US market commentary

[xpertstocktrader]

Market commentary for 02/01/2008

Good day!
After a gap down, the market again showed its true direction the day after the FED announcement. I mentioned that possibility in my previous commentary because that has been the case of late. Truly I didn’t expect as strong a recovery, and after the morning losses on short setups, late longs brought us back to a breakeven day. After all we can say that Thursday was a nice trend day and the indices traded back to Wednesday's high. The SPY and the DIA formed 60 min double top patterns and now seem to indicate that the previous daily lows will hold for some time. We can now continue to look for a weekly correction from lows.

http://www.ivicacharts.com/diagrams/2008/02012008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/02012008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/02012008qqqq60.jpg

On the daily charts the SPY closed at its' 20sma resistance area while the DIA and the QQQQ broke their resistances and closed above their moving averages. Volume was higher and I’m expecting a long continuation for Friday morning. GOOG's bad report pulled the indices back after hours, but that was temporary, and right now as I write this commentary, it looks like the GOOG report didn’t influence the market recovery. Unfortunately on the daily charts we can see that the indices don’t have much room until their next resistance area for swing moves, but should have enough room for possible strength in the morning.

http://www.ivicacharts.com/diagrams/2008/02012008dia.jpg
http://www.ivicacharts.com/diagrams/2008/02012008spy.jpg
http://www.ivicacharts.com/diagrams/2008/02012008qqqq.jpg

For the DIA that is the $127.50 area, for the SPY that is the $14 area and for the QQQQ that is the 20sma daily resistance. We can see that on the charts above. Right now I don’t have a bias for the future direction and I think that we have high odds for back and forth daily action. Earning's reports will continue to influence the market action and morning gaps. My focus will be on intraday moves and smaller time frame trades. I will look for the strongest and weakest names (%gainers and % loser’s lists) and depending on market action I will bring possible new setups. January is over and it is always a good opportunity at the end of the month to scan monthly charts. I will be doing so over the next few days.

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 02/11/2008

Good day!
The consolidation continued. The DIA reached a slightly lower low on the 60 min charts. We saw very whippy intraday action and that is something that we expected. It was not good market action for trading, unless you are scalp trader. There is not much to talk about Friday action. We saw very significant divergences which resulted in difficult trading. The QQQQ was strongest all day, while the DIA was weakest and a fight between those two indices held all of Friday. We can easily see that on the 60 min charts. If you remember my last commentary you will see that the 20sma held as the strong resistance area for the SPY and the DIA (blue line), The QQQQ held best and closed above it, and after breaking in the morning didn’t want to leave it for the rest of the day. One more note, the QQQQ closed at highs and that is now the third try to break higher and that is something that I will keep in mind for Monday. The triangles on the 60 min charts for the DIA and the SPY's show the indecision.

http://www.ivicacharts.com/diagrams/2008/02112008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/02112008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/02112008qqqq60.jpg

Also if we look at the daily charts we can see the same situation. The DIA and the SPY formed doji bars and doji bars mean indecision. The QQQQ closed under its' resistance and still has room for a move up to reach its' 10sma resistance area and the same applies to the other indices. Nothing changed from Friday's opinion. For now we can say that the previous low support area held for the QQQQ and that the double bottom worked, but the bounce is very choppy and still under the 10sma resistance area. I won’t be surprised at all if this is not the end of the selling pressure. That possibility will stay until the indices make a higher high on the daily charts. Everything is in line for a triangle formation and if the QQQQ bounces from its' 20sma on the daily chart, as it did last time, than we will have higher odds for a third try triangle breakout and usually that can be the charm.

http://www.ivicacharts.com/diagrams/2008/02112008dia.jpg
http://www.ivicacharts.com/diagrams/2008/02112008spy.jpg
http://www.ivicacharts.com/diagrams/2008/02112008qqqq.jpg

Because of that I’m not sure that the selling pressure is over and I see that the indices have room for another selling round which will bring the SPY and the DIA to their previous lows and the QQQQ to new daily lows. On the weekly charts we can see that the indices traded back very strongly from their previous resistance areas and will need more time to calm down after the strong move down. All have strong support areas, but after very strong moves in one direction, we rarely see a “V” bottom or top. Because of that I will be very cautious next week.

http://www.ivicacharts.com/diagrams/2008/02112008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/02112008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/02112008qqqqweekly.jpg

In front of us is another consolidation week and every overnight trade will be higher risk. I explained why and that is the uncertainty in the market action. I believe that a weekly bottom area has been reached, but please note the word area. That means the indices could see another selling round on the daily chart, but also could break higher. Previous daily highs and lows are important resistance and support areas and until the indices trade away from them, risk for swing trades will be high and focus will stay on intraday action and smaller time frames. I will bring future updates about my market commentary every day in the room. Should you have any questions, please feel free to contact me.

