US market commentary

DWL said:
Market commentary for 01/04/2008

Good day!
Thursday's market action went exactly as expected. After a large range bar we can expect to see consolidation and that is exactly what the market gave us on Thursday.

...

I’m not interested in the long side right now, but if the indices will break above Thursday's high I will use that strength possibility for an intraday move up. Remember, pace and volume will help us to determine direction.
Click to expand...

I read your analysis with interest sometimes. After a big trending day with range expansion it was indeed to be expected we'd see some slower sideways action. However, why are you not interested in longs? Yesterday we consolidated the lows from the day before and I was looking to buy a long there (as a daytrader). You're right that selling might not be over yet, for all we know yesterday might just be a pause, but if I understand correctly you were standing on the sidelines yesterday?

About pace & volume, yesterday was slow pace and not big on volume, but isn't that how the smart money prefers to accumulate?
 
support

firewalker99 said:
However, why are you not interested in longs?

fw,i think technically we could touch 1420 ish on the spx cash and maybe 20 points lower on the dow ,so a buy recommendation now could be a day early,but if you look closely at the lines drawn for channels ,not all the bars touch so we could rally on this number in 12 minutes
Click to expand...
 
ammo said:
12,970 in dow,1420 spx
Click to expand...

NQ on support... if you look in the DOW thread you'll see I went short today.
Anyway, good stuff on your previous posts. Very sharp calls as far as I can see, only the "20 points lower" is more like 100 lower :)
 
lines

firewalker99 said:
NQ on support... if you look in the DOW thread you'll see I went short today.
Anyway, good stuff on your previous posts. Very sharp calls as far as I can see, only the "20 points lower" is more like 100 lower :)
Click to expand...

when they dont line up with each other you have to see which one holds,obviously wasn,t the dow
 
Market commentary for 01/07/2008

Good day!
2008 has started badly for the US market. Our predictions came true and the indices had a strong move down on Friday. The bad Jobs data helped our technical analysis. The Indices opened with a strong gap down. I was looking for a bounce possibility because lately most gaps have filled, and that is not unusual with range action. But the indices already started their second selling wave on the daily charts and on Friday didn’t have strength for any kind of recovery in the morning. Friday gave us a trend day and every try to break above the 10sma 15 min failed, which is always a measure for a trend day.

http://www.ivicacharts.com/diagrams/2008/01072008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01072008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01072008qqqq60.jpg

On the 60 min charts we can see that the QQQQ was the weakest and its' selling pace was very strong which resulted in more than an equal move target area. The DIA was the strongest, or less weak, and in that case, an equal move target area was not realistic. That is another reason why I repeat I always watch pace and volume. When the QQQQ reached its' 200sma support on the daily chart, intraday risk increased because the indices had a good reason for a possible bounce. Also we can see that all are extended on the daily and intraday charts so that was a good time to cover our open swing short trades. The QQQQ 200sma daily didn’t hold and on the weekly chart we can see that the 50sma, a stronger support area, acted like a magnet. Let’s take a look at the weekly charts. The DIA and the SPY's weekly H&S possibility did great. Remember I mentioned that possibility before the New Year. The QQQQ is close to its' 50sma support area.

http://www.ivicacharts.com/diagrams/2008/01072008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/01072008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/01072008qqqqweekly.jpg

We can say that the indices are at stronger support areas. The conclusion from that is that new short trades will be good only for fast possibilities (day/scalp). For swing short setups risk is higher. I think that the indices have room for more selling in the future, but need rest and a daily correction first. Let’s take a look at the daily charts. The DIA has room for another move down to its' previous daily low. The SPY is already there and the QQQQ has room for another small drop into it’s' 50sma weekly support area. Also we can see that the SPY and the DIA made a second daily wave.

http://www.ivicacharts.com/diagrams/2008/01072008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01072008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01072008qqqq.jpg

