Market commentary for 07/28/2008 Good day! Friday's action was influenced by news once again. On the positive side, the durable goods orders were higher than expected, consumer confidence was higher than anticipated and the price of oil sold off again. On the negative side Moody's downgraded Fanny and Freddie from AAA. Nothing seemed to really matter in the long run. The same divergence between the stronger QQQQ and the weaker DIA with the SPY in the middle. There is not much to say about intraday action. After trend day we usually see a consolidation day with a small range. This is what we saw on Friday. It was also a Friday during the summer and one of the most boring days that was not worth trading. On the 60 min charts we can clearly see the divergence I mentioned earlier. The DIA continued with Thursday move down, but the selling pace was very weak and that resulted in a very choppy slow move down on light volume which is the definition high risk trading action. For any possible continuation move the SPY did the best and stayed in range of Thursday lows which suggests for a continuation move down on Monday. The QQQQ was opposite the DIA (what resulted with divergence) and bounced after the morning gap. Most of the day it stayed in 60 min triangle. It was nice 3rd try triangle, but we could not get very excited with it being a summer Friday's action and volume. On the daily charts we can see the results of Friday's divergence also. The DIA and the SPY formed continuation patterns. But we saw that the DIA consolidation was not very good. Yes, pace can increase and we can see an exhaustion move, but the choppy slow move action can be finished with a strong reversal direction. First scenario is open but so is the second especially if it has QQQQ support. On the other side the QQQQ 3rd try triangle buying pace can increase also and we can see a nice move up. That will result in a daily rounding bottom and a choppy phoenix (60 min triangle) and odds for that scenario are very open also. It is always high risk trading when we see a divergence. On the weekly chart I donât see any big changes. The DIA daily resistance is also 200sma on the weekly charts and that can be bigger trouble in the future. Same is for the SPY, but the SPY was too weak to reach it on initial bounce from lows. The QQQQ daily rounding lows reflected as weekly consolidation at lows (for now). Now letâs predict the future. Bigger time frames are more important and from there I will expect that weekly lows will hold for now. Corrections from the low started and depending on the action it will be easier to predict the future action. Since the correction just started we can only say that pace of the bounce is not very strong for now, it was rather weak with the move down in comparison. The market is influenced with the oil action, financial news and dollar action it is hard to be sure so I will expect that weekly correction will continue, but I do not expect a strong bounce up. I will expect choppier daily/weekly correction which can result with weekly bear flag and selling continuation pattern. Maybe I went too far in future with weekly bear flag, but it open option. For now I will go day by day with intraday setups. Reason for that is Thursday's strong move down destroyed the daily swing pattern and we are back to the choppy action on the daily base. For Monday I donât have a bias because of the divergence and the fight between the indices. Depending on the winner. For the future swing market action my basic time frame is weekly chart. Weekly consolidation just started, so lets it give some time. Wish you all good trading!!! Kind regards. Ivica
watch for a little up move into the end of month ivica,add that into your scenario,portfolio window dressing,thanks for the commentary
Absolutly agree with you. I expect choppy (but up) move on the weekly charts for start. Will that turn to weekly bear flag or maybe to weekly rounding bottom, or phoenix it is too early to say. In my opinion now is important to see can indices form higher low on teh daily charts or tehy will back to previous low for possible double bottom pattern. Anyway I don't know what will be but I know trading risk level and what kind of setups I will looking for. Thanks for your post, absolutly agree with you DIA http://tinyurl.com/6hs995 http://tinyurl.com/6yytzj http://tinyurl.com/6kgqu8 SPY http://tinyurl.com/6mnp3r http://tinyurl.com/6dswah http://tinyurl.com/6ncl93 QQQQ http://tinyurl.com/57a8eu http://tinyurl.com/6mvyrj http://tinyurl.com/6e8oj3 Ivica
