Yesterday
We saw quite a turn around day yesterday thanks to our 820 support range. We had hit the first low of the day at 829 (828.91 off by 9 cents). I had posted in the comments any longs should close out here as we will drop lower. We then went straight for the 820 (819.99 off by 1 cent lol). As you could see we rallied but I was getting concerned as the moves lacked any momentum. We had retested the range and broke into 817.04 which is halfway between the 820-815 range that I stressed was acceptable. Here is where buyers stepped in - highest volume day this year and one of the highest volume days thus far in the past few weeks. We hit the 850 range throughout the day with a nice test at that range. I had closed out my long here to protect the gains. I was really hoping to see a break off that range and close right at it or slightly above.
Today
Of course expect a follow through day and another test of the 850 range which is very close. We need to break this range on the upside to be able to sustain a continued rally. The bulls yesterday gave us a glimmer of hope that we need to continue today. So lets make sure its not a dead cat bounce.
How to trade this?
I would place my trades around the 850 range today. Both long and short carry great protection and both are 50/50 - while we had the volume yesterday I still would ask for caution here as this could be topping out soon. Again the best advise for today is to stay out and let the market find its tone. We need strong volume today and a close at least 10 points above the 850 range. That will make me a believer again so we shall see.
This could be setting up like we did off the lows in november so be ready. Wait for any continuation, then try to get in on the retracement back down to previous resistance ranges that should now be support. Here we can enter with a fairly tight trailing stop loss and see how far it will take us.
Friday, January 16, 2009
Thursday, January 15, 2009
Are there any bulls left here?
Yesterday
I had added my cautionary notes in the comments in the morning hours due to our drastic pre-market moves. The call was either for a v-bottom or an ugly day - well we had an ugly day something I would not have expected. As you can see the 848 should have been the turn around - we stopped at 847.92 after the gap open and attempted to hold this range. Here is where I went long. I had stressed the importance of volume and you could clearly see there was none setting in - I closed out the position after 10 minutes - while it was in the reds it was a good protective trade.
As you can see the past 3 days I have been rather bullish assuming a rally and staying one way in my attitude. This is the same hopeful perspective many have in this market place and I was warning everyone about. One of the main reasons for this is my fear of the cycle we are about to enter which can be very dramatic and very bearish leading to new lows in the short term. I am a bit surprised to be honest we have traded this low in such a short time frame - it is definitly setting the tone of things to come.
The rest of the day was driven by fear with minor attempts at recovery. Higher volume than yesterday which is a good sign for us traders as we will have much better ranges ahead of us for trading. I am going to use a quote that many of us have heard already - "be fearful when others are greedy and be greedy when others are fearful" - I think that by itself says enough.
Today
Well from a technical side we are very oversold but take this with a bit of caution. We need to account for fundamentals as this is the fear driver at the moment. Purely technical take a look at the bollinger bands on the daily - we have sliced through the lower range yesterday and as you know this will call for a reveral but it may not be time yet. We closed below the 850 range at 842 and are 22 points away from major support. I am going to make a statement now I normally do not do - we will see a bounce from the 820 range.
Take a look at BAC, AAPL and watch JPM earnings today - those will be drivers for todays tradeing.
Support and Resistance
As we have entered new ranges its time to present some more numbers again.
880-885 = we know the importance of this range - if we are to get a rally this could be the top but I think we will stall before then.
870 - 871 = another mid point of lesser importance but something to consider in order to get into the 885 range
865 = this should be the top from our rally as we have broken the 850 on the downside
848-852 = this will be the key resistance to break on the upside if we are to see any further highs. It should be broken for a short time frame but may not hold.
836 = yesterdays low but its more meant as an orientation as it does not provide strong resistance nor support. The proper support level is in the 829 range which is 7 points away.
815-820 = this will hold as it provides major support in this range. We have only traded below this range for a short term in this recession so it will provide enough support for a small rally.
