dollars will continue to be printed and the banksters will continue to fleece the tax payers till the end of the world.  And when the world do end, nothing really matters.  So stay away from doom and gloom.
• Do the opposite of what you think and want.  Until you admit yourself into the psychiatric ward, this should work.
• Position sizing.  On a more serious note, if you can right size your position, you can reduce a lot of emotional interference.  Smaller sizes and bigger stop losses on high beta stocks.
• Don't watch the market all day.  Once your in, every move on the market gets magnified to trick and plague your psyche. Go play piano for an hour before returning to your screens.
• Go with the market. I am saying this because everyone is saying it.  But in reality, this is bogus.  It all depends on what time frame you're looking at.  Intraday charts say the market is on a down trend while the weekly charts say the market is on the up trend.  Should I turn a failed day trade into a multi-month swing trade?  Should I turn a swing trade into a day trade because the profit/loss during the day since entry have all of a sudden become significant?

The list could go on and on and that's not my intent.  I've done my own psycho therapy for the day.

TVIX - Looking for a Double Bottom

I redrew the upper line (and thus the projected lower line) of the down channel and found that the break from two days ago wasn't by much.  Today we got good green volume, albeit the finish wasn't so good.  I would feel more comfortable if we go lower, at least till the 6.40 - 6.50 area and then we'd have a more confirmed bottom should we then move above today's high at 8.29.  That's the preferred path, even though it could mean more pain on my remaining inverse ETF's.  It could also take a V bottom but that's a riskier setup in my opionion.  The MACD is encouraging but keep in mind ADX is at 40.82 so MACD should take a backseat.

FLR Long Setup

FLR is a conglomerate of heavy construction, engineering, and project management for government, oil & gas, mining, and power industries.  The daily chart does not show anything negative.  The 20 MA is above the 50 MA which is in turn above the 200 MA.  The MACD is resetting as prices consolidate into a symmetric triangle centered around the previous horizontal support.  With current price just above the 50 day MA, it should be an objective long entry with stop just below the 50 MA on a closing basis.  Additional entries if and when the symmetric triangle breaks to the upside.

Scaling Out Another Third

I executed my plan and scaled out another 1/3 of my inverse ETF's on today's gap fill.  It's unfortunate that this exit was at higher market than my first 1/3 exit, but that's how it goes.  On the other hand, I can be happy that I took action earlier and sold the first 1/3 at a better price.  Now the daily MACD histogram is once again negative, but $BPCOMPQ still flash a buy signal even after today's correction.  Bears have to pray that it (MACD negative divergence) follows through this time around.  How VXX and TVIX ended the day wasn't exactly encouraging.

Scaling out is a form of offering sacrifice (in the case of cutting loss) in order to bring about a closure sooner.  It's healthy for the mind.  Not doing so would be like a person having hurt (or joyous) feelings pent up inside him but refuse or unable to talk it out; it'd be very unhealthy.  Imagine if I hadn't cut 1/3 of loss 3 days ago, I'd have full position getting hit by the monstrous gap 2 days ago.  On the other hand, being a believer of jinx, my timing would normally go against me.  So being wrong on 1/3 could be beneficial for my other 2/3.  If not and I still want to be naughty, I can still add back the 1/3 at better price.  In this context, the 1/3 is like a bait waiting to catch a jinx.  I wish I had done this sooner.  I would have survived longer by keeping my position size manageable at all time.  For a bear, being able to survive longer in order to catch the drop is paramount.

YELP!

I took profit yesterday on YELP while Dr. Fly didn't sell a single share.  So far today it's up another 12% while the whole market corrects!!  Hats must be tipped to Dr. Fly.  He must know something we don't and/or has a heart made of steel!   At the open I bought a token share back when it corrected less than 1%.  31 area must be an area of congestion of some sort.  I'll probably sell my token share there.

UPDATE: YELP is now 31.51, up 14.36%!!  I was out at 31 even.  Good thing shares are NOT available for borrow, or else I'd have thrown myself into the flame!   32.64 is the full target.

Dome and Chimney

My "dome and chimney" pattern as envisioned in my dream played out.  Unfortunately, the dome is much smaller than I had hoped.  I should have known it given the proximity to the 20 day EMA and end of quarter window dressing.

The rectangle target at 142 may have been met by today's HOD at 141.83.  This level was also observed as 123.60 Fib extension on the 60 minute chart with MACD declining.  VXX and TVIX showed some sign of life.  Hopefully, a short term top is in -- as long as someone put a duct tap over Bernanke's mouth.

$BID - Long Setup

BID breaking above trend line.

ZNGA - Channel

ZNGA is testing the projected lower channel line.

