Wednesday, April 8, 2009

Bottom of Channel

I had made an update at the end of the day to restate where we are comparing to the saturday post. As you can see now we are at the bottom of the channel I had outlined. Futures wise we already touched it so it remains to be seen if we can make a combination of higher lows throughout the day today.

Today
Its quite difficult to predict today - first off we have the 10:00AM meeting on the uptick rule that many will wait for before making any larger moves. We have 2 days left this week before going into a long weekend so if you want to build up a position that you want to hold over this time frame it should be occurring today.

On the other hand, I had said yesterday that the break off from the 3 spinning tops was a bit weak - if yesterday was a breakout it should be followed with another day of at least 2% down. I do not think this will occur today but if we get below the 800 we have to watch out.

Unfortunately I did not get to execute my short trades the way I wanted as I was away from the computer when we had build the top - I did not want to chase this trade so I only did some day trades here. If we get another chance at the 822 range here today this may be another chance to try to build a position to hold over the weekend (with protection of course).

21 comments:

  1. Good morning Chris,

    Thanks for last night's analysis. I've got 2 quick questions for you:
    1) What's a spinner? (You mentioned the "three spinners up top" under the SPY Daily section)
    2) The colors of the dots and lines... why blue and yellow?

    Thanks,

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  2. 1) candlestick pattern. Those normally occur on tops. But also possible to be a "hold" mode. However if you have 3 spinners in an island pattern - does not get more bearish then this.

    2) I just choose 2 colors, could have been pink and brown. I just wanted to re-emphasize that we have a MAJOR downtrend line (blue) and the uptrend line of the bear market rally thus far (yellow). You can see we are making lower tops RIGHT along the lines of the major bearish trend line - at the same time we are also getting trending up inline with the rally thus far. Got to make a decision here one way or another.

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  3. ok 2) sounds a bit confusing the way I worded it.

    Better way to put it ... we are not violating the major long bearish trend line and we are NOT violating the mid term bullish trend line either. One will win - one will loose. Which is it?

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  4. opportunity for a short entry you think? or hang on for a while?

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  5. problems with computer again. Posting from my other machine. I would wait for it to get back to the middle trendline in my 60 min charts. There was a bit of strength in this move and it may bring us back to 832-834. Considering we rallied from 808 in pre-market. Also, remember the GAP open up, retrace down, mark the low of the day. So wait first until it attempts to fill the GAP a little so how it sells off there.

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  6. The normal is now abnormal... We actually have a REAL Gap fill here!

    Great analysis the past few days. Thanks!

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  7. back. Sorry was away from computer the last 1.5 hours. Ok looks like it did a complete fill and rallied.

    We did a nice retest at the upper range here and are setup to go one more level higher. We did not sell off after the top test here and stayed on low volume to absorb sellers. 828-832 definitely possible from here.

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  8. what would be best entry for short in your opinion? 830?

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  9. yeah this is a good spot, but keep some on the table in case it does one last spike.

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  10. anything between 826-830 at this point, do not think we will get above 830 from here. Keep in mind this should only be a small trade, risk 4 points to make 12 points. With the long weekend and having gotten back this high I would rather keep it small and short term.

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  11. i would have expected volume to be much higher at this stage???.... :/

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  12. "Fed Staff Sees Slow GDP Growth Returning in 2010: Fed Minutes From March Meeting (story developing)"

    2:00PM meeting minutes. Most were waiting for that one. Lets see how far down this is going to push us.

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  13. Fed actually sounds realistic, not optimistic... no bullish surprises.

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  14. yeah the question is what do buyers and sellers do with this - the past few weeks has been push after push and interpreting information in a bullish manner. It seems we are getting a bit more neutral now - next week is going to be quite informative with bank earnings, will be the last test, and of course the long "crash" weekend; I wonder if GM will do it this weekend for a huge GAP down next week.

    Definitely exciting times, but still hesitant to enter a long term short here, we are not quite out of the woods yet but its playing more and more into the bears hand.

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  15. ok have to leave, keeping my short running with stop loss at 824. (its futures so I can close it easy when I get home tonight).

    Good luck all.

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  16. All of this bullish sentiment started with the rumor that the banks were profitable (excluding writedowns) for Jan/Feb... it would be fitting that we start a major sell-off when we get the news. :D

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  17. any thoughts on where we might close today?

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  18. We need to break 816 to continue lower. After that 808-809 support.

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