Long Term
We are about ready to have everything in place to make another long term call and properly fine tune my October and November calls. I apologize for not making this earlier and waiting so long. Thus far I have been correct with those calls so I want to keep that track record as you may understand. The other reason is that I am fearful myself of the cycle that may be coming and want to hold off as long as possible before giving such bad news. We have the potential of possibly 25+% drop from where we are now (842) in a fairly short time frame. Before making a statement like that I rather have all my facts in order with the proper justification.
How to trade?
Well as you can see I have been rather bullish and keep stop lossing out of my longs. Yes I did have a bad beat 2 days ago but lets scratch that one off the list as it was one of those days you wish you could remove from your trade log. Keep in mind while we have been trying to go long we had great protective trades thus having only minimal losses.
If we are to reach the 820 range which is very possible from here we have a long opportunity however we also have a wider risk range. Anywhere from 830-815 is an acceptable range for a long entry so build your position slowly instead of going all in.
Shorting again I would avoid as we can snap at any point from here making your shorts risky and require constant monitoring.
I had added my cautionary notes in the comments in the morning hours due to our drastic pre-market moves. The call was either for a v-bottom or an ugly day - well we had an ugly day something I would not have expected. As you can see the 848 should have been the turn around - we stopped at 847.92 after the gap open and attempted to hold this range. Here is where I went long. I had stressed the importance of volume and you could clearly see there was none setting in - I closed out the position after 10 minutes - while it was in the reds it was a good protective trade.
As you can see the past 3 days I have been rather bullish assuming a rally and staying one way in my attitude. This is the same hopeful perspective many have in this market place and I was warning everyone about. One of the main reasons for this is my fear of the cycle we are about to enter which can be very dramatic and very bearish leading to new lows in the short term. I am a bit surprised to be honest we have traded this low in such a short time frame - it is definitly setting the tone of things to come.
The rest of the day was driven by fear with minor attempts at recovery. Higher volume than yesterday which is a good sign for us traders as we will have much better ranges ahead of us for trading. I am going to use a quote that many of us have heard already - "be fearful when others are greedy and be greedy when others are fearful" - I think that by itself says enough.
Today
Well from a technical side we are very oversold but take this with a bit of caution. We need to account for fundamentals as this is the fear driver at the moment. Purely technical take a look at the bollinger bands on the daily - we have sliced through the lower range yesterday and as you know this will call for a reveral but it may not be time yet. We closed below the 850 range at 842 and are 22 points away from major support. I am going to make a statement now I normally do not do - we will see a bounce from the 820 range.
Take a look at BAC, AAPL and watch JPM earnings today - those will be drivers for todays tradeing.
Support and Resistance
As we have entered new ranges its time to present some more numbers again.
880-885 = we know the importance of this range - if we are to get a rally this could be the top but I think we will stall before then.
870 - 871 = another mid point of lesser importance but something to consider in order to get into the 885 range
865 = this should be the top from our rally as we have broken the 850 on the downside
848-852 = this will be the key resistance to break on the upside if we are to see any further highs. It should be broken for a short time frame but may not hold.
836 = yesterdays low but its more meant as an orientation as it does not provide strong resistance nor support. The proper support level is in the 829 range which is 7 points away.
815-820 = this will hold as it provides major support in this range. We have only traded below this range for a short term in this recession so it will provide enough support for a small rally.
Long Term
We are about ready to have everything in place to make another long term call and properly fine tune my October and November calls. I apologize for not making this earlier and waiting so long. Thus far I have been correct with those calls so I want to keep that track record as you may understand. The other reason is that I am fearful myself of the cycle that may be coming and want to hold off as long as possible before giving such bad news. We have the potential of possibly 25+% drop from where we are now (842) in a fairly short time frame. Before making a statement like that I rather have all my facts in order with the proper justification.
How to trade?
Well as you can see I have been rather bullish and keep stop lossing out of my longs. Yes I did have a bad beat 2 days ago but lets scratch that one off the list as it was one of those days you wish you could remove from your trade log. Keep in mind while we have been trying to go long we had great protective trades thus having only minimal losses.
If we are to reach the 820 range which is very possible from here we have a long opportunity however we also have a wider risk range. Anywhere from 830-815 is an acceptable range for a long entry so build your position slowly instead of going all in.