If you are interested for more about market commentary, chart of the wee and other free information’s you can find at my site. If you like my column here I’m sure you will like opportunity to see and get much more for free: IvicaCharts

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 02/13/2008

Good day!
Divergences marked Tuesday’s action. We saw a divergence all day between the DIA and the QQQQ. The day started with a gap up and the indices held the gap in the morning. The DIA and the SPY had more room to reach their resistance areas than the QQQQ. We can see on the 60 min charts that the 02/05/2008 high is the resistance area which also served as the gap resistance area. The buying pace in the morning was very strong and promising, but the volume was light and that concerned me all day. I posted the QQQQ daily chart in the room before the open: http://www.ivicacharts.com/diagrams/2008/02122008qqqqd.jpg . We can see why I have said we must pay attention to light volume on a bounce from lows. Also we can see that the last time the QQQQ reached its' 20sma selling pressure began and that was the reason why I repeated several times that we must be careful on the morning strength. The DIA/SPY broke above their 10/20sma on the daily charts but lack of volume continued.

http://www.ivicacharts.com/diagrams/2008/02132008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/02132008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/02132008qqqq60.jpg

During the doldrums time my focus was on the consolidation which started with the 11:00 am EST reversal period, because it was very important to see if the consolidation would hold for a possible buying continuation or not. Unfortunately that was not case and around the 12.00 reversal period, the indices started to lose their consolidations and the selling pace started to be stronger and stronger. That was the signal to close open trades because the odds for a daily reversal possibility increased and the bias turned to the short side. All day the daily QQQQ scenario possibility was in our minds and we saw that our decision was right. Selling pressure got stronger and we can see that the downside pace finished with a strong intraday move down. Intraday selling volume was strong too which was confirmation that the resistance areas will hold for now. One more note: look at the QQQQ 60 min chart. The buying volume decreased and when the QQQQ broke its' uptrend channel, the selling pace was stronger than the buying pace, and the selling volume increased. It is proof that sellers are still around and the indices are not ready for a healthy strong bounce from previous daily lows.

http://www.ivicacharts.com/diagrams/2008/02132008dia.jpg
http://www.ivicacharts.com/diagrams/2008/02132008spy.jpg
http://www.ivicacharts.com/diagrams/2008/02132008qqqq.jpg

Odds for another move down are still here, especially on the QQQQ. The SPY formed a daily doji bar which means indecision, while the DIA closed under its' 10sma resistance area. We still can say that is a strong trigger for a swing move down. Focus will stay on intraday moves and we must be faster with our profits as well as continuing to monitor volume and pace. Those two tools with support and resistance areas will be the key for recognition if we are in the right or wrong direction with our trades. For swing trades risk remains high. For Wednesday morning, my bias is short but a morning gap caused by an earnings report can change the bias so we must pay attention to the market action after the open. If anyone has any questions about this commentary, please feel free to contact me.

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 02/14/2008

Good day!
As I mentioned yesterday, morning gaps can change our bias. That was exactly the scenario that we had on Wednesday, but in spite of the bullish action, (trend day up) I didn’t trust the long side all day and I still feel the same. Let’s take a look from the beginning of the day. The Indices started the day with a strong gap up. The DIA was the strongest again and right after the opening strength, it broke to a new high. Before new buying pressure, the SPY filled its' gap and all the indices were ready for a move up. The QQQQ's break above Tuesday's high formed kind of a bear trap and that was another reason for the bullish action. When I look at the 60 min charts, all is clear. But traders, who spent all their time with the market action, know that it wasn’t that easy. Most of the day's action was very choppy and tricky. Buying volume was again light. When we have a choppy move in one direction, with lighter volume, that is a market I don't trust.

http://www.ivicacharts.com/diagrams/2008/02142008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/02142008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/02142008qqqq60.jpg

Because of that it was a less active day than Tuesday, but it was still a good day for us. Sometimes it is best to be patient then to overtrade. This reminds me of last year when the market kept climbing up, up and up on light volume. On the daily charts we can see that the indices are still under their previous highs, and volume on the bounce from lows is not strong. True all broke above their 10/20sma resistance areas which now becomes support areas. The possibility for a selling scenario and 3rd try triangle possibility for the QQQQ are still there, but this time the 10/20sma will serve as support areas and we must count on them.

http://www.ivicacharts.com/diagrams/2008/02142008dia.jpg
http://www.ivicacharts.com/diagrams/2008/02142008spy.jpg
http://www.ivicacharts.com/diagrams/2008/02142008qqqq.jpg

Right now range action is the most probable and that means we can expect a high risk trading continuation. Risk will always be higher during this range action and with more and more tight action, risk will increase. I don’t have a strong bias right now. If volume doesn't increase I will continue to be suspect of the long side, but all that can change in one day and for now I will go day by day. On the daily charts we can see range lines and those are previous highs and previous lows. While the indices stay between those lines, risk will remain on the higher side and my focus will stay on intraday moves and smaller time frame trades.

