TCM Notes : 11/4/09

Well first off let me say to the few of you that actually read my scribblings that I'm sorry for not having anything posted for the past few weeks. I've taken on a new consulting job, and it has been eating into my "analysis" time in the evenings. That said the bulk of all my market calls are being made in a chat room and thoroughly explored instantly with 400+ active traders during the day time. If interested it's a paid for site run by Daniel J. Zanger. It's $78 per month, but for an active trader it can be considered a value. www.chartpattern.com is where it's at. My handle in the room is "spm." By the time I've finished the day I'm typed out. Enough with the excuses though. Let me update.

By luck or perhaps by skill I was able to spot a gap island reversal on the XLF, UYG, and FAS charts during the session of 10/13 - 10/16. This sent a huge red flag up for me that the financials had stalled, and may very well roll over. I wanted to make sure it wasn't a fake out, so I sold only half of my position in UYG on 10/20 for 6.05. Well, the next day the other half got sold out as UYG violated it's 20ema. I was out. Now the next two sessions that followed I wasn't looking too smart, but I knew I would get back in if the resistance gap was filled. Which it did not. What's gone on since for the past 9 sessions is very bearish and could continue on for some time. Financials are offering up tremendous intra day bounces, but the swing long set up I'm looking for has not shown itself yet. This is the fourth instance that I've identified the gap island reversal in real time trading (CHK, DBA, DAG being the others) and it generally stays in place and determines the trend for some time to come.

SPY remains below it's 50ma as the DIA has been propped up by it's 50ma for the past few sessions. The moving averages I use have begun to cross down over one another as prices compress. They are now offering temporary support levels as the market comes down into them for a test. Only to then offer resistance once support gives way. It's going to take some very powerful action to get these averages moving up sharply again. The scenario I see playing out is a choppy grind lower where the averages all "tie up" and converge at some point. Then we will see which way this market really wants to break. For the moment long trades look capped to the upside.

With BRKa making a 44 billion move for BNI one would think the market would've been sharply higher Tuesday. It was not. A market tell perhaps. What it did do though was to goose the transports which have been steadily moving lower after their recent double top. IYT gaped higher reclaiming it's 86ma and closing above it's 9ema. With only the 20ema and 50ma sitting above it, the transports could re trigger another Dow Theory Buy Signal. Keep in mind a Dow Theory Sell Signal was issued shortly after the double top. This is the type of sharp, choppy action we are navigating these days as "owners" of real assets continue to restructure (bankruptcy), reassemble (sell off divisions/cut work forces), and reassert (new jobs/ipo issuance) themselves back into the economic landscape.

Still holding a small stub of GRRF as they head into earnings Nov 11. Louis Navellier issued a buy on them on 10/20 as well sending the volume and price dramatically higher. Since then I think we've seen a sufficient shake out of the hot money that was chasing it higher that day. This is an exploratory stake, and the reaction to earnings is what will determine what comes of this one.