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Name: piazzi

Web Site: http://www.markettimepremium.com/

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S&P 500 – June 4, 2011

Written by piazzi
June 4th, 2011 at 7:10 pm

In this post of May 20, I used Market Time Premium‘s proprietary weekly Momentum Cycle, OEW aggregate trend, and Market Alignment Index indicators to sum up the state of S&P in 4 words

 

“Structurally positive, but weak!”

 

 

In that same post, I said:

 

“It’s not a disastrous situation. All three indicators are still above zero denoting a positive tilt to aggregate trend (as measured by OEW) and aggregate structure (as measured by MAI). The weekly momentum cycle we just saw is also above zero (dropping but above zero). So the situation is not terribly negative, but it reeks of internal weakness, like a patient with a serious yet curable disease. The cure of the market’s disease at this time is money deployed on the bid side.”

 

It seems like our proprietary indicators were correct spotting structural weakness 2 weeks ago

 

Let’s look their current status

 

Weekly momentum cycle (red graph) is still pointing down

 



 

 

Notice that the price low of March has so far not fetched a momentum low. Price has now dipped to an important area of support (1295-1305). A break of this area may accelerate selling and make the March low susceptible to a retest or even a break.

 

This is a daily chart with OEW aggregate trend, and Market Alignment Index (MAI) indicators

 



If you compare the current status of chart above with its status of the post of May 20 you will notice that the indicators have deteriorated rather significantly.

 

These indicators measure aggregate trend and aggregate price structure of all constituents of the index. Deteriorating structure cannot hold price and that’s what we warned then and that’s what we see now.

 

The only somewhat positive is that, while mid-term OEW and daily MAI have dipped below their respective March lows, price itself is still above its March low. This is price positively diverging from structure at this point. Will that lead to a bottom good enough soon for at least a tradeable?

 

All I can say is what I said back in the post of May 20:

 

Market structure reeks of internal weakness, like a patient with a serious yet curable disease. The cure of the market’s disease at this time is money deployed on the bid side — We need buyers.

 

For me to take bulls seriously, they should take a very small first step and get a swing low. They should then take a very small next step and get a short-term uptrend. After that, we’ll see how good they are maintaining a short-term uptrend and squeezing the shorts.

 

posted by piazzi

http://www.markettimepremium.com/

 

 

 

 

 



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S&P 500 – May 20, 2011

Written by piazzi
May 21st, 2011 at 6:54 pm

Structurally positive, but weak!

 

This is a weekly chart with cyclical momentum overlaid

 



 

It’s 9 week since the low of March and we still see no sign of a turn in cyclical momentum. I have talked about structural weakness using OEW and MAI indicators. We can also see momentum weakness

 

If we zoom out

 



 

We see that, in most occasions, momentum lows (or peaks) precede price lows (or peaks). In fact, going back many years, a 9-month momentum is not an ordinary occurrence.

 

This is the chart we have been using for OEW and MAI indicators

 



 

I have said a number of times that these indicators have to uptrend and get to the top of their panels. This is not what we have been seeing. In fact, the peak of early May was accompanied with a lower peak for mid-term OEW as well weekly and daily MAIs.

 

It’s not a disastrous situation. All three indicators are still above zero denoting a positive tilt to aggregate trend (as measured by OEW) and aggregate structure (as measured by MAI). The weekly momentum cycle we just saw is also above zero (dropping but above zero). So the situation is not terribly negative, but it reeks of internal weakness, like a patient with a serious yet curable disease. The cure of the market’s disease at this time is money deployed on the bid side so that we start seeing uptrending OEW and MAI indicators, and, eventually, a turn in weekly momentum cycle.



posted by piazzi

http://www.markettimepremium.com/

 

 



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Precious Metals – May 7, 2011

Written by piazzi
May 8th, 2011 at 10:11 am

This is the current Stage and Trend table

 

 



 

———————————————————-

 

“But did thee feel the earth move?”
— Ernest Hemingway (For Whom the Bell Tolls)

 

———————————————————-

 

Did you see how the earth beneath silver move?

