US Stock Market LOVES War... Futures Up Big

Bloomberg says Dow futures are up 73, Nasdaq futures up 13.5, S&P futures up 8.5.

Obama goes to Rio with his family, the US military starts shooting 120+ tomahawk missiles into Libya, and stock futures jump. Whatever. For those who are still in this almost immoral place which was once a stock "market", here's what I see TA-wise, using S&P500.


So far, the current correction, though it feels severe because it comes in the middle of geopolitical troubles in the world (plus 9.0 earthquake in Japan), is not very big one. Take a look at how the market corrected from May 6th flash crash. It took 5+ months to recover. The obvious resistance is 50-DMA, which sits at 1,302, about 23 points away.

Down volume is more significant than up volume, but again, the volume doesn't compare anywhere near the level seen in May and June last year.

I'm invested in gold, silver, and oil stocks and options, but I don't trade any more these days. I was too busy to cover AMZN short on Friday and close out all trading position. Oh well. My AMZN target was around $150, where the weekly 50-MA is right now. But I may just get out, depending on how much Ben and Timmy want to hype the stock market.

On-going, Unfolding Disaster in Japan

News out of Japan is getting worse by the minute. Despite Bank of Japan throwing 15 trillion yen ($182 billion) to prop up the market, Nikkei is currently down 657, to 9,596.

I have no doubt of Ben and Timmy's power to prop up the US market, but frankly, I don't care. I have my friends and families and relatives in Japan, and I am too busy blogging on my other blog on the March 11 earthquake/tsunami disaster with information from Japanese news sources. I don't think I would be very much actively trading near-term. I'll hold what I have, which is gold/silver ETF and ETN, iron ore company (MTL), USO calls, VXX, and short AMZN.

Too bad I don't have any re-insurers. Or maybe none of them is public. I just don't know. General Re is a Warren Buffett company. Munich Re is traded on DAX, but it is also 8% owned by Warren Buffett. Hmmmm.

Last I checked, Yahoo SKF MB is still trolled by some jerks spewing venom, so the trend on this indicator remains down. Good luck, and batten down the hatches. The market will go down, if not tomorrow then later but it will go down. IMHO of course..

And don't, for a moment, think it's about Japan only. Financially, Japan is a huge market. Money and credit flow in and out of Japan will be severely impacted. China may have surpassed Japan in terms of national GDP, but in financial market size and complexity, it doesn't compare.

For your TA enjoyment, here's Breakpoint Trades guys' weekend newsletter (free, you can subscribe yourself, they are good).

If you are so inclined, please donate to your local Red Cross or Red Crescent or equivalent, or whatever charity that you prefer that is collecting money for the earthquake/tsunami victims in Japan. Japan is a rich country, but not rich enough to pay comfortably for such a disaster. Food, water, and fuel are in severe shortage in the affected area, where the night-time temperature drops below zero (Celsius).

Why Me, Worry? Says Ben (and Timmy and the Whole Crew)

This gotta be one of the biggest crap I've ever seen coming from Ben, Timmy, the whole PPT and TBTF Wall Street banks: to levitate the US stock market on a non-POMO day on a thin volume, after the massive earthquake in Japan and on-going and worsening turmoil in Libya and euro and the EU getting unhinged over debt crisis in PIG.

They've been throwing everything they've got on the market from the get-go.

The ostensible reason for today's gain? Because the oil price fell! Of course.

30 minutes to the close, Dow is up over 100 points, S&P500 up 13, Nasdaq 22.

US dollar is down big, gold, silver up, oil down, copper is up.

NFLX is still below 50-DMA (which sits at $204.03 today). For that matter, Nasdaq remains well below 50-DMA, despite today's advance.

S&P 500 Intraday, 1-Hour Left

After breaking down from the symmetrical triangle that I mentioned yesterday, it is forming a second rising wedge for the day. Looks bearish to me, but MACD (not on the chart) does show a positive divergence. Probably in anticipation of the PPT.. It's possible that it will reverse upward in the final hour, so that the bulls at CNBC can call it "bear trap".

I don't quite care one way or the other, but I'm irritated with those dip buyers of AMZN... LOL. (But I'm still short.) And I'm mightily irritated with JPMorgue and the gang for banging the precious metals..

The chart is 5-day, 15-minute chart.

