一个笨蛋的股指交易记录-------地狱级炒手

hefeiddd

I was in and out throughout the day on Wednesday. I had an early morning drive up to Tampa to drop off a friend at the airport and missed the morning trading. When I came back and began to scan in the early afternoon, I found that most of the decent setups intraday were on the downside, but many of the top gainers and losers that came up on my scans were rather thin. I didn't find a single thing that I felt was worth the risk to trade and spent the afternoon moving my office instead. I'm now on dsl and hoping that the noticeable difference in speed between this and the cable in my main house will not affect trading tomorrow! My only trade of the day was in the afterhours session when I made a tick on one contract in the NQ when I was testing out my connection! Let's see... That's 20 cents after commissions! So, at least it was a positive day!



I was expecting the market to have should a bit more of a reprieve from the selling this week, but the failure of the market to hold the support zone on Tuesday and into Wednesday now has the indices open to move even lower ahead of the weekend. The break in Tuesday's lows essentially confirmed a continuation pattern on the weekly time frame and it is now the price levels from late late year into early this year that will serve as the next strong support level.


[size=85%]To learn how to recognize these patterns intraday in real time and identify the building blocks of these market moves, check out my new CD course at http://www.swingtrader.net.

posted by Toni Hansen @ 9:40 PM 0 Comments
Tuesday, August 14, 2007Dow Hits New Low on the Month
Good day! The carnage continued on Tuesday with a nice bearish base out of the open. The market had pulled to the lower end of the trading range on Monday before it closed, so the fact that the indices stuck to that level to begin the day on Tuesday was not a great sign. I once again had a difficult time locating much for decent momentum plays out of the open, but Tuesday did follow through with the promise of being a more active session than the previous one had been.

After congesting for the first 30 minutes or so of the day, the indices gave way with a rapid plunge to new intraday lows. A second base took place into 10:45 ET. The declining volume throughout this congestion signified continued weakness and supported a second wave of selling into the 11:00-11:15 ET correction zone, thus completing three waves of selling on the 5 minute time frame beginning with the previous afternoon.

Along with the correction period, the market had quite a few reasons to move higher into noon. Friday's lows were hitting in both the S&P 500 and the Dow Jones Industrial Average, as were Friday's afternoon lows in the case of the Nasdaq Composite. The market also tends to break its trend channel after three waves of downside and will try to establish a larger correction before it continues. These traits opened the door for mid-day bounce off lows.

Due to the pace of the selling, however, the upside got off to a bit of a hesitant start, but managed to increase in momentum once the 5 minute 20 simple moving average gave way. The buying accelerated into the Nasdaq's 15 minute 20 sma and 5 minute 200 sma. This was also the 50% retracement level off the day's lows for the move off the premarket highs. The correction periods also came into play, since 12:00 ET is a common time for the market to reverse its course, or at least correct from the trend move heading into that time zone.



Almost right away upon striking resistance, the market began to again favor the bearish sentiment. The selling off the highs was much stronger than any attempt to retest them, particularly after 12:30 ET when the indices fell back to their 5 minute 20 sma and then just flatlined. This base along the moving average support created an Avalanche setup on that time frame which initially tried to break lower around 13:45 ET. The selling didn't gain steam until around 13:45 ET, however, when the market finally dropped back into the morning lows, hitting them at the same time as the 14:00 ET correction period. Although I attempted to play this pivot, the larger 15 minute charts were still very bearish and I only managed to come out of it with a small scalp gain before I had to step aside in favor of another new intraday low into 14:30 ET.

After 14:30 ET things became quite a bit choppier. The market finally managed another larger correction off support, but there was a great deal of overlap on the bounce and it did not amount to much in terms of a price correction. Once the 15 minute 20 sma hit again then all bets were off and the bears led the way into a close within a few ticks of the day's lows.



Tuesday's selloff has provided us with that additional flush into support that I first talked about on Monday. The momentum of the move, however, does not have me looking quite yet for many buying opportunities. I would like to see a bit of slowing and rounding off first. The Dow fell more than 200 points on Tuesday (-207.61, -1.6%), with 29 of its 30 component stocks posting losses. Wal-Mart (WMT, -5.1%), who lower its guidance for the year, and Home Depot (HD) were particularly hard-hit. The S&P 500 fell 26.38 points (-1.8%). The Nasdaq fell 43.12 points (-1.7%). The worst sectors included broker/dealers (-3.1%), financials (-2.9%), and airlines (-2.6%).




posted by Toni Hansen @ 9:42 PM 0 Comments

Pivot Pattern - NQ example
Hey gang.... Here is a variation of that FSLR pattern but in the NQ....



It was not quite as nice because the third low was not lower and had more volume to it... I got in a little early thinking that little pullback into 14:15 on declining volume was going to go and had to hold through a small little 4th flush. The overall market was not at the best support, so I was a bit leery on this one. My exits ended up being at 1925.25 and 1924. Not the best gain since my entry was 1922.75, but risk was small enough to have me give it a try anyway.... The slowing pace into the 1925 level when it kept making slightly higher highs but without the momentum FSLR had is why I kept it on a tighter leash and choose not to hold to its 5 minute 20 sma, which had been my initial target.


posted by Toni Hansen @ 11:33 AM 0 Comments

High Probability Pivot Pattern
Hey gang,

I wanted to take a minute here to share with you a new pattern I've added to my repetoire. I've mainly been studying it on the futures, but took it on an equity today. Essentially the criteria are as follows:

- Extreme downside move
- Series of three lower lows, with the last one often being a rapid flush and retracement
- Typically highest volume heading into the first low and lighter volume on the last low
- Larger time frame support
- Entry when the channel going into the third low breaks higher
- Max stop under the third pivot low, but typically can cut that in about half since it is pulls back into that third low it's more likely to fail so those more experienced with time & sales can cut the stop quite a bit.
- Target is approximately a 50% retracement of the larger drop... watch for a 20 sma like the one I have circled in FSLR. These can continue and pull all the way up, but usually will at least stall at that 20 sma zone. Watch the pace into the sma, since a sharp pace will more likely have a continuation higher.

Note: This pattern can start out a bit slow before it pops, so the thing I have had to work on has been not bailing on it just because it doesn't get going right away. You can see on the 1 minute that moves ot the move didn't even begin until about 10 minutes or more after the buy trigger.




posted by Toni Hansen @ 9:15 AM 1 Comments

Monday, August 13, 2007Trading Slows as Uncertainty Prevails
Good day! The week kicked off on a hesitantly bullish note on Monday. The indices gapped higher into the open with the Dow Jones Ind. Ave. futures opening higher by more than 100 points, aided by the 8:30 am ET better-than-expected retail sales data. This provided that upside action we were watching for as a result of Friday's closing bias, but the larger time frame bias was not as strong and the market fought with teeth and nails to hold onto those gains. As the session played out, this larger time frame's pressure made itself more well known by keeping constant pressure on subsequent attempts for the overall market to move higher throughout the morning.

Right away out of the gate it looked like we were going to be in for a tough session. Out of the momentum players, very few on the upside showed even the slightest promise for great rewards. Those which caught my eye initially as possibilities included BX, ANAD, VCLK, BEAS, SHLD, and TWC. If you happen to go through that list now, however, you will notice that only SHLD even bothered to give a clear-cut buy trigger following its announcement to increase its stock buyback, and it was the only one of these 6 to manage to hold up against the overall market. I did take a stab at BX after it pulled back in the morning, but was flushed out on the bounce with a tiny loss when I let my concerns about the overall market persuade me to step aside. Whoops! Even this "leader", however, closed just off intraday lows and nearly closed its morning gap, at which point it had gained 3% on better-than-expected Q2 earnings.



A much better stance for the day would have been if I had stuck to my statement early on that it would be a much better day for trading the EMini futures than individual stocks.... Double whoops! In that area of the market, things played out rather well throughout the day for daytraders and scalpers, although it's a bit tough to see that on the 5 and 15 minute charts. While the market was stuck in a range for the most part, the moves back and forth were very solid and support and resistance levels held perfectly, allowing for some really nice pivot and continuation moves on the 1-5 minute time frames.

hefeiddd

I was in and out throughout the day on Wednesday. I had an early morning drive up to Tampa to drop off a friend at the airport and missed the morning trading. When I came back and began to scan in the early afternoon, I found that most of the decent setups intraday were on the downside, but many of the top gainers and losers that came up on my scans were rather thin. I didn't find a single thing that I felt was worth the risk to trade and spent the afternoon moving my office instead. I'm now on dsl and hoping that the noticeable difference in speed between this and the cable in my main house will not affect trading tomorrow! My only trade of the day was in the afterhours session when I made a tick on one contract in the NQ when I was testing out my connection! Let's see... That's 20 cents after commissions! So, at least it was a positive day!



I was expecting the market to have should a bit more of a reprieve from the selling this week, but the failure of the market to hold the support zone on Tuesday and into Wednesday now has the indices open to move even lower ahead of the weekend. The break in Tuesday's lows essentially confirmed a continuation pattern on the weekly time frame and it is now the price levels from late late year into early this year that will serve as the next strong support level.




posted by Toni Hansen @ 9:40 PM 0 Comments
Tuesday, August 14, 2007Dow Hits New Low on the Month
Good day! The carnage continued on Tuesday with a nice bearish base out of the open. The market had pulled to the lower end of the trading range on Monday before it closed, so the fact that the indices stuck to that level to begin the day on Tuesday was not a great sign. I once again had a difficult time locating much for decent momentum plays out of the open, but Tuesday did follow through with the promise of being a more active session than the previous one had been.

After congesting for the first 30 minutes or so of the day, the indices gave way with a rapid plunge to new intraday lows. A second base took place into 10:45 ET. The declining volume throughout this congestion signified continued weakness and supported a second wave of selling into the 11:00-11:15 ET correction zone, thus completing three waves of selling on the 5 minute time frame beginning with the previous afternoon.

Along with the correction period, the market had quite a few reasons to move higher into noon. Friday's lows were hitting in both the S&P 500 and the Dow Jones Industrial Average, as were Friday's afternoon lows in the case of the Nasdaq Composite. The market also tends to break its trend channel after three waves of downside and will try to establish a larger correction before it continues. These traits opened the door for mid-day bounce off lows.

Due to the pace of the selling, however, the upside got off to a bit of a hesitant start, but managed to increase in momentum once the 5 minute 20 simple moving average gave way. The buying accelerated into the Nasdaq's 15 minute 20 sma and 5 minute 200 sma. This was also the 50% retracement level off the day's lows for the move off the premarket highs. The correction periods also came into play, since 12:00 ET is a common time for the market to reverse its course, or at least correct from the trend move heading into that time zone.



Almost right away upon striking resistance, the market began to again favor the bearish sentiment. The selling off the highs was much stronger than any attempt to retest them, particularly after 12:30 ET when the indices fell back to their 5 minute 20 sma and then just flatlined. This base along the moving average support created an Avalanche setup on that time frame which initially tried to break lower around 13:45 ET. The selling didn't gain steam until around 13:45 ET, however, when the market finally dropped back into the morning lows, hitting them at the same time as the 14:00 ET correction period. Although I attempted to play this pivot, the larger 15 minute charts were still very bearish and I only managed to come out of it with a small scalp gain before I had to step aside in favor of another new intraday low into 14:30 ET.

After 14:30 ET things became quite a bit choppier. The market finally managed another larger correction off support, but there was a great deal of overlap on the bounce and it did not amount to much in terms of a price correction. Once the 15 minute 20 sma hit again then all bets were off and the bears led the way into a close within a few ticks of the day's lows.



Tuesday's selloff has provided us with that additional flush into support that I first talked about on Monday. The momentum of the move, however, does not have me looking quite yet for many buying opportunities. I would like to see a bit of slowing and rounding off first. The Dow fell more than 200 points on Tuesday (-207.61, -1.6%), with 29 of its 30 component stocks posting losses. Wal-Mart (WMT, -5.1%), who lower its guidance for the year, and Home Depot (HD) were particularly hard-hit. The S&P 500 fell 26.38 points (-1.8%). The Nasdaq fell 43.12 points (-1.7%). The worst sectors included broker/dealers (-3.1%), financials (-2.9%), and airlines (-2.6%).




posted by Toni Hansen @ 9:42 PM 0 Comments

Pivot Pattern - NQ example
Hey gang.... Here is a variation of that FSLR pattern but in the NQ....



It was not quite as nice because the third low was not lower and had more volume to it... I got in a little early thinking that little pullback into 14:15 on declining volume was going to go and had to hold through a small little 4th flush. The overall market was not at the best support, so I was a bit leery on this one. My exits ended up being at 1925.25 and 1924. Not the best gain since my entry was 1922.75, but risk was small enough to have me give it a try anyway.... The slowing pace into the 1925 level when it kept making slightly higher highs but without the momentum FSLR had is why I kept it on a tighter leash and choose not to hold to its 5 minute 20 sma, which had been my initial target.


posted by Toni Hansen @ 11:33 AM 0 Comments

High Probability Pivot Pattern
Hey gang,

I wanted to take a minute here to share with you a new pattern I've added to my repetoire. I've mainly been studying it on the futures, but took it on an equity today. Essentially the criteria are as follows:

- Extreme downside move
- Series of three lower lows, with the last one often being a rapid flush and retracement
- Typically highest volume heading into the first low and lighter volume on the last low
- Larger time frame support
- Entry when the channel going into the third low breaks higher
- Max stop under the third pivot low, but typically can cut that in about half since it is pulls back into that third low it's more likely to fail so those more experienced with time & sales can cut the stop quite a bit.
- Target is approximately a 50% retracement of the larger drop... watch for a 20 sma like the one I have circled in FSLR. These can continue and pull all the way up, but usually will at least stall at that 20 sma zone. Watch the pace into the sma, since a sharp pace will more likely have a continuation higher.

Note: This pattern can start out a bit slow before it pops, so the thing I have had to work on has been not bailing on it just because it doesn't get going right away. You can see on the 1 minute that moves ot the move didn't even begin until about 10 minutes or more after the buy trigger.




posted by Toni Hansen @ 9:15 AM 1 Comments

Monday, August 13, 2007Trading Slows as Uncertainty Prevails
Good day! The week kicked off on a hesitantly bullish note on Monday. The indices gapped higher into the open with the Dow Jones Ind. Ave. futures opening higher by more than 100 points, aided by the 8:30 am ET better-than-expected retail sales data. This provided that upside action we were watching for as a result of Friday's closing bias, but the larger time frame bias was not as strong and the market fought with teeth and nails to hold onto those gains. As the session played out, this larger time frame's pressure made itself more well known by keeping constant pressure on subsequent attempts for the overall market to move higher throughout the morning.

Right away out of the gate it looked like we were going to be in for a tough session. Out of the momentum players, very few on the upside showed even the slightest promise for great rewards. Those which caught my eye initially as possibilities included BX, ANAD, VCLK, BEAS, SHLD, and TWC. If you happen to go through that list now, however, you will notice that only SHLD even bothered to give a clear-cut buy trigger following its announcement to increase its stock buyback, and it was the only one of these 6 to manage to hold up against the overall market. I did take a stab at BX after it pulled back in the morning, but was flushed out on the bounce with a tiny loss when I let my concerns about the overall market persuade me to step aside. Whoops! Even this "leader", however, closed just off intraday lows and nearly closed its morning gap, at which point it had gained 3% on better-than-expected Q2 earnings.



A much better stance for the day would have been if I had stuck to my statement early on that it would be a much better day for trading the EMini futures than individual stocks.... Double whoops! In that area of the market, things played out rather well throughout the day for daytraders and scalpers, although it's a bit tough to see that on the 5 and 15 minute charts. While the market was stuck in a range for the most part, the moves back and forth were very solid and support and resistance levels held perfectly, allowing for some really nice pivot and continuation moves on the 1-5 minute time frames.

hefeiddd

The open in the market placed the indices directly into the path of resistance from Friday's highs with the 15 minute 200 simple moving average intraday not very far off. The indices pulled back a bit off these levels to form a two-wave correction in the Nasdaq on the all-sessions charts going into 10:00 ET. The second pullback was somewhat slower than the first and on some lighter volume, allowing the market to pivot out of 10:00 ET. Due to additional economic data in the form of the June business inventories, this time zone held a lot better than the typical morning reversal periods and the market made its way higher with another two-wave trend heading back into the earlier highs. The similar momentum allowed the highs to hold and the range persisted intraday into the second hour of trading.



After retesting the morning highs, another correction followed without any strong bias as to which direction the indices were planning on breaking. The previous lows held again at support at 11:15 ET and a third pivot high was established shortly thereafter. It was only after this third high in the intraday trend that a larger bias began to form. The larger intraday trend move took place from about 11:30 ET to 13:20 ET when the market pulled off the mid-day highs. An initial drop led to the market hugging the 5 minute 20 simple moving average support. At first I was a bit more bullish, because if the market had hugged that third intraday high into noon, then it would have been possible to break higher. Instead the momentum of the pullback was too rapid and instead of bouncing back into the third high to hold the range at noon, the market created a small Avalanche pattern that allowed the 5 minute 20 sma to break and for the momentum to pick up a bit on the downside.

The early afternoon selling first took the indices into the previous lows and then they began to hug the support into 13:00 ET before breaking down with a third drop on the 5 minute charts into the 13:20 area. Even though I was bearish at this time, the selling was not any stronger than any of the prior back and forth moves throughout the day so far and it nixed the chances for a stronger breakdown, which I had been hoping for to simply bring in some decent moves beyond the scalp time frame. Instead, this comparable momentum meant that the larger range had a better chance of holding into the close.

A three-wave uptrend brought the market back into its upper resistance zone into 14:30 ET or so, after which time the bulls again succumbed to the pressure and fell once more into intraday lows with the 15:00 ET correction period. The momentum in the market began to increase slightly to the downside, but was unable to bust out of the range before the closing bell. It was only afterwards that they finally gave in and the selling continued.



I haven't made up my mind at all regarding Tuesday's upcoming session. I do tend to find that Tuesdays in general offer more opportunities than Mondays, likely because there are more news events to move the market, but I don't have a strong directional bias heading into the session at all. The market is stuck in the middle of a range and the momentum within that range has not yet began to favor one side over the other for a decent breakout. My bias overall is that we experience a larger correction off the support levels of the last couple of weeks, but I am still open to the possibility of those levels being tested one more time, so I am not doing much at all for swingtrading at the moment and have been focusing almost exclusively on intraday activity.