Now what? On one side the indices have had 3 selling waves on the 60 min charts. All are extended. The daily CCI for the SPY and the DIA are under 200 (oversold area). All are at weekly support areas with large extended red bars. Selling volume is higher. All that is telling us that the support area is here and new short setups will be high risk and we can expect a correction. I think that the indices still have room for another intraday move down which can start with a Monday gap. Generally, I will look for a daily correction and I think that the indices need at least one week for that. For low risk setups, it is best to see a gradual move up to the daily 10/20sma resistance area and a bounce back down, which could be the start of a third daily selling wave. On the weekly charts the indices have room for it, but only after a rest. Of course that is from a low risk setup view. We don’t know what will happen for sure, but we know what kind of risk we have out here for new trades. Right now my focus will be on the indices' correction. That means shorter time frame setups will be safer. Please feel free to contact me should you have any questions.

Wish you all good trading!!!

Ivica
[email protected]
 
firewalker99 said:
I read your analysis with interest sometimes. After a big trending day with range expansion it was indeed to be expected we'd see some slower sideways action. However, why are you not interested in longs? Yesterday we consolidated the lows from the day before and I was looking to buy a long there (as a daytrader). You're right that selling might not be over yet, for all we know yesterday might just be a pause, but if I understand correctly you were standing on the sidelines yesterday?

About pace & volume, yesterday was slow pace and not big on volume, but isn't that how the smart money prefers to accumulate?
Click to expand...

When I say I'm not interested for long trades I mean on swing trades. I'm swing tardes and I just follow market action. There will always be "own way"! charts and I'm always interested about that, but right now market is weak and I'm mostly with shorts.. This is answer for market before range day. Nothing much changed after Friday action.

About pace and volume. I'm breakout trader and both helping me to determine target area. It is not same if pace is stronger or not as pace before consolidation. Same is with volume. Depend on both I will see if I will look for more then equal move or less.
At least that is how I do that. Soon I will make class about that and maybe will be more informations how I do that. One note...this is just my way. Working for me. I know there are lots of styles outhere, but this is just mine and I'm ok with it.

Ivica
 
Market commentary for 01/09/2008

Good day!
The market weakness continued. After the opening's gap up (small gap), I expected the indices would fill those gaps right after the start. The intraday strength, however, was not strong enough to prevent a serious daily reversal. It was mostly a 60 min range continuation. The indices stayed in that 60 min range but the morning high was too strong. We can see that range clearly on the 60 min chart and also the possibility of what we can expect for tomorrow.

http://www.ivicacharts.com/diagrams/2008/01092008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01092008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01092008qqqq60.jpg

Since most of the day didn’t have much of a trend (only scalp moves) I was expecting that the 14:00 pm EST reversal period would bring some action. Right around the reversal period, the indices looked like they wanted to break higher, but that was a false try and the rest of the day we saw a strong move down which brought all of the indices to new daily lows. Monday's pivot low was broken and that was a signal for long traders to close their open positions. The selling pressure had very strong volume. On the 60 min charts the lines I drew show how the indices have room for more selling continuation in the morning. Maybe that will be with a gap down, or maybe after a gap up. I don’t know, but I will count on more selling pressure on Wednesday.

http://www.ivicacharts.com/diagrams/2008/01092008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01092008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01092008qqqq.jpg


We can see on the daily charts that the indices have room for that move and I will look for a possible exhaustion move with strong selling volume. I still think that new shorts trades are higher risk, but long trades are high risk too. Patience is golden right now and I will wait for a confirmation of the bottom. We have a few short trades open right now and let's see how they act. Open longs are still ok and I will stay with them. It is very important to understand that the risk level is higher and to trade with proper risk. After several days I think we could see some better trading opportunities.

Wish you all good trading!!!

