Today we looked at a 4% market rally which was one of the most predictable moves we’ve had in this longer term bear market as a bull flag was signaling a rally. The bull flag was on continuously lower volume each day, and eventually a break out was in place. HOWEVER, we do believe we are finally in overbought conditions as a lot of amateurs piled in at the end of the day, the market rallied up to resistance lines that we had in place, and we could probably start a sell off starting monday. We also try to educate our viewers into understanding which indicators are most important, and which indicators are considered more of lagging indicators. We look at some other charts such as GS, AAPL, XLF and SPY to determine that a pull back, will only be healthy for this 2-6 month rally that we have in store, and the pull back could reach as low as 74-77, but we will talk about that on monday once we have confirmed a sell off. The sell off could also just be another consolidation move lower on low volume. It is important to give the bulls the benefit of the doubt and to trade the sell off very cautiously.
Happy Passover and Easter!
For Those Who Have Had Enough
Take action. At least for your children’s sake.
http://www.anewwayforward.org/rally-list.php
Congrats Idan for your fine call yesterday. You won the argument.
Yes, good job Idan. I like your style.
thanks for all & happy easter xxx
you dressing up as a playboy bunny or what
if anyone shorts financials (except of a scalp based on DM) before GS report, then you are going to lose more money. I said the same before m2m week and it is just so obvious.
After GS, FAZ should reach it’s bottom and make for nice repeated gains and swings much like FAS. There is a ton of money to be made in Faz in the future but it will never be at 40 again, unless SP500 goes to 550.
The odds are more likely that you will be hit with falling plane parts.
I’m just trying to learn and want some clarification. Idan said that there is probability that there will be a sell-off Monday and eventually we will hit 820ish and bounce, or continue down towards 777-740 in the short term. What is going to sell off on Monday if it’s not financials? Should I sell pre-market Monday and then pick up my short again Tuesday at end of the day? Basically, I want to short and ride the pullback down, but what are you advocating for Monday and Tuesday? Thanks.
Chim Chim,
In my opinion, Idan’s retracement plays are good but he is even better at cutting his losses. I have noticed that he bails out when he is wrong and from that point on, the market goes in the way in which he would have incurred much more losses – smart trader. However, that is during game time and you are on your own then. So, you need to be nibble all the time. How you think now means very little regarding Monday at the market open.
That being said, GS reported bad very earnings in November and their stock went up about 1% that day (much like the AA story this week). Then, GS manage to change their reporting period to so that they report in April instead of March…..wow….gave them 4 months to get it all straighten out. These guys are the best…..don’t think otherwise for a moment. GS make the Jack Bower of the financial system.
Be assured that later day buying today was based on GS (buy on the rumor) more than WFC (buy on the news). That is what everyone is missing.
Bottom line, sell on the news after GS reports AND after you see the topping out. No point in going in before GS reports….that would be just stupid in my opinion. Idan is looking at the charts but ignoring the fuck-ta-mentals (sorry Idan).
Also, ignore overbought comments. It is relative and means very little in the face of government intervention.
PS: I am not a bull.
3min, I tend to agree with you, GS will blow the market away (Wed pre-market) and we should start sell-off Thursday or Friday (OE btw). Unless they disappoint, but it will never happen.
does not matter if GS dissappoint with earnings – still will not drop the stock much, if any. There is moment on the stock market floor when all the market makers look at each other and say….”now!?”….that is the only moment that counts and it is not prior to GS earnings or immediatelty after.
Separately, the only fear now is our civil unrest and the incredible wars that are in. I strongly feel that April will not end with out an incredibly horrible event between Isreal and Iran, and North Korea and the USA. These will change everthing, and change the momentum of Gold in its natural downward cycle to a new scream upward.
In the meatime…I just got a 4.5% refi.
Do you mean Tuesday? GS reports Tuesday before market opens. JPM 6:30 AM ET on 4/16 and Citi on 4/17 before market opens.
any drop is a bear trap in financials before Tues, midday.
I think your GS scenario looks very possible. I would be cautious about buying FAZ until late in the week or possibly even the following Monday (4/20) when BAC reports. That may be the all-clear signal to short.
You have a good grasp of market manuevering. Thank you for sharing.
Idan, Great call today! I enjoy your comments and videos!
