Interesting how the media never mentions that the only reason the market ended in the green today was activity that took place in the span of only several minutes.
Was this ‘program trading’ or intentional painting of the tape?
Painting The Tape–
The illegal practice in which traders buy and sell a specific security among themselves, creating the illusion of high trading volume and significant investor interest, which can attract unsuspecting investors who might then buy the stock and enable the traders to profit.
Well whatever this was that occurred at exactly 3:55pm EST it was the event that prevented the market from going into the red.
See the horizontal red line on the chart below that marks the top… that red line is the resistance level going back to the previous high on May 8th, resistance held.
I will have much more on Saturday and on Sunday…
The chart below is a 5 minute chart of the S&P 500 E-Mini futures for today.
(click image for larger view)
S&P 500 E-Mini Futures
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Chunk, what else is new? Corrupt governments, greedy corporations, junk food, junk products, junk bonds, cooked books, painted tapes, etc. etc.. It is all part of the “rotten” world we live in.
But, has n’t all that griping given you a bellyache yet?
Just think, if only we all had loaded up with longs when S&P was at 666, we would would be jumping up and down with joy.
However, I agree it is too late now to go long. But, it is never too late to stop complaining, and going short without confirmation of trend reversal is like guessing the top.
We need to focus on making trading profits, by going with the current trend, or not losing by staying out. Otherwise, our shorts may burnt us out and we may even miss the down move, when it comes.
KK, you said you were leaving.
KK,
As usual, you just don’t get it! You are on a completely different page amiga. In fact, I think you are ready to fill a market niche and create your own website for chart/market analysis. Might I suggest some sames for said website? Yours could be called, “100% Right All the Time.com”, or, “Watch the World Burn and Not Mention It and Invest in It Perfectly.org”, or, “Catch EVERY Opportuntiy and Piss on Those Who Miss One.net”.
In case the sarcasm is too much a stretch, let me be blunt:
1.) Chuck is not complaining, nor whining, and yes I would tell you if he was. Honestly, KK, I hear only ONE voice whining and complaining….I’ll let you connect that dot.
2.) I too missed this rally and went short a bit too soon, stopped out many times, took a 2×4 to the head and finally took some long positions. But I, in contrast to you, do not blame Chuck one bit for it. I am 100% responsible for all my due diligence, sifting through info from numerous websites. In the end I make my own decisions. [Gawd, I'm sick of having to repeat this point that you Just Don't Get!]
3.) Those who rely on another to make investing decisions are called “Clients”. Chuck is not an MM, he has no Clients, he does this all for free, for educational and capital preservation purposes.
4.) We call someone like you, a ‘sore loser’ and ‘grudge holder’, neither are attractive traits.
KK, Chuck is DIFFERENT from you. He’s not trying to be Chuck-According-to-KK. He cares that the world is burning, and it pisses him off that it didn’t have to be this way. [ditto for me] And, in case you haven’t noticed, he’s invested well in that fact at the same time. Move along KK, you obviously can’t stand Chuck and his style, go away and find your place in this world and stop your f*cking whining here.
KK,
To understand ‘why’ something happens is important, to ignore it is dangerous for your portfolio. What happened on the close on Friday warrants some question to allow us better understand the implications. After more study of the tape it would appear to me to not be program trading at all, instead it may very well have been a margin call (on short) that took place in the pit. And there was an offer collapse on the size. If this is the situation it is NOT a bullish outcome. But we have to wait until Monday to know more.
KK, If you want to play in this market you have to analyze the ‘play book’ every day. If you play you have to know your opponents, If you only observe and gripe then you don’t care about the play books, just the score.
KK,
You hit the nail on the head. This site is not about making money. There is no performance figures available. Therefore, it is only about being right, or not admiting when you are wrong.
Would you rather make money or be right? I’ll take the latter. The key is to trade the market you have, not the market you want. I don’t see any longs here and they,(if you go by the chat people), don’t know a thing about shorting stocks. If they did, they would not make the novice mistake of shorting stocks that are priced higher than their 200 or 50 day moving averages.
Oh yeah,
And yesterday was not about a margin call in the trading pit. Margin calls happen daily around 2:30-2:45 p.m. eastern. Yesterday was simply an index arbitrage program trading into the cash close that buys the S&P500 cash,(stocks in the index), and then sells S&P500 June futures after the cash close. Is it manipulation? You bet! Is it legal? you bet! Life is so much fun when you can manipulate the markets without fear of prosecution!
Wow, but it’s fun being an adult and actually taking responsibility for the decisions you make.
I don’t come to this site to have Chuck make decisions for me. Do you? I come because I never fail to learn something. Chuck deals with more “why” issues — FOR FREE — than anyone I know.
But I’ve never heard him say, “I’m perfect. Do exactly like I do, and you’ll be perfect, too.”
Sheesh!
