Cliff Dwellers

The only running the rabbits did today was for the cliff. Put them in with the cliff dwellers at this juncture as they are ready to jump.

I had entertained the notion that we would get more of a push before the fall. Maybe the situation is as bad as I originally thought. I've talked for months about the problems facing this market and have had to caveat that each time with the thought that "It doesn't matter until it does". Well, it does and today it did.

I'm tired and ready to call it a day. I'll be switching the DNS to the new site a bit later. I hope you find it fresher and it continues to be informative. I have the framework to expand to add additional commentators over time and to serve up fresh content including some of the tools I use and am writing about currently in my manuscript. In case things go awry, here's a hard link to the site. This will get you there until the DNS servers catch up with you.

New TAToday

Again, hope you had a great one and as always, I continue to value your trust and readership. Tell a friend or two about what we do if it is valuable to you. That's how we can grow and become a more informed community of traders. Have a great one and I'll see you Monday morning.

Run rabbit run

Will the rabbits be on the run this afternoon? After two consecutive days of squeezes into the close, the rabbits may be on the loose again into the close. They are threatening to stampede again.

I've been reticent to do much at these levels on the downside. A couple quick shorts intraday but I'm still looking for that porcupine spike back to those resistance levels we have talked about previously. In this market, the greatest asset is your patience. Wait, wait, then pounce.

Pressing too hard today

The bears are pressing these markets too hard here today. Yes the data was bad but you have a very oversold market that is like a coiled spring right now and pressing hard against that backdrop can cause alternate effects. I'm patiently waiting and working only my gold holdings. I'd love to see the coil unwind here and get the porcupine spike.

Employment number shakes up the futures

We had traded flat to down over night but the jobs number was release a bit ago and came in softer than expected. That's not what the market expected and the higher futures prices hikes that occurred just prior to the report were given back quickly. Slower growth is not what this market wants.

Slower growth with potentially higher inflation is a recipe for stagflation and it will be interesting to see how the jobs numbers are spun today and what kind of damage they end up doing. This is an extremely tricky period to trade as we have bounce off the bottom now, the spreads are wider (beta higher) and we still have an very oversold market. If the bears press to hard they could get squeezed higher. That would be that porcupine spike I was talking about yesterday.

Although I'm itching to put out some short positions I don't want to do so too quickly lest the timing kill me so I'll wait for those targets that I laid out previously.

Overseas markets were mostly lower last night, the dollar is weaker and the Yen is actually stronger as well. You have to keep your eye on the Yen here. Bonds are flat, oil is up a bit and the metals slightly higher. Grains were up overnight again.

The volatility is likely to continue today. The Fed is up next week and the swings of the last couple days intra day are likely to continue. My gut feel is that we work higher over the next few days with false starts and emotion swings. One of those markets where you have to work smaller if you are trading intra day and you have to mostly close your eyes if your time frame is intermediate term.

Looking for that Porcupine spike

After a long volatile day of ups and downs, they finally finished the day strong with a lot of green on the major indexes. The setup is there. After a long bull run we had a serious hiccup in February and now in July. In February the bull just roared back and the dipsters had to pay up to play once it got rolling again. I'm sure they remember that. Buy and holder said "I told you so".

Now we have the latest hiccup and, being creatures of habit, it won't take a lot to get the short covering underway again. We have the employment report in the morning. If it's strong, look for the rally caps to get dusted off. The setup is definitely in place for that. Fear will quickly turn to greed again and that porcupine spike higher will come about.

As you know, I'm much more skeptical of what lies ahead and that spike, to me, is to be sold as we move into the resistance areas that I've outlined. July is not February. The tables have turned. They say the market climbs a wall of worry. Well, the worry out there is of the aspirin type; take a pill and go to bed and all is well the next day. The only worry soon will be the worry of getting left out again as the train leaves the station. Folks, the train will leave but it's heading south this time. We won't know that for a while but the odds on bet is to short the first porcupine spike and do so with enough firepower to peel off some profits and on the retest of the recent lows. That spike could come as early as tomorrow. More likely it's next week. The retest should be a week to two out from the lows. Those are the general parameters I'm working with. Today's volume numbers continue to support this notion. You fall on heavy volume and rise on light volume. That's all in keeping with this thesis.

