tag:blogger.com,1999:blog-39095055135339809872024-03-08T01:16:55.698-05:00Trader Craig's Market EdgeShort And Intermediate Term Trading Methods
And Market CommentaryAnonymoushttp://www.blogger.com/profile/09362814861901777574noreply@blogger.comBlogger1219125tag:blogger.com,1999:blog-3909505513533980987.post-40922761248840859082012-08-05T10:37:00.000-04:002012-08-05T10:37:19.876-04:00A Little More TimeThanks for the requests to resume posting. I appreciate the positive comments. I will be coming back this fall. I apologize for the inconvenience. <br />
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It does look like the current rally will fail soon. Market breadth is not confirming the rally. Look for a restest of the summer lows this fall with a possible low-risk long entry into the spring of 2013. There may be some shorting opportunities, but don't overstay your welcome. The short side has not been too kind to intermediate-term traders over the last 3 years.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-7981668853001916742012-04-21T18:21:00.000-04:002012-04-21T18:21:05.270-04:00HiatusI wish it weren't so, but I've had to take a hiatus from writing this blog due to the enormous amount of things going on in my personal life at the moment, not the least of which is my oldest getting married next month. I will return to posting, probably in June when things settle down. Thanks.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-50706528503285264732012-03-17T09:51:00.000-04:002012-03-17T09:51:07.062-04:00In The Same PlaceLittle has changed since the last post. It looks very much like the market is in the later stages of its current rally, as the McClellan Oscillator remains below zero, and the Summation index continues to fall. The equity only put call ratio has quickly moved back into overbought territory, which is another concern. As we watch the likes of AAPL go parabolic, it can be hard to sit idly by, but I still believe that is the best course for now. A correction of 4 or more weeks is what we are waiting for now in order to have a low risk entry point.<br />
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At the same time the IWM looks like it wants to breakout, but if it does don't expect much follow-through since it is lagging. A quick 2% to 4% pop may be all that can be expected.<br />
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Oil looks like it is ready to move higher again after testing support. I am looking to go long the OIL with a target of around 30.<br />
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As a side note, I realize there are a lot of things on this blog that need to be updated including the layout and a number of links, but this is perhaps one of the busiest times in my life that I can remember with lots of changes going on - marriages, graduations, anniversaries, new jobs, and much more, so unfortunately, a much needed overall will have to wait until perhaps later this year. Thanks for your patience and support. <br />
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I do appreciate the positive feedback that I get from time to time. As much as I want to be able to offer some valuable insights, one benefit in writing this blog for me is that it keeps me grounded, and forces me to re-examine my perspectives before I take a position. This has saved me more than a few times. One perspective that has recently come to light is the view of the 2011 correction as an expanded flat, which I first proposed last year. I now see that a number of other market analysts have adopted the same view. The only problem is they are still seeing things through a bearish lens, and that is just not the place to be right now.<br />
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<br />Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-60900525219467698412012-03-14T07:59:00.001-04:002012-03-14T07:59:54.672-04:00Patience Required<div class="separator" style="clear: both; text-align: left;">
It is at times like these that a trader wonders if the only way to make money is to keep buying breakouts, but as surely as one gives in to that urge a significant reversal will occur. It is only a matter of when. Looking back at the initial rally from the 2009 low, we can see that the Qs pulled back to the 12 week ema several times providing new entry opportunities. When that will happen now is anyone's guess, but it will happen.</div>
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<a href="http://4.bp.blogspot.com/-gTgpF-AUQ8s/T2CHkmuSHOI/AAAAAAAABNQ/iPuwq1r6tnI/s1600/QQQ+031312.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="215" src="http://4.bp.blogspot.com/-gTgpF-AUQ8s/T2CHkmuSHOI/AAAAAAAABNQ/iPuwq1r6tnI/s320/QQQ+031312.JPG" width="320" /></a></div>
<br />Anonymousnoreply@blogger.com1tag:blogger.com,1999:blog-3909505513533980987.post-8742596910185997332012-03-11T11:23:00.000-04:002012-03-11T11:23:14.409-04:00Is It Time To Short WYNN<div class="separator" style="clear: both; text-align: left;">
