Nasdaq bubble intact. For now.

A whopping 7% pull back in the QQQ's before rallying right back.

88 worked for the stop run and produced a 3ish% move to the upside back towards the long term broken channel.

The two likely scenarios in my opinion.

........Then I see these kind of divergences and I scratch my head....

QQQ's

In one word: baffled.

However;
When I look back at what I've been writing about; this was expected due to the size of the stops around that 88 level and the channel. Which we just jumped back into today.

Once again though. I always have concerns and I really don't trust this market.

• Gap up over a bollinger band  on the daily bars.
• At the upper band on the weekly bars.
• Fundamentally overvalued
• Structurally questionable
• Central Bank Policy induced.
• No large volume spike on upside

Charts:

We are at/in upper channel; barely. But we are there; albeit on extended circumstances.

QQQ's

Look's like she's not done yet. On the edge of that broken long term channel. If we pop back up into it tomorrow then this gal's gonna run. Nimble it is.

Riddle Me This

2s10s vs SPX

Monitoring Developments

Doing my weekend reading and going through all the different perspectives people have on the precious metals market, not surprising that most arrows are pointing lower. All of which have different reasons; Elliot wave theory, triangle already broke, China slowing down purchases (not if you look at Y/Y and not Q/Q), yada yada yada.

Let's just clear out the noise and keep watching the next two series of charts. (steady Eddy chart on prior post)

I do hate to say this and think this because the short term pain is never enjoyable; but an alternate scenario that would take a little more downside pain could create the kind of spark we need to get the bulls to step their game up and create a big reversal off a 50$ downdraft move from this triangle.

Here's what it might look like...

We still have Steady Eddy on our side; but it's always good to be prepared for Mr. Market to mind **** you.

Monitoring Developments

16 weeks now above the 30 week moving average.

Given the action around Steady Eddy (30 week moving average), I'm positioned for the upward move out of the wedge that has formed over the past few weeks. The next chart shows where commercial and speculative traders are positioned and some notes around option expiry over the past year or so.

Quick update on the Q's

Quick check up on Mr. R2K

Nothing new here; trending lower.

Monitoring Developments

       Today's action in the gold market was truly telling. It was even a good tell for the selling in the broad markets. 8:20am; the comex opens and half a billion in notional contracts were dumped on the market; just for gold to rebound at 9:30AM full reversal. This all just wreaks of absolute desperation in a massive chess game of confidence between the market and the real market (the unrigged one).

       An interesting note to watch for strength of this rebounce off that smash is the the DX (dollar index); The DX didn't move significantly around that time. I believe last time I saw this action in gold we retraced it all to prior the "large seller". Noted for future reference.

And the 30 week moving average is still in charge. 15 weeks* now and not a weekly close below. My continued positioning is that the gold market bottomed on 12/31/13 and the equity markets topped (relatively speaking +/- a few percentage points here in the larger picture will be so irrelevant). There's a solid stream of reliable sourced news in the gold community that depicts a great fundamental story for the supply and demand of the market. The probabilities of this being the bid we've seen against these large unorthodox "larger sellers" has to be fairly significant in this market. Quite obvious the investing community is spooked about anything to do with gold after the April 2013 12% drop. This is the pure adage of 'buy fear, sell greed.'

I don't think we'll see gold accelerate off the 30 week moving average until gold trends back over 1400 and then investors will flock in and we could veer off and upward for a time; but we'll always look back and see where steady eddy 30WMA is hanging out to keep our heads cool.

Till next time on the Gold Market.

Technical check up using Stokes:

Nasdaq correction in progress. Or Bubble popping? Stay Tuned

Since my last post on the QQQ's there has been some very interesting price action that has taken place. The importance of recognizing levels where stops are entered is essential to all aspects of trading. It's also very tricky. The market wants to make you more confused then ever. The 88 level on the Q's and the 50SMA were lining up hand and hand for the 2 day short covering rally we saw as everyone got stopped out as those levels were taken out to the upside. My position hasn't changed and I'm still bearish on the market. As that level was breached, the volume was weak and it was quite obvious the algos were in stop hunting mode when watching the tape as we crossed 88.  This next chart is an update from the previous post with the most recent price action as of Thursday 5/15/14. The stop hunt was effective and I believe it set the market up for a fresh new wave down.

I continue to believe the most profitable set up's and trading come from patience and conviction. Although the market doesn't give a **** about what you think or what may be right or wrong. The charts tell a story of buyers and sellers in an open auction market.

The next chart I remove all the technical studies I use and simply look at volume and patterns; if you're a new reader, I suggest reviewing this post to catch up on the developing story.

Yet again, another inflection point. Till tomorrow.

Stop Running 101

Riddle Me This

The Twitter World of Finance has been hot on the yield curve topic. I've noticed more posts and conversations spurring up over the past two weeks. I did some digging around and collaborative work. The 2year10year vs the SPX relationship has been a precursor to equity weakness in the past. A level of .15 appears to be the tipping point. Let's see if this comes to fruition; as you know if you've read other posts; I see equity weakness as well. The more pieces of the puzzle that come together; the higher the conviction level on trades that can be taken and position sizing. In my opinion.

The Good Ol' Russell 2000

It all makes sense as the story continues to develop and unfold. The charts have been screaming divergences for the past year and a half as stocks rose. Coincidentally? the entire move up as been price driven and not earnings; i.e. multiple expansion. No not coincidentally; fundamentals and technical work in harmony; supply and demand in an auction market. Lesson to be learned I suppose is for one to recognize when this disconnect begins to occur and let the greater fool take price higher; you being the one knowing the whole time that this time would come when fundamentals may begin to matter again.

Stay tuned to see the facts and data as this unfolds and we find the fair value.

Reminder

108.66 - April Low.

The Good Ol' Russell 2000

Reminder

The Russell's P/E one year ago was 30 and price was 99(IWM); Today it's 100 and price is 125.

Price grew 20% while the P/E ratio ballooned 70%!. 

Are earnings going to grow fast enough to catch up to that price to bring back some kind of fair value?!?!

There is a small gap up at 113-113.50; so any counter trend bounce, look for that target.

For now; a daily close below the 200DMA makes the next few days very crucial for next direction.  Given the above statements; I'm not scratching my head on the why of this move lower.

Battle continues tomorrow.

Monitoring Developments

Re-posting this chart from early April. The update; nothing has changed and 23.07 has held for over a month and two separate probes of the level.

The next two charts show the importance of gaps and their attractiveness.

Bonus Chart: Shooting the gap.

For Your Review

Nasdaq correction in progress. Or Bubble popping? Stay Tuned

Interesting things happening here that will lead to the next major move.  Three dilemmas I'm watching; A rising channel that is broken and we are back testing; a head and shoulders top that could be to obvious to be the right pattern, a fake break out from the channel and the next move takes us straight vertical to the top side of the channel shown above.  With the moving averages tightening and converging around this 88 level and the 50 day moving average rolling over like a dome as well; there is a bit of coil here that will set up a nice move.

Monitoring Developments

Comments on the chart. Keep in mind; Indian elections are ongoing and end May 12th and that will play a huge factor in the supply and demand story.

Nasdaq correction in progress. Or Bubble popping? Stay Tuned

Well; that gap filled and held through FOMC and back to back large POMO days. Let's see how things play out with Non Farm Payroll Friday with NO POMO and in May. It's my view that the Nasdaq will be dragged down by all the crap MOMO names (LNKD, CRM, P, FB, TWTR, GRPN, ZNGA, NFLX, AMZN, and so on when investors realize they are holding stocks with no earnings and no return on equity.)

For now; here's the latest chart; will update more over the weekend.