Ivica
 
Market commentary for 01/10/2008

Good day!
So is this the bottom? The charts suggest that it could be. We are at weekly supports areas, had stronger volume, and a pivot bar on the daily charts. Those are the reasons that suggest that the indices formed a daily low for now. But that does not mean I will buy blindly right now. After the flat open, the indices started with consolidations after Tuesday's late selling pressure. Selling pressure was very weak and with the choppy intraday action down, I was not happy with new short setups and the best course of action was to wait. Again the 14:00 pm EST reversal period was important. We can see on the 60 min charts, how the indices made new lows (weak pace) and around the 14:00 pm EST reversal period we had an intraday trend change with a strong bounce from lows. On the Tuesday commentary charts we can see that the indices reached their stronger support areas and the bounce after the doldrums was something that we expected all day.

http://www.ivicacharts.com/diagrams/2008/01102008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01102008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01102008qqqq60.jpg

Also we can see that the buying volume was stronger than the selling volume. The buying pace was stronger than the selling pace and for those reasons the reversal had strong possibilities. On the daily charts we can see that the indices closed positive and formed a pivot bar with larger volume. But on the 60 min charts we can also see that the indices still didn’t break their trend lines and that is a warning for Thursday's action.

http://www.ivicacharts.com/diagrams/2008/01102008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01102008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01102008qqqq.jpg


Now when the indices show a potential bottom area, we must be careful with expectations. The main trend is down and in spite of the nice intraday bounce I won’t be surprised if we see weakness in the morning and try to retest the low support area. Maybe a 60 min double bottom, or a higher low, we will see, but it is important to not just jump on the train without a trading pattern. For a reversal (low risk) opportunity, we like to see consolidation (base, triangle, flag) after Wednesday afternoon's run which will bring us a continuation pattern. Without that the long side will be risky. Right now we have a V pattern; it can be phoenix, or rounding bottom, or double bottom etc. Right now the situation is not clear so let’s wait and see. The focus will be on intraday moves. Also remember we are moving into the earning season when overnight trades will be risky and exposed to morning gaps. If anyone has any questions, please feel free to contact me.

Wish you all good trading!!!

Ivica
[email protected]
 
Market commentary for 01/14/2008

Good day!
I missed Friday's open and when I got back I saw that I really didn't miss anything. It looks like we had classic Friday choppy action with slow selling pressure. The SPY was the strongest and was the only indice that had the strength to fill its' morning gap down. After the open the DIA and the QQQQ continued with slow selling pressure for the rest of the day. We can now say, yes, that was a trend day. But the intraday pace was weak, choppy and high risk. It was worthless for low risk trading. The DIA and the QQQQ reached their previous daily lows and formed a 60 min double bottom pattern. While the SPY formed a higher low (for now).

http://www.ivicacharts.com/diagrams/2008/01142008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01142008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01142008qqqq60.jpg

At the end of the week it is always good to see the weekly charts because larger time frames suggest to us possible future moves. We can see that all the indices reached another strong support area with huge weekly volume. All are at previous low support areas, while the QQQQ also reached its' equal move support area. Extended moves with huge volume suggest that Wednesday's low will hold for some time and we can expect a correction next week.

http://www.ivicacharts.com/diagrams/2008/01142008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/01142008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/01142008qqqqweekly.jpg

On the daily charts we can see double bottoms possibilities for the DIA and the QQQQ. All the charts suggest a bottom is here, but we always must be prepared for all possibilities. The market could break lower and in that case I will expect panic and a flush out with extreme strong volume. That is one scenario. It is possible on Monday in the morning. Another scenario is a bounce and a strong reversal, and the third scenario is a daily consolidation (base, triangle, flag).

http://www.ivicacharts.com/diagrams/2008/01142008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01142008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01142008qqqq.jpg

We are entering the earning season and that could bring morning gaps every day. Risk will increase for overnight trades. Right now we can’t have any expectations. It is too late. After a move we can expect rest. What kind of rest, it is too early to tell, but we can measure risk. It is always easier to trade when we have a trend. On the daily charts the indices are already on the move and at strong support areas. Because of that, I will be very cautious next week. I will wait for a market signal for one of the possible scenarios. Right now the short side is risky because the indices are extended, but the long side is risky too, because we don’t have a reversal pattern. In addition, the earning season brings us into a higher risk period for new trades, especially overnight trades. Because of that my focus will be on intraday moves, “own ways” as usual and I will use intraday scanning for the strongest and weakest names. This gives us low risk and better risk-reward trades. I will expect a harder time for the watch list because the open gap can affect the watch list setups. Intraday alerts will be more effective. If anyone has any questions, please feel free to contact me.

