US market commentary

[xpertstocktrader]

Market commentary for 10/23/2007

Good day!
After strong selling pressure last Friday, this week started with a gap down but that was all the continuation from Friday that we had. The Indices filled their gaps very quickly with a strong buying pace and volume that indicates we saw a bottom for Monday. Intraday breathe stayed the same with the QQQQ still the strongest and the DIA the weakest. We can see that on the 60 min charts. If we take a look at the DIA and the SPY charts we can see that the selling pace is stronger than Monday's correction pace which indicates that the 60 min chart will serve as resistance and very possibly bounce to lows again. The 20sma (simple moving average) is always an important support/resistance area and this time with the additional 100sma daily resistance as well this resistance area will be all the stronger. On the QQQQ 60 min chart we can see that the bounce pace, after the morning gap is stronger than the selling pace to lows. After the morning bounce, the QQQQ stayed in a triangle formation for the rest of the day.

http://www.ivicacharts.com/diagrams/2007/10232007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/10232007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/10232007qqqq60.jpg

On the daily charts we can see that the 100sma is resistance for the SPY and the DIA, while the 10sma is for the QQQQ. Since all indices closed near their simple moving average resistance areas, Tuesday open will be the important indicator for the intraday action. AAPL has its earning report after the close and those results can produce a morning gap possibility which can influence the market resistance areas.

http://www.ivicacharts.com/diagrams/2007/10232007dia.jpg
http://www.ivicacharts.com/diagrams/2007/10232007spy.jpg
http://www.ivicacharts.com/diagrams/2007/10232007qqqq.jpg

If the indices gap up above their 100sma daily and 20sma 60 min resistance for the SPY and the DIA and the 10sma daily and 20sma 60 min for the QQQQ, then very possibly we will see a reversal into their previous support areas (red lines). For the QQQQ that means back to it’s' highs and on the 60 min chart that is also its' equal move resistance area after Monday afternoons consolidation. That will be much harder for the SPY and the DIA and I will expect more choppy and gradual action there. In case we see morning weakness and a gap down, I will expect the SPY and the DIA to trade back to Mondays low and possibly even new lows. For the SPY that will be the 200sma on the daily chart. I want to note that Tuesday morning will be important and it is important to pay attention to Monday's low as the support area and the daily and 60 min charts moving averages) as explained above. My focus will stay on intraday moves because during earning season and extended moves, every overnight trade will have additional risk. I will see you all in the trading room where I will bring additional information on specific setups.

Good luck and let’s have a great trading day.

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 10/24/2007

Good day!

The QQQQ reaches new highs!!!!! The day started with a gap up and as usual the QQQQ gap was the strongest and opened right at its' 60 min equal move and previous daily high resistance area. The SPY and the DIA gapped under their 20sma 60 min resistance area which I mentioned in yesterday's commentary as their strong resistance areas. It was very important to saw how the indices acted at their strong resistance areas. The QQQQ held it with a gradual correction in the morning while the DIA and the SPY filled their gaps after the first 60 min. The QQQQ, supported by the strong internet sector (GOOG, RIMM, BIDU etc), broke out to new highs which resulted in new daily highs and a strong intraday buying pace. The DIA and the SPY didn’t follow with as strong a reaction which resulted in a 60 min divergence and they closed the day barely at new intraday highs.

http://www.ivicacharts.com/diagrams/2007/10242007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/10242007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/10242007qqqq60.jpg

On the 60 min charts we can see the divergence and difference between the QQQQ and the SPY/DIA, especially on the DIA 60 min chart. Daily volume is again weaker than Friday’s selling volume and right now it is hard to believe that the DIA and the SPY will easily get back to their daily highs. The QQQQ can continue with its' own way but I will expect that the resistance area (red line) and 20sma will serve as strong resistance for the DIA/SPY on any bounce from Monday’s low. The daily divergence action will continue to bring high risk for swing trades.

http://www.ivicacharts.com/diagrams/2007/10232007dia.jpg
http://www.ivicacharts.com/diagrams/2007/10232007spy.jpg
http://www.ivicacharts.com/diagrams/2007/10232007qqqq.jpg

Possible morning gaps as a result of the earnings season will also continue to bring additional risk for overnight trades. Because of that the only safe area is staying with intraday action and individual names. My primary focus will continue to be scanning for strongest and weakest names depending on the market action at the open. AMZN's earning report after the close (better then expected, but AMZN is trading lower because of concerns about operating margins) can result with another gap in the morning. THO did very nicely yesterday, but it is important to know that we are staying with less risk then usual, because of the above explained reasons. I will use the same tactic for today. That means small risk for o/n trades and focusing on the strongest/weakest charts after the market open. Also I will use gap possibilities to find good risk/reward setups. If anyone has any questions, please feel free to contact me

Good luck and let’s have a great trading day.

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 10/25/2007

Good day!
When we take a look at the table above and the results, we could say that Wednesday was a day without much change. But if we take a look at the charts then we can see that Wednesday was a day with huge intraday moves in both directions. The day started with a gap down, and for a change the QQQQ had the biggest gap down while the DIA had the smallest. All day the action was different then it has been lately, because the DIA was the strongest which was not the case lately. After the gap down at the open, the selling pressure started and the DIA/SPY broke their 60 min bear flags with strong pace and strong volume. The QQQQ was the weakest and reached its' 20sma daily support area and previous support. During the doldrums, the indices formed a double bottom pattern and the reaction after that was the same as the action in the morning, but in the opposite direction, much like a mirror image.

http://www.ivicacharts.com/diagrams/2007/10252007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/10252007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/10252007qqqq60.jpg

The Indices traded back to their open areas and finished the day flat which we can see in the table above. The reversal volume was the same and after Wednesday's action we were right back to where we started. We have had larger daily bars which can result in a larger daily range action in the future. Again we don’t have a clear direction, because the QQQQ looks like it could see new highs again and Wednesday's volume supports that possibility. For the SPY and the DIA the situation is the same. It will be hard for them to get back to their daily highs because the reversal was very strong with strong selling pace. In addition both indices have strong resistance areas above. On the other side, the support areas are holding and Wednesday's strong volume helped to maintain that.

http://www.ivicacharts.com/diagrams/2007/10252007dia.jpg
http://www.ivicacharts.com/diagrams/2007/10252007spy.jpg
http://www.ivicacharts.com/diagrams/2007/10252007qqqq.jpg

