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ES and the Great POMO Rally
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ES and the Great POMO Rally

  #431 (permalink)
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The Good, The Bad, The Ugly


Private Banker View Post
Hi Rtrade,

Sure, feel free.

Cheers,
PB

Thanks PB…ever since I got a good handle on my day trading I moved my game up to a higher level, swing trading. It’s more challenging and more demanding to manage. I don’t trade the news during day trading with the exception of the FOMC interest rate announcements. But recently I find myself paying more attention to the news during my swing trading. I’ve included two charts, Chart A, a more optimistic view; and Chart B, a more in dept analysis of upcoming economic events. I still use my standard and typical technical analysis tools but I’m using a weekly chart to emphasis the time line more clearly, perhaps.

Chart A, The GOOD. I was listening to Bloomberg radio and several so called experts or talking heads were talking up the ES, that the ES was headed to 1500. I wondered how they came up with that magic number since they never said how or why it would get there…until I saw it. A classic AB=CD pattern. I readjusted the trend line T1 from C to D, then I readjusted the trend line again, from A to C to bottom of last candle, T2. The time frame of hitting it’s mark would be sometime after 2012. It’s quite an optimistic chart, but something tells me life just ain’t that simple. Unfortunate, I think Chart B is going to be more realistic.

Before I go on to Chart B, I do have to say I agree with you in, trade what you see, but it’s very interesting to come up with possible scenarios to guess where the market will go. So when I looked at your most recent daily chart of ES, the price action is just sitting on support, the 200….but above the price action is significant resistance coming down in the form of your faster indies. And yes, that set up has the tendency for the price action to bounce off the support and bounce off the resistance, creating a wedge formation. And only two things can result – break above or break below. Which leads to Chart B.

Chart B, The BAD. So much is going on with this chart that I will start with what struck out to me the most . 1) the Gartley pattern, it’s highlighted in the dark blue, consisting of pivot points X, A, B, C, D,…where the abcd is in it’s abcd pattern. Note that the abcd pattern differs from the abcd in Chart A. In chart a, the( ab=cd )where as in Chart B, the (ab not=cd). But in Chart B, the D is a 78.6% retracement from pivots X to A. This Gartley Pattern is a STRONG indication that a Major Short is DUE.

2) The second leg retracement of C to D. If you noticed the retracement of A to B was 38.2% and holding at a 38.2% is a strong bullish sentiment which made the C to D. But on the second leg of C to D, it already tested a 38.2% and now it’s heading back down towards it a second time…and a lot of times the second leg retraces to the 50% level. ES will hit 38.2% retracement of second leg C to D.

3) QE 1, QE 2, and possibly QE3. I’ve noted where QE1 and QE2 started and where they end. This is where my lack of financial knowledge will show, but I’ll take a stab at it. As you can see QE1 created a significant move in the markets and the moment the FED stopped QE1, the market immediately responded like a drug addict in need of a fix. But now look at QE2, the move is only about HALF of the move of QE1 and the market is NOT going to wait…it’s HINTING of Bearish sentiment Way before the Fed ends QE2. Yes, the arrow is correct…ES will be at the 50% retracement of second leg C to D by the end of QE2. And didn’t factor in the Debt ceiling…

4) Ok, this is probably where I begin to really get out of my league. So now the price action is at the 50% of the C to D, and QE2 is over. If QE1 is any indication, Bernanke will wait maybe 5 months and give it a wait and see…but ES will now be at the 38.2% of A to D pivots and it will be around December.

5) Enter Politics an Election Year. Knowing Obama and his thug style politics, people like him are mad for power. He’ll deal with Bernanke to start up QE3…boost the market, boost his ratings…buy votes. But from the results that QE2 produced, I don’t think the market will believe much in QE3 and it will not sustain an artificial market or should I say a BUBBLE…the market will TANK in 2012. Which leads to Chart C.

Chart C. The Ugly. Well, there’s no chart, just my imagination with startling facts:

World Debt – $42,024,635,246,592.00 and growing
National Debt - $14,682,655,589,406.00 and growing
House Hold Debt - $16,040,476,501,714.00 and growing
Mortgage Debt - $14,019,466,539,780.00 and growing
Consumer Debt - $2,409,201,596,879.00 and growing
Credit Card Debt - $812,764,942,901.00 and growing…let’s just make this an even TRILLION.

With so many in debt, I'm wondering who is the debtor that is collecting all this money?

I don’t know where ES will be but I fear there will be riots in the major cities to the point where Obama will declare martial law and extend his presidency…”Never waste a good crisis.”

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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ES and the Great POMO Rally-chart-.png   ES and the Great POMO Rally-chart-b.png  
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  #432 (permalink)
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rtrade View Post
Thanks PB…ever since I got a good handle on my day trading I moved my game up to a higher level, swing trading. It’s more challenging and more demanding to manage. I don’t trade the news during day trading with the exception of the FOMC interest rate announcements. But recently I find myself paying more attention to the news during my swing trading. I’ve included two charts, Chart A, a more optimistic view; and Chart B, a more in dept analysis of upcoming economic events. I still use my standard and typical technical analysis tools but I’m using a weekly chart to emphasis the time line more clearly, perhaps.

