Chop

A choppy, messy day. I'm preferring to stick with watching one market lately (that market being the Ultra QQQ ProShares, QLD). It feels to me like a good method to learning to read "the tape." So, here's the one set-up that gave a decent probability to a trade in your direction. On the 15-minute chart (smaller inset chart) a triangle set up over the course of the last two sessions. The faster chart gives a better perspective. You can play it aggressively and short in anticipation of the break-down (somewhere in the long red candle), or more conservatively as price breaks the trend line (same long red candle) or makes a throw-back to the trend line (green high-wave candle).
On the shorter time frame chart (the larger chart) I have an ellipse around an indicator that fires to alert you when Bollinger Bands are squeezing inside of a Keltner Channel. It's not an indicator to trigger you into/out of a trade, but it lends you a condition to increase probability.

QLD trend day

A beautiful trend in QLD right up until about 2p.m. when the longs seemed to cover at the R2 Pivot Point resistance area.

Dubyah

G.W. just moved up a notch in my book.

Oil $$$

Who has profited most from the "oil bubble"; and what are they going to do with all that money??

America Inc.

QLD trend day

A truly awesome trend day today, Nasdaq up 2.5%. The following is a chart of QLD, and what an orderly chart it is. A lesson in tape reading...

Inverted Roof

It looks (to me) like an inverted roof has taken shape across all of the major indexes and we're testing a break out above resistance, which could bring us a measured move to the upside, if we could get past the major 50-period Moving Average resistance.
Volume on the break of resistance for the Dow is pretty unconvincing, but a measured move from here puts the upside at around 872 points.
The S&P500 breakout would add about 90 points to the upside. It needs to clear the 50-EMA at this point.The Nasdaq has definitively broken out of this pattern (and above it's 50-EMA) and give us a target of the 2530 area.

Why the Dollar Rally?

The U.S. Dollar Index has taken off and I'm left wondering; why? I understand gold and oil sold off, the broad indexes are undergoing a bear market rally, and the Fed kept rates steady and expressed concerns over keeping inflation in check. So, how do you connect the dots (if they can be connected) and what else am I missing?
The articles I have found so far give the following correlations:
-The European Central Bank announced expectations of slowed Euro growth. OK, that might explain the Euro/U.S$ correlation, but there are multiple currencies within the U.S.$-index.
-A short squeeze? "The euro crashed through "big support levels in a short period of time," said Kenneth Broux, an economist at Lloyds TSB. "A lot of participants were caught out and forced to liquidate" long euro positions." Perhaps the Euro-zone is slowing down and starting to mirror the situation the U.S. economy has been in for the past 9 months (a.k.a. recession whispers)?
-"...better-than-expected U.S. pending home sales data Thursday and, in particular, the Chinese government's recent imposition of new currency controls were likely among the catalysts for the dollar's broad surge in Asian trading."
"Currency strategists at Commerzbank also downplayed the ECB's role, saying the moves during Asian hours were clearly a reflection of broad "dollar strength," rather than euro weakness...Obviously many market participants are currently re-positioning their currency allocations and [betting] on an end of the prolonged sideways movement."
-"The Chinese measures may be among the triggers they said, leaving investors who had bet on high-yielding currencies or continued gains by China's yuan currency with few alternatives other than the dollar. That backdrop also underpins the Japanese yen, they said, as traders abandon carry trades in which they borrow low-yielding currencies then use the funds to buy assets denominated in higher-yielding currencies."
- Commodity positions are unwinding. "...investors are long commodities, the currencies of countries that benefit from increases in commodity prices, their stocks and their bonds. In addition, many investors are invested in countries benefiting cross-border capital flows tied to increases in commodity prices (Eastern Europe, for example, which, according to the BIS, has been a major recipient of money from the Middle East). The U.S. dollar is a major safe-haven amid this major unwind." This I can see having a pretty broad ripple effect.
-As part of the above explanation, the Australian dollar continues to slide. The longest consecutive decline since 1980. Another commodity correlation.
-Some more articles can be found here. I think my understanding is clearer, but still a little fuzzy.

QLD setups

QLD using 45,000 share bar chart, trading breaks off of trend lines.

IWM

Going to be watching IWM tomorrow for a possible Cup-n-Handle breakout...

QLD & FCX

QLD had some nice set-ups on it today. Here I'm using share bars which I'm tending to prefer these days.I set an alert this morning for FCX near the highs. When it triggered I bought and picked up about $1.50 quickly. I intended on shorting the second test/failure of the highs but got distracted.

Healthcare

IHF; iShares Healthcare ETF is perking up (perhaps a strategic play in case the Democrats win the White House??). This ETF has top holdings such as AET, HUM, WLP, and CI, that have seen recovery moves of late.

