一个笨蛋的股指交易记录-------地狱级炒手

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Wednesday, March 26, 2008Market Correction Continues
Good day! The market pulled in on Wednesday, continuing the correction which began Monday afternoon following several days of strong upside momentum. The day began with a moderate gap lower, brought about by afterhours selling when the gradual upside momentum triggered a breakdown into the final hour of trading on Tuesday. The durable goods data came out ahead of the open, but had very little impact upon immediate trade action. Orders for durable goods, which is used to gauge business spending, fell 1.7% in February. Such activity is typical during recessions and provided further evidence of one currently underway. The technical breakdown pattern on that 15 minute time frame, however, continued into the open and the downtrend remained in play until the 10:45 ET correction period hit.

Support was extremely strong at the 10:45 ET levels. The Nasdaq had ran into Tuesday's lows, as well as its 5 minute 200 period simple moving average. The Dow Jones Ind. Ave. had closed its Monday morning gap and had hit an equal move support level as compared to the reversal off Monday's highs and into Tuesday morning. Even the S&P 500 had support in the form of Monday's opening price.

The market bounced well as it came off the lows. The momentum was sharp initially, and although it slowed as it ran into resistance again into noon, it was unable to resume the earlier downside with any conviction. Volume dropped off significantly and the market merely chopped lower over noon and into the early afternoon. 14:00 ET is a key turning point in the market in afternoon trade. By maintaining the base into that level and pulling up into the 5 minute 20 period simple moving averages, the bias turned in favor of the bulls.

The market immediately began to rally as the 14:00 ET correction period hit. The initial wave of buying took the indices into the upper end of the mid-day trading range. At that point is stalled and the S&Ps and Dow both formed small two-wave continuation patterns on the upside into 15:00 ET. Adding fuel to the fire were another strong late day pop in Bear Stearns (BSC) thanks to intervention from the Federal Reserve and the announcement from Rambus (RMBS) that a federal jury voted in its favor in an anti-trust/fraud suit. These events took place at approximately the same time and the market shot higher.

Unfortunately the indices did not have as easy of a time maintaining the late day gains as it had making them. After peaking into 15:00 ET they began to swiftly retreat. The selling continued into the close with losses of 109.74 points in the Dow ($DJI), or 0.9%. It closed at 12,422.86 with Citigroup (C) falling 5.8% and J.P. Morgan dropping 4.2%. Another top loser was American Express, which closed lower by 4.5%. The S&P 500 ($SPX) dropped 11.86 points, or 0.9%, on Wednesday. It closed at 1,341.13. The Nasdaq Composite held up somewhat better, but still posted losses. It fell 16.69 points, or 0.7%, and closed at 2,324.36.I am favoring some downside in the morning on Thursday, followed by another round of buying into the close. My bias, however, is not a strong one and I am going to mainly be watching for the opening price levels to provide some better guidance.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 9:34 PM 0 Comments

Tuesday, March 25, 2008Market Corrects with Range
Good day! Market action was choppy and rather indecisive throughout much of the session on Tuesday. The extreme upside of the prior two sessions had exhausted the momentum for that direction, but the bulls were not quite willing to let go of their long-awaited gains. The day began with very little change from the prior day's closing levels. Despite some decent premarket swings back and forth, the indices merely formed a larger 15 minute trading range.

Within minutes of the opening bell the indices were again moving higher within the premarket range, pulling up off the last premarket low. Although the pace of the move was strong, the 9:45 ET reversal period held in the middle of the range with the 15 minute 20 period simple moving average serving as resistance on the Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX) intraday.

The market turned lower coming off the intraday resistance and heading into the 10:00 ET consumer confidence data. These losses became even more extended intraday thanks to a much lower reading than expected. The March consumer confidence levels was expected to come in at about 73.3. Instead the consumer confidence index fell from 76.2 in February to 64.5. This is the lowest level it has hit since 2003.

After flushing lower on the data, the market began to recover. Trade was very choppy. The Nasdaq Composite displayed the greatest relative strength, nearly making it back to the day's highs around 11:30 am. This was followed by the S&Ps. The upside had a great deal of overlap as it moved. One bar on a 5 minute time frame included nearly all of the prior one before moving up again. The bull flag which followed was was not very clear as a result, since the momentum on the pullback was stronger than the rally, although volume remained light and the 12:00 ET correction period favored support.

The market continued to creep higher with slightly higher highs into the afternoon. Volume remained the lightest it has in several weeks. It was not until around 14:00 ET that things began to shift. At that point the indices had established three waves of upside intraday with slower overall momentum on each wave. On the final move into 14:00 ET, however, the end of that move increased in momentum, making a sharp reversal difficult.