To learn how to recognize these patterns intraday in real time and identify the building blocks of these market moves, check out my new CD course at http://www.swingtrader.net!

posted by Toni Hansen @ 8:04 PM 0 Comments
Sunday, August 12, 2007Central Banks Attempt to Forestall the Another Meltdown
Good day! Market volatility has been a huge concern for traders and investors alike these past several weeks and it increased even more on Friday. A number of central banks from around the globe began increasing liquidity on Thursday by injecting billions of dollars worth of funds into the banking systems to attempt to offset some of the effect of the subprime-credit fiasco. This was stepped up on Friday, but the lasting impact of such a move has yet to be seen. In an effort to curtail further excesses in borrowing, the European Central Bank, which has provided the largest infusion of funds, appears to be set on raising interest rates in September.

The market was off to a wicked start on Friday and many credit the central banks for assisting in the mid-day reversal which began around 10:15 ET. I don't know that I really buy into the view that the banks are responsible for the recovery the markets experienced coming off the intraday lows. Selling exhaustion and momentum in and of itself stands as a purely technical reason as well and the mid-day bounce was not something that was unique to Friday's session. The market had been in an extreme decline beginning mid-morning on Thursday. The momentum from this selloff began to build again into the closing bell and followed through into the open where support from previous lows in the Dow and the 100 day simple moving average in the Nasdaq Composite held.

The morning gap on Friday was the second extreme gap to the downside in a row. The first time such a gap occurs, it nearly always fills in at least one of the three major indices. The second day is less certain, but still has a decent shot of again closing the gap in at least one of the three indices. If the markets were to experience a third gap lower of a similar magnitude, however, its preference would be to hold the gap and not attempt to fill.



On Friday the market began the session by playing with the bulls. Even though it opened into support, a strong momentum move in the market as a whole typically needs some slower selling following the larger momentum move before it is able to adequately correct from the selloff. When the market was unable to sustain any stronger-than-average upside out of 9:45 ET, it opened the door to further morning downside. In this case the support levels gave way coming out of 10:15 ET and led to new lows in the Dow, S&P 500, and Nasdaq Composite. The S&P 500 experienced the least weakness, barely breaking the previous lows and instead creating a 2B reversal pattern, whereas the Nasdaq had the strongest break of support due to how it had based sideways while the Dow and S&Ps had crept somewhat higher out of 9:45 ET.

When the 10:45 ET reversal period hit in the market, the trend channel from the last leg of selling gave way to increasing momentum on the upside. Within less than half an hour the indices were back at mid-day highs and the pace of the buying began to accelerate. The resistance from the price levels of the morning highs in the market was not strong enough to combat the increased buying pressure and the market fell into more of a sideways type of congestion on the 5 minute time frame throughout the rest of the morning.



The slower downside, greater degree of overlap in prices, and declining volume which took place as the market corrected into noon were all strong indications that the resistance would give way and another bout of buying would follow. The channel break for the pullback came a bit earlier than the 12:00 ET reversal period and the buying was a bit on the slow side initially, but then increased as the upside move continued. By 12:30 ET the gaps had closed in the Dow Jones Industrial Average ($DJI), S&P 500 ($SPX), and Nasdaq Composite ($COMPX). The buying came to a halt when the gap filled in the Dow and Nasdaq and a little higher at the 15 minute 200 simple moving average in the S&P 500.

Even though the indices pushed through the 15 minute 20 sma initially, that resistance level plagued the market throughout most of the remainder of the day. This moving average was under the closing gap prices, but when the market corrected off that price resistance it was the 15 minute 200 sma that gained its attention. The first wave of selling on the 5 minute time frame coming off the resistance was the strongest. An Avalanche pattern then ensued as the market hugged the 5 minute 20 sma in much the same way as the indices would soon be reacting to their own 20 simple period moving average, except for the fact that the 5 minute time frame was a short setup, whereas it would need to be flipped upside down to be a bullish one.



A second wave of mid-day selling hit at about 13:30 ET as the Avalanche gave way. This time the move was much more stunted than before. After only testing the 11:45 ET lows zone the market again pulled somewhat higher into 14:30 ET. This was a sloppy move with greater price overlap from bar to bar than earlier. Combined with the briefer selloffs, the third was was even more ugly than the second. Volume dropped off more and the indices began to hug the 5 minute 20 sma resistance, as well as the 15 minute one. The trigger on both time frame setups took placing coming out of the 15:00 ET reversal period, but the market never really got too far off its feet before the closing bell rang.

Friday ended with a loss of 31.14 points in the Dow to close at 13,239. The S&P 500 gained a fraction of a point and closed at 1,453. The Nasdaq Composite fell 11.60 points and closed at 2,544. For the weekly gains, the Dow rose 0.4%, the Nasdaq rose 1.3%, and the S&Ps rose 1.4%. Bear Stearns (BSC) was again a big loser, falling 3.4%. My intraday bias heading into the new trading week is somewhat more on the bullish side, but it would not be difficult to put in another slightly lower low on the 60 minute charts first, so I'll be taking it slow again. Volatility is going to remain high.


posted by Toni Hansen @ 7:51 PM 0 Comments

hefeiddd

The open in the market placed the indices directly into the path of resistance from Friday's highs with the 15 minute 200 simple moving average intraday not very far off. The indices pulled back a bit off these levels to form a two-wave correction in the Nasdaq on the all-sessions charts going into 10:00 ET. The second pullback was somewhat slower than the first and on some lighter volume, allowing the market to pivot out of 10:00 ET. Due to additional economic data in the form of the June business inventories, this time zone held a lot better than the typical morning reversal periods and the market made its way higher with another two-wave trend heading back into the earlier highs. The similar momentum allowed the highs to hold and the range persisted intraday into the second hour of trading.



After retesting the morning highs, another correction followed without any strong bias as to which direction the indices were planning on breaking. The



I haven't made up my mind at all regarding Tuesday's upcoming session. I do tend to find that Tuesdays in general offer more opportunities than



On Friday the market began the session by playing with the bulls.



The slower downside, greater degree of overlap in prices, and declining volume which took place as the market corrected into noon were all strong indications



A second wave of mid-day selling hit at about 13:30 ET as the Avalanche gave way. This time the move was much more stunted than before. After only testing the 11:45 ET lows zone the market again pulled somewhat higher into 14:30 ET. This was a sloppy move with greater price overlap from bar to bar than earlier. Combined with the briefer selloffs, the third was was even more ugly than the second. Volume dropped off more and the indices began to hug the 5 minute 20 Economic Reports and Events This Week:
Monday, August 13, 2007

hefeiddd

When the 10:45 ET reversal period hit in the market, the trend channel from the last leg of selling gave way to increasing momentum on the upside. Within less than half an hour the indices were back at mid-day highs and the pace of the buying began to accelerate. The resistance from the price levels of the morning highs in the market was not strong enough to combat the increased buying pressure and the market fell into more of a sideways type of congestion on the 5 minute time frame throughout the rest of the morning.



The slower downside, greater degree of overlap in prices, and declining volume which took place as the market corrected into noon were all strong indications that the resistance would give way and another bout of buying would follow. The channel break for the pullback came a bit earlier than the 12:00 ET reversal period and the buying was a bit on the slow side initially, but then increased as the upside move continued. By 12:30 ET the gaps had closed in the Dow Jones Industrial Average ($DJI), S&P 500 ($SPX), and Nasdaq Composite ($COMPX). The buying came to a halt when the gap filled in the Dow and Nasdaq and a little higher at the 15 minute 200 simple moving average in the S&P 500.

Even though the indices pushed through the 15 minute 20 sma initially, that resistance level plagued the market throughout most of the remainder of the day. This moving average was under the closing gap prices, but when the market corrected off that price resistance it was the 15 minute 200 sma that gained its attention. The first wave of selling on the 5 minute time frame coming off the resistance was the strongest. An Avalanche pattern then ensued as the market hugged the 5 minute 20 sma in much the same way as the indices would soon be reacting to their own 20 simple period moving average, except for the fact that the 5 minute time frame was a short setup, whereas it would need to be flipped upside down to be a bullish one.



A second wave of mid-day selling hit at about 13:30 ET as the Avalanche gave way. This time the move was much more stunted than before. After only testing the 11:45 ET lows zone the market again pulled somewhat higher into 14:30 ET. This was a sloppy move with greater price overlap from bar to bar than earlier. Combined with the briefer selloffs, the third was was even more ugly than the second. Volume dropped off more and the indices began to hug the 5 minute 20 sma resistance, as well as the 15 minute one. The trigger on both time frame setups took placing coming out of the 15:00 ET reversal period, but the market never really got too far off its feet before the closing bell rang.

Friday ended with a loss of 31.14 points in the Dow to close at 13,239. The S&P 500 gained a fraction of a point and closed at 1,453. The Nasdaq Composite fell 11.60 points and closed at 2,544. For the weekly gains, the Dow rose 0.4%, the Nasdaq rose 1.3%, and the S&Ps rose 1.4%. Bear Stearns (BSC) was again a big loser, falling 3.4%. My intraday bias heading into the new trading week is somewhat more on the bullish side, but it would not be difficult to put in another slightly lower low on the 60 minute charts first, so I'll be taking it slow again. Volatility is going to remain high.

posted by Toni Hansen @ 7:51 PM 0 Comments



posted by Toni Hansen @ 6:01 PM 0 Comments
Thursday, August 9, 2007Bears Yell "PSYCH!"
Good day! After just posting one of the best days in the market in years, the bulls were yanked back to reality in Thursday's session with the second worst close in the Dow thus far this year. The session reminded me a bit of the school-yard bully in elementary school. He was the kid who was really mean and would tease another kid mercilessly, but then when a new kid came around he could taunt he would be really nice and jovial to his prior victims. When his new obsession wore out, however, he was soon back to picking on his old favorites. Well, after being held back for most of the year, this bully has decided that it's his day to shine. He took a back seat after the market hit support a few weeks ago as he considered his next move. He concluded that he would play with the bulls for a bit on Thursday before he proceeded to shove them into the mud puddle...

The day began on a sour note for the bulls with an extreme downside gap. The futures had been selling off steadily since the wee hours of the morning, but they did manage to open smack into support intraday at the 15 minute 200 simple moving averages and price support from the last couple of days. Most extreme gaps attempt to fill and this meant a bullish bias out of the open when the bulls thought for a minute that the market bullies had moved on. As soon as the gap closed in the Nasdaq Composite, however, the bulls were grabbed by the collar and yanked back off their highs.



A bit of a scuffle ensued in the latter half of the morning. The market tried to pull back up out of 11:00 ET, but was unable to break through the earlier highs. That price resistance and the more gradual climb gave way to selling again around 11:15 ET. The Nasdaq Composite was the hardest hit of the three major indices and pulled back to well under the 10:45-11:00 lows before finding support at noon with the 12:00 ET correction period and the 5 minute 200 sma. The S&P 500 and Dow Jones Ind. Average also came into the 5 minute 200 sma at the same time, but they had almost no room to move before they hit, so the impact was lessened.

hefeiddd

The market then continued to roll over into the early afternoon. The indices fell nearly flat coming out of 12:00 ET and volume dropped as they managed two waves of upside into 12:30 on a 2 minute time frame. These moves were barely discernible on a 5 minute chart before the 5 minute 20 sma hit, along with another wave of selling. This move was a bit stronger than the last and took the market all the way back to the opening lows. These corresponded to the 15 minute 200 sma. Volume increased and the Nasdaq rounded off slightly to trigger a scalp buy setup shortly after 13:00 ET. The index had three waves of selling into major intraday support and slowing momentum, both of which was rather bullish on at least a short-term time frame. The 5 and 15 minute 20 sma overhead served as resistance for the correction off these lows and acted as the "guaranteed" target for the pivot higher. While a longer correction off the support was possible, getting any more substantial gains past the 5 minute 20 sma was more "iffy" due to the proximity of the 15 minute 20 sma and the underlying market weakness.



When the 15 minute 20 did hit, the 14:00 ET correction period was right there to catch it and the selling resumed. The remainder of the day was a lot more difficult than earlier in the session. I actually took off at about 14:30 ET to hang out with a friend who is visiting from out of town, but I don't think I would have done much in the futures market due to the greater degree of overlap on the 5 and 15 minute time frame that would have made it more difficult to see a lower risk continuation pattern after the 14:00 ET pivot. The main thing that did hold steady was the 5 minute 20 sma resistance. All three indices were unable to penetrate this resistance zone throughout the remainder of the day and the market closed right at the zone of the intraday lows. If you take a look at the daily charts, this was also the moving average support zones that had stalled the Dow and the S&P 500 in recent weeks.

By the closing bell the Dow Jones Ind. Ave. ($DJI) had lost nearly 400 points (actual loss was 387.18, 2.8%). Citigroup Inc. (C) and JP Morgan Chase Co. (JPM) were among the hardest hit. They each lost more than 5% in Thursday's session alone thanks to news of continued worries over credit. The S&P 500 ($SPX), in which the financials carry even more weight, fell 44.40 points, or 3%. Within this index, Walmart (WMT) fell 4.1% after it posted earnings. The Nasdaq Composite ($COMPX) suffered the smallest decline in percentage terms. It lost 56.49 points, which translates as 2.2%.



I'm not very optimistic on Friday. This week has been a great deal better for trading than I had anticipated. I was pleasantly surprised by the number of high quality setups I found, not only in individual stocks moving on momentum unrelated to the overall market, but in the indices themselves. Sure, there were some huge chunks of time where volatility was simply too high to justify the risk, but overall it was a pretty nice week.

I am still concerned about the daily time frame, however, when it comes to follow through. I had expected the market to hold up a bit better on Thursday before it gave way to selling again, but now the door is open for another test of the month's lows. It is even going to be easier for the market to try to break to new lows on the month within the next week. That would not necessarily be the best scenario for the bears, however, because the market really has not corrected enough off the current lows to as easily sustain another mammoth daily selloff quite yet under normal circumstances. For that to happen, ideally the market would continue to chop around for at least one more week, if not two, and do so on declining volume before breaking down.


To learn how to recognize these patterns intraday in real time and identify the building blocks of these market moves, check out my new CD course at http://www.swingtrader.net!

posted by Toni Hansen @ 8:56 PM 0 Comments
Trading "Blindly"
I mentioned in my previous post that one of my equities trades was MSA. Well, while it ended up being a nice trade, it was not nearly as nice as it should have been! I entered MSA thinking that at the very LEAST it was going to get to $58. I was a little late on the entry over $57 because I pulled up the stock right as the setup was triggering, but I had an extremely tight stop due to the narrow range it was moving out of. On this type of setup the larger target is a few ticks under the original high, which meant $59, with initial resistance at $58 because it would be the smaller equal move and whole number resistance.

Well, not too long after I was in the setup, all my charts went down. I was completely BLIND! I am a chartist. I read them like I do a book and now someone went and suddenly took away my eyesight and I was a goner. There was this little voice in the back of my head that said, "Don't worry, this is going to work out. Don't change your plan." The naughty voice took over though, saying, "You can't see anything! Ha! Ha! This could be rounding off here at highs and you can't tell!"

So, what did I do? Well, first I took off half my size into the $58, still trying to listen to the reasonable voice telling me that just because I didn't have charts didn't mean the stock was going to perform any differently than normal. When it didn't break through the resistance, however, I went and just said, "Forget it! I have no idea when or if I'm going to get charts back today and I can't just keep sitting here watching time and sales all day!"

Of course, as soon as I hit the sell button, I knew I'd mucked up! The sane voice said, "You dummy! Now look what you did! Just watch!" Sure enough, three minutes later my charts came back online and it was obvious that the correction off the $58 resistance was not going to lead to a reversal and when the stock broke through the $48.40 level the momentum it was gaining had me realizing at that point that it would go through my original target very soon, but I just couldn't bring myself to get back into it after having so many charting problems all day and not knowing if they would fail again or not...

Lesson: Stick to your plan even if you end up blind! It's very hard to not let things which catch you off guard like this faze you, but it's very important to listen to the sane person! Yeah, ok, so this is really easier said that done! I think I need to go back to keeping my notebook in front of me though where I write down my plan when I enter the trade... the target, stop, etc. It helps to keep the sane voice on top when you have something in print in front of you reassuring you that this is the "sane" way to manage your trade!


http://www.tradingfrommainstreet.com/images/trades/trades20070809MSA.gif




posted by Toni Hansen @ 2:48 PM 0 Comments

Drive by Trading
Ok... So my friend in here for the week for vacation, but I still can't just leave the market! I know... sad.... very sad.... Anyway.... I've been doing drive-by trading... popping my head in, seeing a setup, grabbing it, then taking off again. I'm three for three on excellent setups. The only futures trades I've done was the NQ a few minutes ago. (Other two trades were EXPE and MSA this morning.) The NQ is as follows:

Pros:
- Three waves of selling
- Smack into morning lows
- Volume spike on initial drop into lows
- Congestion where pace slowed into lows
- Lesser volume on subsequent retests of lows
- No immediate overhead resistance
- Slower pace on subsequent lows following spikes off the lows
- 15 minute 200 sma on the ES and NQ at the same time as the lows hit
- Larger congestion and trading range on the 60 minute charts to allow for decent pivots

The market has plenty of room to continue to correct more off this support, but this was pretty much the "sure thing" and I don't want to have to stick around and wait it out! Then I'd have to call this post something other than "Drive-by Trading"!

http://www.tradingfrommainstreet.com/images/trades/trades20070809NQ.gif




posted by Toni Hansen @ 10:52 AM 1 Comments

Wednesday, August 8, 2007Market Rally Continues
Good day! Volatility in the market remained high in Wednesday's session as the major indices continued to react to the support levels which have been hitting over the past week or so. This was in line with our expectations heading into the session. Fortunately, the continuation of the move off support did lead to some very nice intraday setups in individual stocks, even though the indices were a bit more difficult to follow.

Among my favorite gainers due to the daily charts serving as favorable setups for a trend day were SPG, ATI and NMX. Unfortunately, I had to take off early on in the session and missed the best action on the day. Given the number of pivots off support on Wednesday and the fact that Wednesday was the third day of upside in the overall market, I am expecting things to be a bit more difficult in equities again into the weekend. My overall bias is still short-term bullish, however, so I will be focusing primarily on buy setups with more of a scalp perspective on the short side unless it is something moving on news.



Wednesday began with a nice upside gap into the zone of Tuesday's highs. Instead of reacting to that resistance level, the market held the gap without hesitation and fell into a trading range without any pull back into the gap zone. This was a promising start for the bulls. A trading range ensued until the 10:15 ET correction period when the indices broke to new intraday highs. In the larger scheme of things this early morning breakout was too soon on the 15 minute time frame where a rally had been in play ever since reversing after Tuesday's Fed announcement. Without some sort of base or pullback on the 15 minute time frame, it would be difficult to sustain much more upside. The market did creep higher into about 10:45 when the next correction period hit, but then succumbed to the larger time frame exhaustion and began to pull back into noon.