Rotation

The charts pretty much speak for themselves. Using these ETFs as a general representation of sector performance, many of the big names that have been in play for the past few months are breaking down below their 200 EMAs.
There's MOO, Market Vectors Agribusiness ETF (main holdings include BG, MOS, MON, POT). Or, you can check out DBA.KOL, Market Vectors Coal ETF (top holdings include WLT, CNX, MEE, ACI).
SLX, Market Vectors Steel ETF (top holdings include X, MTL, RIO, MT)IYT, iShares Dow Jones Transportation Average is in limbo at the moment, but might be good if Oil continues to the downside (top holdings of BNI, CSX, FDX, NSC, JBLU, CAL)
And then there's PBE, PowerShares Biotech ETF (top holdings being ABI, DNA, GILD, WAT)

KOL

Market Vector's Coal ETF. KOL shook off it's overbought bias and reclaimed it's 20-day EMA.

EWZ

EWZ, iShares Brazil ETF, snapped up today to cling to it's 200EMA. It's also printing a bullish momentum divergence.

watching

PBW is a clean energy ETF with solar holdings that we all have on our watchlists.SLX is a steel ETF that might be a good play this week as we saw some big moves today in AKS, RS, MTL (bullish hammer after capitulation?), X, MT, et al..

trend day

DIA presented another trend day today, except it was in the opposite direction from yesterday. Most of yesterday's support levels were in the same areas.
While the Q's took off in the morning and chopped sideways the rest of the day. It had a pop up at the 50-MA.

mess

I found this video while reading HPTs blog.

Clinton's Role

An interesting read via Stewie's blog regarding the mortgage crisis. Jason Leavitt does a fantastic job summing up the role's played by each variable of the mortgage melt-down. But, ultimately, Bill Clinton seems to deserve to be held accountable as well. Leavitt writes;
"...on November 12, 1999. With the CEO of Citigroup looking over his shoulder, Bill Clinton signed into law the Gramm-Leach-Bliley Act which repealed the Glass-Steagall Act of 1933.
The Gramm-Leach-Bliley Act permitted commercial and investment banks to consolidate, and almost overnight behemoth financial service companies that supplied everything to everybody were born. Smith-Barney, Salomon Brothers, PaineWebber and many other well-known and respected investment banks were gobbled up by Citibank, JP Morgan etc, and while the lay public didn’t have a clue what was going on, conflict of interests were rampant. Suddenly the banking arm of one of these financial service companies was pressuring the investment arm to raise its ratings on stocks to help lubricate the deal-making process. (As a quick side note, Citigroup played a major role lobbying for an end to Glass-Steagall. Starting in 1998, the finance, insurance and real estate industries together spent more than $200 million to get Glass-Steagall repealed, and not so coincidentally, only a couple days after Clinton signed Gramm-Leach-Bliley into law, recently-departed Treasury Secretary Robert Rubin was hired by Citigroup as a member of its 3-person office of the chairman.)
If you start with today and work backwards with intentions of figuring out when “all this mess started,” you’ll find many parties that played a role in adding fuel to a fire which was spinning out of control, but your journey won’t end until November 12, 1999 when Bill Clinton tore down the walls within the financial community.
I’m not going to go as far to say if Bill Clinton had not repealed Glass-Steagall, we wouldn’t be in the financial situation we’re in, but I can certainly say it would have been much more mild and probably isolated. When second and third parties are involved in a transaction, more due diligence is done, more scrutiny is applied, and less risk is taken."

It's a very interesting read. And to top it all off, the article ends with a great photo of Bill Clinton after signing the Gramm-Leach-Bliley Act. Looks like a circle-jerk at an occult sacrifice...not that I know what one of those would look like, but I've seen some movies.

DIA

DIA had a trend-day to the downside. It set up a base break at $113.10 early in the morning. It then consolidated around $112.20, tagged the 20MA (Inverse Holy Grail) before continuing lower. Consolidation then took place for an hour and a half at around $111.65 (which coincides with a 61.8% Fibonacci retracement from the high of July 22 and low of July 15) before breaking lower. Pretty text-book stuff.
Same story with the Q's.Something to keep in mind with these trend days comes from today's post at AfraidtoTrade.com, Corey writes:

"Most trend days begin with two common characteristics:

A low-range day prior (usually a NR7 or a doji pattern)
A (relatively) large opening gap

The last two trend days (the last was the previous Thursday) had slight but not ultra-range contraction, but neither began with a large opening gap. In fact, both were ‘creeping’ trends, which tend to be the most insidious, hidden style of trend days. Lack of an opening gap can lull us into complacency as we fail to recognize the potential for the trend day to unfold. It’s far easier to anticipate a large intrday trend day move if the initial gap occurs (and especially if there’s some sort of major news announcement)."