Market commentary for 08/12/2008 Good day! With all the geo-political stuff going around surprisingly oil and gold dropped and the dollar strengthened. With oil down the markets rallied specifically the QQQQ. During the afternoon with oil recovering the DIA and SPY lost most of its gains. Even the financials took off with the dollar. Now it looks like the market is going to follow oil. Retailers were very strong. Looks like commodity and energy dollars are going into the retail sector. Looking at Friday's action I expected that I missed the party from last weeks run, but the market was good to us again and gave us another nice trading day. We had many setups and all did well. The DIA and the SPY broke above daily 50sma resistance area on first try which is a strong sign for a weekly reversal. The QQQQ followed the same direction and broke above the daily 200sma resistance area, also on the first try. We usually see a consolidation day after a trend day, but today after Friday's trend day the market was strong enough for another 60 min buying wave. All the indices reached previous daily support areas which are now resistance areas. After this strong move I hope for a consolidation day Tuesday. That is very important for new low risk setups. Right now without rest every new setup will be high risk. I don't expect to be very active today. If the market continues to move up to new highs I will just follow open trades and scan for fast scalp possibilities. If the market starts with a correction I will watch for fast trades plus âown wayâ charts. After this move we need to rest and I will look for that. The QQQQ daily chart made nice cup pattern and it will be nice to see handle consolidation over the next few days. For intraday support areas I will follow the 60 min 20sma and on the daily charts that will be Monday low or 200sma for the QQQQ and 50sma for the DIA/SPY. If those do not hold the odds for a choppy daily action will increase. We need a good healthy rest for low risk possibilities over the next days. http://tinyurl.com/6n5cz6 http://tinyurl.com/5dct83 http://tinyurl.com/5nzebv http://tinyurl.com/6x9dy9 http://tinyurl.com/58on46 http://tinyurl.com/6f349y Wish you all good trading!!! Kind regards. Ivica
Market commentary for 08/18/2008 Good day! It was typical summer Friday action. Slow, choppy without clear direction and with small volume. Letâs start with 60 min charts. The DIA didnât whip off indecision, and odds for both ways area open. Friday range action finished with triangle and possible break up (blue lines scenario), but also possible head and shoulder is still open. On the daily chart we can see that doji bar confirm 60 min action. Unfortunately that wonât decrease trading risk. On the DIA weekly chart we can see bear flag formation and again with doji bar. The DIA reached 200sma and previous support area what is now resistance area. Weekly chart support move down if will break under last week low. The SPY 60 min chart is very close to the DIA action just little stronger. It is same indecision and Friday action didnât help much to predict Monday action. On the weekly chart we can see that the SPY almost reached 200sma and previous low resistance area. The QQQQ is much stronger; it reached new high on daily run at Friday. On the 60 min chart we can see another buying wave, but also we can see that pace is much weaker then previous what suggest that the QQQQ need rest. On the daily chart it have room for another push up, but also it wonât be unexpected if daily correction will start for Friday high. On the weekly chart we can see that the QQQQ is much stronger and it is at resistance area, but also have room for move up until triangle resistance area (blue line). Now what? After all this what I write above we must find conclusion for Monday. Bigger time frames are always more important for future direction. First what I see is big divergence between the DIA and the QQQQ, what is very obvious when we see them. The DIA forming bear flag and it is much weaker. Also note that we have synergy between all only on the move down and always when indices started with corrections from lows divergence came out and increase trading risk. Also we must know that we are still in bear market. When I see daily charts I think that we can see another move up what will bring the DIA and the SPY in to previous high what will be double top and what could bring the QQQQ to weekly triangle resistance. Of course that is just one open scenario, but over all I will be very caution with upside move. Of course that can happen. My job is to recognize risk, because I can predict and I can expect market action but I canât be 100% sure. But I can be sure in trading risk, and be full risk swing long trader when indices are at weekly resistance areas after move up, not sound very smart for me. That mean I will be focused on the intraday setups next days and on âown wayâ charts. If DIA will bring all down to another weekly selling wave then I will expect again synergy and I will increase trading risk. If all will stay same and if weekly divergence will stay, then my trading risk will stay same and focus will stay on the intraday moves. That not mean we wonât have swing setups. It will just be less opportunity. Trading is balance between several factors and it is important to find always right balance. If anyone is interesting for more feel free to send me private message. Wish you all good trading!!! Kind regards. Ivica
