when there are more BUYERS the stock goes UP when there are more SELLERS the stock goes down. PERIOD … notice I didn’t mention anything about anything else because, quite frankly, NOTHING else matters. It could be the smartest MBA in Finance or CFA or the geekiest CMT on the planet using all kinds of technical indicators to show divergence, bollinger band breakout, moving average indicator w/ RSI or blah f’ing blah …. just find your edge, believe in your edge and invest w/ your edge. in the end, we are playing cowboy and indians shooting mouse clicks at each other. put your cowboy hat on or your indian out fit and go at it …
I love this quote from the Bible Luke 12:7: “Indeed, the very hairs of your head are all numbered.”
why? well, on a chart that is all we have until we start bastardizing them w/ all kinds of useless lagging indicators. We have a NUMBER for PRICE and a NUMBER for TIME.
so, we have PEOPLE (machines) who are buying and PEOPLE (machines) who are selling. (Machines can’t help be affected by the greed of the person who coded it) those people are governed by EMOTION and EMOTIONS go UP and they go DOWN. So, IF (the big IF) EMOTIONS fuel a move and NUMBERS are graphically showing the move then we can put the two together and develop patterns that show EXTREMES in emotional behavior. this is the nature of parabolic moves.
“calling” or “picking” tops has proven to be tough if not impossible … HOWEVER finding areas of potential tops/bottoms helps and then a STRATEGY to potentially take advantage of the inflection is a gameplan. (see Sugar post for an example)
the Greeks knew it, the Egyptians knew it and it’s the old “yin yang” coming right at ya … EXPLOSIONS up and down lead to corresponding moves in the opposite direction. It’s proven time and time again … parabolic moves are followed by devastating corrective moves.
Now to $TSLA … this thing isn’t parabolic, it’s a ROCKET SHIP…good on them, holy smokes and KABOOM this thing has gone into orbit. as a market musician coloring pictures and going to 3rd grade geometry. that scares me like anything else out there …
here are some potential targets, but this move is OVER and what’s another 10% in the intervening 50+% correction that will be forthcoming.
my first signal would be a MONTHLY signal reversal candle. NOTE IT HAS NEVER GIVEN ONE SO UNTIL YOU GET ONE KEEP RIDING THE ROCKET SHIP.
But, like fighting 1v1 in a high performance fighter the real threat becomes FUEL after a while. you can’t stay in after burner forever … you’ll run out of gas and flame out, just like this high flyer.
when I was flying and someone might have had a particularly bad night landing at the ship or performed the mission badly, invariably, someone would say “well at least your not eating pumpkin soup!” the Vietnam POW’s (God Bless Them All) had as one of their main meals the wonderful bowl of pumpkin soup…
so, perhaps I am eating pumpkin soup w/ regard to my analysis of the Great British Pound. I have NOT deployed capital even though I went to “pull the trigger” a couple times. the 200+pip move engineered by the FED on QE day warned to stay away. as noted, the original target was BLOWN THRU and then found some resistance in teh 1.6140-1.6177 area. I have included the ratio’s responsible for this (in my mind)
now, what to do … I can see a target in the 1.6331 area that I will now be hawking. we have exploded almost straight up since July w/ intervening orderly corrections. the trend line making the bottom of the multi-year triangle has now been opened and closed above (bullish) and, as of this AM, it’s still showing signs of strength.
my gameplan: wait for a sell pattern to appear on a lower, intra day timeframe ELSE wait for upper target in the 1.6300’s to be attacked. If that level is taken out I will go back to the drawing board and call my e
ntire analysis of the pound over the past 1.5 years as WRONG. 🙁
as hard as I try … it’s simply hard to not get caught up in the emotion/hope and chaos of the IPO. WE ARE ALL HUMAN!
Let’s face it … FACEBOOK has changed the game.
I spent last week at the Mid Atlantic Digital Marketing Summit and I was blown away by digital media and the incredible connected nature of our being – right here, right now. WOW … and, guess what, Facebook did it ….AWESOME!
so ( as a BEAR), when they went to IPO,I honestly thought they were like BLACK ROCK (BK) and thought … “this IPO will signal a top in the market.”
Well, as you my faithful readers know …it didn’t call a top in the market….
I was flooded w/ calls about “getting in the IPO of Facebook” and I told EVERYONE to “be patient, a buy will appear.”
So…this being BARTSCHARTS (thanks Kathy) here is the real time email traffic to my institutional clients:
V50 Capital Management, LLC provides investment management and signal services for Commodities, Options and Forex investments. Note: Commodities, Options and Forex trading involves substantial risk, and may not be suitable for everyone; trading in these markets should only be done with true risk capital. Past performance either actual or hypothetical is not indicative of future performance.
V50 is NOT a registered securities adviser – the information/ opinion we provide in regards to Securities, Mutual Funds, ETFs and or Bonds (SEC regulated markets) is an uncompensated opinion; you are free to use this opinion in any manner you choose, and in no way affects the terms of service provided by V50 in regards to your managed Forex/ Commodities account.”
