Worst Quarter since 2009

This quarter has been the worst since 2009, If you cannot watch the market on hourly or less basis, there is no need to trade during these crazy swings. 


As you all know, Market has it own way of hurting the most people in the worst possible way.  There is lot of pumping up and down that happens especially at the end of the day or during the last trading hour apart from overnight foreign markets trading the futures and making things worse.


Also there is lot of pessimism building up slowly and steadily. The markets is starting to get more bears than bulls. The sentiment indicators and overall common man talks  are now bearish so we know that we are nearing the extreme zone.. VIX the fear indicator is also near its extreme zone but the VIX futures (the prices of VIX are based on futures) has very bearish look since beginning of this down move and even while we are in extreme territory the posture is not improving.  So we have to remain cautious.


As always.. we allow the markets to prove itself before we start front running it. There is no need to catch the falling knife. Just as markets melt up and there are extreme moves.. falling markets can remain in the extreme zones for a while causing total capitulation.


So even though most of the indicators are telling that we are close to bottom we need to listen to the king of all THE PRICE ACTION of the indices and price action of VIX futures. 


Some of my colleagues are down 35% in their 401k  and IRA accounts and for them I have only one piece of advise. Learn to listen to markets and take a vow to Never ever get hurt again like that, otherwise History will repeat itself and you will be weeping many more times.


Good Luck.

Updated EMA code.

#########################################################
## BigbullandBigBear LLC
## Date: 1st Sept 2010
## Changed: 26th Sept 2011
#########################################################

input price       = close;
input ColoredCloud = yes;
input ColoredFill = yes;
input BreakArrows = yes;
input displace    =  0;
input length      = 10;
input multiplier  = 0.005;
def lastBar = if (IsNaN(close), 1, 0);

input AverageType = {default SMA, EMA};
def MA;
switch (AverageType) {
case SMA:
    MA = Average(close, Length);
   
case EMA:
    MA = ExpAverage(close, Length);
 
}

plot UpperBand = MA*(1+ multiplier);
plot LowerBand = MA*(1-multiplier);
def MAStatus =
  if close > MA then 2    
  else
    if close < MA then -2  
    else 0    ;                          

rec BreakStatus = compoundValue(1,
  if BreakStatus[1] == maStatus or maStatus == 0 then BreakStatus[1]
  else
    if mastatus == 2 then 2
    else -2, 0);


UpperBand.AssignValueColor (
    if !Coloredcloud then Color.White
    else
      if BreakStatus[0] == 2 then Color.Green
      else Color.Red);
UpperBand.SetLineWeight(1);


LowerBand.AssignValueColor (
    if !Coloredcloud then Color.White
    else
      if BreakStatus[0] == 2 then Color.Green
      else Color.Red);
LowerBand.SetLineWeight(1);

# Breakout/down arrows.
plot BreakOutArrow =
  if BreakArrows then
    if BreakStatus[0] == BreakStatus[1] then double.NAN
    else if BreakStatus[0] == 2 then
      close else double.NAN
  else double.NAN;
BreakOutArrow.SetPaintingStrategy(PaintingStrategy.Arrow_Up);
BreakOutArrow.SetDefaultColor(Color.Green);
BreakOutArrow.SetLineWeight(3);

plot BreakDownArrow =
  if BreakArrows then
    if BreakStatus[0] == BreakStatus[1] then double.NAN
    else if BreakStatus[0] == -2 then
      close else double.NAN
else double.NAN;
BreakDownArrow.SetPaintingStrategy(PaintingStrategy.Arrow_Down);
BreakDownArrow.SetDefaultColor(Color.Red);
BreakDownArrow.SetLineWeight(3);

# colored clouds
plot GreenUpper = if ColoredFill and BreakSTatus[0] == 2 then
  UpperBand else double.NAN;
GreenUpper.SetDefaultColor(CreateColor(0,100,0));
plot GreenLower = if ColoredFill and BreakStatus[0] == 2 then
  LowerBand else double.NAN;
GreenLower.SetDefaultColor(CreateColor(0,100,0));
AddCloud (GreenUpper, GreenLower,CreateColor(0,100,0), color.red);

plot RedUpper = if ColoredFill and BreakSTatus[0] == -2 then
  UpperBand else double.NAN;
RedUpper.SetDefaultColor(CreateColor(200,0,0));
plot RedLower = if ColoredFill and BreakStatus[0] == -2 then
  LowerBand else double.NAN;
RedLower.SetDefaultColor(CreateColor(200,0,0));
AddCloud (RedUpper, RedLower, CreateColor(200,0,0), color.green);

