EUR/USD and AUD/JPY at Critical Levels

The daily is above, I believe the level we are attempting to break is critical, as in April the price retreated from this level, and more recently we have tested this level a few times.  If this level fails to break, and price action gets below some of those moving averages this currency pair could be in trouble.   Also the correlation of the S&P 500 and this pair has been demonstrated in previous posts, but simply look what occurred during the may flash crash.

A hourly view allows is to see the recent tests of the level 82.75 level.  Currently we have broken the 20 MA hourly.  If we continue down over night expect the S&P 500 to start lower on the day.

The European issues have not been settled.  The Irish bailout is still in talks, however, with today's rally and dollar drop it would be expected to see the EUR/USD up.

One thing I wanted to note on this chart is the MACD has just crossed the 0 level today.  This generally signals mid-term bearishness so look for a retest of that level.  If it holds more downward movement would be expected.  Again, looking at the level in price action in April the top coincides with level we are battling.

The hourly shows the pressure from the 200 hour MA.  With a squeeze occurring with the 20 hour MA.

The slow stoch would be good to look at, any breaks below the recent low would be a sign for continued selling and a shift in momentum.

GM IPO Chart - Open $35.00 , Close $34.00

The much awaited IPO from GM occurred today.  The cyan line is the opening price of $35.
I mentioned before that this IPO could be quite symbolic for the US economy, as the governments have a vested interest to see this stock rally strongly.  I believe the $42 mark is the break even point for governments both USA and Canada. 
Today there was a drop of $1 from open to close.  However, I believe the IPO price was at $33 which means for the day the GM stock did climb by $1.   Around 2 pm, the stock pattern turned for the worst and by the end of the day the stock was at the low end for the day.  There was an increase in volume on the bear side the last 10 minutes of the day.  Tomorrow opening will be interesting.

S&P via SDS entry

This is SDS on a 1 minute chart.  Main reason for this chart is to notice the volume.  At the beginning of the day there was strong selling however, after that you can see the majority of volume is buy volume.  Buy volume here = sell volume in the S&P 500.   

Looking at the swing higher around 2:30pm, the price it touched was 26.55.  Therefore my buy stop entry was at 26.56.   The price coincidentally closed at 26.56 also.

lets see this on a5 minute chart

Massive drop, was equivalent to approximately 20 point move in the S&P 500.  What levels I was watching was the 1197.30 on the S&P which is the 20 daily MA.  Also the 200 week MA sits at 1190.98 which is approximately equal to 26.89 level on the SDS.  This is a key to watch breaks of that could send this market substantially lower.  However, this weeks candle stick does appear to be a hammer formation which would indicate a bottoming at this level.  So tomorrow is very very key.  In addition it is options expiration, so  expect games to be played.  For example, people that were holding call options that expired this friday, they have either bailed due to the break down at the beginning of the week, the question is have they reloaded up today?  Also people that jumped on the short wagon at the beginning of the week probably have bailed today because of the massive up move.  This whipsaw is used to flush out "weak" hands during the week. This could have been the bounce that should be shorted which I am doing now, however, next week I think a rally week could be possible, but I will save my predictions until tomorrow has closed.

I made some interday plays on edr, broke even on these as I should have been quick to take profits when I had the chance.

CIIC: Buy Stop Entry : 0.76

All the technicals are positive. A major breakout occurred on strong volume.  I have a buy stop at 0.76, so if the price gets to that level my order should get triggered barring some gap above .76.

This will be an interesting stock entry if the market does have a strong move tomorrow.

This stock was brought to my attention by this video:






















UPDATE:  Buy Stop not triggered. 

This is a perfect example of why Buy Stop orders are key.  There is huge potential for the upside in this stock, however, over all market conditions will always be in control.  Even though it was up early in the day it closed substantially lower.  I will keep my eye on this stock, and even adjust my buy stop to the top of today (Nov 18th) candle stick but at this point 0.76 is a key level.  This is also a profit taking exercise as the bulls know such as massive increase in price can't be sustained.  Remember it is advised not to buy above or sell below bollinger bands as the odds are against you.

Pure Spec trade on Silver mining company : EDR on Tsx

Technicals

MACD has slowing upward momentum as the histogram is barely positive.
Slow stoch, watching the purple line.  If that holds would be confirmation of the move up.
ADX is still quite bullish.


I picked this up near the end of the day as it appeared gold / silver were bottoming out.    At least for tomorrow, as GM IPO will in my opinion keep the market strong.  however, if the IPO fails, it will be a symbolic blow to the current state of the economy.  On the other side, it could be just a normal options expiration week.

My strategy has and I will be going long on precious metal mining stocks, and other commodities, and short the market via ETF on the way down.  The potential for EDR to get back up to at least 50% of the previous move is quite high.  However, i am keeping tight stops as the market has had very strong volume on the downside.  A likely future outlook is a bounce before another lower low.  I will attempt to short that bounce if and when it occurs, unless there is strong buy volume behind an up move on monday.

Update: Silver buying increasing in Asian markets.

  A move of approximately 3% in 24 hours.  The vast majority of the move occurred during the Asian markets. 

Look at the perfect test of the $25.00 mark.

S&P breaks down: GM IPO only 2 days away...... oh no!

Yesterday I called out some levels that I believed would be key for today.  The levels were marked in Purple.

On the 5 minute observe the opening of the day.  Once the purple line was broken, there was a test within the first 15 minutes then on the second test the purple level was held perfectly, and the sell off began. If I had  the time I would have used that failed test as an entry point. 