Market commentary for 09/02/2008 Good day! August is finally over and with it the worse trading month of the year. After DELL's earning results the QQQQ opened under Thursday low which brought bull trap and it was a signal for selling pressure. On the 60 min charts we can see that the QQQQ is much weaker last few days and back to the channel support area which is also the 50sma daily support area. The SPY and the DIA found support area at Wednesday close what is also gap support area and daily 20sma. Generally the jumpy market action with back and fourth action continued. After Thursday move up and the pattern breakouts on the daily charts I was alarmed the breakout volume was too low. Friday's trading action proved that once again. Trading risk will remain high for the next week and the bigger time frame will show us why. Letâs start with DIA and SPY. Both are forming weekly bear flags, but last week âearlyâ trigger didnât work and right now we have 50/50 chances for continued direction next week. The DIA still can pull back from 200sma resistance area (red line), but also can continue with consolidation under 200sma what will increase odds for breakup. Similar situation is with the SPY. I believe the weekly lows will hold for some time. On the QQQQ weekly chart we can see that triangle holding and I will expect that the QQQQ will remain weakest and it will retest triangle support line. From technical analyst view a conclusion is the DIA and the SPY have 50/50 chances for next week and that the QQQQ action suggest down move to support line. For trading risk it will be again need volume to improve. We can see that last week it was very light and without volume conviction trading risk will remain high and my focus will be there. Until we see volume conviction the safest area will be small time frames (scalps) and anything longer, especially overnight, trades risk will remain high. Wish you all good trading!!! Kind regards. Ivica
Market commentary for 09/29/2008 Good day! Another day, another day of meandering around waiting for the politicians to get something done. There were three pieces of news that were important prior to the opening of the market. The first and probably the one that scares the market the most was is there a deal or not? In my opinion that one is just political and it will get done. The second was the GDP number that came in very low. Lower than anticipated. That one means the economy is bad and getting worse. The third was RIMM's lackluster guidance. That one is extremely bad for technology. With all that, the gap down was large and fear is taking over the markets. Once it became clear the Deal was now a matter of gamesmanship the markets chopped for the rest of the day and the DIA finished positive with many people buying the market in front of the DEAL being done. As I write this it appears a deal is almost done. Even if accepted the crisis is no way finished. It will take time for that, but I believe the market will attempt to trade more normally. Technical analysis doesn't work while there are fundamental changes in the market. while this is my opinion, it appears taking 800 companies and not allowing short sales have altered the way the markets trade and until this rule is lifted we will have low volume choppy days. Friday we saw a large gap down to support areas. The indices opened under Thursday low and that was bull trap. But as I said above, I donât expect any meaningful directional until Government does its thing. After the open the indices bounced and the DIA was strongest and it was the first to fill the gap. The QQQQ was very weak and most of the morning traded in a tight range. Volume was light all day and before the end of the day the QQQQ almost filled its gap. The DIA came all the way back and broke Thursday's high. On the bigger time frames we still have uncertainty. Will DIA and SPY see selling continuations and a new selling wave? Will the QQQQ double bottom hold? From TA view it is uncertainty in this situation. This is similar to trading on the FED decision days. Waiting for news and again waiting till the news settles down. I believe we are in the same situation. This time we need to watch the daily chart and in FED's case we follow intraday charts. MY conclusion is that after the plan is accepted it would be smart to wait and see the market reaction and direction. Until that I will stay with fast trades and anything longer than an intraday setup will be high risk, especially swing and position setups. I still have ideas and I will post them, like ESRX OSIP etc but for now they are just ideas for intraday setups. Wish you all good trading!!! Kind regards. Ivica
