Previous Trade Day
The morning hours setup just as predicted. We did get our continuation, topped out at our predicted 840 range during morning hours including retracement. Here is where the bulls needed to continue on the upside and failed. As I had mentioned previously any attempts we have had on the upside has been weak and on much weaker volume compared to previous down moves. You all know what I think about weekends, and I keep on stating the dangers and risks, the market pretty much fell over in the last 4 minutes of trading.
So summary, DOW closed at the second lowest point ever during this recession, S&P on the trendline and failed the previous day reveral candle.
Today
Looking at pre-market we are at our lows already. We have been waiting and waiting and I have been trying to anticipate a market move out of our range and on every decisions, whether it was up or down we have been brought back into it - no more. Finally here ....
I have said last week that the trend change is in even before our confirmation, while we did have a big move off the lows on thursday, you could sense in my frustrating review that this was yet again another jump without any strength behind it.
One of the things we have not talked about yet is what will happen once we enter this new range. We are now entering trade ranges we have not seen in a while and are only 60 points away from our previous bottom, so I would be using this as my first target. I think many will be surprised at the strength of the down moves, bringing back memories of october 2008. The market has gotten used to bad news and narrow range with recoveries giving you a chance to get out of bad trades - this should not occur anymore and many will be struck by surprise.
I see a change of trend on Thursday around 2:45-3:15 so watch it there for a possible short term bottom - if this call holds true you can see that we have quite a few days of down moves.
How to trade this?
Well, time has come, now how to properly trade this, keep in mind we have to follow our trade rules, no trade in the first 15 minutes, your finger will be itching in the morning and I urge you to wait yet again until we are into the market for at least 15 min. We are going to be fairly oversold once we open due to our after hours action so I would be a bit careful, on the other hand a break of 804 is sign enough regardless of time but has more potential of quick 4-5 point snaps that will minimize your protective abilities. I had traded with that mindset on thursday and lost quite a bit of money as I had aggressive positions with much wider stop losses then I liked due to the snaps to be expected. I normally would say remain on the sidelines - not today. I feel we have a great chance of 30+ points on the downside today.
Keep in mind probability of longer term change of trend calls are not accurate enough to use trade signals by itself so don't go short blindly with an exit order on thursday afternoon =).
Tuesday, February 17, 2009
Friday, February 13, 2009
Someone opened the magic drawer ....
Yesterday
well I have been sitting out all week as I was waiting for all the signs to be put into place - I said that its important to see how the market is behaving at certain points and this information can be worth more then trading the ranges we have seen in the past 3 days. On Tuesday we had our big drop after the bailout plan was announced - a down move of this strength was to be expected as the market has been holding out for this information for quite some time now just to hear disappointing direction once the big plan was revealed.
While we neared oversold conditions at the end of the day we used wednesday to remain perfectly sideway to distribute and absorb buying pressures - I was getting more excited after seeing the market retracing 23% only. Additionally I made the reference to the DOW yesterday as another piece of information to confirm our direction - you could see how confident I was in those calls.
Everything was in place for our final confirmation yesterday and we started with a text book setup on the open. GAP open down - We failed an attempt at a rally/gap fill in the morning hours, we dropped into support at 811 and retraced 23%. We continued to drop towards the afternoon and around 2:30 had our decision. Head and shoulder pattern on the intraday, volume, the DOW strongly breaking major support. As we were approaching the low of the day we were unable to rally, confirmed the head/shoulder reversal and time, price, volume all came into play at one point to confirm everything we have been waiting for the past few weeks and past few days and we finally dropped to close the day 4+% down exactly as I had posted in my comment yesterday (previous day conversation).
Wait - this is not how it ended? - what happened? Well, we could all see what occured yesterday. Timing was impecable , it was clearly visible we were setting up for our big down move I keep on describing with all confirmations in place. It seems they have some pretty smart folks in the new administration that understand how the markets work and were seeing exactly the same thing we were yesterday - they knew what was occuring and had no choice but pick up the red phone at 3:00, call the boss and say "Boss, its time to open up your magic drawer and pull out one of the 25 envelopes we have prepared for you." - "Can I pick any?" - "yeap, any, you and me know that it won't make a difference but lets just do it anyways - for your enjoyment we made funny labels for each of them so pick them based on which you think is the funniest" Each envelope contains one page with the following information:
1. [Random Plan Name that we feel will help]
2. Available in 500, 600, 700 Billion or 1 Trillion
3. Two sentence summary
4. "Only to be used in emergencies"
Yesterday envelope's plan was called "Mortgages: pay your own, your neighbors, your neighbors red headed aunt and your neighbor's red headed aunt's hair dressers"
[yesterday] Technically we are still in an uptrend but the market needs to make a stand here - bulls need to step in and match volume on the stronger side - however without outside intervention that takes the market by surprise I doubt this is possible.