Interestingly, Wednesday's trading in the overall market did not differ a great deal from that of the previous session if you line up the trading that began at 10:15 ET to the activity which began at the open on Tuesday on the 5 minute time frame. After the steady move higher,

hefeiddd

The market then continued to roll over into the early afternoon. The indices fell nearly flat coming out of 12:00 ET and volume dropped as they managed two waves of upside into 12:30 on a 2 minute time frame. These moves were barely discernible on a 5 minute chart before the 5 minute 20 sma hit, along with another wave of selling. This move was a bit stronger than the last and took the market all the way back to the opening lows. These corresponded to the 15 minute 200 sma. Volume increased and the Nasdaq rounded off slightly to trigger a scalp buy setup shortly after 13:00 ET. The index had three waves of selling into major intraday support and slowing momentum, both of which was rather bullish on at least a short-term time frame. The 5 and 15 minute 20 sma overhead served as resistance for the correction off these lows and acted as the "guaranteed" target for the pivot higher. While a longer correction off the support was possible, getting any more substantial gains past the 5 minute 20 sma was more "iffy" due to the proximity of the 15 minute 20 sma and the underlying market weakness.



When the 15 minute 20 did hit, the 14:00 ET correction period was right there to catch it and the selling resumed. The remainder of the day was a lot more difficult than earlier in the session. I actually took off at about 14:30 ET to hang out with a friend who is visiting from out of town, but I don't think I would have done much in the futures market due to the greater degree of overlap on the 5 and 15 minute time frame that would have made it more difficult to see a lower risk continuation pattern after the 14:00 ET pivot. The main thing that did hold steady was the 5 minute 20 sma resistance. All three indices were unable to penetrate this resistance zone throughout the remainder of the day and the market closed right at the zone of the intraday lows. If you take a look at the daily charts, this was also the moving average support zones that had stalled the Dow and the S&P 500 in recent weeks.

By the closing bell the Dow Jones Ind. Ave. ($DJI) had lost nearly 400 points (actual loss was 387.18, 2.8%). Citigroup Inc. (C) and JP Morgan Chase Co. (JPM) were among the hardest hit. They each lost more than 5% in Thursday's session alone thanks to news of continued worries over credit. The S&P 500 ($SPX), in which the financials carry even more weight, fell 44.40 points, or 3%. Within this index, Walmart (WMT) fell 4.1% after it posted earnings. The Nasdaq Composite ($COMPX) suffered the smallest decline in percentage terms. It lost 56.49 points, which translates as 2.2%.



I'm not very optimistic on Friday. This week has been a great deal better for trading than I had anticipated. I was pleasantly surprised by the number of high quality setups I found, not only in individual stocks moving on momentum unrelated to the overall market, but in the indices themselves. Sure, there were some huge chunks of time where volatility was simply too high to justify the risk, but overall it was a pretty nice week.

I am still concerned about the daily time frame, however, when it comes to follow through. I had expected the market to hold up a bit better on Thursday before it gave way to selling again, but now the door is open for another test of the month's lows. It is even going to be easier for the market to try to break to new lows on the month within the next week. That would not necessarily be the best scenario for the bears, however, because the market

posted by Toni Hansen @ 8:56 PM 0 Comments
Trading "Blindly"
I mentioned in my previous post that one of my equities trades was MSA. Well, while it ended up being a nice trade, it was not nearly as nice as it should have been! I entered MSA thinking that at the very LEAST it was going to get to $58. I was a little late on the entry over $57 because I pulled up the stock right as the setup was triggering, but I had an extremely tight stop due to the narrow range it was moving out of. On this type of setup the larger target is a few ticks under the original high, which meant $59, with initial resistance at $58 because it would be the smaller equal move and whole number resistance.

Well, not too long after I was in the setup, all my charts went down. I was completely BLIND! I am a chartist. I read them like I do a book and now someone went and suddenly took away my eyesight and I was a goner. There was this little voice in the back of my head that said, "Don't worry, this is going to work out. Don't change your plan." The naughty voice took over though, saying, "You can't see anything! Ha! Ha! This could be rounding off here at highs and you can't tell!"

So, what did I do? Well, first I took off half my size into the $58, still trying to listen to the reasonable voice telling me that just because I didn't have charts didn't mean the stock was going to perform any differently than normal. When it didn't break through the resistance, however, I went and just said, "Forget it! I have no idea when or if I'm going to get charts back today and I can't just keep sitting here watching time and sales all day!"

Of course, as soon as I hit the sell button, I knew I'd mucked up! The sane voice said, "You dummy! Now look what you did! Just watch!" Sure enough, three minutes later my charts came back online and it was obvious that the correction off the $58 resistance was not going to lead to a reversal and when the stock broke through the $48.40 level the momentum it was gaining had me realizing at that point that it would go through my original target very soon, but I just couldn't bring myself to get back into it after having so many charting problems all day and not knowing if they would fail again or not...

Lesson: Stick to your plan even if you end up blind! It's very hard to not let things which catch you off guard like this faze you, but it's very important to listen to the sane person! Yeah, ok, so this is really easier said




posted by Toni Hansen @ 2:48 PM 0 Comments

Drive by Trading
Ok... So my friend in here for the week for vacation, but I still can't just leave the market! I know... sad.... very sad.... Anyway.... I've been doing drive-by trading... popping my head in, seeing a setup, grabbing it, then taking off again. I'm three for three on excellent setups. The only futures trades I've done was the NQ a few minutes ago. (Other two trades were EXPE and MSA this morning.) The NQ is as follows:

Pros:
- Three waves of selling
- Smack into morning lows
- Volume spike on initial drop into lows
- Congestion where pace slowed into lows
- Lesser volume on subsequent retests of lows
- No immediate overhead resistance
- Slower pace on subsequent lows following spikes off the lows
- 15 minute 200 sma on the ES and NQ at the same time as the lows hit
- Larger congestion and trading range on the 60 minute charts to allow for decent pivots

The market has plenty of room to continue to correct more off this




posted by Toni Hansen @ 10:52 AM 1 Comments

Wednesday, August 8, 2007Market Rally Continues
Good day! Volatility in the market remained high in Wednesday's session as the major indices continued to react to the support levels which have been hitting over the past week or so. This was in line with our expectations heading into the session. Fortunately, the continuation of the move off support did lead to some very nice intraday setups in individual stocks, even though the indices were a bit more difficult to follow.

Among my favorite gainers due to the daily charts serving as favorable setups for a trend day were SPG, ATI and NMX. Unfortunately, I had to take off early on in the session and missed the best action on the day. Given the number of pivots off support on Wednesday and the fact that Wednesday was the third day of upside in the overall market, I am expecting things to be a bit more difficult in equities again into the weekend. My overall bias is still short-term bullish, however, so I will be focusing primarily on buy setups with more of a scalp perspective on the short side unless it is something moving on news.



Wednesday began with a nice upside gap into the zone of Tuesday's highs. Instead of reacting to that resistance level, the market held the gap without hesitation and fell into a trading range without any pull back into the gap zone. This was a promising start for the bulls. A trading range ensued until the 10:15 ET correction period when the indices broke to new intraday highs. In the larger scheme of things this early morning breakout was too soon on the 15 minute time frame where a rally had been in play ever since reversing after Tuesday's Fed announcement. Without some sort of base or pullback on the 15 minute time frame, it would be difficult to sustain much more upside. The market did creep higher into about 10:45 when the next correction period hit, but then succumbed to the larger time frame exhaustion and began to pull back into noon.



Interestingly, Wednesday's trading in the overall market did not differ a great deal from that of the previous session if you line up the trading that began at 10:15 ET to the activity which began at the open on Tuesday on the 5 minute time frame. After the steady move higher,

hefeiddd

the market began to pull back. It did so with a very typical two-wave correction which lasted into noon. Volume dropped off a bit and was the lightest during the second wave of selling on the 5 minute charts over noon, suggesting an upside resolution to the trading range. This bias was supported by the fact that the second wave of selling was also slightly more gradual than the first and made a smaller move to the downside, even though it took nearly the same amount of time as the drop out of 10:45 ET.



The two-wave correction in the market triggered a buy setup shortly before 12:30 ET in the indices. The momentum was still on the slow and choppy side, but a number of individual stocks which had been showing strength earlier in the session experiences strong upside breakouts as the overall market began its climb. The mid-day pattern in the indices was a variation of the same pattern we experienced on the daily time frame over the past two and a half months. Just look at the daily charts and compare them to the 5 minute time frames. I've marked both in green to show the comparable moves. In a recent presentation in Denver I spent a great deal of time on this particular market development because it's one that repeats over and over again in the indices as well as in individual stocks.

Throughout the first half of the afternoon the market moved steadily higher. At 14:30 ET, however, the gradual uptrend gave way and the market flushed quickly lower. This was due to the slower upside momentum and has been the primary risk throughout the past two days as a result of the slower pace of the buying and the greater degree of overlap from one bar to the next on the intraday time frames. When the channel support broke, the selling was quite extreme. It reclaimed all of the gains in the Dow and nearly all the gains in the S&P 500 and Nasdaq Composite. In the final half hour of trading the bulls lucked out and the gap support held. The Dow ($DJI) managed to add back 153.56 points before the bell, while the S&P 500 ($SPX) rose 20.78 points and the Nasdaq ($COMPX) gained 51.38 points.

posted by Toni Hansen @ 9:41 PM 0 Comments
Tuesday, August 7, 2007Market Posts Gains Following Fed
Good day! The market managed to close modestly higher on Tuesday after a slow session heading into the day's FOMC statement and large whip-saw action following the announcement. All-in-all it was a rather typical Fed day. The morning began with a small downside gap into the open, but the 5 minute 20 simple moving average held it and the indices crept higher until the gap zone had closed. This took place shortly after 10:00 ET and the indices then fell back and sideways as the volume began to dry up. This made it difficult to do much with the index futures since choppy trading set in and the upcoming Fed announcement meant that the closer the day came to that announcement, the higher the risk would become.

Even though the market as a whole had a really difficult time to start the day, moving only slightly higher, a number of individual stocks had some nice momentum, creating a number of strong opportunities in individual stocks. Among those stocks which did trend pretty well intraday on the upside were NILE, NOV, DE, MR, OII, GES, FMCN, ELON, JASO, OMTR and EQIX. A problem many traders I talked to had, however, was that many of the gappers didn't really go very far after the open and just chopped around instead, so they got cut up a bit. One thing to watch out for when you are trading stocks gapping on news is to avoid those which ran for several days before gapping or are gapping and moving right into a 20, 50, 100 or 200 day sma. Those levels are more likely to hold the first day they are hit on a reversal or correction.



The indices split heading into noon. The Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX) both broke higher out of the 15 minute triangle than began with the previous afternoon's highs. The Nasdaq Composite ($COMPX) had pulled back more and failed to react as much off support. While the Dow and S&Ps managed to climb into noon, the Nasdaq could not bust through its morning highs and the 15 minute 200 sma that was hitting at the same time. The 12:00 ET reversal period corresponded to this resistance and the S&Ps also hit equal move resistance in that zone. This led to a second correction off intraday highs into the early afternoon.

Support hit on the second pullback at about 13:00 ET. This was the 5 minute 20 sma again in the Dow and S&Ps. Volume was now even lighter. The financial sector really began to take off at this time with the Fed only about an hour away. As they soared, the market as a whole slowly climbed. It hugged the 5 minute 20 sma zone, however, and this was a strongly bearish indicator since it was the third move higher on the 5 minute time frame. This meant that the trend was also exhausting itself going into the Fed.



After the Fed announcement hit with no change in rates, we saw the typical three wave reaction. First the market dropped, popped and dropped again on a 1 minute time frame. It then repeated on the 2 minute. This was the easiest to see in the Nasdaq. I had a lot of charting issues after the Fed, as did many I spoke with, whereby many of my charts lost data. It didn't affect how the market reacted, however, and before long the indices were beginning a second wave on the larger 5-15 minute charts by turning around off lows around 14:35 ET with a pattern very similar on the 5 minute of the Nasdaq as compared to the move off Monday morning lows. Resistance hit at 15:00 ET, but then the buying continued into 15:30 ET before pulling back into the close. The Dow ended the session with a gain of 35.52 points, while the S&Ps rose 9.04 points and the Nasdaq Composite gained 14.27 points.



Going into Wednesday I think we are going ton continue to see the market react off the lows of the last couple of weeks, however the momentum coming out of Monday's low is slower than it was heading into it. This leaves the door open to pull back on Wednesday since the pace would ideally need to turn over better with more gradual downside before we would normally see a strong upside momentum move or correction off support. This means that while I expect longer corrective action off this recent support, I think it's going to continue to be a bit more difficult for now with greater chop.


posted by Toni Hansen @ 9:52 PM 0 Comments

Comparative Trade Analysis
I thought you guys might love this chart comparison on two trades in the NQ on different time frames... A favorite pattern of mine which I also showed in earlier posts located at:

http://www.tonihansen.com/blog/2007/08/ym-trade-2-premarket-trade-reincarnated.html

and

http://www.tonihansen.com/blog/2007/08/premarket-ym-trade.html


Image link:

http://www.tradingfrommainstreet.com/images/trades/trades20070807NQ.gif




posted by Toni Hansen @ 1:59 PM 1 Comments

Monday, August 6, 2007Morning Hesitation Gives Way to the Bulls Ahead of Fed
Good day! Monday was an interesting day in the market. The lack of bias that was showing heading into the open continued early on in the session. A slight upside gap quickly closed, but after finding support at Friday's lows in all three of the major indices, as well as Wednesday's lows in the Nasdaq, the momentum began to change and a stronger intraday bias began to emerge. From 10:00 ET into 11:00 ET the market pushed back into the lows, but refused to let go of the 5 minute 20 simple moving average resistance levels. It just slid lower with a great deal of choppy trading and on lighter volume than the first decline of the day. This tug-of-war eventually wore out the bears, which had been working hard since Friday to push for stronger tests of daily support. Soon after 11:00 ET they simply gave up and let go. The market soared.



Even though the market was rapidly gaining momentum, most of the stocks that would end up closing with the strongest gains on the day were not those that began the session on the gainer's list. This made it more difficult from my standpoint to really find decent, class-act setups in stocks since most of the setups were similar to those which took place in the indices. This meant that they rounded off at lows and then took off late in the morning, but only had 5 minute continuation patterns with bull flags and such on that time frame. So the scale of the setups made it difficult to scan for them and take advantage of them unless you just happened to have the charts up at the time these smaller setups formed or choose a few early on and just played those out intraday. Since my initial scans for the day resulted in almost nothing of interest in stocks, however, I didn't even bother to put much effort into scanning for them and stuck purely to trading the futures in Monday's session.

hefeiddd

Some of the most notable gainers on Monday were BSC, MER, GS, FNM, FRE, MA, MBI, LVS, JCP, AAPL, FITB, ERTS, APOL, TROW, LRCX, WYNN, and NTRS. Notice that among the NYSE stocks many of the top performers were in the financial sector, which had suffered one of the strongest beatings in recent weeks. Merrill Lynch (MER) was even rewarded with an upgrade to buy from UBS. After checking out its weekly and monthly charts, I concur that the downside move is quite exhausted in that security at this point. The volume has spiked and its run smack into support from last summer. It makes sense that it will recover some of its recent decline in the near future. I don't expect the buying overall to be nearly as strong as the selloff though. Check out the drop into March and subsequent recovery to that selloff for an example of a typical correction following a stronger than average decline. Typically the correction off a second comparable drop in a row is even choppier than the first.



As the market pulled up off lows, it followed textbook technical rules very well. Three waves of buying into about 12:30 ET were then followed by a two wave correction into the 14:00 ET reversal period. The second wave of this correction was more gradual than the first on volume was lighter on the entire move off mid-day highs, creating a nice continuation to the upside right off the 15 minute 20 simple moving averages in the Dow Jones Ind. Average, S&P 500, and Nasdaq Composite.



The final two hours of trading once again took over where the morning rally had left off. Three waves of buying into 15:15 ET on the 5 minute time frame were followed by a slightly longer correction into 15:30 and a final move higher into the close. By the end of the day the Dow was back near Friday's highs and the S&P 500 was hitting previous 15 minute highs and its 15 minute 200 sma. The Nasdaq lagged behind on the afternoon upside and did not quite make it into those comparable price levels, but still managed to close a few ticks from the high of the day.



Monday's rally tacked on a whopping 286.87 points to the Dow ($DJI). This was the largest single day performance for an upside move since June of 2003 and it came within only a few points of recovering all of Friday's losses. The Dow closed at 13,468 with 29 out of its 30 stocks advancing. The S&P 500 ($SPX) rose 34.61 points after falling 39.14 points on Friday and closed at 1,467. The Nasdaq Composite gained 36.08 points, which was only a tad more than half of Friday's decline of nearly 65 points. It ended the session at 2,547.

Even though Monday ended up being a great deal more active for me than I had been expecting heading into the day, I am still leery going into Tuesday. Often a Fed day begins with some upside out of the open and then things slow down a great deal a few hours ahead of the 2:15 ET announcement. I tend to close down most of my level II windows and time and sales at this time to help prevent my computer from getting clogged up with data when the announcement hits on what changes, if any, the Fed plans on making in interest rates. Most believe they will leave them unchanged this time around.



posted by Toni Hansen @ 9:11 PM 0 Comments

Market Takes Another Plunge
Good day! Well... We knew it wasn't going to an easy correction off the daily support! This certainly proved the case with Friday's session! The day essentially confirmed in my book that this time around the market is not going to be able to make a recovery like it did with February's decline. My weekend scans also make me wary of buying anything other than very short term positions, meaning setups that take place on a 60 minute time frame or smaller.

Heading into the day on Friday, I was a bit more bullish on the smaller time frames given how the market closed the previous day. Right away, however, an initial attempt to move higher based upon Thursday's close failed. The main catalyst was a weak July jobs report in the premarket. The market chopped around for about 15 minutes out of the open and then gave way to selling out of the 9:45 ET reversal period. The momentum of this move led to higher odds for a trading range to hold throughout the morning and the indices became a bit more difficult to trade due to the overlap and chop from one bar to the next on the 5 and 15 minute time frames.



The market fell back into the lower end of the 15 minute trading range by shortly after 10:00 ET. Despite a 2B attempt at the 10:45 ET reversal period, the market failed to regain any significant upside momentum. When the 5 minute 20 sma hit, the indices fell into congestion along it, breaking higher on a Phoenix, essentially triggered a reverse head and shoulders pattern on the 5 minute time frame, but they barely pushed higher even with the more bullish type of pattern. At 12:30 ET the mid-day uptrend channel broke and two waves of selling followed into 13:00 ET. the market attempted again to regain some upside, but when this second uptrend channel break on the 5 minute time frame it triggered a much more substantial short pattern on the 15 minute time frame. All of my focus at this point flipped to the downside.