Shorting again I would avoid as we can snap at any point from here making your shorts risky and require constant monitoring.
Wednesday, January 14, 2009
Sigh ....
Yesterday
Well the market tried its best to make a decision yesterday - highest volume day this year. On Friday morning I had called for a change of trend between 10:30 - 11:30. We did change trends into a sideways trend yesterday - however this is something that normally does not happen. I had posted on 11:31 saying that the breakout and trend change is imminent and 5 minutes later volume picked up. If you look closly at the 1min bars at 11:45 you can see some nice wide ranges with volume - this is where the market needed to break to the upside and it almost occured. While I am glad this call worked out it does not provide a great trade opportunity. Many times sideways action is distribution to absorb buyers/sellers (depending on trend) and then enter a continutation pattern.
Yesterday was a classic bull/bear fight - volume on both sides was equal and we closed the day the same as before. This is a classic sideways sign. As I said we needed a breakout to the upside that did not occur which is a bearish sign. The market lacked the momentum to create the uptrend. To top it off we did not reach my 850 range either - my feel is that the market needs to hit this important support before it can create an upside swing.
Trade Lesson
This one today is just for me. I had a rough day yesterday and regressed in my trading to levels I never thought would re-occur. I was a total beginner yesterday - overtrading, chasing trades, completly ignoring entries, stop losses. I reviewed my trade log at the end of the day, something I do on a daily basis to ensure I trade with proper risk and money management and was sitting just amazed at what I did.
It started off with opening the day with a bad beat. I had entered an alcoa straddle just before close anticipating a strong move just to find both the call and put deep in the reds at the open. That set the tone for the day and for some reason the typical beginners attitude came back "let me try to recover my losses today" - we all know how deadly this attitude can be. No matter if you have a loss or gain - after every trade you start fresh over as if it were the first trade after a 3 months vacation. I had recovered most of those losses by getting lucky trading the ranges (yes lucky as those trades lacked any dicipline). I was almost break even and wanted to close out the day in the greens - I got more risky, used more money and higher leverage and of course got beaten down. Had one of the worst days in 2 months yesterday.
So the advice out of all of this - stick to your trade style at all costs. If you do not get the entry you are looking for have patience and stay disicplined even if that means not trading. And the most important lesson - every trade you enter is a new trade that has no relation to any previous trades you made. I hear many people saying "let me just do this, if I loose its ok as I made money on the last trade" - very wrong attitude - what will you say if your last trade was a loss and the one before, and the one before? Every trade you enter you start with a clean slate.
Ok this lesson was really just for me as a reminder ...
Today
We had our stop yesterday to the downtrend we had created off the 945 peak. Not rallying at our change of trend point yesterday has me a bit concerned and is a clear indication that we will not reach the 945 again on this cycle. The bulls have waited patiently to make their stand and stepped in yesterday just to end the day in a draw. This shows immense selling pressure in the market place with anticipation of further declines.
While I anticipate we will see the 900 range again in the next 6-7 trade days it should remain as the top there and then decline again.
How to trade this?
Due to our draw yesterday I would recommend sitting this one out to see if there are any bulls left in the market place that can push the market higher. If we are to reach of the 850 range we have a great long chance again. 862 yesterday was very close to this range so watch volume carefully as we break yesterdays low. On the short side - we could see the resistance levels as we have stepped down. 871 and 877 are key resistance areas that could provide short term shorts - the key here is on volume and how we arrive at those numbers. Both of those shorts carry a bit more risk then I would like so be cautious at those levels - technically we are still in a bit of an oversold condition.
Well the market tried its best to make a decision yesterday - highest volume day this year. On Friday morning I had called for a change of trend between 10:30 - 11:30. We did change trends into a sideways trend yesterday - however this is something that normally does not happen. I had posted on 11:31 saying that the breakout and trend change is imminent and 5 minutes later volume picked up. If you look closly at the 1min bars at 11:45 you can see some nice wide ranges with volume - this is where the market needed to break to the upside and it almost occured. While I am glad this call worked out it does not provide a great trade opportunity. Many times sideways action is distribution to absorb buyers/sellers (depending on trend) and then enter a continutation pattern.