WYNN has completed a very clear upward double zigzag from its December low. It is tempting to go short here. The risk would be above the 3/2 high. However, my past experience says this would not be a good choice.</div>
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While the daily chart shows a completed pattern, the weekly chart shows that WYNN is trading above its moving averages and the MACD has turned up. It seems more likely that WYNN's upward correction could continue even if it is a corrective pattern. If WYNN moves below the 2/14 low, the probability of success would be greater, assuming the broader market is also in decline at that time, so in my opinion it would be best to wait.<br />
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<br />Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-67727980130281918992012-03-09T19:53:00.001-05:002012-03-09T19:53:44.925-05:00Ripe For A Selloff<div class="separator" style="clear: both; text-align: left;">
While the selloff in equities seemed to be averted with a 3 day rally into the weekend, there are now several clearly negative divergences that have set up. The MACD, MFI, RSI, and Volume are all indicating that the rally over the past 3 days will fail. That doesn't mean we won't see a new high on Monday, but that new high may just be wave (b) of [iv]. If so, then wave (c) of a flat, expanded flat, or triangle should follow. In the expanded flat scenario, the downside target is in the 1310 to 1320 zone. If a flat is underway, then we may only see a retest of this week's low. If it's a triangle, then more sideways trading is likely. In all three cases, a 5th wave with a target of around 1450 should follow.</div>
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A sharp 3 day selloff would probably be a good time to exit any open short positions, particularly if the support zone is hit. At that point the long side will be in play again. While it is possible that a 5th wave is already underway, I am skeptical due to the negative divergences, and the fact that the summation index has continued to decline, and the McClellan Oscillator is still below zero.Anonymousnoreply@blogger.com2tag:blogger.com,1999:blog-3909505513533980987.post-74475578909831260342012-03-08T07:23:00.000-05:002012-03-08T07:23:13.255-05:00One Way Or The Other<div class="separator" style="clear: both; text-align: left;">
The NYSE McClellan Oscillator hit an oversold level on Tuesday. There appears to be two cases following when this occurs. In the first case, the oversold level marks the end of the pullback/correction, which is what happened in March of 2011. In the second case, which is the more common outcome, the market continues lower after a bounce, and the McClellan Oscillator makes a higher low as occurred in May of 2011. One clue as to which way it's going to go is the MACD of the NYMO. If it remains below zero, then we probably have Case II. If it moves back above zero, then we probably have case I. We should know fairly soon.</div>
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The futures this morning seem to be screaming Case I, as in we should see new highs soon, but it's too early to tell.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-26339746773662635662012-03-02T17:41:00.002-05:002012-03-02T17:41:24.427-05:00How I Traded Solar Winds<div class="separator" style="clear: both; text-align: center;">
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<br />Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-40312159963779024862012-03-01T17:44:00.002-05:002012-03-01T17:44:49.101-05:00More Evidence For A Top<div class="separator" style="clear: both; text-align: left;">
The absolute breadth indicator has been quite reliable over the past few years at signaling tops and bottoms in the stock market with few false signals. Extremes in the indicator point to significant imbalances between the number of new highs and new lows. These imbalances tend to occur at market turning points. Today the absolute breadth indicator reached a low level that has marked several prior tops and one bottom.</div>
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Several other breadth indicators have been signalling that a top is imminent as well including the McClellan Summation Index. This doesn't mean that the top need be greater than minor degree, but a top is likely nonetheless.<br />
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Though there are few good setups, I am looking for shorting opportunities in stocks and a reversal in the E-mini futures.Anonymousnoreply@blogger.com6tag:blogger.com,1999:blog-3909505513533980987.post-44385522502537028602012-02-29T18:53:00.000-05:002012-02-29T18:53:28.119-05:00VIX Pointing Toward Correction<div class="separator" style="clear: both; text-align: left;">
Perhaps today's high completed the rally from the December low, or perhaps the market needs another push higher. Either way exhaustion seems to be setting in. IBD continues to note that leading stocks haven't really participated on the up days recently. </div>
