Thursday, November 12, 2009

ES EOD Wrapup

First chart above shows 60 min trading in the ES for the last week and a half off the 1026 low, the White dotted line you see is the Pivot for each day. We have finally tested and closed below the daily pivot for the first time during this move up. The pivot can be calculated by taking the high/low/close divided by three. Looks like a minor correction is underway, or might have been completed.

The bottom chart shows the last measured move up and the retracement levels currently in place, as you see we were holding the 23% retrace @ 1091.50's for awhile, but on an overextended move like this without a meaningful retracement, the 23% retrace's chances of holding are low. Later today we bounced off the 38% and are currently holding. It may look like we need to test the half way back 50% retrace though on this one to hit the -23% target @1115's.

I have a limit order now placed @ 1078.50's looking to get long for 1115 target and a 38pt gain in the Intermediate term.

On the short term I would wait until the open tommorow to see the strength/ weakness in the internals, as long as we don't have up trend like market internals it would be relatively safe to short into the rallies looking for the 1078.50's.

Dow hits its 50% retracement, Russell 2k fills its crash gap!

First chart above shows the Dow futures hitting its 50% retracement or half way back of the entire move off the all time highs to March lows.

The bottom chart shows the breakaway or crash gap that was filled on the TF or Russell 2k futures.

These 2 factors and the fact that the US Dollar appears to be trying to break its short setup leads me to be a little gunshy in jumping back in on the long side. If the bears have anything left this is the time to come back out in full force, if not capitulation will occur, although this time it will be capitulation by the bears and not the other way around. I keep talking about a potential "Blow Off Top" and strength on all the major indexes above these levels may make that a reality.

Right now trading on shorter tme frames is extremely dangerous, these are the times when you should be looking at your 60 min chart and leave the minute charts to those who feel crazy or lucky, or both?

Right now we have a VST range of 1089 to 1103, you can trade off the ends of those ranges for whatever your bias may be, anything in between those ranges and you better be looking to take your profits and run or you will be dissapointed.

Here's the deal for today

Ok well we had -502,000 jobs instead of -512,000 WOW! Here's whats shaping up for today, we bounced off the 78.6% retracement of the last swing low to high @ 1089. I am basing that that will hold for today and will look to take a long position as close to that number with stop just below. On the flip side the short setup has up until 1100's to still be valid, if at any time we trade above 1100 the reaction is over and we will begin our next move to 1115.

If we break 1089 then, again, next short term targets are as follows 1084-85, 1078, and 1072-73, the reaction should NOT break much lower than that.

Also a quick note the US dollar appears to be in another short setup on the Very Short Term time frame, another reason I am for now thinking we have seen our low for the day in overnight action @ 1089.

So that's the gameplan, we have the plan A and a plan B, remember money/risk management is the key and best of luck to all!

Wednesday, November 11, 2009

Dow closes Post Lehman collapse breakaway Gap, SPX LT downtrend line

Well on a national bank holiday some important events transpired today, first being the Dow Cash Index (Not Futures) closed its breakaway gap from the post Lehman Bros. collapse last fall as seen in this chart above. This is the equivalent of the 1096 ES gap that started the whole crash sequence. Mind you that we close the ES at exactly 1096 today, these guys never cease to amaze me!

Next series of charts shows the downtrend line from all time highs from 2007 on the SPX cash index in both linear and log chart formats. Right now the log format is coming in at 1150's as the linear was hit today. Could be a minor reaction here, but from my research on longer time frames log scale is the way to go. And what I am expecting by years end to see us trade in the 1150's. So pretty exicting day giving the Holiday!

My trade is still very much on, new profit target has been moved to 1106, so I plan to make over 20 pts on this trade. Holding my ground and keeping emotions out of it, Observe and Act!

Monday, November 9, 2009

Video Recap EOD

**Click on box in lower right corner for full screen

Bears last line of Defense

Chart above shows the sequence of events that transpired during the profit taking sell offs we had over the last week or so. I have drawn a fib retracement of the entire move from high to low on the hourly chart.
Key lines now left for the bears to defend are: 1083's (78.6% retrace) to the 1087's where as you can see on the chart the sequence really picked up steam to the down side, as supply become increasing and demand decreases the only place for the market to go is down.

ES Important Numbers for Today

Gap Fill or 4pm Close @ 1066.25

Point of Control: 1064.00


Pivot 1063.08

Sunday, November 8, 2009

ES and -23% targets

Above you have a 60 minute chart of the ES, the last and final wave down or sell off we had first retraced back up into it's 50% or half way back, where it found heavy resistance and immediately the sell off continues. What I want to point out is where the sell off stopped? Take a close look, the -23% target not only becomes the profit target spot but also acts as support and begins this move we have had the last week.

When I initially started using targets for all my setups, I started using the -50%, seemed right, you buy/short the 50% into the -50%, easy enough? Well the problem was I continued to find the -50% was just too far away and the chances of it being hit in a timely manner were not as good as I would have liked. I tried a few others, but for me the -23% gave the best risk/reward ratio. I find very often it if where profit taking starts and a conter trend into the next 50% begins a lot of times.

So in a bull market like this we are in, a great time to take a counter trend trade anticipating breaking the bearish setups would have reaped tremendous results in a short amount of time. Remember these Fibbonnacci Retracements are available on most charting packages, you may have to take some time to set it up as I have but trust me it is well worth it.

Sunday, November 1, 2009

Sept 28th - Oct 2nd Week in Review

**Click on the little box in the lower right corner of the video to get to full screen.