Market commentary for 06/13/2007 Good day! Tuesday's action was as expected based on the daily and the 60 min charts. Both Thursday's low and Mondayâs high held. The action stayed between those two areas. However if we look at the 15 min charts, we can see very whippy action after the afternoon breakout. Letâs start with the daily charts. ALL is clear here and the support areas are still holding. The SPY looks the weakest and is back to its' 50sma daily support area. That is a very important trend support area. http://www.ivicacharts.com/diagrams/2007/06132007dia.jpg http://www.ivicacharts.com/diagrams/2007/06132007spy.jpg http://www.ivicacharts.com/diagrams/2007/06132007qqqq.jpg My expectations from yesterday's commentary proved true with regard to the 60 min charts. Both the resistance and the support areas held. This is something that I will look for today as well. http://www.ivicacharts.com/diagrams/2007/06132007dia60.jpg http://www.ivicacharts.com/diagrams/2007/06132007spy60.jpg http://www.ivicacharts.com/diagrams/2007/06132007qqqq60.jpg For educational purposes, it is interesting to look at the 15 min charts, which illustrate why the reversal periods can help us in our trading. We can see a nice breakout around the 13:00 pm reversal period. The breakout pace was strong and we saw an equal move to the resistance area. After that pace we usually see a consolidation for continuation (base, triangle, flag), but this time the 14:00 pm EST reversal period brought a different kind of activity. We saw a strong selling pace into new lows for the SPY and the DIA. The QQQQ held its' morning lows. This is the reason why it is always good to follow these reversal periods and have your eyes open for any possibility. http://www.ivicacharts.com/diagrams/2007/06132007dia15.jpg http://www.ivicacharts.com/diagrams/2007/06132007spy15.jpg http://www.ivicacharts.com/diagrams/2007/06132007qqqq15.jpg We have a few reasons for the strong whippy intraday action. One is the consolidation after last week's strong daily move down. It is usual to see a consolidation after that. It is also the start of a possible daily triangle action, and in future days, we should see lower highs and higher lows. Another reason is option trading week, which always brings whippy action. There are two ways to trade this kind of market. One is to use bigger stops then usual. Second is to not trade at all and wait until the market takes its breather. Every trader will determine what is best for him but one thing is for sure and that is market risk. This risk is high right now and I will expect that it will stay this way for the rest of the week. Use proper risk, donât be greedy and be quick to take profits. Remember that cash is a position too. Sometime it is the best position to have. If you have any questions, please feel free to contact me. Good luck trading today!!!! Ivica Juracic
Market commentary for 06/14/2007 Good day! This is option trading week and with it comes the whippy market action we have been seeing. One day everything is red and the next day everything is green. After the morning gap up, the Indices spent the morning under selling pressure in an attempt to fill the gaps. The pace of the selling was not impressive but led to a more active 14:00pm EST reversal period. This time we saw a nice afternoon move up into Mondayâs high and the daily resistance areas. For the QQQQ, it was the 10sma daily resistance area, while for the SPY and DIA it was the crossing of the 10 and 20sma area. Even though this is not good for more upward action, it does not mean we canât see another move up into daily highs. The QQQQ's strength has more of a possibility of that than the SPY and the DIA. http://www.ivicacharts.com/diagrams/2007/06142007dia.jpg http://www.ivicacharts.com/diagrams/2007/06142007spy.jpg http://www.ivicacharts.com/diagrams/2007/06142007qqqq.jpg On the DIA and the SPY 60 min charts, we can see a nice reversal head and shoulders pattern and a move back into the previous high resistance area. http://www.ivicacharts.com/diagrams/2007/06142007dia60.jpg http://www.ivicacharts.com/diagrams/2007/06142007spy60.jpg http://www.ivicacharts.com/diagrams/2007/06142007qqqq60.jpg With the daily resistance and the intraday pace, I donât have a bias for today. I think that it will all depend on the morning's action, but from my experience, option week tends to not be the easiest to trade. Because of that, I wonât be surprised to see a gap down in the morning and a move up to new highs after that. Of course, that is just one option. Right now, it is best to trade small and be ready to exit a trade any time the market turns around. Swing trades are going well for now, but it is important to not be at full risk with them. If I would have to bet, I would say that the Indices will move back to the daily highs, however, I will leave all options open. If you have any questions, please feel free to contact me. Good luck trading today!!!! Ivica Juracic
