Tom’s TTT Buy Signal has a fantastic record of calling a return to mean 3 to 5% counter trend rally in a 5 day window.  It fires only a few times per year.  This is the 3rd firing.  The 1st one failed to achieve the goal, the second on was good and this is our 3rd this year and we are feeling pretty confident.  Over time this signal has a greater than 80% success rate.

For each of the 5 days we will cycle the various indexes through to see how they fair on the buy signal.  Our prediction is that the Q’s and the Russell (IWM) will do the best. 

Here is the Q’s marked:

Around the Globe

Asia – CLOSED
• Shanghai (China) -1.44%
• Hang Seng (Hong Kong) -1.30%
• Nikkei (Japan)-2.99%

Europe as of 7:30am EDT

• DAX (Germany) +0.33%
• FTSE (UK) -0.47%

Today’s Economic News:

Quote of the day:
I myself am made entirely of flaws, stitched together with good intentions. – Augusten Burroughs

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

The trenders remind us to not trust rallies.  We tried unsuccessfully to front run them for two days and now we are 20+ points down.

ES SP500 Futures Comments:

When our Zweig went down and under the 40 we had to make a decision on deep deep or shallow.  We thought based on the October surprise that this market still had some interest that would prevent this 3 day wandering so we tried to outsmart and lead our indicators, which sometimes works well, this time it didn’t. 

We had 1320 for a bottom target on Tuesday and Wednesday and then revised that when the market refused to move to 1280.  So we were wrong on the 1320 and we might be proven wrong on the 1280, at least for now.

We will focus on our day trading until the market flags us differently, suspecting that a super bounce is just around the corner any day. Let’s get OPEX Friday and post-Opex Monday open out of the way first.

Today we are interested in the Globex overnight lows for a possible long entry and a target of 1325 and 1340 on the short or selling side.

We are waiting for a break in the afternoon selling pattern before we start to call for bounces again.

We do think that if you are long there is some relief in the next few days.

US Dollar DX Futures Comments:

The Dollar is struggling the last couple of days with some nice selling tales on the top.  We want to see today’s close before thinking short.

TLT Twenty Year Bond ETF Comments:

Wow, I just noticed the ETF was twisted on this title for the last six months!  No Comments?  How come I only hear from you when I am wrong about a call, or even worse when you are right about a call?

Boy, if you can handle a 3 point drag up in the TLT this is a good bar to short. We are up near historic highs.  At some point this bond bubble with just not hold once the grass on the other side looks greener (equities).  The boat is crowded now.

>>> Follow us @TopTickTraders <<<<<

DISCLAIMER: The information and data in the following report(s) were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities. TTTHedge.com, its  officers, directors and its contributors may in the normal course of business, have position(s), which may or may not agree with the opinions expressed in this report. TTTHedge.com, its officers, and directors are not agents, representatives, or affiliates of the CME Group or any trading entity. Trading Futures, Options, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in these report(s) will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

Asia – CLOSED
• Shanghai (China) +1.39%
• Hang Seng (Hong Kong) -0.31%
• Nikkei (Japan)+0.86%

Europe as of 7:24am EDT

• DAX (Germany) -0.78%
• FTSE (UK) -1.19%

Today’s Economic News:

Decent numbers out of Japan, nothing out of Europe except the Spanish auction which went off ok.  Jobless claims numbers out of the USA  and Philly Fed numbers will establish some USA sentiment.

Quote of the day:
A man is rich in proportion to the number of things he can afford to let alone. – Henry David Thoreau

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

Our breadth chart today is the Zweig which now sits 3 days oversold.  It should be very turbulent as the bears and bulls battle it out in here.

ES SP500 Futures Comments:

Yesterday we called for a multi-day bounce.  We did get a multi-minute bounce and then the same old afternoon selling that we thought based on a return to mean need for our sentiment indicators would not happen.  It did and we closed on the lows of the day.

We did like the underlying bid to the auction however as we saw for the first time in a long time buyers willing to show their hands and step in around that 1320 area.  We are below that as of 7:30am ET.  We still like the looks of a bounce.

What we can’t control is the news flow which has injected Fear, Uncertainty and Doubt. FUD.  The number one enemy of bull markets.  The premise of investing is that you can get a picture of the future and believe in it.  The integrity of the European system is under attack right now and until that paints some picture of stability or some of the fear and uncertainty can be removed we should continue to have money flow out of the markets into bonds and other safe havens.