It was not the easiest selloff to work with once under way. There were no clear-cut bear flags or even bases at lows for decent continuation patterns. Instead, the market just chopped lower with more overlap from bar to bar as it chopped up traders left and right before finally plummeting into the final minutes of trading. The closing drop in the S&P 500 even took this index to new lows on the month, although the Dow and Nasdaq still managed to hold Wednesday's lows.



By the closing bell on Friday the Dow Jones Industrial Average ($DJI) was down 281.42 points. The S&P 500 lost 39.14 points. The Nasdaq Composite fell 64.73 points. In each of these it meant a decline of more than 2% during that session alone and was a second straight week of steep losses. Among the hardest hit on Friday were those wrapped up in the housing debacle. Brokers such as Bear Stearns' (BSC) (-6.3%), Goldman Sachs (GS) (-4.2%), and Lehman Brothers (LEH) (-7.7%) all had a rough day. Even Home Depot (HD) (-4.3%) experienced a sharp decline.



The Fed makes another interest rate announcement on Tuesday and I suspect that Monday and Tuesday morning are going to be slower and lacking in higher number and high quality momentum moves in individual stocks. Many traders and investors will be sitting on the sidelines after the last two weeks of carnage and will await the Fed's news before looking to establish any new positions of greater size. The Fed is expected to leave rates unchanged, but everyone will be watching to see what, if any, clues their may be for helping ease the current credit crisis. So far the Fed has taken quite a back seat approach and shown no signs that it plans to do anything at all to really address these concerns.


posted by Toni Hansen @ 9:09 PM 0 Comments

hefeiddd

Investment Stock of Interest - CHK
I did a great deal of scanning this weekend, and nearly every one of the S&P 500 looks lower on the weekly and monthly time frames as the year continues. I've had a very difficult time in recent months in finding decent setups on the larger time frames for position trades and longer term buys and very few of the stocks I scanned through this weekend are even close to what I would consider to be an ideal buy. In fact, not a single one of them was one I would deem to be a low risk setup.
I do have one stock that still really stands out on the weekly and monthly time frames that I do like, but as is the case with MMM from a few weeks ago, this stock can also still hold its base and congestion for several months or more before it really gets going, so these two are things I am more comfortable accumulating coming off the lower levels within the range itself for the time being instead of take any new break to weekly highs, since those are more likely to not hold for the time being. This second stock is Chesapeake Energy Corp. (CHK).

Chesapeake Energy Corporation, an oil and natural gas exploration and production company, engages in the acquisition, exploration, and development of properties for the production of crude oil and natural gas from underground reservoirs. As many of you may recall, CHK has been on our radar since last December, when I also expressed that a longer consolidation was likely. I will continue to monitor this for additional setups within the congestion itself, as I will with MMM. Do not be surprised it it attempts to take out the lows made at the beginning of this year before it can turn back over again. FWLT on the weekly time frame early last year has a




posted by Toni Hansen @ 5:19 PM 0 Comments

Friday, August 3, 2007YM Trade #2 - Premarket trade



posted by Toni Hansen @ 7:02 AM 0 Comments

Premarket YM Trade
Ok, so I usually don't trade the premarket at all, but today I




posted by Toni Hansen @ 6:01 AM 0 Comments

Thursday, August 2, 2007Market Congests as Participants Attempt to Digest Recent Selling
Good day! Market volume remained high on Thursday after last week's steep selloff, but the indices continued to try to correct from the daily support levels which hit late last week in the S&P 500 and Dow Jones Industrial Average. The market resumed Wednesday's late day surge right away into the open, moving higher for the first 15 minute of the day. When the 9:45 ET reversal period hit, however, the indices began to round off and correct off the extreme momentum move on the 15 minute time frame. The extent of the 15 minute move meant that the indices would have a very difficult time resuming the buying without a correction taking place on the larger intraday time frames. The momentum of the move also meant that such a correction would tend to be more gradual overall than the rally, which created a strong chance for a trading range throughout the session on Thursday. This is, of course, what we had been expecting heading into the day, so at this point not a lot had changed in terms of the day's outlook.

At first the indices were a bit on the bearish side, pulling back off the 9:45 ET highs at a steady clip. Support hit initially at the 10:15 ET reversal period and volume dropped off a bit as the indices hugged the support zone with only a very gradual upside move before giving way to a second wave of selling out of the 10:45 ET reversal period. I've talked a lot about corrective moves in the market and how typical corrections will take place with two waves of downside. The same was true this time around as well. In the Dow and Nasdaq the second decline only barely pierced the initial low and this led to a form of double bottom pattern called a 2B, which took those indices back into the previous 5 minute highs at about 11:30 ET.



The momentum coming out of the second wave of selling was faster than the first correction off lows, favoring a bullish bias into noon. The indices based slightly along the upper trend channel intraday and broke to new intraday highs heading into noon. A major problem with this otherwise ideal breakout was that fact that on the 15 minute time frame this breakout attempt was still very premature and the market had not corrected nearly long enough to sustain a strong continuation move after the extreme rally from the previous afternoon. So, while the breakout was nice from a daytrade or scalp standpoint, it only managed to establish an equal move as compared to the bounce off lows into 11:30 ET when it broke higher into noon on the 1-5 minute time frame.



Another two-wave correction took place in the market in the early afternoon. As in the morning, the market fell off highs and into support from about the 5 minute 20 simple moving average. Volume again declined as the indices hugged this support zone and for the second time on Thursday. The indices again broke this support for another quick daytrade/scalp into 13:30 ET. This time the amount of the break was greater in the Dow and Nasdaq than before and the corresponding correction off the second low was hence a bit more choppy and uncertain as well. The market had two hesitant upside moves into about 14:15 ET on the 1-5 minute time frame, but pulled back before reaching the previous highs.

This third pullback off the highs finally did the trick. After the 15:00 ET reversal period hit, the market began to creep upwards. At about 15:30 ET the volume began to climb and the bulls scrambled higher as the day's range broke to new highs on the session. Even though they pulled back slightly into the close, the Dow ($DJI) still managed to 100.96 points on the day, while the S&P 500 ($SPX) rose 6.39 points and the Nasdaq Composite ($COMPX) added 22.11 points, exceeding the Dow and the S&Ps in terms of percentage gains with a 0.9% increase, as compared to the Dow's 0.8% move and the S&P's 0.4% gain.



Despite the range, a few stocks managed to make waves with extreme up and downside moves. One of the top gainers was Hewlett-Packard Co. (HPQ), which gained 3.2% aftter Bank of America upgraded it to a buy. Advanced Medical Optics Inc. (EYE) climbed 5.2% when it withdrew its bid to buy Bausch & Lomb Inc. (BOL). Beazer Homes USA Inc. (BZH) managed a bit of a comeback after rumors of bankruptcy plunged it more than 40% on Wednesday and closed up13.6%. Checkfree (CKFR) had one of the largest gains, rising 23.3% after agreed to be acquired by Fiserv (FISV).

Earnings news also managed to move a lot of securities on Thursday. Credit Suisse Group (CS) rose 5%, while Eastman Kodak (EK) rose 5.4% on earnings. Furniture Brands International Inc. (FBN), Invitrogen Corp. (IVGN), Nokia Corp. (NOK), Sirenza Microdevices Inc. (SMDI), and Unum Group (UNM) also rose strongly.

Not fairing as well were Accredited Home Lenders (LEND), which fell a whopping 35.3% to add to the concern of credit woes when it delayed it annual report for 2006. Ameristar Casinos Inc. (ASCA) drop 9.5% on earnings and Bare Escentuals Inc. (BARE) dropped 12.5%. ELY, CHE, CLX, GTW, and GYI also had difficult sessions and closed at least 5% lower.

My outlook at this point remains the same. I am looking for more of a correction off this support zone, but the odds remain higher that things will continue to be rather choppy. My intraday bias heading into Friday is slightly bullish for the short-term. My commitment level is not that high yet though.


posted by Toni Hansen @ 9:40 PM 0 Comments

Wednesday, August 1, 2007Market Continues to Correct Off Daily Support


I don't know that I am as excited as these late day bulls were. Yes, intraday it was a perfect opportunity, but I am not quite ready to believe in the odds of these exact lows actually holding. I think that it will be very simple for the market to try to chop around here for a few more days before we really see another decent attempt to correct off these lows. Greater overlap on the daily time frame and slightly lower lows over a few days would actually allow the market to jump more quickly and sustain a larger correction in terms of price movement on the upside than it it does just try to begin that move on Thursday. When the correction does take place, I still expect just under the previous highs to serve as very strong price resistance.

On Thursday I'll again be back to trading and will return with a more in depth market letter. For now though, it's time to catch up on the sleep I've missed out on this week! Have a wonderful trading day tomorrow and don't forget to get out and enjoy the weather this week while it's still summer!








posted by Toni Hansen @ 8:52 PM 0 Comments

hefeiddd

Sunday, September 30, 2007Market Holds Congestion into the Weekend
Good morning! The range widened intraday on Friday, but still held the larger daily congestion zone. All three indices posted mild losses despite greater intraday activity and sharp bouts of selling. The Dow Jones Industrial Average ($DJI) fell 17.31 points (-0.1%) to close at 13,895.63. This meant a 4% gain on the month and an 11.5% gain thus far on the year. The S&P 500 ($SPX) lost 4.63 points on Friday (-0.3%). It closed at 1,526.75. The monthly gain the S&P 500 came to 3.6%, which meant a 7.6% gain on the year. The Nasdaq Composite ($COMPX) also managed a strong showing to end the month. Despite losing 8.09 points on Friday to close at 2701.50, it also gained 4% on the month. The recent relative strength, however, has not been reflected in the longer term gains, which only amount to 3.8% on the year to date.



Heading into Friday's session my bias was "hesitantly higher," but with a very wary eye due to a number of signs of upward exhaustion. As such, as I mentioned heading into the day, I was on the lookout for any change of intraday momentum to flush out the bulls. While the bulls did in fact hold on going into the session, and the move to the upside out of the open was pretty quick, and it did not last for long. Within the first 20 minutes of the day the indices had found resistance at previous highs and soon gave up trying to push through them.



After turning over into 10:00 ET, the indices began to sell off very quickly. The reversal gained momentum over the course of the next half hour and took all three indices past Thursday's lows, retracing the entire previous day's price range in a mere 30 minutes. Support hit initially at 10:00 ET with a push to those lows and into the S&P 500's 15 minute 200 simple moving average. This corresponded to the closure of Thursday morning's gap in the Nasdaq Composite and Thursday's opening highs in the Dow Jones Industrial Average. The market then pushed slightly lower to test the support levels more securely at the same time as the 10:45 ET reversal period hit.

The slowdown in the momentum as a result of the slightly lower lows, combined with the reversal period and the larger time frame support all worked together to create a correction off the morning lows. I took the YM due to its greater relative strength into the previous day's close. While the Dow made it back into the early morning congestion zone, the S&Ps and Nasdaq had an extremely difficult time showing any inclination to assist the bulls. They held the lows instead, pulling slightly higher in a trading channel along the lows. This channel broke initially into 12:00 ET and then a second channel followed into 14:00 ET.



As the S&Ps and Nasdaq continued to move slowly off the lows, the Dow managed to retest the morning highs, but volume was light throughout the upside. After the highs hit, along with the 14:00 ET reversal period, the bears again took over. An initial drop into the morning lows in the Nasdaq was soon followed by a correction and second decline into 15:00 ET. Momentum again accelerated throughout the move. It exhausted itself around 15:10 ET as the Dow fell into its morning lows.

While I timed the support and pivot off the lows very well, I was nevertheless surprised at the extent of the bounce off those lows in the final 45 minutes of the day. The market nearly made it all the way back to the 14:00 ET breakdown prices, which meant that the rally during this time was actually stronger-than-average. This action also is one indicative of market congestion, however, and tends to be followed by trading range activity.

With a range already well under way though, I am hoping to see some better intraday swings this week and a potential resolution to the range, although there is still the potential for it to hold the range into the 20 day sma zone. My directional bias is once again bullish on the 60 minute time frame, but I continue to remain on edge given the daily overhead resistance at previous highs in the Dow and S&Ps and the larger uptrend extension in the Nasdaq since the 18th.

I do not expect any upside to be very sustainable if it begins early in the week, since a base on the weekly time frame will typically be necessary to bust through daily resistance such as this. As we head into the end of Sunday's afterhours trading at 11:40 p.m. ET, the market is currently bearish on the 15 minute time frame, but it is hard to say whether or not it will sustain the move heading into the open since there is still plenty of time for the momentum to change again before then.





Economic Reports and Events This Week

Monday, October 1, 2007
10:00a.m. Sep ISM Manufacturing Business Index. Previous: 52.9.
5:00 p.m. Auto and Truck Sales for Sep.

Tuesday, October 2, 2007
7:45a.m. ICSC Chain Store Sales Index. Previous: -1.0%.
8:55a.m. Redbook Retail Sales Index. Previous: +0.5%.
10:00a.m. August Pending Home Sales. Previous: -12.2%.
5:00p.m. ABC/Wash Post Consumer Confidence. Previous: -11.

Wednesday, October 3, 2007
7:00a.m. MBA Mortgage Application Survey. Previous: -2.8%.
7:30a.m. Sep Challenger Layoffs. Previous: +85.2%.
8:15a.m. ADP/Macroeconomic Advisors Employment Estimate Non-Farm Payrolls Forecast. Previous: -4K.
10:00a.m. Sep ISM Non-Manufacturing Business Index. Previous: 55.8.
10:30a.m. Crude Inventories

Thursday, October 4, 2007
8:30a.m. Initial Jobless Claims. Previous: -15K.
10:00a.m. August Factory Orders. Previous: +3.7%.
10:00a.m. DJ-BTMU Business Barometer. Previous: -0.7%.

Friday, October 5, 2007
8:30a.m. Sep Nonfarm Payrolls. Previous: -4K.
8:30a.m. Sep Unemployment Rate. Previous: 4.6%.
3:00p.m. August Consumer Credit. Previous: +$7.5B.


posted by Toni Hansen @ 8:49 PM 0 Comments

Thursday, September 27, 2007Market Yet to Shake Trading Range
Good morning! Ever since last Tuesday's Fed meeting and the subsequent rally, the market has had a difficult time sustaining any momentum from one day to the next and even within a single session. A tug-of-war has been underway without either side prevailing. Instead the market has been stuck in that trading range we were expecting at the beginning of the week and not much had changed since.

While there have been some very large moves in a couple of stocks each day, such as in the China stocks, the market as a whole has been extremely sloppy. The stocks which grabbed my attention for play in Thursday's session were KongZhong Corp. (KONG), China Fin Online (JRJC), and Unibanco (UBB) on the long side of the market and Starbucks (SBUX) on the short side. Starbucks was hit when Banc of America cuts its rating to "sell" from "neutral" due to slowing growth stateside.



Before the opening bell, the Labor Department announced that first-time claims for jobless benefits fell to their lowest level last week since May. Additionally, the Commerce Dept. noted that U.S. economic growth accelerated in the second quarter. The market had been heading higher following Wednesday's close, but beginning at about 4:00 am the S&P 500 began to turn back over and the 8:30 am ET data didn't move the market very much at all. While the afterhours setups were very clear-cut, when the open rolled around the indices became very choppy and throughout the rest of the day they failed to break free from the congestion between the premarket highs and lows.



I didn't have a lot of luck with the futures market on Thursday and came out of it nearly flat after only four trades. I found it more difficult to avoid getting flushed and while the Dow had been the weaker index in recent days, that was not the case on Thursday when the Nasdaq lagged and the Dow led. As you can see on the charts, I have very few patterns even marked because there was so much overlap in price and chop that it was difficult to locate strong intraday triggers. The general areas of support and resistance at previous highs and lows and trend channel lines held, but they were not nearly as tight as in the week thus far and did not hold them as closely, so timing the pivots off the highs and lows was a bit more difficult than usual. Not even the intraday housing data phased the market. While sales dropped 45,000 to 825,000 in August, this weakness in the housing market is hardly newsworthy these days and was brushed off quickly.



Despite the slop, the market still managed to close near highs on this exceptionally narrow range day. The Dow gained 34.79 points and closed at 13,920.4 after testing the 14,000 zone several times. The S&P 500 rose 5.96 points. It closed at 1,531.38. The Nasdaq Composite also posted gains of 10.56 points. It ended the session at 2,709.59.

I would describe the current market bias as "hesitantly higher". Both the S&P 500 and Dow Jones Ind. Ave. had two waves of correction off highs within this range since the 19th, but since coming out of the second wave of selling they have not had much luck gaining momentum nor falling into a more gradual correction to allow for a strong upside breakout to more easily take place. Instead the upside creeping action adds risk for downside flush potential, even if it's only short-lived. The Nasdaq's better relative strength is also a bit of a potential problem for the bulls since it now has three waves of selling since it began to move higher on the 18th on the 120-minute chart and it is also now at risk of flushing lower into the weekend. So, while I will still be focusing primarily on the long side, I will be monitoring intraday momentum changes very closely.


posted by Toni Hansen @ 11:10 PM 0 Comments

hefeiddd

Wednesday, September 26, 2007
Market Holds Daily Trading Range

Good morning! The market experienced a great deal of divergence on Tuesday. While each of the three major indices gapped lower into the open, the S&P 500 and Dow Jones Ins. Ave. experienced the largest gaps. The market opened into support from previous lows in the Nasdaq and the 15 minute 200 sma in the S&P 500. In the S&Ps and Dow the gap was significantly larger than average, which meant that typically that gap zone will attempt to fill and will nearly always do do in at least one of the three major indices .



By the times the 11:15 ET reversal period hit the indices had all closed their gaps and had put in at least three waves of buying on the 5 minute time frame. A short setup triggered well after the third his to lead to a decent correction off the market's initial highs. After pulling back off the morning highs the indices formed their first upside continuation pattern after 12:30 ET and moved into highs following 13:00 ET.

The market struggled throughout the day to gain any real momentum. The Nasdaq faired the best and trend higher into the close, but the S&P 500 and Dow were stuck in a range nearly all day and failed to trigger strong setups on the 5 minute time frame. The Dow Jones Ind. Ave. formed an upside continuation pattern coming out of a cup with handle pattern around 14:30 ET, but the market did not seem terribly excited. The market still managed to close at intraday highs., but the action was one conducive to intraday shopping for work clothes.!



When the closing bell rang the Dow was up 19.59 points and it closed at 13,778.7. Home Depot was again another strong decinrer. The market ended on a strong note, however, and continued higher throughout the afterhours and into the early morning. The S&P 500 shed 0.52 point on Tuesday and closed at 2,683.45. The Nasdaq Comp. ($COMPX) ended its session higher by 15.50 points at 2,683.45.



