Previous Trade Day
Well Friday was quite a trade day. We had hit all price targets I was looking for and my "feeling" of not breaking the 864 was proven wrong. Opened right around my first 857 point and never managed to get strongly below this point. After breaking 864 we managed to get a few more points out of hit but did not create a new high. After reaching the top in the afternoon the sell off held the 857 perfectly. I had mentioned that I would short over 875 or 5 points below the high of the day if we are to get a sell off. I never managed to get a short in on the upper ranges but I did short as we started selling off just to see it rally again. I had kept my short position regardless as it was a smaller position and I had no choice but to assume a wider risk margin towards 874.
Today
Similar to last week we have a few points to look for. As futures indicate we have to get ready for a bit of a correction here but it is very possible to hold the 845-852 range as support and rally. From a bullish perspective last week was actually positive. We created a base and never managed to break the uptrend or make a new lower low. The market is actually well positioned to take out the 875 range here and rally.
From a bearish side of course we have to be a bit more careful yet again. It seems everyone is under the impression now that a real retracement is needed. All the divergences you are seeing now have to be corrected and there are two ways of doing so, either rally very strong right away to bring divergences inline again or retrace to try again under healthier conditions.
So look for the 845-852 ranges carefully today. 842 is the lower end of the trend channel at the moment so support here should be very strong.
also forgot the mention the 857 range on the upper side. Just as it was extremely important on Friday it will play a big role today. At this point we are slightly below this range so we have to see how the market behaves. A break of the 857 could lead us all the way up to 864 so we have to be careful. Switch to 5-min bars again as we approach/break this range to know where it will head.
ReplyDeleteTrade Plan for today. As I still have a decent short from Friday I am looking to add to shorts between 857-862.
ReplyDeleteIf we turn down and head to 842-848 range I will be careful. Add a long add 842 to hedge against current shorts with planned exit of 8 points above low point. Depending on momentum I may add shorts there after the 8-10 point rally.
futures already below 850, also take a look at TK's observation regarding weekly candles - looks like today's action will confirm or consumate what what the hanging man pattern is suggesting
ReplyDeletehttp://slopeofhope.com/2009/04/24/time_to_cram_for_the_exam.htm
yeah while on the weekly it looks very bearish you have to consider that we held the previous low. That by itself is very bullish and a sign that we could be creating a base.
ReplyDeleteOf course I do not feel it will occur but it has to be considered. We have a chance today to break out of our 3+ week channel for the first time. If that occurs well we finally have something to trade with here on the short side.
I do not think we will see a repeat like last monday in terms of trending down without any retracement so its a bit more difficult to find the good entries today. Regardless the probability of closing below the 852 is very high at the moment.
you're right about holding the previous low.
ReplyDeletebut check this out, looks like todays gap down will have stongly bearish implications from a quantifiable/backtesting perspective
http://quantifiableedges.blogspot.com/2009/04/putting-large-gaps-down-into-context.html
interesting observation. Never considered an analysis based on size of the GAP open. Something to include going forward.
ReplyDeleteAlso, I will be glued to the desk if we see 842 today. While we may be in short term oversold conditions by then I think we have a chance for further downside that will come fast without much of a stop in between.
If everything plays out in my "bearish" best case scenario we should be seeing 814-816 by 11:00 tomorrow.
stopped out again out of all positions. Re-attempted on SDS again after first stop and got taken out again.
ReplyDeleteCapitulated bear here !!!
yea, this is extremely aggravating for any bears, looks like you were right about this Monday not being like the last, but we will have to wait untill EOD to see if we dont close substantially lower than last friday
ReplyDeletewe have been going up today with TICK not confirming the up-move, and breadth is 57-30 negative/positive - another non-confirmation of move upwards since the open.
we have been having non-confirmations of the up moves for quite a while. Yet here we are still above 850. We will get squeezed closer and closer to the bottom trend line of the channel soon and purely looking at charts without any indicators would say break to the upside.
ReplyDeleteAs much as I "want" the market to drop. We are not seeing the confirmations we all need for the drops. All we are seeing is non-confirmations of up moves.
lets see how the 857 behaves now. This is the line that has held now for 2 days.
ReplyDeleteNow we are 857 + soon should see the results. If it breaks do you think next stop 845? Take profit on short as it may still bounce back up? Ypou are right we are scared bears and do not want to get burend. while I was typing this we did break 857.
ReplyDeleteits difficult. We are licking are wounds here and are always torn between taking a quick profit or letting it run towards our real targets.
ReplyDeleteAfter having been stopped out I entered a small day trade position that is up nice now. Entry price is not what I would prefer for a longer term position but I may stay in it if we close below 857.
What I said this morning still applies, 845-848 is the important point now. Of course I would expect a rally there but if it remains below 857 I will add at the top of the rally (after hours) and stay short.
Going to grab some dinner real quick. Should be back for the last hour craziness today. Definitely will be interesting to see the last hour of the day.
ReplyDeleteThat sounds like good strategy. After hours has worked for me quite well. Because the last hour is crazy. Thanks Chris.
ReplyDeletestill holding the short but considering closing out unless we can make it back below 857. Not looking like it at the moment.
ReplyDeleteChrsi, what do you think 864 or 874? are those good short entry. I got out of my shorts around 857-858. at least broke even from earlier position. good, I waited for retracement.
ReplyDeletemost likely staying short here.
ReplyDelete