Before The Bell-CHINA Update YINN Jan 31st

On January 10th I posted this chart of the CHINA Bull ETF YINN and recommended taking a long position.

The bullish recommendation was based on a Bloomberg report indicating that China's stocks regulator will begin pushing pension funds and housing funds into the capital markets.

On Balance Volume also backed up this trade with a parabolic upside move; indicating some insider knowledge of this government action before the press release.

My Jan 10th conclusion read:

Just like with the US Fed QE and Twist Interventions, in the short run, some upside easy money can be made. Just don't stick around the after party celebration too long.

Here is a weekly chart of YINN as of the close Jan 30th. The stock has moved 30% in our favor since Jan 10th.

Notice the horizontal line drawn from left to right, clearly identifies the previous support level at $25, now resistance until proven otherwise.

The daily chart is showing a Bearish Harami, I believe this pattern will be denied today. The %B indicator is diverging, and the over all pattern of trend is down.

Conclusion: Recommend taking the 30% profit by the end of this week; I believe the broader downtrend pattern will hold and CHINA will once again resume its downward trajectory.

Expect the shares to reach $23-25 range, but doubt their ability beyond that. I am looking for a failure at this level, and will look to get short CHINA once confirmed.

Tim Kathlina

AFTER THE BELL-S&P Update Jan 28th

From Yahoo Jan 27th:
Quest for the golden cross

By Rodrigo Campos

NEW YORK (Reuters) - January has turned out strong for equities with just two trading days to go. If you're afraid to miss the ride, there's still time to jump in. You just might want to wear a neck brace.

Bullish write ups like this are what tops are made of. The S&P is up 14% last 9 weeks. VectorVest universe of 8000 stocks now trades well north of 43xs P/E. (Very expensive)

On Dec 23rd SPY update, I reiterated my price targets set in early December by stating:

Conclusion: My forecast for 1290 to 1320, although many times in December looked improbable, remains. The forecast remains not because stocks should be going up, they should not be (Look at ORCL earnings miss, 1st in 10 years), the forecast remains because the technicals have not changed.

 

Lets look at where we are now

SPY weekly chart I have marked potential Elliott Wave counts. The 1st 5 waves up, followed by irregular a-b-c correction are easy.

 

The next 5 waves are yet to be determined, but this is the count I am going with for now, which has the SPY uptrend completion between the current close of Friday 133 and the 1st R1 area of 138.

The next two charts are to validate the above chart; indicating that the 5th wave is completed.

If we take on the weekly chart the bottom of Wave 1, to the top of Wave 3, its 31points. 5th waves tend to equal .61 of other waves. If we take the bottom of the 5 wave, add in 18 points we come to a price target of 133.

Lets take the daily chart to try and get a price target. The daily chart has an inverted head n shoulders pattern. Calculations for IHS patterns are head to neckline added to neckline. Using this formula, same price target of 133.

Next lets look at length of time. Counting from October low, we are coming into the 180 time frame from the low. The divisible numbers by 3 are strong point and time areas to look for tops and bottoms. So anytime between now and Feb 8th is a strong place for market turn.

Conclusion:

Current evidence of price and time, both on weekly and daily charts point to a 5th wave EW completion between Jan30th and Feb 8th.

Square of 9 calculations using Fridays closing price shows a GANN sell signal at SPY 129.39. A strong close below this price; coupled with increasing volume and within our 180 time frame; should seal the deal.

Until you see these numbers play out, taking down any high leveraged short ETFs other then ones tracing the $VIX is not advised. The reason we average into TVIX down here, AND ONLY TVIX, is because the $VIX tends to have defined lows, no matter how high the market goes.

Tim Kathlina



REVIEWING CANDLE PATTERN-BULLISH KICKER JAN 27TH

This morning on Twitter, I indicated what I believed to be a potential Bullish Kicker setting up in shares of TVIX. However, it was not to be as the pattern was defeated by market bulls just as the opening bell rang. (Dummy me already took the bait pre-market. Let that be a lesson to you kids, wait for the open tic to confirm) Afterward I thought lets run thru some random charts and show you what a Bullish Kicker looks like, and just how powerful and profitable this pattern is.