Since we were wrong on a bounce yesterday we thought we would pull the charts back a little bit and look for a downside target which we have now at 1280 area.  That would be a 10% correction from the highs.  We are currently down about 7%.  Our run up from October was about 34%.

We are trading as I write around 1317, which makes our 1280 target 37 points down.  We still like the idea of a bounce call and have an upside bounce target of 1346 and 1360.  That is 29 points up and 43 points up.  So our call’s risk reward ratio is about 1:1.

The markets are very fragile and the 1280 if it comes with come very swift indeed.  We will be looking closely at the bid today to see if it will hold and buyers step in.  If it is there we will be shooting long.  If not we will join the crowd for the ride down.

So for today we are being stubborn and leaving our cash buy area in this 1320 region with a short target at 1346 with the condition that our Bid/Ask line in real-time looks as good as it did at yesterday’s cash close.

This is front running some very weak breadth indicators that are screaming doubt rallies.  Play it as you see it.

US Dollar DX Futures Comments:

Watching reaction to 82.

TLT Twenty Year Bond EFT Comments:

If there is one chart that shows the fear it is the TLT which is now just 2 points away from the highs.

>>> Follow us @TopTickTraders <<<<<

DISCLAIMER: The information and data in the following report(s) were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities. TTTHedge.com, its  officers, directors and its contributors may in the normal course of business, have position(s), which may or may not agree with the opinions expressed in this report. TTTHedge.com, its officers, and directors are not agents, representatives, or affiliates of the CME Group or any trading entity. Trading Futures, Options, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in these report(s) will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

Please read the daily digest piece for what we are thinking and how we are thinking it.  For breadth, it remains incredibly weak.  Our Zweig is now 3 days underwater.

The CVI remains weak:

Our 40 DPI, nothing to see here but bearish numbers

NH/NL is in bounceable territory:

and our trenders remain bearish:

Asia – CLOSED
• Shanghai (China) -1.21%
• Hang Seng (Hong Kong) -3.19%
• Nikkei (Japan)-1.12%

Europe as of 7:26am EDT

• DAX (Germany) -0.53%
• FTSE (UK) -0.63%

Today’s Economic News:

The UK came through today with stronger jobs data than expected.  In the US a healthy mortgage application number has started the day.  Still some big news events and releases left to set the market action.

Quote of the day:
If we were to wake up some morning and find that everyone was the same race, creed and color, we would find some other cause for prejudice by noon. – George Aiken

Current Allocations from our room:

Performance Month to Date from our room:

Current Breadth Readings:

Our “breadth chart of the day” is the NH/NL chart that is showing extremely stretched.  We are making a rare counter trend call (the trend being down) for a multi-day bounce for some mean correction.

ES SP500 Futures Comments:

Maybe we are just tired of the down action and we think up, but there is evidence in our breadth charts to indicate some upside price action is needed, even for the bears story, to bring our indicators back to some norms.

Overnight we landed on our 1321 target area and are now 10+ off that zone.  We think buyers will see this as a decent buy in here and multi-day shorts will add to the price squeeze in the up side direction.

We are leaving all our targets the same as yesterday.   We think upside 1355 area will be a piece of resistance’ and a retest of the the overnight low should hold. 

The upside should be lead by the NQ and Russell 2000.  We think those offer the best risk/reward ratio on any bounce here.

US Dollar DX Futures Comments

So much for containment on the 81 area of the dollar.  All eyes on 82.  That was the best price action yet on the dollar rally.  Best to let it work its price and watch.  If our call on the market bounce is correct, we should see our first red bar in the dollar over the next few days.

TLT Twenty Year Bond EFT Comments:

Same comments on TLT as the dollar.  A good run yesterday.  If the European wheels can stay attached for a few more days, we think there is some downside before any more upside resumption.  Watch for TLT to come back to the 119.60 gap fill area this week.

>>> Follow us @TopTickTraders <<<<<

DISCLAIMER: The information and data in the following report(s) were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities. TTTHedge.com, its  officers, directors and its contributors may in the normal course of business, have position(s), which may or may not agree with the opinions expressed in this report. TTTHedge.com, its officers, and directors are not agents, representatives, or affiliates of the CME Group or any trading entity. Trading Futures, Options, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in these report(s) will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

Our Zweig is 2 days now in oversold.

We see that the CVI has been stretched by the bears for about as far as it can go.

Ditto for the 40 DPI

Our NH/NL is also in oversold extreme

Our trenders are still bearish, and “Don’t trust rallies” is the mantra, we think with the current readings though a multi-day bounce is in the cards this week.

and