I had originally been expecting the market to pull lower into the afternoon. The reason I favored this move is because it would have allowed the market to more easily form a longer range for more upside. With just one low on the 30 minute charts within that base at highs, the market would be more likely to form a false upside breakout if it did trigger and just trap people before breaking lower again. Nevertheless, the indices still kept climbing with a final bull flag out of 14:30 ET and into the 15:00 ET reversal period.

The breakout was indeed false when taken into perspective on the larger 30 minute charts. The market began to give way to selling pressure during the final hour of trading with many stocks, such as Baidu (BIDU), falling hard into the closing bell. The weak Dow lost 16.04 points, or 0.1%, on Tuesday, closing at 12,532.60. Top decliners were Bank of America (BAC), which fell 3.5%, and Home Depot (HD), which lost 1.7%. The stronger S&P 500 gained 3.11 points, or 0.2%, and closed at 1,352.99. The Nasdaq, which had the best relative strength on Tuesday, gained 14.30 points, or 0.6%, and settled at 2,341.05.

I am expecting some more corrective action on Wednesday, but on the daily and weekly time frames the indices are looking pretty good. If they can pull off a slow correction along these highs instead of sharply declining, then another solid breakout higher in a couple of weeks is likely. The Dow will have the hardest time pulling off such a correction, while the Nasdaq has the best chance.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 8:19 PM 0 Comments

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Monday, March 24, 2008Market Extends Last Week's Gains
Good day! The market had another strong session on Monday, following through on last week's momentum. Intraday the ES hit highs at the 1361.5 resistance level I targeted last Wednesday and held that high perfectly. The NQ also came directly into the middle of last month's congestion, which we had also been tracking. This zone hit strongly at first in the initial 90 minutes of trading, but momentum slowed as the day continued, stalling over mid-day.

The top story of the day on Monday was once again in Bear Stearns (BSC). BSC was up over 100% following news that J.P. Morgan had quintupled its offer from last Sunday's $2/share to $10/share. This move supported further buying in the financial sector. The Amex Securities Broker Dealer Index rose 2.9% on the day. Some of the financial firms, however, did not hold up as well. Lehman Bros. Holdings Inc. (LEH) fell 4.1%, while Goldman Sachs Group, Inc. (GS) lost 0.4%, Wachovia Corp. (WB) shed 1.5%, and Morgan Stanley (MS) fell 1.8%.

Monday's session began with immediate upside, gapping slightly higher and running straight away. It stalled after about 15 minutes with the 9:45 ET correction period. At that point a range began with the indices hugging highs into the 10:00 ET housing data. Currently, some of the best performers in the S&P are in the housing sector. The morning data boosted gains even further when the National Association of Realtors reported that sales of existing homes in February rose by 2.9% to a seasonally annualized rate of 5.03 million. This beat the 4.85 million pace that was widely anticipated and was the strongest move since last October. Meanwhile, inventories of unsold homes fell 3%. Although still high, this was viewed as very positive. The median sales price dropped to $195,900, which is 8.2% lower than this same time last year. Additional data will be coming out on Wednesday when the Commerce Department reports on sales of new homes.

The strong momentum of the opening action began to slow once the 10:15 ET correction period hit. The indices began a series of bull flags with the Nasdaq holding up the best initially. A higher high brought the market to another peak on the 5 minute charts at the 10:45 ET correction period and the market continued to step higher into the early afternoon with a series of bull flags on the 5 minute time frame. The 5 minute 20 period simple moving average served as support and the lighter volume on each correction favored the upside bias.

By early afternoon, the indices were very well extended. The ES was hitting that resistance target I mentioned earlier and the Nasdaq Composite had also hit equal move levels on a 30 minute time frame as compared to the rally from last Monday and into Wednesday. The slightly higher highs of each bull flag shifted the market's pace from the strong momentum of the opening action to the more moderate upside into lunch. It shifted even further into the early afternoon. After hitting the 5 minute 20 sma zone once again around 13:00 ET, the market was unable to again mount another move to new highs. It fell slightly short of the last highs and began to move sideways on very light volume.

The rounded highs broke with the 14:00 ET correction period, pushing through the 5 minute 20 sma support and gaining speed on the downside as compared to the most recent buying. This weakness remained in play for the remainder of the afternoon. A slow ascent into 14:30 ET created a 5 minute Avalanche type of pattern, leading to a stronger drop into 150:00. A third wave followed coming off the 5 minute 20 sma resistance, although the pull higher into that 20 sma was faster than before and the selling somewhat more gradual into the close. This allowed the indices to bounce and hold up within the afternoon range during the immediate afterhours activity.