How do we trade in this market action when we can see reversals in both directions? The SPY/DIA can bounce to their 10/20sma daily resistance areas and at the same time the QQQQ can reach new highs. Also, the DIA/SPY can stay between its' support and resistance areas (red lines), and the QQQQ can trade back to its' previous support area (red line on the daily chart). On the 60 min charts we can see a wild range that could continue and there is only one way to trade this kind of market. That is trading on small time frames, exactly like we did yesterday in the trading room. Scanning strong and weak sectors and looking for the weakest and strongest intraday setups will continue to be my focus. There will always be swing opportunities but much less then usual, and it is important that we have “own way” set ups that don’t react to the market action. Earning season will add risk because the morning gaps are more frequent so the risk on overnight trades must be smaller then usual (at least 50%). My morning focus will be again on gaps and possible gap setups, and intraday setups. Don’t forget that the “whole picture” (view on all time frames) is very important for a successful trade. Right now I don’t have much of a bias. In the future I will look for a larger correction, but for now I just go with the market action and that depends on the intraday action. If anyone has any questions, please feel free to contact me.
Good luck and let’s have a great trading day.

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 10/26/2007

Market commentary for 10/26/2007

Good day!
The large range continued. We did not see a lot of change from yesterday's action. We saw trading again between the range lines and once again the DIA/SPY were stronger then the QQQQ. If we look at the 60 min charts we can see action between the blue lines (range). The DIA is forming a bear flag channel for now with a wild range while the SPY and the QQQQ are staying in a wild base range.

http://www.ivicacharts.com/diagrams/2007/10262007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/10262007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/10262007qqqq60.jpg

On the daily charts the DIA is creeping up to its' 10sma resistance which is its' first important resistance area. The SPY is also close and for now is staying in a range, while the QQQQ is back to its' 20sma support area. There is not much more to say. While the indices stay in this range we will have the same market action and that is a hard market for swing traders because without any market direction, swing traders are without the market's support.

http://www.ivicacharts.com/diagrams/2007/10262007dia.jpg
http://www.ivicacharts.com/diagrams/2007/10262007spy.jpg
http://www.ivicacharts.com/diagrams/2007/10262007qqqq.jpg

There will always will be good trades like FELE (http://www.ivicacharts.com/diagrams/2007/10232007fele.jpg ) which we had, but there will be many less good opportunities. MSFT beat its' numbers and that brought the market higher after the close which could affect Friday's open. We could see a gap up. I will expect a choppier move up for the SPY/DIA, and for the QQQQ, I expect for it to stay in its' daily range. My longer term focus is on the short side, but I don’t expect any significant move before the FED meeting next week. Until then my focus will stay on intraday moves. If you are interested in an explanation how to trade a range market, please look at yesterday's market commentary.

 

[xpertstocktrader]

Market commentary for 10/29/2007

Good day!
Friday saw very sloppy action after a strong gap up. That is the short explanation for Friday’s market action. The day started with a huge gap up and since the QQQQ closed near its' low on Thursday and opened above Thursday's high, the QQQQ was in bear trap formation at the open as well as at its' daily high area. At the same time the DIA gapped under its' 10sma daily resistance area (brown line), while the SPY gapped above its' 10sma daily and had room to reach its' 20sma. Everything was set for a strong run up in the morning; however the indices started with a correction right after the open. The QQQQ was the weakest and almost filled its' gap, but the 20sma on the 60 min held that move. The DIA and the SPY's gap size were not that large and both filled their gaps right at the open. After that most of the day was sloppy and good only for scalp traders. It was a choppy move up from the morning lows and the SPY/DIA broke their morning highs but the action was not tradable for much more then a scalp. When all was said and done, it was a worthless trading day without true strength or weakness. On the 60 min chart we can see that the DIA stayed in its' channel, the SPY reached its' previous high and the QQQQ stayed without any direction after the gap trap.

http://www.ivicacharts.com/diagrams/2007/10292007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/10292007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/10292007qqqq60.jpg

Let’s take a look at the weekly chart to see what we can expect for next week. The QQQQ closed strongly near its' highs and definitely we can see that the bulls are not done and that the QQQQ is ready for new highs with the next resistance (after high) being the $55 number resistance area. The SPY/DIA are not that strong and still have strong resistance to get back to their highs. The SPY weekly volume is interesting. On the weekly chart it is stronger then the selling volume the week before, but if we look at the daily chart, we can see that the volume declined on the bounce from the lows.

http://www.ivicacharts.com/diagrams/2007/10292007diaweekly.jpg
http://www.ivicacharts.com/diagrams/2007/10292007spyweekly.jpg
http://www.ivicacharts.com/diagrams/2007/10292007qqqqweekly.jpg

That is not something that we like to see on a move up when we are looking for a reversal, but on the daily chart we can see that the SPY/DIA bounce from the low is very strong, must stronger then we like to see for selling continuation. There are two options after that strong bounce from the lows. One is a triangle action that will result with a higher lows and lower highs. The second possibility is a reversal pattern (cup and handle) which will result with us trading back to the daily highs. We really can't know yet what will happen because the bounce action is still in process and we don’t know where it will stop. The QQQQ already started with a daily consolidation and right now it is impossible to predict direction, because the correction just started.

http://www.ivicacharts.com/diagrams/2007/10292007dia.jpg
http://www.ivicacharts.com/diagrams/2007/10292007spy.jpg
http://www.ivicacharts.com/diagrams/2007/10292007qqqq.jpg

My focus longer term will be more on the short side, but that can change anytime because if indices will show strength on Monday the QQQQ could see new highs and that could bring the SPY/DIA back to their high areas. Both have resistance overhead but lately we have seen that was not a big problem. The environment has continued to have higher risk because the move up had a decrease in volume and quite choppy intraday action. Generally, the bulls are not dead, they are just wounded. Will they recover or will they die, that is what we must see (rest time after move). My trading focus remains the same. Focus on own ways charts for swing trades and the strongest/weakest names for intraday moves (day, scalp trades). Earning season is still here and don’t forget that news will cause morning gaps which will increase risk for overnight trades. In Conclusion: After 3 weekly buying waves the indices need a correction and I will look for that, but I will be also be looking for another bounce to new highs for the QQQQ. If anyone has any question about the market expectations or chart explanations, please feel free to contact me. I wish you all a nice weekend and a very profitable upcoming trading week.

