by Carlos Narváez | Feb 6, 2017 | RQLAB
We assumed market was to bottom at the end of the session of Tuesday January 31st setting up to rally on Wednesday February 1st with AAPL; so far that happened and even I had not time to write the regular update due we were focusing on AAPL’s earnings I did mention through our communication channels that was very likely that TNA could hit 103.64 on Wednesday but we did not expect the gap to hold. Based on this, on Wednesday we did some movements on our TNA position, selling a the highs, which allowed us to repurchase a 1.42% position on this trading ETF at 101.50. [We sold this last position at close on Friday]
Now, I want to clarify that until the close of Tuesday, 31st based on PCR and the shape of the short term razzmatazz wave, which was inverted at 3.410, we did not expect market to sustain an uptrend, but that on same Tuesday’s night Joel Whithun reported PCR fell to 3.229, meaning the weekend update for higher was on track again. I wanted to clear this up, because we adjust our trading as soon as the price and indicators set new expectations.
Now we can move to this week projections
OI: The shape of the short term razzmatazz wave continue to show a low into February 22nd, but morphed a bit and now is showing a high consolidation all this week into February 10th, then a hard selloff. Opposing to this; the long term razz is showing higher highs into February expiration or February 17th; but PCR for this week is at 4.471 and the change was executed at 8.579 with 78,404 calls expiring versus 350,566 puts, this leaves questioning, what is the contrary to flat?
Moores’ 2C-P is 85.74
Cyclical analysis: Is showing a shallow correction into the 14th-15th, February, then continous upside into March.
Using Elliott Wave, will be enough to say that 104.47 is support, as seen here (link), price can go to 107.76 before retesting it, or test it before heading to 112, which is ideal target.
Monday January 30th – Updates
The short term razzmatazz wave is showing a low int tomorrow Tuesday, January 31st. Then a rebound into February 2nd – 4th. At the same time PCR expiring tomorrow is into standard territory at 2.077; meaning the call for lows into January 30th and 3[1]st is valid.
After this rebound on indexes that is projected for February 2nd-4th, both, and this is important, short term and long term razzmatazz wave are pointing lower into mids of February, so based on open interest we can’t make a bullish case for the market. We must adjust our expectations and assume a retrace will be seen for as long as SPX is under 2311 SPX. I would not trade a breakout above 2311 based on current internals, might be short lived.
Moores’ 2C-P is at 96.08, adding confidence to our call for lower lows.
Tuesday January 31st – Updates
The short term razzmatazz wave is showing a low into today then a rebound, that call is valid based on open interest for today with a PCR of 2.082.
Open interest for this Friday, February 3rd, is into inversion territory, at 3.410; we have 74,677 calls versus 254,637 puts, the change was executed at 8.974 that is very high. If we had to use OI to make a call, this would be a continuous bearish scenario for the market, at least until this Friday. Reason we need a clear structure on the upside to trade the long side of the indexes.
by Carlos Narváez | Feb 2, 2017 | Market Update, RQLAB
Let’s start for what is obvious, there is nothing impressive on CMG’s chart, as we can see here (link) three waves up; that we labeled as ABC, if we measure the move from our 1% extension we see the price moved approximately 20% above the ideal target at 632.32 hitting a high at 758.61. Here things get interesting, ideal support should have been 480.09 factoring the initial 20% deviation above our 1% as we see on this chart (link); nonetheless price derived 26%, so we have a differential of 6%, with a low at 352.96 instead a projected 386. That’s not much, actually was very good, mixed but good.
If we subdivide the decline on a weekly chart here (link), we have five waves down, very well subdivided, where the wave 3 down went as low as the 4.764 extension (link). This is perfect fibonacci pinball and statistically very clean moves if we see how the price has gone from one extreme to another in our monthly regression channel (link). This accuracy in the pinball and the linear methods lead us to be cautiously bullish and consider that from any point of view, CMG should see a standard retrace to 555.79 or 603.65 before a more significative decline ensues.
Certainly we could be bearish, based on this count and the fact that Bill Ackman is a holder, but not here, not now, probably later, but not here. As always price can prove us wrong and CMG can sell off to 0, according to crash callers, but we must respect our methodology.
Few Trades were taken in Chat Room
by Carlos Narváez | Feb 2, 2017 | Market Update, RQLAB
Arrived to the 2.618 for wave 3 of 5 of ((1)) as we have been considering for a long time. Chart here (link), this is the standard fibonacci for waves iii on $AAPL and for for the base case scenario we have this chart (link), Support for iv should be 120.68, and final target for wave 5th of macro 1 of super cyclical 5 should be 136. Let’s just remember pullbacks in waves iv of any degree are dramatic on AAPL.
