Current Levels

	Peek Extension of this run	Current Extension Level	Reset Point (Target)	PPR Value (1.25 value)
DIA	-1.98	-1.02	115.11	115.08
DJI	-1.98	-1.04	11524.16	11520.31
IWM	#DIV/0!	#DIV/0!	0.00	0.00
RUT	-1.29	-0.40	701.35	693.11
QQQQ	-2.09	-1.03	45.96	46.03
COMPQ	-2.05	-1.19	2339.48	2341.26
SPY	-1.76	-0.66	129.37	128.84
SPX	-1.80	-0.72	1295.97	1291.66

10:12 Great time to go long!!!

DIA and SPY the better plays, go long!!!!

DIA Target 115.11.

New Indicator, Sure to help you make some profit!

View that information here:

http://www.channellines.net/New%20Newsletter/Template/PPR.htm

QQQQ, DIA, and SPY reset points

The Q's hit the historically low (of these 4 ETFs) extension of 5.4% at 1:45 PM (eastern) today, at that point a small bounce ensued. The reset point is priced at 45.96, which also correlates with some of my technical analysis objectives. At this point the Q's will no longer be extended and free to roam as it may. (actually expecting a close at that level).

The DIA was extended, at its furthest point, 5.12%, the runner up percentage (they never hit the same simultaneously). The third most popular % is 4.9, no ETF there! So the fourth popular % is 4.6, and that is currently the SPY. DIA resets at 115.17, and the SPY at 129.37.

Reset point updates

DIA resets at 115.61, currently extended -4.54%
IWM has reset at 70.04, currently no extension exists
QQQQ reset 46.14, -4.88% extended
SPY resets at 129.76, currently extended -4.13%

Oversold levels

As of 11:13 Eastern we are at the current levels of oversold

DIA 2.67, reset at 116.99
IWM 2.00, reset 70.61
QQQQ 3.21, reset at 46.63
SPY 2.76, reset at 130.88

Leaning long on QQQQ, short IWM if arbitrage is your objective!

Current levels of overbought....

DIA 0.502%
IWM 0.904%
QQQQ 2.11%
SPY 1.90%

Short QQQQ/SPY

Long DIA/IWM

;-)

11:01 reset points are
118.58
71.66
47.28
131.77

If you placed the arbitrage trades, exit when QQQQ and SPY reset.

Four new Subscribers!

Looking for four new subscribers today! The first 4 subscribers (today only) receive a technical analysis/ Options related book from my library! The newsletter will be out shortly (before the open)! Have a great trading day! Do NOT get butchered by the FED!

Long Q's/SPY, Short DIA/IWM

As of now (9:46 eastern), this trade should have you 0.5% of the indices locked in gains, the trade is still ripe, don't take'em yet!

Update 9:53, that trade is really going in our favor now, cash should be flowing and profits will be locking themselves in, let em' flow. This trade is good until QQQQ and SPY hit their reset (which is now lower than in the newsletter from last night, when the ETFs stabilize slightly, I will list them.

UPDATE 11:01, Targets to exit, QQQQ 47.33
SPY 131.93

Todays arbitrage update.

as of 2:21 eastern, The summed percentage of being short DIA and IWM yields -0.07% (loss), being long SPY and QQQQ yields +0.40% (gain). Currently we have netted +0.33%, after commissions it is a slight gain, hang tight, more is to come. If the reset points on QQQQ and SPY are hit, exit all positions.

If the trades were entered this AM's open, you would be netting 0.365%, The first calculation was just what was currently listed on the quotes, the second figure is calculated from the open, and more accurate.

Sorry, updated reset points on the Q's and SPY are 47.67 and 132.56!

The new week ahead!

Looks like we may be getting some good set-ups heading our way this week. Todays newsletter contains charts of ADM, AET, AG, AKAM, AMGN, DJI, COMPQ, RUT, and the SPX. Some good arbitrage trades exist and are pointed out in there also. Two indices are poised for some quick moves, let's see what Monday brings! May the week bring you many profits to your portfolio!

Current levels of oversold.