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 02/15/2008

Good day!
Was Bernanke's comment about the economy the reason why the markets closed in negative territory? We can’t say for sure, but from a technical view it is not a surprise. The Indices stayed in a daily range and in this type of action up-down days are common. The DIA and the SPY closed above their 10/20sma support areas and volume was average so we can’t say (for now) that Thursday's action is the start of a new swing direction. It is a little different for the QQQQ. Selling volume was higher and that could be the start of the scenario that I explained before (3rd try triangle). Let’s take a look at the 60 min charts. The selling pressure was a little stronger than the buying pressure over the last few days and that suggests the possibility of a downside move, but that can easily turn into 60 min range action. Volume was average and that is another reason for range odds.

http://www.ivicacharts.com/diagrams/2008/02152008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/02152008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/02152008qqqq60.jpg

On the daily charts we can see that the previous resistance held very strongly and the SPY/DIA closed at Wednesday's low, while the QQQQ was the weakest and closed under its' 10/20sma and under Wednesday's low. Thursday action didn't suggest any kind of strong bias for Friday but if I would have to bet, I would have a slightly bearish bias. But since we know that Friday is option expiration day, we can expect more intraday indecision what can result in whippy action without strong direction.

http://www.ivicacharts.com/diagrams/2008/02182008dia.jpg
http://www.ivicacharts.com/diagrams/2008/02182008spy.jpg
http://www.ivicacharts.com/diagrams/2008/02152008qqqq.jpg

Usually I’m not too active on option expiration days because risk is high. One way to trade a whippy intraday market is using larger stops which will avoid the possibility of being stopped out and then seeing the trade continue after taking out your stop. We need to be faster with profits which will result with less risk/reward trades. Another way is to not trade and stay with cash which is also a position. As traders we must recognize trading risk and market action and determine whether it is worth trading. Also in whippy action we must be careful to not fall into overtrading which will result in poor results and keep only ours brokers happy. I expect that we might have some worthwhile market action in the morning, however, as the day continues, I expect that risk will increase. Focus remains on intraday moves like traps and gap trades.

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 02/19/2008

Good day!
It was a typical option expiration day, with lots of nothing. The first part of the day the indices went down without a strong intraday pace and without strong volume. This choppy indecisive action increased the trading risk. As I explained, the only way to trade this kind of action is to use larger stops or not trade at all. On the 60 min charts we can see how small the trading range was on Friday. The last hour finally showed a reversal, which was the chance for scalp traders, but with very light volume it was not an opportunity for new swing positions.

http://www.ivicacharts.com/diagrams/2008/02192008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/02192008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/02192008qqqq60.jpg

The daily charts clearly show the market situation. We can see that the action is getting more and more tight which increases trading risk. We can see that the indices have room for this range continuation and because of that right now it is impossible to have a bias. After a break in any direction, the indices must deal with their previous support or resistance areas which forms the daily ranges (red lines). I don’t expect that we will have an easy trading situation over the next few days. That is all that we can do now as traders... recognize risk. We can’t fight the market, we can only follow it. So we have range action on the 60 min charts and on the daily charts. Maybe the weekly charts will give us some help for direction

http://www.ivicacharts.com/diagrams/2008/02192008dia.jpg
http://www.ivicacharts.com/diagrams/2008/02192008spy.jpg
http://www.ivicacharts.com/diagrams/2008/02192008qqqq.jpg

The QQQQ formed a doji bar and closed in the middle of the range. The same applies to the DIA and the SPY. Volumes decreased which is expected after a strong weekly move down. If we look only at the weekly charts than we can see that the indices need more time for rest after the strong move down. The daily charts also bring us to that same conclusion and thus we can expect more weeks without direction.

http://www.ivicacharts.com/diagrams/2008/02192008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/02192008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/02192008qqqqweekly.jpg

It is good to look at the weekly charts for future expectations. The situation didn’t change after last week. The indices action is tighter and trading risk is higher. I will expect the same trading risk for the upcoming week or until the indices break their daily ranges. My focus will remain on intraday moves and “own way” charts for possible swing trades.

I wish you all a nice long weekend. Please feel free to contact me if you have any questions..