TVIX Bounces

TVIX is finally bouncing, although the day is only half way done. Is it a dead cat bounce?  Most likely.  How high would it bounce?  Well, it's right at  yesterday's gap resistance and the bounce is also backtesting the projected down channel line on the daily.  One encouraging sign is the volume this morning, but that's could be trumped if even bigger red volume comes in the afternoon.  So it's best to stay away unless today's low or thereabout is backtested and the gap resistance is broken.

Time Changes

Dr. Fly brought up a good point this morning.  He said his in house over-bought indicator "score of 3.10 no longer present grave danger as it did 6 month ago".  One has to be adaptive to the times.  Are we in a bubble? If so trade accordingly and don't fight it.  Is the trend strong?  If so, downplay the oscillators and stay away from mean reversion trades.  Most, if not all, systems will have conditions that make them invalid or less reliable.  My favorite proprietary leading indicator, for example, became worse than garbage under the Fed's Operatoin Twist!

YELP - Target

After breaking the IPO high, the first stop would be 27.56,  backtest at 26 support.

Update: Target reached at EOD. That was fast!  Now I hope 26 gets backtested before going higher.

Ben Said Puff, And We Have A New High

Ben Bernanke made a rare Monday morning dovish speech regarding the job market and boom, big green gap up this morning, and as I write, the market is making new highs on the hinting of QE3.  So Bernanke have decided to get in bed with Obama all the way.   It certainly feel that the bears are being conspired upon.  Elsewhere, Dr. Fly is only 7% cash, meaning 93% long.   That certainly doesn't help the bears.  $BPCOMPQ's buy signal will be even stronger after today for sure.

SPY is currently up 1.27%, VXX down 8.36%, and TVIX continues its double digit drop, down 15.22%.

It looks like SPY will likely target 141.89 next.

Extended Warranty and Repair Service

Over the weekend I bought a bargain brand new Lenovo desktop PC from Staples for under $200 and 2 2GB of DDR3 memory at $4.50 each.  Allegedly this was a Black Friday leftover inventory.  I was happy but that's beside the point.  I bought Staples' 3 year EasyTech computer protection plan on the spot due to their convincing up sell tactic.   After some research today, however, I plan to cancel the plan due to some horror stories I read, as well as more competitive pricing and service elsewhere.  Although I don't have first hand experience with either of the two companies below, I've decided to use them as vendor of choice in the future until better choices present themselves.  Just for reference for myself.

For extended warranties:  SquareTrade.

• A+ BBB rating. 
• Free shipping. 
• 5 day service guarantee.  
• 24x7 online claim filing.  
• Discount coupon codes are also available from time to time.

For computer repairs:   Secure Remote Support.

• 24x7 secure remote assistance.  
• No fix no fee policy.
• Still pricey but better than most.

TVIX - Support

Assuming this thing isn't going to 0, aside from the 5.95/6.00 target, the closest support I could conjure up is the area of the projected lower channel line.

In My Dream

My dream today is much different than a month or two ago.  Back then, I had grand bearish dreams fueled by the proprietary leading indicator I subscribed to, coupled with a few big shot traders switching from bulls to bears.

Today, as a defeated bear (see Conceding Defeat), I dare not to dream big any more.  Just for fun, this is my rather modest dream today:

Too Good To Be True

It's only 1 hour into the day, but it's a 4th red day in the making for the market -- in a row!  Almost too good to be true for the bears.  Being conditioned by the market in the past many months where dips are bought with a vengeance, I feel obliged to take off more of my bearish inverse ETF's  here, not trying to overstay my welcome.   But I did not take another whole 1/3 off because suddenly the bears's fear has turned into greed:  The MACD on the SPY daily chart has not crossed down, confirming negative divergence where higher high on the prices yields lower high on the MACD.   Granted, the ADX is still high at 31.63 but it is declining.   On the other hand, prices has retraced 38.2% of the last leg up since the beginning of March and we're at the proximity of the 20 day MA, so it's a good place to resume the up trend.  And as the projected channel (dotted line) shows, prices have refused to close below the channel.   In such dubious state, one can sit tight or in my case where I've lost much confidence, the best compromise is to take some off.   The "this time is different" mentality has proven hazardous in this bull market.

TVIX - Fibonacci Levels

I read yesterday that Credit Suisse announced that it will once again create shares in TVIX so that it would stop behaving like a closed end fund, and become an ETN again.  Shares plunged over 30%.

This morning TVIX had another 18% red gap and is now bouncing, dead cat or not.  Since the 150% fib extension (shown as 50% in chart) was spot on yesterday, may be there'd be some traction with other levels as well.  I post the levels here just for your reference.  The chart does not show the full target which is 5.95 (or likely just 6 for the round number).  The immediate level of interest would be 7.75, should it continues its current course.