Chart A, The GOOD. I was listening to Bloomberg radio and several so called experts or talking heads were talking up the ES, that the ES was headed to 1500. I wondered how they came up with that magic number since they never said how or why it would get there…until I saw it. A classic AB=CD pattern. I readjusted the trend line T1 from C to D, then I readjusted the trend line again, from A to C to bottom of last candle, T2. The time frame of hitting it’s mark would be sometime after 2012. It’s quite an optimistic chart, but something tells me life just ain’t that simple. Unfortunate, I think Chart B is going to be more realistic.

Before I go on to Chart B, I do have to say I agree with you in, trade what you see, but it’s very interesting to come up with possible scenarios to guess where the market will go. So when I looked at your most recent daily chart of ES, the price action is just sitting on support, the 200….but above the price action is significant resistance coming down in the form of your faster indies. And yes, that set up has the tendency for the price action to bounce off the support and bounce off the resistance, creating a wedge formation. And only two things can result – break above or break below. Which leads to Chart B.

Chart B, The BAD. So much is going on with this chart that I will start with what struck out to me the most . 1) the Gartley pattern, it’s highlighted in the dark blue, consisting of pivot points X, A, B, C, D,…where the abcd is in it’s abcd pattern. Note that the abcd pattern differs from the abcd in Chart A. In chart a, the( ab=cd )where as in Chart B, the (ab not=cd). But in Chart B, the D is a 78.6% retracement from pivots X to A. This Gartley Pattern is a STRONG indication that a Major Short is DUE.

2) The second leg retracement of C to D. If you noticed the retracement of A to B was 38.2% and holding at a 38.2% is a strong bullish sentiment which made the C to D. But on the second leg of C to D, it already tested a 38.2% and now it’s heading back down towards it a second time…and a lot of times the second leg retraces to the 50% level. ES will hit 38.2% retracement of second leg C to D.

3) QE 1, QE 2, and possibly QE3. I’ve noted where QE1 and QE2 started and where they end. This is where my lack of financial knowledge will show, but I’ll take a stab at it. As you can see QE1 created a significant move in the markets and the moment the FED stopped QE1, the market immediately responded like a drug addict in need of a fix. But now look at QE2, the move is only about HALF of the move of QE1 and the market is NOT going to wait…it’s HINTING of Bearish sentiment Way before the Fed ends QE2. Yes, the arrow is correct…ES will be at the 50% retracement of second leg C to D by the end of QE2. And didn’t factor in the Debt ceiling…

4) Ok, this is probably where I begin to really get out of my league. So now the price action is at the 50% of the C to D, and QE2 is over. If QE1 is any indication, Bernanke will wait maybe 5 months and give it a wait and see…but ES will now be at the 38.2% of A to D pivots and it will be around December.

5) Enter Politics an Election Year. Knowing Obama and his thug style politics, people like him are mad for power. He’ll deal with Bernanke to start up QE3…boost the market, boost his ratings…buy votes. But from the results that QE2 produced, I don’t think the market will believe much in QE3 and it will not sustain an artificial market or should I say a BUBBLE…the market will TANK in 2012. Which leads to Chart C.

Chart C. The Ugly. Well, there’s no chart, just my imagination with startling facts:

World Debt – $42,024,635,246,592.00 and growing
National Debt - $14,682,655,589,406.00 and growing
House Hold Debt - $16,040,476,501,714.00 and growing
Mortgage Debt - $14,019,466,539,780.00 and growing
Consumer Debt - $2,409,201,596,879.00 and growing
Credit Card Debt - $812,764,942,901.00 and growing…let’s just make this an even TRILLION.

With so many in debt, I'm wondering who is the debtor that is collecting all this money?

I don’t know where ES will be but I fear there will be riots in the major cities to the point where Obama will declare martial law and extend his presidency…”Never waste a good crisis.”

Rtrade,

Great analysis! I like that you've mapped out several potential outcomes. Chart "C" has some scary statistics. The numbers are just baffling. I guess the answer to who is collecting all this debt would be Bond Holders. This will not work out well. And the Fed knows it which is why they are doing their best to keep rates low. A blow up in Europe could trigger the domino effect.


Cheers,
PB

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  #433 (permalink)
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Fed Day


As I expected the Bernanke came out with basically nothing new at this point and all those that were hoping for a QE3 announcement today were definitely disappointed. Many are now speculating that the Fed will make some sort of an announcement in August but that remains to be seen. The Fed will still be conducting QE Lite beyond the normal POMO schedule where they will be reinvesting their income from their MBS portfolio into US Treasuries through their journeymen, the PD's.

