Something Big Is Brewing In The Markets

As Sheila Bair gets grilled on CNBC with “Word Association” and audience inquiries, I have been questioning what’s making the market pop and not drop.  I’m beginning to feel that there is some sort of optimism within the markets, but all in all, I’m not sure many investors and how many traders (professional and individual alike) feel completely confident with the Stimulus Plan.  Many don’t understand why $787 billion needs to be put down in order to save our economy, and I am one of them.  I am not only appalled by the price, but I am also questioning why the price needs to be so high.  Until I understand this, I’m keeping my investment portfolio’s cash on the sideline and my trader portfolio’s cash moving in and out of positions like it’s on fire.

For now, however, I’m going to share a couple of charts with you that could guide you in your journey to gain some mullah.  So, without further ado, the charts:

$UVOL  1 Day, 5 Minute

$DVOL  1 Day, 5 Minute

$TRIN  30 Day, 60 Minute
In my experience with iETFs, when I look for large inverse swings and big down days on the indices, I look towards the $TRIN for some guidance.  The $TRIN itself is the NYSE Short-Term Trade Index, and as we can see from the chart (if you haven’t noticed already), there have been some major days where the iETFs ruled the markets, February 10th being one of those days.  In the past 30 trading sessions, the $TRIN has been decreasing, which could mean two different things:  1) More and more people are moving into cash and not trading at all, or 2) More and more people are going long because many speculate that we’ve hit bottom.

$SPX  3 Month
As seen on the chart above, the “Spinning Top” candle is a dangerous candle because it indicates that the ticker at hand, in this case the S&P 500 (^GSPC), is indecisive and has no direction just yet.  If you go to an $SPX 10-day chart, we’re probably going to end up trading in a channel for the rest of the week because there’s no catalyst to drive the market (minus Friday’s Preliminary GDP Report).  I don’t see us going any higher than 800, and I don’t see us going any lower than 743, the new $SPX bottom.  With that said, however, I am hesitant in both directions and will not go “all-in” on a specific side until I know what that side is.

FAS  10 Day, 15 Minute
Key Points on the Direxion Financial Bull 3X Shares ETF (FAS) chart:

• Watch out for heavy volume and the pattern of the volume compared to its price.
• Watch the $5.33 - $6.36 range for Thursday (going along with my $SPX thoughts seen above).
• FAS is currently trending positively, and because of this, the bulls have the upper hand going into tomorrow (even with the sell-off towards the close).
• On the contrary to the third bullet point, the market is trading on an overall lower-than-normal volume, which doesn’t help the realistic trend over the positive push higher in FAS we’re currently witnessing.

Direxion Financial Bear 3X Shares ETF (FAZ)  10 Day, 15 Minute
*** Watch FAZ to make a move Thursday if the bulls don’t snag the upper hand off the open and HOLD THAT STRENGTH into the second hour of trading ***

UltraShort Real Estate ProShares ETF (SRS)  10 Day, 15 Minute
*** Watch SRS to make a move on Thursday if the bulls don’t snag the upper hand off the open and HOLD THAT STRENGTH into the second hour of trading ***

Energy Conversion Devices (ENER)  10 Day, 15 Minute

*** Watch ENER to make a move Thursday if the bulls snag the upper hand off the open and HOLD THAT STRENGTH into the second hour of trading (it has hit a very strong support level @ $23.66 ***

Some main points about the charts above:

• Something big is brewing in the markets, and until the first signs of it occur, stick to day trading and quick in and out trades so you don’t get beaten like a drum and caught on the wrong side of the trade your planning.
• The Down Volume to Up Volume Ratio today was 1.65 to 1, hence the day was somewhat mixed and was riding on lower-than-normal volume.
• The bulls have to take the upper hand early Thursday, allowing the indices to gain an off-the-bat strength in order to have “security points” if the market falters mid-day.
• IF the bears gain the upper hand off the open Thursday, watch for action similar to Wednesday’s with a larger volume base.

Subscribe by RSS Subscribe by Email