Value of Perfect Information

I gotta keep it short and sweet today, so no ES trade review.

My ES trading has been minimal lately because my performance has been slipping.  I’ve been focusing more in the equity markets.  Today’s charts:

CLICK HERE FOR TODAY’S ES VIDEO

Note: I also show an equity scalp trade that I completely dropped the ball on…….  ‘Douche of the Day’ definitely goes to me.

Areas needing improvement
- Exercise (even) more patience during the opening drive
- Fighting for ticks can sometimes be costly in loss of opportunity in other markets.  I withdrew my attention away from BBBY and lost a great opportunity.  Of course I could have gotten back in but by the time I went to check the chart, price had already taken off leaving me with no low risk entry
- Work on trade visualizations
- Be sure to verbally identify at least four statistically proven reasons supporting a trade idea before entering. (I sometimes slack on verbalizing but when I do, I always trade better)

Chart Review of the ES, Core Sectors and Major (ETF) Averages.  Not that I’m offering anything you couldn’t do yourself but I thought I’d upload the charts I’m always watching and provide a few comments.
* I didn’t include charts of market internals but you can always do that research yourself. 

4:30 pm EST:  After 3 straight weeks of declines the SP-500 managed to produce a 11 point gain on the week and closed above key support at 1075.51.  The main down channel was broken yesterday and a back-test of the channel break was confirmed by a bullish bounce off of 1063 today.   The SP-500 is now well position for additional gains going into options expiration (OPEX) week.

Below is my most update 5-min chart.  There is a lot going on this chart.  But on the bullish side (green counts), there is possible ending diagonal (ED) count for the “c of B” leg that would play out to about 1087 later next week.  And on the more aggressvie bullish side the “c of B” leg could reach 1104 if it’s just a started a 5 wave impulse up and out fo the contracting triangle.   On the bearish down side (red counts), there are two counts one for 4 of (5) of A with a target near 1040 and nd then there is the most aggressive bearish count that says the B-leg is over at 1080 yesterday and we are beginning the nasty C-leg down to targets in the 950 range.  Finally there is a 5th count that is my alternate count (purple count) were P1 is not finished and we have a potential leading diagonal (LD) for wave 1 of [5] of P1. 

Is that confusing enough for you?     Things could break either way as the SP-500 is balanced are on a knife’s edge or tipping point.  Have a great President’s Day Holiday weekend !

5-min Chart (EOD):

15-min Chart (EOD):

60-min Chart (EOD):

Daily Bullish Model Chart (EOD):

Still cautious as hell but today’s action was definitely an improvement.  It has NOT been an easy trading environment for me lately. 

Today’s breakout was everything you could have asked for aside from the lagging of financials during the initial thrust up. Bonds, Commodities, Core Sectors, Maj. Averages, Relative Volume, Baskets, TICK distribution, Market Internals, etc, all confirmed strong pro-risk theme.  Note: During early morning trade, the RUS2K (and its derivatives) were showing relative strength.  

5:00pm EST:  Since the short term counts are unclear, why not look at a couple big picture charts today.  The first one is my bull model, that I’ve been focusing on and refining.  And the second one is my bear model (yes I have one).  Interestingly both models sport a possile alternate count that could produce new highs in the 1180 to 1230 range come May-June, asumming the 1029 low from Oct 2009 holds up during this current correction.  The bear model is a triple ZZ (zig-zag) with the final ZZ complete at 1150 or alternately still in process, again assuming 1029 is not breched.

Daily Bear Model (EOD):

Dialy Bull Model (EOD):

4:45pm EST:   Here’s the updated 15-min chart.  This price action since the 1045 low has been very frustrating to count.  It may have formed a large contracting triangle.  And it’s at a point where it could  pop to 1091 or drop to 1045.  I really think it’s about 50/50 at this time.  The pivot is 1068, and the key levels to watch for a break-out tomorrow are 1072 up and 1064 down.  In the bears favor is that the SP-500 is still withing the pink down channel, so this correction up has not had the power to escape.