Basically you can spot a bullish kicker by a white candle opening that gaps completely above the previous down candle's entire body. Look for at least 2 to 3 new low red/black candles prior to the up gap open. This pattern is easy to anticipate pre-market. It's a very powerful pattern because it causes shorts to cover and brings in new longs. This pattern usually kicks off a good bull run.

Apple gave us a Bullish Kicker right at the 200 day sma-FANTASTIC! Bullish Kicker is highly reliable, but with another confirming signal its like having your cake and eating it too.

Two Bullish Kickers in INTC to confirm the uptrend. One to start the upswing, second one right at the 50 day sma-FANTASTIC!

Microsoft again bull move signaled by Bullish Kicker. Bull moved confirmed once the stock consolidated at the 200 sma average, which then became support.

RIMM gave you a chance to go both ways. First a clear Bearish Kicker with confirming signal of overhead down slope 50 day, then Bullish Kicker reversal that lead to 30% profits on the upswing. FANTASTIC!

Sears Holding-Another one from our NAME BRAND STOCKS THAT GOT KILLED trade list. These are the best stocks because, many hedgies and pensions are involved, so they are backed by big money.

Holding out for the Bullish Kicker pattern got you in safely at the very bottom for a nice, and very predictable run up to the 50 day down slope sma. This Bullish Kicker also came with a Bull DOJI. FANTASTIC!

Conclusion: The Bullish Kicker is a very powerful pattern that often begins a new bull leg or confirms a mature bull move.

This pattern is easy to spot for 1st year traders and can be anticipated pre-market. Being comfortable with this pattern, will give you the comfort to buy up gaps, that might otherwise emotionally be difficult to purchase. Many people have a hard time buying big opening up gaps, they feel as if the move was missed.

Bullish Kicker up gaps, often signal the very beginning of a powerful bull move.

Tim Kathlina

After The Bell-GOLD Trade Update-Time To Sell Jan 24th

On Dec 14th 2011, I posted this chart of Gold and suggested it was time to go long the metal, buying the exhaustive dip at the $153 level. I also indicated the climb up would be at least 9-13 days in length.

On Dec 14th I posted this chart of GLL, which is short Gold etf, and suggest a good way to play the rise in Gold would be to short GLL at its 200 day sma around $20-21, betting the shares would fall as Gold rises.

Here is a chart of the etf GDX today, which is the Gold mining companies. GDX formed a perfect Head-n-Shoulder top, confirmed when the shares broke the neckline downward. Notice the reaction/action of this break was to find buyers, move back up to the neckline, creating a failed retest as it moved lower again.

We take the length of the Head to the neckline, and add that to the bottom of the neckline to get our price target, which is around the calculated support level around $45.

Here is Gold GLD chart today. GLD has reached the top of a down slope channel. We recommend exiting this trade asap.

Finally, here is today's GLL chart. The stock has moved down nicely from the recommended short of $20, and now is touching calculated support at a rising uptrend line. We recommend this trade be covered asap.

Conclusion: GOLD seems to have found a near term top, thus we recommend taking off the Dec 14th trade of going long GLD and/or shorting GLL.

The patterns suggest GOLD will begin a fast down thrust to the lower channel, which should only take 6-10 trading days. However, if the FED signals QE3 or some derivative of, then these patterns could be broken.

We advise locking in these profits, then waiting until the next market signal direction appears. I did hear that Dennis Gartman is long Gold now, so for sure I expect the pattern to hold and Gold to decline; he is a great contrary indicator.

Tim Kathlina

Before The Bell-TVIX 3 Pattern Set Up Jan 24th

From ZeroHedge Jan 24th:
S&P Warning Of Imminent Greek Default Again, But Promises All Shall Be Well, Dallara Speaks

You have heard history repeats? It's True.

Looking at TVIX, the power of the pattern suggest a historical repeat of 2011. Not only does the chart suggest that, but we can take 2011 headlines, such as the one above by ZeroHedge, and change to 2012; they all read the same.