I do have to wonder what would have happened absent the chaotic event of the Wells Fargo news and I guess there’s no way to know that. I would think that earnings announcements and guidance would always distort “normal” market activity and make accurate chart analysis impossible. Do you agree?
TomD
No, we were probably going up today anyway, albeit perhaps not as high! Idan points this out through the formation of the bull flag that had formed prior to this morning.
I agree, I was following the same bull flag very closely on my 60 min SPX chart and it was obvious that we were going to break out today first thing, but I never thought it would continue up afterwards. Another bull flag formed on the 5 min SPX starting at 9:05 am and when it broke out upward at 11:25 am the rally for the rest of the day was on big time.
Still didn’t see 11+ more points coming like a freight train, especially the way BAC took off. That was ridiculous. With gains over 30% it would seem obvious there must be some sort of pullback in the financials monday. I know a few people who got caught shorting after the initial gap up and now have big pain, they could use a 12-13% pullback to get out, but with a positive spin being pushed on everything . . .. . tough to see.
Congratulations Idan, you bet perfectely
It seems that TA is useless now. It makes me more sick than ever
I have to heal my wounds. Huge losses today
Tks
Idan used TA to make his call, and you congratulate him for it, but then you say TA is useless.
That makes sense.
No, it is not the point. Let me explain what I posted:
My post yesterday:
I am not bearish or bullish, only logical and following the charts. I am sorry but since you flipped to the bull side you analysis looks useless for me:
- AAPL, good call? How about the extreme overbought level that it has
- SPY – well for a very short term, like tomorrow, it can be bullish. More than this is suicide
Just to review some market sentiment indicator that had the bearish cross (MACD and STO)
- SP500 itself
- Advance decline line
- Zweig breadth thrust
- McClellan Oscillator
- Russel advance/decline line
- NYSE TICK
Are you kidding with us?
Idan’s response:
Again, my bulish views are for the couple days to come, I do believe a rally to as high as 875 could happen before we get a reversal. This pull back looks like a bear trap for another move higher. I rather stay slightly bullish.
AAPL could see 130, overbought usually means it will continue to rise, it’s when overbought conditions become not overbought that prices start falling.
Conclusion
For very short term, he nailed down perfectely
But it is the point. It is EXACTLY the point. You are TOTALLY missing the point, and that is why your comments make no sense. You berated Idan and said he was kidding with you because he used TA to present his view.
Guys like myself and Idan trade the moves, we get in and get out. That is accomplished using TA to try to determine very short term moves. Get it out of your head about labeling Idan a bear or a bull, or that he has “flipped to the bull side” He is a TRADER. That is what you cannot seem to grasp.
That is why it is nonsense for you to tell Idan that something may be bullish “for a very short term, like tomorrow, it can be bullish. More than this is suicide’. He knows very well that the price is going to move about, and he is going to play those movements as best he can to get profit from it.
What you are doing is calling a duck a duck and then you declare yourself right when everyone already knows it is a duck and nobody disagreed with you to begin with.
godman seeks new stock sell
http://online.wsj.com/article/SB123932742279007541.html
why the news is out before earning on Tuesday?
I have a feeling they are going to beat the est big time that is why they are diluting. Again just a guess…I donot want to be in front of the train this time around
Robert:
Did you really think that anyone of any size was going to fail the “stress test”? What test? Anyone know anything about a test? Just part of the game, like getting $200 for passing GO. We just don’t know all the rules of the game. The only rule I’m sure of is that me and mine are holding the bag and are ultimately going to get the REAL stress test.
someone wants to load big time cheapo before earnings. that’s why news is out – weak hands sell, smart money benefit
Idan, you notice how WFC pre-released their earnings ahead of schedule?!!! Get all the good news out before a leg down
I must be learning! I actually understand this statement and agree.