Market commentary for 06/18/2007 Good day! Unfortunately Fridayâs action was in line with expectations. The day started with a nice gap up that brought our open swings to new highs, however, that was it for Friday. The Indices spent the rest of the day in a tight range, which was really not worth trading. It was a typical summer option expiration Friday. This is always a good time to look at the weekly charts and review last week's action. We can see from the charts that the Indices recovered after last week's weakness. Even the QQQQ almost made new highs Friday morning. The volume in the recovery was strong. The SPY's buying volume was stronger then its' selling volume the week before. From that, we can make a conclusion that the market had a nice recovery week. http://www.ivicacharts.com/diagrams/2007/06182007diaweekly.jpg http://www.ivicacharts.com/diagrams/2007/06182007spyweekly.jpg http://www.ivicacharts.com/diagrams/2007/06182007qqqqweekly.jpg All that sounds great but one thing makes me very cautious and that is the volume on the daily charts. If we look at the daily charts the red volume is greater then the black volume, and that means on the selling days the volume was larger then on the buying days. That tells me to maintain caution in the future days. After the strong recovery from the daily lows, a double top pattern is very possible right now. http://www.ivicacharts.com/diagrams/2007/06182007dia.jpg http://www.ivicacharts.com/diagrams/2007/06182007spy.jpg http://www.ivicacharts.com/diagrams/2007/0612007qqqq.jpg If we look at the smaller time frames, (60 min), we can see that the indices are extended. For an ideal break up, the Indices need several days of consolidation near the highs. In addition, we can see Fridays range action. http://www.ivicacharts.com/diagrams/2007/06182007dia60.jpg http://www.ivicacharts.com/diagrams/2007/06182007spy60.jpg http://www.ivicacharts.com/diagrams/2007/0612007qqqq60.jpg In conclusion, I think that we are entering a week of uncertainty. The range action, and in this case the NR7 bar, means that we can expect a trend day on Monday. That sounds great, but which way? I think we cannot have a bias either way because we not only have higher daily selling volume and a double top possibility, which would indicate a down trend, but the double top can always turn into a higher high and a trend up. The weekly charts are still strong and a selling week can just amount to the market taking a breather before a new run. If that happens, I donât see low risk setups because the Indices are extended now. The best thing for us is to look for is intraday (day trades) moves. If we have a consolidation day, it could be the start of a daily cup and handle pattern. So, all this indicates we are entering a trading week of uncertainty. What the market does is something we cannot control, however, we can adjust our risk management and the number of trades, using patience until we will see a more clear market direction. It is logical that new swing trades are higher risk and it will be best to stick with intraday moves and "own way" charts. Swing traders that donât like that kind of action must continue to use patience. That would mean scanning and researching for future possibilities and being less active then in the last few weeks. If you have any questions, please feel free to contact me Good luck trading today!!!! Ivica Juracic
Market commentary for 06/19/2007 Good day! We had another slow trading range day. I can just cut and paste yesterday's commentary and everything is the same. So, there is little new to say. One thing is for sure, and that is we didnât have a trend day. But, after another range day, we have three options for the open: The same start as yesterday, the possibility of a daily double top or the possibility of a daily cup and handle with continuation to new highs. http://www.ivicacharts.com/diagrams/2007/06192007dia.jpg http://www.ivicacharts.com/diagrams/2007/06192007spy.jpg http://www.ivicacharts.com/diagrams/2007/06192007qqqq.jpg Intraday we saw divergent action. The QQQQ was the strongest, forming a nice 60 min triangle and closing at the same price as last week. The SPY and the DIA were weaker and closed lower. Both are forming 60 min bull flags. http://www.ivicacharts.com/diagrams/2007/06192007dia60.jpg http://www.ivicacharts.com/diagrams/2007/06192007spy60.jpg http://www.ivicacharts.com/diagrams/2007/06192007qqqq60.jpg When we look at the daily and the 60 min charts, we can see that all options are open with the same probabilities. If the Indices form daily cup and handles then we can look for possible swing patterns. If we see the other possibilities, the best approach is for day trades. Since we still donât have a cup and handle pattern, it means we donât have any swing setup possibilities on the daily charts. This means risk will stay higher, and the focus will continue to be on intraday actions. If you have any questions, please feel free to contact me Good luck trading today!!!! Ivica Juracic