S&P500: Triangle Pattern Can Break Either Way

So I was told more than 3 years ago. I distinctly remember when: December of 2007. The market topped in October that year, in retrospect of course. The market sharply corrected, and then sharply bounced back in late November, and was chopping back and forth in December, forming a symmetrical triangle.

"It could break either way", a trader told his followers. It was very clear which side he was expecting: Up. The direction was finally decided in January, and it was down. The trader told the followers it could backtest the trendline and maybe retake it. No it didn't. It went down, down, down.

So, when I saw a triangle pattern on the current S&P500 - different time scale altogether, mind you - and was told by another trader "It could break either way", all I would say is "Sure it could." My bias is down, but I'm not the one to underestimate what Ben Bernank can do for the stock market with daily $billions.

The top is S&P 500 daily chart from October 2007 to January 2008. The bottom is S&P 500 5-day 15-minute chart, ending today (3/9/2011):


If it breaks to the upside, fine. I'll get stopped out of AMZN short and VXX long. I'm not worried about gold and silver stocks, because my costs are so low.

BTW, Dr. Copper has decisively broken below the trendline today.

(I'll just keep my Yahoo MB indicator in mind... The jerk is still there, though spammers are disappearing quickly. Spammers seem to have sensed a change in direction.)

Watch Dr. Copper for Market Direction...

Copper, I've learned, tends to top before the general market does. It is at a critical support right now (on a log scale).

Here's the chart of copper from Breakpoint Trades guys. It is a still shot, EOD Friday. But today, copper sits right at the trendline from June 2010:



Here's a dynamic link to the chart.

S&P500 Ends Below Trendline On a Log Scale

On a linear scale, it sits right on the trendline from September 2010.

So here's the chart on a log scale. The index sits inside the lower bollinger band, thanks to the late buying (again). RSI shows negative divergence, but not on MACD, Slow stochastics. MACD histogram is negative. Despite the jerky moves every day, not much of a clear sell signal, yet.


It's hard to see on the chart, but the bollinger band is very tight, again. Big move coming? But then again, you wouldn't want to join hundreds of hedge funds who want to pick the top and be a hero.

If it is indeed correcting more than it already has, I've put Fibonacci lines in the chart. Don't hold your breath for the downside, because I don't sense much negative sentiment in the market. This may be just a minor correction, even smaller than the November 2010 correction (the pattern looks similar), and as soon as it retakes the trendline it may be off to the races again.

But then again, my personal, unscientific indicator is saying more downside. Spammers are still there. The know-it-all jerk is still there, spewing insults and calling the end to the downside. We'll see. I'm happy with all my positions - almost all long (gold, silver, iron ore, oil, VXX), and one short (AMZN). I'll think about the next move if the index retakes the trendline.

Friday EOD Ramp-up Time!

And here we go. Out of nowhere comes algo dip buyers - it's Friday, you know. You can't end the week on a depressed note...

At this point, I can only laugh.

Market Reaction Cheat Sheet for NFP Day

NFP - non-farm payroll. The announcement of the seasonally-adjusted, birth-death rate adjusted (in other words, duly rigged by the government) statistics on employment for February will be at 8:30AM EST Friday.

Zero Hedge has a handy cheat sheet on how the stock market acts on the NFP day, as I reproduce below. In essence, it can be summarized as: the market direction is up, whether it's a good number or bad number. In other words, BUY BUY BUY.

Zero Hedge's Tyler Durden says even if a nuclear war breaks out tomorrow, it will still be a toss-up.

J.P.Morgue's economist says the great number is in the stars. (Oh brother...)

Rebound to 61.8% Fib, Now What?

I should be getting used to it by now, but it never ceases to amaze me and sometimes nauseate me. The US stock market went up again today for no good reason other than Warren Buffett being bullish. Dow, S&P, Nasdaq all retraced back to 61.8% Fibonacci retracement; Dow and S&P past 61.8%, Nasdaq, barely. My short Amazon worked today, although I wish I had had enough money to put NFLX. Oh well. Can't win all the time.

So what now?Will it trace all the way back to the February 18 level and keep going up? I shouldn't be surprised, but as I said, it's nauseating, partly because it's been levitating like this for too long.

Here's the daily chart of Nasdaq. It was the weakest index today, along with Russell 2000 (so much for economic recovery and growth). I see negative signs - RSI, MACD and price in negative divergence, up-volume not as significant as down-volume, a hanging man formed today which could be a bearish reversal signal.


