Market Recap: 3/28/2012

 Well one day move on Bernanke's statement all nearly wiped out two days later. So here are some thinks I'm looking at. The daily chart below shows long somewhat of a longer trendline support.

The pink line from the Nov 25, 2011 low shows the Santa rally when we thought the market was about to take a turn for the worse. The Fed came to the rescue. Now two days ago when we thought the market had run its course a bit yet again Ben B talked easing. And while we're at it, the dip 3/6 was again supported by another Feb chief calling QE4,5,6 ... So that's really whats been driving the markets. We see a similar long term trendline support on the ES mini, and clear bounce off the support line.

Over the last few days we've definitely seen an inclination to move lower and only dragged higher. The chart above is the hourly candles. The short term trendline support makes for a rising wedge which I'll be watching tomorrow. If the trendline breaks we could move to retest the 3/23 support near 1389. But that seems a bit too drastic, especially given the overall bullish moves (not to mean fundamentals IMHO)






 

Market Recap: 12/22

Short post today. We did finally touch the upper trendline target my downside target would be the MA(200) for the trend to have better structure and if that fails I'd be looking at a possible reversal. So in wait and watch mode. Also tomorrow is the last trading day before Xmas so trade light

Market Recap: 12/21

Dislocated equity index moves today with SPX +0.19%, DJ +0.03% and COMPQ -0.99%. Its almost like pairs traders are shorting COMPQ and going long SPX. Algo's or not I remain looking for cycles in a trend. So if yesterday was a break out, today's move isnt as convincing to me as a strong trend up. Overall chart posted yesterday is the same, we haven't yet reached the upper trendline on the daily. Take a look at the 30m SPX chart. The regression line with 1.5 sigma deviations capture the downward channel I posted yesterday sort of statistically. Stochastics are getting overbought and on a 30 minute timeline tend to predict cyclic moves better. So not a lot more higher before we correct a little, although the dip and move up (higher low) is somewhat bullish.

Market Recap: S&P week before Xmas

So we stabilized a little after the SPX downgrade in August (See ROC), in terms of intraday volatility but are not out of the woods yet. We've been trading sideways ever since and might continue to do that as we stay within the bearish channel. We've had four retests of the upper trendline and are due for another as today we moved above the MA(50) and its santa rally time and the stochastics are slightly over sold. Will we break through the trendline? I have my doubts about it. 

Above daily chart, see the rising wedge in a downward channel, thats bearish, and the stochastics have more room to move lower. Next chart is the weekly

Tradings been rough as you can see, from the chart but the Fib target high to low (Pink lines) is much lower.  

The same actors persist, Europe and Mr Ben B and US politics. Any resolution for each not in sight. It seems that the Fed has decided to wait on the European roslution, read breakup, before it gets involved with QE3. No point in inflating when a crisis will undo the impact would be the logic. So short term we may move a little higher but longer term I'm still bearish.

Trading in volatile markets

Take for example YM (DJ mini futures), on the 1 min candlestick the ATR spikes to 6.8 and has been in 4-5 pts range lately. So what does that mean. You enter a trade say 1 contract and odds are you would make say 5 pts or loose 5 the next minute. If its trade good you would be making 2 ATR the next minute or get stopped out at 2*ATR stop loss. Now if you traded 10 contracts that stop loss would cost you $1000. 

Now a tight stop loss in this market would almost always get called, so in a high vol market stop losses are say 4*ATR thats putting 2K at risk every 2 minutes assuming 10 contracts. While we tend to look at the positive side, trading discipline requires that we look at the worst case more often. 

So why this example? In this environment you should lower your trade size and increase your stop limit. 

Next is, try to enter trades where you are more confident about getting it right. Scalping will lead to ruin unless its an automated system.  Thats my 2cents .. trade on!

Market Recap: An analogy - Germany to buy Greek houses that pay no rent

My view on the direction remains the same and we are still working the flag downwards. Tomorrow is an important vote in the German parliament and might give us a more decisive move in either direction. The last weeks have been filled with rumors of a Eurozone fix, I'm not sure what that might be. 

At the moment, as an analogy, it seems to me like German taxpayers are being asked to purchase Greek homes that don't pay any rent (read bad bonds). Thats probably an oversimplification but catches the jist of the situation. The chart below is an updated version of the one posted earlier, be careful in case the vote fails that would result  in aggressive selling, much stronger than we have seen these last few weeks.

 

Market Recap, Look at the bear flag now

Well sometimes technical charts are too accurate, below is an example of how things played out. So am not posting much other than the daily chart.

We know the euro-zone noise is picking up we could easily see the flag post length down move from here.
The stochastics are overbought region and can stay there but its to be watched and the candlestick has a long tail, as we closed much above the lows of the day, which is a sign the bulls might be stepping in here. Lets watch out which move is next.