Again we are trading TVIX because it offers the most, and quickest upside once a decline begins and it also provides a well defined low. Unlike ALL OTHER bear ETFs, that can go down and reverse split forever, the volatility index generally only goes so low.

TVIX exhibits what I believe are 3 repeating patterns, with Pattern 2 about to be embarked on soon. I expect the shares to jump up to $30, followed by headlines out of Europe that all the problems are solved, sending the shares sharply back below $20, which then sets up the final Pattern 3 scenario as we realize the sh_t is about to hit the fan.

This time, unlike last time however, I expect TVIX to go much higher. The reason being a full 5 wave up cycle will have been completed in the S&P by the time P3 begins, ushering in the start of P3 bear that will ultimately take the S&P to sub 600.

Conclusion: History is repeating as central planners believe doing the same thing, only more of it, will bring about a different result.

We added to TVIX position today, will probably scale that back at $30, then look to re-enter on the final pull back below $20, all in.

Tim Kathlina

Before The Bell-German DAX-Tail That Wags the Dog Jan 22nd

From Reuters today:
"German Finance Minister Wolfgang Schaeuble on Sunday rejected pressure to beef up the euro zone's permanent rescue facility, saying Berlin would stick to the agreement made in December for a lending capacity of 500 billion euros ($646 billion). "We are sticking to what was agreed in December," Schaeuble told public broadcaster ARD. "In March we will check whether that is sufficient."

Notice the key word in the news release is "lending capacity". This is not a gift, its a LOAN, on top of the LOANS that can not be paid back already. The world has gone fing mad. 

Looking at the DAX we can see a clear bear DOJI set up right at the calculated R2 line. This is backed up by the negative divergence in the %B indicator. Notice RSI<2> has rolled over as well.

Conclusion: This is a tail that wags the dog situation, the USA being the dog. The DAX technically is at a point of at least short term potential reversion; that coincides with this week being a potential price and time turning point for a top. Expect the dog to be wagged by the tail should a free fall in Europe commence.

It's clear that Europe will deffer to the US Fed to hang Europe's debts on the US Taxpayer, since we have the worlds reserve currency and can monetize like theres no tomorrow. The problem is a declining tax base in the US, along with food and fuel inflation, causes money printing to produce negative returns on economies world wide.

The natural order of markets and economics will prevail, its a question of when? US traders and bond funds are convinced the FED on Tuesday will begin pumping cash into the system; it seems Germany is in agreement.

Clearly stocks have already priced in this potential Fed action; the jury is out as to what the reaction by markets will be, since everyone is all in already.

Tim Kathlina

Before The Bell-CROX Update-Name Brands That Got Crushed Jan 19th

CROX is on our Name Brands that Got Crushed Trade list. Fund managers look to get long these type of household names, once established price discovery base has been identified. (Balance between sellers and buyers)

CROX got crushed down to $15 last October. The shares have not gone a penny lower since, thus price discovery.

The last two candles have formed a Bullish Engulfing Pattern, defined as:
Bullish Engulfing Pattern is a pattern characterized by a large white real body engulfing a preceding small black real body, which appears during a downtrend. The white body does not necessarily engulf the shadows of the black body but totally engulfs the body itself. The Bullish Engulfing Pattern is an important bottom reversal signal.

Volume interest seems to be picking up slowly as noted by a slightly rising 20 day moving average. I use the ema20 over volume to determine buy interest. If the ema begins to upswing, either reversing a down slope or a flat slope, this is a good indication elephants are moving in.

Tim what is the catalyst to move higher?? Glad you asked.
CROX reports earnings on Friday 20th. Looking at numbers posted on Yahoo, analyst expect a 20% decline, eps of .04cents, reduced from .06cents. Last report, CROX beat estimates by 150%.

The mean 1year price target by analyst is $25.50, or 38% above current price. Call options that expire Friday, have largest open interest at $20.

Conclusion: CROX seems to have a few big players moving in ahead of earnings. With a solid base at $15, and still 38% below its yearly mean price target, the downside risk of $3 for a reward of almost $10 seems like a decent bet.