 

Tectonic if you ask me.

 

Let’s do a post mortem

 

Let’s review the anatomy of the tectonic move

 

I posted this chart in the premium post of April 22

 



 

And said:

 

“Because of parabolic nature of silver’s rise, it is hard to pick tight exit points based MAs

 

One thing I personally would do is to switch from any leverage double ETF I might have into a single ETF like SLV. Another think I could do could be selling some out of money call and buying at money or close to money puts. I could also use a 60-min chart and use its MAs or successive short-term higher highs as stops. This has been wonderful ride. I don’t want to just sell out and leave, but would like to keep as much as possible and having some sort of trailing levels is one way of doing that. Using options with part of the position can help as well.“

 

When one makes 50-50-70% or so, a 5-7-10% put and selling a 2-3-5% call does not hurt much, does it?
In the premium post of April 27, I said this for GLD:

 

“I will keep trailing the price till it breaks me out of my position. I am thinking of 13-21 EMAs as immediate support. I can alternatively use the small uptrend line as my immediate support. I have marked the trend line with a red arrow. I am picking 144-145 as my immediate support level for now.”

 

and this for SLV

 

“I have 42-43 as immediate support. There all all sorts of opinios where silver would go from here. From the uber-bears that have been saying a crash in imminent for months and months to those who see it at 100 or 200 dollars an ounce.

 

To each his own is my motto

 

I personally just want to make sure that I have a position that I can handle and just let the market get me out. I can easily sell calls and perhaps buy puts and set a collared position with options.”

 

In the premium post of May 2, Isaid:

 

“We seem to be having a correction getting started in PM ETFs. In fact, PM mining ETFs have been behaving poorly for quite some time falling out of step with the metals.”

 

In the same post I showed this chart

 






 

And said:

 

“One issue with accelerated trends and vertical moves is that they become hard to count as they do not correct enough to form discernible swing/waves. Another issue is that they can correct sharply and deeply and still maintain their larger trends.”

 

and

 

“I have support for SLV around 40-41. I would become seriously suspicious of SLV’s prospects if 40 fails”

 

Did I for sure know there was a top pending to unravel so soon? No.

 

But that’s what risk management and a bit of common sense is for. Any premium one might have paid on puts after building in 10s of percentage of profit would just be a nominal insurance fee. It’s easy to get caught in the euphoric moment and look for lofty and loftier targets. It is just as easy to forget about risk and risk management.

 

Notice that on the chart I had marked two shorter-term trend line with red arrows. Notice that they are quite a few point down from where price was. That’s how much technical drop a trader needs to put up with just to see if the short-term uptrend holds or not. As I mentioned to a subscriber via an email:

 

“my goal is to capture 60-70% of the trade

 

trailing stops, occasional pruning for size, buying outs, selling calls, stuff like that can help me reduce my anxiety”

 

In hind sight we know it all. we are oracles of the past. The future, well, I think only prophets and delusionals know the future. To borrow from Alexander Elder, we not get the luxury of trading the ledt side of the chart. We must act on the right side of the chart and there no certainties on that side.

 

That reminds me of this quote of excellent insight

 

“The sharp edge of a razor is difficult to pass over; thus the wise say the path to Salvation is hard.”

– From Katha-Upanishad aka Death as Teacher

 

—————————————————————————

 

So we got to be saved and keep some profits by being prudent, but what now?

 

Silver is in an OEW mid-term downtrend

 



 

A first area of support is the area of Minor (dark blue) wave 4, which is 27-30 area. There may be quite a few shell-shocked longs trapped all the way to to the top and that may create a sizable overhead supply causing a dragged-out correction

 

GLD has not confirmed an OEW downtrend yet

 



 

GLD has dropped to 13-wk EMA, on heavy volume. I think there is a good chance that after the hurried dash we had to dump SLV and GLD, we get a low soon and an attempt at a bounce.