The Dow Jones Industrial Average ($DJI) posted gains on the close of 187.32 points, or 1.5%. It ended the session at 12, 548.64 with 27 of its 30 components in positive territory. The S&P 500 also rose 1.5%. This amounted to a 30.27 point advance into 1,249.88. The Nasdaq Composite Index ($COMPX) was the darling of the day thanks to its technology components. It rose a whopping 3%, or 68.64 points, and closed at 2,326.75. The Russell 2000 performed even better with a 3.89% in the futures market. Seminconductors ($SOX) alone rose 3.7%. Notable standouts in the technology sector included Apple Inc. (AAPL) with a gain of 4.7%, Google Inc. (GOOG) with a 6.2% upside move, and Hewlett-Packard Co. (HPQ), which rose 3.1%. I think we may still see these gains extend even further into the early morning trade, but am looking for a correction off resistance into the afternoon on Tuesday.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 6:35 PM 0 Comments

Friday, March 21, 2008Market Relief in Sight?
Good day! The market posted its first weekly gains in a month last week after the back broke on Bear Stearns (BSC), plummeting it to $2.84 on Monday after the announced buyout by J.P. Morgan Chase for $2/share on Sunday. The indices were all over the place throughout the week, but the action is still quite bullish heading into the new trading week next week. Many are speculating that this past week's crash and recovery are what was needed to flush out the market and open the door for further upside at this point.

After watching the news on the housing market here in Florida where people are practically giving away homes and after having talked to my realtor, who was kind enough to tell me that my house can now be sold for about 50% less than what I originally listed it at, I am still wondering that, while panic is surely at hand, have enough backs been broken? Nevertheless, I am also favoring further upside into the end of the quarter in the overall market, but we are likely to continue to see higher levels of volatility with it.

Last week ended with a gain of +261.66 points, or +2.2%, in the Dow Jones Industrial Average ($DJI) on Thursday. It closed at 12,361.32 with a gain on the week of +3.5%. The S&P 500 ($SPX) added +31.09 points, or +2.4%, on Thursday. It closed at 1,329.51 with a weekly gain of +3.3%. The Nasdaq Composite ($COMPX) rose +48.15 points, or +2.2%. It closed at 2,258.11 on Thursday for a weekly gain of +2.1%.

The session began on Thursday with hesitation. The market had flipped from an uptrend day on Tuesday to a downtrend day on Wednesday and the trend continued into Tuesday's afternoon lows in the first 15 minutes of the new session. That strong price support level, combined with the 9:45 ET correction period, held very well and the market quickly broke the trend, pushing higher into 10:00 ET. The 5 minute 20 period simple moving average hit as resistance in the Nasdaq, while the 5 minute 200 sma hit in the Dow and S&P. The momentum lost ground throughout the rest of the morning, creeping higher with slightly higher highs until finally breaking the channel with a sharp flush around 11:30 ET.

Even though the market held resistance well into noon, the momentum shift did not hold. Instead, a second move lower into 12:30 ET was at a much more gradual pace and on light volume, creating more of a bullish bias into the afternoon. The indices continued to congest along the 15 minute 20 sma and then the 5 minute 20 sma. The range broke around 13:30 ET, moving sharply higher into the mid-afternoon.

The 5 minute 200 sma served as initial resistance on the afternoon rally. The Nasdaq formed a decent bull flag at that level, but action in the Dow and S&Ps was not as obvious as continuation pattern due to rounded highs. The ranges on these corrections off highs, however, still broke higher around 14:30 ET. This kicked off a second afternoon rally that took it into price resistance from the previous afternoon. A double top formed on the 5 minute time frame into the close with closing prices at the second high, followed by another correction off highs in afterhours trade.

In other markets this past week, a number of declines have taken place. The euro peaked on Monday and is now pulling back sharply, allowing the dollar to finally recover to some extent. Commodities with close ties to the dollar came under pressure. Crude oil and gold both experienced their sharpest downside moves in years. Crude oil hit record highs at $112.75/barrel a week ago Friday. It closed this past week at $101.84/barrel. Meanwhile, gold hit a record high on Monday at $1,034/ounce, but by the end of the shortened trading week it was down 8.3%.

