Sunday, November 02, 2008

Sunday Wad Ever

Good Sunday morning to you, from a cold and rainy day in Beaver, where your's truly is just cheerful as a little stinking lark, no hang over for the first time in a few weeks, was that Texas/Texas Tech game a great game last night, or what!!! Tech was so stinking lucky, they made three enormus errors on the last three plays of the game, and still won, good stuff.
I didn't even open up yesterday, I was a little, aaaaahhhh, under da wheather, but the 60min charts have been bugging the shit out of me all weekend, so I decided to find out why.
Number one are these two charts:

The top chart is the Q's, the bottom the SPY, the top indicator is the Up/Down volume differential, the bottom indicator is the Advance/Decline issues differential. Right off the bat I notice we are getting a severe divergence, as they continue to go down, as the index's continue to grind upward. I marked off a couple of other divergences we got in this short time frame, just to try and get a little confirmation that they can work.

I'm looking at several little baaaaaaaad things on the price chart (I'm always so damn negative, geeze), it looks to me like we are working on a bearish rising wedge right now. The Stochastics are also making a pretty severe divergence, I pointed out the prior divergence we got Oct. 17-20 on the left.
I haven't checked in with Brian Shannon over at Alpha Trends in a while, , mainly because he's just been saying the same thing over and over, DOWN DOWN DOWN DOWN (geeze, don't be so negative Brian, you remind me of some one else, oh, What's that you say?? You ARE positive, positive we are going DOWN, ahahahahahah!!), so I did Friday night, and he brought up the posibility of an inverted head and shoulders forming down the road. Now, he's not wild about it, it's just some thing to keep an eye on, that would be pretty cool, and it would fit in with some times frames I'm looking at down the road. I don't really look for head and shoulders to much, even though they are a major staple (that's probably why Brian gets the big bucks), plus I prefer to use the Tony Oz way of playing them, and that is the FAILURE pattern that sets up, I've showed this before, you may be able to find it by searching the site for Tony Oz or head and shoulders. Anyway, briefly, because everyone and their brothers uncle knows, and looks for, the head and shoulders, or this case INVERTED head and shoulders, they tend to fail. What I mean is, like in this case, we pull back and set up the RS marked on the chart, down the road some where, then start going up to challenge the neck line, in this case about 98-99, what this does is get all those H&S players extremely excited, so what the god's who are in control what you see on these charts do, is they let them take the neck line out, and get them all piling in for the next great 20 year bull market, and then they crush'em, and take it back down through the neck line, usually in a pretty sharp break and failure, scare the shit out of them and get them all stopping out. Then, the failure play, is to draw a line from the head through the FIRST RS, and try and take it long when we come down to the area of what will be the SECOND RS. Naturally, it doesn't always work, but it's a way to play it.
Another thing, I'm not to wild about the inverted H&S, mainly because of the low from Oct. 10 over to the left, of the LS, I think that invalidates the whole pattern, but wad ever, that's just me.
What I personally think MAY happen (that's a disclaimer), is we grind up inside the rising wedge into the election tuesday night, then, in order to show their displeasure (for the moment) at Obama and the Democrap's sweeping every thing in the world, they gap us down wedesday and start taking us down into the next pattern setup. OR, they could gap us UP and do a horrendous gap and crap or some thing like that. Now, just by me saying this, undoubtedly means they gap us up, and then go UP, into the next 20 year bull market, hahahahaha, sigh. That's actually fine with me, as my weighting right now is on the long side, at least on the SSO, but I'm prepared to dump the unhedged long portion of the position at the first sign of a failure, keeping the other hedged part, then adding if we start forming some thing like what I've mentioned above. The UYG is fully hedged, so I don't make any thing if we go up, so I would prefer we go down in that thing. My only Tech exposure is those little leap's I have on INTC and AMAT.
This week is shaping up to be another wild and crazy week, as besides the obvious, the election, we get a full slate of beginning of the month economic reports, mainly the ISM's and the monthly payroll reports, so I may not drink any thing again tonight............. hahahahahaha, fat chance!!

Good luck out there, start stretching and exercising your mouse finger.


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