Friday, 28 February 2014

Equities: YM, ES, TF, NQ & DAX...todays the day for a shake out...Lower we go

If its going lower then bar counts and price action points to today as a big day. Last day of the month, economic data due and a feeling that which ever way it goes it's going to be a large move and I remain bearish for the reasons I have stated before re current price action and the DAX megaforks centre lines etc. If not lower we could see more upside but as lonely as us bears are at the moment i still stick to my daily chart view below on the DAX and look to fill the shadow/wick of yesterdays candle. The battle has been raging this morning for 9600 DAX and looks like a fail after repeated attempts. Still inclined to trade from the long side but flat until WS opens.

Wednesday, 26 February 2014

Equities: YM, ES, TF, NQ etc. A free whipping

Well, that was a bloody business with a false break lower. Clearly we are not ready to move lower  and indeed may see another pop to the upside that will carry through overnight however there are mixed messages. Ther Spoos shows a definative non touch ie centre line rejection in this PF shown below but to understand market flow you must view price in multiple forks and the historical median lines which show up as the horizontals below and provide supp/res.

 Heres the daily DAX futures which shows the black and blue historical PF/ML's plus the black thinner PF.
Heres the DAX 5 min chart with the simplest of PF's showing the opposite of whats happened in the SPoos ie a struggle to get to base/the centre line
Conclusion: The whole business is still up in the air with a growing amount of volatility and looks like being another range day but remember the SPoos has a gap to fill at 1841 so may grind lower.

Equity Markets continued.. DAX, ES, YM, RT,NQ etc... Ladies and Gentlemen, Please take your shorts now!

Subtle changes afoot after yesterdays inside bar..... For the first time in ages the recent moves have failed to produce a touch on the centre line of what i call " local" pitchforks. ie the most recent low and previously pertinent pivots in low-ish time frames here in the 15 or 30 min chart seen below. This may not sound much but this has been almost unheard of in recent weeks as we have motored higher with eye watering energy.
Now there is always a relationship between all the previous lows and i find i can gauge sentiment well by observing the different relationships between the different choices that can be made for P0. You can change the angle of the PF as you work your way up the "handle" of the fork and choose different lows and observe centre line behaviour. Two pivots are most important. The classic Andrews lowest low and the most recent low behind the  P1-P2 (or BtoC) move ( this gives you the best reaction line to observe). In a vibrant trending market all possibilities are covered and the centre line is always pierced but see below...

 Heres what i mean   FAIL
Just in the centre line but a whisker off a fail

All eyes on the opening session and another post after the first hours trading but just to offset any bearish sentiment check out the Spoo's and this pitchfork plus its reaction line.... No hint of a planned visit to the centre line of this PF BUT the setup is the trade off the inside bar (break below candle body) or off the b-line to sell the first retracment of a confirmed move lower using the  2 x +B-line template overlaid onto reaction+ ML structure ie combo setups.

Yet look at this most interesting PF in the DAX

Please not the GAP at the centre line in the 240 min chart at 9300

Tuesday, 25 February 2014

Equity Markets continued.. DAX, ES, YM, RT,NQ etc... where do we stand now? Are the bears running for the hills or does this market still stink?

Let's take a cold and rational look at where we are viz a viz price action and let's all remember that none of us earn money from calling tops and bottoms but by making prudent trade entries and managing risk. We may massage our ego's by getting the right reversal level but as the old saying goes "those who pick bottoms
(or of course tops) get dirty fingers". I have spelled out in detail to my valued subscribers my unease about equities and have presented both fundamental and technical reasons in a dispassionate way. It's been a difficult week to be bearish and yesterdays early and mid session left me pulling my hair out and re evaluating the charts in detail until by the time a few hours later I had reinforced my initial convictions about this being the end of the road re the topside we had seen a full false break out and subsequent selll off late afternoon on many if not all the equity indices. The ES  and Russell emini could easily display a double top depending on what data system you use.There is a cautionary point to make here which is that no down sloping Andrews pitchfork has had a touch on its centre line except in very low time frames and price has been very reluctant to retrace in any major time frame (60 min etc) and now we are moving sideways (among the DAX's Centre lines (from the two major pitchforks)) this test cannot be applied but as this drama unravels and we either see a trend continuation or a decline there is no denying the the recent price pattern was exceptionally strong... 11 consecutive days with higher closes which makes a weekly candle that is a tonic for the previous drop lower and as yet we still have to see this trend broken by a lower low but the pace and momentum has become almost hysterical as can be seen in the first chart below with shallower and shallower retracements and shorter and shorter waves higher. You can draw what conclusions you wish from this but it appears that some people have taken leave of their senses and now live in the land of wishful thinking.
Provided we continue to see price fatigue set in at these levels around 1840 we will need another day or two for price to be 'ripe' for a move lower (or another higher attempt again). Bar counts can be useful tools and time plays a more significant role than we credit it. 13 bar decline and rise- H to low to H( not a John Crane count).
So lets have a nice easy and basic look at the DAX in easy peasy charts with minimal clutter ( ML's RL's). For background re pivots and pitchforks you can always refer to the January and subsequent posts HERE

 OK, so we are faced with a pattern forming where some indices have made higher highs (all time highs) and some like the YM and DAX have made lower highs but we have two options as illustrated below. . Higher to new pastures in the heavens towards 1900.00(ES) and 10000 (DAX) or lower back to see a HEALTHY retracment.Retracements that will in the longer term enable us to go higher. I put this case in 2012 regarding gold
Today has opened with another false break out up and we have seen a small drop and 1840 ( trades as I write) sees good linear support. I suspect today will be an inside bar so lets have a look at the daily and what the candles+ price action are telling us.