Economic concerns remain strong despite the market's recent recovery action. On Thursday the Labor Department reported that first-time claims for state unemployment benefits hit 378,000 for the week ending at March 15. This was a rise of 22,000 and brought focus to a weakening labor market. In a separate report, the Conference Board reported that the index of leading economic indicators fell 0.3% in February, marking the fifth-straight month it has fallen. The January leading index was also revised lower by 0.3% from a 0.1% decline to a loss of 0.4%. Finally, while the Philadelphia Federal Reserve Board announced that, while sentiment among manufacturing firms improved from negative 24 to negative 17.4, the levels are still very low.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 10:26 PM 0 Comments

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Tuesday, March 18, 2008Market Rallies on Fed Tuesday
Good day! The markets soared on Tuesday's highly anticipated Fed day. The session began with a strong gap higher, right into the end-of-day trading from Friday. This gap exhausted the market temporarily, but market players still kept their eyes out on the larger prize: the afternoon Fed rate cut. Typical Fed days begin with upside, but Tuesday's was exceptional. Although stuck in a congestion zone throughout the first half of the morning, prices broke higher between 10:30-11:00 ET. A bull flag into about 12:30 ET with the 5 minute 20 sma as support led to a continuation move throughout the first half of the afternoon.

A glimpse into the market's initial bias ahead of the Fed's rate announcement began at 14:00 ET when the uptrend channel broke lower. The market had been widely prepared for a full point cut, but Sunday's 25 basis point cut ended up factored into the Fed's decision and resulted in a 75 basis point cut on Tuesday. The selling accelerated on the downside as initial disappointment hit, followed by a second reaction back to the 5 minute 20 sma resistance before moving for a third wave of reaction. This time it was once again on the downside, falling into 14:30 ET and the morning's lows. The 15 minute 200 sma zone also served as support.

Slightly lower lows created a trap pattern and the market rolled over into the final 90 minutes of trading, moving strongly higher into 15:00 ET and then basing at the highs before slowly continuing higher into the closing bell. The Dow Jones Ind. Ave. ($DJI) managed to rally a whopping 420.41 points, or 3.5%, on Tuesday. This was the strongest point gain since July 29, 2002. It closed at 12,392.66. Citigroup (C) led the way with an 11.22% gain, while American Intl (AIG) added 9.72% to its share price. GM, BAC, JPM, HD, and GE all gained more than 5%.

The S&P 500 ($SPX) rose 4.2% on Tuesday for a total of 54.14 points. It closed at 1,330.71. Goldman Sachs (GS) rose 16.3%, while Lehman Brothers Holdings (LEH) climbed 46.4%, and Bear Stearns (BSC) rose 22.9% on disputes by shareholders against the buyout by J.P. Morgan Chase (JPM). The Nasdaq Composite ($COMPX) performed equally well with a 4.2% gain, amounting to 91.25 points. It closed at 2,268.26. Top performers included Sepracor Inc. (SEPR) (+9.91%), UAL Corp (UAUA) (+7.94%), ahd Amazon (AMZN) (+7.77%).

The action on Tuesday leaves the market favoring more upside in the immediate future. The Nasdaq has rounded off at the daily lows and follow-through is likely over the next several days. I am not expecting moves like Tuesday, but will be very cautious on the short side. 1361.5 is ES daily resistance. 1800 and 1888.5 are NQ resistance levels to watch out for.


Notice: I will be taking an extended weekend with my family so I will not be releasing a column tomorrow evening. The Daily Market Action Letter will resume on Monday. Have a wonderful weekend!

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 8:51 PM 3 Comments

Monday, March 17, 2008Market Makes Hesitant Recovery Following BSC Buyout News
Good day! The market was back and forth throughout the day on Monday. The day began with a sharp downside gap following the surprising announcement that J.P. Morgan and Chase (JPM) would be buying out Bear Stearns (BSC) for $2/share. This was a staggering 84% lower than the prior day's close. Other financial institutions were also significantly hit. Lehman Brothers (LEH) fell 19.1%, Merrill Lynch & Co. (MER) lost 5.4%, and Goldman Sachs Group. (GS) lost 3.7%. Although the market began to recover after the Federal Reserve cut its lending rate from 3.5% to 3.25%, the gap into the open was enough to still leave the indices severely oversold and favoring a move higher.

As I mention on Thursday, most extreme gaps into the open in the market will begin to close within the first 15 minutes of the day. Thursday's took a bit longer, but this was not the case with the beginning of the new week. The market climbed steadily out of the open. There was a lot of overlap in prices, but the move was still steady. The Dow Jones Industrial Average, led by a 10.32% gain in JPM, had the easiest time completing the gap closure, while the pace on the Nasdaq Composite was excruciating. Neither the S&P 500, nor the Nasdaq, were able to complete the gap closure, although they came close by testing lows of a swing into Friday's closing bell.

When the indices struck their 15 minute 20 period simple moving averages, the reaction was immediate. The market bounced off the resistance and began to move through the lower channel from the morning's upswing. The selling continued into 11:30 ET, at which point a small range formed under the 5 minute 20 sma to create a continuation pattern lower into noon. The 12:00 ET reversal period held for a few minutes, but slower selling into 12:30 helped the market begin to roll over into the early afternoon.