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 10/30/2007

Good day!
The indices move up on declining volume continued. The day started with a small gap up and the indices held that area all day. On the 60 min charts we can see the type of range action we had yesterday. That kind of action increased trading risk and the number of good opportunities. Scalp traders had some possibilities, while others had a more difficult day, because we didn’t have any support from the market. It stayed in a range all day and because of that most of the day was worthless for trading. On the charts we can see that the indices reached their previous support areas, which is resistance now and the rest of the day just consolidated under it.

http://www.ivicacharts.com/diagrams/2007/10302007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/10302007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/10302007qqqq60.jpg

On the daily chart we can see that the DIA reached its' 20sma daily resistance area (big resistance area). We can also see a daily volume decline which is not the type of action that we like to see for a healthy reversal. The SPY was stuck between its' 20sma daily support area and its' previous support, now resistance area (red line), while the QQQQ continued to fight its' daily high resistance area.

http://www.ivicacharts.com/diagrams/2007/10302007dia.jpg
http://www.ivicacharts.com/diagrams/2007/10302007spy.jpg
http://www.ivicacharts.com/diagrams/2007/10302007qqqq.jpg

Monday was the narrowest day in the last 7 days which will increase the possibility for a trend day on Tuesday. With the FED meeting tomorrow and Wednesday, however, I will use caution with that possibility. For a trend day, it is very important to follow the intraday 10/20sma (5/15 min) and the 60 min high/low area. Those tools will determine the strength/weakness and from there we can recognize what kind of risk management should be used. Overall, I think that the market is at a crossroad and I have been and will continue to be cautious. I take several trades every day continue to use small risk (less then 0.5% per trade) and then I do elimination. At the end that has resulted with several breakeven trades, a few small loss trades and some nice gains, like TTEC and AVP today. I’m a swing trader, but is foolish to push something that is against the market development. So, there is no change from yesterday's commentary. Same focus, same risk and let’s wait for some truly healthy market action in any direction.

Wish you all great trading day!!!!

 

[xpertstocktrader]

Market commentary for 10/31/2007

Good day!
Another choppy pre FED trading day. The SPY and the DIA's opening gap suggested the possibility in the morning of action on the short side, because both opened under Monday's low which could bring sellers as result of a mini bull trap. But that was not the case. The QQQQ broke to new highs and kept the SPY/DIA from a selling continuation. On the 60 min charts we can see the QQQQ's pennant action with a choppy move up on light volume. That kind of action can result with a break down and that was one reason why I was not interested on the long side for more than a fast trade. On the other side, the DIA and the SPY struggled with their 20sma support area with light volume and we can see that before the close both lost that support area and broke down. The volume picked up, and the selling pace was much stronger than the intraday buying volume.

http://www.ivicacharts.com/diagrams/2007/10312007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/10312007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/10312007qqqq60.jpg

The QQQQ closed under its' resistance area (red line) and the SPY/DIA's daily 20sma was too great of a resistance for the first try. Usually the first try to break the 20sma will fall and that was case on Tuesday. We can see that the bounce was on declining volume and I will look for more of a correction from the daily resistance areas, but that can change after the FED meeting that we have today. It looks like everyone is waiting for that moment and because of that I will expect the same intraday action on Wednesday morning. On the daily charts the first support area is the 10sma (brown line) which will be the test for a possible break down to previous lows(SPY/DIA) or for consolidation under the 20sma if that support area will hold.

http://www.ivicacharts.com/diagrams/2007/10312007dia.jpg
http://www.ivicacharts.com/diagrams/2007/10312007spy.jpg
http://www.ivicacharts.com/diagrams/2007/10312007qqqq.jpg

Usually, when we have a FED day, we will see some action in the morning (often is up) and during the doldrums things will settle down and everyone will wait until the 14:15 pm EST FED decision. After the decision things start to pick up very quickly with strong volume and extended bars. This is a very risky time for trading and for me that is the time to sit it out and wait for the market to show its' direction. My bias is on the short side and on the longer daily/weekly correction, but we can never be 100% sure. It is best to wait and see and then come in and follow the market action. Holding open positions into a FED decision is higher risk so please pay attention to that.

Wish you all a great trading day!!!!

 

[xpertstocktrader]

Market commentary for 11/01/2007

Good day!
After the FED’s rate cut the indices broke higher. The QQQQ made a new high while the SPY and the DIA broke above their 20sma daily resistance areas.
The action before the FED was expectable, especially after the gap up in the morning. Lots of time we will see strength in the morning before the FED announcement and we had the same situation on Wednesday. The problem was the pace and the volume. We saw a slightly choppy low volume move up and that was not worth trading if our focus is on low risk setups. It was a scalpers market. Everyone was waiting on the FED announcement and after the news, (rate cut) we saw a very strong 5 min move down with strong intraday volume. That was the first reaction on the 5 min chart and when the indices reached their support areas it was important to see the reaction on the 2nd wave and that one was again very strong and indices moved back to the area they were trading at before the announcement. Usually the 3rd wave will show the final direction and that was on the long side. The QQQQ broke to new daily highs. Intraday volume was strong and the pace was as well and that was a sign that the bulls are still here.

http://www.ivicacharts.com/diagrams/2007/11012007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11012007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11012007qqqq60.jpg

The Indices closed strong and on the daily charts we can see that the QQQQ reached its' $55 whole number resistance area, while the DIA/SPY closed above their 20sma resistance areas, but still under their previous support areas (red line). Now we have a situation where the QQQQ is at a strong daily number resistance area and the SPY/DIA are at their previous support areas which are their resistance areas now. The intraday break was on strong volume and pace and that suggests a strong opening on Thursday, however, nothing is ever certain.

http://www.ivicacharts.com/diagrams/2007/11012007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11012007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11012007qqqq.jpg

I will closely follow the market action in the morning and I’m very interested to see if we will gap in the morning or not. The reason for that is because I have noticed that several times in the past we have gotten the true direction the day after the FED and that is the reason why I closed Wednesday without any open position. In case the indices resistances will hold, we could see a strong move down which could lead to a possible trend day down. In that case I will look for swing short ideas, but if the indices stay strong my focus will be again mainly on intraday moves, day-scalp trades etc. -as we have done over the last few days. Despite the strong close, including the QQQQ high, I don’t like the market action for swing long trades with full risk. I will use the strength possibly for a maximum overnight trade with less risk then usual. If the SPY/DIA will break above their resistance areas (red line on the daily chart) then very possibly they will trade back to their previous highs which is still a very strong resistance area. All in all it is very important to see Thursday's open. From there I will decide what might happen next. If anyone has any questions please feel free to contact me.