The market range is likely to continue over the next couple of days. I am still rooting for a better test of the previous highs. I'm going to be out of the office throughout most of Wednesday though, so I am hoping that any strong activity in the market which serves as a break in this congestion will be kind enough to wait until I return on Thursday!


posted by Toni Hansen @ 12:44 AM 0 Comments

Tuesday, September 25, 2007Nasdaq Breaks to Highs, Dow and S&Ps Hold Range
Good morning! The market had a bit of a tough time trying to make up its mind on Monday. Thanks to strength in some key technology stocks, the Nasdaq managed to outperform the rest of the market throughout the day. The S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) both began to fall as soon as the opening bell tolled, but the Nasdaq Composite ($COMPX) actually climbed somewhat for the first 15-20 minutes of the day and broke to new highs on the month. While it also gave in to a bit of selling heading into 10:00 ET, the selling was not enough to close the gap and the 15 minute 20 simple moving average held as support.



The market began to head higher following 10:00 ET. At first there was a great deal of congestion on the 1 minute time frame, but when the 10:45 ET correction period hit the market shot higher. I did not notice anything in terms of news at this time, but the market reaction was very similar to one driven by news. The S&P 500 and Dow both returned to the zone of Friday's highs, while the Nasdaq cleared the resistance very well and confirmed that 60-minute range breakout we had been watching for heading into the day. Unfortunately for the bulls, the S&Ps and Dow were unable to mimic this breakout. After hitting the highs the market turned around immediately.



The pullback off the highs was extremely gradual to begin with due to the sharp rally into the highs in the first place. I was initially watching for a slightly higher high to slow the momentum, but the market held the zone of those highs even though it did retest them shortly after 10:15 ET. When the market didn't attempt a new high almost right away though, I began to change my focus towards the short side. I took a scratch on my initial attempt around 10:55 ET, but caught it perfectly the second time around at 12:11 ET. By this point the Nasdaq and S&Ps were hugging the 5 minute 20 simple moving average support and volume was drying up on the buying. This meant that even though the prices were heading higher in the Nasdaq at least, there was no conviction to the move.

Once the moving average support broke the sellers began to show their heads. They were a bit hesitant at first, but the momentum intraday on the downside increased a great deal shortly after 13:00 ET. Support hit initially at the morning lows in the Nasdaq Composite just prior to 14:00 ET. A bear flag on the 5 minute time frame followed and broke to a lower low heading into 14:30 ET. This move took the S&Ps into price support from last Thursday's lows. Since this breakdown did not last as long as the one which preceded it, the move began to turn the indices over and create a momentum shift on the 15 minute time frame. Another bear flag tried into 15:00 ET, but this time the lows was even less than before and could not break at all in the Nasdaq. The rounding off at the support allowed the market to hold the zone of the lows into the closing bell, although they dd give way again in the afterhours session until around 18:00-19:00 ET when the slower afterhours downtrend broke higher.



When the closing bell sounded the Dow was down 61.13 points. It closed at 13,759.1 with losses in 22 of its 30 stocks. The financials led the decline, while MSFT helped moderate the selling thanks to its 1.5% gain. The S&P 500 lost 8.02 points on Tuesday. It closed at 1,517.73. The Nasdaq Composite lost 3.27 points. It ended the session at 2,667.95. Since the selling increased on Monday within the range, it seems likely that the range will hold for a few more days at least, but I suspect that we will see some upside spikes within the range to regulate the selling and uphold the current bias for a continuation pattern coming out of the trading range. The 20 day simple moving average will be support.


posted by Toni Hansen @ 12:52 AM 0 Comments

Sunday, September 23, 2007Phoenix? Avalanche? Breakouts? Flags????
Anonymous said...
Hi ToniI have read about the Phoenix set up in the bonus manual and understand that it is the reverse of an Avalanche.In the last chart posted on this blog or thread using the DIA, there is a breakout, avalanche, and a phoenix.Here is the question: What is the real difference between a breakout and a phoenix set up?They look the same to me but I know there must be some difference.ThanksTAB
September 20, 2007 9:13 AM


Hey TAB,

Actually these setups all look pretty similar other than where they take place in the trend. A Phoenix is the first high and higher low to kick off a new uptrend. The Avalanche is the opposite. A flag just takes place in the direction of an already established trend as opposed to the beginning of a new trend.


posted by Toni Hansen @ 8:30 PM 0 Comments

Chatroom, CD course, etc....
sngdncman said...
Toni,I so much enjoy the daily reports I receive. Do you folks still offer various 'trade' services during the trading day? I am so busy at my chosen profession, but do trade online some. However, 'during the day' anaylsis, on my own, is not possible, so I do some dumb stuff. I am willing to purchase or help cover costs of such service
September 23, 2007 5:56 AM
Hey "sngdncman" :)
Well, the chatroom is actually free. The link for the setup is http://www.tradingfrommainstreet.com/roomsetup.html. I'm there pretty much every day and we just share trade ideas, etc. throughout the session. The posts must conform to they style of trading that I focus on, but it does not mattern what time frame or security you trade. I compiled all the basics of my trading style into a CD course. More details can be located at http://www.swingtrader.net/. It is about 7 hours long with well over 200 pages of text, but I'll be adding a packaged deal with another 3 hours of material and about 100 more pages by the end of this coming week.




posted by Toni Hansen @ 8:22 PM 0 Comments

Position Trades - MATK, BCR, ADTN, UPS
Good morning! Our watch list from Sept. 10th has panned out quite nicely over the past two weeks (9/10/2007 Short: CAKE, ADP, and IRF. Long: NEM, GG, SYY, ALTR, SLAB, EBAY and PAY)!

There are fewer setups this week than earlier this month now that the market is again heading back into the previous highs and hence decent price resistance, but I have a couple of things that have caught my eye. The main one is Martek Biosciences Corp. (MATK). Martek Biosciences Corporation engages in the development, manufacture, and sale of natural products derived from microalgae, fungi, and other microbes primarily in the United States. It's been in a downtrend since peaking in 2004, but has begun to round off at the monthly lows. These lows were smack into price support from the pre-2003 breakout and rally.

In May MATK took off, shooting higher throughout June and into mid-July. Since then it has fallen into a period of congestion. It had two waves of correction within that trading range and on Friday it busted through a third test of the highs of the range.

MATK is a stock which I feel can keep running throughout the remainder of the year and easily into the next. This might correct a bit on the weekly and lacks a decent daily setup now since the daily trigger was on Wednesday before it had popped up in my scans, so I'll be looking to build a position on correction intraday and on the daily time frame. August lows will serve as support. This pattern on the monthly time frame is very similar to these ones which took place in OSTK and NWRE earlier this year.

Other stocks to watch in coming months for buying ops include BCR and then on the larger time frames I am watching the base developments in ADTN and UPS.




posted by Toni Hansen @ 6:40 PM 1 Comments

hefeiddd

Wednesday, September 26, 2007
Market Holds Daily Trading Range

Good morning! The market experienced a great deal of divergence on Tuesday. While each of the three major indices gapped lower into the open, the S&P 500 and Dow Jones Ins. Ave. experienced the largest gaps. The market opened into support from previous lows in the Nasdaq and the 15 minute 200 sma in the S&P 500. In the S&Ps and Dow the gap was significantly larger than average, which meant that typically that gap zone will attempt to fill and will nearly always do do in at least one of the three major indices .



By the times the 11:15 ET reversal period hit the indices had all closed their gaps and had put in at least three waves of buying on the 5 minute time frame. A short setup triggered well after the third his to lead to a decent correction off the market's initial highs. After pulling back off the morning highs the indices formed their first upside continuation pattern after 12:30 ET and moved into highs following 13:00 ET.

The market struggled throughout the day to gain any real momentum. The Nasdaq faired the best and trend higher into the close, but the S&P 500 and Dow were stuck in a range nearly all day and failed to trigger strong setups on the 5 minute time frame. The Dow Jones Ind. Ave. formed an upside continuation pattern coming out of a cup with handle pattern around 14:30 ET, but the market did not seem terribly excited. The market still managed to close at intraday highs., but the action was one conducive to intraday shopping for work clothes.!



When the closing bell rang the Dow was up 19.59 points and it closed at 13,778.7. Home Depot was again another strong decinrer. The market ended on a strong note, however, and continued higher throughout the afterhours and into the early morning. The S&P 500 shed 0.52 point on Tuesday and closed at 2,683.45. The Nasdaq Comp. ($COMPX) ended its session higher by 15.50 points at 2,683.45.



The market range is likely to continue over the next couple of days. I am still rooting for a better test of the previous highs. I'm going to be out of the office throughout most of Wednesday though, so I am hoping that any strong activity in the market which serves as a break in this congestion will be kind enough to wait until I return on Thursday!


posted by Toni Hansen @ 12:44 AM 0 Comments

Tuesday, September 25, 2007Nasdaq Breaks to Highs, Dow and S&Ps Hold Range
Good morning! The market had a bit of a tough time trying to make up its mind on Monday. Thanks to strength in some key technology stocks, the Nasdaq managed to outperform the rest of the market throughout the day. The S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) both began to fall as soon as the opening bell tolled, but the Nasdaq Composite ($COMPX) actually climbed somewhat for the first 15-20 minutes of the day and broke to new highs on the month. While it also gave in to a bit of selling heading into 10:00 ET, the selling was not enough to close the gap and the 15 minute 20 simple moving average held as support.



The market began to head higher following 10:00 ET. At first there was a great deal of congestion on the 1 minute time frame, but when the 10:45 ET correction period hit the market shot higher. I did not notice anything in terms of news at this time, but the market reaction was very similar to one driven by news. The S&P 500 and Dow both returned to the zone of Friday's highs, while the Nasdaq cleared the resistance very well and confirmed that 60-minute range breakout we had been watching for heading into the day. Unfortunately for the bulls, the S&Ps and Dow were unable to mimic this breakout. After hitting the highs the market turned around immediately.



The pullback off the highs was extremely gradual to begin with due to the sharp rally into the highs in the first place. I was initially watching for a slightly higher high to slow the momentum, but the market held the zone of those highs even though it did retest them shortly after 10:15 ET. When the market didn't attempt a new high almost right away though, I began to change my focus towards the short side. I took a scratch on my initial attempt around 10:55 ET, but caught it perfectly the second time around at 12:11 ET. By this point the Nasdaq and S&Ps were hugging the 5 minute 20 simple moving average support and volume was drying up on the buying. This meant that even though the prices were heading higher in the Nasdaq at least, there was no conviction to the move.

Once the moving average support broke the sellers began to show their heads. They were a bit hesitant at first, but the momentum intraday on the downside increased a great deal shortly after 13:00 ET. Support hit initially at the morning lows in the Nasdaq Composite just prior to 14:00 ET. A bear flag on the 5 minute time frame followed and broke to a lower low heading into 14:30 ET. This move took the S&Ps into price support from last Thursday's lows. Since this breakdown did not last as long as the one which preceded it, the move began to turn the indices over and create a momentum shift on the 15 minute time frame. Another bear flag tried into 15:00 ET, but this time the lows was even less than before and could not break at all in the Nasdaq. The rounding off at the support allowed the market to hold the zone of the lows into the closing bell, although they dd give way again in the afterhours session until around 18:00-19:00 ET when the slower afterhours downtrend broke higher.



When the closing bell sounded the Dow was down 61.13 points. It closed at 13,759.1 with losses in 22 of its 30 stocks. The financials led the decline, while MSFT helped moderate the selling thanks to its 1.5% gain. The S&P 500 lost 8.02 points on Tuesday. It closed at 1,517.73. The Nasdaq Composite lost 3.27 points. It ended the session at 2,667.95. Since the selling increased on Monday within the range, it seems likely that the range will hold for a few more days at least, but I suspect that we will see some upside spikes within the range to regulate the selling and uphold the current bias for a continuation pattern coming out of the trading range. The 20 day simple moving average will be support.


posted by Toni Hansen @ 12:52 AM 0 Comments




posted by Toni Hansen @ 8:22 PM 0 Comments

Position Trades - MATK, BCR, ADTN, UPS
Good morning! Our watch list from Sept. 10th has panned out quite nicely over the past two weeks (9/10/2007 Short: CAKE, ADP, and IRF. Long: NEM, GG, SYY, ALTR, SLAB, EBAY and PAY)!

There are fewer setups this week than earlier this month now that the market is again heading back into the previous highs and hence decent price resistance, but I have a couple of things that have caught my eye. The main one is Martek Biosciences Corp. (MATK). Martek Biosciences Corporation engages in the development, manufacture, and sale of natural products derived from microalgae, fungi, and other microbes primarily in the United States. It's been in a downtrend since peaking in 2004, but has begun to round off at the monthly lows. These lows were smack into price support from the pre-2003 breakout and rally.

In May MATK took off, shooting higher throughout June and into mid-July. Since then it has fallen into a period of congestion. It had two waves of correction within that trading range and on Friday it busted through a third test of the highs of the range.

MATK is a stock which I feel can keep running throughout the remainder of the year and easily into the next. This might correct a bit on the weekly and lacks a decent daily setup now since the daily trigger was on Wednesday before it had popped up in my scans, so I'll be looking to build a position on correction intraday and on the daily time frame. August lows will serve as support. This pattern on the monthly time frame is very similar to these ones which took place in OSTK and NWRE earlier this year.

Other stocks to watch in coming months for buying ops include BCR and then on the larger time frames I am watching the base developments in ADTN and UPS.




posted by Toni Hansen @ 6:40 PM 1 Comments

hefeiddd

Market Holds Range into the Weekend
Good morning! The market had a very strong showing this past week following a larger-than-expected 50 basis point rate cut by the Fed. The S&P 500 rose 2.8% on the week, while the Nasdaq Composite climbed 2.7%. Nearly all of the week's gains, however, came on Tuesday immediately after the announcement. Some follow-through occurred heading into Wednesday morning, but ever since then the markets have been stuck primarily in a trading range. The dollar hit record lows over the past couple of days, while crude oil is once again at record highs. The credit woes which contributed significantly to the late-summer collapse are also still on many people's minds.

As I mentioned this past week, I do still think that we are going to head for a better test of this summer's highs and are likely to see that happen this coming week. The general zone of those highs will be resistance, but since we have been consolidating the last couple of days, the push to those highs has some better potential to push past the exact price level. The last trading range at highs lasted from the 13th to the 17th, which was three trading days, and broke higher on the 18th with the Fed. Often these corrections are repeated, so since we now have three days of congestion beginning last Wednesday, it's quite possible to begin to move higher early this week. I do not, however, expect a repeat of Tuesday's extreme upside momentum.



Following Tuesday's rally, volume declined throughout the remainder of the week. Even though Friday was more active than Monday, it was the lightest volume of the week following the Fed. The first and final 15 minutes of the day had the strongest activity on this triple-witching Friday when contracts for stocks index futures, stock index options and stock options all expired.

To kick off the day, the markets gapped strongly higher into the open. The markets had begun to turn around following Thursday's afternoon decline almost right away after that day's closing bell. They gained momentum around 3:00 am ET with a rally in the Asian markets. Although the premarket momentum slowed after 4:00 am ET, the indices continued to creep higher. At 8:30 am ET the momentum again began to pick up steam, hitting premarket highs just ahead of the opening bell.



The market hit strong resistance from 15 minute highs of the previous two trading days going into Friday's open and held them very well at the start of the day. Initially I was looking at the potential for the morning gap to close completely in at least one of the indices, but kept in mind that the market has had a lot more exceptions to this larger than average gap closure rule in the past month or so as the phase of the market has changed. Initially the market did a decent job of holding this potential by falling strong into the open off the premarket highs. That momentum slowed, however, as the move came into initial price support from the highs in the Nasdaq and Dow on Thursday.

Thursday's highs held very well as support in the marketplace and the indices began to reverse momentum. They first made their way back to the intraday highs, hitting them at the same time as the 10:15 ET reversal period. They then retested the intraday lows, but at a somewhat more gradual pace than the initial morning decline. This time the lows did not correspond quite as neatly to the 10:45 ET reversal period, but still began to turn back around in that general area. The market tested the intraday highs for a third time around 11:00 ET, breaking quickly through them in the Nasdaq, but stalling in the S&P 500 and Dow.



The mid-day activity in the indices was very sloppy and the volume in the market began to decline dramatically. While the indices continued to push highs, they did so in small spurts of momentum and could not sustain any move. This creates a bearish bias and adds risk to each subsequent test of highs. At 12:30 ET the market gave up on one last-ditch effort and held the price resistance from Wednesday's highs. They turned over slowly at first, but the Nasdaq began to drop sharply following 13:00 ET and the Dow and S&Ps following heading into 14:00 ET.

The market had not been trading that well throughout the day and this became more marked in the final hours of trading. While the three traded in the same general direction, they were constantly switching roles in terms of relative strength leader versus laggard. While the Nasdaq had led on the upside, the greater extension also allowed it to fall the quickest into the early afternoon, but this meant that it also came into support more quickly as well on the 15 minute time frame from the morning highs and the 15 minute 20 sma. So, when the indices again dropped into 14:00 ET, it did not have as much room to move before those support levels hit more securely than compared to the Dow and S&Ps which had not risen much above those same support levels and hence did not view them as strongly as the Nasdaq. They broke them quickly and had little in the way of support until the morning lows.

14:00 ET is a very strong reversal zone in the market. The Nasdaq hit this level as it hit its larger intraday support levels and held it almost perfectly. The S&Ps and Dow slowed their downside momentum into 14:00 ET, but continued lower for several more minutes, bounced into 14:30 ET and then flushed hard into the morning lows and a few ticks beyond into 14:40 ET. The flush took the Nasdaq with it, but the Nasdaq still held the 14:00 ET lows and then made its way back to its intraday highs soon after 15:00 ET. The S&Ps and Dow also moved higher at this time, but they were more choppy and only returned to lower resistance levels such as the breakdown zone in the S&Ps and the 15 minute 20 sma. Another sloppy reversal then took the market back to the zone of the afternoon lows heading into the closing bell.

The Dow ($DJI) closed 53.49 points higher at 13,820.2, while the S&P 500 ($SPX) rose 7 points and closed at 1,525.75, and the Nasdaq ($COMPX) gained 16.93 points and closed at 2,671.22. The Dow was weighed down by Home Depot (HD), which fell 2.4%, and American Express (AXP), which she 1.4% on Friday. On the other hand, Google Inc. (GOOG), which gained 1.3%, and Oracle (ORCL), which rose about 4.4% on earnings, topped the Nasdaq gainers list.


posted by Toni Hansen @ 12:51 AM 0 Comments

Thursday, September 20, 2007Market Deals with Predominately Range-Bound Trading
Good morning! Volume was somewhat lighter on Thursday as the market continued to correct off Wednesday's morning highs. After pulling lower out of the open into the previous day's lows, the market bounced into the 5 minute 20 simple moving average and promptly fell into a trading range which should last well into the afternoon. While the range made it a decent day if a trader simply focused on trading pivots, things were a bit more difficult for those searching out some decent momentum.

