Tuesday, June 2, 2009

Time to fire up the grill for some beef?

I made quite a large post yesterday to do a more detailed review of what happened during the day. It was quite an important day with lots of information to absorb. Technology breaking out, energy breaking out yet my key drivers for market rallies are lagging - especially financials. Take a look at AAPL - what I consider the noob index - 5 up days in a row showing the race for not being left out of this rally. Additionally technology had another win yesterday thanks for CSCO being added to the DOW. On the energy side we have a weak dollar driving global commodity prices. We have a bit more to go on the dollar side I think but this move should be over soon. If the dollar does not turn here soon - and by soon I mean as early as this week potentially next we may have some more difficulties ahead - bear or bull.

"Ok we have quite a GAP to deal with here. Forget about my GAP trade lesson you can find on the right hand side. This GAP here will be very important and only gives 2 scenarios. Scenario one is the most likely with the Open price today being the low of the day (give or take 2-3 points) and a rally higher to close the day at 945 or the last resistance level of 956."

While we did not get to the 956 level, the most likly scenario played out perfectly with the exception of not closing at the highs.

As we are currently navigating at the extreme end of the spectrum it is quite difficult to make a call here. 3 up days in a row, one of them with a break through major resistance. We had no significant pull back on S&P500 yesterday so I would expect some profits being taken today. On the other hand - as I had described on the 120min chart yesterday there is a very good potential that we continue rallying. Trying to catch a long at this point is impossible so even if you are a bull, long term or not, you will be looking at protecting yourself via short plays today.

The only pull back we had seen yesterday was a test at the 937 range yesterday - this should hold as support if we continue a bit more on the upside.

My best case scenario for today - that is for both bulls and bears is a break of 947 and a test at the 954-956. I will be going short at this level fairly heavy and will decide after the entry if this is going to be a short term or mid term play. The market will retest breakout ranges so its a low risk trade that will give me a chance to get out if I am wrong without much of a loss.

I will be posting updates via comments again today whenever I see important turning points.


  1. Chris, thanks for the info; I take it you haven't seen any turning points yet.

    Any comments about the ADP report tomorrow, or the oil report. Thinking these could create a pivot point for the current market.

    How long ahve you been studying the markets? I've been at this for about 2 years (still struggling).

    Thanks..... Steve

  2. Steve, no turning yet. Seeing distribution here which will indicate that we have a bit more room on the upside unless we get any surprise in terms of news. This week is not very news heavy and the tone for the week had been set yesterday.

    Its quite a slow day today, we had all the action in the morning and now coming to a slow halt. Based on what we are seeing here we will probably have a spinner today with a close around current prices (942).

    Have not been studying markets all that long to be honest and still struggling myself as you can see. But getting there slowly but surely =)

    Been writing about markets for a bit longer then a year. Before I used to send emails to a distribution group and then I got with it and finally made a blog mid last year ... and here I am.

  3. samalamadingdongJune 2, 2009 at 1:25 PM

    chaugsy agree we'll close around flat on the day. you do get the employment report at the end of the week. think 970ish is in the cards.

  4. My targets are very similar. 956 needs to be tested first for me though. Any upside after that will quickly be reversed within less then 24 hours. We may get a 956+ for the week but should close below it for weekend.

    If you were to ask me now, and this is not a bear/bull talking I would expect weekly close to be below 945 - but at this point its more a WAG indicator based call. Will need to see end of tomorrow first before I can try to be more accurate ...

    WAG = wild ass guess !!!!

  5. it looks like 956 in on the way now Chris. I think down tomoorw. Rally from friday and next week we may see 960 + and then major down days next mid week .

  6. today "should" stay within existing range here. 956 or possibly a bit higher tomorrow with some pull back for Friday. Thats the "most obvious" plan now but we all know that the market does the most obvious things - well - not so obvious.

    Seems Steve woke everyone up here =)

  7. because the market is so slow today added a poll to the site =)

  8. BTW am long spx from 943. will be out by 955.