Market commentary for 04/14/2008 Good day! Obviously the market didnât like GE's earning's report and the indices opened with a strong gap down. It was not a textbook example, but it was a kind of daily bull trap that resulted in a trend day down and a weak close. On the intraday charts we can see that the indices didnât have enough strength after the open for any bounce and that every attempt for a bounce finished with new lows resulting in a trend day. The SPY and the DIA found support at their 200sma 60 min while the QQQQ closed at itsâ 20sma daily support area. All have room for more selling over the next few days. http://www.ivicacharts.com/diagrams/2008/0414008dia60.jpg http://www.ivicacharts.com/diagrams/2008/0414008spy60.jpg http://www.ivicacharts.com/diagrams/2008/0414008qqqq60.jpg The daily volume was higher, but nothing climactic. The QQQQ volume was average, while the DIA and the SPY were slightly above average (blue line). On the charts we can see how the previous resistance areas are becoming a support area now which is always important to follow for expectations. Unfortunately, the idea for a possible weekly continuation pattern fell apart on Friday and all the indices are back to a short bias. The weekly charts will show us more clearly. http://www.ivicacharts.com/diagrams/2008/04142008dia.jpg http://www.ivicacharts.com/diagrams/2008/04142008spy.jpg http://www.ivicacharts.com/diagrams/2008/04142008qqqq.jpg After two selling waves, the indices started with a weekly range action which was expected, because previously the selling pace was very strong and I didnât expect that the market would recover very easily, especially not after only two selling waves. Because of that I still think that we can expect more weakness in the future (hope I will be wrong). Usually the first try to break a strong resistance area will fail, and that was the case with the 20sma weekly. We can see on the chart how that finished and Friday's session helped with that. If you remember my last Monday's commentary I was very suspicious with the long side and most of the week that feeling continued. But the Indices held very well and the weekly continuation pattern possibility was open until Friday. Volume was not huge and we can see a number of support areas before the previous lows so it is hard to expect that Friday's selling pressure is a trigger for a new weekly selling wave. http://www.ivicacharts.com/diagrams/2008/04142008diaweekly.jpg http://www.ivicacharts.com/diagrams/2008/04142008spyweekly.jpg http://www.ivicacharts.com/diagrams/2008/04142008qqqqweekly.jpg But in case the selling will continue, than Friday's action is the start of a possible 3rd try on the weekly charts and it is good to keep that in mind. Friday gave us a trap and a strong move down, however volume was not excessive. (That concerns me for now). Usually traps have a tendency to go for several days in the same direction and if that will be the case the indices will trade back to weekly lows and that will be the 3rd try. We know that the 3rd try can be the charm and that could be the start of a 3rd weekly selling wave, which is not unusual. That is one possible scenario. Since Friday's selling volume was not very strong, and since the indices have plenty of support areas, the indices could stay in a weekly range for some time which also wonât be unusual. Obviously it is hard to be sure of a direction, but it is always good to have possibilities in mind. Right now it will be important to see Monday's action. We know that very often after a strong move, the next day we typically see consolidation-correction day. If that will be the case, it will be very important to see Monday's action. Should we have a strong bounce, then odds for selling continuation will decrease, however if we have a consolidation at lows, selling continuation will increase. There are many âifsâ and right now we canât ignore them, but we can read risk. Intraday charts are extended and right now new low risk short trades will be higher risk until we will see consolidation. Because of that I donât expect much from Monday's action and I will be again focus on intraday setups. There are too many support areas for low risk swing trades and we must use proper risk on them. I still have a short bias for the future and unfortunately I donât think that the market crisis is finished. I will go day by day and we will see what we will get. Best will be to see a weekly consolidation which will give us low risk possibilities for short setups and could lead into a weekly 3rd try break down. If anyone has any questions or comments, please feel free to contact me. Wish you all good trading!!! Kind regards. Ivica