Bloomberg News
Job cuts needed to stop NY bankruptcy: mayor
Sweeping layoffs of government employees are needed to prevent New York going bankrupt, Mayor Michael Bloomberg said Thursday.
http://rawstory.com/news/afp/Job_cuts_needed_to_stop_NY_bankrupt_04092009.html
Great job. Idan. My initial view when GS and MS delayed earnings was “this MUST be bad.” Conversely, companies advance the earnings release when the news is good. Now, I’m not so sure. A worst case for bears would be GS blows away earnings. GS issues new stock at its highest price. Markets continue to rally in advance of MS earnings the following week. Then, a reversal. Of course there will be pops and drops along the way. AAPL doesn’t report until April 22. AAPL likewise closed above the 200ma yesterday. .
http://stockcharts.com/charts/gallery.html?aapl
Does it look overbought? Sure. But on a wider view of the daily chart, a case could be made there is no significant resistance up to 144. Crazy.
I’ll see what develops Monday and go with the flow.
Congratulations on the dead on call Idan. I strongly believe that there will be a slight pullback on Monday for consolidation only. GS will release earnings on 4-14, JPM on 4-16, C on 4-17, BAC on 4-20 and WFC on 4-22. All these banks will take advantage of the m2m and most likely beat the estimated earnings which will result a rally. The pullback may happen after all of these earnings but the evaluation of the bank stress test is to be released on month end. Govt intervention and manipulation will show that all banks will pass the stress test. Passing the stress test will cause another rally. Unless M. Whitney actually appears in CNBC again and inform that the normal public is manipulated I really do not see a big pullback happening anytime soon.
Any feedbacks will be greatly appreciated.
El Guru,
I agree that we will most likely rally due to the banks putting a postive spin on their earnings next week. But it all depends on how you define a “big pullback” and the word “soon”. I think we dip Monday and then continue up on Tues and reach the 880 s&p range, max 915 before having a big move down. I think we can then head back down to the 800 to 820 range from there before continuing its uptrend. Going back to how you define a big move. To me roughly 80 points in the s&p is a big down move when you are holding onto positiions for short periods of time. It’s not a big move when comparing it to the likes of what was it 10+ consecutive down days reaching the lows of 666 but a big enough down move nonetheless. Its a move big enough to make a good profit or to severly cripple your account. As far as the word soon goes, many on this board daytrade so its kind of vague. But I can certainly see the market make this decent sized move the wk of the 20th which some would call soon and to daytraders ages away. As far as the stress test goes, I dont think all the banks will pass it or the public will look at it as the gov spitting out a bunch of bs. But most if not all of the “major” ones will look to be in good shape. Some have to fail and it will be the little ones in trouble that we have heard of but dont bank there. The ones that probably wont effect the market too significantly. Its the governments “psychological stimulus” plan to have most of them pass.
Following on the circumstantial evidence track, as Zero Hedge pointed out previously, over the past month, the Volume Weighted Average Price of the SPY index indicates that the bulk of the upswing has been done through low volume buying on the margin and from overnight gaps in afterhours market trading. The VWAP of the SPY through yesterday indicated that the real price of the S&P 500 would be roughly 60 points lower, or about 782, if the low volume marginal transactions had been netted out. And yet the market keeps on rising. This is an additional data point demonstrating that the equity market has reached a point where the transactions on the margin are all that matter as the core volume/liquidity providers slowly disappear one by one through ongoing deleveraging.
Unfortunately for them, this is not a sustainable condition.
As more and more quants focus on trading exclusively with themselves, and the slow and vanilla money piggy backs to low-vol market swings, the aberrations become self-fulfilling. What retail investors fail to acknowledge is that the quants close out a majority of their ultra-short term positions at the end of each trading day, meaning that the vanilla money is stuck as a hot potato bagholder to what can only be classified as an unprecedented ponzi scheme. As the overall market volume is substantially lower now than it has been in the recent past, this strategy has in fact been working and will likely continue to do so… until it fails and we witness a repeat of the August 2007 quant failure events… at which point the market, just like Madoff, will become the emperor revealing its utter lack of clothing.
So what happens in a world where the very core of the capital markets system is gradually deleveraging to a point where maintaining a liquid and orderly market becomes impossible: large swings on low volume, massive bid-offer spreads, huge trading costs, inability to clear and numerous failed trades. When the quant deleveraging finally catches up with the market, the consequences will likely be unprecedented, with dramatic dislocations leading the market both higher and lower on record volatility. Furthermore, high convexity names such as double and triple negative ETFs, which are massively disbalanced with regard to underlying values after recent trading patterns, will see shifts which will make the November SRS jump to $250 seem like child’s play.