 

This is a daily GLD

 



 

GLD is not in a confirmed mid-term downtrend — not yet, anyways. But that may be very small comfort as GLD can drop to 140 without threatening the current mid-term uptrend. I think GLD is lagging SLV the peak of Major (black) 3 wave. I think GLD is in a Minute(green) 4 correction, and will have another attempt to at least challenge the high. This drop may be just the first leg of a correction, but if GLD has not peaked its Major wave 3, then it is very likely that it will not confirm an OEW downtrend just yet

 

I shall be proven wrong about my thinking if GLD makes it below 138-139, some 4-5% lower from here. If that happens Major 3 is in and we are correcting major 4 and GLD has been in sync with SLV and I am wrong.

 

If I am right, I may get a good push up to challenge the prior high. So, 138-139 is the cut-off for any trade from oversold conditions. Notice that GLD came to rest on an uptrend line that started late Jan 2011 which also coincides with 55-day EMA. I would be taking a trade if GLD moves below the trend line while having 138-139 in mind as a stop

 

I humbly suggest that new subscribers read the three precious metal premium posts of

 

April 22

 

April 27

and

 

May 2

 

That is the way I look for clues and make different scenarios as I deal with the uncertainty of the future. I am not a guru. I do not believe in gurus. And I am the first to admit that I have no knowledge of the future. All I have is a simple knowledge of charts and a desire to identify risk levels and scenarios.

 

I have launched a MIDAS resistance curve (yellow) for GLD. It’s currently around 139

 



 

The channel on the chart is an adaptive channel and its mid-line is 55-day EMA. The lower boundary of the channel is around 131 at the moment. If this is not Minute wave 4 as I think it is, and if it is Major wave 4, I would expe

 

PM mining ETFs started acting poorly way ahead of PM metal ETFs.

 

Many times I have said as long as gold does OK the rest of the PM area may get by somehow. I have also been saying that I would want “more than just getting by”.

 

When gold finally started its correction, which we suspected and mentioned in the post of May 2, all hell started breaking loose.

 

We had repeatedly noted the poor performance of PM mining ETFs. On the MAI chart of those ETFs. I had said that there was room for improvement and that composite trend (as measured by OEW indicator) and composite posture (as measured by MAI) was not acceptable as they were. The internal trend and structire of the ETFs components did not improve, and when gold finally petered , they stopped getting just by and fell.

 

GDX

 



 

GDX was doomed when it broke out of the double fork to the downside.Daily resistance is at 59 and then 61

 

GDX’s McClellan has fallen to oversold levels

 



 

Notice that since Feb 2010, the area around 233-day EMA has absorbed corrections. I have marked past occurrences with black arrows. GDX is at 233-day EMA righ now. Failure to hold now, or after an oversold bounce may send GDX into a fast a furious drop.

 

MAI and OEW indicators have taken a hard beating

 



 

In the post of May 2, I said:

 

“For quite some time, I have been saying that both daily and weekly MAI needed improvement. GDX could never improve those. Now, we have mid-term OEW dipping which means some of the constituents have entered into confirmed downtrends. This is not a disaster yet, but it is hanging on to neutral and urgently needs buying to turn things back up”

 

So, the buying, which was needed urgently, did not come and the neutral situation broke into a disaster.

 

Now, OEW is dredging the bottom of its range. That means most of its components are in mid-term downtrends.

 

I was curious to see who might still be in a mid-term uptrend because they may, I emphasize may, be good candidates when teh PM area firms up to run for another uptrend

 

The ones that are still uptrending are

 

EGO (Eldorado Gold)

MFN (Minefinders)

RGLD (Royal Gold)

TRE (Tanzanian Royalty Exploration)

 

This is not a blank check to go and buy these but a possibly interesting situation of some miners still hanging on to their uptrends. I leave it up to you to do further investigation in those or any individual miner if you are interested to monitor individual stocks

 

The other mining ETFs are in similar situation: broken down prices, and oversold internals

 

GDX’s weekly MAI is down to neutral. It would good if it could stay above or around neutral as GDX works on some sort of a bottom

 

GDXJ

 



 



 



 

Weekly MAI is down to neutral. It would good if it could stay above or around neutral as GDXJ works on some sort of a bottom

 

SIL

 



 



 

SIL’s McClellan has just crashed into deep oversold.