Market commentary for 04/17/2008 Good day! The market action continued with the same patterns, a trend day and after that several choppy worthless trading days. Wednesday brought a trend day. It was a day when stocks traded like they did in the old days. No matter which direction you traded, both shorts and longs both did great. It has been a while since we have had a "normal" trading day. Although it was nice, that does not mean Iâm in love with the market action enough to decrease risk. The reason for that is visible on the 60 min charts. The resistance areas are close, the move is extended and we are in the earnings season and those are the main reasons why I didnât want to take any overnight risk. My bias is on the long side and the reason for that is the difference between the selling and buying pace. After last Friday's bull trap action I was expecting much stronger selling pressure, but obviously the market is strong enough to absorb bad newsâ¦for now anyway. http://www.ivicacharts.com/diagrams/2008/0417008dia60.jpg http://www.ivicacharts.com/diagrams/2008/0417008spy60.jpg http://www.ivicacharts.com/diagrams/2008/0417008qqqq60.jpg On the daily charts we can see that the indices have room for another move up, which can result with a morning gap, but with earnings we could also see a gap down. Volume is not climactic and still in an average area, which is not good for the long side, but it was enough for a nice day trading day. The Indices still have a number of resistance and support areas and because of that the swing risk remains high. The DIA broke above its' 20sma weekly, while the SPY and the QQQQ still have room to reach those areas. http://www.ivicacharts.com/diagrams/2008/04172008dia.jpg http://www.ivicacharts.com/diagrams/2008/04172008spy.jpg http://www.ivicacharts.com/diagrams/2008/04172008qqqq.jpg Iâm a swing trader, and I feel best there, but this is not the market for me and because of that I will remain with the same mode. Bias is bullish, but I will go day by day and we will see where that will bring us. Remember that after a trend day usually we will see a consolidation day. It was same on Monday and that is what I will expect for Thursday. Two trend days in row mean a strong reaction and we will very rarely see that. But letâs see how the market opens and be prepared for fast trading once again. Iâm sure that the swing market will return, but for now we must be patient. Before that happens, letâs take what we can get. If anyone has any questions or comments, please feel free to contact me. Wish you all good trading!!! Kind regards. Ivica
Market commentary for 04/21/2008 Good day! Was GOOG the only reason for Friday's strong gap up, or was it short covering? There is not much to say about Friday's action. After the strong gap up, and open weakness, the indices started with a strong rally to new highs. The problem was volume and I will show you that on the larger timeframe charts. That is the reason why Iâm cautious about the market action. After the noon consolidation, the indices started with a correction around the 14:00 pm EST reversal period. The rest of the day we saw a correction from highs, but without strong pace which increased trading risk and brought slow choppy market action. The day closed in the middle of the range. http://www.ivicacharts.com/diagrams/2008/04212008dia60.jpg http://www.ivicacharts.com/diagrams/2008/04212008spy60.jpg http://www.ivicacharts.com/diagrams/2008/04212008qqqq60.jpg On the daily charts we can see that the day's intraday action resulted with a doji pattern, which means indecision. All is nice, the market is strong, the resistance areas are becoming support areas, but Iâm worried about volume. On a strong gap up like Friday, I expect stronger volume and that is what I haven't liked over the last several days. The daily buying pace is strong but without volume support. We can see that the indices have room for more upside, but for me risk will remain higher because I donât trust it to be a swing trader's environment right now. In addition, earnings season is another reason for added caution. We must keep in mind and respect, however, that the market has been absorbing bad news and looks very strong. http://www.ivicacharts.com/diagrams/2008/04212008dia.jpg http://www.ivicacharts.com/diagrams/2008/04212008spy.jpg http://www.ivicacharts.com/diagrams/2008/04212008qqqq.jpg On the weekly charts we can see that the move up from lows is happening without volume support and on the QQQQ's chart we can see that it decreased. The SPY and the DIA are under their strong weekly resistance areas, while the QQQQ still has more room for a move up. It will be important to see