I am not shorting the market (just short AMZN), so if it keeps going up that should be good for my commodity stocks. If it corrects more seriously, that should be also good for my gold and silver stocks and VXX.

Dow Theory Also Worked...

Non-confirmation between Dow Jones Transport and Dow Jones Industrial was a warning sign for a market correction.

(Not that I was paying much attention to the Dow Theory. I was paying more attention to the Yahoo stock MB, as you know... They both ended up working.)

For more on the Dow Theory, read here.

Weak Rebound, Putting AMZN

My unscientific indicator (Yahoo SKF MB) is showing more signs of a major move still coming.

In addition to the know-it-all jerk, now there are stock peddlers (spammers) coming in. More ominously, there is some bickering among long-time posters. All of these all at the same time.

As I've said, this is just my personal, totally unscientific indicator. Don't quote me on it or count on it.

The US stock market is trying its best to put in a rebound, but S&P500 smacked right against the trendline (slightly above 1320) of the rising wedge that was broken two days ago.

I putted AMZN that was forming, I thought, a bearish rising flag on a very small volume, when AMZN was up 45 cents for the day. We'll see. One logical stop would be 50-DMA, currently at $181.83.

I'll put the charts later.

Three Black Crows?

It's past midnight in California, and do you know where your S&P500 E-mini is at?


It's down 9.5 points (or 0.79%). The reason? I don't know. Asia was down big on Thursday, except for Shanghai and Taiwan, although the gains were very modest.

But if tomorrow is another big down day, the three-day pattern may resemble "Three Black Crows", which could be a harbinger of a much more serious correction.

GL. Be safe.

Thoughts at the End of a Long Weekend - A Big Turn in the Market?

I have an extremely unscientific indicator that has worked pretty well for predicting the direction of a next significant move in the stock market: Yahoo's stock MB for SKF.

When either of the following two happens, a significant market move may be near:

1. All of a sudden, a burst of new posters appear, peddling penny stocks, stock newsletters, winning strategies, etc.; or

2. A know-it-all jerk appears.

In both occasions, many long-time posters disappear, or post very infrequently.

When it is the case No.1, the market direction is usually down. The case No.2 can break either way, depending on which direction that jerk is proposing; in the past it often broke in the opposite direction.

As it so happens, the US stock futures are down big tonight, with Dow futures down 97 as of 11:29 PM EST, supposedly because of the "unrest" in Libya (it's a revolution).

But then it doesn't mean much to Ben and the Inkjets at the Fed. All they care about is how to pump the market using whatever means imaginable. I wouldn't be surprised at all if the futures go back to unchanged by the time the cash market opens tomorrow morning. J.P.Morgue seems to be very busy trying to suppress the price of silver, which has been beaten down from $34.40 to $33.40. (Friday's close was $32.52.) It is also trying to put gold down back below $1,400.

But my very unscientific gauge, Yahoo stock board, is flashing a warning sign that the market may be ready to move big, and I think it may be to the downside.

Whichever the direction may be, I'm pretty happy with what I've got - gold and silver shares, an iron ore company, a uranium company, and VXX. AMZN calls and KO calls will suffer if the direction is down, but I'm not too worried about them because positions are small.

Hold on to your seats...

2/18/11 Low Vol Op-Ex Day

like the last one.

Let's see, they (option MMs) would want:

AMZN below $185

GOOG below $630

NFLX below $230

AAPL below $350

So Nasdaq is dutifully in red, ever so slightly.

By the way, analysts and chartists have been saying this has been the late-stage rally, indicating this may be the major top. Calling the top has been a losing game ever since April 2009, but one of these days it will be the top. Whether it is next week, next month, or 10 years from now is anybody's guess, but we have Ben Bernank to the rescue....

Nothing to do here in the market but watch the silver squeeze (J.P. Morgue is trying its best to beat it back down) Enjoy your long weekend.

Q-Man (Quint Tatro at Tickerville) Seems to Be Catching On...

with the antics of Ben the destroyer of capital and wealth. Oh uh... My days of using him as contrarian indicator may be approaching to an end...

And here's a post from Washington's Blog, arguing that you cannot just talk about economics without knowing about politics.

I wholeheartedly agree with Washington's blog, and I would add that you cannot talk about investment or trading without knowing about economics OTHER THAN Keynesian or neo-classical economics. Why? Because Keynesian economics would uncritically approve of what Ben has been doing, and neo-classical economics would simply ignore whatever the government does.