No need to say more ....
Yeah technically we had a great reversal yesterday, look at the extremely bullish hammer candle stick on the daily, extremely strong volume, v-bottom like recovery, close above our weak up trend line - don't get too excited though, even with all of this it was only a 38% retracement off our peaks.
Today
We are entering very dangerous market times. The market is kept in this range longer and longer. This can turn out to be quite negative overall. Its like a bungy cord that you keep on pulling and twisting - at one point its going to snap back violently or break all together dropping whatever was attached to it. The longer we remain in this formation we are in the more dramatic the moves will be - unfortunately this is looking more and more like a very strong move to the downside.
I am quite frustrated with yesterday and for today - no review, I refuse to give in and forecast a market that quite frankly is unpredictable.
ok ok, maybe just a little bit - the bulls need a follow through today and continue with a 3+% day on strong volume if they want to maintain any type of uptrend. While this move is quite bullish we did not break Wednesdays top. This needs to occur today on strong volume and we need to see a test at the 850 range. If this is too occur the most likly scenario is trading towards 840-842 in the morning as part of the continuation, retrace slightly to the 831 range and rally into resistance at 850.
A break of the 831 range on the downside will bring is back to 820-821 where we will make our decision.
well I have been sitting out all week as I was waiting for all the signs to be put into place - I said that its important to see how the market is behaving at certain points and this information can be worth more then trading the ranges we have seen in the past 3 days. On Tuesday we had our big drop after the bailout plan was announced - a down move of this strength was to be expected as the market has been holding out for this information for quite some time now just to hear disappointing direction once the big plan was revealed.
While we neared oversold conditions at the end of the day we used wednesday to remain perfectly sideway to distribute and absorb buying pressures - I was getting more excited after seeing the market retracing 23% only. Additionally I made the reference to the DOW yesterday as another piece of information to confirm our direction - you could see how confident I was in those calls.
Everything was in place for our final confirmation yesterday and we started with a text book setup on the open. GAP open down - We failed an attempt at a rally/gap fill in the morning hours, we dropped into support at 811 and retraced 23%. We continued to drop towards the afternoon and around 2:30 had our decision. Head and shoulder pattern on the intraday, volume, the DOW strongly breaking major support. As we were approaching the low of the day we were unable to rally, confirmed the head/shoulder reversal and time, price, volume all came into play at one point to confirm everything we have been waiting for the past few weeks and past few days and we finally dropped to close the day 4+% down exactly as I had posted in my comment yesterday (previous day conversation).
Wait - this is not how it ended? - what happened? Well, we could all see what occured yesterday. Timing was impecable , it was clearly visible we were setting up for our big down move I keep on describing with all confirmations in place. It seems they have some pretty smart folks in the new administration that understand how the markets work and were seeing exactly the same thing we were yesterday - they knew what was occuring and had no choice but pick up the red phone at 3:00, call the boss and say "Boss, its time to open up your magic drawer and pull out one of the 25 envelopes we have prepared for you." - "Can I pick any?" - "yeap, any, you and me know that it won't make a difference but lets just do it anyways - for your enjoyment we made funny labels for each of them so pick them based on which you think is the funniest" Each envelope contains one page with the following information:
1. [Random Plan Name that we feel will help]
2. Available in 500, 600, 700 Billion or 1 Trillion
3. Two sentence summary
4. "Only to be used in emergencies"
Yesterday envelope's plan was called "Mortgages: pay your own, your neighbors, your neighbors red headed aunt and your neighbor's red headed aunt's hair dressers"
[yesterday] Technically we are still in an uptrend but the market needs to make a stand here - bulls need to step in and match volume on the stronger side - however without outside intervention that takes the market by surprise I doubt this is possible.
No need to say more ....
Yeah technically we had a great reversal yesterday, look at the extremely bullish hammer candle stick on the daily, extremely strong volume, v-bottom like recovery, close above our weak up trend line - don't get too excited though, even with all of this it was only a 38% retracement off our peaks.
Today
We are entering very dangerous market times. The market is kept in this range longer and longer. This can turn out to be quite negative overall. Its like a bungy cord that you keep on pulling and twisting - at one point its going to snap back violently or break all together dropping whatever was attached to it. The longer we remain in this formation we are in the more dramatic the moves will be - unfortunately this is looking more and more like a very strong move to the downside.