Yesterday was a classic bull/bear fight - volume on both sides was equal and we closed the day the same as before. This is a classic sideways sign. As I said we needed a breakout to the upside that did not occur which is a bearish sign. The market lacked the momentum to create the uptrend. To top it off we did not reach my 850 range either - my feel is that the market needs to hit this important support before it can create an upside swing.
Trade Lesson
This one today is just for me. I had a rough day yesterday and regressed in my trading to levels I never thought would re-occur. I was a total beginner yesterday - overtrading, chasing trades, completly ignoring entries, stop losses. I reviewed my trade log at the end of the day, something I do on a daily basis to ensure I trade with proper risk and money management and was sitting just amazed at what I did.
It started off with opening the day with a bad beat. I had entered an alcoa straddle just before close anticipating a strong move just to find both the call and put deep in the reds at the open. That set the tone for the day and for some reason the typical beginners attitude came back "let me try to recover my losses today" - we all know how deadly this attitude can be. No matter if you have a loss or gain - after every trade you start fresh over as if it were the first trade after a 3 months vacation. I had recovered most of those losses by getting lucky trading the ranges (yes lucky as those trades lacked any dicipline). I was almost break even and wanted to close out the day in the greens - I got more risky, used more money and higher leverage and of course got beaten down. Had one of the worst days in 2 months yesterday.
So the advice out of all of this - stick to your trade style at all costs. If you do not get the entry you are looking for have patience and stay disicplined even if that means not trading. And the most important lesson - every trade you enter is a new trade that has no relation to any previous trades you made. I hear many people saying "let me just do this, if I loose its ok as I made money on the last trade" - very wrong attitude - what will you say if your last trade was a loss and the one before, and the one before? Every trade you enter you start with a clean slate.
Ok this lesson was really just for me as a reminder ...
Today
We had our stop yesterday to the downtrend we had created off the 945 peak. Not rallying at our change of trend point yesterday has me a bit concerned and is a clear indication that we will not reach the 945 again on this cycle. The bulls have waited patiently to make their stand and stepped in yesterday just to end the day in a draw. This shows immense selling pressure in the market place with anticipation of further declines.
While I anticipate we will see the 900 range again in the next 6-7 trade days it should remain as the top there and then decline again.
How to trade this?
Due to our draw yesterday I would recommend sitting this one out to see if there are any bulls left in the market place that can push the market higher. If we are to reach of the 850 range we have a great long chance again. 862 yesterday was very close to this range so watch volume carefully as we break yesterdays low. On the short side - we could see the resistance levels as we have stepped down. 871 and 877 are key resistance areas that could provide short term shorts - the key here is on volume and how we arrive at those numbers. Both of those shorts carry a bit more risk then I would like so be cautious at those levels - technically we are still in a bit of an oversold condition.
Tuesday, January 13, 2009
Time is up ...
Yesterday
Well another steep down day. After breaking the 885 range in the morning hours the market continued its slide without any type of rally. I did try to play the long side yesterday at the 880 range and had to close out in the reds after it was clear we were not going to rally. As I mentioned a break of that range will bring us back into the 857 range - however keep in mind this was not a shortable down run as we are quite oversold at the moment.
Today
Well time is up for the market and we need to make a decision today. On Friday I had called for a change of trend in the morning hours today so lets watch the morning action carefully. One thing to look for today is volume. Yesterday it was very clear and easily visible how the market traded - looking at the 1min spy bars you can see how every strong move was only apparent in the down bars and any minor rallies were beaten down as they occured on lower volume. So watch for those signs today and wait for momentum to step in here.
Looking at the daily S&P chart we have 0 divergence on the MACD, 45 on the RSI (which is pretty much 50/50) and momentum pretty much in the smack center as well. We have spliced through the 50dma and 20dma so we need to make a move above this range in the next 2 days.
We are technically still in a mid term uptrend so we need to make a decision here today or we will continue on our slide back and resume the primary bear trend.