Technicals:
ADX is the highlight today, a sell signal has occurred as the DI- crossed above the DI+.
MACD, Slow Stoch: both continue to signal momentum gaining for the bears.
Volume was quite strong today for the bears as well.  This could be the turn date but again, a bounce is expected and that bounce I will be shorting



I did however get into SDS a bit late in the day.

The purple line is the same level percentage wise as the purple line in the S&P 500.  The green line was my entry that I setup yesterday.  However, due to a human error the order I setup didn't get executed.

Mistakes are learning experiences, and i will not make this mistake again.
What happened was I used a Buy - Stop - Limit Order rather than Buy - Stop.
The difference is that when the level 27.07 was touched, the stop part gets triggers and the order becomes a limit.  If that price is never seen again which is what happened is the limit order never gets triggered.  Instead if I used just a simple Buy - Stop order, when the stop price gets touched the order becomes a Market order and will trigger the sale at what ever the market price would be.  In this case probably 27.08-27.09.

However, I did get in a bit later at 27.16.   And I have locked in a break even stop loss.  I am not expected much from this as my entry was glitchy but at least I have an in the money position in case tomorrow heads south again.  Hoping no decent size gap up, occurs tomorrow i this could be a solid starting entry if the selling continues, if not limited risk as I am setup for break even.


CIENA update.  Put option @ $14.00

I have been holding Put options for Ciena at a strike price of 14.  I have already mentioned in previous posts, I regret not selling this at the beginning of November as there was still a large amount of time value left and would have yielded a substantially higher price.  The price broke through 14 later in the day only to regain the level.  However the close price is a cent below the 20 MA which could signal that even if the markets are flat tomorrow Ciena could have a sell off.  If that is the case, i might take the opportunity to sell my options.   As options ex is friday, it will be very hard to time the sale of these.  If there is a strong down day again >1% I think a sale would make sense, if there is a flat day, I might hold until thursday.

Why is Thursday is so important?  GM IPO, news articles have been hyping this up, and they have apparently increased the share price by 14% to $32-$33 due to increased interest.  This is a chance for the US gov to get back part of their money, and in some ways is symbolic of the success of QE and stimulus.  The US gov was given a large portion of the GM shares in exchange for a bailout.  With the stimulus package and the subsequent QElite and QE2, the markets have rallied and it is time for them to turn a profit.  If the market is overall on shaky grounds on that day and the GM IPO tanks its first day, it could be a strong signal for the loss of faith in the current system.  I might be taking this out of context however, I do believe there is a level of symbolism behind this IPO.

Range to watch: S&P 500

S&P 500, daily

The purple line is where the 200 Week MA is as of November 15th, 2010.

The Technicals all are showing momentum down, however, the ADX hasn't had a sell signal yet.  Also note that the volume was not overly strong today, but recently Mondays are generally lighter volume than the rest of the week.

I have been out of the stock market as I haven't had the time to fully digest the current situation.

Here is some recent fundamental news out from the Euro Zone.



Bloomberg: Ireland Economic News

The MACD line has just crossed into negative territory.  Which means that this could have turned bearish.  With bailout talks in the works for Ireland, it will be interesting to see how it plays out.


As I have been on the sidelines for a couple of days, I thought I would setup a trade using a Buy-Stop Order.  I am not 100% convinced this market has peaked.  One major reason is the GM IPO this Thursday, where there is so much vested interest in seeing the markets move up that day.  They increased there share price to ~$32-$33.

I am using a Buy-Stop order as I will not be able to monitor the markets this week, and we are currently at some major market levels.  The ETF is SDS which is a 2x Inverse of S&P500.

The purple line is at the same percentage adjusted level as on the S&P 500 chart at the top of this post (26.88), which is the 200 Week Moving average on the S&P 500.  The green line which is at 27.05, is where I see the most reasonable entry on the SDS chart.  My Buy-Stop order will be at 27.06.
The light red light is where I see potential resistance on the SDS chart specifically as it is the low of the last major pull back.  The S&P500 does not have such as level of resistance as it has already dropped lower than the previous major high back in May.

I will probably add to this if the market continues to head south.  However, I do believe a small rally might be coming which will provide a better entry.

S&P500 update

A review of this weeks S&P500 action.

We had the largest pull back since this up leg began.
This is also the first time price action touched the 20 day Moving average.   This level will be key, and if we close a couple of days below the 20 MA, this market could be peaking.

Volume isn't massive for the bears, so that is something to look for. If sell volume starts to pick up, it might be a signal to start lighting up positions.
MACD histogram as a negative tick indicating short term momentum has shifted to bears.   However the MACD line is well above the 0 level.
The slow stoch again has falling below the 80 level.  Previous 3-4 times it bounced right back over the 80 level.  This time, it appears it has a steeper slope, which I would interpret as a stronger momentum shift that previous declines.
ADX has not signaled a sell yet, but it is something to watch, it appears it could happen next week but we will see.

I am usually pretty bearish and I do believe that this market is in store for a massive and quick correction / breakdown.  However, today I thought I would assess the bulls side of the argument.

 Still a novice at Elliot wave, so don't put to much weight to these counts but you could make the argument that we will see a slight correct now, and make a new high to end a wave 5 within a wave 3.  Then we would have an ABC correction that would be Wave 4.  This would imply that there would be a higher high yet to come in the form of a wave 5 (yellow). 

I am currently not in the market as I don't have the time to monitor any of my trades.  However, I play on entering when this move is more defined.