I am quite frustrated with yesterday and for today - no review, I refuse to give in and forecast a market that quite frankly is unpredictable.
ok ok, maybe just a little bit - the bulls need a follow through today and continue with a 3+% day on strong volume if they want to maintain any type of uptrend. While this move is quite bullish we did not break Wednesdays top. This needs to occur today on strong volume and we need to see a test at the 850 range. If this is too occur the most likly scenario is trading towards 840-842 in the morning as part of the continuation, retrace slightly to the 831 range and rally into resistance at 850.
A break of the 831 range on the downside will bring is back to 820-821 where we will make our decision.
Thursday, February 12, 2009
Bulls out of lives ....
Yesterday
The marketed traded fairly sideways yesterday on decent volume. We were unable to even try to reach the 38% retracement. Considering we are so close to this major support line we should have seen more strength. I said I am confident of our direction even without confirmation - yesterday was a great sign for us that further declines are very likly. You remember what has happened in the past 2 weeks whenever we got close to key support ranges that were in the 800-820 range - we rallied fairly quickly. This did not occur yesterday even after we have found ourselves in quite an oversold condition.
If you look at my numbers again yesterday you can clearly see why I am so confident.
834 = this is something the market should break towards the upside, if this is to remain the top we can see a break of our uptrend line by this week
We broke this range on the upside however it was rather weak and we only topped out 4 points above.
842 = yet again a key resistance number we have seen in the past. This should be the top today and could provide the last peak before heading down.
We did not even reach this point after a break of the 834 - that is a very bearish sign showing even stronger weakness. The 838 yesterday may be the top I was hinting at.
Today
We should see further declines in the market place and our premarket is already fairly close to yesterdays bottom ranges. Technically we are still in an uptrend but the market needs to make a stand here - bulls need to step in and match volume on the stronger side - however without outside intervention that takes the market by surprise I doubt this is possible. The past few weeks the market has been immune to bad news. It is my feeling that this immunity has come to an end and bad news will yet again lead the market lower.
We have to be a bit cautious with the 820 range here that we did not give a real test too yesterday. We could see some support on this range. Now, this is something I normally do not do but I am going to include the DOW today as another trade confirmation - the 7800 level on the dow is a substantial support point - the market has only closed ONCE below this point so it is much more important today then the S&P equivalent (around 820 for us). If this will get broken and I feel it will today or tomorrow (unless the bulls have a major rally from here) we are guaranteed to revisit the november lows.
How to trade this?
Do not chase it. Trust me my fingers are itching as much as yours, however the market will retrace - even if it does not, the information it will give us at those key support ranges are worth more then a few % you can gain on a trade. This break will bring us back into new fresh ranges with many amazing chances to make money. So do not chase it - even if it does not retrace back to the 820/7800 levels we know our trend finally and its not the same 100 point range for a 4 month time frame. Considering how important our 820/7800 range is, we should see another test on the upside after we have established a new leg down.
The marketed traded fairly sideways yesterday on decent volume. We were unable to even try to reach the 38% retracement. Considering we are so close to this major support line we should have seen more strength. I said I am confident of our direction even without confirmation - yesterday was a great sign for us that further declines are very likly. You remember what has happened in the past 2 weeks whenever we got close to key support ranges that were in the 800-820 range - we rallied fairly quickly. This did not occur yesterday even after we have found ourselves in quite an oversold condition.
If you look at my numbers again yesterday you can clearly see why I am so confident.
834 = this is something the market should break towards the upside, if this is to remain the top we can see a break of our uptrend line by this week
We broke this range on the upside however it was rather weak and we only topped out 4 points above.
842 = yet again a key resistance number we have seen in the past. This should be the top today and could provide the last peak before heading down.
We did not even reach this point after a break of the 834 - that is a very bearish sign showing even stronger weakness. The 838 yesterday may be the top I was hinting at.
Today
We should see further declines in the market place and our premarket is already fairly close to yesterdays bottom ranges. Technically we are still in an uptrend but the market needs to make a stand here - bulls need to step in and match volume on the stronger side - however without outside intervention that takes the market by surprise I doubt this is possible. The past few weeks the market has been immune to bad news. It is my feeling that this immunity has come to an end and bad news will yet again lead the market lower.
We have to be a bit cautious with the 820 range here that we did not give a real test too yesterday. We could see some support on this range. Now, this is something I normally do not do but I am going to include the DOW today as another trade confirmation - the 7800 level on the dow is a substantial support point - the market has only closed ONCE below this point so it is much more important today then the S&P equivalent (around 820 for us). If this will get broken and I feel it will today or tomorrow (unless the bulls have a major rally from here) we are guaranteed to revisit the november lows.