Market commentary for 06/20/2007 Good day! For the second day in a row, the QQQQ closed flat without any change. The DIA and the SPY closed with just a small change. This tells us a lot about yesterday's market action, especially, when we look at the daily charts. During the last three days, we can see that we had range days with little change and with declining volume. This action is a consolidation after the bounce we saw from the previous daily lows. Right now, we can see that the Indices are starting to form cup and handle patterns, which are ideal for a breakout. The best case scenario for that would be for the Indices to stay in their ranges for a few more days. http://www.ivicacharts.com/diagrams/2007/06202007dia.jpg http://www.ivicacharts.com/diagrams/2007/06202007spy.jpg http://www.ivicacharts.com/diagrams/2007/06202007qqqq.jpg On the 60 min charts, we can see the consolidation of the last three days more clearly. The SPY and the QQQQ are forming a base, while the DIA are forming a bull flag. http://www.ivicacharts.com/diagrams/2007/06202007dia60.jpg http://www.ivicacharts.com/diagrams/2007/06202007spy60.jpg http://www.ivicacharts.com/diagrams/2007/06202007qqqq60.jpg The risk hasn't change. While the Market continues with this consolidation, we will have high risk trading. The best way to handle this is to stay with the strongest and weakest charts for possible intraday moves. For now our open swings are doing great, however, it is important to continue to compare them to the market action and use trailing stops to cut risk. If you have any questions, please feel free to contact me Good luck trading today!!!! Ivica Juracic
Market commentary for 06/21/2007 Good day! Is the party over???? For the immediate future the QQQQ, SPY and the DIA all broke immediate support. The 20 sma and the 200 sma on all the intraday time frames were broken leaving the 20 sma on the daily as the next support area. The market was weak all day with the selling accelerating after the 2pm reversal period and the volume and pace also increased dramatically. Looking at the market fundamentally, stocks started the day with Morgan Stanley and Home Depot reporting excellent news with the futures gapping up. The initial selling started when the crude and gas inventories both came in significantly greater than expected. The price of oil started to drop immediately and significantly. This started the selling in the oil and energy issues but lower oil prices should have a bullish effect on stocks. It did not. The 10-year bond barely sold off but the selling continued. The only reason that can be put on the day was the two hedge funds failing from Bear Stearns which many blame might spill over into the overall market. Financials and Utilities both got crushed yesterday. For now the 20 sma daily will be the initial support for the market and the 200 sma 15 min and the 200 sma 60 min will be resistance. My bias for today is perhaps a small gap down on the open and then the markets will consolidate or rest before the next move down. Until earnings season gets going in a couple of weeks the market will react daily news reports. For now new short positions have additional risk and I will look to exit any long positions still open. I will look for "Own Way" stocks and day trades today in the trading room. Swing trades have additional risk. I will trade smaller positions and look at shorter time frames today. Good luck trading today!!!! Ivica Juracic
Market commentary for 06/22/2007 Good day! Yesterday's action was exactly in line with expectations. That was a weak morning and then recovering from the strong daily support areas. For the QQQQ daily 10/20sma are still support areas and last few days it is the strongest. Reversal pace is strong with nice daily volume. The SPY is the weakest index and is back to the 50sma daily support area, which held yesterday. The reversal volume is nice also. It was the same with the DIA. Yesterday's volume was stronger than the selling volume Wednesday, which is promising for the long side. http://www.ivicacharts.com/diagrams/2007/06222007dia.jpg http://www.ivicacharts.com/diagrams/2007/06222007spy.jpg http://www.ivicacharts.com/diagrams/2007/06222007qqqq.jpg On the 60 min charts we can see reversal pace. The DIA and the QQQQ reversal pace is strong for now. The same as the selling pace which will suggest more range action in the near future. The QQQQ looks best while the DIA still has problems with the 20sma. If we look at the SPY on the 