TOS code with 10 SMA , Choice of SMA and EMA and Clouds

#########################################################
## BigbullandBigBear LLC
## Date: 22nd Sept 2011
#########################################################

input price       = close;
input ColoredCloud = yes;
input ColoredFill = yes;
input BreakArrows = yes;
input displace    =  0;
input length      = 10;

def lastBar = if (IsNaN(close), 1, 0);

input AverageType = {default SMA, EMA};
def MA;
switch (AverageType) {
case SMA:
    MA = Average(close, Length);
   
case EMA:
    MA = ExpAverage(close, Length);
 
}

def MAStatus =
  if close >MA then 2    
  else
    if close < MA then -2  
    else 0    ;                          

rec BreakStatus = compoundValue(1,
  if BreakStatus[1] == maStatus or maStatus == 0 then BreakStatus[1]
  else
    if mastatus == 2 then 2
    else -2, 0);

plot UpperBand = MA*1.01;
UpperBand.AssignValueColor (
    if !Coloredcloud then Color.White
    else
      if BreakStatus[0] == 2 then Color.Green
      else Color.Red);
UpperBand.SetLineWeight(1);

plot LowerBand = MA*.99;
LowerBand.AssignValueColor (
    if !Coloredcloud then Color.White
    else
      if BreakStatus[0] == 2 then Color.Green
      else Color.Red);
LowerBand.SetLineWeight(1);

# Breakout/down arrows.
plot BreakOutArrow =
  if BreakArrows then
    if BreakStatus[0] == BreakStatus[1] then double.NAN
    else if BreakStatus[0] == 2 then
      close else double.NAN
  else double.NAN;
BreakOutArrow.SetPaintingStrategy(PaintingStrategy.Arrow_Up);
BreakOutArrow.SetDefaultColor(Color.Green);
BreakOutArrow.SetLineWeight(3);

plot BreakDownArrow =
  if BreakArrows then
    if BreakStatus[0] == BreakStatus[1] then double.NAN
    else if BreakStatus[0] == -2 then
      close else double.NAN
else double.NAN;
BreakDownArrow.SetPaintingStrategy(PaintingStrategy.Arrow_Down);
BreakDownArrow.SetDefaultColor(Color.Red);
BreakDownArrow.SetLineWeight(3);

# colored clouds
plot GreenUpper = if ColoredFill and BreakSTatus[0] == 2 then
  UpperBand else double.NAN;
GreenUpper.SetDefaultColor(CreateColor(0,100,0));
plot GreenLower = if ColoredFill and BreakStatus[0] == 2 then
  LowerBand else double.NAN;
GreenLower.SetDefaultColor(CreateColor(0,100,0));
AddCloud (GreenUpper, GreenLower,CreateColor(0,100,0), color.red);

plot RedUpper = if ColoredFill and BreakSTatus[0] == -2 then
  UpperBand else double.NAN;
RedUpper.SetDefaultColor(CreateColor(200,0,0));
plot RedLower = if ColoredFill and BreakStatus[0] == -2 then
  LowerBand else double.NAN;
RedLower.SetDefaultColor(CreateColor(200,0,0));
AddCloud (RedUpper, RedLower, CreateColor(200,0,0), color.green);

TOS Code for 9 Ema Break

Since lot of you have been asking about my cloud bands. I thought of posting this code on the blog itself.
The Bands I have are called Vidya Bands. These bands were invented by Prof. Tushar Chande  You can find him on SFO magazine or University of Pittsburgh's site. He has lot of indicator RAVI, ARUN etc.

I came across his article on how to find early the stocks that break out and that lead me to this quest. He had described using 1% above and 1% below his Chande momentum oscillator. His oscillator is very complex using sigmas and deviations etc. So I decided to make it little simple and I use his 99% and 101% on 9 Ema with the new clouds on TOS platform.

Here is the code for you folks to use.


#########################################################
## BigbullandBigBear LLC
## Date: 1st Sept 2010
#########################################################

input price       = close;
input ColoredCloud = yes;
input ColoredFill = yes;
input BreakArrows = yes;
input displace    =  0;
input length      = 9;

def lastBar = if (IsNaN(close), 1, 0);

def EMA = expAverage(close, 9);

def EmaStatus =
  if close >EMA then 2    
  else
    if close < EMA then -2  
    else 0    ;                          

rec BreakStatus = compoundValue(1,
  if BreakStatus[1] == emaStatus or emaStatus == 0 then BreakStatus[1]
  else
    if Emastatus == 2 then 2
    else -2, 0);

plot UpperBand = EMA*1.01;
UpperBand.AssignValueColor (
    if !Coloredcloud then Color.White
    else
      if BreakStatus[0] == 2 then Color.Green
      else Color.Red);
UpperBand.SetLineWeight(1);

plot LowerBand = EMA*.99;
LowerBand.AssignValueColor (
    if !Coloredcloud then Color.White
    else
      if BreakStatus[0] == 2 then Color.Green
      else Color.Red);
LowerBand.SetLineWeight(1);