over the next few days how the market holds Friday's gap. Will there be enough strength for a consolidation at highs or will we see a weekly range which will result with a pull back. Right now I donât see a market reversal pattern and I still think that the weekly selling pressure is not over, but until that possibility we can only follow the market and trade with smaller risk. http://www.ivicacharts.com/diagrams/2008/04212008diaweekly.jpg http://www.ivicacharts.com/diagrams/2008/04212008spyweekly.jpg http://www.ivicacharts.com/diagrams/2008/04212008qqqqweekly.jpg Also earning season will continue and that will keep me in the same mode. I donât like that, but for now intraday trading is best for low risk trading. Every o/n trade will be higher risk because of earning news possibilities. Lately we can see that short trades havenât work well, and I will be very picky with them. Also for the long side, we have strong resistance overhead and the market is already on the move (daily charts). Because of that I will pay attention to faster intraday moves (gaps, traps, and own way charts) If anyone has any questions or comments, please feel free to contact me. Wish you all good trading!!! Kind regards. Ivica
ivica, the low volume may continue as the mom and pop customers are staying out of the market or in cash,these strong updays are forcing the money managers to put their customers in so as not to look bad,the economy is only as good or bad as what they with all the knowledge tell us,whether that is true or not is another story
Agree with you ammo. Tried to explain that risk is higher because of that and that is important to be caution..imo. Thanks for your comment Thanks Brandon..I will try to do my best.
Market commentary for 04/22/2008 Good day! The market action today was consolidation once again. There is not much to say about it and if we take a look at the 60 min charts we can see that Friday's consolidation continued into the new week. Trading risk was high all day. The main reason for that was the trundles range action and the divergences in the indices, which we can see on the charts. The DIA and the SPY are forming possible reversal patterns with a possible lower high and an avalanche, however, the QQQQ looks strong and ready for buying continuation on Tuesday, The daily gap is holding very well for now. If I draw lines on the QQQQ chart the odds for a break up increase. That will be the 3rd buying Wave. http://www.ivicacharts.com/diagrams/2008/04222008dia60.jpg http://www.ivicacharts.com/diagrams/2008/04222008spy60.jpg http://www.ivicacharts.com/diagrams/2008/04222008qqqq60.jpg Volume is again lower and lately that is normal. I donât like that kind of action, but that does not mean I won't follow it for possible ideas As I said above, I will look for a daily continuation. My bias is long but cautious. Risk will stay higher because of volume and in that kind of action we can expect to see chart reversals. We can also see on the daily charts that the indices are already on the move and for low risk setups we will need several consolidation days. http://www.ivicacharts.com/diagrams/2008/04212008dia.jpg http://www.ivicacharts.com/diagrams/2008/04212008spy.jpg http://www.ivicacharts.com/diagrams/2008/04212008qqqq.jpg My focus will stay the same and o/n trades will be higher risk due to the market action and earning season. Monday's low is now a strong support area and resistance areas are also drawn on the charts in case we see market strength. Wish you all good trading!!! Kind regards. Ivica
Market commentary for 04/28/2008 Good day! The market digested a whole lot of bad news and pretty much ignored it. First MSFT came out with a soft outlook and the stock weighed on the indices all day. Next came the consumer confidence report and it was the worse reading in 25 years. This took the indices even lower. Then came the rumor that an Iranian ship was fired upon and that took oil back over $119 a barrel. The one bright spot was the Dollar continued to rally into the Fed meeting next week. The markets ignored all the bad news and continued to rally from the lows and finish in the positive side. While that is positive for the markets going forward the volume was very low so basically Fridays action had little conviction and little confidence moving forward. Friday session brought the same action as several days before. The sellers took control and we saw strong an intraday move down. After three 15 min selling waves indices started to consolidate and as we have seen before we didnât see any continuation. Instead we saw a reversal. This time the DIA and the SPY were the strongest and reversal was strong enough for take out