Wish you all good trading!!!

Ivica
[email protected]
 
Market commentary for 01/18/2008

Good day!
Selling pressure continued. Is this the bottom or not... it is hard to say, but usually after a strong extended day, we can expect a consolidation day. It looks like the bottom area is close. Thursday gave us a strong trend day. We can see this very clearly on the daily charts for the DIA and the SPY. The DIA bar is the largest in quite a while and the strong selling volume supported the daily down trend. Also we can see that the SPY and the DIA are in their third selling wave which is another signal for a possible bottom area. I think that both have room for more selling until they reach their number support areas which are the 120 area for the DIA and 132.5-130 area for the SPY. I think that both indices will see those areas, but for now the question is will that be on Friday or can we expect a day or two bounce before that.

http://www.ivicacharts.com/diagrams/2008/01182008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01182008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01182008qqqq.jpg

On the 60 min charts we can see that the equal move support area is here. Thursday brought a second selling wave, so after a strong extended move down, all the indices have room for a consolidation before the final move down. That is what I expect for tomorrow. That could reflect as a correction on the 60 min charts and the 10/20sma resistance areas will be the key areas for that possibility.

http://www.ivicacharts.com/diagrams/2008/01182008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01182008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01182008qqqq60.jpg

Tomorrow is option expiration Friday. Usually that will bring whippy intraday action and we can expect lots of up-down moves on the 5/15 min charts. One way to trade that kind of action is to use bigger stops then usual to avoid false moves. Also we must be faster with exits than usual. In that case we can expect good risk/reward trades. Risk will be high again. Also we must be careful to not fall into the overtrading trap. Another way to trade that kind of market action is patience. In other words, just wait and don’t trade. I won’t expect a trend day, but with the strong daily action, we cant exclude that possibility

Wish you all good trading!!!

Ivica
[email protected]
 
Thought I'd do a little chartgazing this morning on the S&P. Comments welcome.

The S&P has broken down through the March 02 uptrend channel and also through the base of the October 07 triangle. The triangle depth when the pattern confirmed in November was 119 pts and breakout occurred at 1447, so we have reached the target price, 1328.

The August 07 low has been convincingly breached but the index has ended the week on the May 06 high at 1325. The head and shoulders started in July 07 appears to have been confirmed, and this suggests a further fall from here of 80 pts or 6% to 1247.

Note that 1240 is around the 61.8% Fibonacci retracement level from the index’s October 02 post-tech bubble low to its March 2000 all-time high. This also coincides with a resistance level from August 05.

Some earlier minor support is possible at 1265 (4% down) – this is the 38.2% retracement level from the October 07 high back to the low at the start of the recent uptrend, October 02 – then possibly at 1234 and 1223. Worst case currently suggests to me a fall of a further 10% to 1223. This might suggest a FTSE100 value of 5311, 10899 for the Dow.
 
Market commentary for 01/22/2008

Market commentary for 01/22/2008

Good day!
The selling pressure continued but this time on a much slower pace and with choppy intraday action. We can see that on the 60 min charts. The day started with a strong pre market gap, but during the pre market action most of the gap was already filled and that action just continued after the open. For the SPY/DIA the 10sma was again the trend confirmation resistance area. Always when the 10sma is trend resistance or support, we can see strong trend pace action. If it is much choppier and a slower trend pace, than we can see a situation like we had on the QQQQ 60 min chart. Every try to break above the 20sma finished with a new low. Because of that I always pay attention to the 10/20sma areas on every time frame. We can see that the DIA reached strong number support (120.00) and the QQQQ reached 45 area. The SPY still has room until it reaches number support (130.00 areas) and I think that we will see that next week. So, I will expect another intraday move down on Tuesday.

http://www.ivicacharts.com/diagrams/2008/01222008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01222008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01222008qqqq60.jpg