The 5 minute 20 period sma was initial resistance for the market with the 13:00 ET reversal period. The indices retraced off the resistance, making their way to a very slightly lower low into 13:30 ET. The channel broke quickly to the upside when it gave way and soon the 15 minute downtrend channel was also busted. Earlier congestion served as resistance in the S&Ps and Nasdaq, but the stronger Dow was almost able to hit the morning's highs, coming into the 5 minute 200 simple moving average zone.

A pullback to the 5 minute 20 sma on light volume into 14:30 ET resulted in a continuation of the mid-afternoon upside. the momentum was a bit more choppy, but it was steady, moving back into morning highs and the price resistance which accompanies such a level. It held the zone well and although the Dow ($DJI) had been up by more than 100 points on the move, the indices pulled back into the close. It ended the session up 21.16 points (+0.2%) at 11,972.25. The S&P 500 ($SPX) was not as lucky. It still posted losses of 11.54 points, (-0.9%), to close at 1,276.60. The Nasdaq Composite ($COMPX), which had the least relative strength, fell 35.48 points (-1.6%) to 2,177.01.

On Tuesday, the Federal Reserve meets once again. It is speculated that, despite the 25 basis cut on Sunday, the Fed may cut rates by up to another point. Typically a Fed day begins with some upside in the morning, followed by much lighter trading over noon. Risk increases at this point, peaking directly after the 2:15 ET announcement. Three waves of reaction then follow. These often take place first on 1 minute time frames and then the larger 5 minute time frames. An initial reaction, is usually followed by a secondary reaction, which may be stronger than the first, and then a third move in the same direction as the first.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 5:07 PM 0 Comments

Tumultuous Session Completes the Week while Additional News Weighs Heavily into the New One
Good day! Well... perhaps not for everyone given the latest shakeup in the marketplace, but it has at least been eventful! It is markets like these that can make or break a trader or investor. Bear Stearns (BSC), a name that has been a cornerstone in the financial world for nearly a century, turned up the heat on Friday when it announced that its ability to support itself was in dire jeopardy. It had little choice other than to accept a bailout package from the Federal Reserve and J.P. Morgan Chase, which did little to provide much sought-after reassurance.

The indices went into free fall mode within 15 minutes of the opening bell, not stopping until they had hit Thursday's lows at about 10:00 am ET. Although the market held true to the bias we had been looking at going into the day, whereby it favored a larger range within the zone of Thursday's trade, it was not at all a pretty picture. The market bounced well off the lows, but held the middle price levels of the descent and began to correct through a larger trading range into mid-day.

Volume dropped off as market players digested the morning's move and considered whhich course of action would be the most prudent. When one of the big boys like Bear Stearns is vocalizing its worries, particularly after earlier reassurances aimed to ease investor concerns, then all is most certainly not well. Just how unwell "unwell" meant did not make itself known until Sunday evening, but I shall get to that a bit later.

As the market corrected into the second half of the day's trade on Friday, a narrowing channel formed by way of a symmetrical triangle. Upside moves became more and more stunted as the range progressed, creating a bearish bias into the early afternoon. Due to the morning's price action, however, downside was somewhat limited. In order to continue a move of that magnitude on a second wave of selling, the market will tend to have a longer relative correction from the descent than it would a normal selloff. The early afternoon breakdown, for instance, would have retraced back to the middle of the triangle, or even the upper end of it before it would break sharply lower on a continuation.

When Friday's breakdown took place into 12:30 ET, the volume was still on the light side and the momentum was not very strong. This created favor for a bounce before it would continue. Instead of pulling all the way back up to within the range, however, the market only tested 5 minute 20 simple moving average resistance level and stayed in the lower segment of the earlier triangle. While volume was lighter on this upside than on the downside and the momentum was gradual, favoring a break lower, this also meant that the break would not be nearly as extreme as the morning move and that the zone of morning lows would remain a key support level.

The market managed a decent recovery into the final 90 minutes of trade on Friday, coming off that second afternoon continuation on the 5 minute by pulling up to the 5 minute 20 sma. It rested there for about half an hour, and then broke strongly higher shortly after 15:00 ET. This move took the indices back to the upper end of the morning range, as well as 5 and 15 minute 200 period simple moving average resistance zones. A retracement back to the 5 minute 20 sma held with the market closing down 194.65 points in the Dow (-1.6%), 27.34 points in the S&P 500 (-2.1%), and 51.12 points in the Nasdaq Composite (-2.3%).