60 min chart, we can see it is the weakest. The reversal pace is weaker than the selling pace and it is still under the 20sma on the daily chart. It is also under the 20/200sma on the 60 min chart. I think we can expect more weakness there in the near future if it doesn't move back above the 10/20sma on the daily chart. http://www.ivicacharts.com/diagrams/2007/06222007dia60.jpg http://www.ivicacharts.com/diagrams/2007/06222007spy60.jpg http://www.ivicacharts.com/diagrams/2007/06222007qqqq60.jpg The QQQQ looks the strongest and looks ready for new highs. The SPY looks weaker and looks like it wants new lows soon. Because of this situation we could see divergence action today. We donât have synergy and in that case risk will increase. Also from the 60 min charts we can make a conclusion about possible range action the few next days. That is in line with daily charts. I expect another day for fast trades and intraday moves with up/down action which we had yesterday. The trading room is the best way to trade that kind of market. I will try to find the strongest and weakest names and compare them with market action and look for intraday setups. That way we can have a profitable day despite the market action. Own way stocks, like HURN are always welcome and always will be in my focus. They come from comparing stock action with market action. Good luck trading today!!!! Ivica Juracic
Market commentary for 06/25/2007 Good day! Last week was interesting in the it began with a couple of range days at the weekly highs which gave us an opportunity for new highs, but after Wednesday's weakness specifically on the DIA and the SPY the market closed at the weeks lows. On the weekly charts we can see the DIA and the SPY are back to the 10sma support area, while the QQQQ was is the strongest index and is still above all its daily moving averages. We can also see the weekly consolidation continued after several months uptrend. The weekly volume is another important point to consider. It was stronger than the average volume which indicates we have more selling interest right now. The best reason I heard for the selling was large funds were liquidating to buy into Blackstone. (Yea right!!!!) http://www.ivicacharts.com/diagrams/2007/06252007diaweekly.jpg http://www.ivicacharts.com/diagrams/2007/06252007spyweekly.jpg http://www.ivicacharts.com/diagrams/2007/06252007qqqqweekly.jpg The weakness can be seen more clearly on the daily charts. The QQQQ is still in cup and handle formation, while the DIA and the SPY lost that possibility. The SPY closed under 50sma support area and has additional room to the previous low support area. Another important point is that the SPY made lower daily high which indicates it will be more difficult to see new daily highs soon. For the DIA that is daily double top, another indicator for future upside possibilities. http://www.ivicacharts.com/diagrams/2007/06252007dia.jpg http://www.ivicacharts.com/diagrams/2007/06252007spy.jpg http://www.ivicacharts.com/diagrams/2007/06252007qqqq.jpg The 60 min charts just confirm the weakness differences between the QQQQ on one side and the SPY and the DIA on the other side. The QQQQ is only one still above 200sma and the selling pace is the weakest there. http://www.ivicacharts.com/diagrams/2007/06252007dia60.jpg http://www.ivicacharts.com/diagrams/2007/06252007spy60.jpg http://www.ivicacharts.com/diagrams/2007/06252007qqqq60.jpg If we only watch the QQQQ we can still hope for another move up to new highs, but can the QQQQ bring others with it? Looking at the weekly and the daily charts and volume they lost the strong daily supports (10/20sma). It is hard to believe we will see that soon. From a trading perspective I still donât see a swing short setup and I donât see evidence we are in down trend market. For that we must see new a daily low. Right now, I think that Indices will continue with their weekly consolidation. If we look back to the weekly charts we don't know what kind of consolidation or correction this will be. Maybe it will be a base or maybe we will have a strong reversal or even perhaps a slow reversal (bull flag). It just is to early to tell. Swing trades can expect higher risk over the next several months (summer) and we probably will see lots of daily overlap. Of course that is just possibility for now, but that is what charts telling me right now. We just don't know where will market is going from this point, but we can recognize risk. Since we lost the daily/weekly trend and since the trend is what we need for trading (Iâm trend trader). Without trend the risk will increase and that is case right now. My focus will be on âown wayâ trades, and on intraday moves. Nothing changes from that side. I will compare market action and individual stock actions to determine the strongest and weakest names for intraday opportunities. We will must be faster with taking profits and we can expect less opportunities. That does not mean we wont have any. For now we must go day by day. Good luck trading today!!!! Ivica Juracic