TVIX - Stay Away

I complained yesterday that VXX was a scam by the financial institutions. Well, TVIX seemed like an even bigger scam.  The SPY had a red gap this morning is currently down .80 for the day.  VXX at least gapped up accordingly and is now up over 5%.  But look at TVIX, the 2x VIX short term ETN, it's down over 25% for the day!  I was wondering yesterday as VXX went down 5% per day, why TVIX went up instead.  All these futures settling subtlety are beyond me.

So can technical analysis be applied to such?  Don't hold your breath.  9.73 is the 150% Fib level support.

Meanwhile, AAPL is down nearly 1% for the day.  Oh, no! The world is coming to an end!

UPDATE: A video clip from CNBC on TVIX provides some informative discussions. Thanks to KeiZai for the link.

VXX - What's Next?

OK, so the market refused to sell and after some brutal rallies to new highs, it's gone sideways for a few days.  But the VXX has been absolutely decimated while the market consolidates.  I had thought it could take a rest after yesterday's dump, yet tanked another 5.43% today.  There's simply zero volatility and therefore no fear in the market.

Is there any end in sight for the VXX downward spiral?  Well, first of all, this is another scam invented by the financial institutions.  It can only go down over time.  Look, it was as high as 480 in 2009 We shouldn't even get ourselves involved with this in the first place.  As far as finding a possible bounce point, I see 17.80.  Was today's low of 18.14 close enough?  Who knows?

If we're really desperate, may be there is some selling in the market under current as per today's money flow, courtesy of The Wall Street Journal:

However, $BPCOMPQ continued its third day of buy signal with no signs of let-up.  Again, with quarter end window dressing around the corner, the bears' odds are really slim.  However, I couldn't do anything with my remaining 2/3 of inverse ETF's today; they remained trapped.

GMCR - Taking Half Off

The entry on backtest of wedge support worked.  Too bad I didn't get another chance to add.  In light of the horizontal support, I am taking half off.  The other half hopefully will be on the 20 day EMA test.

Unloaded 1/3 of My Inverse ETF's

I got a rare break today -- a red gap just as I executed my plan and duly booked loss on 1/3 of my SPXU positions this morning just off the 76.4 Fib retracement level.  The negative divergence on the SPY 60 minute chart has almost played out as the MACD now approaching 0.

Meanwhile, VXX continued to drop like a rock. The Fly was right in taking loss yesterday because it sold off another 4% today despite the opening green gap.  It reached the rectangle target at the close.  Perhaps the market will have another small gap tomorrow for the VXX to correct the closing dip.  The close was almost at the 176.4 Fib extension from a bigger base, so hopefully it will bounce a bit or consolidate.

The $BPCOMPQ confirmed the buy signal today.  That's bad news for my remaining bear ETF's.  Even though I took 1/3 off, I still prefer the market to go down because I don't plan on adding any more shares should the market rally higher.  On the other hand, I hope to unload the remaining shares at lower prices.  

By the way, this scaling out has one therapeutic effect:  if the market goes higher, I can be glad I unloaded 1/3; if the market continues to drop lower, I can be glad I kept some shares.  You can do it in halves, too, like glass half empty or half full.   Just some mind tricks that can ease the pain a bit!

Conceding Defeat

Today marked a milestone.  It's a giant failure by my bearish positions held over the course of the past 6 months, unfortunately coinciding with one of the stock market's most violent rallies.

The $BPCOMPQ index, which showed the first sell signal over the past many months, has flashed a buy signal after today's close.

Dr. Fly gave up his VXX positions today for a whopping 17% loss, and went long a few stocks.

Buyanddonthold.com withdrew its sell signal, just short of iterating a buy signal.

End of the month and end of the quarter window dressing are just around the corner.

It's over for the bears.

I am disgusted by the market and its relentless bullying on the bears.

I am disgusted by the politicians and their cronies with their election year maneuvers.

I am disgusted by the insatiable greed of the financial institutions.

I resent all the turns of events that brought about today's defeat.  The biggest culprit of all is this proprietary leading indicator that I subscribe to.

It worked miracles in forecasting trends, market tops and bottoms even during QE's .  Its inventor demonstrated his mastery of zen in obeying the indicator with total faith, even as he was being ridiculed in the forum.  But every single time, he was right IN THE END, and its followers were amazed.   Came Oct 1st, he began charging subscription fees just as I became a believer myself of his leading indicator and his style of total faith trading (euphemism for no stop loss).  Almost to the dime, he jinxed the leading indicator and jumped the shark.  The stock market and his leading indicator literally have gone orthogonal ever since. But this was the hindsight.