The best way to play is a buy above $20, which will confirm the Bull Engulfing Pattern and move past call option resistance.

Tim Kathlina

After The Bell-Mid-Day Prepare for Increased Volatility Jan 18th

Let me share with you a truth about the markets-Low volatility preceds high volatility. When looking for points/profits-sometimes you have to start with facts that you know, then try to fill in the blanks.

What we know is the market has been struggling higher amidst low volatility and increasing bullish sentiment.

Looking at the XIV etf which moves opposite the VIX, we see a 5 day struggle to move higher. The %B indicator, an indicator I use to look for divergence from the BBands, is showing lower highs.

The VXX is the old formula. We see the same thing as the XIV, 5 days unable to move lower and a divergence in %B indicator.

TVIX same pattern, 5 day support with %B divergence.

Conclusion: As noted last week, I believe Semi earnings will kick off the start of volatility either by missing earnings or bringing about the final exuberant exhausting high because they blow away numbers. (The 1st scenario is more likely)

Either way, we are averaging into TVIX for the ride higher that's about to begin.

Tim Kathlina

After The Bell-NETFLIX Mid Day Update NFLX Jan 18th

On Jan 12th I noted a Bullish Doji that made a successful test of the zero number 90. The DOJI was confirmed by the positive price appreciation follow thru the following day.

Today we get this from Analyst:

FORBES

Netflix: Bernstein Cuts Target-Sees Slowing Sub Growth

Bernstein Research analyst Carlos Kirjner this morning chopped his price target on Netflix to $71, from $79, well below yesterday’s close at $94.72

The market got word of this downgrade prior to market open. The stock has fought off this news and is now positive. The shares have formed a bull flag while trading against a spike.

Conclusion: NFLX shares continue to exhibit bullish trends despite market attempts to keep the shares down. Shares have formed a bullish flag against a negative backdrop of analyst downgrades.

I continue to believe the turnaround is on the way and expect the shares to reach $150 to $200 over the next 3 months.

Tim Kathlina

AFTER THE BELL-BULL AND BEAR DOJI PATTERN SET-UPS JAN 12TH

DOJI:
The appearance of a Bearish/Bullish (Doji) Star Pattern in an uptrend/downtrend shows that buyers/sellers are now losing control and the market is moving to a deadlock between buyers and sellers. This deadlock or balance between buyers and sellers may result because of a diminution in the buying force or an increase in the selling force. The star tells us that the strength of uptrend/downtrend is now dissipating and the market is increasingly vulnerable to a setback/advance.

Conclusion: These patterns require follow thru confirmation. Note however, Transports, large caps, mid-caps are all backed up by low RSI<2> readings.

As noted in yesterdays Semiconductor post, I believe Intel earnings report will bring in a short term top of some sort. Either an exuberant exhaustion style high, based on good numbers, or a disappointment ceiling, based on bad numbers.

The question remains, will this be the high of the year????? Not sure yet.

Tim Kathlina

AFTER THE BELL-OIL TO $120, SPY, EURO/DOLLAR UPDATE JAN 11TH

ZeroHedge Jan 11th-Iran Interest Rates Raised To 20% To Fight Hyperinflation; Iran Nuclear Scientist Killed In Street Bomb Explosion.

Americans will not support an invasion of Iran without provocation by Iran. History is well documented that governments in order to achieve an objective will create circumstances, under the radar, to pressure an identified enemy to make the first attack.

As FDR did enticing Japan to attack Pearl Harbor, George Bush urging Saddam to attack Kuwait, Obama is now boxing Iran in to entice them to attack US interest. Nothing helps re-election like war; foreign and domestic: Oklahoma City-Bill Clinton, 911-George Bush, Iran-Obama.

Looking at Light Crude, the daily chart seems to have an Inverted Head-n-Shoulders pattern. IF this pattern breaks the neckline upward, then the calculated upside is between $110-$120. If this breaks the neck line based on Iran/US military encounter, sky is the limit. Either way, as of today, it seems the path of least resistance for OIL is HIGHER.

