The ACD Method

Hope everyone is having a good weekend. Just finished up with some weekend homework and there were a few things that stood out to me.

The equity market as a whole is still strong, but momentum has significantly came off. What you will be seeing into year end is significant rotation. Paying attention to where money is flowing into and out of is key.

Seeing some good action in the lines in XRT, KRE, QQQ...think these will have some flow in the next month or so.

The energy space has had some very troubling action. I have some failed yearly aup action in the XLE, XOP. The lines in all of the energy sector etf's have signifcantly broken on the 30 days and 5 days. Oil's 30 day has been weak for a while and price has came into to reflect that action. I am expecting another leg down in oil coming next week. The materials space as also failed to hold momentum into the up leg. The biggest laggard is of course X(US steel). We have lower level H&S playing out there with a very weak numberline.

All of the weakness is concentrated in certain sectors. Play the leadership and stay away from the laggards. Laggards can be shortable, but it requires skill to sell short in a strong tape like this.

Have a great week everyone!
 
Quote from Maverick74:

We went into massive backwardation on that blow off top. All the spreads blew out. The volatility got so big on those strips that they were trading like outrights excepts firms had on 1000 times the size as those strips usually barely move. When those spreads blow out, you see massive carnage. The back months barely moved on that spike. It was insane volatility. No, it was not "manipulated". It's just something that happens with regularity in the commodity markets. Were there firms that forced that squeeze into backwardation? Sure. That's a consequence of that market. The guys that sell those spreads to collect some carry are synthetic naked put sellers picking up nickels in front of a steamroller. When they get blown out, it gets ugly. Same thing happens in all the commodity markets.
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I think you're saying that we went into backwardation because of the sell off... But really, what's the story behind the sell off...?

I'm checking my news sources and they're not really talking...:confused:

Rumours...

"With speculation that Saudi Arabia will pump more oil backed by senior officials in Riyadh, rumors that the Obama Administration will release petroleum reserves, and a easing expectations already priced in before Bernanke and Draghi unleashed their bond buying plans, crude oil prices appear to be on a clear down trend, at least in the short run. Investors that bought risk assets, including oil, around June 21 this year have reaped massive profits. While it’s still too early to tell, Monday September 17 may have marked the end of oil’s recent bull run."
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http://www.forbes.com/sites/afontev...sell-off-could-continue-at-least-to-88barrel/
 
Quote from CoolTraderDude:

I think you're saying that we went into backwardation because of the sell off... But really, what's the story behind the sell off...?

I'm checking my news sources and they're not really talking...:confused:

Rumours...



http://www.forbes.com/sites/afontev...sell-off-could-continue-at-least-to-88barrel/
More...

Forget the news man. Focus on the action of the market. There doesn't have to be a reason for every move! When we find out the reason it will probably be at much lower levels and it will prob be time to buy then lol

"I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over. When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned just to go with the chart. Why work when Mr. Market can do it for you? These days, there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates the illusion that there is an explanation for everything and that the primary task is simply to find that explanation. As a result, technical analysis is at the bottom of the study list for many of the younger generation, particularly since the skill often requires them to close their eyes and trust the price action. The pain of gain is just too overwhelming for all of us to bear!"

-PTJ
 
Quote from Shanb:

Forget the news man. Focus on the action of the market. There doesn't have to be a reason for every move! When we find out the reason it will probably be at much lower levels and it will prob be time to buy then lol

"I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over. When I got into the business, there was so little information on fundamentals, and what little information one could get was largely imperfect. We learned just to go with the chart. Why work when Mr. Market can do it for you? These days, there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates the illusion that there is an explanation for everything and that the primary task is simply to find that explanation. As a result, technical analysis is at the bottom of the study list for many of the younger generation, particularly since the skill often requires them to close their eyes and trust the price action. The pain of gain is just too overwhelming for all of us to bear!"

-PTJ
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...LOL... Paul Tudor Jones one of my favorites... But I wouldn't trust much of what he says... Besides being a master at trading he's also a master at lying...!:p
 
Quote from CoolTraderDude:

...LOL... Paul Tudor Jones one of my favorites... But I wouldn't trust much of what he says... Besides being a master at trading he's also a master at lying...!:p
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You can trust me though and I am saying the same thing he is! Haha
 
Risk assets feel like they are going to give back some this week. Look for a re-test of 1430 on the spoos (the monthly A up). I suspect the weekly A down will be around the same area. Next stop after that is 1411, the top of the QTR A up.

A lot of sector numbers lines are -5 right now confirming some short term weakness.
 
The one sector that is on fire is the healthcare sector. It made a new all time high last week, that's right, all time high. We are seeing some serious breakouts in some of the drug stocks.

chart.ashx


Here is the weekly chart on XLV.

Here are my number line values:

30 day: +20

Monthly: +10

5 day: +6
 
Quote from CoolTraderDude:

I think you're saying that we went into backwardation because of the sell off... But really, what's the story behind the sell off...?

I'm checking my news sources and they're not really talking...:confused:

Rumours...



http://www.forbes.com/sites/afontev...sell-off-could-continue-at-least-to-88barrel/
More...

No, the sell off did not cause the backwardation. We went into backwardation on the way up. It was an inflection point. Could be a big inflection point. So pay attention to it.
 
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