Archive for the ‘Technical Analysis’ Category

Technical Analysis Video of Major Index’s

Thursday, November 5th, 2009

Today is Wednesday, November 4th and the major index’s could not hold on to the gains.

It was Federal Reserve announcement day today at 11:15 am West Coast time and the markets gave us a good show. The night trading in anticipation of some good news, speculators bid up the price of the futures and on the open, the cash S&P shot up to match the current futures prices. It pretty much continued higher for a while and started to level out at mid day. From 9 a.m. to 11 a.m. the price action basically stopped. If you were trying to trade in that stuff, it would be enough to make you go crazy. No Movement. Anyone trading the market should know about key announcements days and times.

I will give you all a link to a site that you should be looking at. You don’t have to use this one, there are other sites that do the same thing, but it lets you know about important news releases. I rarely hear what it is, that they say in the releases, but the point is to know what time key reports are going to be released.

If you don’t know whats going on, first, you are at a disadvantage. You may ask yourself, where did all the volume go, after you have tried to put on 2 or 3 trades and now have losses. Think about it, 2 hours and the range was basically 2 points high to low. Most people can not make money in a condition like that. Everyone else knew to stay out, did you?

After the news release, you almost always get a mixed bag of indecision. Some think the news was good, others see it as bad and the wild swings begin. The first 15 minutes or so after the release is really better to stay out. You won’t get good fills and the market can turn so fast, you will wish you waited.

After, the initial noise, if you see a good trade, it could be worth a shot. The reward can be “good and plenty”, but be on the right side of the fence.

So here is the site, www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm  .

On another note, I had promised to show you some price action in the major cash index’s and how they compare to each other.  I have the NASDQ, S&P 500 cash and the Dow.

I start out in a monthly chart, cover a few points of interest, where we were and where we will most likely go. I only have 5 minutes, so I go pretty fast, but still enough time to get an idea of what has happened, so you can gain insight into what may be coming.

I did not cover this, because of time and may touch on it tomorrow, but the bottom that we put in back in March, is not the same type of bottoms that we have put in before. With the type of bottom we put in bach in March, a substantial put back is likely.  It may only be back to the middle of its most recent range, but from where we have come from, that is a major shift and a substantial point value, several hundred S&P points lower. No-one likes to think about that, but we have some real big problems out their that are being covered up, with tons of Fed liquidity.

The Federal Reserve gave us an indication that they were going to keep an easy money policy for now and gave no clue on when it would end. In a general sence, that is good for the stock market, but there is so much more, and no room and time to cover it today.

Back to the price action: To me, the natural rhythm of the market says it goes lower over the next few months. This run up, was all of what I had been saying for literally 7 months. You can go back and read my older blogs from back then and see that I had been saying that, where we are today, is where we were eventually going to go. “WE ARE HERE”. Now, in tomorrows blog, I will continue where I left off today. There is more to show and discuss when we get to the daily’s. I do believe that we will continue to go slightly higher from here as a bounce back up to the middle of recent selloff. From there, well, that is where the real trouble could come in.

Tune in tomorrow to get “THE REST OF THE STORY”

To see the video in a larger screen, just click on the screen

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Technical Analysis: Video Trading Lesson Today

Thursday, June 4th, 2009

Today is Wednesday, June 3rd and we are starting to get a pull back in the markets.

Today the markets made a nice late rally to recover from a steeper sell off it was seeing earlier in the day. The Dow was only off around 65 points, not too bad. With a close up off the lows, it sets the tone for an early rally tomorrow, but we may not be done to the downside. I

have no predictions on where prices are going at this point. I will tell you that we did hit an upside objective with the 940 S&P number being hit and completed that I had called. We are still in an uptrend, there has not been any damage to the chart and until then, you have to give the benefit of the doubt to the bulls.

There is some heavy resistance at the 940-950 area so that is going to be a very critical area to watch. I previously had in my mind that we would see some kind of a pull back and a lot of people will think this is more of a correction than it really is and start shorting the market. That could be a mistake. A pull back would be normal from here, but everything about this market right now is not normal.

I do  think overall we will see higher prices over the summer, that I am pretty sure about, but be careful, I don’t think it is going to last. By this September and October, we are going to have problems holding on to any meaningful gains going into the end of the year. I am a bear long term and do think the lows on the S&P and Dow are going to get taken out in a very big way. For now enjoy the mini Bull and get some of that 401K money back.

I am a bit cynical about how things are run around the good old USA. I believe the powers that be know exactly what is going on and when any changes are taking place. If you ask yourself, did “THEY” know that the market was going to tank last year?  Here, let me answer that one for you, YES.  Did they know that it was going to turn and when?  I can’t help myself, let me answer that one too, YES.

Our leader came out on the airwaves three days before the bottom on the S&P at (interesting number, I did not pick it) 666. That would make him a pretty good market timer if you ask me. Just three days earlier everyone thought the very worst. After that third day people who took his advice have done really well. I don’t know if anyone knows that, but it’s true.

What if people put a lot of new money in the market and it did not work out? Mr. O would not be looking too good right now and he could not have that.  The reason he could come out and make a stock market call like he did was because, well, you make your own conclusions. We hear that things are getting better and I am all for that, Ya-Ya.  I always say to keep an open mind and think for yourself. This will be one of those times, even as I give my opinion. That is all it is, my opinion.

