Wednesday, February 24, 2010

Wednesday, February 24th Review, Bernanke does it again!

As I stated in yesterday's review, don't be surprised to see the bulls recapture most if not all of the losses from yesterday. Scenario played out beautifully!

As you can see in the top chart, the overnight session spent most of the time building value above the Value Area High (sign of strength), and opened just below it. Market internals were good as well. We had new home sales data come out, which was not very good at all. The market sold off right into the perfect long setup for the bulls at the Point of Control and IB low, you had to take this long position on first touch! Another reason why I say that market structure determines direction and not news, the news only provides a place to shake out or stop out weak money over to the pros. If you don't understand market structure, you won't understand why the market reacts the way it does to "news".

So the new home sales numbers shook out the weak longs and made for great long setup for the longer time frame buyers, as prices rallied fast without much pullback to jump in on. Rest of the day was uneventful as prices consolidated gains in the 1100-1105 area. Market closes just above today's Point of Control.

The volume chart shows you the value built higher from yesterday, with 1103 being the high volume value area. Tomorrow we have unemployment claims numbers @ 8:30am, my bias is bullish for tomorrow if prices can hold the 1098 level, below it more long liquidation may occur, and 1085 - 1087 will be my target. However I believe the market is headed for 1130 soon before any significant reaction will occur. 1230 area should be reached by summer.

Trade of the day
#2 - Long at POC and IB low off the New Home Sales data, doesn't get anymore easy money as that!