Hope you had a great one. I'm apologize for not having sufficient time to put up a Chart of the Day this week. Time just doesn't permit. I've not been able to update the thesis neither. We will cut this site over this weekend and I'll have a hard link to the new site as the last post here just in case the DNS servers don't pick up the change over the weekend. So, if www.tatoday.com brings you back to this old look, then click on the hard link I leave in the last post tomorrow and that will get you there. Until tomorrow. Have a great night and chat you then.

Look at the calendar

Tomorrow we have the employment number. It's likely to be favorable. Next week, the Fed. At this juncture at least the anticipation of their meeting should be favorable. We have an oversold market and though no bounce is guaranteed, it is indeed very likely.

This morning they are very hesitant with chips and oil service acting as lead weight. Give it some time though. Not the time to be shorting here. That will come.

Now a stab higher

Looking back, yesterday was a hectic day for the market as they ate away at support around the 200 day MA on the SPX and at the critical line in the sand on the DJIA. What we have seen before is that each time the market has had a stumble it was short lived and onward and upward after that. I believe that the majority believe that this time is no different. As a result, we should see follow through buying today as the dipsters go back to work. If they don't then the change I see in the market is not only worse than I think, but is going to unravel even faster than I plan.

What I expect to happen here is that we will see folks began to work their way back into the market with a thrust back up occurring on the indices as a result. It's always greed and fear. Lately fear. Today and the next week or so; greed.

What we have to look for as we rise is the quality of the rise. If that rise comes again on lower volume, then that will telegraph yet another warning sign that this market remains in ICU even though its smiling and reward you with higher price points. That could go on for a week or two but I doubt much more. Watch the price points to see where the resistance resides.

On the SPX, the resistance range of significance is 1492-1504. On the NASDAQ its 2608-2650. I know these are wide ranges but this is a reasonably wild ride right now. Those zones should turn back the initial thrust. That reversal should set up the middle part of either a W formation or eventually a M formation. What that means is that once it reverses, we will need to retest the lows from yesterday. That retest and the volume that accompanies that retest will tell us a lot. If it fails, then its obvious as to what that means. Given this long bull run, I would expect it to hold. If so, then we bounce up again and once more attack the same zone as indicated above. If that fails, that will make the third trip back towards the bottom and if volume picks up on that move, it's going to get very ugly. PPT, manipulation, whatever you wish to think or call it won't matter.

This morning futures are higher after trading negative most of the night. Overseas markets all lifted off of our move yesterday. The dollar is weaker except against the Yen. Bonds are losing their flight to quality premium; down 9 ticks. Oil is down a bit more off of yesterdays inventory numbers reversal and the precious metals trading higher. Grains were solidly higher overnight.

It's been a wild ride of late. I've been concerned that a big spill was coming and indeed it was in the cards although it took forever to play out. Now we should see the bounce. My larger concern has been and continues to be that we are entering into a bear market for equities. Although the average investor will likely look at this latest hiccup as only a hiccup, I believe it continues to telegraph that worse times are ahead, not better. You can believe what you want as its your money but if you are working this bounce that's unfolding, you had better at least consider the other side and what you are going to do about it if it unfolds against you.

Tenous but holding

I've got to head out early here today and though I'll check back in and maybe get another post in before the bell, just wanted to leave with the thought that the equities are holding the early lows here and unless another bombshell hits these markets, they look ready to run them higher.

If they can hold prices for an hour look out

If they can keep these prices propped up for an hour, the dipsters will come in. The price action is futures driven so far as internals are negative. Looks to me like some market stablization forces are at work here trying to build confidence. Part of it is also that we are quite oversold short term and that helps.