Chuck I really appreciate all the work you do..I am very impressed with the news you provide….Could you tell me how you figured out that it could have been a margin call (on short) that took place in the pit?
Chuck,
You mention that there is about $60B selling of company shares (this May?) compared to $30B in May 2001.
Is this insider selling, or special sales to other parties?
DaveW:
Firstly, I need to mention this – This site is a must visit everyday. My knowledge of the financial markets improves my listening to different points of view and Chuck’s view I hold in high regard.
However, I fully agree to what KK says. DaveW – Look at 2000-2003 bear market rallies or any bear market and please let me know which candles were manipulated and which are not. Please let me know when you read the charts 5 years from now whether you would not consider today’s candle as it is “manipulated”, if proven. Markets are too huge to be manipulated for long.
I dont see KK’s message as showing disrespect to Chuck nor do Chuck’s comment seem to have taken it that way – no need to go berserk. Its a point of view & lets learn to respect that – that is what we have been shouting to the world via this site as “alternate” economic theories and point of views.
I dont day trade, for me, monthly and weekly signals are more important than daily signals. Look at monthly MACD and Stoch and weekly – what has it been shouting for the last 3 months: To go short? If yes, pl. revisit TA basics. One of my earlier entries here a few months shouted to go long at 750.
If you draw the resistance line we have actually broken and gone sideways of the long term resistance line since this bear market began. Heres another – every 17 weeks since this bear market we have made a lower low – its done 5 times. In this cycle, 12 weeks over, will we make a lower low in the next 4 weeks – maybe, but I doubt. And if it really does, I would go all guts longs.
And yes, I am a confident long on the US markets – my SL is around 8230 on the Dow. We MAY correct forming the perfect reverse H&S. But if we breakout next week just as the emerging markets have done, then shorts will get killed, actually trounced, demolished – begging for mercy and the world will be very very bullish. (The smart assess who diluted, made money on shorts, are still sitting on cash – they need to get in). And best part is, I feel that needs to happen before we start falling again.
Yes my “economic” stand is that we will enter a phase of stagflation on the long term. Chuck tries to mix fundamentals & technicals and most of the time, they show divergence. I stick to pure TA as far as trading is concerned. Is the world burning – sure is. Will we go long term down – maybe. Will we have a 3rd world war – maybe. Has the govt pushed us into a debt hole – oh yeah yes. Will it continue this path – it cannot. GM becoming bankrupt is great. Yes we (taxpayer) wasted money on GM, but we are coming to the right path. Markets will force all to get to the right path – including govts.
Till then, I will join you in your prayers so that markets fall and you can take fresh longs.
Dont go berserk on me please
Indytrader,
You are obviously bullish. I have read the arguments for the market going lower. Why do you think the market will continue to go up?
I am learning options having fun love the site Chuck haa taught me alot for free unlike many so called experts.Do I always agree no,but moatly I so. If you liaten to Brad on Sink or awim you will learn juat be on the right aide of the market no matter what that might be.
Phxbob:
Bcos everyone including the average Joe on the main street thinks that the markets is on steriods. That is exaclty the reason the markets will go up.
Dont get me wrong – we are in a nice trading range, consolidation after the run up. A breakout either way has to be played – long or short. But I am betting on long. Why – see my comments on MACD and Stock monthly and weekly.
My take is we will touch atleast 1000 on S&P, Jim Cramer will be crowned the new Buffet/Messiah and that is when we will start falling !!
With all due respect to Chuck, I find the TA on this site to be quite erroneous. On daily charts, we are in wave 3 up. Only an idiot would would short this market.
KK,
There are differing opinions on EW wave counts, just as there are differing views on the market in general. Wave 3 is not my opinion and EW has ‘not’ been reliable over the past 3 to 4 months based on three EW guru’s I keep tabs on.
Respected EW and technical analyst Richard Russell writes this weekend:
You know where I stand.
KK:
To find out why the other folks have such a strong disagreement against ur entries, I actually did a google of your comments posted on this website.
And buddy, I am actually very impressed – I like your TA comments & actually agree to your views. I have my own trading methodology (I keep it simple) – I use simple EMI and MACD to track the trend apart from ADX but will analyse DMI. But would you mind sharing some of the other sites you track. Tim woods site was one you had recommended. Any others?
Indy, people with low self estime posting on sites just to boost their ego are never accepted by majority who are there just to share their views…
KK,
I respect your opinions, however I don’t much care for people who make it a point of telling others they think they are wrong only to hear themselves speak or to voice frustration of their own actions.
You say it is ‘never too late to stop complaining’. What am I complaining about? I’m reporting what is taking place, market and economic. If you perceive my dissatisfaction with various bailouts, et al as ‘belly aching’ them so be it. Someone has to stand up and say ‘enough of the crap’.