December thru many fund managers under the bus because the decoupling of the Euro from the S&P. Prior to December, fund managers could count on the currency to move lock step with the US index. The majority of fund managers missed the 1290 S&P upside that we called for due to this decoupling.

Looking at the Euro, the chart looks to be in a bear wave 3 on the daily chart. I project the ending of this 3 wave between $123-125. Generally a 3-wave, an impulse wave, will extend 61% of wave one.

Wave one was 12 points top to bottom. 1.61%x12 is 19. Subtract 19 from wave 2-top of 142, gives us a price target between $123-125. At this price, we will buy the Euro.

Here the dollar/spx in December began running together. Again, this shows the appetite for all things US. Money will always go where its treated best.

Conclusion: Inverted H-n-S pattern in oil, plus Obama desperate to win re-election, almost ensures escalation of Iran conflict towards war, and higher oil prices. (Nothing is ever a sure thing)

For now, money is flowing into all things American, its the lesser of two evils. The question is as everyone seems to be all in USA, will the EURO bottom as we project, money move out of US stocks/US dollar; moving into EURO, GOLD, OIL, SILVER, etc? Or will a rising tide float all boats, and everything goes higher on extreme bullishness? This we do not have an answer to yet.

So, we will go long the EURO at the calculated bottom, wait for the response by US equities. Our next TVIX insurance purchase is coming within days.

Tim Kathlina

After The Bell-Time To Short Semi-Conductors-INTC, AMD, TXN Jan 10th

As we move closer to the high for the year in the S&P,(today reaching my lowest high price of 1290) it's time to begin getting serious about getting short. Today the Semi-Conductor space pulled into view.

Semi companies such as Intel begin reporting earnings middle of next week, into the following week after. Nothing more exciting for me then for stocks to ramp into earnings, and investment strategist(cough) try and front run the numbers such as David Trainer did today:

Buy Intel: a stock for all seasons

Marketwatch Jan 10th David Trainer < http://www.marketwatch.com/story/buy-intel-a-stock-for-all-seasons-2012-01-10?siteid=yhoof2 >
In an increasingly challenging market, Intel Corp. is one of the safest investments with compelling upside potential. That's right, investors get to have their cake and eat it too.-David Trainer

I will make a bet with David that INTC doesn't WOW Wall Street with their earnings report, and notes the strong US dollar, higher labor cost, lack of new compelling tech gadgets over Christmas shopping season as just a few of the reasons.

SMH is the Semi holder ETF. The chart shows the stock has taken out the upper BBands and ramped into overhead resistance levels. Most telling is the R2 figure of 97. Exhaustive study has been done on this, stocks above 98, tend to under perform in the next week or weeks. (Just in time to sucker everyone in for earnings next week)

SOXS is the bear ETF for Semiconductors. Notice our trading RSI<2> indicator is BELOW one. (Love it)

Exhaustive studies show that stocks with one or less RSI<2> readings, tend to outperform the next week or following weeks. Highest Volume by Price is around $55. I look for the shares to ramp to the level without much effort.

Conclusion: Now that the S&P has reach the underside of my top price target range, some short calls such as run, and run fast from Semi-Conductors can be comfortably committed to.

In the coming weeks I expect sell side analyst who believe stocks never go down, will lose their clients a bunch of money.

Tim Kathlina



After The Bell-Morning Update-Name Brand Stocks that Got Crushed WebMD Jan 10th

We keep a running list of Name Brand Stocks that Got Crushed. History shows that the biggest gains come from famous companies that have fallen on short term hard times. Today we add shares of WebMD to or list: ticker WBMD.

The Wall Street Journal-WebMD Health Corp. said President and Chief Executive Wayne T. Gattinella resigned from the health-care-information company, which also projected lower revenue for 2012 as a pharmaceutical industry patent cliff is taking a greater-than-expected toll on advertising and sponsorship product sales

Conclusion: Long term successful INVESTORS learn to be opportunity Vultures, verses Band Wagon mojo buyers. The most famous investors of all time, Warren Buffet, Peter Lynch, Bob Olstein are so because they lie in wait for their pray to come to them, while avoiding the hot topic mojo stocks of the day.