AAPL upgrade

Futures markets pushing back higher on AAPL upgrade. Talk about timing ....

Greenspan put ... put out to pasture

Over the term of Alan Greenspan, the market had come to expect that if anything bad happened to the equity markets, Greenspeak would be there to bail them out. It became known as the Greenspan put. In 1987, 1989 and later during the Asian contagion, Long Term Capital Management, the implosion of the dotcom era as well as 9/11, Mr. Greenspeak was there with a helping hand bailing the markets out with excess liquidity. He's off to pasture now and the Bernacular seems to be singing a different tune. The result is some serious red on the screens overnight as they started selling the futures after the close yesterday and continued selling them overnight.

We will see a big gap down opening; a gap down that destroys a lot of equity and that truly starts to put some fear into the players out there. It's a gap down that the dipsters likely won't want to touch (although if a gap down holds and they close it, the whoosh up to form the middle part of the W will be underway and that will come somewhere in this move down). A gap down that will will show huge volume once more to the downside. If we needed a sign post that the party is over, this gap down will do it. The game is over and now the bear is back and in full coat.

Yesterday I sold down my holdings more, spread my gold a little but mainly raised cash into the early strength. I will get hurt today just like anyone holding anything, but if you have to choose a sector to sit in, precious metals is not a bad one. Like oil, they are printing money right now and they will be one of the first ships to right when the turbulent waters calm.

The real place to be of course is short; heavily short into this melt. I did get off some shorts yesterday morning but got to cute and cashed in late in the day. Definitely too early given the way the futures look this morning. I hope that you took my writings to heart this week and saved yourself some pain as pain is what they are dealing out today. They are taking the price gains back to zero for the year. It's August and though the bear is a bit early for winter, he's definitely strutting his stuff today. As for my particulars, I'll look to average into precious metals in a melt, but have no desire to work any other long trades.

Futures have stabilized and actually picked up a bit since I started this piece, bond are moving back towards flat. The dollar is gaining strength and the Yen also. Note the Yen has been a great indicator of late. Oil is down half a dollar and the spot metals are down a percent across the board. Overnight grains showed strength. I would stay away from risk here as much as you can. Fast markets can cut you faster than imagined. If you play, you have to play smaller.

Lower Lows ... already!

I thought we might get a swift move down and then a try at a continuation bounce but we are hitting lower lows as I type and the tape gets uglier. Like a good bull market which won't let you in; a good bear market is one that won't let you out and that's what we are seeing here. Closing on the lows and with volume selling to higher levels, this market looks very sick now and anyone holding significant longs is getting hurt. I used this mornings strength to spread and peel off some precious metals longs and lock in some gains thinking they would allow us to buy them lower. Took off some more of what little longs elsewhere I possess and worked some shorts today to pad the books a bit. The volatility is offering up opportunity for sure; or pain if you are on the wrong side. Now that we have lower lows which serves as a continuation move still, we could see the market work lower in the morning washing out further sellers before finally getting a real bounce. If you were doubting the ability of this market to work lower, today should serve as a bit of a notice. Things really have changed.

Hope you managed to take the talk here today and make use of it. Have a great night and I'll catch you tomorrow.

AAPL in your eye

For so long AAPL has taken the NASDAQ higher. In fact it was the leading horsemen of the four technology horsemen I've talked about many times. Last week it reported earnings and though they talked a good show I shorted those earnings and got my head handed to me. I shorted because the projections for upcoming earnings were horrible and I felt they would sell off as a result.

Well, teflon Jobs talked about selling a million Iphones and the next thing we know AAPL is up $10+ after hours and the shorts were squeezed. Next day it held as the market sold off and it cushioned the NASDAQ; in particular the NDX and QQQQ. Today we are getting the inverse. Finally someone has noticed that they don't plan to make as much money going forward and it finally matters. Timing, timing, timing!