 

[xpertstocktrader]

Market commentary for 11/02/2007

Good day!
If you read my Thursday commentary you know why we didn’t want to stay in our overnight positions, despite the strong close after the FED rate cut. I have noticed lately that the true market direction will come the day after the FED announcement, and that is exactly what happened once again. After a strong Wednesday close, the indices opened with a very large gap down, especially the SPY and the DIA. Both opened near their Wednesday low and the break under that was a trap. When we look at the 60 min charts it looks very easy, however, that was not the case. The QQQQ didn’t want to cooperate all day and because of that after the strong selling pressure, the indices fell into a range. I almost quit with my continuation expectation for the afternoon, but then finally in the last hour, the indices started to move with the same strong pace as in the morning. On the charts we can see the buying pace into Wednesday's high and the selling pace on Thursday (blue lines). Obviously the selling pace and volume is stronger which adds to the probability of more of a correction from the weekly highs.

http://www.ivicacharts.com/diagrams/2007/11022007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11022007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11022007qqqq60.jpg

I don’t expect it will go smoothly, because we still must respect the bulls and if we look at the daily charts we can see that the QQQQ is still very strong and still above all its' support moving averages. True, Thursday's selling volume was again stronger then the buying volume, but we have had that same situation before and every time the indices trade back up. What is the different now? Possibly the difference is that the SPY and the DIA made lower daily highs which could be the start of new daily down trend. That is the big difference from before when the indices traded back to new highs. On the daily charts we can see that the red bars are much larger than the green bars and the red bars have stronger volume than that green bars. That is telling us that the bears are slowly taking control of the market. In other words, the bulls are tired now need rest. Will they just rest or will they disappear??? My focus will be on the daily DIA chart. I expect that the SPY/DIA will retest their previous lows, and after a rest we could see the 200sma daily support area which will be also be the equal move support area.

http://www.ivicacharts.com/diagrams/2007/11022007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11022007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11022007qqqq.jpg

At the same time, it is important to see if the QQQQ will join in the selling pressure or if the daily divergence will continue. If the divergence continues, my expectation will be smaller and the market action will be choppier and harder to trade. It is always easier to trade when we have synergy in the market. My bias is on the short side. We have the jobs report on Friday before the open and that news can move the market in either direction. Also earning season is still continuing and because of that I will continue to use less risk for overnight trades. I believe, for now, that the Indices have seen their daily/weekly highs but I don’t expect that the bulls will quit easily, without a fight. We have the possibility for a downtrend on the daily SPY/DIA charts, but we still don’t have it. Because of that it is still important to be cautious. My focus is still, as usual, on the strongest and weakest names. The difference is that for swing trades I’m more interested on the short side than on the long side. On Friday I will expect to see more back and forth action and consolidation after Thursday's strong move down. It is important to not overtrade and lose Thursday's profit. We rarely see two trend days in a row. I will closely follow the indices action, because depending on the consolidation we see on the 30/60 min charts, we can start to determine what to expect for next week. If we have a consolidation near the lows, then we can look for more selling on Monday. If we see a strong bounce, then we can look for choppy daily action which will not be good for swing trades. I will continue to do updates in the room. If anyone has any questions, please feel free to contact me.
Wish you all a great trading day!!!!

Ivica

 

[xpertstocktrader]

Market commentary for 11/05/2007

Good day!
Friday brought the expected action after the strong trend move down on Thursday. The day started with a gap up, but the market didn’t have the strength to hold the gap and started with selling pressure right after the open. The QQQQ was again the strongest while the DIA was the weakest. The gap was filled but that was not the end of the selling pressure. The QQQQ reached its' 20sma daily support area and the SPY/DIA traded to its' previous daily low support area. That is a strong support area and after the extended intraday charts and strong daily support it was quite expected to see the indices start with consolidation. Since the selling pressure was very strong I didn’t expect a strong bounce, more whippy action from the intraday resistance (10/20sma 15 min) to the support (low of the day) area. After the bounce from the low, the indices traded back and formed a 15 min double bottom pattern which marked Friday's low. The rest of the day was choppy, but the last 30 min reversal period showed us that the bulls are still alive and wont give up control that easily.

http://www.ivicacharts.com/diagrams/2007/11052007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11052007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11052007qqqq60.jpg

After the last 30 min strong intraday bounce the QQQQ closed flat, while the SPY/DIA closed in small negative territory. Friday’s volume was strong which suggests that the low will hold for now and the possibility for wild daily range action will increase. The QQQQ daily chart is still strong and in an uptrend. The SPY/DIA daily charts suggest range action between Friday's low and Wednesday's high. I will still look for a daily/weekly correction and I think that we can expect more weakness in the future, but that does not mean that a bear market has started.

http://www.ivicacharts.com/diagrams/2007/11052007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11052007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11052007qqqq.jpg

If a strong daily reversal and a start of a new trend (down) was expected, looking at the weekly charts will tell us why that is not realistic. The QQQQ weekly chart is still strong. The last weekly bar is a doji bar which suggests indecision. This can bring a reversal, but it can also bring a continuation. The QQQQ is still far away from first its' moving average support area and it is still very strong. From that view it is not reasonable to expect a downtrend, but it is more reasonable to expect a correction. Depending on the type of correction we will have either a higher or lower risk trading market. If the correction will be gradual then we can expect more choppy days, which adds risk to the market and makes it harder for swing traders. If we see a strong reversal to the first support area, that will bring less of a trading risk and more daily/intraday trend moves. If we look at the SPY/DIA weekly charts we can see that both are similar.

http://www.ivicacharts.com/diagrams/2007/11052007diaweekly.jpg
http://www.ivicacharts.com/diagrams/2007/11052007spyweekly.jpg
http://www.ivicacharts.com/diagrams/2007/11052007qqqqweekly.jpg