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The VIX is showing a positive divergence with a higher low against the SP500's higher high. This alone is a strong indication that the long awaited correction is near at hand. A move back to the 1300 to 1340 level +/- would be the expected outcome. I think we will know before the end of the week if it has come to pass.</div>
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One problem that I see is that there are few stocks to short unless you want to try to pick tops. My recent stab at AAPL was a failure, as such top picking efforts usually are. However, there a few possibilities. AMZN is one of them. It was down 7.6% in February versus a gain of 6.4% for the Qs, and it is on the verge of breaking a 3rd trendline. The head and shoulders top formation gives a target of around $130.<br />
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As long as the October highs hold as support in the indexes, this correction will be another buying opportunity.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-63576126065626950992012-02-24T18:22:00.001-05:002012-02-24T18:22:12.592-05:00TLT Forming A Triangle<div class="separator" style="clear: both; text-align: left;">
The TLT appears to be forming a very long triangle that should lead to an upside breakout later this year. If so, the target is 132 to 140.</div>
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Very little has happened this week as the market has stalled out with the SP500 just below the 2011 high. It looks like the SP500 will try to breach that high next week before rolling over, but the selling could begin from the outset on Monday.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-74128009462528759992012-02-22T06:50:00.000-05:002012-02-22T06:50:38.958-05:00Stalling At The Median Line<div class="separator" style="clear: both; text-align: left;">
The SP500 is stalling just above the median line for the rally as negative divergences continue to develop. Failure to reach the upper channel line suggests that a return to the lower channel line or to support at the October high will be the target for a correction. A break of 1337 should be the first indication that the correction is in progress and a short term top is in.</div>
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Oftentimes the terms pullback and correction are used interchangeably, but perhaps it would be better to make a distinction. Let's use the term pullback to describe a minor decline of smaller degree within an ongoing uptrend and a correction as a larger decline that concludes an uptrend at the current degree of trend. It appears that we are near the conclusion of minute wave [iii] of minor wave 1 of the current uptrend from the December low. The November low, though higher than the October low, was probably the orthodox low of the 2011 correction, so technically the rally began off of the November low. It is a small distinction that is not of immediate importance, but it may be important later.</div>
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<span style="text-align: left;">The positive divergence in the VIX suggests that the wave [iv] correction is near. It should be proportional in time and price to the correction into the December low, or about 65 points in 8 to 10 days. T</span>he clear resistance zone in the VIX should not be violated if the correction is to remain contained. A move above resistance would indicate a larger correction is underway.<br />
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After the correction ends, we may expect another 8 to 10 day rally to complete minor wave 1 followed by a deeper correction into the April/May time period. Based on this view, it may be best to take profits early after the next rally begins with a possible double top to end it.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-79390690971001748242012-02-15T19:41:00.001-05:002012-02-15T19:41:38.152-05:00AAPL Sports A Bearish Engulfing Candle<div class="separator" style="clear: both; text-align: left;">
A huge reversal today in AAPL along with the Qs pushing into the target zone probably means the long awaited pullback is finally upon us. The Qs will most likely retest the 2011 high at 59.83. I am not planning to short the indexes unless the Qs break and sustain below the 2011 highs. I am short AAPL from 498.64 with a target in the 427 to 443 range.</div>
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<br />Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-81547845497283145482012-02-14T05:42:00.000-05:002012-02-14T05:42:23.728-05:00Running Out Of Steam<div class="separator" style="clear: both; text-align: left;">
The McClellan Oscillator has now made a lower high from its October peak which was the initial thrust off of the low for this this rally. At most we might expect one more push higher in the NYMO to form another lower high as the SP500 pushes into resistance in the 1360 to 1370 zone. The momentum of the NYMO has turned sharply lower, which suggests that a correction may come sooner than later. </div>