 Don't be a Tulip Bulb chaser.

Tim Kathlina

Before The Bell-CHINA Intervention Bernanke Style YINN and YANG Jan 10th

In order for stocks to be in a bull market, Central Banks have to step in and force the people to purchase shares buy destroying all other investment avenues. The Ponzi system is so roted with debt and fraud, natural market mean revisions must be avoided at all cost. Today, according to ZeroHedge report, CHINA bankers have come out swinging:

Bloomberg report on what is about to take place in China: "China’s stocks regulator will “actively” push pension and housing funds to begin investing in capital markets, and encourage long-term investors such as insurers and corporate pension plans to buy more shares."

This first chart is YANG, etf short China. I have circled a clear DOJI pattern; which in normal circumstance being at the bottom of the BBands, would begin to peak my buy interest. DOJI is defined as:
Doji is a particular signal showing indecision about the direction of the market and it represents a tug of war between buyers and sellers.

So, in other words, what was a strong downtrend, found an equal footing between buyers and sellers, or price discovery. But after today's CHINA news, forcing retirement funds to buy over leveraged, worthless stocks, it doesn't take to much guess work to see which way this will be resolved.

YINN is the bull etf for China. The last two candles formed a Bullish Homing Piegon, defined as:

The Bullish Homing Pigeon Pattern is a signal of disparity. In a market characterized by downtrend, we first see heavy selling reflected by the long, black real body of the first day. However small body of second day points out to diminished power and enthusiasm of the sellers thus suggesting a trend reversal.

In this case, the "diminished power and enthusiasm of sellers" is being forced by Ponzi scheming Bankers who are intent on beating the house; the house being the natural order of markets.

Conclusion: CHINA has long been building bridges to nowhere, lavish cities with no residents, and the largest shopping malls in the world with no shoppers. Over the last year however, the gig was finally up and the natural order of market mean revision has begun.

Just like with the US Fed QE and Twist Interventions, in the short run, some upside easy money can be made. Just don't stick around the after party celebration too long.

Tim Kathlina

After The Bell-S & P Update Using IBM as DIrectional Jan 7th

On twitter/tkathlinastocks Friday I noted:
SPY-Weekly formed White Opening Marubozu, created an upper shadow. SPY-Daily chart formed Bearish Harami Pattern. Monday pull back likely.

I don't like making daily calls based on candles due to low % accuracy, however, went out on a limb this time and below is the Daily chart showing the pattern.

Effective charting requires multiple looks at the same stock or etf, without getting analysis paralysis. It's prudent to compare the stock or etf you are charting against the most bullish stocks. One of the best winners, no matter bull or bear market, is IBM.

Here is IBM in candles, over layed with S&P 100 (black line), over last 6 months. Notice the double bottom in IBM August-September, followed by Inverted Head n Shoulder bottom $SPX. IBM, the most bullish of all stocks, leads the way for the broader index.

IBM 3-month chart shows a clear Head n Shoulders topping pattern. In a bull market, we would expect this pattern to fail; not so in a bear market.

Here is a BIG RED FLAG notice to bulls, showing the divergence of late between IBM and S&P.

Here we do a common charting technique by dividing IBM/SPY to dig even further under the hood for clues. This chart also has a 100 day EMA line included in red. This chart really brings the BIG PICTURE into focus.

Notice every time this division reaches the 100 EMA, its been buy time; both 2010 and 2011. However, notice in 2012, a massive Bear Diamond Distribution Pattern has formed, unlike years past.

Conclusion:  The stage is set for a WAVE 3 down to begin soon; given the extreme bullish sentiment and the most bullish of bull stocks IBM setting up for a breakdown. I expect the action/reaction dynamics to kick once the Head-n-Shoulders IBM pattern breaks the neckline. This will bring in a short trap, and give us the final S&P push to new highs for 2012.

Tim Kathlina