I only traded three stock positions on Wednesday. Alexandria Real Estate (ARE) I managed to catch for a rapid daytrade breakdown in the morning, along with another scalp, this time on the upside in JA Solar Holdings (JASO). The third one, however, in Monolithic Pwer Sys Inc. (MPWR) was by far the best of the bunch and it trended highs throughout the afternoon. Other notable gains on Thursday included Cree Inc. (CREE) once again, E Future Information Tech Inc. (EFUT), Sigma Designs Inc. (SIGM), and Barrick Gold (ABX).



Over noon the momentum in Thursday's session began to turn over. The upside slowed with lighter volume and at 13:00 ET the market could not even take back all the losses from the decline into 12:30 ET. The strongest downside began soon after af the 14:00 ET reversal period and led to a rapid return to the morning lows in the Nasdaq Composite and a closure of the previous day's gap in the Dow Jones. Ind. Ave. The support levels hit at 15:00 ET and the market moved somewhat higher throughout most of the remainder of the day until hitting the 15 minute 20 sma resistance and pulling slightly lower again into the close.



By the end of the session on Thursday the Dow ($DJI) had fallen 48.86 points (-0.4%). It closed at 13,766.7. 20 of its 30 components lost ground on the day. One of the hardest hit was Home Depot Inc. (HD). It lost 2.4% by the end of the session. The S&P 500 ($SPX) shed 10.28 points (-0.7%). It closed at 1,518.75. The Nasdaq Composite ($COMPX) lost 12.19 points (-0.5%). It closed at 2,654.29.



My outlook into Friday is now favoring a hold of the 60 minute range since the market did not attempt to move higher on Thursday, but there is still room to push for a better test of the daily highs. I don't think, however, that at this point the market will be able to do this before the week is over. I am leaning for a continuation of the somewhat more difficult trading of the last two days instead.


posted by Toni Hansen @ 8:01 PM 1 Comments

hefeiddd

Wednesday, September 19, 2007Indices Push for a Retest of the Summer's Record Highs
Good morning! The much-desired rally which kicked off with Tuesday's Fed meeting continued into Wednesday, but the session as a whole was a more difficult one with a lot of more choppy action and trading range activity. A large chunk of the day's gains were made in the premarket following the 8:30 am ET economic data. The Labor Department reported a 0.1% decline in consumer prices last month, while the core consumer price index rose 0.2%. This core CPI excludes the costs of food and energy. Both of these numbers came in at expected levels. In other news, the Commerce Department announced that U.S. housing starts and permits fell to a 12-year low last month, which was slightly less than expected.



After Tuesday's move, it became a lot more difficult to sustain the upside momentum and, as expected, the intraday upside on Wednesday was a lot more muted. The market experienced three waves of upside on the all-sessions 5-minute time frame coming out of the premarket data. The first stalled at 9:00 ET and the second began at the open and stalled at the 9:45 ET reversal period. The market then fell into a trading range along the intraday highs and a third rally began out of the 10:45 ET reversal period. It continued into the 11:15 ET reversal period.

When a security or index has three waves of buying whereby the correction time between each wave of buying is comparable between waves 1 and 2 and 2 and 3, then the market typically cannot establish a decent 4th wave of buying without correcting for a longer period of time following that 3rd move. In Wednesday's session the indices did not even bother to form a minor 4th move and broke the trend line going into noon as they returned to the congestion zone between the 2nd and 3rd waves of upside. This support held for a bit of a bounce into the early afternoon, but then established a lower high and was quickly followed by a lower low. This established the beginning of a new trend: a downtrend.



The afternoon trend was a very sloppy one. I had a much more difficult time with Wednesday's trading because many support and resistance levels would get flushed and more easily trigger stops even when given what would typically be considered ample room to avoid such actions. I was flushed out of three positions on Wednesday by just a few ticks before they continued and hit targets, which is something I cannot recall ever happening in one day of trading for me before. It's a disadvantage of using stop orders on the books as opposed to manually managing positions. I have yet to decide which is the best option long term. I tend to do better when manually handling stops, but it requires a lot more time and can result in a lot more significant losses when the flushes hold. Since many times a security can tease a stop level for quite some time, this also takes away from your ability to scan and look for other trades and setups which can boost your overall performance.



The afternoon downtrend continued until nearly 14:30 ET with the final push into lows gaining momentum out of the 14:00 ET reversal period. This was the sharpest decline of the day with an initial downward thrust closing the Nasdaq's gap and a secondary once only a few minutes later as the S&Ps attempted to close their own gap but didn't quite make it.

Typically a downside move such as that which took place into 14:15-14:30 ET on Wednesday will have a difficult time turning around quickly. The market did manage to return to the levels of the congestion ahead of the final downside move on the 5 minute time frame, but it took longer to regain the losses than it did to loose them in the first place. The momentum picked up a bit after a small Phoenix into 15:00 ET created a bit of a more rounded low. Once the previous 5 minute highs hit, however, the sellers returned and the market pulled somewhat lower again in the final 30 minutes of trading.

As the primary session closed on Wednesday, all three of the major indices were reporting comparable percentage gains. The Dow Jones Industrial Average ($DJI), S&P 500 ($SPX), and Nasdaq Composite ($COMPX) each posted gains of 0.6%. In the Dow this translated as a gain of 76.17 points and the index closed at 13,815.6. 24 of the 30 Dow components closed higher. Merck Co. (MRK), which was one of the top Dow stocks, gained 2%. The S&P 500 rose 9.25 points. It closed at 1,529.03. The Nasdaq Comp. gained 14.82 points. It closed at 2,666.48. Some of the other top winners on the day were Plexus Corp. (PLXS), which rose 7.8% following an upgrade by J.P. Morgan, Accredited Home Lenders Co. (LEND), which climbed 18.2% due to news of its acquisition by Lone Star for $11.75/share, LDK Solar Co (LDK), Cree Inc. (CREE), and my favorite Warnaco Group Inc. (WRNC).

I am still expecting the market to head back into the highs from July, but as I mentioned yesterday, the pace of the buying is likely to be a lot slower. So, if the buying continues on Thursday then expect some rounding off into the highs. Should the market base into the weekend instead of continuing higher on Thursday, then it will be easier for the indices to push to a higher high as opposed to stalling right at or just under the prior high


posted by Toni Hansen @ 8:31 PM 1 Comments

Tuesday, September 18, 2007Stellar Move Following 50 Basis Point Interest Cut
Good morning! Tuesday was a very busy day for the market. The indices gapped higher into the open after turning around at 3:00 am ET and then gaining upside momentum at 8:00 am ET. The Labor Department reported that wholesale prices fell 1.4% in August. Falling food and energy prices played a significant role. The core producer price index, however climbed 0.2%, which was more than anticipated. It was read as good news by the market since it represented a nice curb on inflation.

The morning gap was pretty impressive in and of itself. The session began at strong prices resistance, however, from the previous 2-3 days of trading where the market had been stuck in a range. The result was an attempt to close that gap shortly after the open. The indices rounded off at premarket highs and began to fall rather quickly following the bell. The Nasdaq's gap zone closed nicely, while all three indices found support at the 5 minute 20 period simple moving averages.



After the first 25 minutes or so of the day there really was not much of a bearish bias at all in the market. The indices were on the more sloppy side, but they trended higher into the 11:15 ET reversal period. This closed the gap zone from Friday's close in the Nasdaq and brought the S&P 500 back into the resistance level from Thursday's highs. The strong overhead prices and impending Fed rate announcement put a halt to the upside for awhile. Volume diminished dramatically and the indices slowly pulled lower head of the announcement. There were some stronger moments of selling than buying on the pullback, but the larger momentum of the correction itself remained more gradual than the earlier buying.



When the news hit at about 2:15 ET that the FOMC not only cut its overnight interest rate, but that it did so by half a percentage point, the market was stunned. The bulls were tripping over themselves to initiate new positions and the indices soared. A continuation pattern quickly followed after a brief stall at highs into 14:30 ET. The S&Ps did not perform quite as well as the Dow and Nasdaq, but they still climbed back into the intraday highs.

Even after already establishing one of the largest intraday upside moves in the past 5 years, the indices still did not let the sellers gain any edge. A second correction off the highs pulled the market slightly lower into 15:00 ET, but the volume declined as the market pulled back. This meant that true sellers were not driving the correction, but rather that the buyers had just eased off for a bit. They took the helm for a third time soon after 15:00 ET. This time the Nasdaq was left behind while the S&Ps and Dow experienced the strongest pushes to new highs.

By the end of the day the Dow Jones Industrial Average ($DJI) rose 335.97 points (+2.5%) to close at 13, 739.4. The S&P 500 ($SPX) gained 43.13 points (+2.9%) and closed at 1,519.78. The Nasdaq Composite ($COMPX) added 70 points (+2.7%). It closed at 2,651.66. Broker/dealers and many others in the financial sector were among the top gainers on the day. They were led by Lehman Brothers (LEH) and Goldman Sachs (GS).



The move which resulted from Tuesday's economic data and news triggered a breakout on the daily time frame as well. This comes from a rough cup-with-handle pattern that began at the start of the month. It will once again be easier for the Nasdaq to retest July's highs and now the S&Ps and Dow have a decent shot as well. Expect that the buying would stall just a hair under the exact highs since there is some congestion in that zone. Intraday corrections on the 15 minute time frame are worth keeping an eye on. I am concerned that since the breakout momentum was so strong, that the buying which follows will be much slower overall as the excitement dies down a bit.


posted by Toni Hansen @ 7:20 PM 0 Comments

Afterhours Bull Flag


I know, I know.... I should be sleeping.... :)







posted by Toni Hansen @ 1:02 AM 3 Comments

Monday, September 17, 2007Market Activity Slows Ahead of the Fed
Good morning! I hope you had a wonderful weekend and nice start to the new week! Things were a bit slow on Monday with narrower trading throughout the session on lighter volume. The largest contributing factor to this is Tuesday upcoming FOMC meeting. The Fed meets Tuesday afternoon and it is expected that they will cut the federal funds rate by 25 basis points. More importantly, the focus will be upon any accompanying comments regarding the potential to further ease rates. It is not likely, however, that they will allude to any upcoming rate changes in this newest report. The U.S.'s economic outlook has been rapidly diminishing and in the overseas market many customers have been yanking their savings from troubled banking enterprises.



Monday's session began with a decent downside gap after the indices rounded off at highs on the 15 minute time frame intraday on Friday, leaving the indices with a bearish bias going into the new week. The indices found themselves heading in different directions following the opening bell. While the Nasdaq soon began to head lower and fell into a downtrend intraday, the Dow Jones Industrial Average ran into 5 minute 200 simple moving average support and previous 15 minute lows support right away with the opening bell. It then fell into a trading range into 10:00 ET before rallying higher to close the morning gap. It is very typical that in the case of a larger-than-average gap, at least one of the indices will close the gap zone. It was the Nasdaq which closed Thursday's upside gap, while the Dow closed it this time as the Nasdaq remained the weaker index.

The 10:15 ET reversal period held very well on Monday and the Dow's gap closed at the same tim as this reversal period hit. The Dow turned quickly, pivoting off highs, while the Nasdaq broke lower out of a small 5 minute trading range along the intraday lows. While the S&P 500 had pulled up slightly with the Dow, it held the 5 minute 20 and 200 simple moving averages and soon broke to new intraday lows with the Nasdaq. The Dow faired somewhat better and found support at the morning lows as the market moved into 11:00 ET. The indices popped quickly for a few minutes at that point, but they were not able to break above 5 minute resistance and instead just created a continuation short pattern going into the 11:15 ET reversal period.



A final wave of selling took the market once more to new intraday lows. The decline into 12:00 ET, however, was a lot more gradual in the S&P 500 and particularly in the Dow as compared to earlier in the morning and the change of pace or momentum began to prejudice the market towards a stronger upside resolution to the final morning decline. It did not take the market long to begin to gather momentum and all three indices moved quickly back into the 15 minute 20 simple moving averages.

As resistance hit heading into 13:00 ET, the momentum began to change. A slowdown on upside trading until 13:00 ET resulted in a pullback into 13:0 ET. It lasted through two waves on the 5 minute time frame before heading back higher after 14:00 ET. The market failed to gather eager participants, however, and even a continuation pattern on the upside out of 15:00 ET failed to return any of the three major indices to their morning highs. The market pullback back again as the Nasdaq hit its prior 5 minute highs from around 13:15 ET, but rolled over at the resistance and continued to selloff afterhours.



Monday's session concluded with a loss of 39.10 points in the Dow Jones Ind. Ave. ($DJI to close at 13,403.4. The S&P 500 ($SPX) lost 7.6 points and ended the regular trading day at 1,476.65. The Nasdaq Composite ($COMPX) experienced the strongest percentage decline and fell 20.52 points to close at 2,581.66.

On Tuesday, due to the Fed announcement, I expect to take things pretty slow. I will be missing the first hour or so of trading due to an appointment and that tends to be the best trading period the day of a Fed announcement before it's been released. When it does come out I would advise that you do not keep a lot of level IIs or data streams up and running since they can quickly become bogged down and begin to post inaccurate quotes. I am still waiting for the day that this is not the case and each year it does seem to get better. Following the announcement itself there are often three swings back and forth on first a 1 minute time frame and then on a 5 minute time frame.


posted by Toni Hansen @ 11:56 PM 0 Comments

hefeiddd

My Trading
john said...
gleftgptoni you always talk about the indexes in your blog and newsletter, which I appreciate, do you rade the futures on a daily basis? do you do day trades? I am still debating as to my approach and thinking of your cd course. thanks for your thoughts (September 14, 2007 12:33 PM)


Hi John,

Well, not exactly a daily basis, but nearly every day! In the indices 99.99% of my trades would be considered to be daytrades. I actually cannot think of the last time I held them overnight. I tend to trade about as many futures trades as stocks... perhaps a bit more lately though since I am averaging 4 stocks vs. 6 futures trades lately. If you have any questions at all just let me know! My email is toni at tradingfrommainstreet dot com.

All my best,
Toni


posted by Toni Hansen @ 11:52 PM 0 Comments

Wednesday, September 12, 2007NIHD Breakdown Setup
Hey Gang,

Here is one of my trades from today. It was in NIHD. It popped up in my "range" scan in Real Tick shortly before 12:30 ET. It was in the process of pulling back up into the range with a slower momentum move from 15:10 to about 15:25 ET. The entire range was hugging the 15 minute 20 simple moving average and volume was light throughout after it had rolled over in the morning off highs. The target was based upon an equal move on the breakdown and the whole number support at $71, although slightly stronger momentum than that seen off the morning's highs allowed for it to push a bit past that equal move and whole number support.




posted by Toni Hansen @ 8:48 PM 0 Comments

Market Mixed in Wednesday's Trading
Good morning! So today (13th) is my birthday! Yippee! I turned 29! (For those of you have have helped celebrate my previous 29th birthdays I'd like to thank you for sticking with me this long! =) For a bit of a heads up, I'll be out of the office the next few days, so sadly I will not be sending out a column for tomorrow or Sunday night. Please forgive me!

On another exciting note... Well, ok, maybe it was not terribly exciting this time, but let's chat a bit about the market action from Wednesday. Trading was a bit lighter throughout the day and a lot more range bound. There were some nice setups, but the action was definitely a lot more mixed! By the end of the session the Dow Jones Industrial Average ($DJI) lost a mere 16.74 points (-0.1%) and ended at 13,291.7. The S&P 500 didn't want anyone to notice that it had actually traded on Wednesday. It closed only 0.07 point higher at 1,471.56. The Nasdaq Composite shed 5.4 points (-0.2%) and closed at 2,592.07.

There were not really a lot of stocks that managed to trend higher throughout Wednesday's session. The market gained ground throughout the morning and this is when most of the top gainers on the day had their strongest performance as well.

Some of those top names in the Nasdaq included Amgen Inc. (AMGN), which continued its rally from Tuesday; Wynn Resorts Ltd. (WYNN), which had also had a strong showing the day before; Google Inc. (GOOG); Synaptics Inc. (SYNA), which gave back a large chunk of its intraday gains in the afternoon, but still managed to close strong; Sohu Com Inc. (SOHU); and Lifecell Corp. (LIFC). In the NYSE the financial stocks, as well as the oil and energy stocks were the top leaders. Las Vegas Sands Corp. (LVS) also rose substantially for the second day in a row after breaking out of a nice daily range on Tuesday.

On the flip side, a number of names performed very poorly on Tuesday. One of the top NYSE losers was NYSE Euronext (NYX), which has been sliding lower all year and triggered a swingtrade short setup on Tuesday by breaking lower out of a multi-week base. The high-flying Aluminum Corp. (ACH) also had a tough break and gapped down sharply on the session. In the Nasdaq there were a lot of well-known names topping the losers category. These included the likes of Sandisk Corp. (SNDK), Nvidia Corp. (NVDA), First Solar Inc. (FSLR), Kla-Tencor Corp. (KLAC), Apollo Group Inc. (APOL) and Lam Research Corp. (LRCX). Most of these fell into trading ranges through the morning, but then broke lower over noon and continued lower throughout the remainder of the session.



In the markets themselves, while there was a great deal of choppy trading throughout the day, there was still a lot of order to the action as well. For instance, the market began with a bit of downside, but it was very mild selling which simply continued the correction from the previous afternoon. This downside was established with a slight gap and was followed by an almost immediate reversal and move back into the highs of the 15 minute range with the Nasdaq leading the way. It broke to new highs before 10:00 ET, but the S&Ps and Dow hit resistance at previous 5 minute highs and a pullback into 10:15 ET followed. Lighter volume on the very gradual correction off the intraday highs created a buy setup into 10:30 ET. This took all three indices to new intraday highs and past those of the previous session. A second pullback soon followed into 11:00 ET.

Since the second pullback on the 5 minute time frame had followed a somewhat slower upside move than the one out of the open, I had expected the third upside move of the day to be even more gradual. The move was a bit stronger, however, and the market was again able to hit the upper trend channel limits. This stronger move on the upside meant that while I'd been looking for a reversal and pullback into the afternoon, it would have a difficult time getting off to a strong start and would take longer to roll over. Nevertheless, the 11:00 upside move was still an exhaustion to the intraday trend. The market had hit resistance at previous highs on the 60 minute charts from last week and after three waves of buying, in which each correction between the waves is comparable, then the market needs to establish a longer correction and any additional continuation attempt is often very stunted.