Update: looks like the level has held so pay attention to FXI in the coming days.
DEFINITION (BART’s) for the circle of life – fixed income, FX, equities (global and conus) and commodities and their symbiotic relationship.
in this case, we have a BUY pattern coming in a little lower on the AUSSIE vs the USD. The following three charts show how you can diligently walk thru finding a pattern by projection, extension and retracement. Here’s the flow in chart form:
as you can see above, after a rather strong move up – after quite the beating – we have a normal/controlled and pretty unremarkable pull back in the AUSSIE vs the USD. I say all that because this can sometimes be a rare occurrence. My specialty is the SPOT FX market … I like to call it the wild wild west. That being said, the patterns do work in this 3-4 Trillion Dollar/Day market.
An opportunity is simply presenting itself to manage risk. NOTHING more and/or nothing less. The pattern works or it doesn’t. Our job is to find these type of patterns and determine, beforehand, how much we are willing to risk. Because, in this world of investing/trading the ONLY thing we can control is how much risk capital to deploy. After we have entered the market, we are playing w/ dynamite being thrown by caged gorilla’s and, guess what, we are in the cage…
now, seeing this very nice level, we can now put this into the context of the intermarket world … perhaps you are aware and/or perhaps not but the AUSSIE’s do a lot (OK, probably a majority) of their trade w/ CHINA. Now, take a look at the correlation of FXI (ETF for CHINA LARGE CAP) and AUSSIE vs USD. Pretty nice and, it’s safe to say, by looking at the chart below that nice swings occur when both of them find inflection points.
so, what can we surmise …
IF AUSSIE level holds and the AUSSIE goes UP vs the USD then the Chinese market should follow higher …
IF AUSSIE level FAILS and the AUSSIE goes DOWN vs the USD then the Chinese market should follow lower …
advanced pattern recognition in the intermarket circle of life ….
rock on, always
if you have the time, please read this post: http://allstarcharts.com/are-staples-the-key-to-this-market/ . You’ll note that I incorrectly saw a triangle and expected the market to roll over once the break out occurred. that analysis was wrong … however, the market went UP when the ratio went down — exactly like it’s used to. We are now approaching another pattern point here … the chart below shows how critical the time component has been w/ these corrective moves and also the beautiful BUY pattern we have approaching — If this pattern works then we should see the equities go down as this pattern works … if not, then the trend UP in equities will continue. To review, here is the pattern we are watching:
since a picture paints a thousand words and, quite frankly, I’m beat tonight I’ll SHOW you why this ratio has proven to be so accurate in the past. bottom line, every MAJOR MOVE since 2000 has been inverse to the move of this ratio. it’s almost EXACT ….I’m just going back to a weekly chart. see the above link for the monthly look.
as a advanced pattern recognition trader dealing w/ probabilities I think this level on the ratio will tell us EXACTLY where we are …. stay tuned and monitor closely.
first off, I love the company GOOG. what amazing innovation, passion, creativity and, most importantly, the ability to create a word into a lexicon like Seinfeld – yada yada blah blah blah. so, before I show the SELL pattern that has appeared, let’s go back in time (remember this is no “could of, would of, should of) to show the BUY recommendation. here it is w/ all of it’s geometry. note, there was a 20 point difference in the two levels I was hawking (a Naval Aviation term — HAWK TANKER was when someone was boltering all night (couldn’t land) and the hawking tanker would (very stealthfully) hawk the poor bastard who couldn’t land to save his life. ) Anyway, 20 dollars is a pretty big margin of error, but here’s what I saw coming into the low ….
hit the target and off we went …. recent action (say the past 5 months) has been stopped by the 925 target. here’s a quick look at the potentiality of the 925 area being significant:
A short was and still is being worked w/in the levels depicted and as we approached the potential area here’s the projections:
here’s the “real time” intraday look at the fill and, also, the BEFORE THE MARKET OPENED gun shot up to the 925 area and then the retreat …. interesting, to say the least. (sorry about the black background — again, this was real time)
here’s the picture as of today …. looks like 850 is going to be the line in the sand …..
our S&P post last week of parts I-V spelled out the overall look and feel for the S&P as we approached and eclipsed new highs … we took a look at technology, financials and energy. additionally, throughout the past weeks, we have walked thru the circle of life for fixed income, the dollar and certain commodities. Additionally, we looked – globally – at the current state of affairs for the other equity indexes. this blog post will be a quick update to where I “think” we are and some key levels to watch over the next week …
- Financials: a pattern did complete at the high for XLF at 20.92. Higher targets also remain from 21.50-22.20. Would really like those “higher” targets to be attacked to get a true feel of the market but, for now, realize 20.92 could be it on the financials. if this is complete, then it does not spell “good” for the overall index.