For the first time I was fearless in going short.  For the first time stop loss was not a consideration.  And for the first time, I got run over head-on by the market's runaway freight train with no recourse, as I modeled after the master's zen.  The most damning aspect of the proprietary leading indicator as it went orthogonal with the market was that it made me discount the long hedges and amplifies the bearish arguments, AND it made me think "tomorrow may be the doom's day" every single day that it was wrong in the past few months.

To add insult to injury, just as I was about to give up my faith in February, Dr. Fly, who had a stellar 17% YTD return, sold all longs and bought VXX and TZA.  Many bulls also turned bears in this time frame.   I was raised from the dead and continued my quest as a bear (per the leading indicator, mind you).  Instead of taking losses in SPXU and SDS, I started positions in VXX.   As aforementioned, it turned out to be a 17% disaster.

Then over 2 weeks ago, the most trustworthy $BPCOMPQ finally flashed a sell indicator, as did buyanddonthold.com.  I was once again hopeful and decided to withstand the pain a bit longer.  But these signals all got taken away today!

I will begin taking my loss 1/3 at a time.  And then I will cease to hold overnight positions for sometime to come.  The last thing I need should I find myself exiting at the top is to find myself bagholding for the bulls.  The bulls are not on firm grounds, but I am tired of fighting.  Here's the 60 minute SPY chart.

After I liberate myself, I vow I will never short the market (SPY, SPXU, SH, SDS) again --  I will short sector funds instead.  I am disgusted by such ploy as sector rotation.  It's a scam.

PCLN - Target Reached. Time to Correct?

Been traveling the last 4 days.  Anyway, the much hated PCLN has reach the full target based on last October's low.  The closest support would be the 78.4 Fib retracement to 661 should it finally decide to correct.  If not, 728 would be the next target.  Under current market psychology, overbought conditions can last indefinitely.

Initiated AES Position

Electric utility that came up on my scanner.  Just felt the need to hedge with some long against my grossly large short position.  This one isn't frothy, neither a beaten down loser.  No MA's has crossed over.  It's sitting on 50 day MA, and the projected lower trend line of the up channel.  MACD resetting to 0.  Only RSI is a bit low at 45.15.

The Bears Stayed Legit for Another Day

Despite AAPL's green-gap-and-run day, the market failed to follow through.  However, the bulls didn't do badly either -- giving up only a fraction of a few points after yesterday's mammoth sized rally.  The transports and the small caps showed a bit more weakness, however.  And VXX made some respectable attempts to make a bottom, although the rally faltered into the close.  But my main concern for the day's action was still on the $BPCOMPQ bullish percent index, which was hanging on a thread yesterday.  After the hours I was relieved to learn that the sell signal survived another day.  Teetering, but the sell signal remains.

VXX - Intraday Target

Morning setup played out nicely.  Target around 22.40 is around the corner.

VXX - 60 Minutes Shows Sign of Hope

The down trend line has been broken, and it has bounced from the 100% Fib extension from the 3/6 high.  Also not shown is the MACD for the new low is higher than the reading at previous low.  This chart looks better than the SPY short.

Sell Signal Is Flickering

After today's carnage to the bears, the sell signal that finally flagged last week is now flickering. If we get another green day tomorrow, it will be goodbye for the bears.

A Kodak Moment

After a gap up to new high this morning, the market did not stop to amaze the masses.  It went on steroid and breached SPY 140, decimating the bears.   Speechless.  Needless to say, lots of bulls and bears threw in the towels today.  Bulls chased, and bears cut losses.  This is a Kodak moment and should be framed on every trader's wall.

It's funny I still don't know who stabbed me in the back today.  The FOMC thing at 2:15ish didn't do anything more than small knee jerk reactions, even with selling volume to the downside.  Now this was a clean and convincing breakout.  But with the market's recent wicked temperament, would SPY 140 be a closure of some sort?  Last week we had a big bear trap, would today's SPY 140 breakout be a bull trap?  Dream on...

May be this one should be framed instead?

SPY - 2 Day Rectangle Target Reached

Bears are sucking wind...

Staying the Course For Plan B

Plan A failed as last week's red gap did not follow through.  Now the plan B is for double top with bigger correction than plan A.  The prices in SPY has been rsing in the past 4 days, but the MACD on the daily has been dead flat.

We'll have a green gap this morning above last months high, if no follow-up for the rest of the week, the MACD will confirm negative divergence.  Also, today would be the fifth green day and a red day would be due, according to the price actions in the past 3 months.

It's painful holding the shorts (VXX TVIX SPXU TZA SDS SH), but I am staying the course.