Thursday's high. The SPY even reached a slightly higher high. On the other side the QQQQ was the weakest and only got back half of morning move down. On the 60 min charts we can see that action is very whippy with very slow buying pace. http://www.ivicacharts.com/diagrams/2008/04282008dia60.jpg http://www.ivicacharts.com/diagrams/2008/04282008spy60.jpg http://www.ivicacharts.com/diagrams/2008/04282008qqqq60.jpg Intraday we had whippy action resulting in big dally bars without much result. The SPY and the DIA closed at previous week high while the QQQQ reached slight higher high. Indices have room for another move up on the daily charts but if intraday action will stay same trading risk will stay higher. Reason why indices are so whippy we can see on the weekly charts. After Thursday volume, higher the average, Friday volume was again at average amount. Support areas are staying the same and that area is the 100sma plus coming 10/20sma and closest resistance area is 200sma. http://www.ivicacharts.com/diagrams/2008/04282008dia.jpg http://www.ivicacharts.com/diagrams/2008/04282008spy.jpg http://www.ivicacharts.com/diagrams/2008/04282008qqqq.jpg Right now, to determine the future bias, the weekly charts are the most important. We can see the indices continue move up from the weekly low on low volume. Previous low is now the resistance area. This is still over head for the DIA and the SPY. Both formed continuation patterns which will increase the odds for a break up. Negative is the volume, but with a break up volume can increase and the break up is still an open scenario. The QQQQ closed under 50sma which is strong a resistance area and the volume is light also. http://www.ivicacharts.com/diagrams/2008/04282008diaweekly.jpg http://www.ivicacharts.com/diagrams/2008/04282008spyweekly.jpg http://www.ivicacharts.com/diagrams/2008/04282008qqqqweekly.jpg Generally I think that situation is very mixed. I see the odds for move up, but I also see odds for a reversal. Resistances over head are strong and volume is light and those are odds for a reversal. On the other hand the daily consolidation (even wild) and weekly small range bar are odds for continuation. Conclusion is risk is high and that is most important for us to be concern of as traders. If I must bet, I will say that we have more chance for reversal but all that can change with one strong up day on bigger volume. I will follow market day by day and then will see where that will bring us. I can see us moving up to the daily 200sma at start of the week and then a reversal during second part of the week which could result with a weekly pivot and weak close. Of course that is just guessing. Reason why we can see that âguessingâ scenario is that our shorts have not worked lately and all look like indices want break up. Since the daily 200sma is strong a resistance area that could be the trigger for pullback. More important is to recognize risk and it is higher and every overnight trade is risky and that is reason why we donât have many it lately. Patience is also very important because market will come back and swing risk will decrease and then we will use them as we did before. If anyone has any questions or comments, please feel free to contact me. Wish you all good trading!!! Kind regards. Ivica
Market commentary for 05/01/2008 Good day! We saw the usual pre FED action and that was a move up in front of the FED decision at 2:15pm ET. On the 60 min charts we can see that the indices reached new daily highs. It was on light volume and everyone waited to see what the FED announcement would bring. The FED cut interest rates by 0.25 points and the action after the announcement was unusual. We didnât see a very strong reaction. It was more of a range action without direction. The move down started at 15:00 pm reversal period. It was a strong move down on higher volume and reached Tuesday's low support area. For the rest of the day, the indices consolidated and closed at lows. http://www.ivicacharts.com/diagrams/2008/05012008dia60.jpg http://www.ivicacharts.com/diagrams/2008/05012008spy60.jpg http://www.ivicacharts.com/diagrams/2008/05012008qqqq60.jpg On the daily charts we can see that the volume was higher (above average amount) and maybe this is the start of a new direction. But right now it is hard to say, because lately we have seen the true direction the day after the FED announcement and we will see what Thursday will bring. Earning season is still here and changes are common. The daily 10sma are the first support areas and no matter how choppy the daily action was it is still is in an uptrend and we must respect that. Also the daily uptrend is still part of weekly correction