Now, is that finally the bottom area? The answer for that can be found on the larger frames. Let’s start with the weekly charts. The first view will tell us that all the indices are at strong support areas. Number, previous low and moving average support areas. I will just give some room for the SPY to see 130.00 area which is its' strong number support and also it’s' 200sma support area. Volume is high, action is extended and with a strong support area we have all the characteristics of a bottom area. I believe that bottom area is here, please note that is an area not exactly a specific price. We can see another strong panic move down before a reversal, but we can see a reversal without that. Because of that it is still not time to be buyer.

http://www.ivicacharts.com/diagrams/2008/01222008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/01222008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/01222008qqqqweekly.jpg

On the daily charts we can see that the SPY and the DIA are already in their third selling wave which is another sign of a possible bottom. We can see that the indices are extended and the volume is higher over the last days, which resulted in stronger weekly volume. Right now new short trades will be high risk unless it is “own way” chart or longer term setup. Take a look and see the 10sma on the daily chart. This shows another good example why the 10sma is a very good trend measure indicator.

http://www.ivicacharts.com/diagrams/2008/01222008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01222008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01222008qqqq.jpg

Now what? The situation right now is high risk. The short side is extended so logically it is high risk for new short trades. I think that the indices have room for another move down. Something like a choppy move down for the DIA and the QQQQ and intraday trend move for the SPY until number support area. Another possibility is a bounce on Tuesday (1-3 days up) and then a move down to a double bottom pattern, which will result in the SPY having a slightly lower low. From my experience, after a strong extended move down usually we won't see a strong reversal. Usually a strong move down or up won’t finish with a “V” bottom or a “V” top. Because of that I will expect a bounce from lows, but also I will expect that the indices will retest their low areas and then we will truly correct from the lows. Of course that is just one scenario but we can't be 100% sure. Larger time frame charts are telling us that after strong support and three selling waves on the daily chart, we can look for a weekly correction. That means I will look for several weeks correction. It will be important to see how strong or weak that correction is. In the longer future I see more room for weekly/monthly selling, but it is too early to talk about that. The Indices are in a down trend on the daily charts and we must respect that. Those who follow my work know that after a move we can expect rest. I hope I explained clearly what my expectations are for the future, but if something is unclear or anyone has any comments, please feel free to contact me by email

Wish you all good trading!!!

Ivica
[email protected]
 
Market commentary for 01/23/2008

Good day!

The market opened with a strong gap down from worries about a recession. We can imagine what kind of panic we would have seen without a FED rate cut. That helped at the open for sure and we saw a strong move up and the indices filled the gap during the day. I was expecting that kind of action but I didn’t expect that the rally would be that strong. We used that market action for several long day trades which overall gave us a nice positive day. We saw three strong buying waves in the morning on the 5 min charts and, as usual, a correction started during the doldrums time. The Indices didn’t have the strength for any continuation in the afternoon and stayed in a range for the rest of the day. On the 60 min charts we can see that the 10sma was again too strong of a resistance area and the day finished with a reversal pivot.

http://www.ivicacharts.com/diagrams/2008/01232008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01232008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01232008qqqq60.jpg

There is not much to say for the daily charts. We can see large green bars with strong volume which again indicate a bottom area, but right now the market is an unusual environment. There are lots of worries and fear is still here and the charts are telling us that Tuesday's low will hold but right now we cannot be totally certain. After hours AAPL's results are not helping (warns for Q2) and the indices are trading lower right now. We will see the situation before Wednesday's open but right now we have higher odds that the indices will open lower and could retest Tuesday's low.

http://www.ivicacharts.com/diagrams/2008/01232008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01232008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01232008qqqq.jpg

When we have extreme moves in one direction, as I explained in Tuesday's commentary, we can't expect a “V” bottom and because of that I will expect more overlapping action on the daily charts until the dust settles down. Over the next few days overnight trades will be higher risk because of the market action and earnings season. Of course i will continue to look for “own way” charts. It will be smart to wait and see the open action before taking any new trades and my focus will be on the strongest and weakest names compared with market action. The short side is logically higher risk and probably good only for faster trades. For long trades (swing possibilities) it is important to start with low risk and then add to the position if the trade improves.

Wish you all good trading!!!