The SPY/DIA are already trading in a whippy range action and their weekly charts suggest that the same type of action could continue. Friday’s volume and reversal support that possibility for now. If both indices stay in these wild ranges than the risk for swing trades will remain higher. For now the safest trading is with intraday trades (scalp/day) and “own way” swing trades. Earning season is slowly going to end, and every day gaps should disappear which should decrease risk for overnight trades. For now I won’t change anything. Since Friday's action was not good for selling continuation on Monday, I will continue to focus on "own way” swings and strongest/weakest intraday moves based on intraday scanning. If anyone has any questions about the market explanation or the chart explanation, please feel free to contact me.
I wish you all a nice weekend

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 11/06/2007

Good day!
After Thursday's strong move down, the consolidation continues. Because of that Monday was a trading day without market support in any direction. The day started with a strong gap down into Friday's low, but for now that continues to serve as a strong support area. The indices moved quickly back to the middle of the range and stayed there during the doldrums. Before the 14:00 reversal period they tried again to retest the strong support area, but again failed and we saw a strong intraday bounce with a move back up into the close. In other words we had a up-down-up –down day. If you look at the 60 min charts, you can see Monday’s action

http://www.ivicacharts.com/diagrams/2007/11062007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11062007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11062007qqqq60.jpg

The Indices are forming 60 min triangles and until they make lower highs, they will form a bear setup (triangle). The support area is very strong and very important. The SPY/DIA support area is its' previous daily low. For the ideal setup on the 60 min charts, it would be best if the indices can stay in a triangle on Tuesday as well.

http://www.ivicacharts.com/diagrams/2007/1106007dia.jpg
http://www.ivicacharts.com/diagrams/2007/1106007spy.jpg
http://www.ivicacharts.com/diagrams/2007/1106007qqqq.jpg

If we take a look at the daily charts we will see why the indices are at an important area. Right now we have a fight between the bulls and bears which results in a 60 min consolidation and if the bears win then we can expect a move down. For the DIA, the next support area is its' 200sma which will be also its' equal move support area. But if the bulls win, then the DIA daily double bottom will hold the support area and we can expect more of a daily consolidation before a new try or a new pattern. If we look at that from a risk level, that means if the indices will break down on the 60 min triangle, we can expect less risk intraday with a trend move down. If the double bottom holds then we can expect more action in a daily range and in that case risk will increase and my focus will stay with intraday moves and faster trades. Because of that I will closely follow the intraday action to see what scenario we can expect. My focus is more with a daily correction from highs, but for tomorrow morning the picture is not clear yet. I will see the open and I will bring all updates to the trading room.

Ivica

 

[xpertstocktrader]

Market commentary for 11/07/2007

Good day!
Most of the day was quite choppy and stayed in a range so consequently there were not many low risk setups. The only way to be active in a range market is to look for the strongest and weakest names and use intraday setups for faster trade, or for possible swing setups. We had a high risk environment for most of the day and because of that I only traded with small lots. During the day I was able to eliminate the slow movers and by doing so I was able to stay with trades that I liked. In addition if the trades improve, then we can add to our positions with new intraday setups. One could have also waited and been patient, because the indices continued in their weekly range action and for now I don’t see an end to it. If we look at the 60 min charts, we can see that we had some action the last hour when the indices broke from their triangle consolidation. The SPY and the DIA have a lot of resistance overhead and any of it can stop it. Because of that it will be very important to follow volume and pace. Because the breakout pace was strong, we can look for a continuation on Wednesday morning.

http://www.ivicacharts.com/diagrams/2007/11072007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11072007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11072007qqqq60.jpg

On the daily charts we can see that there is quite a bit of resistance for the SPY/DIA. The previous daily high is the most important, and for support, Friday’s low seems to be holding for now. The QQQQ is trying again for a new daily high. Remember that the QQQQ formed a weekly doji bar last week, which means indecision. The pattern can break in either direction and right now it looks like it wants to go up. The previous high is its' strong resistance area and in case it tries to breakout again it is very important to follow the breakout volume and pace. That will tell us about the strength or the possibility of a false move. Also the next attempt at new highs could form a double top pattern and we must keep that in mind.

http://www.ivicacharts.com/diagrams/2007/1107007dia.jpg
http://www.ivicacharts.com/diagrams/2007/1107007spy.jpg
http://www.ivicacharts.com/diagrams/2007/1107007qqqq.jpg

After all is said and done, I can say there were no changes to speak of. The QQQQ is still the strongest and looks like it wants to see new highs. On the other side, the SPY/DIA looks like they want to form daily triangles for a possible breakdown. The high risk swing trade environment continues and I will stay in the same mode. My focus will stay the same as it has been for the last weeks. I will look for the strongest/weakest names from intraday scanning for day/scalp trades, and weakest/strongest names from night scanning for possible swing trades. This will help find “own way” charts. We have several open swing trades and my recommendation is to trade them with small risk. We can always add if they improve. Let’s follow the market action day to day and see where that will lead us. My bias for Wednesday morning is up with extra caution on the daily and intraday resistance areas. It is important to see reactions for future possibilities.

 

[xpertstocktrader]

Market commentary for 11/08/2007

Good day!
The QQQQ lost its' 20sma daily support area. That is the main news from my chart analysis. If we look at the past action, we can see that the 20sma area held on the QQQQ, and the QQQQ held the SPY and the DIA, but after Wednesday's selling pressure the QQQQ couldn’t hold that important daily support area. Wednesday's start didn’t show the weak closing possibility. The Indices started with a gap down, but lately the indices have filled that kind of a gap and the QQQQ started in the same mode and made it. But the SPY and the DIA were much weaker especially the DIA which couldn’t break above its' 20sma 60 min resistance area. That was all that we saw from the bulls and the bear dance started with a strong pace. We can see that on the 60 min charts. It was the same selling pace as before the consolidation (blue lines). Now we can see that Thursday's break up from the 60 min consolidation was a false break up. This is the main reason that every overnight trade must be traded with a ssmall risk.

http://www.ivicacharts.com/diagrams/2007/11082007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11082007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11082007qqqq60.jpg

On the daily charts we can see that the SPY and the DIA made new daily lows and with lower daily highs we can say that a trend down has started. What kind of trend down we will see, but technically the SPY and the DIA made new lows, a lower high and again lower lows, which is a down trend definition. We can’t say that for the QQQQ, but we can say that the QQQQ broke under its' 20sma daily support area and under its' weekly doji bar which suggests continued selling pressure this week.