As of 1:54 EDT, DIA 0.718% oversold, IWM 0.00% oversold, QQQQ 2.92% oversold, SPY 2.27% oversold. May I suggest long QQQQ and SPY, short DIA and IWM ;-)

Prophet Charts

OK, I finally took the plunge and checked out Prophetcharts. I was using Javacharts through Optionsxpress, an early version put out by Prophet Systems. At least this is what I believe. OptionsXpress is doing away with Javacharts and forcing me to move on (their charts REALLY SUCK). Anyway, if you do not have Prophetcharts, GET THEM NOW! Do NOT hesitate, I am getting no kick-back here either. I have subscribed to the Gold package and this ROCKS! I'll post a smokin chart here. Do not mind the "harmonic" lines within the channels (man how I have wished for this tool!), I just dig harmonics! What this chart here says.... SHORT AEG!

Test Chart Post

NASDAQ Folded!

Well, the NASDAQ folded with it's attempt at extending the downward move, and when it turned, it was the most explosive. As of now the arbitrage trade of long the Q's and short the index of your choice should have you in profit.

2:52, Q's are now overbought, IWM reset to 0. Arbitrage play, Short the Q's, Long IWM. Ratio 1.5:1

3:36, this trade went green by 3:15 ;-)
3:52, now both legs are green.... hmmmmmm....

Take a look!

I am offering out tomorrows newsletter for free. I am writing up some mechanics of how I utilize arbitrage trading with options. It is a safe alternative to playing a market with no defined direction, although, toward the close of the day, the NASDAQ gave us some hope in defining that direction. Now will the others follow or does the NASDAQ make a sharp whipsaw? Email me if you want a copy

Arbitrage mechanics

I'll be writing up a short description on how I trade options with arbitrage pairs. Get signed up if you havene't! Sometimes it is difficult to judge market direction, but have you ever said "If we go up, XXX is gonna rock! If we go down, XXX is going to fall big!"? Well, those are the safe plays in a non-trending market, by capturing discrepancies. I use arbitrage as a "target of opportunity" to exploit the markets, not my primary trading technique, but useful.

Potential Move

Now we are dealing with some potential, DIA is oversold 0.8%, the other ETF's keep compensating. So either A. DIA has taken the lead and the others will follow in short order with a significant downward thrust, or B. the DIA comes back to 120.89 without making lower lows (10:51 EST).

Update: 11:18 EST, well...... that sucked!

Welcome to amatuer hour!

As far as I am concerned, the lack of direction and loss of movement is due to the participation of pure speculation. Speculation will get the markets moving.... eventually. It is a fight of the bears and the bulls, a tug of war. The professional money will not get involved until the one side has proven worthy. Totally against traditional thought? You betcha. Gambling and guessing is for suckers, ties in directly with luck and hope. When hope and luck give way, greed and fear is of what I'll feed! Till then, sit back, have a smoke, tip a beer even!

The professional money went into today (this week even) pretty much flat, or delta neutral anyway. Don't try to play a forced market, move with the market, let it move and anticipate. Every action has it's own counter re-action, just practice patience, the market will be here again tomorrow!

Close of today.

The market is currently in a purely speculative state. A close higher, or AM upward gap, of about 0.4% - 0.5% (general, across all indices) from this leve (3:30 eastern time), would lead my SPECULATIVE side to start shorting the market. As of this post, the RUT (IWM) is the best opportunity for maximizing any profit from aforementioned short, and the least risky. If you're hell bent on shorting anything in the NASDAQ, it may not rise 0.5%, it is better to short it immediately. Keep tight stops, or keep your conviction!

RUT and VXN.

The RUT now leads the pack in level of upward extention. It is at a small upward level of 0.7%, nothing to write home about. Although, the other indices have reset intra-day. The VXN, but not the VIX, is at a level of -6.5%, it is not uncommon for the VXN to reach the -11% and -12% levels. Putting these things together (indices flat, vix flat, and vxn oversold), the VXN correction should bring down the prices in the NASDAQ for a little deeper correction in the coming days, I'll keep an eye on it and point out any opportunities.

The RUT has compensated!

The RUT has now compensated for it's recent plunge, it also did not immediately go to a short term overbought state. The market has now got to decide a direction for the next surge. I'll keep you informed as to the most likely direction as it unfolds!

Subscriptions Now Available!!!

Time to get the newsletter back on line! Come see the Chanellines blog site to sign up! www.channellines.com


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Only $5.00 per week!!! Within each issue, you will receive the daily oversold/overbought market readings of the 4 major ETF's I follow (DIA, IWM, QQQQ, and SPY), which allows for high probability arbitrage trades, and let's you know relative strength/weakness of the indices. You also receive daily charts on high probability trades using conventional technical analysis! The blog site will be going to a "subscriber only" basis soon, get in now and don't miss out!

