Saturday, January 16, 2010

Three Line Break Overview

This is a weekly view of the three line break for the S&P (hereafter referred to as "3LB"). This chart is showing where the S&P became bullish in 2009. The mid (or wkly rev 50%) is the 50% price of the 3LB range. By the time the market gets to the mid a change in trend may be underway. After a reversal you can change from bull to bear (or bear to bull) but it's best to wait for confirmation by another higher (or lower close). Some prefer to wait for the trend. The trend may be late but it's considered a safer entry point.

Monthly view of the S&P gives you a long term view of the trend. This chart shows where the S&P reversed down in 11/2000 and up in 10/2003. It also shows the recent moves in the market with a reversal down in 1/2008 and a reversal up in 7/2009. The midpoints shown are for the final range of the 3LB before the reversal.
In 9/2000 the S&P closed below its mid and it reversed down in 11/2000 (closing below 1389.07). In 5/2003 it closed above its mid and reversed higher in 10/2003 (closing above 1040.94). From 5/2006 to 8/2006 there was a reversal down but there was no confirmation (lower monthly close). In 9/2006 it reversed higher. In 11/2007 the S&P closed below its monthly mid and on 1/2008 it had a monthly reversal (closing below 1438.24). In 4/2009 the S&P closed above its monthly mid and reversed higher in 7/2009 (closing above 968.75). Started trending in 9/2009 and hasn't stopped...yet.

Here's the monthly view on Amazon. Figured out something on annotations. See if you can understand the chart from what's presented.

Having problems staying above the 20 SMA. The 20 is crossing below the 50 which could be signaling weakness. The 3LB range is small and makes it easier for a reversal. Once it does reverse (from what I see in the chart) it will continue for some time. With so many tankers storing oil I don't see how the price can actually rise. There is too much supply and demand is weak.

The shorter the time frame the more signals you get. That's why I like the monthly 3LB for the long term trend and the weekly 3LB for short to intermediate term trends.

Friday, January 15, 2010

Weekly 3LB Update for week ending 1/15/10

Weekly 3LB update (week ending 1/15/09)
a new high or low will change the reversal price and the midpoint

SPX -no change
rev= 1105.98; mid= 1125.48
Chart of SPX:

Dow Jones -no change
rev= 10388.90; mid= 10503.55

Nasdaq Comp -no change
rev= 2194.35; mid= 2255.76
Chart of Nasdaq Comp:

DXY -no change
rev= 75.75; mid= 76.81
Chart of DXY:

Gold -no change (but is back trading below the mid)
rev= 1095.70; mid= 1134.95
Chart of Gold:

10 Year -no change
trend=no; direction=down (2 bars)
rev= 38.62; mid= 35.37

30 Year -no change
trend=no; direction=up (2 bars)
rev= 40.11; mid= 43.49

SLV -no change (now approaching previous weekly high...again)
rev= 16.50; mid= 17.36

BAC -no change (trading above mid...barely)
rev= 17.46; mid= 16.02

AXP -new high
rev= 40.93; mid= 41.66

AMZN -no change (2nd down week after bearish thrusting candle and nearing reversal price)
rev= 126.20; mid= 132.34

M -no change (had a weekly reversal but still needs confirmation week. Still not confirmed after 6 weeks)
trend=no; direction=down (1 bar)
rev= 19.82; mid= 17.90

VIX -new low
rev= 21.25; mid= 19.58
Chart of VIX:

XLF -no change (almost had a reversal again)
trend=no; direction=down (1 bar for 11 weeks)
rev= 15.24; mid=14.65

BKX -no change (alomst had a reversal again)
trend=no; direction=down (1 bar for 11 weeks)
rev= 47.69, mid= 44.96

WTI Crude Oil -no change
rev= 73.89; mid= 78.32

Powershares USD Bull (UUP) -no change
rev=22.32; mid=22.70

Goldman Sachs -no change (still below mid)
trend=no; direction=down (2 bars)
rev= 189.30; mid= 176.10

TLT -no change
trend=no; direction=down (2 bars)
rev= 99.01; mid= 94.15

Apple Computer -no change
rev= 204.45; mid= 208.22

Sugar #11 -new high (getting very congested with a shooting star followed by a doji).
rev= 26.34; mid= 26.98
Chart of Sugar #11:

Wednesday, January 13, 2010

BIDU is sending GOOG a fruit basket

BIDU gapped at the open and is pushing higher still.

Doesn't look like the 10 year auction went as well as expected...

UST & Fed may be tested at 10 year auction

Bouncing off the 50% retrace and may indicate auction is in trouble.

Tuesday, January 12, 2010

Daily Ruminations: Profit Taking or rush to the exits?

SPX long down day candle but the lower shadow indicates buyers are fighting back. Did get a daily 3lb reversal down though.

GOLD bearish engulfing (but I'd prefer a higher open). Weekly candle forming a bearish harami. Trading back below weekly 3lb mid.

WTI major down day (long closed candle). Yesterday it closed below trendline formed from 12/14/09 & 12/21/09. no daily 3lb reversal and still trading above weekly 3lb mid.

DXY high wave candle (lots of volatility). Not a doji but a small body candle. It's trending down on the daily 3lb but still above the weekly 3lb mid (76.81).