Bear Stearns (BSC) fell 47% on Friday, but other financials were also badly hit. Citigoup (C) dropped 6.1%, American Express fell 4%, J.P. Morgan lost 4.1%, Goldman Sachs lost 5.2%, and Morgan Stanley shed 4.9%. To magnify the situation, on Sunday Bear Stearns made the shocking announcement that it was working on a buyout by J.P. Morgan Chase & Co. for a mere $2/share. The Fed stepped in to try to cushion the blow by cutting interest rates another 25 basis points just two days prior to an anticipated 75 basis point rate cut most had been expecting coming out of Tuesday's meeting. Although the index futures had been trading higher on Sunday, they again plummeted Sunday evening on the heels of BSC's news. The next major support zone in the market is going to be the 2006 lows in the S&P 500.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 4:30 AM 0 Comments

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Friday, March 14, 2008Market Recovers Losses and More
Good day! Thursday began on a rather sour note, gapping sharply lower on the continued downside we had been seeing afterhours the night before. This gap led to an open right at those price levels from Tuesday morning, which I had pegged as the next major support. The S&P 500 and Dow Jones Ind. Ave., however, opened at the lower end of the opening range, whereas the Nasdaq opened in the upper end of it. Continued weakness out of the gate led to the S&Ps and Dow eventually making it back into Tuesday's lows and a little beyond in the S&Ps. The Nasdaq Composite held up more readily and maintained a price level still within the Tuesday morning congestion.

Part of the morning tumble was attributed to news from Carlyle Capital (CARYF), which is a bond fund, that stated that it was unable to meet the margin calls on its portfolio of securities backed by residential mortgages. The fund fell 97.6% on Thursday. Other companies facing the same pain include Bear Stearns (BSC) (-7.4%), Citigroup (C) (-0.7%), UBS (UBS) (-0.9%), and Deutsche Bank (DB) (+0.1%). To top this, Treasury Secretary Paulson also called for banks to reconsider their dividends in an effort to curb the outward flow of capital.

Economic data also influenced the morning's activity. The Commerce Department reported early Thursday morning that consumer spending weakened once again in February. U.S. retail sales were down 0.6%, lower than the no-change status that most had been anticipating. First-time claims for unemployment benefits had little impact. The data came in as the same as which had been revised for the week before: 353,000.

After the initial reaction to the open wore off, the market was able to pick itself up extremely well. A strong 800 tick buy setup had formed in the S&P EMinis going into the 10:45 ET reversal period and it triggered sharply into 11:00 am ET. The setup received a very welcome boost from a report by Standard & Poor which fueled speculation that banks may be close to seeing an end in sight in terms of the current subprime meltdown.

The Dow had been down by 235 points in morning trade, but the S&P 500, Dow Jones Ind. Ave., and Nasdaq Composite all closed the zones of their morning gaps into noon. A nice mid-day correction began coming out of that reversal period, but it lacked any real bearish bias intraday, hugging the 15 minute 20 sma on light volume. This kept me in a bullish frame of mind into the afternoon.

The breakout to new intraday highs happened rather quickly. It began after a short two-wave correction over lunch and took off into 13:00 ET. The indices hit equal move resistance into 14:00 ET, as well as price resistance from the prior session. The momentum shifted at these highs, but not enough to lead to any sharp reversal in the final two hours of trading. The indices hugged the 5 minute 20 sma support throughout most of the final hour, leading for a bearish bias on that time frame into the close, but there was not enough time to see any strong follow-through on the setup until afterhours, when the market dropped sharply back into the 13:00 ET support levels.

Although they moved quite a bit lower after the bell, the Dow closed with a gain of 35.42 points, at 12,145, while the S&Ps gained 6.71 points to end the regular session at 1,315, and the Nasdaq Composite added 19.74 points, closing at 2,263. I am favoring a range on the 60 minute time frame heading into the weekend.


Note: the charts below are created using March futures contracts to show the best comparative data, however, the current month to use is June. The June futures symbol is M.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 12:14 AM 0 Comments

Thursday, March 13, 2008Applying Fibonacci to the Market
Hey gang,

Part 2 of my Trading Market series is now available! I hope you enjoy!

All my best,
Toni

Opening paragraphs:

The dimensional properties of Fibonacci Series, introduced to the West by the 12th century mathematician Leonardo Pisano, aka "Fibonacci", offers a popular tool to contemporary traders and market analysts. In the first installment of this three part series on Fibonacci I acquainted you with the development and key characteristics of Fibonacci series.

In this second installment of this educational series I will begin to explore the practical applications of utilizing Fibonacci levels while trading. In it, I will teach you not only how to draw Fibonacci grids correctly, but also how to read the projected price levels. This goes beyond simply identifying the actual price, to tools for taking a position based upon those price zones...