 

Almost all components of SIL are downtrending

 



 

The only ones still hanging to their mid-termuptrends are

 

MFN (Minefinders)

OKOFF (Orko Silver)

 

Again, this is just an observation and not an endorsement of any stocks. If you are interested in picking stocks, you can take a look at the technicals for yourself

 

All three mining ETFs fell out of the forks I had going. Let’s have some down swing forks

 



 



 



 

There is hype, propaganda, conjecture, and there is the cold hard facts of technicals and price levels.

 

For every ounce of gold, there are tons of experts. Some say gold will crash to pennies, some say there shall be backwardation widening upward from here to eternity, and some say so many other things that fall between those extremes.

 

I shall ignore them all and play my own game and manage my own risk. That policy has served me well — so far!

 

In a post of April 12, when things looked good and healthy, I said:

 

“So far, so good, but complacency is not an option, it will be an abomination — outright sacrilege to let fat profits evaporate, or, even worse, turn to loss.

 

This is a volatile area, 10-20% drops or more are just routine and common place. If I were losing sleep over it, it would mean that I had more skin in the game that I could handle being peeled by the market. I would reduce for size, or set partial stops tight to reduce for size so that I could sleep well. To me not losing money is more important than making it — I like to sleep well is what I am saying “

 

That is the bottom line of my approach: manage risk and let profits take care of themselves

 

Enjoy the Rest of Your Weekend!

 

By Piazzi

http://www.markettimepremium.com/
——————————————-


Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. All information included in Market Time Premium reflects ongoing thoughts of Market Time authors about market-related issues, and is prepared for educational purposes, and is presented as authors’ observations, and is not a solicitation, or an offer to buy or sell any security or use any particular system. Information is based on historical research using data believed to be reliable, but there is no guarantee as to its accuracy. Market Time Premium, its author(s), and its affiliates do not represent themselves as acting in the position of an investment adviser or investment manager. Market Time Premium, its author(s), and its affiliates shall not provide you with personally tailored advice concerning the nature, potential, value or suitability of any particular security, portfolio or securities, transaction, investment strategy or other matter. From time to time, Market Time Premium, its author(s), and its affiliates may hold positions in securities mentioned, but are under no obligation to either divulge or hold such positions.



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S&P 500 – October 30, 2009

Written by piazzi
October 31st, 2009 at 12:55 pm

Trend day down. Trend day up. Trend day down.

This is a day trader dream

What happens really is that market sells with force and we get a nice down day. Then dip buyers come in at oversold conditions to roll their dice at glory, and we get a nice day up, but they do not do so on huge volume. Sellers re-appear and crush the dip buyers into losses. And it goes on until either sellers stop and join the dip buying party (end of correction), or dip buyers get the message and start looking for bounces to get out of mounting losses. The latter is the situation where oversold stays oversold and bounces never bounce high enough for those trapped because of their dip-buying excursions. Then, overhead supply builds and resistance levels mount and things get really ugly

So, if this is going to be just a correction, buyers should force it into a turn soon.

Regardless, judging by the volume of the recent declining days, and the force and fluidity of today’s dump, dip buying is something I’d rather not do at this point. Let the real champions pick the bottom!

This is a 15-minute chart of the index that I showed on my blog on Thursday.


The amazing 20-point run of yesterday had taken the index to a point where a perfect channel could be drawn. Today, all of that bounce was given back, and then some. The channel I drew yesterday held to perfection. Sometimes, we get it right

Today felt as if Thursday did not happen. But wait a second! Didn’t I say the same thing last Friday in the blog post of October 23? Friday, October 23, also wiped off an impressive bounce of its preceding Thursday. Seems like people do not want to be stuck with stuff over the weekend

Anyhow, if the count in the chart above is correct, we may be close to a bounce for a minor wave 4. There may be a bit of residual selling early next week before that.

