Meadows on the Markets 4.18.2012

In currency markets, EUR/USD erased early losses to close above the 1.31 figure. USD/JPY moved higher, gaining to 81.25. Gold fell 0.5%, closing below $1,650 per ounce. 

Tonight, all eyes turn to Spain to see how well their auction performs. Seems to be a simple formula for tomorrow: better-than-expected results = higher equities; worse-than-expected = lower equities. Now, what happens if the results are as expected… that’s the real question.

Yes, another Butterfly Pattern in the $SPX


So in order to share the conclusions of my analysis I wanted to also share my process so our followers can learn how I got there as well. Starting with the templates that I always leave as a reference on my desk this is the pattern that I am seeing in the market.


So starting with the Late July 2011 High of 1350 I measured down to the major swing low of Early October and labeled it X-A.

I saw the first measurement that happens exactly in these harmonic patterns which is a B retracement of 78.6 of the Length of X-A.


It is always good to see this retracement hit exactly because the next measurement of C was also surprisingly exact as well. Looking at the Length of A(October swing low) to Nov Swing High B, C pulled back exactly 6.18%! This is a very good secondary measurement indicating that the next measurement of D will have VERY important potential trend reversal points.


Using now two differnt harmonic View points (X-A) and (B-C) with very exact harmonic movements in regards to the Fibonbacci and Harmonic series, The D point is then projected higher. So the first projection is 1.27% above X, using X-A as the base measurement and this is strengthened as a possible turning point when it lines up close to 2.00 or 1.618 projection higher from the B-C base measurement. As indicated with the green arrow on the chart you can clearly see that the April high hit exactly on the 1.27(x-a) and 2.00(B-C). A very good set up for a trade that I missed. But I dont think it was the final high.

The next level higher noted as D* has a better projection of a possible final D turning point. D* is a perfect 1.414 of X-A and 2.24 of B-C. Addtionally D** fits even better as a potential turning point for a few reasons.
First, this level lines up with two Phi extensions from the X-A and B-C base points. I have found in Fibonacci measurements that have .618 and derivatives or extensions of are the most important points to pay attention two. This is a Sacred Number and there are many scientific disciplines that prove this ratio has universal importance in world around us. Additionally I am reserving this zone as denoted in red, as the final top area because it also sits slightly below the 2007 high and If you measure the 2000 -2003 as well as the 2007 to 2009 both have .886 retracements that lie in this box at 1483 and 1474 respectively so from multiple   using multiple base measurements the stars are aligning so to speak at this zone being a very highly probability major turning point for the over all market. my year end target of 1483 is still in play and I have also pinpointed two exact turning points that I think will be very significant: 1463 & 1518.

by @AlexKOTM

Earnings Trade of the Day 4.18.2012

Trade: Selling the FFIV April 120-115 Put Spread for $1.56.  I sold the April 120 Puts for $3.50 and bought the April 115 Puts for $1.94.
Profitable: I make money on this trade if FFIV closes above $118.44 by April 20, 2012.
Break-even:  I breakeven on this trade if FFIV closes at $118.44 by April 20, 2012.
Unprofitable: I lose money on this trade if FFIV closes under $118.44 by April 20, 2012.  The most I can lose on this trade is the Price of the Spread can be worth $5 minus the Price I sold it for $1.56 for a total of $3.44.  

UPDATE 4.23.2012 I had this position on and bought back my short Put Spread on Thrusday for $.04.  Another big winner at KOTM.

Trade: Buying the MS APRIL 18-19 Call Spread and Selling the 17-16 Put Spread for $.15 total
Profitable: I make money on this trade if MS closes above $18.15 by April 20, 2012.
Break-Even: I breakeven on this trade if MS closes at $18.15 by April 20, 2012.

Unprofitable: I lose money on this trade if MS closes under $18.15 by April 20, 2012.  The most I can lose on this trade is the Price of the Spread can be worth $1 plus the Price I bought it for $.15 for a total of $1.15.

UPDATE 4.23.2012  As MS rallied over the $18 level, I took this Spread off for $.32 for a nice double and moving to the next trade.

Trade: Selling the EBAY April 37-38 Call Spread and April 35-34 Put Spread for $.44 total.
Profitable: I make money on this trade if EBAY closes between $34.56-$37.44 by April 20, 2012.
Break-even: I break-even on this trade if EBAY closes at $34.56 or $37.44 by April 20, 2012. 
Unprofitable: I lose money on this trade if EBAY closes under $34.56 or above $37.44 by April 20, 2012.  The most I can lose is the Price the spread can be worth $1 minus the price I sold it for $.44 for a total of $.56 

UPDATE 4.23.2012 I was offering this Spread in the book, but never got filled.  The Spread would have achieved full value or $1

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Halftime Report for 4.18.2012

Following news overnight that Warren Buffet was diagnosed with an early form of cancer, Berkshire (BRK.A) shares are down 1.3% – not something that is indicative of any concern among investors. IBM is down 2.9% after reporting earnings last night, while Intel (INTC) has lost 1.7%. Haliburton (HAL) gained 4.4% following its earnings report.

Wynn Resorts (WYNN) shareholders are benefiting from rumors on additional Macao properties, up 5% at $131.00. 

Morning Rage 4.18.2012

This morning, in earnings news, Abbott Labs (ABT) reported EPS of $1.03, 3 cents above expectations; BlackRock (BLK) reported EPS of $3.16 versus $3.02 expectations; PNC reported EPS that is 1 cent higher than expectations; and Southwest Bancorp beat the street with a $0.21 EPS versus expectations of a $0.01 quarterly loss.

Crude Oil futures are lower by 0.5% this morning, while Natural Gas futures are marginally higher. At 10:30 a.m. ET this morning, the Department of Energy will release the weekly report on Crude inventories. Gold is also lower by 0.5%, down $8.80 to $1,642.30.

In currency markets, EUR/USD is under pressure, trading down 60 pips to 1.3065. A close below the Ichimoku Cloud at 1.3055 could inspire further losses in sessions ahead. The US$ is also higher against JPY, which spiked to 81.57 before trading at 81.35 currently.