LINK: http://www.tradingmarkets.com/.site/stocks/how_to/articles/-75657.cfm


posted by Toni Hansen @ 7:56 PM 0 Comments

Wednesday, March 12, 2008Market Posts Losses Despite Strong Open
Good day! The market had an interesting session on Wednesday. Heading into the close the prior day I had been expecting to see a bit more corrective action Wednesday morning, but while the market did pull lower for the first 30-45 minutes of the day, the 5 minute 20 period simple moving average held extremely well and the market rallied strongly off the support. It remained strong until the 11:15 ET correction period hit. Rallies such as those which took place on Tuesday afternoon rarely continue past the first hour of trading the next day. The opening correction did help with this, but it still marked one of the most extreme rallies the market has experienced without taking longer to catch it breath on the way.

Once the market pivoted, it did not take long for it to break through the lower trend channel on the 15 minute time frame. Instead of forming some decent textbook trade patterns, however, things got a bit dicey. The market displayed a markedly bearish bias into the early afternoon, but it didn't really have the strongest, most recognizable bear flags and continuation patterns. Instead one had to rely primarily on the fact that the 15 minute time frame simply had to put in a larger correction given its price exhaustion.

The Nasdaq had a decent channel break coming off 13:30 ET highs, at which point the S&Ps and Dow had perhaps the most obvious bear flag. This was followed by rather mild selling into morning support before the market bounced back into the early afternoon range between 14:15-14:45 ET. The strongest downside move of the day came in the final hour of trading, led by the Nasdaq Composite, which completely fell apart beginning at about 15:00 ET. The selling continued into the close, although the momentum stalled in the final 15 minutes of trade.

The indices finished the day with a 46 point loss in the Dow Jones Industrial Average, an 11.88 point loss in the S&P 500, and an 11.89 point loss in the Nasdaq Composite. 18 of the Dow's 30 components closed lower. The top losers included American Express (AXP) (-2.5%), Microsoft (MSFT) (-2.2%), AT&T (T) (-2.1%), and Bank of America (BAC) (-1.8%).

Making headlines on Wednesday was the fact that once again the dollar had fallen to new lows against the euro and crude oil again hit new highs following positive economic data from January's industrial production in the 15 nations which make up the currency. The euro hit a new highs of $1.5569. Crude oil for April delivery hit an intraday high of $110.20/barrel on the New York Mercantile Exchange, gaining 1.1% on the day.

Wednesday's highs intraday corresponded to the 20 day simple moving averages. This level can be a tough one to break in terms of a resistance zone, particularly once it has fallen out of a trading range such as the one which took place throughout February, and then retests the 20 sma shortly thereafter. I am going to remain more bearish into Thursday, but so far the market is heading strongly lower in afterhours trade. This can leave it with a decent gap down unless it can mange to recover in the early morning premarket hours. 3-4 am ET is a typical time frame for such corrections to take place. The congestion from Tuesday's opening action is going to serve as price support on the 15-60 minute time frames.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 9:05 PM 0 Comments

Market Rebounds on Fed News
Good day! The market took off on Tuesday with an extreme upside move that I certainly had not expected. Yes, we were looking for upside on Tuesday, as I mentioned in yesterday's column, but I was not anticipating anything along the lines of the sharp upside move experienced by the indices on Tuesday. The day began with a very rapid rally at 8:30 am ET. The Fed announced that it would loan as much as $200 billion in securities in order to increase liquidity.

When the market opened on Tuesday, the prices were already very overbought. The exhaustion from the initial premarket reaction had extended the indices to a point whereby they found it very difficult to continue at such a pace, if not impossible to do so. The market's reaction was to chop lower though out the morning. The indices found support, however when the 12:00 ET correction period hit. after bouncing into the 5 minute 20 sma resistance, the market retested the day's lows, but it did do at a slower pace and on lighter volume, corresponding to the 15 minute 20 sma support. This created a bullish bias into the afternoon.

The market took off immediately into 13:00ET . Although the 5 minute 20 sma stalled the bulls for a few minutes, it did not last long at all compared to the extreme upside which followed. My focus was upon Apple (AAPL) and Bucyrus Intl (BUCY) during afternoon trade but a lot of other stocks faired well also. In the Dow, only Boeing Co (BA) closed lower.

Once the market planted a foothold on Tuesday, it began to gain momentum. It rather surprised me how fast the indices rode that rally. I was able to time the resistance levels, and hence the mostly likely pivot zones, extremely well. The problem was that each resistance level held for only a couple fo minutes, so it was the scalpers and larger time frame position traders tht would have come out of this with the greatest reward.