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This is not the time to be the hero as a multi-week rally into old highs rarely breaks through on the first try, just as it could not in November 2010. I will be selling short-term and intermediate-term long positions this week, and looking for shorting opportunities in individual stocks, but not in the indexes, in anticipation of a correction lasting 2 to 8 weeks that should bring the SP500 back down to the 1300 level, which will probably be a great place to get long again.<br />
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So far, this has been a great year for longs, and I expect it will continue to be so.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-65374117610227784182012-02-09T18:32:00.002-05:002012-02-09T18:32:38.784-05:00In The Zone<div class="separator" style="clear: both; text-align: center;">
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<br />Anonymousnoreply@blogger.com1tag:blogger.com,1999:blog-3909505513533980987.post-40172280844315900202012-02-07T18:34:00.000-05:002012-02-07T18:34:08.605-05:00Looking For A Pullback<div class="separator" style="clear: both; text-align: left;">
We haven't seen a pullback in some time, and there is no way to predict exactly when a 3rd wave will end, but we should be on the lookout for a pullback between now and the early March. The most likely pattern for the pullback would be a triangle with wave [v] to follow up to new rally highs afterward. Calls for a major top continue to build, but the technical support for it is waning. I would only alter my view if the Qs fell below the 2011 high. For now, it's time to tread lightly until there is another buying opportunity.</div>
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<br />Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-28136620562993987302012-02-03T20:10:00.000-05:002012-02-03T20:10:17.846-05:00A Market That Just Won't Quit<div class="separator" style="clear: both; text-align: left;">
Despite attempts by many, including myself, to find a top in this rally, the market seems content to keep marching higher. Since August I believed that we were in wave (X) of [X], but the action in the Qs this week seems to negate that view as almost the entire weekly bar is above the 2011 highs. And now we have a weekly squeeze long signal in the Qs as well to go along with already existing signals in the SP500 and the Russell 2000. The last time there was such a confluence of weekly signals was 2010, which led to a 19 week rally after the signal week. </div>
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I will look at a new wave count next week, but the best interpretation is that the November low completed the combination correction. This means the Qs are now in wave [iii] of 1 of (A) of [Y]. Wave [ii] ended at the December low. Typical fib projections of wave [i] put a target for the Qs at 65.58 to 69.94. I suspect 65.58 will be seen at least before wave [iii] ends. A 2 to 3 week correction in wave [iv] should follow as a flat, expanded flat or triangle (I would bet on a triangle given the market strength), and then wave [v] with a target between 69.07 and 74.47. If wave [Y] = wave [W], wave [Y] will end somewhere around 90, but if speculative fever takes over, we could see a retest of the 2000 highs.</div>
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There will be pullbacks of course, but until we begin to see some distribution the only place to be is long, with perhaps a few exceptions. As things heated up this week I began to add new long positions and will continue to do so until I see a reason not to. I had exited STX with a 26% gain off of its pullback to the 50ma, only to see it rocket higher another 30%. This was a pretty good clue that my original view was wrong. <br />
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There are those who continue to wait for the mythical wave [3] down, but I believe those hopes will be dashed when the SP500 eclipses the 2011 highs over the next few weeks.Anonymousnoreply@blogger.com1tag:blogger.com,1999:blog-3909505513533980987.post-24353835559749172942012-02-02T18:37:00.000-05:002012-02-02T18:37:18.128-05:00Oil Closes Off Its Low<div class="separator" style="clear: both; text-align: left;">
Oil closed off its low today (sic-not in the upper half of the range). The main problem with the short perspective is failure to accelerate to the downside. The action since the high on 1/4 now looks more corrective than impulsive, which negates the possibility of a flat correction and raises the probability that a triangle is underway. The existing squeeze setup may turn out to trigger long. If so, the first target is around 102. Only a break of today's low with a close under support would change this view.</div>