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 02/20/2008

Good day!
There is not much to say about the first trading day this week. The Indices opened with a strong gap up and we can see on the SPY daily chart that it opened above the daily triangle. But after the open the indices didn’t have the strength for continuation and attempted to fill the gaps. In the morning the indices stopped half way and during the midday action, a 15 min consolidation brought some indecision about the afternoon action. The 60 min avalanche made the decision and the indices continued their morning direction. This time, however, the selling pressure was much stronger and with an exhaustion move, the indices reached Tuesday's low. During the last reversal period the SPY and the DIA regained some of their afternoon losses, while the QQQQ closed near lows which suggests for the possibility for continuation on Wednesday.

http://www.ivicacharts.com/diagrams/2008/02202008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/02202008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/02202008qqqq60.jpg

The DIA and the SPY bounced from their 10sma support areas and closed above their 10 and 20sma support area. The same applies to the QQQQ, however, it just wasn’t strong enough to close above its' 20sma. We can see that all the indices are still in triangles and soon, maybe a day or two, the triangles will be broken. Whatever direction will be taken, the next strong resistance/support area for the indices will be the range area (red lines). Right now it is a very tricky situation and we can see false breakouts in both directions. Volume is low and we don’t have any strong signs right now for direction.

http://www.ivicacharts.com/diagrams/2008/02202008dia.jpg
http://www.ivicacharts.com/diagrams/2008/02202008spy.jpg
http://www.ivicacharts.com/diagrams/2008/02202008qqqq.jpg

My bias right now is on the down side, but that can be changed in a flash. First I want to see the direction on the 60 min range which will give us a possible direction for the daily charts. Before that risk will be high for anything longer than a day trade setup. On Tuesday was had nice setups and intraday moves and it is very important to protect open trades as soon is possible because with intraday range action, strong reversals are very common. Also risk for overnight trades remains higher because a morning gap up can change the direction. I believe that the next days we give us a more clear situation for a possible swing move.

Wish you all good trading!!!

Ivica

 

[xpertstocktrader]

Market commentary for 02/25/2008

Good day!
Friday's action showed us all the risk of range action. The late Friday afternoon news of a potential bailout plan for the troubled bond insurer Ambac Financial brought the market from lows to a strong closing high. That was a surprise for all short traders, as before that all the charts suggested that we could see a short continuation. During Friday's session, the indices broke under their 60 min ranges, without strong volume which is important, and stayed with consolidations at lows until the news came out. We can say now that the morning break down was a false break and the indices are again in the middle of the range. Because of that the whole market commentary from Friday can just be repeated for Monday.

http://www.ivicacharts.com/diagrams/2008/02252008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/02252008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/02252008qqqq60.jpg

We saw no change on the daily charts. The QQQQ's try for a 3rd try daily triangle failed. Volume was average and we can’t read now what next week will bring. We could easily see another consolidation week, which will increase risk every day on a higher and higher level. Lets take a look at the weekly charts.

http://www.ivicacharts.com/diagrams/2008/02252008dia.jpg
http://www.ivicacharts.com/diagrams/2008/02252008spy.jpg
http://www.ivicacharts.com/diagrams/2008/02252008qqqq.jpg

After looking at the daily charts, this is not a surprise. Possibly the most frustrating thing about the weekly charts is that after a strong move down, this kind of action can easily continue for the next few weeks and possibly even for months. On the DIA and the SPY chart we can see that the 10sma is coming closer and that should be the first moving average resistance area.

http://www.ivicacharts.com/diagrams/2008/02252008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/02252008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/02252008qqqqweekly.jpg

Generally, there isn't much to say about last week. We must keep in mind that it is best to wait for a range breakout, because before that risk will remain high. Right now it is better to leave the initial breakout and wait for a consolidation then trying to pick a possible breakout which could finish with a false move. That is what I will do. That mean we can expect that patience will be the name of the game because after a possible initial move I will again wait. Right now the traders that are selling tops and buying bottoms are the ones in the money with this range action.

Wish you all good trading!!!

Ivica
[email protected]

 

[jryder]

DWL great commentary im learning so much just from reading your posts, im new to trading so please excuse my excitedness but what a great community

 

[xpertstocktrader]

Market commentary for 03/04/2008

Good day!
After a trend day we will usually see a consolidation day. Monday was no exception. The QQQQ was the weakest and made new lows, but that was the room that was left after Friday's trend day. We expected weakness at the open and that was the case with the SPY and the DIA which reached their previous low support areas. We can see that on the 60 min charts. The same applied to the weakest QQQQ. Just the QQQQ reached its' one leg down support area which we can see on the daily chart. Also we can see on the charts that the DIA and the SPY spent the day in their 60 min ranges which was expected, because after any big move, we need to see rest. For now that is a consolidation at lows and it is good for selling continuation. All the indices are still under their 10sma (first trend test resistance area), and if a correction will continue into Tuesday, I will follow the 20sma as another very important resistance area. Also, for the down trend continuation, it will be important that the indices bounce down from the 20sma. If that doesn’t' happen, than that will be a sign for more of a daily correction from the support areas.

