Yesterday
I posted my daily review again yesterday. As the title said, the market had me fooled, it was setting up perfectly for what I anticipated, however, I did not see the breakdown towards the 710 I was hinting at and the market traded lower a bit too slow. When looking at volume and downtrend angle it was not doing what it should have done - so as a result, yet again, when the market does not do what you think its going to do change your strategy.
Today
Well, we had our indecision and strong signs of weakness for the bulls yesterday. The chances of the bulls seeing their day today are fairly slim as the decision was required yesterday.
Today yet again becomes a bit more difficult to forecast. We closed at the 721 range just shy of the 724 I said we needed to close above for us to see the rally continue. We are still very close to our major targets ranging from 731-741. Quite a wide range and also difficult to trade, especially today.
In favor of the bulls, we did not get to test the 709-710 range yesterday, something that we needed to test and possibly break before we can continue on the downside.
As the decision ranges are fairly narrow we can make some assumptions and wait for signs to tell us where we will turn. 710 as the bottom and downtrend signal, 731-741 as the top end of the range. Considering MACD is at 0 we will have a wide range of gains to follow after the decision is made - 778-780 on the upside and of course our mid term bottom target at 620-640 on downside. So wait for those signs to manifest itself as a decision for our direction.
How to trade this?
We do actually have some great trades ahead of us here. 710 range for the longs with decent protection. From a long side you get 2 tries here, 709-712 and 701-704. This however is not something I would fade into as the downside risk is too large. If you do end up going long make sure your stops are tight.
On the short side, 731-741. If we are to reach this range I would still consider a fade on the short, though if at all possible, try to add some hedge while fading into the position to minimize losses if we do end up turning higher with a break of 741.
If we end up reaching those ranges look for my comments again for more precise guidance. The past few days I have been more active in the comments due to the difficulties of the current enviornment.
I'm assuming this is a pretty nice short setup with heavy resistance in the 740-750 range. F financials and the M2M smokescreen. How you guys feeling?
ReplyDeleteyeah I am short at the moment and got rid of my long protection. Though the market is itching to hit the 738-741 levels from here. I may add some more hedge if we go back down to 730 for my current short position.
ReplyDeletethere are quite a few positive signs. 60 min chart.
ReplyDelete100 unit moving average, we broke through but created spinning tops there, MACD divergence dropping while price is increasing, volume dropping as well as we keep on moving up. Momentum peaks trending lower again as we increase in price.
Its definitly not an easy trade here and carries a bit of risk. perfect entry would be 738 and I think we may get a chance.
We have QUAD options expiration next week. VIX should skyrocket and good chance of setting an intermediate bottom then I would think? I'll cut my losses on anything high of 750. Looking for more of a swing trade here, so I've been scaling into my shorts from 730 and up, trying to build a nice snowball for the roll downhill.
ReplyDeleteis this (739) a good entry for short?
ReplyDeleteI think it's worth a stab for sure, I'm holding all positions until we hit the 750-752 area. Until then I don't buy this rally.
ReplyDeleteSick call on 738 area chaugner. Chances are we just printed a top...i hope :) Guess we'll find out in the next 2 hours.
ReplyDeleteback from lunch =) Interesting development for sure. I guess I was quite off on my top call yesterday. Can;t win them all but still a bit embarassing.
ReplyDeleteAs you can see we have more signs for reversal here, bearish rising wedge inching up more and more while volume is dropping. I know its difficult holding a short here when you see it going higher but we have yet to seen breakout signs towards the top range.
of course keep in mind. When it comes to technicals you can overanalyse a situation as there will always be signs to support you in a position. I am confident this is not one of those times. The important time frame to look for now is the 2:30-2:45 window that will open up in the next hour. Here we should see some decision making occur.
ReplyDeleteWell I certainly spoke a little soon! Busted through 741. Still adding on my short up until 750-52. Is that where your next major resistance is?
ReplyDelete745 = 38% retracement level from the 87X top in feb 9th
ReplyDeleteFYI we need to get back below 740 in the next 15-30 minutes, preferrable below 738, otherwise the chances of continuation above 738 are very likly into the close.
ReplyDeleteWatch the 20 day sma at 744.73 currently. After that 750.
ReplyDelete