Saturday, Still working......

Hey guys and gals, I'll be around all day today, you got questions, comments, or concerns, lay 'em on me. You can email me or comment in the comments section. Paypal likn will be posted shortly for the newsletter. Have a great weekend.

Just a new post ;-)

Just for comments, and some notes!

OK, I am not using this chart to base any trade decisions, but it does support what I DO use. Look at the SPX, IF we have a double bottom in the highlighted area, a traditional target would be that of the outlined channel. This would also coincide with the RUT tagging 735.30. All indices would then be neutral or overbought, allowing another down leg, if it is to come.

SPX (Click to View)

Just had to open my mouth!

I just had to go and mention the 5.2% line didn't I? Well, guess where SPY made its low? Yup, you betcha, 5.2% oversold, yet compensated before. The run being left uncompensated is like leaving a gap in the market, only more so. The compensatory gap will now close at 136.34. What importance does this have? That one I can not clue you in on. The RUT has also not compensated, it is 5.9% oversold, and one I do not normally follow, hence, I have not done in depth studies on it. I will lay pretty good money on tomorrow being a fairly significant up day. I closed out 3 paper trades today, the highest for 20% gain, the lowest about 5% (Q's, legged out of yesterdays arbitrage trade). Todays DIA/SPY arbitrage should have worked OK if you got in at the open, if I recall correctly, DIA was about .2% higher at the open than SPY, during the day the gap widened and I stated to hang tight (Adding to the trade would have been nice), as I look now (4:38 EDT) the SPY is 0.07% higher than DIA. After commissions, the trade may have washed, unless increased volatility gave you some premium to sell. The SPY and RUT remain oversold and should be the strongest of the indices still yet. Hindsite shows the best arbitrage pair would have been any indice long and short the Q's, thank god I backed out of longing the Q's this AM premarket ;-)

Todays Observations

Good morning! I have noted an interesting observation as of late. Last week I noted that the true reading of oversold/overbought on the indices I track never really reaches an extreme over 5.2%. The SPY, in after market hours, obtained 4.9% oversold. Historically, the SPY will obtain maximum values in an UPWARD market of 4.9% overbought and 3.3% oversold. So, flipping the reciprical, in a true downward moving market, the maximum oversold would be 4.9% and overbought of 3.3%. If this observation proves true, we have just established our first leg in a downward trending market. The SPY will need to tag the 136.60 area to relieve the oversold condition, at that point (re-evaluation will be done to confirm at that point)the second downleg of the market should ensue. Looking at my traditional ways of technical analysis, here on the SPX, seems to comply with the idea. I appologize for not listing charts of the DIA, IWM, QQQQ, or SPY, due to the fact I have so many notes on them which can not be erased yet.



As an updated side note, and a word of caution, watch the alternate channel possibility. I do not believe it will develope, but always have a back-up plan. Try to develope a system that will take advantage of either scenerio.




The Q's, as they stand now (47.72 pre-market (anything over 47.50 does this)) have comped their oversold status. The arbitrage between the Q's and IWM has been thrown out the window. Long the SPY, and short the index of your choice (except IWM, because of the RUT), they are all (other than the SPY and the RUT) at flat levels, although my preference would be short DIA.

Potential tops today SPX 1362, SPY 136.60, and RUT 735.30. Those areas will be exciting.

Wednesday Wrap Up

The Arbitrage trade Long SPY/ Short QQQQ, worked rather well, I entered around noon when SPY was higher than the Q's by about 0.5%, I had 28 QQQQ puts and 10 SPY calls, this netted about 6% at the close, if entered at yesterdays close or todays open, that amount would be about doubled. The SPY has now reached an uncompensated 4.9% drop, pretty extreme. As of the close, the DIA and IWM were NOT oversold or overbought, but flat. The Q's show about 1% oversold. So for tomorrows arbitrage play, I will recommed Long SPY/ Short DIA and Long QQQQ/ Short IWM. Everyone have a great night.

This AM's action.

Well, the SPY is relatively stronger than the other indices at this point, and should reamin so for a while. The Q's keep resetting (compensating) their levels of oversold. The IWM is almost 1% oversold as I type this. So, putting it together, IWM and SPY should hold up better in relation to the NASDAQ. So preffered play, long SPY, short QQQQ. The RUT/IWM dis-correlation I mentioned yesterday still has me straying from playing IWM/RUT, although it holds a bullish bias in the medium term. Once the RUT corrects, it could be a different story.