http://www.ivicacharts.com/diagrams/2008/03042008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/03042008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/03042008qqqq60.jpg

On the daily charts we can see that the daily range areas are still holding. If you all remember last week's 60 min range action, we now have the same with the daily charts. If the indices won't break down, then we could see a reversal into the range highs, which is the usual range action. Because of that it is very important to follow the consolidation (correction) which started on Monday. If we have a strong bounce, than we could expect a move up onto the daily range upper line. If we have a gradual move, than we can expect a break down and very possibly a retesting of the previous monthly low support areas. For any possibility it is important to watch volume and pace. Monday's volume was light and the intraday consolidation is moving in line with a possible break down.

http://www.ivicacharts.com/diagrams/2008/03042008dia.jpg
http://www.ivicacharts.com/diagrams/2008/03042008spy.jpg
http://www.ivicacharts.com/diagrams/2008/03042008qqqq.jpg

But for low risk setups and enough rest for retesting the previous lows, the best case scenario would be if the indices will continue with a gradual correction and if they will wait for the 10sma on the daily chart (trend test= which will lead into a daily down trend after range break) That will reflect as a bounce down from the 10sma, on every touch, into new lows. Every fast break down from Monday's low will increase risk and it will cut the possibility for a move down into the previous lows. Generally, for lower risk setups the indices need more rest (few days). I hope that is clear to all, but if isn’t, please feel free to contact me.

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 03/05/2008

Good day!
The daily range is holding with Tuesday bringing an intraday reversal. The day started with a gap down to Monday's low support area for the DIA and the SPY. I was expecting that the gap would be filled after the open, but the indices showed weakness and the bounce after the open was very choppy on decreased volume which was not a sign for a true reversal. In the meantime, the QQQQ stayed in a range until 10:30 am EST. At that moment the SPY and the DIA touched their 20sma 5 min resistance areas which were a signal for the 5 min trend down. The Indices broke under Monday’s lows but the selling pace and volume was not strong for healthy. We can see that on the 60 min charts. It was more choppy action with nervous pullbacks from the 10sma 60 min resistance areas. After slightly lower lows, we saw bounces back to the resistance areas. Also volume didn’t confirm healthy action and at that point we just followed our open short trades, because for new setups it was just too high risk. If you remember I always repeat that volume and pace are great tools for future expectations. We were right and around the 14:00 pm EST reversal period, the indices bounced from lows. If you look at the smaller time frames (5 min), you can see that the bounce from lows was on higher volume and with a stronger buying pace. That was the start of the reversal, and the buying trigger.

http://www.ivicacharts.com/diagrams/2008/03052008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/03052008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/03052008qqqq60.jpg

Since the buying pace was much stronger than the selling pace, it was expected that the 60 min 10sma would not hold. The SPY and the DIA almost filled their gaps before the close. On the daily charts we can see that the range support area held and Tuesday's action formed a daily pivot bar for the SPY and the DIA with heavier volume. This intraday action can lead us to be bullish for Wednesday. Additionally, Tuesday brought the 4th selling wave and we can say that the 60 min indices are extended.

http://www.ivicacharts.com/diagrams/2008/03052008dia.jpg
http://www.ivicacharts.com/diagrams/2008/03052008spy.jpg
http://www.ivicacharts.com/diagrams/2008/03052008qqqq.jpg

What next? After a strong reversal and heavier buying volume I will expect to see that the correction that started on Tuesday will continue for the next day or two. I will expect that the indices will trade back to their daily 10/20sma resistance area. It is very important to follow the correction pace, because that will give us answers. Can we expect to see daily selling continuation and a pullback from the 10/20sma resistance area, or can we can expect that the daily range action will continue. Right now it is impossible to say, but after day or two it will be more clear. For daily selling continuation it is best to see the correction pace much weaker than the selling pace. Any other action will increase trading risk. I will explain tomorrow in more detail during the education course. If anyone has any questions, please feel free to contact me.

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 03/07/2008

Good day!
Thursday's action gave us a trend day. When we look at the daily charts it is easy to see that but those who followed Thursday's trading saw that the intraday action had divergences between the weaker QQQQ and the stronger DIA. The last hour brought synergy, but most of the day the DIA and the SPY were in a very choppy slow downtrend move with low volume which suggested the possibility for a break up. With that action trading risk was higher and I was very cautious with the short side. Now we can say that the daily resistance held and that the possibility for a daily trend continuation is open. On the 60 min charts we can see that the indices closed at Tuesday's lows which suggest the possibility of a double bottom pattern.

http://www.ivicacharts.com/diagrams/2008/03072008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/03072008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/03072008qqqq60.jpg