Note that I can count the above chart in other ways as well. I just went with this one because I like its momentum profile and MA alignment. But, as usual, I shall try not to get caught in short term counts and shall pay close attention to important levels and trend lines.

Speaking of important levels, bulls lost the 1041 level. They also failed to prevent a close below 55 EMA



Index also closed below the broken March trend line with an emphatic candle on expanding volume. It just does not look good for the bulls. Can they redeem this? Of course! They, as we have been saying for days, need to spend money across the broader market.

Daily volume was heavy. Breadth was ugly!


The last time down volume trumped up volume like this was October 1. That selloff proved to be the washout event and bulls came back albeit at pathetic volume. This time, breadth has deteriorated further and the lead up selling has been at higher volume that it was prior to October 1. So, the situation is a bit more hostile to the bulls. We’ll see.

McClellan Oscillator (MO) is mired in oversold territory


You need to go back to February to see comparable behavior from MO

This is one of my favorite breadth charts


Short term breadth is very oversold


Many a moon ago, I was saying that the bears of the last drop had no significance in the course of the market action, and that market needed new bears with capital and conviction, and that new bears would have to come from the ranks of well fed bulls. I repeated that almost daily and constantly advocated watching for signs of distribution. We have been seeing heavy distribution for days in a row.

So far, market has delivered two good bounces off short term oversold conditions. Both of them fizzled and market got even more oversold. But have bulls really changed sides? Have the fat cats finally said that it’s over. I don’t know. All I know is that, if there still are bulls and green shooters out there, they should deliver a rally soon with a chart like above. Failure to do so will be very telling. TRIN MAs moving like that can make the environment very unfriendly to bullish aspirations.

A study of S&P’s cyclical momentum helped me plan ahead for a possible peak. It also helped me take a short stance near the recent peak with relative confidence.

This is an updated chart


CCurve is at a critical juncture. It is sitting on its uptrend since July. I will regard a break of that trend line as a second piece of evidence for magnitude momentum swing failure at the recent price peak, and may plan to get more aggressive on the short side. If it turns and make a higher peak than the last peak before making a lower trough, I will regard it as an indication that another momentum up cycle may be in the works, and may become wary of the short side.

VIX finally broke out of its down-sloping channel


It is at a long term level of resistance, and I wouldn’t be surprised if it ebbed back. Regardless, if it starts an uptrend, it would be supportive of a downtrend of the broader market.

—————————–

Hypothetically, assuming rather foolishly, if the market has topped (at least for a good correction), what can I expect as a possible target at this point?

This is a weekly chart that I have been showing a lot recently


There is a strong technical support band around 930-950 that coincides with 50% retracement of the rally since March. David Rosenberg, in his daily musings, says that he regards 850 as value given current numbers, so, I am gonna say that somewhere around 850-950 (I know it is a wide 100-point band) may be good drop target for what I know now – all hypothetically, of course.

If market indeed starts going that way, I would not be surprised if we started hearing rhetoric in support of another round of stimulus money. Keep that in mind.

Nas100 had a bad day as well


Above average close below 55 EMA with an ugly candle.

It is still in the weekly box formed by some price points that I calculated in September


My price points have been my trading markers and I see no reason why I should abandon them

Bears need to break the techies down or all of this might end up being just another meaningless correction. For me, there is no way around it, if bears are serious, techies have to go, and go faster than the broader market.

Let’s Wrap Up:

Short term picture does not look very good at this point. I am operating under the assumption that a top is in, expecting an OEW mid-term trend change. Technically, everything that I look at tells me that, at the very least, a good size correction in underway.

Market prices and breadth are sufficiently oversold to produce a bounce. Failure to bounce in the coming week may be interpreted as a serious sign of bulls losing their grip on the market

Support is 1018 and 991. Resistance is 1041 and 1061.

Short term trend is down. Mid-term trend is up. Long term trend is down.



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