The stunted continuation attempt on Wednesday came out of 12:00 ET when the market hit the 5 minute 20 sma support and the indices popped for a few minutes. Even though I thought they might form a 2T with a slightly higher high, they actually ended up holding those highs and the 5 minute 20 sma quickly gave way to some strong early afternoon selling. A continuation followed for a third wave of selling into 13:00 ET. This third move was a bit shorter than the second. Support held and the market turned back around with a pace change into 13:30 ET and another strong upside move which quickly took the market back to the morning highs.

Once again the market had a difficult time at the upper price resistance. The S&P 500 was the strongest and returned to the upper trend channel line, but the Dow had begun to round off at highs and the Nasdaq had given up its position as the relative strength leader. It only moved back into the resistance zone from the earlier congestion at highs and held under the absolute high. This reversed its leadership role and placed it in the spot of the index with the least relative strength. As I mentioned earlier, the afternoon is when most of the Nasdaq losers really began to move, so the fact that the overall Nasdaq had a more difficult time as well was not much of a surprise.



Since the upside in the afternoon was stronger-than-average, it did take the market a little bit of time to turn over and create some stronger afternoon selling. The market did this by hugging the 5 minute 20 sma with two waves of upside within the congestion and lighter volume along the support. The support gave way to a very strong late-day move to the lower end of the range in the Dow and S&Ps and through the previous 15 minute lows in the Nasdaq when the 15:00 ET reversal period hit. This second afternoon reversal off highs left the market relatively unchanged into the closing bell after being up nicely two times intraday.


posted by Toni Hansen @ 7:38 PM 1 Comments

Tuesday, September 11, 2007Market Closes Higher, Previous Nasdaq Highs Back in Sight
Good morning! After turning around on Monday into the late morning and early afternoon the indices continued to head higher throughout Tuesday's session. The Dow Jones Industrial Average ($DJI) gained 180.54 points (+1.4%) on the session. It was led by General Motors, which climbed 4.6% after announcing reduced spending on crossover vehicles and McDonald's (MCD), which moved 3.2% on a strong increase in August sales. The S&P 500 rise 19.70 points (+1.4%), while the Nasdaq Composite ($COMPX) climbed 38.36 points (+1.5%). Advancing stocks outpaced the decliners on the NYSE by 3 to 1, while the beat 2 to 1 on the Nasdaq.

Fed. Chairman Ben Bernanke let very little slip in his speech intraday regarding the potential for an upcoming rate cut next week and left market participants assuming that we would in fact receive a cut in interest rates. The volume was light compared to the volume from late July and early August, but held up well against the average of the last two weeks. There were still some decent moves though. Top gainers included Las Vegas Sands Corp. (LVS), National Oil Well Verco Inc. (NOV), Trina Solar Limited ADR (TSL), Agrium Inc. (AGU), Amgen Inc. (AMGN), Imclone Sys Inc. (IMCL), and Celgene Corp. (CELG).



Tuesday began with another gap higher for the second day in a row. Unlike Monday's gap, which took place after the market had turned around into the close on Friday, the market ended the day on selling on Monday, so it had no upside to already take out part of the potential on continued upside. After the open the market stalled, but it held onto the gains and moved slightly higher. Then the indices based into 10:15 ET. The volume declined a bit and the market popped coming out of the reversal period.

This morning breakout took the indices into very strong resistance on the 15 minute time frame. The Nasdaq ran into previous daily highs, while the Dow hit resistance at its 15 minute 200 simple moving average and the S&P 500 hit price resistance at Friday's highs. All of these corresponded to the 10:45 ET reversal period and the market reacted accordingly and pulled lower throughout the remainder of the morning.



The market pulled quickly into the 5 minute 20 sma support at about 11:15 ET. It then hugged that support level before breaking lower for a second wave of selling on the 5 minute time frame into noon. This second decline was a bit slower than the first with more overlap from bar to bar and on lighter volume. These were the perfect traits for a mid-day buy setup and the corresponding 12:00 ET reversal period and 15 minute 20 sma support didn't hurt matters either! Within half an hour the market was back at the previous highs, but it did take a bit longer for strong momentum to come in again.

The indices chopped around a bit for another correction into 13:30 ET and then at 14:00 ET they broke out to new intraday highs. The buying was steady into 14:30 ET before the market again slowed and began to show signs of correction. The correction took the market into the 5 minute 20 sma into 15:00 ET, but then retested highs before falling apart into 15:30 ET. This flush was brief, testing the 15 minute 20 sma, before it pulled back up into the close. The session ended within a few ticks of the day's highs, but the resistance left it selling off afterhours for the remainder of the evening.



My bias in the market remains on the upside as the week continues, but I'm still refraining from being too aggressive on swingtrades and have been putting a lot more focus on intraday setups in recent weeks than on larger time frames where I'd hold for more than a day or two at a time. I'm still targeting the previous highs from July as resistance for the Nasdaq, but the rest of the market has a lot of moving average resistance that it's going to have to deal with first and due to the stronger gap and drop on the 7th I'm not completely sold that the Nasdaq is going to make it!

Note: Due to upcoming b-day plans, I will not be releasing a letter on Friday or Monday, but will resume the newsletter for Tuesday morning!


posted by Toni Hansen @ 8:57 PM 2 Comments

hefeiddd

Monday, September 10, 2007Market Swings Strongly Intraday, Attempting to Find a Foothold
Good morning! The indices were riding a bit of a roller coaster in Monday's session. The market gapped strongly higher to begin the day, but this open was smack into price and moving average resistance. The S&P 500 ($SPX) and Dow Jones Ind. Ave. ($DJI) both opened into the mid-day price levels from the previous session, while the Nasdaq Composite ($COMPX) hit Friday's highs and the 5 minute 200 simple moving average into the open.

Within just a couple of minutes of the open the bulls found themselves under pressure. The gap closed quickly, but the market only bounced for about 15 minutes when support hit at 10:15 ET. By 10:30 ET the bears had again taken over. This second drop continued into 10:45 ET, where once again the market had a hard time reacting despite the support from Friday's lows in the Nasdaq. I had bought both the 10:15 ET and 10:45 ET pivots, but neither moved more than about 4 NQ points in my favor before turning and heading lower again.



A third and final drop in the indices began at about 11:00 ET on Monday. The volume was lighter on this wave of selling, and while it began to move quickly lower, the pace changed into 11:30 ET. A very slightly lower low held as the Dow hit lows from a few weeks ago. Momentum increased immediately to the upside. After hitting the 5 minute 20 sma the indices stalled, but another strong buy setup followed into the 13:00 ET reversal period. The market had pulled over the 5 minute 20 sma by that point and had been correcting for about half an hour. The decline was gradual off the overhead resistance. It also took place on declining volume as it pulled back into the 5 minute 20 sma support, which hit at the same time as that reversal period. This kicked off a second wave of buying on the 5 minute time frame.



The indices moved higher throughout the early afternoon, establishing a 5 minute measured move into 13:30 ET. At that point the indices hit resistance from the first support zone of 10:15 ET and the market corrected for a second time in the afternoon. The pullback was sharper into 14:00 ET than the earlier drop, but volume still declined to show a lack of motivated sellers and the 5 minute 20 sma support zone held. New afternoon highs soon followed, although the larger price correction meant that they barely broke before the market was again stuck. This time the correction was very gradual.

From 14:30 ET onwards the indices just fell flat along the afternoon highs. This correction continued into 15:00 ET and the 5 minute 20 sma support once again. A final upside move then took the market all the way back into the morning highs zone and the opening prices for the session. This was also 5 minute 200 sma resistance in several of the major indices.

Given the time frame for this resistance, the market had a difficult time getting through it and turned over to sell off into the close. This move was steep and took back a large chunk of the gains. The Dow still gained 14.47 points to close at 13,27.8. The S&P 500 lost 1.85 points and ended the day at 1,451.70. The Nasdaq Comp. lost 6.59 points. It closed at 2,559.11.



As you all know, today marks the anniversary of the Sept. 11th attacks. I want to send my thoughts out to all of those directly impacted by this event, including those whom have lost family members in the ongoing war and those still overseas. I remember that day beginning much like any other day in the market for me, but before we could even get under way we began to see the catastrophe unfold before our eyes. I have never witnesses a live event such as that in my life and hope I never do again.

It will take many years for us to not have some reservations and nervousness each year when September 11th rolls around. On the first anniversary of that day I found myself on a very nearly deserted plane bound for Los Angeles. Even though many of us are less likely to alter our plans for the day at the point that we hole up in our homes, there is still the lingering concern that something, somewhere will go horribly wrong. The impact of this could be a rather subdued session on Tuesday. There is not much on the economic front in terms of data to move the market until next week.


posted by Toni Hansen @ 10:52 PM 2 Comments

Sunday, September 9, 2007Borrowing Money For Trading
Reply to a trader who just borrowed funds for trading and is now feeling overwhelmed....

Well, ok, yes you are right "you'll probably chastize me for what I'm about to say..." I've known so many traders over the years that have taken out loans, borrowed from friends, etc. etc. to get the funds they think they need to trade with full time. Not once, and I mean not ever, has it worked out for them. This does not matter whom they borrowed from or what the reason was. I don't know a single one that made it. I don't say this to be disheartening. It's just what I know from my own experience with others in your place.

Now, what would I do? Well, first I would close the loan. Then I would start to save and while saving I would study. Get a charting platform... something that is cheap. It doesn't even have to be live charts... You can use something 20 min. delayed. In this case you can often get them free. Then start studying market moves, momentum stocks if you are looking at stocks. Examine top gainer and losers on the day and study the intraday activity. Treat it as if you are going to school part-time for your advanced degree. During this time you can keep a small account if you want. Use it to try out different strategies with very small shares. You can use something like Interactive Brokers where anything 100 shares or less is only $1. You can even take a couple of daytrades a week if it's under the pattern day trader rule, but can still swingtrade.

This is what I would do and what I would tell my friends and family to do if in this situation. You have to make it so that you are NOT trading scared and trading is almost always scary to start with, but particularly so on borrowed cash.

All my best,
Toni


posted by Toni Hansen @ 11:03 PM 1 Comments

Trading Software Commercials....
Question:

Toni,

Say do have any opinions on the trading software info commercials that appear late into the night on tv? Someone brought it up to me and generally i think it is just someone trying to sell you something. Yip it works to a certain extent but that's it! You for one may now what i'm talking about. It's dependent on your technique, discipline and your own ingenuity. I made a whole series of mistake over time before i got into books and professionals that trade for a living that taught me what oscillators were really about until i got good enough to build one. It interests me to hear if you have any opinion one these so called trading software informercials.

Thx

Answer:

Well, I tend to agree that yeah, it's just someone trying to sell you something. Most of the books, courses, platforms... are all like that. I've actually never been able to read most trading books because they are just not that helpful. I flip through them and toss them aside. I don't even use the indicators like oscillators, etc. They are just trying to show you readings on price and volume activity. It's best to just learn to read the underlying price and volume itself. It will keep you from getting mucked up when price activity and the oscillators are giving separate readings. Yeah, indicators can help to a certain extent, but I'd never rely wholly on one and I'd certainly never buy one of those "red light, green light" trading systems.

All my best,
Toni


posted by Toni Hansen @ 10:59 PM 0 Comments

Market Hit Hard by Friday's Jobs Data
Good morning! After pulling back slightly from Thursday's close in afterhours trading Thursday evening, the market began to experience some restlessness in the early morning hours, gaining momentum a bit after 4:00 am ET. Then, after basing at premarket lows for several hours, the furies were released. At 8:30 am ET on Friday the government announced that in August the U.S. suffered the worst jobs decline in nonfarm payrolls in four years. The unexpected loss of 4,000 jobs hit the market hard and the indices plummeted ahead of the open. So much for the 60 minute upside breakout and retest of July's highs in the Nasdaq that I'd had my eye on! Yikes!



Typically larger-than-average gaps in the indices will attempt to close the morning of the gap. This is not as common when the market is in a larger monthly transition stage. Given that the market never closed its gap earlier in the week on the 5th, I was a bit more hesitant to buy the downside gap this time around as well. While I did take it in the NQ, I only ended up with minor gains since the indices merely crept slightly higher after the open into 10:00 ET. The choppy upside and declining volume created a reversal pattern and selling hit. It began slowly, but after a small base from about 10:15-10:30 ET the downside increased. This was particularly true in the Nasdaq Composite where the downside momentum was the strongest.

Selling stalled at about 10:45 ET with the reversal period, but the market lacked a strong exhaustion move with a decent volume spike, even though the volume was higher than during the previous session. The market continued slightly lower after 11:00 ET, but the Nasdaq was too extended and barely slid past the previous lows by only a few ticks, whereas the Dow Jones Ind. Ave. and S&P 500 which had been more reserved on their price declines and were able to push through the earlier lows by a greater degree. In the Nasdaq the fact that the second low took place on such gradual pace and on lighter volume than into 10:45 ET helped turned that index and the market as a whole higher into lunch.



The pivot at 11:30 ET, while not coming out of a typical reversal period, was much stronger-than-average thanks to the slowdown in the selling just prior to the reversal. The market hit resistance initially at 12:00 ET when the Nasdaq came back into opening lows and the S&Ps hit that morning congestion at the same time as this mid-day reversal period. Volume dropped off as the market pulled back off these highs, but it failed to increase much when the market attempted a new mid-day high into 12:30 ET. The indices only broke the previous high by a few ticks before pulling back a bit more strongly into 13:00 ET. A third wave of buying on the 5 minute charts mid-day followed, but once again the highs were only slightly above the previous one. This created a larger momentum reversal and a strong breakdown setup triggered at about 13:30 ET when the lower trend channel and 5 minute 20 sma support gave way.



Although the initial breakout kicked off strongly, it did not get far before congestion set in. The market chopped sideways, using the 15 minute 20 sma as resistance, before breaking lower into 15:00 ET. This took the indices back to the morning lows, but the indices had a difficult time maintaining downside momentum and the market whipped back and forth after hitting the support. The market retested lows and then pulled up a final time in the last 15 minutes of the day after hitting the 15 minute 20 sma a third time around 15:15 ET.

Despite closing up off lows, the Dow ($DJI) still lost 249.97 points on Friday, while the S&P 500 ($SPX) fell 25 points, and the Nasdaq Composite ($COMPX) dropped 48.62 points. While the market has been under heavy pressure, gold stocks have really chosen this moment to shine. Many broke out of congestion to the upside recently and really took off in this past week. GLD, which tracks the index, shot to new 52-week highs.

Most the focus in the market this week will be on the Fed. since there is very little in terms of significant economic data this week. Federal Reserve Chairman Ben Bernanke, Fed. Governor Frederic Mishkin, and San Francisco Fed. President Janet Yellen are all planning on speaking early in the week. Currently the Fed.'s lending rate stands at 5.25%, but more and more people are expecting a 50 basis point cut to be announced with the Sept. 18th Fed. meeting.


posted by Toni Hansen @ 7:55 PM 0 Comments

hefeiddd

Thursday, September 6, 2007Market Closes Higher on Light Trading
Good morning! It was a bit of a tougher day out there in the markets on Thursday. Volume remained on the lighter side and the market spent a large chunk of the day stuck chopping back and forth. The best activity came in the morning. The indices had gapped slightly higher out of the open, but this gap took them smack into resistance from previous highs and congestion levels as well as the 5 minute 200 simple moving average resistance intraday. Although there was a bit of hesitation initially, the market quickly turned over and began to sell off.

The morning gap filled fairly quickly, but the indices barely paused before it continued lower. The Nasdaq Composite and S&P 500 both fell into the zone of the previous day's lows, while the stronger Dow Jones Ind. Ave. came into its previous 15 minute lows before the selling finally abated. This roughly corresponded to the 10:15 ET reversal period. My only futures trade for the day came just a couple of minutes later at 10:23 ET.



This market moved very well off this early morning pivot. The indices stalled somewhat going into 11:00 ET, but a second wave of buying on the 5 minute time frame triggered at 11:15 ET and this took the Dow and S&Ps both to new intraday highs and brought the Nasdaq into its opening prices. This resistance stalled the rally for a second time, but the third and final move of the trend did not take long to develop.

Soon after 12:00 ET the Dow and S&Ps were again making new highs. This final push took the Nasdaq back into its morning price resistance at the opening highs and its 5 minute 200 sma. This resistance corresponded to the zone of Wednesday's highs in the Dow and S&Ps, so once again, even though the types of resistance were not the same, all three indices nevertheless ran into a price ceiling at the same time.



While most trend moves in the market consist of three waves of buying or selling, corrective moves are notorious for taking only two. One of my favorite strategies in the market is to buy a two-wave pullback when the larger time frames are strong. This time around, however, while the market did still conform to this bias, the pullback was a bit on the more sloppy side. All three indices did have two waves of selling on the 5 minute time frame, but the price spike in between them was a bit stronger than usual in both the Nasdaq and S&P 500, so the continuation caught me a bit off guard even though it triggered out of the 13:00 ET reversal period.

The second wave of selling on the early afternoon correction brought the indices back into their 15 minute 20 sma support levels. This was also price support from earlier intraday congestion. The market rounded off a bit at this support, but not enough to trigger strong buying. Instead the indices just crept higher into the close with a great deal of chop. I found it incredibly difficult to settle on a bias and ended up not trading the final two hours of the day for fear that I would just get chopped up in the mess.



I was leaning a bit more to the bearish side going into the last hour of trading, but the congestion really should have broken lower around 15:00 ET. Instead the market held the lower trend channel that had been in place since about 13:15 ET. The Dow ($DJI) ended the session with a gain of 57.88 points, while the S&P 500 gained 6.26 points, and the Nasdaq Comp. rose 8.37 points. This ugly close still had me a bit more bearish into the end of the day, but only on about a 5 minute time frame, so that follow though can easily work itself out afterhours. The creeping move higher, however, is more often resolved with an increase in upside momentum, so it would not surprise me if the Nasdaq makes that push for July's highs.


posted by Toni Hansen @ 9:58 PM 4 Comments

Wednesday, September 5, 2007Market Stumbles Yet Again
Good morning! The market was inundated by bad news on Wednesday and struggled to recover throughout the session. While the major indices didn't close at lows, they were unsuccessful in regaining any real footing intraday. The session began on a sour note with a strong downside gap which was the most pronounced in the Dow Jones Industrial Average ($DJI) and the S&P 500 ($SPX). The market had kept falling throughout afterhours trading on Tuesday evening and into the early morning hours on Wednesday and both the Dow and S&Ps opened at their 5 minute 200 simple moving average zones. In contrast, the Nasdaq gap was minor and nearly filled within the first 15-20 minutes of trading except that it first hit the 15 minute 20 sma overhead as resistance. After that resistance hit soon after the open all three indices gave way to further selling.