Since our base case has played out exceptionally well we would not need to post an alt count, but we will for the sanctity of the EW Theory, the chart is the same (link) what change are the considerations, AAPL could extend to 136.55 without major retrace, for that case immediate support is now 124.15. We should not comment a lot about this case until 136.55 is hit and instead of wasting our energies around possible scenarios we should focus on support areas these are 124.15 and 120.68 respectively, since for both cases the important number is 136.5.
by Carlos Narváez | Jan 30, 2017 | IKE, Market Update, RQLAB
Previous update, January 27th:
While we could take time to chest thump our current trades and join to the crow cheerleading current market action or regret our failure for not adding $TNA on time we will address a more serious situation: Market is about to hit 1% of the gray 1-2 on this chart (link), so, as we considered on January 9th, we will update support for the market to 2187, this means stops should be trailed and cores should be reduced to protect profits. Initial signals for concern should come once market breaks under 2291 followed by a break under 2274.
Looking at today’s update:
The short term razzmatazz wave is showing a low int tomorrow Tuesday, January 31st. Then a rebound into February 2nd – 4th. At the same time PCR expiring tomorrow is into standard territory at 2.077; meaning the call for lows into January 30th and 3st is valid.
After this rebound on indexes that is projected for February 2nd-4th, both, and this is important, short term and long term razzmatazz wave are pointing lower into mid’s of February, so based on open interest we can’t make a bullish case for the market. We must adjust our expectations and assume a retrace will be seen for as long as $SPX is under 2311 $SPX. We would not trade a breakout above 2311 based on current internals, might be short lived.
Moores’ 2C-P is at 96.08, adding confidence to our call for lower lows.
Japhy the trader from Data Trader pro: $VIX is under 11, for the first time since august 2015. VIX put/call is back to extreme lows. These are the types of areas that CAN (not will, can!) start violent reversals. i am looking to start small vol longs soon, next 1-2 days max, but not in $VXX or its leveraged brethren
Cyclical Analysis matches interestingly well the Open Interest projections. Charts will be provided per required in our Chat Room
We maintain our expectation for lower levels on indexes, price is not diverging from our call, so we will consider we are right until price proves something different.
The Following Charts were Posted in our Chat Room which we constantly provide updated view on market conditions along with trade setups
$ES_F 60 Minute Chart Traget – needs to hold
$ES_F Daily chart
$SPX Weekly Update
Geopolitical Events
- Tuesday the FOMC begins a two day meeting. Also on Tuesday a joint ECB and European Commission meeting will meet and a Bank of Japan Rate decision is due.
- Thursday the BOE will release its latest interest rate decision.
- Friday EU Heads of State will meet. Federal Reserve Chicago President Charles Evans will speak on Friday to finish out the week.
Economic Releases
Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications, jobless claims and personal income, Chicago PMI, consumer confidence, construction spending, ISM Manufacturing PMI, Q4 Productivity, nonfarm payrolls with the unemployment rate and factory orders.
Earnings Releases:
Notable releases include $EPD $GGP $AAPL $XOM $FB $MO $AMZN $V $HMC $PSX – Join our Group for earning trades
Economic News:
Monday, January 30:
- December Personal Income is due out at 8:30 a.m. EST and is expected to rise to 0.4% from 0%.
- Markets are closed in China for the Lunar New Year. South Korea, Taiwan and several other Asian countries are closed for trading as well. China is closed until Friday.
Tuesday, January 31:
- The Bank of Japan rate decision is due.
- The S&P/Case Schiller Home Price Index for November is due out at 9:00 a.m. EST and is expected to drop to 5.0% from 5.1%.
- January Chicago PMI is due out at 9:45 a.m. EST and is expected to rise to 55.5 million from 54.6.
- January Consumer Confidence is due out at 10:00 a.m. EST and is expected to fall to 113 from 113.70.
- The European Central Bank (ECB) and European Commission will hold a joint meeting in Frankfurt.
- The Federal Reserve Open Market Committee (FOMC) begins its two day meeting that concludes on Wednesday with an interest rate announcement.
Wednesday, February 1:
- ADP Payroll for January is due out at 8:15 a.m. EST and is expected to rise to 165,000 from 153,000.
- December Construction Spending is due out at 10:00 a.m. EST and is expected to fall to 0.30% from 0.91%.
- January ISM Manufacturing PMI is due out at 10:00 a.m. EST and is expected to rise to 55 from 54.70.
- The first Federal Reserve Open Market Committee (FOMC) interest rate decision of 2017 is due out at 2:00 p.m. EST.
- Monthly Truck and Car Sales are due out at 2:00 p.m. EST. The only short squeeze of note in this space is Tesla Motors (TSLA).
Thursday, February 2:
- Challenger, Gray & Christmas Monthly Job Cuts are due out at 7:30 a.m. EST; last month they rose 42.2%.
- The Bank of England (BOE) is out with its latest interest rate decision before markets open.
- Q4 Productivity is due out at 8:30 a.m. EST and is expected to fall to 0.9% from 3.1%
Friday, February 3:
- January Nonfarm Payrolls are due out at 8:30 a.m. EST and are expected to improve to 175,000 from 156,000. The unemployment rate is expected to remain at 4.7%.
- December Factory Orders are due out at 10:00 a.m. EST and are expected to rise to 1.4% from -2.4%.
