Recap 5/31/2013 - Short term bearish

We've been seeing some weakness on the daily candles for the peak bearish reversal bar near ~1780. Today was a bearish close, the daily bar closed below short term support and it seems we have more downside in the short term. Near term target is about 1.5% lower down to support line drawn on chart around ~1595.

HPQ near term target 29.21

Was looking at HPQ since is bounce from the dismal lows. Seems the measured move target and the resistance make a confluence target around 29.21. I'm guessing this is reachable here.

Also, I've been using www.tradingview.com and its a good charting system, unfortunately uses javascript but works both on Linux and windows.

Switching to a systematic approach to trading

For a few years I have been day trading using technical chart patterns together with an understanding of the fundamentals of the US economy and using discretionary entries. Lately, CB interventions (verbal and actual policy actions), rumors, HFT runs had been making it challenging to read the markets and control open trade positions, so I decided to try algorithmic approaches. My endeavor has kept me busy over the last 6-8 months, building a system and coding the strategies is quite frankly a tiresome exercise. I shall be writing about some of my findings as we go along, at the moment I am finding quantitative work quite exciting.

Recap: QE3 price not value or dodging a bullet?

This week, 9/13 Fed announced QE3 $40b of MBS purchases a month until further improvement in Labor market condition is visible. So that's it, detractors have been shouting about the breakdown of the transfer mechanism or saying flat out that money printing doesn't do anything for the economy, while Keynesian think even this action is bit too small. I don't think QE has done much for the improvement in the labor situation, and I just dislike this kind of manipulation, not saying anything about the politics of it. Also, I'm getting a bit concerned about the way both ECB (Draghi's bazooka) and now the Fed have touted unlimited intervention. They're moving a lot of bad assets onto their balance sheet which only makes me worry about the banks going BK.

That said, it is the world we live in and we trade prices and let investors (missing in action so Fed then?) decide on the value. SPX broke a major resistance level this week. I'll start with the monthly chart: 5/31/08 high of 1440.24. If you look at the chart, that peak doesn't look too prominent in the scheme of things, the move down was huge, 1576.09 to 666.79. If you look at the chart since 1997 onwards, we've moved into the monthly ATR of 100pts, So breaking up to the peak of May 08 doesn't seem too far fetched, given that we've moved 76pts this month and we've had QE and a major resistance has been broken. On the other hand I would have been happy to have SPX turn lower into the lower price channel support from here. So the market must turn lower this week or it would confirm my upward target however incredulous it may seem.

Weekly chart below you can see that the move above was on good volume and the fact that we had a second day continuation only makes us believe that it might have legs, only time will tell. With that said, maybe first ever bullish view, I'm not positioning long here. Also, I think Friday's price action of giving up mornings gains, might be hope for the bears of a possible return to sense.

Recap 8/13/2012: SPX weekly moving higher

Last post was a while back, I have been investigating some quantitative approaches, but I thought I would update the SPX weekly chart and my thoughts on the market.

First, in April the market was on the upper channel resistance and we dropped about 10% from there the possibility of Central bank intervention kept us from moving any lower. At this time the bounce off that low seems to have formed a bullish flag which targets the near term highs in the SPX. Now, thats a bit too bullish for my taste but I have a few participants that I believe are better at this than me who believe that might be were we are headed. So take a look

Right now i think the markets have the bulls wondering why they should buy and the bears worrying about getting stopped out of their positions. Everybody is waiting for news to clear the air a bit, last couple of days the volume has been pathetic and I think might continue to be so. (Maybe the volume has been this pathetic all this time, we just don't have Knight Capital fooling us anymore?)

Anyways, near term targets seem to be the 1440, 5/08 high and it that breaks then we're going all the way up to 1600 (I doubt this level will be reached this year)

On the Central Bank front the Fed's next meeting is in September and will probably decide on a mortgage twist type intervention and while Europe is on vacation now, more news or decisions on the Euro front will be forthcoming in September. And it seems likely that news would support the market with some kinda of Greek exit which is already priced in. I heard a comment "Lehman has taught us that loosing a few billions in bailout is better than 100 or more times that in case of bankruptcy", that makes sense and after all paper money has no limits on capacity. Anyways, its the world we live in. 

Market Recap: Major US market indices bearish outlook

I wanted to present four weekly charts of the main US market indices SPX, DJ, NASD and RUT. What is common to all are the parallel channel and that we are bouncing off the upper resistances on them. Which makes my near term market outlook bearish.


First up: SPX, market hit the channel trendline resistance and bounced off it mostly on some earnings (ref AAPL) shrugging off the not so great economic data, pattern seems clear although we never know which Fed official would prop us up.

Next: DJ Industrial: The channel is roughly over the same period over a longer term channel, DJ has been lagging somewhat lately on the lower time frames.

NASDAQ: This index broke resistance trendline and has been leading all other indices but it too might have to take a step back as AAPL is feeling some pressure lately, in spite of the blockbuster earnings last week. On AAPL my view is the risk reward isn't as appealing as an long term investment going forward, but I'm in no way a sector or AAPL specialist.We'll have to watch what the tech sector does from here on.

Russell 2000: This midcap index is forming a bearish head & shoulders pattern, not in a channel but is bearish nonetheless. Its bouncing off an important support ling and the right shoulder could form higher but if this breaks beware.

I think these charts convey my outlook for the months ahead, we may trade range bound or lower, I'm worried about what happens in Europe with the French elections and the never ending PIGS debt. Stay  nimble.

Market Recap: 4/4/2012 - Bears have more work to do

Some technical damage today with a decent size selloff and no bounce off the lows. After the FOMC minutes and Europe bond sale. I think what was interesting today was that the longer term trendline from Nov ( 3/28 post ) was retested and somewhat broken. Thats a bearish sign and if that breaks we will have some sharp moves lower but not so sure that happens yet. First its a short week with a holiday on Friday, usually day before is seasonally bullish. Also, if you look at the 30m chart below we have channel support that has held near close, so the uptrend is intact.  

As of writing this, Asia is trading lower so we'll have to see how Europe does overnight, we might just drag sideways in indecision too. Short term support from 2/29/2012 is at 1378 about 20pts below close today so thats to keep an eye out for.