Tuesday, May 19, 2009

Just an update on the chart posted yesterday

Just an update on the chart I had posted yesterday. I have one ground rule for charting, once I forecast a channel or a pattern and the market is not playing within that pattern I am not allowing myself to move whatever trendlines needed to make that same pattern fit - this applies to the down trendlines I had put in yesterday. I do feel I have reason to expand them here considering we had such an up day today and a huge GAP, additionally I also drew the center line at the 50% level as another guide here going forward.

Futures wise we are already trading at 916 so we have to see if this range holds up. I have to admit, a test at 920 would be quite bearish (EDIT: thx Kat - I meant to say bullish here for a test at 920), but could be explained with the fairly large GAP yesterday and possibly another GAP today. Exceeding 920 however, GAP or not, should bring a new high.

So in summary - we are well positioned today to try to get some decision whether or not last week was the start of a new move or just some large distribution to the next important support level to continue higher.

Just to restate from yesterday.

"I have 2 time windows for a change of trend for [today] - 9:55-10:05 or 10:25-10:35"


  1. April Housing Starts Fall More than Expected, Down 12.8% to 458,000 (story developing)

    Futures falling off the highs but still up.

  2. but they are getting pretty close to yesterday's close. My SDS is about break even. :-)

    Maybe your call for a change of trend will be a down trend... I've waited so patiently and for so long... [tears]

  3. [more tears]

    While many have been waiting patiently, unfortunately I cannot use the word patiently myself and have been trading the downside too heavy, too strong, too fast, too soon. (yeah yeah I am too bearish as you know).

    I am really looking forward to the next 2 weeks to see what fund managers are going to do with their inventories. Do they have similar views to us in terms of the overall outlook for the remainder of the year or are they filled with hope and getting greedy.

    Considering the low amount of liquidity at the moment the next week will be very telling on who is really selling this strong. Once major selling steps (if at all) it will be a domino effect.

    To be honest, I like slow selling as its much easier to trade in/out of positions and continue to improve average prices on the way down. This type of move is normally very easy on bull markets as you are waiting for margin to slowly set in, in bear markets the selling is a lot more rapid and more volatile as long positions will want to get rid of margin very fast to minimize risk on cash capitals.

  4. also the change of trend call ... do not be fooled as this could also be a low. Keep that in mind when trading. Change of trends are based on time cycle, volume and price projections to narrow down a turning point.

    Change of trend does not mean the up or down, or opposite of previous trend. Normally it is, but we have to be sure and wait for volume and price to tell us.

  5. lets hope this was not the low ...

  6. Chris,

    :-( Im scratching my head [not for the first time!]....i was thinking we will set a HOD today then move down towards the 870 range by the close end of week,..and an up trend within the channel next week?...guess im wrong...[again!]
    Thanks for the chart,priceless commentary from you as always!

  7. well which is it ..

    low of the day at 9:55-10:05
    or high of the day at 10:25-10:35

    lolz ... funny and frustrating ...

  8. looking more like the first was the low of the day and we continue higher from here for a test at the 920 ... a bit scary have to admit and will destroy my 5 wave scenario here.

  9. I'm confused, you had stated a test of 920 would be bearish. Did that only apply if it had continued up in morning trading?

  10. ooops ... sorry for the type guys ... I meant to say 920 test was quite bullish even with the GAP

  11. high of the day at 915.67 as we had anticipated as a price target for continuation.

    However, we moved there off the low at 905 which is quite strong. Normally on continuation type trades you will not see any sell off ... moving 10 points off the low shows quite a bit of strength.

    And regarding the 5 wave scenario posted yesterday. We have violated a specific retracement range for this to be valid. It could overshoot due to the large GAP yesterday - but this would be more hoping then rational analysis.

    Have to admit, today definitely did not play out the way I had anticipated. Now I am back paddling trying to clear my head to identify the next move. It was all laid out perfectly in my head =) .... MAX PAIN for sure on this one again.

    Give me some more time and I will provide another update for more direction for the day.

  12. samalamadingdongMay 19, 2009 at 2:04 PM

    where u at chaugsy?