RedlionTrader

Tom’s TTT Buy signal fires.. look for a 3-5% bounce over the nest five days $study

redliontrader — Fri, 18 May 2012 12:38:31 +0000

TTT Buy Signal issued on the market Close yesterday..

Tom’s TTT Buy Signal has a fantastic record of calling a return to mean 3 to 5% counter trend rally in a 5 day window. It fires only a few times per year. This is the 3rd firing. The 1st one failed to achieve the goal, the second on was good and this is our 3rd this year and we are feeling pretty confident. Over time this signal has a greater than 80% success rate.

For each of the 5 days we will cycle the various indexes through to see how they fair on the buy signal. Our prediction is that the Q’s and the Russell (IWM) will do the best.

Here is the Q’s marked:

Around the Globe

Asia – CLOSED

Shanghai (China) -1.44%
Hang Seng (Hong Kong) -1.30%
Nikkei (Japan)-2.99%

Europe as of 7:30am EDT

DAX (Germany) +0.33%
FTSE (UK) -0.47%

Today’s Economic News:

Quote of the day:
I myself am made entirely of flaws, stitched together with good intentions. – Augusten Burroughs

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

The trenders remind us to not trust rallies. We tried unsuccessfully to front run them for two days and now we are 20+ points down.

ES SP500 Futures Comments:

When our Zweig went down and under the 40 we had to make a decision on deep deep or shallow. We thought based on the October surprise that this market still had some interest that would prevent this 3 day wandering so we tried to outsmart and lead our indicators, which sometimes works well, this time it didn’t.

We had 1320 for a bottom target on Tuesday and Wednesday and then revised that when the market refused to move to 1280. So we were wrong on the 1320 and we might be proven wrong on the 1280, at least for now.

We will focus on our day trading until the market flags us differently, suspecting that a super bounce is just around the corner any day. Let’s get OPEX Friday and post-Opex Monday open out of the way first.

Today we are interested in the Globex overnight lows for a possible long entry and a target of 1325 and 1340 on the short or selling side.

We are waiting for a break in the afternoon selling pattern before we start to call for bounces again.

We do think that if you are long there is some relief in the next few days.

US Dollar DX Futures Comments:

The Dollar is struggling the last couple of days with some nice selling tales on the top. We want to see today’s close before thinking short.

TLT Twenty Year Bond ETF Comments:

Wow, I just noticed the ETF was twisted on this title for the last six months! No Comments? How come I only hear from you when I am wrong about a call, or even worse when you are right about a call?

Boy, if you can handle a 3 point drag up in the TLT this is a good bar to short. We are up near historic highs. At some point this bond bubble with just not hold once the grass on the other side looks greener (equities). The boat is crowded now.

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Breadth remains weak but bounce-able.. crying wolf! $study

redliontrader — Fri, 18 May 2012 11:40:24 +0000

Our Zweig is about as deep as it can go, reading below 32 now. Even if you are a bear with the most pessimistic view of the European outcome, we are in bounce territory so if you have been smarter than us and short, the markets are telling you to lighten up.

No turn in sight here:

Our 40 DPI continues drilling.

NH/NL no go

Trenders are un-impressed:

FUD is killing the markets, $ES_F 1280 if we can’t get some clarity. $study

redliontrader — Thu, 17 May 2012 12:11:03 +0000

Around the Globe

Asia – CLOSED

Shanghai (China) +1.39%
Hang Seng (Hong Kong) -0.31%
Nikkei (Japan)+0.86%

Europe as of 7:24am EDT

DAX (Germany) -0.78%
FTSE (UK) -1.19%

Today’s Economic News:

Decent numbers out of Japan, nothing out of Europe except the Spanish auction which went off ok. Jobless claims numbers out of the USA and Philly Fed numbers will establish some USA sentiment.

Quote of the day:
A man is rich in proportion to the number of things he can afford to let alone. – Henry David Thoreau

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

Our breadth chart today is the Zweig which now sits 3 days oversold. It should be very turbulent as the bears and bulls battle it out in here.

ES SP500 Futures Comments:

Yesterday we called for a multi-day bounce. We did get a multi-minute bounce and then the same old afternoon selling that we thought based on a return to mean need for our sentiment indicators would not happen. It did and we closed on the lows of the day.

We did like the underlying bid to the auction however as we saw for the first time in a long time buyers willing to show their hands and step in around that 1320 area. We are below that as of 7:30am ET. We still like the looks of a bounce.

What we can’t control is the news flow which has injected Fear, Uncertainty and Doubt. FUD. The number one enemy of bull markets. The premise of investing is that you can get a picture of the future and believe in it. The integrity of the European system is under attack right now and until that paints some picture of stability or some of the fear and uncertainty can be removed we should continue to have money flow out of the markets into bonds and other safe havens.

Since we were wrong on a bounce yesterday we thought we would pull the charts back a little bit and look for a downside target which we have now at 1280 area. That would be a 10% correction from the highs. We are currently down about 7%. Our run up from October was about 34%.