Now we have a situation where the daily charts suggest possible selling continuation, and the intraday charts are extended for new short setups. We can see the support areas on the daily charts and they can very easily be broken tomorrow. Before the open, the jobs data will come out and that can determine Friday's action and because of that staying in positions is higher risk. For the morning action, we have a dilemma, will the double bottom hold or will the selling pressure continue with a gap down after the jobs data report.

http://www.ivicacharts.com/diagrams/2008/03072008dia.jpg
http://www.ivicacharts.com/diagrams/2008/03072008spy.jpg
http://www.ivicacharts.com/diagrams/2008/03072008qqqq.jpg

It is hard to put together a watch list with a full trading plan when we don’t know what the market reaction on the jobs report will be and because of that I will wait at least 5-15 min after the open for new setups. Generally, my bias is on the down side, but the question is will be there just be continuation after the open or we will see a bounce first. We have open swing trades and I will be focused on them. The Indices have room for a move down which will bring the QQQQ to new lows and the DIA and the SPY have room to retest their previous monthly lows. After the open we will see what the market will bring and then I will decide about Friday's activity

Wish you all good trading!!!

Ivica

 

[xpertstocktrader]

Market commentary for 03/10/2008

Good day!
The jobs report brought the market down and all the indices opened on Friday with a gap down. It was a very whippy day because after the open, the indices filled their gaps and reached their 10sma 60 min resistance areas. But there was no strength for keeping that area and consolidation. The reversal period at 11:00 am EST and the resistance areas pulled the indices back to new lows which brought the QQQQ to new daily lows. The selling was steady on light volume which increased trading risk because of the potential bounce possibility. At the 15:00 reversal period, the indices bounced strongly again into the 60 min chart 10sma resistance area. We can clearly see how the 10sma can be a nice trend tool, The last two days every try to break it failed and finished with new lows. Also we can see on the charts that the morning and late afternoon bounces brought the strongest intraday volume which was the reason for the high trading risk for new short setups. All in all we saw a very tricky trading day for new setups. Our open swing short trades did well, but because of the intraday action I was not in a mode to open new short trades on Friday.

http://www.ivicacharts.com/diagrams/2008/03102008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/03102008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/03102008qqqq60.jpg

After all, on the daily charts we can see that Friday’s volume was higher and the day finished with a doji bar what suggests indecision for next week. The QQQQ reached new lows. The DIA and the SPY closed higher than January's low and still have room for more selling next week. It will be hard to find new low risk short setups because the market is already on the move and we don’t have consolidations (pattern) and we all know that we need them for low risk setups and reasonable risk/reward trading plans. With the daily doji bars, the indices can go lower and see new lows (QQQQ) or previous lows (SPY/DIA), but also can form higher daily lows. On the daily DIA/SPY chart we can see that both have room for their previous lows, but also that will be their equal move support areas and with the strong trend down I will expect more than that scenario.

http://www.ivicacharts.com/diagrams/2008/03102008dia.jpg
http://www.ivicacharts.com/diagrams/2008/03102008spy.jpg
http://www.ivicacharts.com/diagrams/2008/03102008qqqq.jpg

Since the week is over, let’s see what the weekly charts tell us. The DIA has room to meet January's low, the SPY closed at its' 200sma and the QQQQ reached its' 200sma and with the late bounce closed a little higher. With the market mode lately, we can easily see more selling in the first part of the week and that will be my focus for now. I will expect that move, but also I will expect a possible daily reversal in the second part of the week. Since the DIA has a more clear situation for the move down I will expect more selling pressure there, but that is just one scenario.

http://www.ivicacharts.com/diagrams/2008/03102008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/03102008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/03102008qqqqweekly.jpg

Again with the daily indecision bars we can see whippy intraday action with strong bounces and stronger reversals to new lows. For new short setups, risk will remain higher. Because of that I will be focused again on intraday moves on smaller time frames (5/15 min charts). The weekly third selling wave continued and we could see a weekly reversal soon and for swing trades that will be the best possibility. Before of that it will be best to be patient and trading activity must be lighter with less risk than usual. If anyone has any questions, please feel free to contact me.

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 03/13/2008

Good day!
Wednesday brought a correction after Tuesday's strong move up. As we expected the indices showed strength in the morning because there was room on the charts for that. After the indices reached their resistance areas, the correction started. During the doldrums time it was a tight slow correction but around the 15:00 pm reversal period the selling pressure increased and the indices finished the day in negative territory. That is a short explanation for Wednesday's action. On the 60 min charts we can see that the previous resistance was too strong and when the 10sma support area didn’t hold, that was the signal for selling pressure. Also we can see that the indices have room for selling continuation in the morning and that is the scenario that the charts suggest right now.

http://www.ivicacharts.com/diagrams/2008/03132008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/03132008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/03132008qqqq60.jpg