Market commentary for 06/26/2007 Good day! The markets had a wild ride to finish almost unchanged for the day. While the indices finished a little lower on the day you can see that they tested support and bounced slightly finishing above the daily support. The DIA and the SPY (more clearer) are in a double bottom possibility. That means the Indices are already on the move and future action is a little more predictable. http://www.ivicacharts.com/diagrams/2007/06262007dia.jpg http://www.ivicacharts.com/diagrams/2007/06262007spy.jpg http://www.ivicacharts.com/diagrams/2007/06262007qqqq.jpg Looking at the intraday charts (60 min) we can see yesterday's action which was more interesting than the daily charts. After open weakness the Indices bounced strong on higher volume. They touched the 20sma which is always the stronger resistance area (on every time frame chart) and the reaction was very strong. We got strong selling pressure and a move to new lows. That was the third selling wave on the 60 min charts. On the DIA and the SPY charts we can clearly see how the previous low held yesterday's selling. http://www.ivicacharts.com/diagrams/2007/06252007dia60.jpg http://www.ivicacharts.com/diagrams/2007/06252007spy60.jpg http://www.ivicacharts.com/diagrams/2007/06252007qqqq60.jpg After the daily double bottom possibilities, support areas and after three selling waves on the 60 min charts we can expect to see a correction. I donât usually like a double bottom or double top situations because for me that is very tricky. The SPY can make lower low and after a lower high on daily chart with strong intraday selling pace that wonât be unusual. They have enough room for that. The DIA has room for more selling on the daily charts and it is same for the QQQQ. On the other side, we can see a nice support area and a double bottom possibility and that wonât be an unusual situation if Indices bounce from here. You all know that I need consolidation for my style and right now the Indices are on the move (on the daily charts) and because all the reasons mentioned above, I donât have a clear bias for the morning action. If I was betting I would lean toward continued selling pressure in the morning and a reversal in the afternoon. That is just guessing and will wait for the opening action. If indices start with correction after daily move down we must see what kind of correction that will be (base, triangle, flag). So we can say right now that every option is open and because of that risk will stay higher and we must be focused on intraday moves. During the summer, I expect more indecision with a weekly consolidation possibility. Good luck trading today!!!! Ivica Juracic
Market commentary for 06/27/2007 Good day! I can copy all the text from yesterday's commentary with only a few additions. We saw a typical summer trading day. The morning was choppy, during midday we saw choppy range action and for the rest of day we saw selling pressure. The SPY was weakest and made a new daily low. On the chart we can see that it has room for another intraday move down to previous daily support area. The QQQQ closed at strong daily support area (50sma), while the DIA closed at low, but with very little change from day before and it too has room for another drop. http://www.ivicacharts.com/diagrams/2007/0627007dia.jpg http://www.ivicacharts.com/diagrams/2007/0627007spy.jpg http://www.ivicacharts.com/diagrams/2007/0627007qqqq.jpg On the 60 min charts we can see that 20sma still holding and now is key resistance for any possible future reversal. The fourth selling wave is on the way and we can expect continuation today in morning after the open. http://www.ivicacharts.com/diagrams/2007/0627007dia60.jpg http://www.ivicacharts.com/diagrams/2007/0627007spy60.jpg http://www.ivicacharts.com/diagrams/2007/0627007qqqq60.jpg We will watch the opening action since we can easily see a gap down and reversal. We can see a small gap up and then selling pressure. Risk remains high and the market is already on the move down and after four selling waves on the 60 min charts. New short setups right now will come in the high risk level. My focus will be on the reversal and during that time we will manage open short trades. I will look for strongest names for reversal possibility and for that I will use % lists. Risk from overtrading is high now, and please keep that in mind. We donât need a ton of trades every day and right now it is smart to preserve capital for future challenges. The FED meeting starts with the decision on Thursday at 2:15 pm ET, keep that in mind. Good luck trading today!!!! Ivica Juracic