We are trading as I write around 1317, which makes our 1280 target 37 points down. We still like the idea of a bounce call and have an upside bounce target of 1346 and 1360. That is 29 points up and 43 points up. So our call’s risk reward ratio is about 1:1.

The markets are very fragile and the 1280 if it comes with come very swift indeed. We will be looking closely at the bid today to see if it will hold and buyers step in. If it is there we will be shooting long. If not we will join the crowd for the ride down.

So for today we are being stubborn and leaving our cash buy area in this 1320 region with a short target at 1346 with the condition that our Bid/Ask line in real-time looks as good as it did at yesterday’s cash close.

This is front running some very weak breadth indicators that are screaming doubt rallies. Play it as you see it.

US Dollar DX Futures Comments:

Watching reaction to 82.

TLT Twenty Year Bond EFT Comments:

If there is one chart that shows the fear it is the TLT which is now just 2 points away from the highs.

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Breadth, bearish but bounce-able

redliontrader — Thu, 17 May 2012 11:30:21 +0000

I know,we said that yesterday. It is really tricky here and we don’t think people should mortgage their houses and buy long, this is just a technical area for a bounce and a setup for a bottoming reversal that could take several weeks.

Please read the daily digest piece for what we are thinking and how we are thinking it. For breadth, it remains incredibly weak. Our Zweig is now 3 days underwater.

The CVI remains weak:

Our 40 DPI, nothing to see here but bearish numbers

NH/NL is in bounceable territory:

and our trenders remain bearish:

Chin up.. Think Up for a few anyways.. Take a chance on the small caps $study

redliontrader — Wed, 16 May 2012 11:56:50 +0000

Around the Globe

Asia – CLOSED

Shanghai (China) -1.21%
Hang Seng (Hong Kong) -3.19%
Nikkei (Japan)-1.12%

Europe as of 7:26am EDT

DAX (Germany) -0.53%
FTSE (UK) -0.63%

Today’s Economic News:

The UK came through today with stronger jobs data than expected. In the US a healthy mortgage application number has started the day. Still some big news events and releases left to set the market action.

Quote of the day:
If we were to wake up some morning and find that everyone was the same race, creed and color, we would find some other cause for prejudice by noon. – George Aiken

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

Our “breadth chart of the day” is the NH/NL chart that is showing extremely stretched. We are making a rare counter trend call (the trend being down) for a multi-day bounce for some mean correction.

ES SP500 Futures Comments:

Maybe we are just tired of the down action and we think up, but there is evidence in our breadth charts to indicate some upside price action is needed, even for the bears story, to bring our indicators back to some norms.

Overnight we landed on our 1321 target area and are now 10+ off that zone. We think buyers will see this as a decent buy in here and multi-day shorts will add to the price squeeze in the up side direction.

We are leaving all our targets the same as yesterday. We think upside 1355 area will be a piece of resistance’ and a retest of the the overnight low should hold.

The upside should be lead by the NQ and Russell 2000. We think those offer the best risk/reward ratio on any bounce here.

US Dollar DX Futures Comments

So much for containment on the 81 area of the dollar. All eyes on 82. That was the best price action yet on the dollar rally. Best to let it work its price and watch. If our call on the market bounce is correct, we should see our first red bar in the dollar over the next few days.

TLT Twenty Year Bond EFT Comments:

Same comments on TLT as the dollar. A good run yesterday. If the European wheels can stay attached for a few more days, we think there is some downside before any more upside resumption. Watch for TLT to come back to the 119.60 gap fill area this week.

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Breadth is now firmly in bounce territory–Think Up $study

redliontrader — Wed, 16 May 2012 11:19:11 +0000

We are comfortable now for those early knife artists to say that all the breadth indicators are stretched far enough to try an RTM trade (Return to Mean). This is not a call on the bottom in place, it is a counter trend call, so upside could be limited.

Our Zweig is 2 days now in oversold.

We see that the CVI has been stretched by the bears for about as far as it can go.

Ditto for the 40 DPI

Our NH/NL is also in oversold extreme

Our trenders are still bearish, and “Don’t trust rallies” is the mantra, we think with the current readings though a multi-day bounce is in the cards this week.

and

News will drive the market today, looking for $ES_F topside 1357, landing zone 1321 $study

redliontrader — Tue, 15 May 2012 11:44:43 +0000

Around the Globe

Asia – CLOSED

Shanghai (China) -0.25%
Hang Seng (Hong Kong) +0.81%
Nikkei (Japan)-0.81%

Europe as of 7:02am EDT

DAX (Germany) +0.25%
FTSE (UK) +0.09%

Today’s Economic News:

Quite a bit of data to pour over today. The USA has CPI, NY Empire, Housing Data.. Wow!

Overnight for Europe the GDP numbers came in much stronger than expected, but the ZEWs were a miss that is a mixed picture and is keeping the Eurozone from having a decent rally.