How to trade this?
Of course the short side carries tremendous risk here so stay away. On the long end I have to emphasize again that we have a great chance if we are to reach 857. Even if the market is done on the upside we should see at least 20 points off this range. We had hit the 864 as the low of yesterday which is only 7 points away from my target - yes we rallied into the close but this was short covering as many shorts want to look in profits before alcoa earnings.
Keep in mind we can overshoot the 857 so my final call for the low would be in the 852 range so watch volume as we step into the 850's to see if we have buyers step in.
Good luck today for everyone. I am pretty confident we will get to see a great trading opportunity today with a very high risk/reward ratio. If you have any questions during the days trading please post them up in the comments and I will try to answer them as quickly as possible.
Well another steep down day. After breaking the 885 range in the morning hours the market continued its slide without any type of rally. I did try to play the long side yesterday at the 880 range and had to close out in the reds after it was clear we were not going to rally. As I mentioned a break of that range will bring us back into the 857 range - however keep in mind this was not a shortable down run as we are quite oversold at the moment.
Today
Well time is up for the market and we need to make a decision today. On Friday I had called for a change of trend in the morning hours today so lets watch the morning action carefully. One thing to look for today is volume. Yesterday it was very clear and easily visible how the market traded - looking at the 1min spy bars you can see how every strong move was only apparent in the down bars and any minor rallies were beaten down as they occured on lower volume. So watch for those signs today and wait for momentum to step in here.
Looking at the daily S&P chart we have 0 divergence on the MACD, 45 on the RSI (which is pretty much 50/50) and momentum pretty much in the smack center as well. We have spliced through the 50dma and 20dma so we need to make a move above this range in the next 2 days.
We are technically still in a mid term uptrend so we need to make a decision here today or we will continue on our slide back and resume the primary bear trend.
How to trade this?
Of course the short side carries tremendous risk here so stay away. On the long end I have to emphasize again that we have a great chance if we are to reach 857. Even if the market is done on the upside we should see at least 20 points off this range. We had hit the 864 as the low of yesterday which is only 7 points away from my target - yes we rallied into the close but this was short covering as many shorts want to look in profits before alcoa earnings.
Keep in mind we can overshoot the 857 so my final call for the low would be in the 852 range so watch volume as we step into the 850's to see if we have buyers step in.
Good luck today for everyone. I am pretty confident we will get to see a great trading opportunity today with a very high risk/reward ratio. If you have any questions during the days trading please post them up in the comments and I will try to answer them as quickly as possible.
Monday, January 12, 2009
Still no decision
Previous Trade Day
Well I have to admit I was quite surprised at Fridays trade action. We had a very strong move in the morning hours as anticipated but the remainder of the day remained very tight. We absorbed the unemployment which turned out to be a number many expected - that by itself can be a good thing sometimes. However, after the initial drop nothing happened. I would have expected much stronger moves throughout the day but we did not see anything that would resemble a decision for a trend.
As you saw in my note I would not feel comfortable holding over the weekend - I guess many others thought the same way and started pusing the sell button just before the close. We closed right at the 890 range which is my confirmation for a break for the downside - however we did not break it - we had a few points below at the 888 but went back into the close. The market is trying its best to avoid a breakdown off this range as it will accelerate selling.
Today
Earning season starting again with many expecting horrific numbers. This in fact could help the market in case any - even if its just one out of five will report numbers that are better then expected - kind of like "I only lost 3 billion this time and not 3.1 like last time" =)
Just as we rallied off our lows in November the market is looking for any excuse to buy. I still feel we have one last push left in the cycle, however we have to account for the fact that the top may already be in.
Mid Term
As we have a few new readers here I would ask you to read my older posts as well. This one was done back in October giving you a long term outlook http://chaugner.blogspot.com/2008/10/where-are-we-headed-long-term_29.html
The other one in November when we had created the lows http://chaugner.blogspot.com/2008/11/is-this-bottom.html
When looking at the daily chart of the S&P we have a very strong reversal signal building. While we are creating higher peaks our momentum is dropping and creating lower peaks - this is a very bearish sign and considering this is a 1+ month pattern we have to be cautious for a rapid drop back to retest the lows.