How to trade this?
Do not chase it. Trust me my fingers are itching as much as yours, however the market will retrace - even if it does not, the information it will give us at those key support ranges are worth more then a few % you can gain on a trade. This break will bring us back into new fresh ranges with many amazing chances to make money. So do not chase it - even if it does not retrace back to the 820/7800 levels we know our trend finally and its not the same 100 point range for a 4 month time frame. Considering how important our 820/7800 range is, we should see another test on the upside after we have established a new leg down.
Wednesday, February 11, 2009
Back in town ...
Well I arrived back home again in Miami. Definitly loving the weather over the cold UK rain and snow. Slowly getting back into it and wanted to give a little bit of an update.
So where are we now? The market has been very disappointed by the bailout as it lacked any type of direction or detail needed. Hearing Obama on TV is very scary. There is only a small percentage of people in the US that really understand the severity of what we are going through. I remember when I had talked about my long term target of 400 12+ months ago - I was laughed at. However, Obama is painting a picture that is much more severe and graphic for the normal consumer to even understand.
- "catastrophe"
- "tanking economy"
- "worst recesssion"
- "unreversable downfall"
- "worst crisis in our generation"
- "[insert strong graphic word here] since the Great depression"
Those are just some of the words used by our new president. I understand this is also a lot of politics, trying to paint a bad picture to put pressure on congress to allow him to do the things he feels are needed, showing a bad picture so once the economy recovers by the end of his term he can take credit for it. I think he is walking a very fine line between using the proper words to his political advantage and causing damage and fear to the average consumer that does not have a full understanding of economics. All we hear now is that it will get worse, a lot worse - people have to understand after bad comes good - that is being removed now. Yes it will be difficult but everyone else is having the same problems. This is not like Japan in the 90's (a reference our leaders like to take to get their plans approved) - its a world crisis of credit, debit and liquidity - it will turn around. The average consumer needs to hear that and they don't.
Ok enough of my rant - I am not trying to turn this into a political debate, our new leaders are having one of the most difficult challenges ahead of them, I do not wish to be in their shoes and I give them credit for trying what they feel is best for everyone.
Back to the markets - we have had a severe drop yesterday on one of the largest volume days thus far. Yesterday goes into the top 15 days in terms of volume we have had in the past 2+ years so it is definitly a strong sign to where we are going. I am going to state, even before our confirmation, that our trend decision is in and we will be moving towards the downside - a scenario I had described earlier. From here on out we have 2 scenarios, either a break of our very important (and very weak) up trend line that the bulls have worked very hard on, or some distribution and retracements after such a strong down move yesterday. The market has failed to break key resistance areas at the 20 and 50 moving averages and that of course is very bearish. Volume has lacked on any of the upside attempts and only became apparent on strong moves either at the bottom or towards the downside.
In terms of trading - we know our direction now, its Wednesday today - the middle of the week. I would recommend staying on the sidelines yet again with the only exception of entering a short at specific key retracements if volume and time work out. At this point the most simple things work best so I am just going to state the Fibs that I feel will come into play.
834 = this is something the market should break towards the upside, if this is to remain the top we can see a break of our uptrend line by this week
842 = yet again a key resistance number we have seen in the past. This should be the top today and could provide the last peak before heading down.
848-850 = this would represent the 50% retracement off the past 2 days. Reaching this could be a bit bullish as I would not expect more then 38%.
So watch those numbers again, volume and time. Being on the sidelines is the best thing to do at this point. I did not trade at all yesterday but was watching the market with my fingers itching - we do not gamble, we want to get our trend in and then get in on moves that have great protection and follow technicals.
So where are we now? The market has been very disappointed by the bailout as it lacked any type of direction or detail needed. Hearing Obama on TV is very scary. There is only a small percentage of people in the US that really understand the severity of what we are going through. I remember when I had talked about my long term target of 400 12+ months ago - I was laughed at. However, Obama is painting a picture that is much more severe and graphic for the normal consumer to even understand.
- "catastrophe"
- "tanking economy"
- "worst recesssion"
- "unreversable downfall"
- "worst crisis in our generation"
- "[insert strong graphic word here] since the Great depression"
Those are just some of the words used by our new president. I understand this is also a lot of politics, trying to paint a bad picture to put pressure on congress to allow him to do the things he feels are needed, showing a bad picture so once the economy recovers by the end of his term he can take credit for it. I think he is walking a very fine line between using the proper words to his political advantage and causing damage and fear to the average consumer that does not have a full understanding of economics. All we hear now is that it will get worse, a lot worse - people have to understand after bad comes good - that is being removed now. Yes it will be difficult but everyone else is having the same problems. This is not like Japan in the 90's (a reference our leaders like to take to get their plans approved) - its a world crisis of credit, debit and liquidity - it will turn around. The average consumer needs to hear that and they don't.
