Well after seeing the pre-market action we had to be ready for selling off the open. We attempted a GAP fill that failed and then continued lower in a lowering wedge formation. We were down around 2% and sell volume was dropping, bears were not stepping in with strength and we turned around to recover most of the days range.
I had talked about a change of trend yesterday and of course it did not materialize as we had expected.
"I had mentioned that we should be seeing a change of trend today. Time wise the most likely scenario is the 12:30-12:45 window for a potential top."
The low of the day occurred at 12:39 and we changed trends there to rally into the close. Of course I expected this to be the top as my change of trend call played out a bit different in my head, however, we cannot ignore important turning points in the market and this was one of them. Not seeing strength to the downside yesterday was quite bullish. Yes it just seemed like another day on the market but it "should" have sold off.
Looking at the daily, yet again another indecision to show. Go back to April-May of 2008, very similar ranges there with lots of indecision but a slow uptrend. Of course this time around its a bit worse.
Today
Its quite different to continue to make predictions from here to be quite honest. One thing we can take from yesterday is that institutions are not selling into the rallys - maybe its the hope of things actually continuing on the upside for a bit longer. Bears are not stepping in because they have the fear of more upside. And new money is entering the markets - again AAPL is one of the "crowd" stocks I watch for confirmations - and its just going up and up and not showing the same signs of indecision.
So how are we going to trade today? Well, not going to try because quite frankly its not very predictable. Patience is important now and our time will come, whether bull or bear. I have to be quite honest, this could go on for a little while longer, especially next week earnings for banks, while many know it won't be good any surprises may create another upleg - I do not believe this will occur but it will give more indecision.
I will post in the comments if I see something worth mentioning today or if we get a strong day into any direction. Anything could happen =)
EDIT:
Just an FYI. Futures are down already at the lower side of this channel. So watch for support as the 50 unit average moves up and the lower part of the channel moves down. If we break this lower part we should be going back to 804-808 here where we should find support.
ok as I am looking futures more and more carefully its setting up for the big move to start. Of course I want to see behavior after the GAP open. Re-read the gap trade lesson on right bottom. It is my feel we will fail at filling and not even get to the 32% range. Best case is yesterdays low.
ReplyDeleteTake a look at the daily candlesticks again. Breakout to upside on lower volume, 3 spinning tops with each of them with lower tops. This by itself is a very strong reversal sign so we have to see if it plays out. If we can get 2 days of big sell off our downtrend has started.
Re-read the Saturday post on the last graph with the yellow dot. This is exactly what should be occurring here in the next 2 days. I had assumed it would start yesterday but a GAP down this large is quite a sign. So watch the rally off the open very carefully.
Trade wise I may enter 25% short at open (going against my trade rules), then add 25% every 10 min as we start to fill the gap. If we continue lower hard I may hold off to add the other shorts.
Here are my short entries. I am going to assume a bit more risk then usual today so here we go.
ReplyDelete50% 822
25% 827
25% 832
Stop at 836.
I do not think we will reach the last level so I may go 50% at the 827-828 range but keep the same stop of 836. As you can see I am taking almost 12 points of risk which is normally something I do not do but it is my feel that the primary trend has resumed/restarted. I will hedge my shorts with spy call options at 827 just in case.
All of this of course only if we rally off the open which is very likely. If we trade down right away I will have to look for another entry after this first push is done.
Again I was wrong at 741, 780, 800, 828. 4 wrongs in the last month for my short entry. Cost me quite a bit (and I am sure I was not the only one that got caught by surprise). I had ignored very bullish signs with my overly bearish sentiment and as a result lost my edge. This time around however, we have too many strong arguments for the bearish case.
according to geometric price/time analysis im getting action zones at 10:15, 11:20 and 3:25pm today
ReplyDeletethis is off a 5 min chart so margin of error is +/- 10-15 min
yeah quite a difficult day now that we gapped this low. Its difficult entering such an unprotected short term oversold condition here as a short. I do expect a retracement towards the 822.
ReplyDeleteAlso watch the 12:15 time frame today. This could be a retracement top or daily bottom.
http://screencast.com/t/gm62Okoy
ReplyDeleteChris, please confirm or amend my hns observation
Thanks
yes you are 100% correct, if you draw a shoulder line as well you can see that they are almost parallel. I actually just went short here a few minutes ago as I saw that we were not going to be able to take out the 826 target. I was a bit hesitant after I saw the first part of the retracement.
ReplyDeleteBut keep in mind that it can very likely stop before as it may just be creating a base. Thats actually what I assume is going to happen here. We have MANY MANY bearish pattern over 60min charts and even dailies but are not able to complete them. That has me quite concerned and makes me very uneasy holding any short on the smallest support point.
keep in mind that I still believe we will be starting the major downturn very soon. But we have to be careful and it seems any support point here turns into a buying opportunity. However, the buying is getting a lot less intense comparing to last week.
ReplyDeleteAlso a lot of shorts are covering just like I am on any type of support range that can also explain some of the buying here. When looking at volume any up trends are a lot weaker now. We are getting closer and closer to "tipping" over.
keeping emotions out
ReplyDeletehttp://screencast.com/t/CEQQM1DSuZL
http://4.bp.blogspot.com/_hE3pp93emY0/SduAOiysJhI/AAAAAAAAAFM/UCmG8ovwaRM/s1600-h/daytrade.GIF
ReplyDeletewhat I am seeing at the moment.
target below the low of the day.
ReplyDeleteit looks like selling pressure is coming. 808 chaugner or lower? would you cover your short around 808?
ReplyDeletecover at 809-810
ReplyDeletejust covered some of mine once we hit low of the day. Going to cover the rest at the above target.
ReplyDeletewell looks like that descending triangle worked out ;p
ReplyDeleteclosed out. We may get a bounce here before reaching the 810 range.
ReplyDeletegood call! any quick thoughts about tomorrow? gap open on down and downtrend again you think?
ReplyDeletepretty difficult to say at the moment. The last hour is fairly important today to see if we get short covering, new buying, OR new selling.
ReplyDeleteMany that bought on the pullbacks may be looking for a way to get out as the market is not able to repeat the "crazy 2 week bull run" we had in march. Many thought it would just continue going up and here we are back in the same range we have been at for over a week.
Remember the three "i"'s. Innovator, imitator, idiot ... I think the innovator already sold, imitator got in before we broke into 800, and idiots bought in above 800. (ok I am reaching a bit here to justify my bearish stance so take it with a grain of salt).
Thank you
ReplyDeletewhile we have the end of day rally here its fading and not as strong as the previous ones. It seems short at the end of the day has worked out in the past few sessions ... (not going short FYI)
ReplyDeleteas I post this I see this HUGE down bar 1 min before the close. Quite surprising and a change from previous sessions. Going to post up some more graphs soon ...
ReplyDelete