The sellers were given a boost by 10:00 ET economic data. At this time the National Association of Realtors reported a decline of 12.2% in July for contract signings on existing homes. This was the weakest performance since 2001. The market immediately responded with a rapid decline to new intraday lows. Support hit when the Dow came into its 15 minute 200 sma, but the market didn't go far from those 10:15 ET price levels. Instead they crept very slightly higher into the 5 minute 20 sma resistance before giving in to another wave of selling intraday which continued into about 11:45 ET.

The momentum began rather quickly on the second 5 minute decline ar 11:00 ET, but then it slowed significantly into 11:45 ET. The slower descent into the Nasdaq's 5 minute 200 sma was on lighter volume than the first move lower. This created favorable conditions for a mid-day correction off the lows. The Nasdaq, which had been holding up the best of the three indices, had a more difficult time finding room to move on the upside due to the 15 minute 20 sma overhead. The Dow and S&Ps on the other hand had a lot more room before their own 15 minute 20 period simple moving averages would hit in terms of price movement.



All three of the indices rose into their 15 minute 20 simple moving averages at about the same time as the 13:00 ET reversal period hit. The market dropped and then based along support into 14:00 ET. The sharper decline created a more bearish bias into the afternoon and when the Fed Beige Book came out at 14:00 ET the bears took over yet again. The Nasdaq fell strongly to lower low intraday and returned to Friday's closing level. The S&Ps and Dow were only able to make it back into their morning lows because they were already further extended on the downside to begin with. After hitting this support the market again turned over, pulling higher into the final hour of trading.



By the end of the session the Dow had fallen 143.39 points (-1.1%). The S&P 500 fell 17.13 points (-1.2%). The Nasdaq Composite lost the least in terms of percentage movement, falling 24.29 points (-0.9%). Most of the Nasdaq's losses were in the afternoon and were aided by news on Apple (AAPL) which announced substantial price reductions on their iPhones. Other top losers were TSN, FNSR, COST, and GES. APLX and KFT were a few of the bastions of strength While I'm still favoring a larger test of resistance from prove highs on ton the year, I'm taking positions in both directions


posted by Toni Hansen @ 9:14 PM 0 Comments

hefeiddd

Tuesday, September 4, 2007Market Breaks Free of Congestion
Good morning! The market was significantly stronger on Tuesday than I had anticipated heading into the session. I figured that the congestion would continue for another couple of days before the breakout would occur, but instead the indices began to move higher right away out of the open with the Nasdaq leading the way into this shortened trading week. The Nasdaq quickly moved through Friday's highs, but the S&P 500 and Dow Jones Ind. Ave. both had to deal with the price resistance from those levels before they could continue. The Dow hit those highs soon after 10:00 am ET and based at that level until 10:30 ET before breaking through them. The S&Ps, however, lagged by quite a bit and stalled on the upside at the 5 minute 20 simple moving average.

As the market continued to climb throughout the morning it broke each previous intraday high by a lesser degree than before. This created some rounding off at highs on the 5 minute time frame and when the S&PS finally hit Friday's highs that slowing uptrend broke its lower trend channel. I shorted the ES break around 11:45 ET, but the market failed to gain any momentum to follow through on this setup. After hitting the 11:00 ET price support the market again pulled back up into the zone of the morning highs. Then shortly after 13:00 ET the highs broke with a rapid flush into new intraday highs.



The market continued to trend higher throughout the remainder of the day. The trend was not an easy one to trade if you are used to daytrading pullbacks and breakouts since a great deal of the move higher experienced only slightly corrections and crept slowly to the upside with a lot of overlap from bar to bar on the 5 and 15 minute time frames. I really dislike this type of trend move, because while it is wonderful if you are a swingtrader or trade off the larger intraday time frames such as the 60 or 120 minute chart, they are not nearly as much for an average daytrader.



Upside moves such as that which took place in the overall market on Tuesday afternoon easily give way to strong flushes on the downside and it can often be difficult to tell exactly when that move will begin. This made me very hesitant to be aggressive on the long side in the final hour of trading. This flush finally began around 15:35 ET and the market dropped sharply into the close, continuing lower afterhours.

On the plus side, while the indices were a bit more difficult for me, there were a number of individual stocks which performed exceptionally well. The ones I focused on included Vasco Data Sec Intl. Inc. (VDSI), Freeport-McMoran Copper & Gold (FCX), Wynn Resorts Ltd. (WYNN) and Morgan Stanley China Fd (CAF) on the upside.



By the end of the day on Tuesday the Dow gained 91.1 points (+0.68%). It was led by GM, which rose 3.8% after posting a large increase in light vehicle sales in the U.S. for this past month. Home Depot was the largest Dow loser. It fell more than 5% after announcing a buyback of nearly 3 million shares at $37. The S&P 500 did better, rising 15.43 points (+1%), while the Nasdaq gained the most in terms of percentage, gaining 1.3% or 33.88 points. Now that the Nasdaq had broken most of its upside resistance levels, it will be easier to retest the highs from July this week. The S&P 500, however, will first have to deal with August's highs, which would likely correspond to the Nasdaq's July highs.


posted by Toni Hansen @ 9:42 PM 0 Comments

Monday, September 3, 2007Market Appears Weaker into Shortened Trading Week
Good morning! I hope you had a wonderful holiday weekend! Not surprisingly, trading was light as the week wound down on Friday. Despite the lighter volume, the market still pushed higher. The Dow Jones Industrial Average ($DJI) gained 119.01 points on Friday, while the S&P 500 ($SPX) climbed 16.35 points, and the Nasdaq Composite added 31.06 points. Advancers led decliners 7 to 1 on the New York Stock Exchange, but on the Nasdaq advancers beat out decliners by more than 2 to 1.

Two key news events existed on Friday which were watched closely by many market participants, although the end result was rather indecisive intraday given that the market had a difficult time gaining and maintaining any strong momentum one way or the other intraday. Fed chairman Bernanke spoke at the central bank's yearly conference in Wyoming, but he let very little slip. The market is expecting at least one rate cut by the end of September and was hoping to get a better read as to when and if their expectations would be met.

In other news, President Bush announced his goals to assist subprime mortgage borrowers in keeping their homes, a plan that would include refinancing into government-insured mortgages. For now this is merely word-play and it is yet to be seen as to whether any of his proposal will make it. The market toyed with this while Bernanke continued to preach to the choir about the pressure the housing market could have upon the overall economy.



The market had initially turned bullish again on Wednesday, gapping up into the open and then continuing higher throughout the day. This buying then continued into Thursday morning. At this point, however, the momentum slowed. The indices had a more difficult time making new intraday highs as Thursday morning progressed. Before noon the indices had rounded off at highs before giving way to some stronger selling into the afternoon. The market recouped very little of its intraday losses before Thursday's closing bell, but the market nevertheless gapped higher on Friday.

Although the indices were trading higher in the early hours of the morning, the morning gap had a bit of help from premarket data. At 8:30 am ET the Commerce Department reported milder-than-expected inflation in July, while there was slightly better-than-expected growth in consumer incomes and spending.



Following the open, the indices fell into a weak trading range. This range broke lower with the 10:00 ET economic data. The Commerce Dept. announced that factory goods made in the U.S. rose 3.7% in July, which was better-than-expected. Most of this increase was the cost of transportation, however, with an increase of 2.4% when transportation data was excluded. The flush primarily affected the Dow and S&Ps. Both quickly moved into the day's lows and into support at the 5 minute 20 simple moving average intraday. They bounced off this support and then slowly pulled back a second time into the 11:15 ET reversal period.

The second pullback intraday on the 5 minute time frame was not only more gradual than the first, but the volume was also quite a bit less than on the initial drop. This created a decent buy setup around 11:30 ET. While the market stalled at the morning's highs, a sloppy congestion along that level was soon breaking to new highs on the day. It didn't get too far though. Within half an hour the market was at strong resistance on the daily time frame. The Nasdaq was testing previous daily highs while the Dow and S&Ps were running smack into their 50 day simple moving averages. When these daily moving averages hit for the first time after reversing they have a very difficult time breaking through the level the same day.

All the congestion and slower highs began to round things off on the daily time frame. There were some decent scalp setups into the afternoon, but overall the market was pretty sloppy the rest of the day with volume very light until the last moment when the market suddenly fell apart into the last 15 minutes of the trading day as folks rushed to unload positions ahead of the three-day weekend.



Heading into the new week I am looking a bit more on the bearish side into the open on Tuesday. The slowdown in the buying makes it easier for the sellers to take hold. On the daily time frame, however, there is the potential now for the market to attempt to pull back into June's highs. I would like to see a day or two of nice selling before I look to position myself too strongly on the long side.


posted by Toni Hansen @ 10:14 PM 0 Comments

hefeiddd

Wednesday, October 31, 2007Market Falls on Rate Drop, but Quickly Recovers
Good morning! The afterhours climb following Tuesday's closing bell continued into the opening bell on Wednesday. When it rang, the Dow was already back at the price resistance from Tuesday's highs and the S&Ps were also dealing with the same resistance zone. The ES (S&P 500 EMini) chopped around in the 1542.5 level we were looking at for the first 45 minutes or do of the day. Volume was on the light side and continued to decline into the 14:15 Fed announcement. The lighter volume as the market corrected from the morning gap in the first 45 minutes or so, however, created a continued bias for more upside throughout the morning.

The indices rose steadily into 12:30 ET with only a 5 minute congestion zone at highs stalling the move from about 10:45 ET to 11:30 ET. It held the 5 minute 20 simple moving average throughout the ascent and found resistance eventually at the zone of prior highs in the Dow and S&Ps. A couple of stocks really did their best to outshine the overall market during this time. Newmont Mining Corp. (NEM) was a great example. It had tested a third high earlier in the week on the daily time frame and then formed a bear trap on the daily chart into Wednesday morning after it double its third quarter earnings. The result of the break from the range and the trapped bulls was an extreme continuation move out of the open that lasted into about 10:45 ET. Mastercard Inc. (MA) also took off on earnings, but it fell into a range out of the open and then broke higher around 11:00 ET. FXI, SIMO, SIRF, IVGN and ICON also took off strongly higher intraday in morning trading.



At 12:30 ET the market began to experience a greater divergence between the indices. The Dow formed a strong bull flag pattern into 13:00 ET and then broke higher into the Fed. The Nasdaq Composite, on the other hand, pulled more quickly lower into 13:00 ET and then based under the 5 minute 20 sma on light volume before breaking lower ahead of the Fed. The S&Ps fell in between the two and attempted, but did not quite hit, a retest of the intraday highs. It also broke lower prior to the lending rates announcement. The Dow never shook off its own 5 minute 20 sma and gave way to the pressure when the 14:15 news hit.



I'd been expecting the initial reaction to the Fed news, no matter what it was, to be on the downside and was not immediately disappointed in that bias, except for the fact that the market as a whole actually began to break lower before the news even hit that the Fed had lowered rates by the anticipated 1/4 point. The market fell as an initial reaction and then swung higher before selling off again. These three smaller waves became the first part of three larger ones.

At 14:30 ET the market began to reverse. This kicked off the second move on the 5 minute time frame. This counter-reaction to the initial news was much more pronounced that the initial move. As I mentioned yesterday, this is not at all unusual. The upside in the Nasdaq ended up being about twice that of the first downside move. The result was that when the market went for its third move it did not fall as hard. Instead the 5 minute 20 sma zone served as support. Even though the indices shown here all moved higher off the support, the market still held the 15:00 ET zone highs



By the end of the session on Thursday, the Dow ($DJI) had added 137.54 points and closed at 13,930.0. The S&P 500 (SPX) rose 18.36 points and closed at 1,549.38. The Nasdaq Composite ($COMPX) gained 42.41 points. It closed at 2,859.12, giving it the largest monthly gain among the three indices. It had risen 5.5% at the end of trading on Wednesday. As news continues to pour out in the form of earnings, my focus is going to remain on the premarket gainers and losers lists. There have been a lot of really nice gap plays this week and it seems reasonable to expect this to continue until earnings season begin to taper off.


posted by Toni Hansen @ 7:50 PM 0 Comments

Market Mixed Ahead of Fed
Good morning! I hope that you had a wonderful weekend! This week has been a bit tough in the overall market so far as folks weigh in on their feelings for Wednesday's upcoming FOMC interest rates release. Monday was a narrow range day in the market and while things widened up a bit on Tuesday, trading was still lighter than in recent weeks. The market had managed to post gains on Monday, primarily due to a nice upside gap into the open, but it took back those gains and more in yesterday's session in both the Dow Jones Industrial Average and S&P 500. The Dow ($DJI) fell 77.79 points and closed at 13,792.5. The S&P 500 ($SPX) lost 9.96 points and closed at 1,531.02. The Nasdaq Composite did manage to hold onto its gains thanks to continued strength in the tech sector. It closed virtually unchanged with a loss of 0.73 point to end the session at 2,816.71.



The action so far has been pretty typical of trading leading into a Fed day. Even on the top gainers and losers lists today many of the stocks leading the momentum moves were ones which tend to have wider spreads and choppier trading intraday. Although there were still some very nice setups throughout the session, I didn't have the best of luck locating many of the top leaders in time to catch the moves and ended up doing very little throughout the day. Apple (AAPL) led the gainers with news on sales for their latest operating system, while Dryships Inc (DRYS) completely fell apart after hitting new 52-week highs just one day earlier. It lost nearly $23/share to end the day at $108.00/share. Other top gainers included GOOG, SEPR, ATHR, SKS, and GT.



The indices began the session on Tuesday on a weak note. The market had gapped down a bit into the bell, but attempted to close the gap shortly thereafter. The Nasdaq accomplished the feat, but the Dow merely based out of the open at lows, while the S&Ps barely move higher before they again gave way to another round of selling. The decline mirrored the one in place from the gap after a slightly delayed reaction to the 10:00 ET consumer confidence data which has hit two-year lows.

The move lower out of 10:00 ET reversed off that equal move support and some congestion from the previous two days after only a couple of minutes. The S&P 500 and Dow both pulled up into the 5 minute 20 period simple moving averages for resistance at 11:00 ET, but the Nasdaq managed to make it into new intraday highs and the upper end of the range from the previous day. A gradual correction then followed as the market slid lower into noon. The volume declined further as the indices pulled up and then based into about 13:00 ET before finally gaining some upside momentum again after 13:00 ET to take the S&Ps and Dow back to morning highs and the Nasdaq to new 52 week highs in the afternoon.



The Dow and S&Ps could barely shake off the 5 minute 20 sma support as my inched higher. At the 14:00 ET reversal period the S&Ps came into resistance from Monday's afternoon lows and the indices then began to hug the lower trend line from the upside move. This lasted for about 15 minutes into 14:15 before the channel broke and the market pulled into its 5 minute 20 sma. The indices again hugged this next support for about an hour, managing a false upside breakout in the Nasdaq, before selling off strongly into the last 30-45 minutes of the day.

The late day drop took the indices into some strong price support from the prior 15 minute congestion and 15 minute 20 sma in the Nasdaq and prior lows in the S&Ps. Momentum shifted into the close and within a few hours the indices were triggering buy setups and moving higher in afterhours trading.

The upside we are seeing here in what is now the premarket is fairly typical of pre-Fed activity. The indices often move higher in the morning ahead of the announcement. Even when the market gaps down it will try to move higher off the downside gaps. There have been a lot more exceptions to this tendency in recent months, however, so it is not something I rely on completely for a morning bias. As the announcement approaches, however, volume dries up, as does the ability to locate lower risk intraday setups for trading. Noon tends to be the dividing point whereby the market begins its siesta. There is occassionally a decent directional bias during this period, but not that often.

Following the 2:15 ET FOMC announcement things become a bit crazy. It is highly advisable for most traders to just sit and wait out the initial reaction to the Fed news. There are usually 2 sets of three moves. The first is on the 1 minute time frame where there is a reaction, a counter-reaction, and then return to the bias of the initial reaction. This same set of actions then plays out again on the 5 minute time frame. The counter-move can be larger than the initial move. Support and resistance levels still hold very well on Fed days, but they can have a bit more "give" to them due to the momentum impact of such strong moves. I am looking at 1342-1342.5 for upside resistance initially, while 1530 is support in the ES (S&P 500 EMini).

There is a bit of a consensus that the Fed will lower rates another 25 basis points. I am learning a bit more heavily towards the camp that thinks they will leave the rates unchanged, but it doesn't really matter for a daytrade what the news it, but rather what the reaction itself is.


posted by Toni Hansen @ 1:12 AM 0 Comments

Sunday, October 28, 2007Market Action Video
Good morning! After several days off, I will begin the Daily Market Action letter on Wednesday. In the meantime, I have posted my new Weekly Action Video. Last week's video is available at http://www.tonihansen.com/marketactionvideo/ . Each week this link will also be updated. The location of the current video is http://www.tonihansen.com/MarketAction/20071028/20071028.html I hope you enjoy it!

All my best,
Toni


posted by Toni Hansen @ 9:12 PM 0 Comments

Tuesday, October 23, 2007Apple Leads NASDAQ to New 52-Week Highs
Good morning! The market continued to shrug off Friday's losses on Tuesday. Apple (AAPL) rose 6.8% on the day after reporting a 67% increase in last quarter's earnings, while Amazon (AMZN) rose 10.4% ahead of its own upcoming earnings report due out after the bell. Research in Motion (RIMM) also rose sharply, posting nearly a 10% gain after taking off sharply mid-day on news that it would be selling its BlackBerry wireless devices in China. American Express (AXP) was another winner, gaining 3.2% after reporting an 11% increase in Q3 profits.

By the closing bell on Tuesday, the Nasdaq Composite ($COMPX) had risen 45.33 points, or 1.7%, ending the session at 2,799. The S&P 500 ($SPX) came in second with a gain or 13.26 points, or 0.9%. It closed at 1,519. The Dow Jones Industrial Average ($DJI) had the smallest percentage gain of +0.8%, but still tacked on over 100 points (+109.26 to be exact.) It closed at 13,676.

While news has certainly helped push the Nasdaq higher, leading it to new 52-week highs on Tuesday, the Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX) have risen to a lesser degree and are in line with the typical price reaction following a move such as on Friday. In other words, we've seen some upside in those indices, but nothing nearly as extreme as the earlier selling. It would now be normal to see some retracement again on Wednesday and the indices had a strong sell signal intraday heading into Friday's close which played out afterhours to already assist with part of that corrective bias.



The day began on a strong note on Tuesday. The indices gapped higher into the open thanks to continued upside after Monday's closing bell and early morning buying. The gap was right into resistance, however, from the congestion zone mid-day on Friday. I was expecting it to pull up into the middle of that range before it reacted to it, hence the 1528 level I posted in the ES (EMini S&P 500) as resistance, but it only made it into the lower end of that zone. The market actually rounded off at premarket highs into that level, so my bias as a whole was to the downside in the first half of the day with my first short