SPY on the rise?

Good evening, I hope everyone had a great day!
Just a heads up of a few things that caught my eye today.

First off, The DIA (DJI) has compensated for it's recent loss.

IWM (RUT) are dis-correlated, which is REALLY abnormal! IWM has compensated for recent losses, but the RUT has not met that objective (RUT actually shows more over-sold than SPY/SPX). The RUT has to tag 742.00 by my calculations, which makes it a dangerous short.

The Q's (compq) are in the amateur no mans trading range, not oversold, not overbought, the next directional surge is yet to be determined, though classic TA leans the favors to the downside. It should make a good arbitrage pair to the SPY or SPX (Long SPY)

The SPY (SPX) only has to reach 137.49 (1370) to equillibrate with the other indices. At that point, the next market surge will need to be estblished, as I said, the downside is favorable in classic TA terms once this landmark has been hit.

In a nutshell, here we go:

DIA/DJI - Arbitrage use only (short side)
IWM/RUT - The rules I have identified in the market states that IWM is no longer oversold, which does NOT mean it has to turn down, the RUT has a higher objective to be met, of course the RUT will pull up IWM. So bullish on the RUT/IWM
QQQQ/compq - Arbitrage use only (short side)
SPY/SPX - Bullish to the points named above.

Posting for comments!

Just putting up a new post, figured I'd put up a picture of what I felt like after I figured out this hole game of shenanigans! The first thought in my mind was " (various cuss words) I been (cuss word ending in -ing) had!" Also, I posted some of my recent comments from a different blog.



Comments I posted earlier today:

Q's and IWM are compensating for short term overbought, DIA and SPY are still oversold, I am expecting them to rock today, or at least not drop as fast as IWM and QQQQ. The arbitrage trade looks even better this AM's premarket. Long DIA and SPY, Short QQQQ and IWM, my opinion anyway.

Over that time frame, things get balanced so to say. One index outpacing another is perfectly fine, as long as it has compensated the run, which SPY and DIA have not. IWM and the Q's have been compensating, hence to say, the Q's and IWM are at flat and the DIA and SPY are oversold relative to these. They may all go up, in this case SPY and DIA should outpace them (QQQQ and IWM) in the short run, if they all should fall, IWM and the Q's have a lot more room to drop before equillibrium is met with DIA and SPY.

And a new comment, a quote even ;-)

The game, which consists of our financial markets, is a rather easy game, once you identify it. Once you have establish how the game is played, you can then identify the rules under which it is played. The principal behind the trade is the game, the techniques you use are outlined by the rules of the game.
George (Winace) Swanson

OK, you can leg out of the Arbitrage trade now, sell the puts and hang on to the calls, I feel DIA and SPY are gonna open a can of whoop ass. I already caught you over 1.5%!

DIA, is no longer oversold, dump the calls to keep the safe bet (not saying it won't go higher, it is just no longer "obligated" to go higher), SPY is the only one left to correct to the upside. (12:24)
123.58 Compensated DIA's oversold condition ;-)

Keep it simple!

I always here people say: I follow this, I follow that, according to ______ we do this, according to _______ you are wrong. Jeeze people, if these peolpe are correct about their crap, they wouldn't be writing it. So according to Winace, I probably watched it, or read it, and have judged it as pure crap. Quite following the steps of those that have failed or are failing. 95% of traders are lost in the confusion of information overflow. There is a simplistic order where corruption has conformity within the markets.

Here I have listed a chart where the market maker for the Q's screwed up, not only once, BUT TWICE! He left the big money holding the bag for quite some time. Once the error finally corrected it made a major top where volume poured out due to the time lapse that was caused. Yes, I DO have factual information to back this up. The thing is, the mistakes were only about .03 cents each, and the mistake was human error, I see how they screwed up and can even understand the screw up. But, if anyone knows how to find out who the MM's are, let me know if one has been replaced since April, I'm willing to say he got canned or had the beat-down of a lifetime!



The markets are rather extended at this point, these are the percentage points from equillibrium:

DIA -3.4%
IWM -1.3%
QQQQ -0.5%
SPY -3.3%

historic value max down moves are

DIA -5.2%
IWM -3.6%
QQQQ -4.1%
SPY -3.3%

The SPY is most extended, may I suggest long SPY and short QQQQ. This should catch some profit for you, unless we gap up large on Monday.

50.13, hmmm, Coincidence?