The late selling pressure and weak close resulted in a red bar on the daily charts and we can see that the moving averages again showed the reason why they are a good tool for market expectations. The DIA pulled back from its' 20sma and closed under its' 10sma, the SPY couldn’t stay above its' 10sma, while the QQQQ pulled back from its' 20sma. Right now we can say that the QQQQ is holding up the best because it closed above its' 10sma which will serve as its' support area. It will be important to see if the support areas can hold because if the selling pressure will continue in the morning then buying optimism will slow down and concern about the recovery will return to the market.

http://www.ivicacharts.com/diagrams/2008/03132008dia.jpg
http://www.ivicacharts.com/diagrams/2008/03132008spy.jpg
http://www.ivicacharts.com/diagrams/2008/03132008qqqq.jpg

Unfortunately the market didn’t hold Tuesday's gain very well and that increases trading risk for the next few days which could result in whippy intraday action with strong bounces from the support areas and strong reversals from the resistance areas on the smaller time frames charts. If anyone hoped that after the FED market support, risk would decrease and we will finally see healthy action supported with healthy pace and volume, I must say that right now we don’t have that situation and the charts don’t suggest it. I will stay with intraday setups and with faster trades. Swing trades are still higher risk and it is very important that every setup be taken with proper trading risk. My bias for the morning is down, but right now I don’t expect that the indices will retest Monday’s low. For now I think that we have odds for daily/60 min triangle action between Monday’s low and Wednesday's high. Of course that can change with the intraday action and because of that we need to know that trading risk is higher until the charts suggest a more clearly daily direction.

Wish you all good trading!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 03/17/2008

Good day!
Someone in the room on Friday mentioned that right now the market action doesn’t have anything to do with technical analysis. I agree with those thoughts. Friday's action clearly shows that fact. After the BSC news, the indices fell and in just 20 min gave back all of Thursday's gains, and those were strong gains. On the 60 min charts, we can see that the large range is holding and the indices show very strong moves between the resistance and support areas. Obviously this is high risk action and I believe that most traders are not enjoying it. I don’t want to talk much about Friday's action because it was just another very whippy day after a series of them starting after the FED announcement.

http://www.ivicacharts.com/diagrams/2008/03172008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/03172008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/03172008qqqq60.jpg

Before that lets take a look at the daily and weekly charts. On the daily charts we can see that the indices are fighting with their support areas. Friday's volume was strong but still doesn't suggest any daily direction. I mentioned in Friday's commentary that one bottoming scenario is rounding lows. If that is how it happens, we will see more days like Friday and we can expect difficult trading days in the future. I always try to imagine the higher time frame charts with the smaller ones, because it is the same. Let’s say that we have 5 min charts. Then try to imagine rounding lows. We know that for rounding lows we see choppy action before the true reversal, and if that will be case, then we will need a number of days before any true reversal. Of course that is just one possible scenario.

http://www.ivicacharts.com/diagrams/2008/03172008dia.jpg
http://www.ivicacharts.com/diagrams/2008/03172008spy.jpg
http://www.ivicacharts.com/diagrams/2008/03172008qqqq.jpg

But let’s take a look at the weekly charts. You all know that I really like 3rd try patterns. The reason why I don’t like the second try is the possibility of a double top or bottom risk. Now look at the weekly charts. A double bottom possibility is here. We have strong support and the formation of doji bars which suggests indecision. With the possible double bottom we already have enough indecision, and the dojis bar just increase that. Last week's volume was stronger and increased over the last weeks. That suggests a bottom as well. There is another point: a double bottom can result with slightly lower lows, an exact low or with slightly higher lows. We can see that all three possibilities are open. When we add the doji bars the result is indecision and a high risk trading environment.

http://www.ivicacharts.com/diagrams/2008/03172008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/03172008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/03172008qqqqweekly.jpg

I don’t sound very pessimistic, but with this commentary I like to lead you to a real conclusion for the week in front of us. Maybe I’m absolutely wrong but this is the way I read the charts. From the text above, we can conclude that the market is at a very confused point. That will lead us to less activity and lower risk trading next week. But next week we will have just 4 trading days. The FED meeting is on Tuesday and options expiration is on Thursday. I can’t predict the market action 100%, but I can have expectations. After the emotional whippy Friday I will expect range continuation on Monday and Tuesday before the FED announcement. I expect that traders will wait and expect the FED to save the economy. After the FED we can expect to see a strong reaction (as usual). Thursday's option expiration day will most probably be the usual option action which most of the time is whippy. So in conclusion, if anyone plans to take vacation I believe that next week is a great opportunity for that. Maybe the market will finally pick a direction and I really hope that will happen. If the weekly support areas don't hold we could see a strong move down (panic) which would be the 3rd selling wave continuation. If the support areas hold, we must see which bottoming scenario we can expect. When the situation is unclear and when we don’t know what direction to expect, the best thing to do is to leave that initial move alone and then look for the continuation possibility. That means I can expect (at least for myself) to have a less active week. Please remember, especially if anyone had a difficult time last week, that CASH IS A POSITION TOO!!!

