Line in the sand

Discussion in 'Trading' started by NoProblem, Jan 16, 2009.

  1. We're very near a (short term) line in the sand, IMO of course.

    Here's an update of the same chart I posted a week or two predictions, just some T/A.

    The gap served as a formidable resistance.
    Volume increased as price bounced off the gap and plowed through the key support area of 858.

    Today we tested the 858 area as resistance and sold off with a wide range bar. So this first test of resistance, and resistance held strong. (Typical of 1st tests imto)

    Recent two day uptrend occurred on declining volume, forming what sure looks like an obvious bear flag.
    If we get a confirmed break above that 858 area, next target, IMTO, would be 919 area and bear flag is busted.
    If the bear flag works, watch for test of that 813 area, it needs to hold, if it fails, there is very little to stop us from heading down to test that 739.

    All JMHO . . . . . . . What's yours?

  2. Yep, we're in the middle. We either go up or down lol. Not trying to knock your analysis at all. I think basically being in the middle reflects the whole trading community at this point. Good place to land in front of inauguration. LOL

    My analysis is on the SPY daily, because it shows the gaps well. Using an (11,2) Bollinger band, we stretched the bottom a little, then bounced. I think we'll continue to the upper band or at least almost there (should be around 937 or so by the time we get there). We did stretch the band then continue to fall with one up day in between in November, but fear was high then and everyone was afraid the world was ending.

    I think for such a disruptive pattern to occur again, we've got to have news, if there's news like that, I don't think the fear will be too hard to sniff out (you'll probably be feeling it too).

    Ignore news except when the chart's telling you the market needs something as an excuse, or when it is truly so disruptive that it is causing people to login to their 401(k)s/IRAs and sell :)

    It's been a while since we've had much stretching of the upper bands, I won't have to worry about that for at least a week or more while we work our way up (unless there was some other news that was obvious, like a shorting ban or such).

    And, no, I'm not trading too much on my analysis, I just like to give my mind a bigger picture while I do intraday stuff. Keeping things open at night makes me lose sleep, I try to keep it all intraday.
  3. 2 sectors I weigh highly for market sentiment are the financials(XLF) and semis(SMH).

    At Friday's close, the banks were at their lowest point verses the S&P since the 2007 crisis begin. In fact, they closed at the lowest point in history, relative to the S&P index.

    But strangely, the semis closed at a 2 month HIGH verses the S&P. The QQQQ and NDX also closed at 2 month highs.

    any thoughts about this divergence?

    fwiw.. the VIX took a 9% drop Friday
  4. piezoe


    Good work, Steve.

  5. Cool replies! That's always a rare thing here lol.

    Anyway, I'm not seeing those 2 month highs on the Qs or SMH - -they both closed higher just last week so not sure what you mean there, but personally, I've been viewing the Nasdaq as lagging the dow and S&P, vs what the talking heads are always saying - that it is the strongest of the thee indexes...........losing +1/2 million jobs a month will keep me thinking that way till I'm proven wrong.

    XLF seems sure to test / break the lows and the fundamentals seem to agree with the chart and scream more down is coming -- - - perhaps the fed adds another trillion or so to keep it from tanking and we start heading higher?

    The VIX is also at a line in the sand here. Like the S&P, it hit the line in the sand - and the line held.
    IMO, the 50ma and 20ma right at the key level help to strengthen it.
    Even tho we had one close below the 200ma - that 200ma is rising which adds to the indecision, but keeps my bias bearish - for now.

    IMO, the "surprise" would be that the market goes higher, and if it does, hopefully we get an obvious move - - like a high volume, wide range bar break of that 858 area.

    Until then, IMTO, the trend is still down.

  6. Try charting SMH:$SPX to see what I'm looking at.
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  7. The XLF:$SPX chart

    That the lowest close in history, afaict
    • xlf.png
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  8. The referenced ratio indeed did hit its lowest value ever, but we probably should also consider the XLF only has a ten-year history and the ratio has been trending lower since early 2007.
  9. Awesome. Thank you for posting that!

    I never knew there was a chart for those.......probably better off for it lol.

    I'm not sure how to relate the XLF and SMH vs the S&P in any useful T/A.
    In my opinion, the positive divergence says that we go higher, yet never having used those charts, I don't know how reliable they might be.

    For me, I remain a short term bear unless or until we have a confirmed break above the 858 area.................seems like next week we should know one way or the other.


  10. With 2 important sectors of the market trending in opposite directions, I don't see a strong move up or down.

    So if we do retest S&P lows, it could be a good buying chance.
    #10     Jan 17, 2009