You can see in todays earlier comments I mentioned to go long the Q's at 50.13. OK, well, I found a new secret weapon. Once I discovered WHY the markets do what they do and KNEW how to trade with great %'s of winning trades, I took a step back. Now, how do they judge when and where? I took a very common TA tool and applied it CORRECTLY! Kind of like the statement I have taught everyone before "Every trendline has a parallel". Well this one is MUCH MORE golden, it is the basis of arbitrage trading and market guage. Notice at one point in time I listed the %'s of over-extention on the markets? Well, IWM was at 2.2%, all the others had reset, or corrected, for their extensions. What does this mean? Long one that corrected, and short the one that is over-extended. That is the basis of arbitrage trading, to trade in pairs. This is NOT my secret recipe, but damn it is good! This (the tool and its application) in and of itself is golden, it is adhered to as the bible of the financial markets, I can prove it! Have a great evening!

Still here!

Just wanted to let everyone know, we are all still here, communicating behind the scenes. I will be dropping a few high probability trade set-ups today as they appear. Sorry, the reasons of the trades will not be explained. But, I'll bet ya a biscuit they will lean the odds in your favor! The trades will have certain criteria, such as: If XX hits XX.XX then go short. They will be shorter term trades (exit when you are happy with the gains (but don't get GREEDY!)) I'll even post the stops for ya! So, refresh often, and let's make some money.

Currently, as we stand at these open prices (9:20 EST), we are currently not in a position which I say is oversold or overbought, but within a normal trading range. I use a proprietary indicator of judging the markets extent of "over-extension (under-extension)". The great thing about this indicator, is it does NOT change regardless of the time frame used (other than daily). Use 1 min, 3 min, 5 min, etc... bars and the reading is identical. This is the FIRST TRUE reliable indicator I have found which you CAN NOT alter with time mis-allignment. It is proving to be highly accurate (although, this is not my secret recipe!). So, let's have some fun!

OK, I see a potential "milk money" trade coming up. We are going to take someones milk money! Or at least, try like hell!

Trade nullified, I was expecting QQQQ to reset like DIA and SPY did. But hey, I said they reset, now look at them go ;-)



My current calculation of market extension is as follows (12:40 EST):

DIA -0.2%
IWM 2.1%
QQQQ 1.5%
SPY -0.1%

With SPY and DIA correcting their over extensions and IWM and the Q's holding tight, we are at most probable odds of making higher highs for the day. (11:41)

12:46 Pretty good chance we just seen todays top here at 12:30

Newsletter Relaunch and Pledges

Good morning people! I have two topics here. First off, the newsletter, which will now be a "Chart Bulletin" will be available starting on Monday, June 9th. The cost will be $3.00 per week, payable via Paypal. Watch for the Paypal subscription link on the right column of the blog, it should be there later today. It will be compiled of a few charts which show characteristics of high probability trade set-ups and will be distributed daily. Second, as everyone knows, I have been looking for one large investor who was serious about making money consistantly in the markets. There had to be some give and take there, as of this point, although there has been a few interested parties, terms could not be negotiated. I have now opened up the possibility for multiple smaller investors. If you would like to pledge funds to the account, either notate that intention within the comments section of THIS post, or send me an email if you wish to remain annonymous. My intention, after repaying these funds, is to provide profit for those who invested. Once my account has reached a level which is self-sustaining, I will start working with those individuals with the largest investments on their trading strategies. I have currently traded 33 consecultive profitable trades, although on paper. I have been paper trading the markets and studying the markets for almost 4 years. I know I was nervous about attempting this for a living, speculative trading, via any means, is a crap shoot. I am sorry to bring reality to light, most traders lose money, read as many books you like, the truth will not be found there. Reality sucks, and when it comes to money, it sucks worse. WHO wants you to profit in the market? Just you. I am offering to leverage your funds to make money in the market, and for that, I am willing to teach others (you) the same. So, have a great trading day and remember..... luck and hope is for suckers!

Positions exited

Positions opened at the open, just exited 3 positions in the green. 2 long (calls) positions (Q's and DIA), one put (IWM). Need to work on getting the house clean now ;-)

Working the market

I am in process of finding a way to maximize smaller trading accounts using a very successful trading technique. I will be working on this until I find the solution. So, bear with me as I develope the process. I am thinking of restarting the newsletter, or shall I say "chart bulletin", for a very low fee. I need to bring in some income as I develope the trading process. Let me know your thoughts and ideas. Thanks! Email: Winace at Channellines