Today's non eventful Fed announcement has disappointed the risk correlated markets negatively and we are seeing selling continuing from this afternoon and into the over night session. As I've said before, without the Fed intervening in the markets, we would see a major sell off. We recently bounced off the 200 day moving average and have run straight into the 20 day moving average where we've found some more selling coming in. I'm still watching to see if we get below the 200 DMA to start building a swing position and will continue to intra-day trade the ES in the mean time.

Tomorrow should be another interesting day with unemployment claims and new home sales. They're forecasting claims of 414,000. Who wants to bet we miss this? Lol!

Cheers,
PB

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  #434 (permalink)
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Just Wondering

Is it as weak as it appears to be. I can' help but wonder if today 6/23 is more of a "shakeout" type move more than anything else. Just something to consider. If the immediate lows get taken out then I would change my tune, but until that and the lows just beneath the market, I still wonder if we will see more upside.

David

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  #435 (permalink)
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David_R View Post
Is it as weak as it appears to be. I can' help but wonder if today 6/23 is more of a "shakeout" type move more than anything else. Just something to consider. If the immediate lows get taken out then I would change my tune, but until that and the lows just beneath the market, I still wonder if we will see more upside.

David

It's certainly possible. What we're seeing is a war between which way the market will go next. I expect to see these types of attempts at these levels. A break below the 200 will be what the bears are looking for. Today's bounce was supposedly news driven on Greece meeting an austerity plan so tough to say. The market rallied straight up into the 61.8 level from yesterday's high which was also a gap fill (ironically). The markets are just extremely sensitive right now and anything can cause them to turn on a dime. The good news is, we're getting some great intra-day moves. It was a great day for intra-day trading ES and CL among many others. Let's hope this sticks around for a while.

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What the Fed is up to with the end of QE2

Great article on Zero Hedge.

A Blinking Idiot & the Banking System | zero hedge

Meanwhile my own realtime calculated dollar weakness index seems to be a helpful tradng tool, at least for now.

https://futures.io/index-futures-trading/11604-dollar-index.html#post130569

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The Battle Continues...

It appears that the 20 day moving average on the daily ES chart is still proving to be substantial resistance. The market wiped out the previous day's rally and we officially have a war on our hands at the 200 day moving average. The 10 and 20 DMA's are very close to crossing the 200 DMA as well. Like I said before, a break below the 200 could trigger some massive selling and with the world's economy in a very sensitive situation, this wouldn't come as a surprise.

When looking at the the S&P 500 index on a weekly chart, we're pushing down hard on it's supporting trend line and the MACD is essentially pointing straight down. This is getting very interesting.

Friday provided some amazing short trades in the morning before just chopping around at the low for the remainder of the day. I'm hopeful this volatility will stick around. We have a lot of economic reports coming out next week coupled with more Fed jawboning so, we could be in for some wild markets. Stay safe!

Cheers,
PB

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Michael.H View Post
Looks like we're hitting some support here, i grabbed some shares today at 1264 on the ES, im gonna keep it tight on this, but expecting some sort of bounce within the coming days. Maybe ill get a runner out of this, we'll see.

Its actually currently trading at 1262 in after hour right now... Lets see how it opens tomorrow..

Hi Michael, I noticed you made a good trade. I was wondering if you can share how you managed this trade?

Since you didn't have a chart of your trades, I took the liberty of using PB's chart (hope ya don't mind PB...). I wanted to know the following (note: the letter's are associated with the letters on chart):

a) Did you scale some profit for taking some initial heat...ie reward yourself for fortitude?

b) Added to your existing position?

c) Scaled or Close all positions?

d) Let your protective stops take you out?

e) Re-entered market or added more to your position?

f) Scaled out or Close all positions?

g) Added to position?

h) Scaled out or Close all positions?

i) Added to position?

j) Close out all position....FLAT?

k) Close out position....add position...?

l) Re-enter market?

The reason I'm asking is because in my intra-day trading, I'm in and out of my position...But in swing trading, I'm still trying to find my groove.

Oh, and if you don't want to share....no worries or pressure....it's cool.

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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  #439 (permalink)
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The last few days have been excellent from a volatility perspective. The ES battle has provided so many amazing intra-day trade opportunities, I'm smiling from ear to ear.

Well, as I expected, we would get a good bounce off of the 200 day moving. The next obvious area of resistance is the 100 day and 50 day moving average which also happens to be half way back from the high of 1373.50. I love how the market will move roughly 50 points on no significant news. Greece is a foregone conclusion, we all knew they would pass the austerity measures despite the literal chaos that is ensuing. The market is blind in the dark with one boxing glove on swinging for the fences at the others in the room at this point. There's no rhyme or reason here. But like I said, the good news is the intra-day volatility is amazing.

Tomorrow morning we have unemployment claims with a forecast of 419k. Come on... Bets anybody?

Stay safe!
PB

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I pretty much went all in, and im still holding my position. I haven't done anything yet. When the market goes a little higher, i will scale some out. My average position was somewhere around 1263-64. Here's a screenshot.


Its not letting me upload the image.. don't know why

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