By the way, don’t tell others to not complain about manipulation when you do it also.
KK wrote on 3/6/09:
What do you make of this? I believe that it is outright manipulation!
[...]The overnight trading of futures should be banned as it allows manipulators to manipulate the market with relatively small amount of money due to low volume during the night.
KK wrote on 2/18/09:
[...]Moreover, as the implications of a breakdown are very ominous, it is unlikely that PPT won’t spring into action
Great site Chuck. Your analysis has been good food for thought.
What’s all the fuss about? With GM, US$, bond and mortgage issues we should have our eyes peeled for the slightest clue of intervention or trend change.
Just a guess, but the next decline will involve panic, prayer, unopened statements, and a realization that a few nuts should have been buried for the winter.
I subscribe to Elliot Wave International. Their stance for the last couple of weeks is as follows:
Update for Wednesday, May 27, 2009; 5:00 PM, Eastern.
[Bottom Line]: The market remains in “setback†mode, which started at the May 8 highs. Prices should continue to work lower over the coming week or two (possibly more).
After the spike on Friday:
Update for Friday, May 29, 2009; 5:25 PM, Eastern.
[Bottom Line]: The market has recovered to the point where it is possible that another rally phase within Primary wave 2 up is starting. Next week’s early market action should be telling.
However he goes on to say the move looks suspect in his books for varying reasons.
I also subscribe to an Australian Elliot Wave guru. Neither are of the opinion we are in a wave three up. On the contrary both agree that technically the wave count is complete and this could be a top though Elliot Wave International believe the market probably needs to retrace further before wave 2 is complete.
One interesting thing though is they have called the $US correction probably complete on Friday and say it is now in a position to rally. Given the strong inverse correlation of the dollar index to the s&p since this crisis began it makes sense to me a dollar correction bottom would also mark a s&p correction top.
They are also calling a top on gold and silver, stating they are ready for a third wave down. The only way I could see this all being possible was if the markets were coming down and coming down hard.
Anyway I enjoy the site, have learnt an increadible amount, best wishes to you Chuck…
Annette from Australia
Chuck,
Your site is no doubt very informative and one of the best. I appreciate your effort to keep us updated with a lot of useful information. Many thanks!
Cc
An interesting article re the effects of Interest Rates on the stock market
http://www.moneyandmarkets.com/interest-rate-indicators-flashing-stock-sell-signals-3-33939
BTW elliot wave international analysis has bond yields set to take their next leg up, one which will carry rates to 4.72%-4.81% – just the tip of the iceburg – long term projections are a major bull.
Similar Money and Markets were calling this the “next bubble” back late last year during the lows.
I think if people look closely they will soon see their crop of “green shoots” are just noxious weeds…..
Cheers
Annette
Chuck,
Do you think this is the blow off top, or at least the start of the blow off top that you have been v-blogging about?
Al: Sorry for being so naive, but who are you referring to?
Chuck:
I enjoy your videos & I have absolutely learnt a lot. But I do think that mixing up FA and TA is a sure case of disaster. For example, in the past 3 months, there has been no calls for long in the videos. Trendlines are great, but do you have a TA system which says markets is in an upmove or downmove atleast after a move is confirmed. Even when trendlines were broken, you were stuck finding short opportunities.
If this is a bear rally, long term bull run start, elliot wave main 4, sub-wave C,…. – Does not matter – that will get proven in hindsight. Point is – are we on the right side of the trend (for me as a mid term position trader – weekly trend)
I did see some of the chatters posting – still holding their AAPL shorts from 125. I also feel that there are a lot of new traders who listen to your every word. I hope they have a good SL exit strategy.
One suggestion could be: To analyse charts from a pure TA perspective and then get on board with the FA. Even most of the FA data published (housing, int. rates) are usually not forward looking FA data. FA usually reflect on the charts in the long run, maybe months, maybe years.
Indy,
All of my positions in my longer term account are ‘longs’. I speak of those positions often in my videos.
IndyTrader, Thanks for your support.
It is nice to know that you too are following the trend indicators.
As we should all know, the daily chart for SPY shows a DMI 14 crossed over into an uptrend on March 16. This indicator is still strongly bullish.
Even on weekly chart for SPY, the DMI 14 crossed over into an uptrend on May 8.
Incidentally, I used to visit many sites, but don’t do that anymore. Based upon my experience, it is a waste of time. Instead, we should spend more time doing our own analysis.
I still occasionally come to Chuck’s site because I do like Chuck, his friendly voice in his commentaries, his style, and his stubbornness. His rebellious, contrarian views remind me a younger me, and also to keep myself reminded of the fact that, as a short-term trader, I need to ignore his long term views, until the short-term indicators line up with the longer-term indicators.
IndyTrader… I know I’ve been quoted between the lines on some occurrences. Like “novice” trader shorting a stock above its 200 dma/50 dma cross.