- European Union Heads of State meet.
by Carlos Narváez | Jan 26, 2017 | Market Update, RQLAB
From January 22nd:
We will describe what $TNA has been doing: Holding at or above 98.92. That’s it. For positioning we maintain our tactically neutral approach on this market, this is long, at least until 112 or 123 on $TNA. While it is possible that the market can extend to the lower ends of our targets at 91.42 before finally heading to new highs that potential retrace is already factored in within our updates and our books.
Probably we should have stressed more how important 98 was for $TNA, —I certainly think we did— but, since we were already long, for risk management purposes we avoided to go heavier at 98, waiting for 91.
That was, at all lights, a mistake in our trading system, but while we avoided to add more to $TNA, we certainly posted our entries on $BRK.B, which we turned into a 4.8% position and $AAPL which we made a 2.48% position. Timely wise we minimally reduced $TNA to move our capital to $UPRO — a 1% position—. So all in all our executions were good. Including the IBM earnings trade, which certainly panned out better than what we expected in terms of time.
While we could take time to chest thump our current trades and join to the crow cheerleading current market action or regret our failure for not adding $TNA on time we will address a more serious situation: Market is about to hit 1% of the gray 1-2 on this chart (link), so, as we considered on January 9th, we will update support for the market to 2187, this means stops should be trailed and cores should be reduced to protect profits. Initial signals for concern should come once market breaks under 2291 followed by a break under 2274.
For $TNA, micro, should have a pullback to 103.39 or 102.44, that should be the standard situation, but current strength signals a gap up to 107.02, which has been serious resistance in the past.
As an additional note one of the best volatility traders I know posted he is alarmed because there is nothing that indicates a reversal on indexes, you know what this means… an event might be lurking out there, a buying opportunity.
Today we added:
FCX at 16.52
NVDA at 107.47
by Carlos Narváez | Jan 23, 2017 | RQLAB
Previous Updates
January 9th:
Saying that, it seems there is an event being priced; the short term razzmatazz wave shows a considerable top was constructed last week and a potential bottom should occur into the 23rd, the indicator might be lagging at this time. The PCR for this week is less informative since it is into standard territory at PCR: 2.839 so this call for a pullback should be valid. Open interest has been one the few indicators that give us a bearish approach for this market.
AMZN: Support is at 776.19, target at 822, support is buyable.
AAPL: Support continue being 116.56. Target at 122-130
FB: Support is 120.19 target is 128
January 6th
Instead of following through to the upside we got a test of support at 104 area, where we did a repurchase of the stocks we had sold higher. Setup is simple and clear, for as long as 100.25 holds, we can project 109.98 at a minimum, but if 1002.25 breaks with follow through under 99.95 we can establish target at 98.92, with low probabilities for 93.21 and 91.87.
The last standard targets on our books for NFLX are 135.78-140.41, but we should use a tight stop if want to participate on that upside, initial concern should be a break under 1341.43 with continuation under 129.10. Chart here (link) and here (link).
Current update:
I will summary our positioning this way: We have had to sell partially or entirely our cores on NQ (IBM, FB, AAPL, NFLX, IBM, TSLA, AMZN, QRVO) and trade miners to maintain our standard rate of cash flow during this month.
We will describe what TNA has been doing: Holding at or above 98.92. That’s it. For positioning we maintain our tactically neutral approach on this market, this is long, at least until 112 or 123 on TNA. While it is possible that the market can extend to the lower ends of our targets at 91.42 before finally heading to new highs that potential retrace is already factored in within our updates and our books.
We will go one by one across the indicators we follow:
Data Trader Pro or Japhy: His system registered very large blocks on UUP (dollar), SPY, IWM, DIA, XLF, EEM, USO, EFA all at fridays closing levels. As we know he will be bearish below and bullish above the levels the marks were printed. We particularly notice that IWM has been registering decent buying pressure at current levels 100-98.92
Open Interest: The short term razzmatazz is indicating a high into January 25th, I made sure to attach the chart. The long term razz points higher until May’s expiration, attached too. So we have a case where PCRs must maintain into standard territories. But that is not the case at least for tomorrow Monday, January 23rd, PCR is quite high at 3.654 and the change was executed at 11.674, with huge volume 11,198 calls versus 130,728 puts, we must not be surprised by a fast and strong move down. We need more movement on the net dollar space to make a call, Moores’ 2C-P is at 78, with room to go lower.
From cyclical analysis the low is expected to be on the 26th, January.
There is no call from the volatility space…
From what we are seeing we can definitely can say the market should go lower, not sure right now if into our target areas, but we must not be surprised if our levels are seen or by the speed of the move down, we must stay patient and trigger until 91 TNA, cover any underwater short and go net long.
NUGT/GDX
Above 23.55, we at least could expect 23.99 on GDX with chances for 24.49-24.71, but this last upper range is not reasonable probable.
For NUGT ideal target continue being 11.08-11.24 with upper end at 11.70-11.95, again this upper end is not reasonable and not probable.
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