The market is currently setup to give us one last push. This is also driven by Obama with the hope of changes and leadership that could help us out of this crisis with a black eye instead of broken legs. But I think many of us know this one will break legs - denial sometimes is the best thing you can do after severe losses. Consider this - you have lost 50+% of your money that you have worked very hard for in the past 5+ years - poof and it went away. Many do not want to accept those realities and continue life filled with false hope. Ok back to technicals as we could be sitting here for hours analysing how we will continue.
How to trade this?
We will have an opportunity with great protection to go long at the 885 range as a break into 870's would signal a run to 857. However, as you can read in my mid term review it will be difficult to justify holding this for long. On the short side I would be cautious as we have dropped quite a bit quite fast. We have some very short term opportunities at the 900 and 911-912 range but those could be broken if we get the hope of better earnings results.
Lets try one of the hardest things to do - patience. Wait it out and see where the market will take us before entering positions. Maybe I have become too cautious of the enviornment but please bear in mind where we currently are time wise. We need to know the mid term direction of the market to be able to properly hold positions - and at the moment we have none so waiting on the sidelines and staying small in your trades is the best advise I can give.
Well I have to admit I was quite surprised at Fridays trade action. We had a very strong move in the morning hours as anticipated but the remainder of the day remained very tight. We absorbed the unemployment which turned out to be a number many expected - that by itself can be a good thing sometimes. However, after the initial drop nothing happened. I would have expected much stronger moves throughout the day but we did not see anything that would resemble a decision for a trend.
As you saw in my note I would not feel comfortable holding over the weekend - I guess many others thought the same way and started pusing the sell button just before the close. We closed right at the 890 range which is my confirmation for a break for the downside - however we did not break it - we had a few points below at the 888 but went back into the close. The market is trying its best to avoid a breakdown off this range as it will accelerate selling.
Today
Earning season starting again with many expecting horrific numbers. This in fact could help the market in case any - even if its just one out of five will report numbers that are better then expected - kind of like "I only lost 3 billion this time and not 3.1 like last time" =)
Just as we rallied off our lows in November the market is looking for any excuse to buy. I still feel we have one last push left in the cycle, however we have to account for the fact that the top may already be in.
Mid Term
As we have a few new readers here I would ask you to read my older posts as well. This one was done back in October giving you a long term outlook http://chaugner.blogspot.com/2008/10/where-are-we-headed-long-term_29.html
The other one in November when we had created the lows http://chaugner.blogspot.com/2008/11/is-this-bottom.html
When looking at the daily chart of the S&P we have a very strong reversal signal building. While we are creating higher peaks our momentum is dropping and creating lower peaks - this is a very bearish sign and considering this is a 1+ month pattern we have to be cautious for a rapid drop back to retest the lows.
The market is currently setup to give us one last push. This is also driven by Obama with the hope of changes and leadership that could help us out of this crisis with a black eye instead of broken legs. But I think many of us know this one will break legs - denial sometimes is the best thing you can do after severe losses. Consider this - you have lost 50+% of your money that you have worked very hard for in the past 5+ years - poof and it went away. Many do not want to accept those realities and continue life filled with false hope. Ok back to technicals as we could be sitting here for hours analysing how we will continue.
How to trade this?
We will have an opportunity with great protection to go long at the 885 range as a break into 870's would signal a run to 857. However, as you can read in my mid term review it will be difficult to justify holding this for long. On the short side I would be cautious as we have dropped quite a bit quite fast. We have some very short term opportunities at the 900 and 911-912 range but those could be broken if we get the hope of better earnings results.
Lets try one of the hardest things to do - patience. Wait it out and see where the market will take us before entering positions. Maybe I have become too cautious of the enviornment but please bear in mind where we currently are time wise. We need to know the mid term direction of the market to be able to properly hold positions - and at the moment we have none so waiting on the sidelines and staying small in your trades is the best advise I can give.
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