We wait for the setup  and break either way (1851 and 1836 ES H14)  but price remains resiliant and there is no short trade here yet and short term setups must be made from the long side.

Tuesday, 18 February 2014

Equity Markets (DAX, SPX) continued: I will spell it out! Why this is the turning point and why you should look for a short entry.....Continued...continued

OK, we are at the point where we should expect a sharp break one way or the other and as you know we are in the bears camp ( still not flustered and still resolute about the conviction of a change in trend which will only change if we see a serious break towards 10000 in the DAX) . In the DAX we are back at the original centre line targets from the historical Andrews pitch forks ( see previous recent posts in this thread but below in green and black and blue and black underneath in 2nd study). Please note there are no arbitary drawn lines below all are either pitchforks or reaction lines are where i have drawn over lines as they appear in other time frames.
There is no doubt the market seems bullish and the recent eye watering series of daily bars and HH closes could lead one to reasonably expect a further break upwards especially when we look at last weeks weekly bar which is a real healer for the downside damage done recently. However - "Au contraire, Dr Watson" -as i said last week we are not yet short and do not want to be against this trend yet but this is the critical area to watch (DAX 9615 to 9700) and there is no rush "per se" ( or at least for today)....and just think about, all those greedy professionals - fund managers and the rest of the investment banking industry all rubbing their hands together in expectation of 2014 and beating their hands in approbation on the proverbial 'table' as they wait with growing expectation for the market to just keep going up.....after an already exceptional bull run of in excess of 5 years ( we could argue more years pre 2009) with fundamentals that were simply - to be polite -strange, yet now with the macro economics starting to make sense of recovery what should happen?? Well i ask you? The inverse to what is expected perhaps as markets are never rational & if this simply is the force of huge purchasing power of the industry at work driving us higher? Well if thats the case then there still must be a point at which we simply all wake up and realise the massive asset inflation that has taken place since Ben has been at the wheel and now ----all change- and a different era-Janet- yes, Dear Janet ... But seriously, how to spot a bull trap? When the whole world comes back to work in 2014 and thinks its biz as usual
But forgive my behaviour, please remember i am always impartial and as corruptible as anyone so back to whats important -the  trend( and i am not prejudiced either way- up or down (!). If this is a crucial turning level we will need to see a range established before going lower( a top must be formed in time/candles/bars) but the bulls remain in high spirits and could drive the ES to a new high but i suspect that the reaction line will hold it until snapping point at 9700 DAX and 1850 ES, and we will see it fall but its not going to be an easy ride and we are currently flat ( no position). I think we will see our nerves pulled to extremes..false break outs up and down like we saw 17 to 23 jan this yr.
The charts below show mostly the DAX and also the Spoos. They show the main two centre lines from the forks and also the down sloping reaction line form one of those mega forks.
Here are the basic charts ...see we have both mega forks in play plus the second reaction line from the blue PF a few weeks away and closing fast..perhaps that will be the reaction line to score?

and below are today's close ups  Also below to confuse you further ( sorry lack of time!) there are manually drawn lines that relate to the location of those aforementioned centre lines in other time frames ( see my article on line location or "mirror lines"). I am happy to send anyone a link to the daily video but we no longer post them freely due to time constraints but we offer free material to non trade enquiries .

Lastly: Email for free market report: Why you should buy Soybeans @1350-00 and sell ES at 1840.00 ( both ref today's post date date of 18th Feb 2014). New grains trend PDF available..............

Thursday, 13 February 2014

Equity Markets (DAX, SPX) continued: I will spell it out! Why this is the turning point and why you should look for a short entry.....Continued

I have deliberately left for posterity the previous post from late January and the thread about the process of topping out without a second instalment but feel the time is now right for preparing you for the next phase of this equity market move. Of course I do not have second sight and there remains a possibility of us moving higher but think this is highly improbable now we have reached the upsloping Centre line of all forks drawn off the recent low in all major indices i follow.. Now we wait to see if we build a second lower high here above the critical 1800 area on the ES before a move lower next week. The pace of the current rally is strong so if we make a new high all bet's are off and It's certainly not the time to take a short position with such feverish upside action yet but we need to watch price carefully to see if it stalls and struggles. Remembering we have a appointment with a gap on the DAX futures at 9300 area but will need to build a right hand side shoulder first ie a period of sideways movment on the DAX, DOW, Russell.
I stress again that I believe we have completed a cycle and that there is no more upside and we are merely in the process of starting our descent lower -even with an eye watering  rally as we have just seen which you can clearly see below the reaction line that is responsible. Please remember that what you see below in terms of reaction and median lines is but a mere fraction of what makes up the fabric or matrix that price moves through and i am by no means sure that we are to represent this matrix best by using bars, candles, tic, volume bars etc etc to our best ability but so far in searching for a 3rd dimension for charts or a third value for the Z axis (  X & Y time and price respectively) i have only given my brain a headache. However one thing is certain which is periodicity trumps all and is far more important than we give it credence for. This may sound obvious but in other words a median line or reaction line from the 60 min chart will overcome lower time frame structure and likewise it is blatantly obvious that a weekly or monthly reaction line will impose greater stress and pressure on price than any lower time frame reaction line from a 240 min or hourly or 10 min chart time frame. With 24hr trading surely the only really true interval is weekly?...perhaps at a stretch the daily time frame? I am unsure still about the most effective time frame but the higher we go the greater the advantage for future direction and trade entries that can be finessed in lower time frames. Hence an overriding conclusion we are headed down but using the low time frames to take the entries using standard ML and RL combo setups. Remember that if periodicity is critical then so is the angle of any reaction line which changes its angle as we change the time frame.