Ivica
[email protected]
 
Market commentary for 01/25/2008

Good day!
The day was as expected. We can see that almost every time after a strong range day we have a consolidation day (rest, low range day). That is all in line with move-rest-move action and Thursday was the same. The day started flat and we saw morning buying pressure. That brought the DIA/SPY into its' 10sma daily resistance area and the QQQQ filled its' Tuesday gap down and reached the $45 number resistance area. For the rest of the day the indices stayed in a range which we can see on the 60min charts. The SPY/DIA formed a triangle pattern, while the QQQQ traded back to its' high area, and before the close, formed a possible double top pattern.

http://www.ivicacharts.com/diagrams/2008/01252008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01252008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01252008qqqq60.jpg

On the daily chart we can see that the SPY finished with a doji bar, the QQQQ closed at highs and the DIA had a small range bar under its' 10sma resistance area. Volume was smaller than the day before and that is normal on a consolidation day. The question is: can the indices continue on Friday or will the correction continue. If we take a look at the daily chart we can see that for low risk technical patterns, the indices will need to spend some time in consolidation. Also the resistance is strong, but in extreme moves that can be broken and the buying pressure can easily continue.

http://www.ivicacharts.com/diagrams/2008/01252008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01252008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01252008qqqq.jpg

I will say that we are now in a 50/50 situation. I can’t be a blind buyer because resistance is strong, but the indices closed near highs and have room for another morning move up. This will bring the QQQQ into its' daily 10sma resistance area. We are in the earning season and a morning gap could mark the morning action and because of that right now it is hard to predict. But one thing is for sure. Risk for swing trading is higher and the safest place is with intraday setups, fast trades and “own way” charts. My focus will be on strongest/weakest names and I will compare them with market action which will give us intraday setup possibilities. It is important to use proper risk management right now. If anyone has any questions, please feel free to contact me.

Wish you all good trading!!!

Ivica
[email protected]
 
Market commentary for 01/28/2008

Good day!
It looks like fear is still here and traders didn't want to be long stocks over the weekend. After a really bad start of the week, the market recovered most of it’s' losses and finished near last Friday's area. The Indices had room for a morning gap up and that was all we saw on the long side. For the rest of the day we had a nice trend move and after all Friday brought us a trend day. We can always recognize trend action with lower lows and lower highs (down trend), and if we look at the 5/15 min charts that is exactly the action we had on Friday. Now what can we expect? The DIA 60 min chart can give us one possible scenario for Monday. We can see two selling waves and a consolidation at lows and enough room without a support area for another (third) selling wave. Of course now it is too hard to tell if we will see that selling in the morning, because earning season is here and the open can have a gap in any direction.

http://www.ivicacharts.com/diagrams/2008/01282008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01282008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01282008qqqq60.jpg

Since it is the end of the week, it is always good to review the weekly charts. We can see that the indices are extended and in the oversold area (CCI). Last week formed another big range bar, but this time it is green with strong volume which is telling us we have the possibility of a bottom. All the indices closed above their 200sma support area and reached their previous support area (now resistance), but after Friday's action, lost most of the gains from the lows. Remember after a move we will see rest. The weekly charts are obviously in a large move and very possibly have reached a bottom. If we look only at the weekly charts, it is logical that we can expect several weeks of consolidation, or maybe even months. It is always easier to trade when the market is on the move and always higher risk during consolidation.

http://www.ivicacharts.com/diagrams/2008/01282008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/01282008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/01282008qqqqweekly.jpg

Now it is important to note that the market is in a downtrend. We can clearly see that on the daily charts. After three selling waves, we can expect a correction and with the possibility of a bottom in, it has possibly already started. We can also see that the first try to break the 10sma failed and that is characteristic in trend action. Also we can see that most of the daily bars (except Thursday) are big range bars. After long runs we need longer rest. Last weeks market had a long run, and it will need a longer rest for a continuation or trend reversal. Right now, at the start of a possible consolidation (correction), we can’t predict that. We can’t know if this bottom will hold longer term or if it will be just a rest for continuation. We will know after several weeks. In the mean time I will expect jumpy market action from day to day.