So, while the rest of the market hums along today, the NDX is taking a bit of a licking. It's a weighted index and AAPL has a lot of weight. Internals are not bad but volume is running light again on the push higher and you know how I feel about V shaped recoveries given my last post. Let's give it some time and see how this works out but the GOOG has fell off it's horse. AMZN has had its last squeeze probably. RIMM looks to be working off of one leg and now AAPL and its earnings are drawing attention. Looks like a decent setup for a retest argument to play out.

Forget P's and Q's, think V's and W's and M's

In the technical world, V shaped recoveries are extremely rare. What you find in stead is a V that morphs into a W. You get a plunge down follow by a whoosh up that wears itself out and falls right back down again. If it successfully tests the earlier bottom of the V (a little higher or lower), then you get the last part of the formation that ends up being a W. Now once you have the W, it it breaks higher than the middle part of the W, then you are off to the races again. If it doesn't then the W can turn into a M and M's are murder because they lead to even lower thrusts when the bottom of the W is taken out and the M reveals itself.

So mind your own P's and Q's and pay attention to the V's, W's and M's as those are the formation that can help or hurt you depending on your posturing.

We got the early morning push that is now coming back in pretty fast. The retrace up was about a 38.2 Fib retrace. That may be it for this round and the W could be on the way already.

A whoosh back up?

This morning we see strong futures markets pushing higher. After the beating last week, we are poised to see some type of recovery ... the bounce move back up after the stretch down. Yesterday was the beginning and it came on lighter volume. Today should be the extension and if it comes on lighter volume as well we should see buying enthusiasm fade and what would seem like a more orderly market develop (less volatility for a bit). All of that should lead to a retest of the lows of yesterday sometime later this week or more likely, next week.

It's going to feel as if all the problems have been swept under the rug and that last week was an aberration. There's going to be talk that, like February, this was just a quick dip that you have to buy. I wouldn't jump into that camp easily. If anything, wait for the retest and then decide if there's muscle behind the move higher. My take is that we are far enough along and that with tightening credit worldwide that we will likely see a different path play out this time. It may be the same old song and dance but the risk this time is even greater that a more substantial pull back is in store; one that last weeks and months, not days.

The dollar is weaker again as that Treasury intervention wears off a bit while the Yen is weaker. Bonds are down a good bit. Oil and the metals are showing strength and grains were mixed. Overseas markets rocketed higher and that's what has us up strong to start the day.

Follow the bouncing market

The bounce took front and center today. The early action worried some more longs out and the later action caused some shorts to cover. In between, lots of money turned over from one set of hands to another as volatility was still in vogue.

In between the lines, we bounced on light volume and though the point spread was good and though we could bounce a bit more, I suspect we are going to see this market roll back over rather quickly and retest those bottoms. It could be in a day or two or it could be in a week to two, but it will almost certainly happen. If volume remains low on the push back up, given that kind of selling we saw last week, they will most certainly entertain the thought of a lower low.

Looking past the short term retest, the question is "What do you do on this bounce?". In my opinion that depends on what you did prior to the fall; how much inventory you are holding and whether or not you think this time is different; i.e., do you believe we simply start heading higher again like before.

My opinion is that it is different and a primary reason is how we have traded now for the majority of this year. The push lower in February came after about a couple months of distribution. This fall comes after another five months of distribution. The deep pull back on heavy volume takes prices back three, four and five months compared to recent price points. What that says is that any buy and holder since three, four and five months ago is underwater on their trades. To wipe out a quarter's worth of earnings is tough to swallow. Half a year is a killer. Technically this pull back cut across a lot of trend lines and MAs. All in all, I can't see us just running right back to the highs. In fact, just getting a Fib retracement of 61.8 is a stretch.

Hope you had a good one. Take care and catch you tomorrow.