and the weekly trend is a down trend and we must keep that in mind too. http://www.ivicacharts.com/diagrams/2008/05012008dia.jpg http://www.ivicacharts.com/diagrams/2008/05012008spy.jpg http://www.ivicacharts.com/diagrams/2008/005012008qqqq.jpg If you remember my Monday commentary and the scenario that I mentioned, we can see that that scenario is still possible. We saw strength in front of the FED on light volume and choppy action. That kind of action can result in a sharp breakdown on strong volume. Is Wednesday after the FED action the trigger... we will see. The charts for now suggest a move down for Thursday, but again I need to repeat that earning news can change that. The market is still high risk and lately we haven't seen much continuation in any direction. Before that risk will remain high. We took two swing shorts hoping that will happen and I will look for that possibility in my scanning for a watch list but I will also be prepared for any change if the choppy action returns. Caution and patience are still very important. If anyone has any questions or comments, please feel free to contact me. Wish you all good trading!!! Kind regards. Ivica
Market commentary for 05/05/2008 Good day! The day started with strong gaps up into weekly resistance areas. The Indices didnât have the strength to hold their morning gaps and we saw selling pressure for most of Friday's session. The morning gap was filled and around the 14:00 pm ET's reversal period and after 15 min double bottoms, the indices started with a recovery and closed the day in positive territory. For the QQQQ that was more or less a flat close, while the DIA, as the strongest of Friday's session, traded back half of its' gain and closed in the middle of its' daily range. Overall we can say that the market closed strongly at new weekly highs. http://www.ivicacharts.com/diagrams/2008/05052008dia60.jpg http://www.ivicacharts.com/diagrams/2008/05052008spy60.jpg http://www.ivicacharts.com/diagrams/2008/05052008qqqq60.jpg The DIA closed above its' daily 200sma resistance area as did the QQQQ, while the SPY still has some room to reach it. Friday's volume was average and that supported the bullish action that we have had over the last few weeks and we can see that on the daily charts. Thursday's breakup and Friday's continuation is part of the 4th daily buying wave after March's lows. The start was choppy and we can see that the last breakout was strong which is more clear on the weekly charts. Usually after three waves we can expect a correction and any new wave is more and more risky for new swing trades. Honestly, the market strength surprised me after the strong weekly move down, but the only thing that we can do is follow the market action. Is this all part of a full recovery or is the market just taking a breathe before more weakness. We will see, but on the weekly charts we can say that the possibility for the short continuation is cancelled for now. The reversal is too strong for that. http://www.ivicacharts.com/diagrams/2008/05052008dia.jpg http://www.ivicacharts.com/diagrams/2008/05052008spy.jpg http://www.ivicacharts.com/diagrams/2008/05052008qqqq.jpg As we can see on the weekly charts, the indices reached their strong resistance areas. The previous support area becomes resistance and after four daily buying waves the charts suggest that the odds for a correction are higher. The volume on the recovery from weekly lows decreased which is another argument for that. That is a possibility, but also we can see a strong break up with higher volume which will bring the indices to previous weekly highs and will form weekly double top patterns. Right now that scenario is open too because even though the indices reached stronger resistance areas, they closed strongly and next week's action will be very important for that possibility. http://www.ivicacharts.com/diagrams/2008/05052008diaweekly2.jpg http://www.ivicacharts.com/diagrams/2008/05052008spyweekly.jpg http://www.ivicacharts.com/diagrams/2008/05052008qqqqweekly.jpg If the indices consolidate at highs, or if their daily bull trend continues next week, then the odds for a weekly/monthly double top will increase. If the indices see a sharp correction from their resistance areas, then the odds for a weekly correction after four daily buying waves will increase. Right now, with the weekly charts on the move, and without consolidation, it is hard to say which direction is more possible. For that I need to see the behavior of the consolidation and from that I can make more clear conclusions. If anyone has any questions or comments, please feel free to contact me. Wish you all good trading!!! Kind regards. Ivica