I think investor/trader-friendly economics that provides you with insight and perspective into the government actions and non-actions and their effect on private businesses is the Austrian economics. But that's my take, and you should do your own DD. Good places to start doing DD is here and here.

Having a better, clearer idea of where all these (Barry's fiscal insanity, Ben's monetary insanity) has helped me stay in my positions in gold and silver and commodities. Today's purchase of KO? Well, that's more like calling Ben's bluff - the stock market will never go down as long as he's the chairman of the Fed...

Running on Empty? Who Cares? (Updated with KO Chart)

My call last November before Ben Bernank announced QE2 that Dow would reach 16,000 someday may not be far-fetched, and my target for S&P500 of 1,340 is just around the corner. My left-for-dead AMZN March call is coming back to life (AMZN is jumping over $6 today). All thanks to Ben Bernank, who only has our welfare in mind.

My latest purchase today is KO. Has a very peculiar chart formation, but I'm just looking at the buy signal in Slow Stochastic set at 60. MACD histogram shows positive divergence. Oh uh, tomorrow is their earnings report. Will it matter? Maybe. Maybe not. Here's the chart of KO, 9-month daily.



I also set up a call backspread on MTL, using April calls. It may be ready for a bounce here, after steadily losing all the gain from Feb 1, but it is at the support around $32.50. If I'm wrong, then I will lose out-of-pocket cost, which is about 30 cents (x100).

Do your own DD, but for me, I've sort of given up. If S&P500 can remain above 1,320, it could go up to 1,380 or so, then 1,440 (May 2008 top).

And of course I may be the perfect contrarian. If I am, I still have VXX....

Tech, Small/Mid Cap Head Down While Big Caps Levitate

Just a heads-up for those who believe Obama is "pro-business". The two indices that represent growth (tech and small caps) may be heading south.

From the top: Nasdaq, Russel 2000, S&P500, Dow Jones Industrial Average.


Dow Jones Industrial and S&P500 continue to levitate, suggesting to me that they - big cap, multinational conglomerates - are the targets of Obama's affection for business. Like, GE.

Whether Dow and S&P can withstand the selling pressure coming from Naz and Russell remains to be seen. It is certainly possible, and may even be probable if the tax repatriation stuff passes Congress. After all, Dow and S&P500 are full of companies that stand to benefit from such a law.

Dow at Fibonacci Resistance

Technically, a logical place to stop and turn back.

As the chart below shows, Dow Jones Industrial Average tried to bust through the 61.8% retracement from the March 2009 bottom back to the October 2007 market top, and failed.

Not all is lost. On the daily chart, it is sitting right on the 50-day simple moving average, which may act as a support. Personally, I don't like the way it's been trading for the past week - one big down day followed by one big up day, and then another big down day. That doesn't look like a bottom being formed; rather, it looks like a topping pattern.

It looks and feels the same - that the index is about to break down - as at the end of August. Back then, a big up day was followed by a big down day, and just about everyone was looking at the neckline of the big head and shoulders pattern. And it didn't happen. September was a big up month as the US dollar cratered.

Ben's printing (QE2) hasn't resulted in an up-market in November, contrary to what Ben said when he boldly embarked on the purchase. The only thing keeping the market from crashing (there are a plenty of reasons why Dow should be tanking 1,000 points every single day) may be the hope that Ben and the Inkjets at the Federal Reserve will deliver on their word, that QE2 will cause the stock market to go up, making everyone feel rich.

I'm watching the US dollar, which has broken out of the pattern which could be called a bullish falling wedge. The breakout coincided with the worsening of Ireland's debt problem, which is supposed to be resolved now by the $113 billion bailout.

US dollar down, stock market up. That pattern persists.

Louise Yamada Cautions Further Weakness

A week ago I posted that Dow was on the blink. A week later, it is still on the blink, actually almost at the same level; the index had a huge rebound 2 days after I posted (to be expected, LOL), then went nowhere for two trading days, and a big down day with good volume.

Louise Yamada, one of the best technical analysts out there, thinks the next logical support will be the August high, around 10,700 for Dow (like I said....), and that would be still considered consolidation.

However, she sounds caution that it may not hold there. The reason? Because the market failed to break out of the April high. She considers that to be more important than the lack of daily volume which many analysts (including Art Cashin) have pointed out as a bearish sign.

For more, go to Kingworld News.

(h/t erikbacardi)