In today’s trading, I did well, had taken a few small trades early, some up and some down, but saw a very nice high probability trade to capture a big move to the downside. I put it on, took not one tick of heat and picked up 6 & 1/4 points on that trade. I held it for a while which was painful in and of itself. I am not usually in a trade for as long as I was, but I played it for the extended move out of a higher time frame and that is what it gave me. I got in just as the market told me and got out just as it said “get out”. I did give it a few extra ticks of room, just in case it was a fake out. I have a chart of it below.  All in all, 3 times my daily goal. A lot of early trades were split trades with different exits.

Trading Lesson: Below is a short video of how you can use support and resistance by plotting  parallel channels. I cover how you can use them in your trading to give you some possible insight on where prices can go before they get there. It is not a science but it is something that gets played out everyday. Take the insight that I give you here today and check it out on the markets. It may take some time to be able to spot these, but when up and down trends play out, you should be able to apply some of these ideas to give you an edge.

Technical analysis is the study of price movement through patterns, support and resistance, and general price fluctuations. You can draw conclusions as prices move from one area of support to another area of resistance and use that information to trade accordingly. Even if you spot these patterns, you still have to know how to play it, with low risk entries in mind.  Check back for more insight and ideas.   Anyone interested in learning more please feel free to email me. I will do my best to answer your questions.

http://www.screencast.com/t/LuSFBV59R Today’s equity chart

http://www.screencast.com/t/3bLxmtzYZI One of today’s trades

http://www.screencast.com/t/HMBxbNpJ7 Trading lesson, 5 minute video

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Where does the market go from here

Sunday, May 24th, 2009

This is for Friday’s post May 22nd, which I did not write.

In Friday’s trading, I did not have a very good connection, I was traveling and not in my home office and my data was freezing because of that, so I elected to just make a few calls on direction but not trade at that time. Later in the session, I was able to link into a faster data connection and took a few trades to a get double daily goal.

I was trading small, but picked up my points with no problems. I remember taking 9 trades and only had one very small loss of  1/2 point. I had some split trades in there, half the order comes off first and the other half later (T-2) , usually at a better gain.

The market sold off on Friday during the last 15 minutes of the day, another close at the lows of the day after trading higher through out the session. That again should have an impact on Tuesday’s opening market.

Trading Lesson:    Generally, when the market sells off early in the session while it is in an uptrend on the daily, you can often see the market come back and close at the highs of the day. The same is true when we are technically in a down market. You will see the market rally early in the session, only to close at its low of the day. We have been seeing exactly that the last three trading sessions. It happens all the time, so it’s one of those things to keep in mind. If you don’t know if we are in an no trend or downtrend, you have work to do.

Where do we go from here?  Since last week, we had broken the wedge that was forming to the upside, that I had been talking about for weeks, but we do not yet have a lower low from our most recent pivot point. Some of my daily indicators are pointing down and some have yet to turn down. From the price action that has recently taken place over the last three trading sessions, I had become bearish on the daily, but with caution.

On Wednesday I stated in my blog, the short term top was in and lower prices were coming off of the price rejection I saw that day and hitting the adjusted outside purple line that I had talked about for a month. All of that has happened and now we will have to see if the last pivot low is going to hold. There are things happening that say it can hold and at the same time, there are things that say it will drop down and break the low, which will bring in more selling. I don’t know which one it will be yet. Pure price action says there is no violation yet, while momentum says it should break. I am going to have to let the market decide and you should too at this point.

We have come off 50 S&P points from the top at 930 to Thursdays low of 879. A month ago I had said 940 or so would be the top of this little run and was off about 10 points. I just needed to re-adjust my lines and last Wednesday I saw that.

Anyway, let’s just let the market decide. If it does break the low, we could see a move down to 847 to 850 on the S&P. It’s not too steep but it would naturally find initial support there at a parallel channel taken from the most recent tops. That lower end of the channel comes in at around the level I just mentioned. Again, we will have to see what happens first. It would appear that is what is going to happen, but if price action changes to reflect something different, I will look to re-asses. With the Gov looking to take control of GM, that could tip the scales south for now.

The financial networks always try and come up with a reason why the market did this or that, but fail to realize that much of the price action would happen that way regardless of the news – just a personal observation.

Last week I was talking about “Price Action”. I wanted to clarify one thing, the difference between price action and price patterns. I believe I was pointing out a “Head & Shoulders” formation that developed in a 5 minute cash chart of the S&P from Wednesday’s sell off. Anyway, there is a difference between the two and I wanted to make that clear.

Price Action is a collection of price movements based mostly on support and resistance. Prices are pushed above and below their mid point.  While price pattern is the collection of price movements that cluster to form identifiable patterns. When those patterns are broken, you can draw a conclusion that will yield a highly predictable outcome. Price action is what takes you to the point where you can see the formations coming together. It is almost like, which came first, the chicken or the egg?

In this case, price action comes first, then comes price patterns from the price action. I hope that helps clear up any questions you may have had about that. If you were not even aware of the difference, you now have it explained.

http://www.screencast.com/t/lcQ9oHq5q Friday’s equity chart

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