As for those who are “holding the AAPL shorts of 125″, it has more to do with high transaction costs compared to the amounts traded. With these small amounts, I can handle losses when they come to it. Visa was also a question of risk/reward trade (walked against me so far, but we’ll see
). And more based on FA than TA (I have a poor opinion of TA so far on this rally: not efficient in a divided market). So don’t talk about what you don’t follow. I think that from now on, I’ll keep my trades to myself. Free riders have been riding my nerves. 
I’ll just point out one thing… if you go to any one site to go and get trade ideas, you’re bound to be on the losing side long-term. Up to you to do your own job. If you follow Chuck’s analysis… It’s your problem.
And as to the mixture of FA/TA, let me show you an opposite example: technically, everything indicated to go long GBP a few weeks ago… Then a credit rating agency gave a negative outlook on the long-term UK. The charts wouldn’t have told you that; instead FA would have told you that it is a weak country. AAPL, for instance, is a company with huge mountains of cash… But never creates value for the shareholder (no dividends). So what’s the rationale of investing into AAPL?
I have to say that I have some difficulty being patient with guys who think they’ve come to the absolute bonanza like KK… When he was on the chat, I remember his following Chuck line by line and ranting against those who were filling the chat with “nonesense”… Free site, free advice, free trading advice… And perfect 100 %. You don’t think you’re exaggerating? Even with a paid financial advisor, you wouldn’t request so much exactitude.
Chuck is a perfect analyst, he works with probabilities and it might be that here or there he may make a mistake.
But he never invited you to be his disciple.
Chuck, much like me or others, is more of a swing trader than a day trader. He has been too kind for his own good… And has been giving tips to individuals, by which way he has incited people to hold him accountable for those.
So the day traders have to learn to be more independent and do their own due dilligence. If they don’t know to do it, then they should go to a financial advisor and retire from trading. And ultimately, it’s your responsibility when you press the button, not Chuck’s however much you rely on him.
As to the Maine/LP/Holmes/TBTF or whatever the ID… No, indeed, this site IS NOT ABOUT MAKING MONEY. It is about LEARNING!!! And being with friends if you have any. You can’t understand it, then go elsewhere.
FreeMind:
No, I was not pointing to you in my comments. I don’t understand why critique cant be given & taken well – why this brouhaha. And this is not personal just a view on trading strategies.
There is a reason this site is called blog.rebelTRADERS.net and not blog.rebelAMERICAN_PATROIT.net
Finally, I like reading Chucks site, value his opinion & will continue doing so.
The bottom line is that after all the discussions, trading is NOT about being right! It is only about being profitable! If you have not been profitable since the March lows, I disagree with everything you say. Why? Because the market disagrees with everything you say.
Also, if you are trading individual stocks short, you don’t need advice from anyone. However, iwould love to hear the technical analysis setup for shorting AAPL. That has been one of the generals all year.
Free Mind, I surely miss you. You behaved like a good friend in the chat room. I do have a question for you. How is Fazzie doing? Or are you now in love with Fazzie’s nemesis, i.e. Fassie?
As for Chuck, he is one of the sweetest and swellest guys I have had the good fortune of running into and I am sure we all are proud of him.
Hello,
Nice to see such a livley and respectful, exchange of ideas.
My strength is research and history. My views are from 35,000 ft.
The big picture.
This recession, like almost all of the dozens we have had, is a cyclical recession. They happen about every 5 years or so. All recessions are a normal cycle of expansion and contraction. This recession is no different. Nobody caused it, and no one can fix it.
Free markets destroy all governments attempts to control any part of it. Governments have little control to do good, but great power to do harm, mostly to itself.
The major, respected indicators, indicate that this recession is officially coming to an end very soon. We may have a window of 2 to 3 weeks to go long before the 2nd quarter earnings.
As with ALL recessions, it’s just a matter of time now. The honest debate is, how long before the S&P hits 1400. I stopped looking at the daily markets turns 6 weeks ago. Looking forward to 4th quarter of 2010 earnings. Wish each and everyone of you the best going forward.
Wow Scott – you seem to be more bullish than I am.
I just saw Chucks video –
** There is an over-reliance on trendlines. My guru (Alexander Elder’s books – I consider it my bible) says in a book, he does not rely too much on trendlines as you could shift the line up or down depending on how bullish or bearish you are. Indicators you cannot fudge with.
** I agree there has been a huge amount of distribution with insider selling. However, the bull case is, with so much dilution why did the markets not fall?
Assuming GM bankruptcy happens this week, if the markets do not take down the 8230 support and fall below, we are probably looking at our last chance to get in long before we see a parabolic up move as seen in the Asian markets recently at least for the rest of 2009 before peak oil becomes an issue, more banks go down and there there is probably a retest of the lows in early 2010.
Good luck to all. Final post for today.