Quote of the day:
It takes too much energy to be against something unless it’s really important. – Madeleine L’Engle

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

Our Featured chart this AM is the Zweig which finally made it to oversold. While this dip-the-toe-into-the-sub- 40 region usually produces a bounce, it remained 9 days oversold in August. It is signaling to us that this market is getting ready to rock, we just have to find the beat. Once that 40 gets crossed to the upside we will begin our Zweig Breadth Countdown.

ES SP500 Futures Comments:

The markets are setting up for a decent gap up today. There is plenty of news in between the US open that will set today’s direction so one must be prepared for reactions in either direction. On the upside we think that the down trending upper trendline will offer enough resistance at 1357 to look for a short. For the downside we have pushed our landing pad a bit lower to 1321 area. We would like to see some real capitulation, else we think after a few days of bounce we will need to retest the lows.

US Dollar DX Futures Comments:

We like the dollar short here for a few days down to the just below 80 area. The consistent grind of the rally is bullish and we think after some downside relief that trend should continue. It is all about news today though.

TLT Twenty Year Bond EFT Comments:

We think it is about time that TLT did a little gap filling. We like TLT short from here for a couple of days with price moving back to the 119s. If Europe continues its un-winding story we see more money coming into the US bonds. That is not necessarily bad for the US markets, in fact we could see the crowded play squeezing money into equities. There is only so much room in the boat.

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Zweig returns to oversold, often a place for a bounce $study

redliontrader — Tue, 15 May 2012 11:15:14 +0000

We finally hit that Zweig oversold, it was crunching for a while, but the weakness yesterday had us officially into the oversold region and we all know what that means right? Once we climb above 40 we start our Zweig Breadth Thrust watch.

Oversold Zweig’s are not automatic buys however, last August for instance we spent 9 days in the oversold region, selling sharply down once hit. What we are looking for is a big green bar, a really big green bar. That would be our thrust bar. Then we want an NR7, an inside bar or a continuation day. That would be the pattern for a bottom in place and a rally trend about to begin. Until then follow the trenders.

Our CVI continues to look weak. It would like to have a big down day to bounce.

The 40 DPI would also like to have a flush day.

Our NH/NL index is very close to bounce status usually only sitting here for one day.

What can we say about the trenders? The trend is very bearish and rallies remain un-trustworthy until we get a face ripping upside with follow through.

Cumulative 4 week NH/NL

Looking for $ES_F 1352 to short and 1322 to go long $study

redliontrader — Mon, 14 May 2012 10:25:27 +0000

Around the Globe

Asia – CLOSED

Shanghai (China) -0.60%
Hang Seng (Hong Kong) -1.15%
Nikkei (Japan)+0.23%

Europe as of 5:41am EDT

DAX (Germany) -2.16%
FTSE (UK) -1.76%

Today’s Economic News:

Interest rates continue to fall as investors seek safety. We can not resume our rally until that breaks.

Quote of the day:
The only time people dislike gossip is when you gossip about them. – Will Rogers

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

This chart printed on Friday pre-market was a neutral, but the follow through with Friday’s trading has us back to bear readings for both of our long term trenders. We would like to see selling today and a Zweig reading below 40 for tomorrow.

ES SP500 Futures Comments:

The world continues to want to sell into the summer and so far the USA bulls have not capitulated. We would like to see that in order to begin the bottom building process and resume to the upside. Our target area for the downside is 1322 where we will be going long. Today we think should a rally happen the 1352/55 area should exhaust it, so we want to be short in that area.

Breadth continues to question all rallies, it does show, however, that the US market is more reluctant to sell than the rest of the world, but the afternoon selling into the overnight markets is a frustrating pattern for the bulls trying to turn the ship. Once that overnight selling pattern stops, the bulls will have move footing and we should begin to see some stronger reversal patterns, but until then.. continue to doubt the rallies.

US Dollar DX Futures Comments:

Working on the 10th day of green for the dollar. That trend is hard to find without a single red day. The moves have been small grinding moves without any real thrust. We are anxious to see if 81 will contain the dollar here, which if it does, so give some relief to equities.

TLT Twenty Year Bond EFT Comments:

The TLT remains contained below 120, that could end today. We are breaking out of a good size inverse head and shoulder that targets the 127 area roughly. We don’t think that will happen, but then again we didn’t think 120 would happen again. The debt crisis genie needs to be put back into it bottle to reverse this trend.

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Breadth returns to full bear, looking for a Zweig 40 reading to reset $study

redliontrader — Mon, 14 May 2012 09:54:40 +0000

We lost our little glimmer of breadth strength with Friday’s price action and has breadth back a full bull.

On our Zweig we are looking for a return to oversold in the 40s.

Our CVI continues to head lower:

For the bulls they are gong to like the slowing momentum on our 40 DPI chart:

New High/New Low chart is actually in a decent location.

Our long term trenders are keeping us bearish. The McSi is on a double bottom.

The bears have a managed to push our 4W NH/NL Lower