http://www.ivicacharts.com/diagrams/2008/01282008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01282008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01282008qqqq.jpg

From economic news, a recession is here and can continue, but I won’t go into that because I use technical analysis to help determine my expectations. I know that right now risk for swing trades will be higher (until the dust settles). Also I know that we will have lower risk with intraday moves and smaller time frames. “Own way” charts are always desirable. Right now my focus will be to see if the indices will make a higher low on the daily charts or if the low area will be retested. Because of that and because of the 60 min charts, I will expect to see a continuation of Friday's weakness, but again with a possible gap in the morning that can be changed. During earning season, it is always good to be careful because good or bad reports can change everything. I will scan for the strongest and weakest charts and I will use them for possible day or (depending on intraday behavior) swing trades. Generally for now I will expect another move down on the daily charts before a new move up. Also we must pay attention to Friday's high and Tuesday's low. Both are important areas and we will very possibly trade between those areas. If anyone has any questions or comments, please feel free to contact me.

Wish you all good trading!!!

Ivica
[email protected]
 
Market commentary for 01/29/2008

Good day!
I was expecting more selling pressure in the morning. But the market was just not feeling the same way and after a small morning selling period, it bounced back into a range (QQQQ) or a choppy move up (SPY/DIA). The view on the 60 min charts will tell us everything about Monday's slow high risk trading action. The DIA was strongest and we can technically say that it brought us a trend day, and the same applies to the SPY. But the buying pace was really weak and very choppy with low volume. This was not an example of low risk trading action. Because of that I was patient and mostly watched Monday's action after the morning activity. Looking at the QQQQ 60 min chart will show us that a divergence was also a factor in the high risk action of Monday. The QQQQ stayed in a range all day and now looks like it could have a possible short break down opportunity.

http://www.ivicacharts.com/diagrams/2008/01292008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01292008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01292008qqqq60.jpg

The daily chart will show us that the support area is holding for now and the SPY and the DIA are forming higher daily lows which is another bottom sign. The QQQQ daily bar is very small which is proof of the intraday tight range action. The SPY/DIA are still fighting with their 10sma resistance areas, but now looks more and more like it will break it and then have room to trade towards the 20sma resistance area (blue line). The QQQQ is again the weakest and first must deal with its' 10sma on the daily chart and its' $45 number resistance area. It will need more strength to catch the DIA and the SPY.

http://www.ivicacharts.com/diagrams/2008/01292008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01292008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01292008qqqq.jpg

Unfortunately Monday's indice action didn’t remove the direction dilemma. The divergence, between the stronger DIA and the weaker QQQQ, is not helping us with our expectations for Tuesday. If the QQQQ 60 min consolidation will break down, then the DIA and the SPY 60 min double top possibility could support the short side and selling pressure. On the other hand, if the DIA and the SPY will break above Friday's high then we could see a move up into the 20sma resistance which will be the 60 min double top for the QQQQ. Right now I think that both directions are open with the same probability. Also we can expect that low volume will continue until Wednesday at 2:15 pm EST when the FED will come out with rate news. From Monday's action it looks like all eyes are turned towards the FED and are waiting for the news. Because of that I will expect choppy action for the next two days with low volume and a high trading risk continuation.

Wish you all good trading!!!

Ivica
 
Market commentary for 01/30/2008

Good day!
If anyone thought that Monday's action was tight, well, Tuesday proved that there can be tighter and choppier intraday action. The Indices opened with a gap up. For the SPY/DIA that was Friday's high resistance area and for the QQQQ that was the 200sma 15 min resistance area. The gap was not too big and our expectation that it would be filled at the open came true. Unfortunately that was all for healthy market action on Tuesday. The rest of the day we saw choppy intraday action as we did on Monday. It is always harder and more risky to trade when the market is without intraday action. Also, Tuesday had even lighter volume than Monday and that was another reason for the higher risk trading action. On the 60 min charts we can see that the indices stayed in range action all day. For the DIA and the SPY that is a handle, part of the cup and handle pattern possibility and for the QQQQ that is a 60 min triangle. The DIA and the SPY have room for another move up until their daily 20sma resistance area and that is something that I will look for in the morning.

