Tuesday, October 23, 2012

10/17/12 written report

Hi Everyone,

I am still waiting to hear from the Doctor and I am still not sure if I will be in the office tomorrow. But I will be able to have everything ready for the live charts before I leave (If I have to leave)

The inverted head/shoulders pattern I was following with IWM is not in play anymore. The small caps, which have under-performed the other indexes since Monday's lows-played catch up today and were the best performers today. When they try and catch up after a large move has already been in place with the spx. it usually means traders that missed the upside move are chasing beta. When either side chases-they usually lose. I don't think this time will be different.

My timing systems were looking for a rally as early as Monday-per my weekend report and that is exactly what we have seen. Now they are looking for some weakness and I wouldn't be surprised if the expected drop takes some by "surprise" They key to this road map-is the dollar finding some support and start to rally. If they continue to pressure the greenback down, we will see sideways or even more upside before the next turn.

There are some fractal patterns I am watching that are looking for weakness to start as soon as tomorrow. Whether we need a bit more upside first remains to be seen-but I believe this move is running on fumes right now. The longer they push it higher on no gas-the more powerful the drop will be when we top.

Off topic-kind of--I am seeing many economist labeling a housing bottom because of the housing starts number today. Adding more supply to excess supply is hardly any reason to say "housing has bottomed" Building companies do what? They build! They already own the land and they can either just sit on it or build and try and sell homes. In no way do I see this "housing stat" a reason to believe real estate is back in an uptrend. Being a home owner myself-I HOPE I am dead wrong and real estate moves higher. But I am more of a realist and adding supply on top of supply-with demand dwindling, is NOTHING to be jumping up and down about. G-

Open port positions: 

10/17/12 IWM short 1/3 @ 83.80
10/16/12 IWM short 1/3 @ 83.21
09/04/12 IWM short 1/3 @ 81.59

Recently closed

09/04/12 IWM short 1/3 @ 82.20 (closed 10/09/12 @ 82.57)   -.37
09/06/12 IWM short 1/3 @ 83.11 (closed 09/25/12 @ 83.69)   -.58
09/14/12 IWM short 1/3 @ 86.64 (closed 09/17/12 @ 85.80)   +.84
09/10/12 IWM short 1/3 @ 84.27 (closed 09/11/12 @ 83.92)   +.35

Full closed positions-click here

Click on charts to enlarge

60 minute timing system: Stochastics have rolled over from overbought levels and there is a clear sell signal bearish divergence in place. Odds of a pull back or hard drop are increasing greatly.  Short term view Bearish-ER

60 Minute timing system (Time Frame-Short term)

Block Volume System:  The block volume indicator has rolled over and there are some bearish divergences in place. We may get another pop up again, but there is no cash build up for a sustained move higher.   Short term view Bearish-ER

Block Volume chart  (Time Frame-Short term)

60 minute Chart   Stochstics are starting to roll over and IWM is right ion the thick of resistance. I am expecting a pull back down to the 83.20 or even 82 in the coming days     

IWM 60 minute chart





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