Market commentary for 12/29/2008 Good day! The news last week continued to be poor. Jobless claims were at a 26 years high, home sales at a 17 year low, the Fed invoked its emergency powers again and the holiday sales came in a dismal -4.0 %. The market sold off 1.7% on very light holiday trading. Friday gave us another small range day on very low volume. It was expected because it was between the holiday and the weekend and many traders just took an extended weekend. The indices started with a gap up and right after the open the selling pressure started. The gap was filled and for the rest of the day we saw a slow recovery and the indices closed at the highs. It was nice intraday cup pattern. But since the volume was so light and we had another consolidation day on the daily charts. I wonât take Friday's action with any conviction in any direction. On the 60 min charts I drew consolidation lines and from the commentary, nothing changed. I still see a 50/50 chance in either direction right now. From the 60 min correction the indices can break up and try to get back some of the losses after several down days. It can also use this consolidation as a rest for a selling continuation. Generally, my bias is still short, the question is will we see a bounce before the selling continuation or not. On the daily charts the first resistance will be the 20sma and then the 10sma and after that the 50sma. That shows there are many resistance levels for the indices to get back to the highs. To change my bias I need to see proof and that will be a strong bounce from the 60 min consolidation with a fast pace and large volume. Since next week is again a short week Iâm not sure that will be case, but the market is unpredictable so we will see. For a weekly bear flag that I drew before on the weekly indices need to go down soon or the odds for that will decrease. I donât expect much from this week. Maybe some action on Monday and Tuesday and then we can close the year. Wednesday and especially Friday will be days with very low volume and action. The action I expect to see will be next year on Monday 5th. In any case I will be here to see that. Conclusion is that I will still be focused for swing shorts and in the mean time I will look for intraday longs. In the case those indices will see more intraday up action. If my bias changes I will let you know in this column.
Market commentary for 01/05/2009 Good day! The 6% move in the market was nice and I'll take it, however Monday the real story starts to be written. There was little of no volume last week. Bad news continued and the market continues to ignore it. Perhaps the Obama rally has started, we shall see. I didnât expect that strong of a bounce. I canât remember when I have seen three trend days in the row. Rarely do we see two in a row and three is really a surprise. Truth is we have never seen a market this weak, so it looks like we must use that condition for strong reversals. The main problem was volume. On the daily charts we can see the rally started with extremely low volume which was because of the holidays. Since the volume increased every day and the indices broke previous highs we have a chance for an explosion at Monday with big volume, but also we must know that increase in daily volume was still less than normal. Letâs start with 60 min charts. Friday we can see the indices formed a third buying wave. We can also see the last buying wave was bigger than the previous on higher volume which is a strength sign. We can also see that only the DIA closed at the daily resistance area, while the SPY and the QQQQ broke it and closed on new daily highs. Also, Friday's buying pace was strong which a strength confirmation is again. We can see the same on the daily charts. The SPY and the QQQQ have room for a possible Monday explosion, while the DIA need to deal with the previous high. To have a clearer picture we need to look at the weekly charts. The SPY and the QQQQ broke a small (maybe too small) consolidation and after the CCI setup they have room for a move to the 20sma resistance area which is the next target area. Again, the DIA still needs to do that. We have a phoenix reversal pattern, but I still have some concerns. First is the weekly pace. The selling pace is stronger than the buying pace, plus a weekly volume decline. For a true reversal pattern I like to see a stronger buying pace than a selling pace and also I would like to see heavier volume on the bounce than selling volume. For me those are two important indicators for a reversal pattern. Daily charts suggest that we could see a gap up, also the SPY/QQQQ have room for more buying, but after three 60 min buying waves and after reasons what I explained on the weekly charts I will use extra caution for new long setups, actually I will use them only for fast trades, nothing longer. When I see weekly charts I still donât trust the reversal pattern will work. Also, I expect to see a true direction next week, because generally I donât trust the holiday market action on small volume. After three trend days, we can see a gap up, also we can see strong move up, but also we can see a stronger correction also. Where is the exact top it is hard to know and because of that it will be more watching than trading for me. It will be good time for taking profits for long trades and possible 5/15 min CCI short setups (day trades). Wish you all good trading!!!