# Breakout/down arrows.
plot BreakOutArrow =
  if BreakArrows then
    if BreakStatus[0] == BreakStatus[1] then double.NAN
    else if BreakStatus[0] == 2 then
      close else double.NAN
  else double.NAN;
BreakOutArrow.SetPaintingStrategy(PaintingStrategy.Arrow_Up);
BreakOutArrow.SetDefaultColor(Color.Green);
BreakOutArrow.SetLineWeight(3);

plot BreakDownArrow =
  if BreakArrows then
    if BreakStatus[0] == BreakStatus[1] then double.NAN
    else if BreakStatus[0] == -2 then
      close else double.NAN
else double.NAN;
BreakDownArrow.SetPaintingStrategy(PaintingStrategy.Arrow_Down);
BreakDownArrow.SetDefaultColor(Color.Red);
BreakDownArrow.SetLineWeight(3);

# colored clouds
plot GreenUpper = if ColoredFill and BreakSTatus[0] == 2 then
  UpperBand else double.NAN;
GreenUpper.SetDefaultColor(CreateColor(0,100,0));
plot GreenLower = if ColoredFill and BreakStatus[0] == 2 then
  LowerBand else double.NAN;
GreenLower.SetDefaultColor(CreateColor(0,100,0));
AddCloud (GreenUpper, GreenLower,CreateColor(0,100,0), color.red);

plot RedUpper = if ColoredFill and BreakSTatus[0] == -2 then
  UpperBand else double.NAN;
RedUpper.SetDefaultColor(CreateColor(200,0,0));
plot RedLower = if ColoredFill and BreakStatus[0] == -2 then
  LowerBand else double.NAN;
RedLower.SetDefaultColor(CreateColor(200,0,0));
AddCloud (RedUpper, RedLower, CreateColor(200,0,0), color.green);

############ END##############################################

The picture matches up very nicely with even Hekin Ashi style of charts..
Also it matched perfectly with my picture perfect setup couple days ago on SPY....that I posted here on the blog.

Any questions, please e-mail me at marketing1977@gmail.com

Tell-Tale Sign today

Today, the futures are positive so I expect VIX to drop sharply, if it does not then remain defensive and any sign of weakness bail out.

The reason for this is VIX is stubbornly sticking above 32 levels and the VIX futures all the way upto December are showing a bearish tint.  Today both has to adjust with markets moving up, if they dont then we have another down wave on the horizon. 

Another Picture perfect short term rally setup..

Couple of days ago, we had a picture perfect setup and we have the same today for another short term rally. This rally can pull around 100 points on SPX. But as usual we take some profits on the way and then have stops to protect ourselves.

 For people who follow Larry Connors RSI system, there is that 2 day RSI also in the extreme level.

Ticks started ringing the bells too.. when we got the breakout above that hourly doji..

Remain in Cash in 401k and IRA acocunt. Let the volatility subside before you commit long term capital.

Caution Ahead... Obama and his crew fail to jolt the markets.

Obama's job jolt is not working right now. May be on Monday when he announces actual numbers of the plan, it may help. Otherwise we will have to wait for Congress's vote on tug of war. 

Meanwhile  watching very carefully here.... If we break 1140 on SPX would be very bad. So plan your trade and trade to your plan.

Waiting for Longer term setup

As I said today, this is not a good time to deploy long term capital. Yes for short term bear rallies, you can deploy very strategically and bail out with profits or small losses but for longer term account, patience pays at this junction.

You want VIX to come down to 25 levels and cross below its 150 day MA. If you go back and study most of the rallies have started when VIX crossed its 150 day MA.

So patience is the name of the game. We will soon have our way.. 

Picture Perfect Set up Yesterday (for short term rally)

After last week's debacle on jumper trade and yesterday's scary open,  I was scared of market both going long and short.  But after some good coffee and good analysis, I regained my footing and sense.
Some of you know that I went long last night with deep in the money SPY calls and today morning I  sold 1/2 position on the Gap open.

Here is the setup I looked at last night..

Tick study started ringing bells 20 mins before close. There was constant ding ding.

SPY was forming very bullish setup on hourly and then daily was forming a hammer pattern that we have talked about so many times now.

This setup made me go long with tight stop below 8 EMA and I was hoping for a gap open which I got.
I am also looking at TLT short setup this morning.

I am long DBA in ETF portfolio . Also holding some long positions in MOS, IP and HD and AMZN. I am short Autodesk will cover today. Also these are all short term trades. I am only 10% invested in IRA and 401K right now. No need to initiate long positions till VIX comes to 25 levels or meets its 150 d SMA which currently is at 21.37. I expect them to meet at 25-26 levels where they have met historically.

Please e-mail me on marketing1977@gmail if you need TICK study for TOS platform.