http://www.ivicacharts.com/diagrams/2007/1108007dia.jpg
http://www.ivicacharts.com/diagrams/2007/1108007spy.jpg
http://www.ivicacharts.com/diagrams/2007/1108007qqqq.jpg

Also we can see that the SPY and the DIA still have room for to their daily equal move support area. There is also the 200sma for the DIA on the daily chart. In other words, the indices have room for more selling and that will be my focus for the next days. We took several swing short trades and did nicely with them as they closed near lows, but I chose to protect some of my profits. The reason for that is CSCO's earning report which can bring the indices up in the morning if CSCO beats its' earning numbers. With a bad earning report, it can bring the market down, but since we have had quite a jumpy market lately with lots of gaps in the morning, I chose to protect some of my profits. If they continue lower, I will add again on intraday setups. From my chart analysis, my bias is down in the morning and I will look for an equal move support area. We will see what CSCO news will bring. Wish you all great trading!!

 

[xpertstocktrader]

Market commentary for 11/12/2007

Market commentary for 11/12/2007

Good day!
The markets finished a turbulent week with another huge move down. Despite Thursday's reversal at the close, Friday started with a strong gap down into Thursday's low. Most of Friday traded in a range of choppy action without strong intraday direction and with a pitiful try for a reversal. But in the last hour the fear came back and we saw a strong move down into new lows and a weak close. On the 60 min charts we can see the big red bar formed into the close which pushed the QQQQ to new lows and the DIA/SPY into their previous intraday lows which was their lows of the day.

http://www.ivicacharts.com/diagrams/2007/11122007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11122007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11122007qqqq60.jpg

From a technical view it is not unusual when we have a very strong selling pace ,which we can see on the daily charts, to expect more then an equal move. When the breakout pace is weaker than the pace before the breakout, then we can expect less than an equal move. That is from a technical view; of course major banks warning of future losses helped and completed that expectation. The Indices closed at very strong support areas. Let’s look at the weekly charts. The DIA reached its' 50sma weekly, previous low and 130 number support areas. The SPY reached its' previous low and 145 number support area, and the QQQQ reached its' previous low (red line) and 50 number support area.

http://www.ivicacharts.com/diagrams/2007/1112007diaweekly.jpg
http://www.ivicacharts.com/diagrams/2007/1112007spyweekly.jpg
http://www.ivicacharts.com/diagrams/2007/1112007qqqqweekly.jpg

From that we can see that the indices are at strong support areas and the weekly volume is strong which suggests that we can expect to see a correction (rest) from the lows. That is one scenario. The second scenario is more selling with very possibly panic selling and a huge move down to August's low with heavier selling volume. That is the place the market will go in the future, that is my humble opinion, but right now the question is will that be in the near future or after a daily/weekly correction.

http://www.ivicacharts.com/diagrams/2007/1112007dia.jpg
http://www.ivicacharts.com/diagrams/2007/1112007spy.jpg
http://www.ivicacharts.com/diagrams/2007/1112007qqqq.jpg

On the daily charts we can see a clearer situation and information for a correction next week, and that is CCI. That is indicator that I use to determine oversold/overbought area. If it is under -200area that determines an oversold area and we can see that the SPY is very close and the DIA and the SPY are already in negative territory. If I must bet I will chose correction from lows before future weakness, but from this point it is very hard to say. The Indices are already on a strong move and above I explained several reasons that marked the bottom area, but remember that oversold area can become more oversold. As traders for us it is very important to recognize risk for new setups. Right now is very high. It is especially high for swing trades. Only safe area is “own way” charts. That means charts which are not influenced with the market action and have “own way” and own direction despite the market action. One example is RESP (http://www.ivicacharts.com/diagrams/2007/11122007resp.jpg ). We can see that RESP had its' own way and held very strongly, and that is an example of the charts I will try to find on my weekend scanning work. For intraday setups we must wait for reversals pattern (phoenix). That means I like to see a strong bounce first and after a consolidation (pattern) and the “whole picture” (view on all time frame charts) I will see if is worth a trade or not. Without a reversal pattern every trade will be very high risk and for me it will be more gambling than trading. Since my focus is to find low risk setups, I will be very picky at Monday. I like to see market behavior before any decision. If the Indices will start with the second scenario and start with panic selling I will look for possible intraday moves, because new short swing trades are too risky for me. The reason for that is the possibility of a strong bounces which could bring us into negative area. If anyone has any questions about setups or market expectations, please feel free to contact me and I will help as much as I can.
Wish you all good trading week.

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 11/14/2007

Good day!
What a relief for long traders. The day started with a strong gap up into Monday's range area before the late move down. The Indices held the gap very well after the open without a pullback which was the sign for short traders to cover their positions. It also brought the bulls out and resulted with a move up. The first resistance was the 20sma 60 min and during the midday, the indices held very strongly without a significant pullback. The DIA was the strongest and was the first to break its' resistance area. We finally saw synergy and we were ready for an afternoon continuation into the previous resistance area which we can see on the 60 min charts (red line). We can clearly see the nice trend day up, but during the midday it looked like we could bounce from the 20sma which would have been higher risk because of a reversal possibility.

http://www.ivicacharts.com/diagrams/2007/11142007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11142007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11142007qqqq60.jpg

One by one each resistance area was met with buying pressure (daily 100sma for QQQQ, daily 200sma for the DIA and 60 min 20sma for all). The volume was not as strong as the selling volume, but the reversal pace was strong enough to mark a daily low for now and very possibly it will hold for some time. The SPY closed under its' 200sma resistance area, while the DIA and the QQQQ still have some room for a possible gap up or move up in the morning.

http://www.ivicacharts.com/diagrams/2007/11142007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11142007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11142007qqqq.jpg

Despite the strong close and nice trend day, I still think that overnight trades are higher risk. The reason for that is the resistance that the indices reached by the close and because of the daily weak market. I don’t think that we are done with the bear move down and we could see more overlap from day to day. We can see a gap up on Tuesday's strength, but we could just as easily see a gap down from the resistance area. Because of that I’m still more focused on intraday moves. For swing trades, it is important to protect positions before the close. After every strong move in any direction, it is important to pay attention during the consolidation period to the 10 and 20 simple moving averages as key support/resistance areas. Those areas will be the test for a trend continuation. Right now that is a move down as the main move on the daily charts. On the SPY/DIA daily charts we can see that the last strong move down started from the 10sma daily resistance area and if we are in a trend move down, then we will see another bounce from the same resistance area. I will pay extra attention to that area. The SPY and the DIA are not far from it and still have room to reach it. Be careful with risk management because I believe that we will see more intraday strong moves in both directions this week. Don’t forget that the main move is down and until the reversal pattern we could see stronger moves with stronger pace in that direction.