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<br />Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-73958446412054117212012-01-31T16:26:00.002-05:002012-01-31T16:26:32.454-05:00Oil Fails To BreakoutOil tried to breakout above its 3 day high this morning but quickly reversed to close near the low of the day. This action is confirming the likelihood for a downside breakout with a squeeze short setup that could trigger soon.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-79683891850731110632012-01-27T18:40:00.000-05:002012-01-27T18:40:01.606-05:00Crude Set For A Big Move<div class="separator" style="clear: both; text-align: left;">
The Bollinger Bands have formed a six day flat squeeze pattern in crude oil. This is the most explosive type of squeeze setup. Presently, momentum as measured by the DI+/- is negative suggesting that the move will be to the downside. However, oftentimes this setup will lead to a fakeout in the opposite direction of the final move, so be prepared to re-enter the trade if stopped out.</div>
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Another reason to think the move will be to the downside is that the Dollar is oversold at trendline support with the Euro at resistance. A sharp retracement rally next week would be expected, which should be a negative for stocks and commodities near term.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-60446821900358033072012-01-26T21:21:00.001-05:002012-01-26T21:21:04.899-05:00Pullback Imminent<div class="separator" style="clear: both; text-align: left;">
The SP500 has stalled at the median line for the rally for the second time since the rally began in November. Short-term momentum is rolling over with short-term sentiment at extreme bullish readings. It seems a pullback is likely, but there is support at the October high and at the lower trendline. </div>
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I suspect the pullback will terminate in this area. By the rule of alternation this may turn out to be a triangle or a flat correction lasting about two weeks. There are some stocks setting up for short trades. The easiest way to find them is to look for stocks that have not participated in the rally forming lower highs along with missing earnings and/or lowered guidance. A good example is UA which is down 16% from its high, and missed earnings expectations today, and lowered guidance. Any short trades would be hit and run at the present time.<br />
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Another rally should follow the current pullback with the SP500 tagging the median line or exceeding it with a target between 1340 and 1360.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-68281162836241541872012-01-24T18:22:00.000-05:002012-01-24T18:22:04.361-05:00Rally ContinuesThere is no evidence other than extreme sentiment readings that an end to the rally is near. Momentum remains positive, and AAPL's results will only help tomorrow. It looks like the Qs could very well reach the next target zone around 63+/- before a top is seen, which could take another 2 to 4 weeks. This is consistent with the lag from extreme sentiment readings seen in the past. Traders should be mindful of sudden reversals and trail stops appropriately.Anonymousnoreply@blogger.com0tag:blogger.com,1999:blog-3909505513533980987.post-43742328960775285932012-01-19T18:55:00.000-05:002012-01-19T18:55:50.532-05:00Sentiment Has Reached An Extreme Level<div class="separator" style="clear: both; text-align: left;">
Sentiment as measured by the equities only put/call ratio has reached an extreme. This doesn't mean that a top will follow immediately. A decline could start tomorrow or in 2 to 4 weeks. However, prudence dictates that it's time to take some profits. I would be willing to leave some long positions on if they are working, but it's time to lighten up. The Qs breached the July 2011 high, closing above that level by only 3 cents with a doji candle.</div>
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I will be selling half my position in the Qs and raising the stop on the remainder to this week's low at 58.48. I have sold two swing stock positions that reached target zones, and I will be selling two more tomorrow. I will be tightening stops on the remaining positions, and not taking any new positions until we see a healthy correction. Once a decline is underway, swing short positions may be taken if setups are available.Anonymousnoreply@blogger.com1tag:blogger.com,1999:blog-3909505513533980987.post-32753537871464220442012-01-19T16:17:00.003-05:002012-01-19T16:17:50.793-05:00GOOG Has ToppedGOOG is down almost 10% after reporting earnings this afternoon.<div>
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See my post from Monday January 9: <a href="http://tradercraig.blogspot.com/2012/01/goog-has-topped.html">http://tradercraig.blogspot.com/2012/01/goog-has-topped.html</a>.</div>
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GOOG rallies are shorting opportunities with a target below 475.00</div>Anonymousnoreply@blogger.com0