January was our best month ever.  Our monthly results came in at 36.28% versus a 5.07% loss for the S&P 500 — a nifty 41.35% outperformance.

It was made possible by pretty straight-forward chart patterns and huge volatility.   None of January’s 19 sessions featured a daily range of less than 10 points.  In fact, only one came in at under 20 points.  By contrast, 8 had ranges of over 40 points and 5 had ranges of over 50 points!

Fifty points represents about a 2.5% move, so it’s not surprising we had some phenomenal days.  January 13 [see: That Was a Close One] was a good example.  SPX lost 48.40 points (-2.37%) overall.  But, by anticipating and capitalizing on the huge intraday swings, we were able to rack up gains of 61.25 points (+3.19%)

January was very reminiscent of the pre-central bank manipulation era.  Most days, it felt as though the “markets” were left to their own devices.  Bottom line, it was a real delight for those of us who play both sides of the market.

The month started off with a failure (by 30 points) to reach the neckline of a large Inverted Head & Shoulders pattern.  The subsequent falling red channel (within the falling white channel) proved to be a very accurate guide.  If only they were all like this…

We averaged a little over 6 position changes per session — higher than usual, but not excessive given the greater volatility.  It was also a function of my preference for reverting to cash after reaching a target in order to prevent subsequent bounces from reclaiming gains.

We also go to cash every night, even though it often means leaving some money on the table.  Like December, there were many end-of-day plunges that closed below technical support which were magically ramped back to a big gain in the futures overnight.

Our average monthly result bumped up slightly from 17.10% to 18.58%.   We’re obviously overdue for a quieter month with less spectacular results.  But, if the first week of February is any indication, it’s not going to happen any time soon.

Following @pebbletrades?

A reminder to members, I recently set up a private Twitter account @pebbletrades to disseminate notices of intraday position changes.  If you trade frequently, just go to the twitter page and click “follow.”  This generates a request that I can then approve.  It’s generally pretty fast unless you make the request in the midst of a busy session.

If your twitter handle bears no resemblance to your actual name, please drop me a line saying so.  This service is for subscribers only, and I’d hate to inadvertently exclude you.

Note that I will still post all intraday position changes on the website, first.  Once the post is entered, I tweet a trade alert that usually references the position change in some way (e.g. “target reached.”)  Hopefully, these tweets will make it less necessary to constantly refresh the web page throughout the day.

The Deal

I’ve had a few inquiries about holding another promotion.  Our regular annual rate is $1,750 — about $33/week or $4.80/day.  I consider it a pretty fair price for what I have been told is one of the top forecasting services out there.  But, people like deals.  I get it.  Here’s ours.

Last month, I offered a promotional price ($640.42) that reflected the compounded return on a member’s hypothetical $10,000 trading account ($64,042) in the event that they were able to follow every single market call to the letter.  It was a great way to celebrate a successful 2015.

Given last month’s 36.28% results, this hypothetical trading account would theoretically now be up to $87,277.  So, we’ll set this month’s promotion at $872.77.  It’s about half price, which works out to around $2.73/day — less than a caramel frappo-mocha-macchia-latte at the local java shop — with about half the calories.

I’ll even throw in the “Charter” part.  It’s different from a regular annual membership in that your rate will never increase as long as you subscribe to the site.  To sign up, just click on the link below.

SIGN ME UP!

 

 

 

When USDJPY reached the 120.11 price level that marked a Fibonacci 61.8% of its drop from 147 to 75 that began in 1998, we thought it would signal a decline for stocks.  The BoJ, cagey as ever, kept the pair rising slightly — with occasional bursts higher when needed to support the yen carry trade [what’s this?]But, in the end, there had to be some capitulation after reaching a critical Fib level like that.  This past week, it began in earnest — dropping through the red channel bottom that has provided support since November 2014.

This morning, the plunge finally reached the next most significant support: the .500 Fib and the bottom of the rising purple channel from 2011.  USDJPY, along with WTI and SPX, should bottom here.  If stocks are to avoid a meltdown, they must bottom here.  The only question: is it too late?

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I thought it would take a couple more weeks for the .500 tag.  But, it looks like they’ve decided to rip the band aid off right here and now.

A similar move for CL, which finally reached our 26.22 target late last night.If there is a concerted effort to create a bounce, look for the initial sell-off to reach our 1810 target and stage a comeback.  If it can’t, then the .886 at 1783 is in the cards.Start out short, but start looking for an entry point there — keeping an eye on CL, USDJPY and NKD for signs of a turn.  You’ll know because all three will be screaming higher.

As far as a bounce target, the initial goal would be to close this morning’s gap back at the channel midline around 1850.32.  Maybe Janet can force some dovish language this morning to help it along.  Beyond that, I’d start looking at  the white .618 at 1901.16.

UPDATE:  9:35 AM

SPX just tagged our target.  I’d go long here with tight stops, as we could see another leg down to test 1800-1810.  The key, as mentioned above, is to watch when USDJPY and CL reverse.  This will be my last trade alert for the day.A reminder: I’m out for the next four sessions on a bit of holiday.  I’ll try to post each morning like this, but it depends on scheduling and internet connections.