Wish you all a good Wednesday.

Ivica

 

[xpertstocktrader]

Market commentary for 11/15/2007

Good day!

Wednesday's action shows us how well the indices can act at resistance and support areas. I mentioned in the Tuesday commentary that the 10sma on the daily chart will be the first test for the SPY and the DIA. On the charts we can see that the first try to break it after a bounce from lows held very well. We also had previous support before last week's breakdown. The QQQQ didn’t reached its' 10sma resistance area yet, but its previous support was strong enough for a strong pullback. On the other side the QQQQ closed at its' 100sma support area and the DIA closed at its' 200sma support area. We can see how important it is to recognize support and resistance areas because they are very important for our trading plan and expectations.

http://www.ivicacharts.com/diagrams/2007/11152007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11152007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11152007qqqq.jpg

When we look at the daily charts, we could have expected Wednesday's reaction on the strong resistance areas, but if we look at the 60 min charts we will see that we didn’t have smooth market action nor easy trading. We had a range action almost all day after the morning gap up. The Indices opened higher and under their daily resistance areas and all of them started with selling pressure and filled their gaps right after the open. That was pretty much all the market action in the morning and until the last 30 min we had a range action that is always high risk for new setups. Whenever we have no direction, risk will increase. Most of the day we just waited and waited. I almost gave up and expected a strong close but the last 30 min brought the bears and a strong pullback right into the 20sma 60 min support area. Volume increased and told us that the bears haven't disappeared and the market reminded us that the main direction is down.

http://www.ivicacharts.com/diagrams/2007/11152007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11152007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11152007qqqq60.jpg

Moving averages, numbers and previous highs/lows are great tools to determine expectations and mark target areas. The combination of them coupled with looking at several time frames will help us to make trading plans for possible setups. Now what? What we can expect for Thursday? I will expect over the next few days that the indices will move between Wednesday's highs and Tuesday's lows. That means we must follow reactions on intraday support and resistance areas. If we will see a gradual action after support or resistance areas are reached, then we can expect continuation. If we see a strong bounce from resistance or support areas, then we can expect a wild range action, similar to what we had on Wednesday's 5/15 min charts before the last 30 min break down. If I must bet I will expect the second scenario. For the QQQQ that means action between $51 and $49, for the SPY between $149 and $145 area and for the DIA between $134 and $131 area. For now the charts suggest that scenario is most possible. In trading talk that means focusing on intraday moves (5/15/30 min charts) and focusing on the strongest names when the indices reach support areas and the weakest names when the indices reach resistance areas. If anyone has any questions please feel free to contact me.

Wish you all a great Thursday.

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 11/16/2007

Good day!
The bounce from the 10sma daily resistance area continued. That is the short explanation of Thursday's action. We saw a selling continuation that started late on Wednesday. The Indices reached their support areas which we can clearly see on the 60 min charts. Volume and pace are two very important tools. If we look at the DIA 60 min chart we can see that the selling pace is the same as Tuesday's buying pace, which suggests a double bottom pattern. Maybe the DIA will go a little lower, maybe it will reach its' daily low, we can’t know that, but we know that the bottom of the last move down is very close. The same applies to the 60 min SPY. The QQQQ 60 min chart is a little different. Tuesday's buying pace is stronger and that suggests a bounce from the support area. Since yesterday's move down is not gradual enough for a bull flag, and since we didn’t get a base, I will expect the QQQQ to form a 60 min triangle pattern.

http://www.ivicacharts.com/diagrams/2007/11162007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11162007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11162007qqqq60.jpg

Also the daily QQQQ Thursday bar is a doji which means indecision.. With the late bounce from the selling pressure the DIA formed a similar daily pattern. Also the DIA closed under its' 200sma daily resistance area while the QQQQ closed under its' 100sma daily resistance area. There are lots of resistances on the indices above and lots of support under. I will stay with the expectation that the indices will trade between Wednesday's high and Monday’s low,, or possibly even yesterday's low.

http://www.ivicacharts.com/diagrams/2007/11162007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11162007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11162007qqqq.jpg

That leads us to the conclusion that I will look for a 60 min bounce from the support areas, and I will use that possibility for intraday moves. My focus is the same. I will scan over the strongest names (for 60 min bounce possibility), and the weakest names (in reversal case after bounce). If the indices have a weak open and there is selling continuation that will no longer be my focus because the support areas are very strong and the intraday reversals can manifest with very strong intraday bounces and that is too high risk for me. The Thursday daily chart bar and intraday range action possibility tells us that risk is higher, especially for swing traders. I will be very surprised if Monday’s lows don't hold (unless we see a slightly lower low, which is still a double bottom pattern) and indices will continue with selling pressure. If anyone has any questions, you know where you can find me. I wish you all a nice Friday and upcoming weekend.

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 11/19/2007

Good day!
The consolidation after the strong sell off continued. We saw very whippy action on the intraday charts which is usual for option expiration day. If we look at the daily charts, however it is no big deal and basically was another range day. The Indices continued with the range action that I mentioned several days ago and we can see that very clearly on the 60 min charts. Thirty minutes before the close it looked like the DIA wanted to break down into Monday's low and everything looked very weak. The QQQQ held very strong, however, and stayed in a choppy 15 min bull flag, however in the last 30 min (last reversal period) we saw a very strong bounce and reversal into the middle of the range, which is not unusual for options expiration. That is almost all worth mentioning from Friday’s action.

http://www.ivicacharts.com/diagrams/2007/11192007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11192007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11192007qqqq60.jpg

Since it is the end of the week it is always good to take a look at the weekly charts to see what we can expect next week. The first thing we can see is that the support area is holding. During the week we saw a nice bounce, but the late week's reversal brought the indices back to their previous week's low. Without a strong bounce on Monday we will see a very nice continuation pattern and I will be ready for selling continuation. It also would be quite possible to have another consolidation week as well. If we look at the weekly charts in terms of low risk setups, then it would be best to see a few consolidation bars near the lows, or a gradual correction and then the charts will look good for another swing move down. Monday’s low will remain as the main support area for now and the SPY/DIA have resistance at their 20sma (blue line), while the QQQQ has resistance at it’s' 10sma (brown line).