Market finally breaks over the early highs

The market finally breaks over the early highs which sets up the bounce we have been looking for. How far?

Again, I think the first bounce is sold but eventually it could bounce as highs as 1494-1500 SPX. 1475 to 1480 on the first bounce is probably as much as can be expected. They will short into that strength and try to break it down further. Volume so far on this bounce is not as heavy as the selling which keeps me thinking that this market continues to telegraph it's troubles to everyone.

I'll be looking for some short exposure into this first bounce for a flip.

Dipsters choose fear over greed

The dipsters have started to abandon the notion of always buy the dip. The fear of what can happen and maybe the inventory they are carrying right now has made the dipping a thing of the past.

We are deeply oversold short term and what kind of a bounce that produces will be just as informative as anything. Typically you get a quick one to two day bounce that is sold hard which leads to a retest of the lows. If that holds, then you get a real bounce.

So, I'm attempting to sell the first bounce and see what the retest offers but until we get a bounce, it's hard to sell.

Look for a weak bounce

After being hammered last week, the timing oscillators we watch have hit extreme levels. The damage is done though and unlike February, this is no buy setup ... but a sell the bounce one.

Take a look at the 10 day NYSE net differentials numbers. This kind of extreme reading coming at the top tells us that we should see a bounce almost immediately, that the bounce will likely come quickly and will be sold into. After that, we'll see the retest of whatever the lows are. Given that we are starting this morning near the lows of last week, we could see lower lows to get the week started which actually would be the best setup for a bounce.

Overseas markets were mostly flat to slighlty higher and the futures here are flat this morning although they've been up and down overnight and still remain volatile. Bonds are up again and they have been on a heck of a quality run since the volatility hit last week. Oil, having hit new highs last week is down half a dollar and most of the metals are trading higher. Grains were up in the overnight session.

The volatility is likely to continue. Huge technical damage has been done and the tables have turned. I'll update the thesis later today. I've been so busy readying the new face lift to TA Today that I've been unable to spend as much attention to commentary. Still shooting for a cut over this weekend. More on that later this week.

Huge price spreads today

With five minute bars on the futures showing 6 point ticks, the price spread today is very large offer both danger and opportunity to anyone willing to tackle such a beast. After this week, it's not me. I'm just trying to limp home and lick my wounds as my mettle has been tested this week on my gold shares.

I have to cut out early today so this is the final post. Pretty good push back up from the brink. Would be a feather in the cap if they could run them green by days end. Financials actually indicating its possible. Selling elsewhere off setting it though right now. I'd give the benefit of the doubt to a push into the close though. Heavy volume once again today which, given where prices have traded is another bearish signal longer term.

Taking a beating

The markets continue to take a beating here revisiting the lows of yesterday. If there's a place to jump start a V'ish rally it would be from this area but it takes a lot of guts to step up to the plate with the fast ball being thrown like it is here in front of a weekend after an onslaught that has worn patience thin. Gut feeling is that someone will though as the money to be made fast is huge.

I'm making small adds to my core gold holdings but honestly this is getting old quick. I need some relief as does the general market.

Another market pillar starting to crumble

There has been the Yen carry trade. It's appears to be starting to end. The devaluation of the Yen may fool us again but this time, if you look at a chart, it truly appears as if it has put in a decent start of a bottom which would project higher longer term. That process will take a while most likely; like months but it's starting.

The other pillar, the weakening of the dollar has continued which actually helps big cap companies as it makes their overseas earnings that much more when repatriated.

The last pillar was all the M&A that was the result of cheap money and liquidity. No failed deals yet but a number of them on the ropes and money is definitely getting tighter so deals that have not happened are less likely to do so.