Ok enough of my rant - I am not trying to turn this into a political debate, our new leaders are having one of the most difficult challenges ahead of them, I do not wish to be in their shoes and I give them credit for trying what they feel is best for everyone.
Back to the markets - we have had a severe drop yesterday on one of the largest volume days thus far. Yesterday goes into the top 15 days in terms of volume we have had in the past 2+ years so it is definitly a strong sign to where we are going. I am going to state, even before our confirmation, that our trend decision is in and we will be moving towards the downside - a scenario I had described earlier. From here on out we have 2 scenarios, either a break of our very important (and very weak) up trend line that the bulls have worked very hard on, or some distribution and retracements after such a strong down move yesterday. The market has failed to break key resistance areas at the 20 and 50 moving averages and that of course is very bearish. Volume has lacked on any of the upside attempts and only became apparent on strong moves either at the bottom or towards the downside.
In terms of trading - we know our direction now, its Wednesday today - the middle of the week. I would recommend staying on the sidelines yet again with the only exception of entering a short at specific key retracements if volume and time work out. At this point the most simple things work best so I am just going to state the Fibs that I feel will come into play.
834 = this is something the market should break towards the upside, if this is to remain the top we can see a break of our uptrend line by this week
842 = yet again a key resistance number we have seen in the past. This should be the top today and could provide the last peak before heading down.
848-850 = this would represent the 50% retracement off the past 2 days. Reaching this could be a bit bullish as I would not expect more then 38%.
So watch those numbers again, volume and time. Being on the sidelines is the best thing to do at this point. I did not trade at all yesterday but was watching the market with my fingers itching - we do not gamble, we want to get our trend in and then get in on moves that have great protection and follow technicals.
Thursday, February 5, 2009
On the right side again ...
Yesterday
Well I am gloating a bit, yesterday worked out to perfection. I had hinted at the volume being low this week and alos mentioned that the close on Tuesday in the upper ranges with a break of my 837-838 target was something to be taken into consideration. It was clear before yesterday that this was setting up for a fake up move.
I had called the top of by 9 minutes (10:36) and anyone who went short there had a great run down - even if you went short within my 10:45-11:00 window you still had a pretty close to perfect entry.
I had mentioned the importance of time yesterday, not price. We got all our confirmations I mentioned, low volume as we jumped up in price and even lower volume as we created new highs giving the 20dma a test pretty much at my target time. Text book example of a suckers rally. Price, time and volume - those indicators by itself can be sometimes the most powerful ones.
Special Note
Well I will be traveling the next few days so you won't see me online or replying to comments. Good luck everyone and stay put.
I foresee a change of trend on Tuesday next week but will confirm this weekend with more precise details on time. From where we are now we could be setting up to give the 800 a final run down where I feel we will break to the downside and reach the 790 price target by Friday or Monday. We do not have a confirmation for this move yet so stay put but considering I am not available the next 2 days I wanted to give you a heads up on what I feel will occur - as I cannot watch today or Friday I am unable to give confirmations for those moves so look for confirmations and stay light on your trades.
Good luck.
Well I am gloating a bit, yesterday worked out to perfection. I had hinted at the volume being low this week and alos mentioned that the close on Tuesday in the upper ranges with a break of my 837-838 target was something to be taken into consideration. It was clear before yesterday that this was setting up for a fake up move.
I had called the top of by 9 minutes (10:36) and anyone who went short there had a great run down - even if you went short within my 10:45-11:00 window you still had a pretty close to perfect entry.
I had mentioned the importance of time yesterday, not price. We got all our confirmations I mentioned, low volume as we jumped up in price and even lower volume as we created new highs giving the 20dma a test pretty much at my target time. Text book example of a suckers rally. Price, time and volume - those indicators by itself can be sometimes the most powerful ones.
Special Note
Well I will be traveling the next few days so you won't see me online or replying to comments. Good luck everyone and stay put.
I foresee a change of trend on Tuesday next week but will confirm this weekend with more precise details on time. From where we are now we could be setting up to give the 800 a final run down where I feel we will break to the downside and reach the 790 price target by Friday or Monday. We do not have a confirmation for this move yet so stay put but considering I am not available the next 2 days I wanted to give you a heads up on what I feel will occur - as I cannot watch today or Friday I am unable to give confirmations for those moves so look for confirmations and stay light on your trades.
Good luck.
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