http://www.ivicacharts.com/diagrams/2007/11192007diaweekly.jpg
http://www.ivicacharts.com/diagrams/2007/11192007spyweekly.jpg
http://www.ivicacharts.com/diagrams/2007/11192007qqqqweekly.jpg

To see the situation more clearly, let’s look at the daily charts. The blue lines are ranges which I have marked after Tuesday's high as I have mentioned in previous commentaries. On the SPY/DIA charts we can see that the lower range line held on Friday and we had a pivot bar with higher volume, which suggests that we could see a bounce from support. The QQQQ stayed above its' 100sma support area. True, the indices are in the middle of the range and it is not easy to predict the action for the next week, but for the Monday I will look for strength and a move up.

http://www.ivicacharts.com/diagrams/2007/11192007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11192007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11192007qqqq.jpg

How strong and what target we can expect will be more easily determined from the intraday action (pace and volume). On Friday I talked about pace and volume and how important they are. I plan to hold a class on that in the near future. It is always important to compare previous action (pace and volume) and from there we can form expectations. The DIA has resistances overhead on the daily charts (200 and 10sma), while the SPY has its' 10sma overhead and not much room for a move up. The QQQQ has the most room for an intra range bounce, because it has more room until its' 10sma daily resistance area. The market will be dealing with two options right now. One is staying in a range and waiting until the 20sma resistance area for a possible bounce into lows or new lows on the daily chart. That is one scenario, consolidation continuation. I believe and I think that will we see that one and I’m prepared for another range week. The second scenario is a strong bounce from the 10sma resistance areas, which is also very possible, bringing the indices into the August lows (50sma weekly for the QQQQ, 100sma weekly for the SPY and DIA) I think that the indices will see that area sooner or later, but for now I believe that the daily/weekly consolidation will continue. If anyone has any questions, comments or suggestions please feel free to contact me. I wish you all a great trading week.

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 11/20/2007

Good day!
So much for a holiday week filled with thanksgiving market action. Monday was one very choppy trend day with divergences all day. The DIA was the weakest and took every opportunity to move lower, while the QQQQ was the strongest and stayed in its' 60 min range, under its' 20sma 60 min resistance area. The Indices acted like they were getting ready to bounce, but every try failed. On the other side, the selling pace and volume were not sufficient for a low risk strong move down. The result of that was choppy intraday action and a trend day for the SPY/DIA.

http://www.ivicacharts.com/diagrams/2007/11202007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11202007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11202007qqqq60.jpg

Both the SPY and the DIA reached their previous low support areas (last Monday). If we look back a bit on the 60 min charts, we can see that the QQQQ is forming a nice triangle pattern, and the SPY/DIA formed a possible double bottom pattern. The 20sma will be the big test for a reversal possibility. On the daily chart we can see that the QQQQ stayed in a range under it’s' 100sma resistance area and the SPY/DIA as previously mentioned formed a double bottom possibility.

http://www.ivicacharts.com/diagrams/2007/11202007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11202007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11202007qqqq.jpg

I am still in a bullish mode. Of course, it is very possible I can be wrong, and in that case I will just follow market action. The QQQQ still has room for a daily move down, but the weekly support and 60 min range is holding very well. The SPY/DIA double bottom possibility and the choppy 60 min selling pace suggests to me that we will see a bounce on Tuesday. Again I can be wrong and in that case I will take few shorts and the day will be good again (like CMI, IBM, CCOI yesterday). Of course we can see a strong move down and some panic action. If we do see selling, I’m interested in day trade short setups only, because for me double bottom patterns are always very tricky to trade. The SPY/DIA can make a slightly lower low and then have a very strong reversal. Anyway, it is time to follow the market action very closely, and remember that we are in a holiday week. Thursday is Thanksgiving Day and that means Wednesday and Friday (half day) will be slow. Wish you all a good day!!!

Ivica
[email protected]

 

[xpertstocktrader]

Market commentary for 11/21/2007

Good day!
After all the intraday mess, the indices finished the day positively. Looking at the daily charts, especially the QQQQ daily chart shows us that the indices had whippy, intraday action. The QQQQ formed a wild doji daily bar with stronger volume. The SPY and the DIA formed the same type of bar plus a daily double bottom pattern. The volume was stronger than average. The chart action suggests that we will see an up day tomorrow, but before we draw that conclusion, let’s analyze other factors. The SPY and the DIA daily charts are in downtrends (lower highs and lower lows). All the indices are still under their 10sma first strong trend test.

http://www.ivicacharts.com/diagrams/2007/11212007dia.jpg
http://www.ivicacharts.com/diagrams/2007/11212007spy.jpg
http://www.ivicacharts.com/diagrams/2007/11212007qqqq.jpg

If we look at the intraday charts, we can see Tuesday's market behavior. The day started with a gap up and strong open action. The QQQQ broke out from its' 60 min triangle and made a higher high. It was the strongest index. The SPY and the DIA reached their 20sma resistance area, but didn’t have enough strength for another consolidation or another step up. Without any consolidation all the indices fell down to new lows with strong intraday volume and pace. Previously the QQQQ low held and the trading channel for the SPY and the DIA held as well. That was not the end, and after a 5 min very choppy reversal H&S pattern, the indices bounced stronger than the selling pace with strong intraday volume. That action trapped the short traders and after all the QQQQ was back in the middle of the range, while the SPY and the DIA were back to their upper trading channel line and 20sma 60 min resistance area.

http://www.ivicacharts.com/diagrams/2007/11212007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/11212007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/11212007qqqq60.jpg

After an intraday view, I’m still looking at the long side for Wednesday, which the daily charts suggest, but I don’t expect any spectacular buying pace or volume. I hope that the market surprises me, but I will expect a choppy and slow move up. Anyway, whatever will be, I will use smaller risk, because after the morning action we can expect that the volume will drop down dramatically, as it typically does on the afternoon before a holiday. Historically the days before Thanksgiving Day are positive. Let's see if Wednesday will be same.
Wish you a good trading day and peaceful holiday.

Ivica