Wish you all good trading!!!

Ivica
[email protected]

 

[mcichocki]

SPY could be leading the markets higher...

ALL the index ETF's are showing similar traits with divergence and volume based support. One set stands out from the others to me though and thats the SPY/ S&P. I think this guy has a chance at leading the way for what's to come in the broad markets.

Here is my view. I remain bullish mid term and think we could get a large rally before the herd expects it.
Shorts will probably SCREAM and cover from this next wave also.

Macd divergence is fairly large and macd histogram divergence is backing us up as well.

Volume, volume, volume. Folks volume like this down low is bullish, that's not retail, that's big bucks moving around and in this case buying in at the lows. Why do I think it's buying...look at the support level and how it's been fought with big $. Go to the intraday charts and look where the volume is focused at...down low. Pros don't buy high and sell low folks.

Yes we have a descending triangle, yes we have both volume by price and the top trendline as resistance. BUT the top trendline is pinching off and building pressure like a spring. This spring is getting tight and that's why I feel whichever direction it breaks will have some great momentum behind it. Based on the above backing reasons I have to carry a bullish bias and fade the herd here mentally.

All that being said, a wise trader may have a bias but rarely trades on it. You should be ready for momentum to either side for the best odds of a winner. If your aggressive you could buy at support down low. The more conservative approach will be to have a buy stop AND sell stop in place just outside the triangle so whichever way it breaks you would capture some of the momentum early and then just trail the stops and manage the trade.

Good trading
MC

 

[grantx]

MC,

This is my take.

Presumably, the first volume bar circled would represent the result of two cuts in rates in nine days by the Fed to solve the financial crisis; the second volume bar circled would represent the realisation none of this is working. I reckon we'll be going considerably lower.

Good Trading,

Grant.

 

[mcichocki]

MC,

This is my take.

Presumably, the first volume bar circled would represent the result of two cuts in rates in nine days by the Fed to solve the financial crisis; the second volume bar circled would represent the realisation none of this is working. I reckon we'll be going considerably lower.

Good Trading,

Grant.

Fair enough...fun to watch and there is millions of opinions out at any time in the market. Anything can happen at any time and I truly believe that. Let's watch it unfold.

For the most part in trading every share trading hands has a buy and a sell. Our job is to see who's winning the tug o' war. There are many sellers that are giving up their shares, that's obvious (*cough* HERD *cough*). And I do think the selling volume could still be too high at this stage for an all out reversal.

But think about how that bar would look though if all 500 mil traded were sellers and no buying pressure. See what I'm getting at? It's more about the reaction to the volume that can show more insight to supply vs. demand. Did the bar ATTEMPT to go lower? Was it all talk and no action?

The volume and its correlation to the candles reaction can be used to see whether there is buying pressure or did the buyers step aside and let it sink knowing lower prices were coming?

What I'm more gonna be watching for is when it does pop are they holding shares or are they dumping into the rally? That will be key, if they hold most the shares and we see retail type low volume we could test the lows or lower again to see more accumulation. When the lows are finally tested on fairly low volume that's often when the real reversal will ensue as the market has been bled dry of weak hands and the lions share of holdings are locked up.

JMHO, heck we both could be right in different timeframes even.

 

[grantx]

MC,

I suppose one point to consider is significant moves on low volume - mm's marking down in anticipation of sellers; mm's marking up in anticipation of buyers. Then we would need to look for a continuation on increased volume, Finally, the price may overshoot to encourage more buyers (mm's turning a quick buck) or to encourage sellers (mm's loading up on cheap stock).

To sum up, business as usual.

"Millions of opinions" and all right and wrong - that's why we have functioning markets

"we both could be right in different timeframes" or even on the same day with the current maket.

Grant.

 

[firewalker99]

Volume, volume, volume. Folks volume like this down low is bullish, that's not retail, that's big bucks moving around and in this case buying in at the lows. Why do I think it's buying...look at the support level and how it's been fought with big $. Go to the intraday charts and look where the volume is focused at...down low. Pros don't buy high and sell low folks.

You've made a good analysis and you've observed some interesting patterns imo. Also it's one of the rare times I see people plot volume by price... it's a good indicator of where potential interesting levels are to be found.

As for volume, yes. But I think you need to see what it does to price. The previous time volume peaked price reversed strongly. Now we have another huge volume, but did buyers manage to push the market higher? Hardly... so... big effort, but the result isn't big. So I tend to agree with grantx, once those who have bought realize this isn't going to hold, we'll be going down to break the low's of earlier this year.

Good trading!