Which brings us to the thought that things are finally different; different in a more fundamental way. Unfortunately for myself I let the market wear me out mentally before the rewards were delivered on the bear side. When the big drop came; and it did come yesterday as volume skyrocketed to confirm the move; I was left watching rather than participating. Of course that's what makes it hurt that much worse. Knowing that the problems are out there and continuing to position for a coming fall yet not having the conviction to stay with it night and day month after month despite the knowledge that it's coming is very frustrating to say the least. Timing is everything in the markets as if you miss the mark on timing the rest of it just doesn't matter cause in the end its money in the bank that tells the story.

Futures starting to sell off again this morning. Yesterday was a washout and although we may trade lower today as well and mop up the remnants who can't stand the pressure, a heck of a bounce in just around the corner most likely which can be shorted. Stepping back and looking at a very large picture, if this is the start of a bear market sequence rather than a couple day pullback, there's still at least another 150 SPX points to give up over the course of a few months. The key words there is that "if this is the start of a bear market". That remains to be seen but the conditions are ripening.

To start the day Asia was down hard, Europe is bouncing a bit, futures are still falling as I write, the dollar is up big, oil is higher and all the metals are pushing lower. There's GDP numbers up an hour before the opening and a continuing of earnings reports. This is not a time to sell or to buy but to wait. We have to catch the next bounce for a sell which likely starts today or next week. Given the new lows list expansion it's likely to be a good bounce that doesn't last long.

Unwinding of Yen trade smacks the markets

There's word out that it was subprime scares, etc. That's been with us. The real problem is the Yen carry trade unwinding and doing so fast. That carry trade is the easy money that's been sloshing around. Will this be like February where they simply start afresh and the carry trade continues or is it somehow different. Clearly the risk is back in the market and my endless concerns for a sick market that has been propped up in the hospital bed for months now but dressed in silk suits has been undressed again.

My disappointment is that when the big one did come I, like many others probably, had no short exposure left on the table. They milked us dry and then smacked us hard. If there's any pleasure it's that we were not long the broad range of stocks that have been farmed out, but have a lot of exposure in the metals sector hurts just as bad short term.

Oh well, it's life and it's the markets and they are a bear to bet. If you were caught on the wrong side lately and if you didn't pare down exposure early enough, recognize that we are way oversold short term now and a good rush of buying is likely to ensue soon. Look back at the February charts, as this one will look the same. A rush higher and then some sort of retest. If it holds, then it's the old game again. If it doesn't, then the bear market finally will be in vogue. Realize we are later into the game now and problems of the past have continue to mount and multiply. Unfortunately the dipsters didn't give us that one more run higher than I had crossed my fingers for yesterday. Just when you need them, they disappear.

Hope you managed to make it through the day. Catch you in the morning.

Brutal!

This some of the heaviest selling and volume we have seen since February. I believe we are finally seeing a wash out here with the SPX down 30+. The whoosh back up is likely as a result. I have suffered greatly in my gold shares but have the resolve to stick with the idea that they work higher over the next few weeks and months. That's why you take some profits when they run and scale back in when they fall.

I'm still amazed to see APPL up $10+ in this environment when what they reported was not good going forward. I guess the charm of Jobs is to much to ignore. What a day already.

Fear starting to set in

Futures are down big this morning and given where the market is, this could be another attempt at a wash out followed by a bunce. There is real fear out there about everything unraveling finally and the sellers just keep showing up. AAPL looked to come to the rescue as that PR machine reported lower project sales and earnings yet the PR in the conference call took it up 12% after hours. This morning, the selling seems to come on no real catalyst. The only thing I see is oil heading higher again (kind of been the story for a long time there) and the Yen trade unraveling which has been occuring for a few days now. Maybe it's just emotions doing the market in as lots of profits sitting on this table although in many cases now, there's losses to cut on the long side as well.

Dollar stronger after Treasury intervention yesterday to prop it up, metals down again as a result. Bonds up almost a half point on the strengthening dollar and flight to quality out of stocks. Grains were strong overnight. Looks like another volatile day on tap. It's been that way all week and doesn't look to change just yet.