- Energy: as we showed in the last post a potential terminal target remains higher in around 97 on the XLE. However, we also showed at pattern completing in/around 85.20. that has hit and a break below 80 (weekly close below) would not spell “good” for the overall index. Crude sold off on Friday and the real test will be it’s “return to the top of the triangle trendline” to see if it bounces for the higher target shown in the past. the $XOI and $OSX are also showing weakness at targets described in the past.
- Technology: I am breaking down the overall technology look into the NASDAQ index (NAZZIE). if you look back at the “technology” post from last weekend you’ll see that we still have some higher targets 30+ points away. Too early to tell if Friday was a high but would, again, certainly like the upper targets to get hit and for all three of the major components of the S&P to go down together.
- I still feel that the “big guys” are going to “tip” their hand and “try” to rotate out of the high flyers and into the staples (deodorant, tooth paste, water, etc.). I am watching this ratio like a hawk. This is a perfect set-up for a BUY of the ratio which sets up a (HISTORICALLY) SELL on the S&P. That target is a little lower and, again, would really like to see that level hit/targeted.
- Last, I had the WONDERFUL chance to train w/ Joe Dinnapoli of www.fibtrader.com a couple years ago. Wonderful training and very very important information on the “internals” of the market and it’s structure and the importance of liquidity in the world of program trading, micro trading, the bid-ask and the false injections of cash that has occurred w/in the house of cards this market has produced. Take the time to watch this series of videos: http://www.youtube.com/watch?v=MQed-Aqay5w I also ask you to take a look at the picture/explanation in part 2 of 5 and in/around 10:38 and 13:01 for part 4 of 5. The series is a couple years old, but still so extremely valid and important. If you read my post a couple hours prior to the FED announcement you’ll find that I correctly surmised that the QE would continue … believe it or not, sooner or later, the illiquid nature of todays market will, ultimately, put us at risk for a potentially major move. This is ONLY a probability and one that has, more than likely, a low chance of ever happening. But education around potentialities isn’t so bad, is it?
I AM NOT DESIRING OR CALLING FOR A CRASH OR ANYTHING LIKE THAT …however, the market has been propped up by trillions of dollars and, therefore, liquidity is an issue. If this is an issue then why not put some of the profits in the bank and let some or a little ride?
What if this DJIA chart is correct …. ?
my buddies and I enjoy buffalo wild wings and the UFC night …. the energy is amazing, the beer is cold and the wings aren’t bad …. everyone gets fired up as Bruce Buffer does his amazing introductions and then, at the last minute bellows “IT’S TIME!” Well, folks “IT’S TIME” to see what “the Creature from Jekyll Island” has in store …not knowing a thing about the fundamental theory of economics (is the ramifications of printing trillions of dollars in ECON 101?) I ALWAYS go to the charts …
again, trying to give some background on the PATTERNS and the charts I have included the chart of short term interest rates below. If you remember, there was a time when they were RAISING INTEREST RATES … at the time I was asked to start “charting them” so I did and as we came into a very important FOMC meeting just like today I said, “nope, they are done raising interest rates.” Why? Well, to me it was a simple as our .786 retracement level ….
I actually have a chart as the interest rates hit the .786 level and I’ve spent the past half hour searching “interest rates” thru folders and can’t seem to find it …bummer. note on the chart above the divergence present and the patterns that existed. bearish divergence into a .786 retracement is “usually” a sign of resistance. Plainly there for us all to see ….
I also like to track the “30 day Fed Futures”
note, not sure if that pattern can every complete because to go above 100 would mean interest rates are (-) so … consider this pattern complete (?)
It’s time … interest rates are at zero, IMHO we have a “house of cards” recovery and the ONLY direction we can go is UP w/ regard to yield/rates. HOWEVER, in the context of an amazing 30+ year bull market in the fixed income world we have reached the “normal” and “standard” correction that has existed since the beginning of this bull market in the 80’s. We do have one more correction low that “could” happen so perhaps a little lower is in the cards. what’s really fascinating to me w/ regard to the FED FUND futures chart is it hasn’t budged. the traders of the world don’t think anything is going to happen …
Per my post a week or so ago on bonds the BUY of BONDS (sell YIELD) is the side of the market I want to be on ….
for information on the FED FUNDS futures see: www.cmegroup.com/trading/interest-rates/files/IR-143_30_Day_Fed_Funds_Futures_and_Options_Fact_Card.pdf
in my last post for the pound at: http://bartscharts.com/2013/09/12/the-great-british-pound/ I laid out the case for my analysis pointing to a wave 2 top followed by lower prices. I had the C? put in around this area. Well, believe w/ FOMC meeting today that we’ll see this area attacked and the nature of the move to come will become apparent. I have not entered, yet as I watched most if not all the targets get hit. The final ones are in the 1.600-1.6046. Here’s the updated chart:
swings on this puppy have been extremely nice ….charts below.
just follow the bouncing ball …
note, now we have completed the equality of swings and the level held at/around 41.