http://www.ivicacharts.com/diagrams/2008/01302008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01302008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01302008qqqq60.jpg

The QQQQ triangle can break in both directions and since Wednesday afternoon is the FED announcement (at 14:15 pm ET), I will expect the “usual” pre FED market strength. The Indices have room for that action and I will expect it, unless a gap up destroys that idea. On the daily charts we can see that all the indices have room for another intraday move up before their strong resistance areas (10/20sma). One of main reasons why the indices are trading like this is because of the FED decision. Everyone waits to see what the FED will do and if it will help the market to recover.

http://www.ivicacharts.com/diagrams/2008/01302008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01302008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01302008qqqq.jpg

It is impossible to know how the market will react to the FED announcement, but it is very possible to cut risk. That means: staying in the trade during the FED decision is high risk, unless it is a longer swing or position trade. Usually after the announcement we will see three moves: Initial move, counter move and then back to the initial direction. But remember that is usually what happens, not the rule. I never trade right after the FED and I wait at least an hour before I take new trades. Lots of time I don’t trade at all and the reason for that is that lately the market shows its true direction the day after the FED and may open with a stronger gap the next day in the morning. Because of that I will expect some action in the morning and after that very possibly I’m done for the day. I know that can be boring but remember that cash is sometime the best position. In the morning focus will be on intraday moves, if the market action will allow that.

Wish you all good trading!!!

Ivica
[email protected]
 
Market commentary for 01/31/2008

Good day!
The FED’s rate cut was not enough to bring buyers into the market and after an initial pop, the day closed with a strong pull back into negative territory. Let's take a look from the beginning. The action before the FED announcement was in line with expectations. It was choppy, range action, but this time without much of a move. Volume was very low and risk was high. Individual names had some moves but most of the patterns brought false breakouts and then moved back into a range. Because of that risk was too high and my main objective is to find low risk set ups. On the 60 min charts we can see that the DIA and the SPY made equal moves which we expected, but that action occurred after the FED announcement and it was too high risk for trading. Since the 20sma daily resistance was close there was not much room for low risk setups (unless they were scalps). Breakup volume was strong, which is usual after the FED announcement, and buying pace was very strong.

http://www.ivicacharts.com/diagrams/2008/01312008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/01312008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/01312008qqqq60.jpg

But since I don’t trade after the FED it was interesting to see if the bounce would hold because the daily 20sma for the SPY/DIA and the 10sma for the QQQQ is a big test after last weeks downtrend, I decided to wait for a consolidation before I looked for long trades. That was the right decision because we can see that the indices didn’t have strength to hold that run and a reversal from the daily resistance areas was even stronger with heavier volume. Now we can say that it was a trap for buyers, but if you follow my commentaries you know that action was expected. Of course now it is easy to say, but after strong moves (look at daily charts), the 10/20sma is always a strong test and big resistance.

http://www.ivicacharts.com/diagrams/2008/01312008dia.jpg
http://www.ivicacharts.com/diagrams/2008/01312008spy.jpg
http://www.ivicacharts.com/diagrams/2008/01312008qqqq.jpg

We can see that the FED rate cut didn’t help and the worry about recession is still strong. Will that lead the market to new daily /weekly/yearly lows? I don’t know now, it is possible, but from a technical analysis point of view, I will expect that the previous daily low is still a very strong support area and for now I will expect that will hold. Future days will bring a clearer picture. The SPY and the DIA now have their 10sma on the daily charts as their first support area and also several others supports areas and we must see now if they hold or not. For me the first question is: will the indices make a higher low or a double bottom on the daily charts. I still think that the weekly consolidation will continue and that will reflect with jumpy daily action. Additionally with the ongoing earning season we will continue to have a difficult time for swing trades. My focus is on individual charts finding the strongest and weakest names. For Thursday morning, my bias is down and after that we will see. Worst case scenario, I expect that the indices will hold their previous lows.

Wish you all good trading!!!

Ivica
[email protected]
 
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