15-min Chart (EOD):

5:30 pm EST:  A very weak Monday with no follow-through to the upside to confirm Friday’s late day buying.  Today ws the first red Monday I can remember in a while.  It’s possible the SP-500 is tracing out a very weak B-leg corrective with a-B and b-B completed.  The maximum now for c of B looks like about 1085.  But I’m not so sure of that count at this point.   I think wave 4 of (5) of A may have completed today at 1071 and wave 5 of (5) of A is now getting underway that will reach levels below 1045.  The 1030 area is still a solid target for the completion of this wave, whether it be just A or all of A-B-C of the corrective off 1150.  The 200-day SMA has now climbed up to 1020 and still rising, so as shown in my daily chart.  The 1030 area will be point of confluence for the 200-day SMA and horizontal support by the end of this week.  Also notice how the 13-day EMA that crossed over the 34-day is now acting as a cap on upward price movement.  The 13-day EMA sits at 1087 today and rapidly falling.  Any pop up towards the 13-day should be sold.  And until the upper pink down channel is breached to the upside, there pops should continue to be sold.  The trend is still down and I believe it likely to continue through most of this week.

15-min (EOD):

Daily 13 vs 34-day EMA (EOD):

Grueling day…….
Qs – Relative Strength; opened inside yesterday’s range and quickly moved to test recent swing highs.  Around lunch time Qs broke out and above prior high and successfully held on on subsequent test. (AAPL, BIDU and GOOG were strong today)
IWM – Relative Weak,  Open in mid of prior day’s range, quickly proceeded  to test previous high but was unsuccessful; IWM were unable to hold above 200MA on 5min and dropped briefly below yesterday’s lows; Closed back in Mid Range. 
SPY – Range trade but overall performance was soft; dropped below overnight range three times but eventually closed back inside. 
USD Strong
Oil Neutral
10 YR Up

Materials,  Energy  Financials, Health Care were the most ‘flacid’ on the day while Industrials, Cons. Staples, and Utilities held their own for the most part.  Cons. Discretionary outperformed. 

ES dropped through its overnight range three times.  I suspect the above average weakness of the IWMs and above average strength of the Qs, put the SPYs right in the middle and some ’softness’ (i.e. not adhering to rigid price levels) should be expected.  Furthermore, set today’s trade against the backdrop of a possible trend change (suggesting the past few days are only a bounce seeing as the Russell2K and S&P rejected the underside of their 50DMA; noticeable selling into strength from many of the stocks I scalp, and an over all lower relative volume); and what it appears to be a more fragile economy (shocking), some market tepidness would be a reasonable reaction. 

*However, there was also positive sentiment divergence and improving internals for much of the day.  The Qs showed relative strength today and they’ve been a market leader for some time. 
 So………….. Where this takes us? Who the f_ck knows.   

By the way; volume has picked up dramatically during the 10:00CST – 11:00 Time Frame.  Those two periods have been running ‘hotter’ relative volume for the past 7 days in a row. 

Grueling day…….
Qs – Relative Strength; opened inside yesterday’s range and quickly moved to test recent swing highs.  Around lunch time Qs broke out and above prior high and successfully held on on subsequent test. (AAPL, BIDU and GOOG were strong today)
IWM – Relative Weak,  Open in mid of prior day’s range, quickly proceeded  to test previous high but was unsuccessful; IWM were unable to hold above 200MA on 5min and dropped briefly below yesterday’s lows; Closed back in Mid Range. 
SPY – Range trade but overall performance was soft; dropped below overnight range three times but eventually closed back inside. 
USD Strong
Oil Neutral
10 YR Up

Materials,  Energy  Financials, Health Care were the most ‘flacid’ on the day while Industrials, Cons. Staples, and Utilities held their own for the most part.  Cons. Discretionary outperformed. 

ES dropped through its overnight range three times.  I suspect the above average weakness of the IWMs and above average strength of the Qs, put the SPYs right in the middle and some ’softness’ (i.e. not adhering to rigid price levels) should be expected.  Furthermore, set today’s trade against the backdrop of a possible trend change (suggesting the past few days are only a bounce seeing as the Russell2K and S&P rejected the underside of their 50DMA; noticeable selling into strength from many of the stocks I scalp, and an over all lower relative volume); and what it appears to be a more fragile economy (shocking), some market tepidness would be a reasonable reaction. 

*However, there was also positive sentiment divergence and improving internals for much of the day.  The Qs showed relative strength today and they’ve been a market leader for some time. 
 So………….. Where this takes us? Who the f_ck knows.   

By the way; volume has picked up dramatically during the 10:00CST – 11:00 Time Frame.  Those two periods have been running ‘hotter’ relative volume for the past 7 days in a row.