Good luck to all!

In our Dec 29 update on XLF, we noted that the rising white channel from Aug 24 and an important TL would be tested were the SMA200 to hold.

Note that XLF just tested its 200-day moving average at the top of the falling red channel within the rising white channel which is, itself, rising within a larger falling white channel.

If it breaks out, then the top of the falling white channel  and/or the rising white channel midline is the next overhead resistance to consider.  If it doesn’t break out, then we should see the rising white channel fall and the yellow TL tested again

Not only did the rising white channel break down, but the yellow neckline failed as well.  Given these bearish developments, we’re left to wonder just how much worse things can get.

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In December’s update [Update on Gold: Dec 14, 2015] we discussed the importance of the dollar on gold’s future price moves.

…the weakness in DX since Dec 3 suggests there’s a decent chance of the Fed punting.  If DX plunges further, GC’s 4th bounce could be a doozy: 1150-1180 for starters, and 1286 after that.

The Fed didn’t punt.  They increased rates by 0.25% as expected, and DX rallied for a whole five days.  After peaking on Dec 21, DX has sold off in fits and starts [see: Update on DX Feb 9, 2016.]  GC spiked, reaching 1150 on Feb 4 and 1180 four days later.Today, it backtested the TL at 1180 and is threatening to break higher.  Does it still have legs?

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Futures were unimpressed with Yellen’s prepared remarks this morning, with ES paring 16 points from its overnight highs.   Still, we would all do well to remember that “markets” can do some awfully strange things on Fed testimony days.  Traders won’t like Janet’s lack of capitulation on rate rises.

But, indices often rise on these days as algos go into overdrive to maintain the illusion that all is well and the FOMC doesn’t, as a matter of policy, ever make mistakes.

Case in point: the focus of yesterday’s post — the Nikkei futures — dipped well below the key TL from 2013, but have since rebounded exactly to the neckline.continued for members… (more…)

In our December 1 update on DX [Is DX Really Breaking Out?] I (somewhat cynically) suggested that DX’s rise above a key Fib level was just another scheme to convince investors that the markets were doing just fine.

TPTB have done their best to convince the investment world that higher rates are just around the corner — even as signs of a faltering global economy continue to stack up.  Ramping the dollar up past a natural reversal point is just one more way to support that meme.

As the FOMC dates approach, keep an eye on DX.  A sudden plunge below the .886 would be an excellent way of detecting that investors aren’t buying the story.

Since Dec 1 (the yellow arrow, below) DX has plummeted, forcing USDJPY and stocks lower as “investors” abandoned the yen carry trade.  It got a momentary reprieve (the white arrow) when the FOMC raised rates on Dec 16.  But, since then, it’s been all downhill until today — where it has nearly reached our next downside target.Clearly, the dollar’s performance is critical to stocks.  What next, then, from the world’s reserve currency?

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To continue yesterday’s theme, we focus this morning on the Nikkei futures, which are testing a critical TL – again.  NKD is the first derivative of the BoJ’s manipulation of stocks via yen devaluation and, at times, leads “markets” in carry trade-oriented algorithms.

This support, therefore, is critical not only to NKD, but to SPX and the entire yen carry trade complex. [see: Update on NKD: Feb 9, 2016.]

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In our last update on NKD, we noted the arrival at an important junction of the 50 and 100-day moving averages.  We noted at that time that a drop through those levels would be quite bearish for both NKD and SPX.  NKD did drop through, managed a feeble recovery for two weeks, then really plunged.

This was somewhat surprising, given that the NKD is one of the most heavily manipulated of the major “markets.”  What wasn’t surprising is where it finally found support on Jan 21.  Fun fact?  After a 13.4% bounce that climaxed in a disappointing BoJ QQE experiment, NKD is right back to that bounce spot.  It’s a very important spot.

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One simple chart illustrates the importance of holding 15,820.  Abe, Kuroda et al have a lot riding on this trend line.  They should step in and aggressively buy, today. 

I’ve been beating the yen carry trade drum so long, I can’t remember when it didn’t matter.  Today, as on Jan 20, USDJPY has dropped below the bottom of the red channel.  And, stocks are not amused.  S&P futures were off over 31 points overnight before attempting the latest bounce.ES has dropped 100 points since USDJPY reversed at our upside target on Jan 29 following the BoJ’s ill-fated attempt to turn things around [see: BoJ Underwhelms.]  Now, as USDJPY drops through the channel bottom again, the “market’s” fate rests on whether or not the central planners will elevate the USDJPY yet again.

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QQE didn’t work.  Jawboning didn’t work.  Not even NIRP worked.  When all else fails, the only course left to central planners is direct intervention.  Welcome to direct intervention.

Yesterday, USDJPY tagged the bottom of a channel dating back to Nov 2014  for the second time in two weeks.  Remember, on Jan 20 it actually dipped below the bottom, resulting in SPX briefly dropping below the neckline of a large H&S Pattern targeting 1530.As we’ve discussed many times, this channel can’t fail without the yen carry trade suffering a huge setback and stocks plummeting much lower.

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