The indices all closed at the day's highs. The S&P 500 also gained ground. The S&P 500 rose 47.28 points, or 3.7% compared hummus. I am expecting that on Wednesday we see a lot of overlap, holding Tuesday's range.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 3:42 AM 0 Comments

hefeiddd

Monday, March 10, 2008Selling Pressure Plagues the Market
Good day! The market did a fairly decent job of imitating the weather here today: cold and gloomy. I know, you northerners have great sympathy for me freezing when the weather happens to slip under 75 degrees, but still... brrr! By the closing bell on Monday the Dow Jones Industrial Average ($DJI) had shed another 153.54 points, or 1.3%. It closed at 11,740.15 with 26 of its 30 components losing ground, led once again by the financials. Citigroup, Inc. (C) lose 5.8%, while American Express Co. (AXP) fell 3.6%, and J.P. Morgan Chase & Co. lost 2.9%. McDonald's bucked the trend, however, after it reported an 11.7% climb in same store sales for February, adding 2.9% to its share price. The S&P 500 ($SPX) also fell throughout the day, losing 16.77 points, while the Nasdaq Composite ($COMPX) dropped 43.15 points, or 1.9%.

For the third session in a row, the market managed to spend nearly all of the day in a steady downtrend. The session began relatively unchanged, and showed little ambition throughout the better half of the morning. It remained stuck in a range until 11:00 ET, but within that range the upside was on lighter volume and the pace of the trading favored a break lower from the range. It still took until the 11:00 ET correction period, however, before the indices were able to manifest any follow-through.

Once the late morning selling hit, it only took about 15 minutes to break through the morning lows. The S&P 500 and Dow quickly returned to Friday's lows, but the Nasdaq held up a little better, hitting support just shy of Friday's lows. The selling had stalled into 11:30 ET, but continued into the 12:00 ET correction period. This is another common time for the market to correct from a prior intraday trend move. Although the indices had rounded off at these lows, however, the buyers still were unable to take the upper hand. The correction off the lows was very choppy with light volume and light momentum. All of these indicated underlying weakness despite the support.

Highs on the mid-day correction off lows corresponded to the 13:00 ET correction period. These mid-day correction periods did a very fine job of holding moves on the 5 minute time frame and it did not take long for the mid-day uptrend channel to break, setting off a second wave of selling intraday on the 5 minute time frame. Momentum was pretty decent and the indices continued to new lows on the day after a nice little continuation pattern formed heading into 14:00 ET.

The selling was enough to establish an equal move on the 5 minute time frame as compared to the morning's drop. This created price support into 14:30 ET, allowing the indices to correct once again into the final 90 minutes of the day. This final segment of trading was very similar to the first 90 minutes of the day, leaving the indices chopping around into the close. Since the market has now fallen for about three days, holding the 15 minute 20 sma for the most part throughout that descent (although not perfectly), I am anticipating a correction off lows with upside on Tuesday. The market has begun to correct already in afterhours trading in the indices, bouncing off the late-day lows.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 6:55 PM 0 Comments

Saturday, March 8, 2008Economic Reports and Earnings This Week

Economic Reports and Events This Week

Monday, March 10, 2008
10:00a.m. Jan Wholesale Trade. Previous: +1.1%.

Tuesday, March 11, 2008
7:45a.m. ICSC Chain Store Sales Index For Mar 8.
8:30a.m. Jan Trade Balance. Previous: -$58.76B.
8:55a.m. Redbook Retail Sales Index For Mar 8.
5:00p.m. ABC/Wash Post Consumer Conf.

Wednesday, March 12, 2008
2:00p.m. Feb Federal Budget. Previous: +$17.84B.

Thursday, March 13, 2008
8:30a.m. Initial Jobless Claims.
8:30a.m. Feb Import Prices. Previous: +1.7%.
8:30a.m. Feb Retail & Food Sales. Previous: +0.3%.
8:30a.m. Feb Retail & Food Sales, Ex-Autos. Previous: +0.3%.
10:00a.m. Jan Business Inventories. Previous: +0.6%.
10:00a.m. DJ-BTMU Business Barometer.

Friday, March 14, 2008
8:30a.m. Feb Consumer Price Index. Previous: +0.4%.
8:30a.m. Feb CPI, Ex-Food And Energy. Previous: +0.3%.
10:00a.m. Mid-Mar Reuters/U Mich Sentiment Index.


Key Earnings Announcements This Week:

Monday, March 10, 2008
Before: AIMC, BX, XJY, GOK, HITK, HYGS, IGTE, LCUT, LMIA, NOVN, SIX, MTN
After: ASHW, CSR, DWRI, FL, HOV, IPAR, JSDA, MIVA, UWN, FACE, QTWW, RADN, RSCR, SAFT, SYKE

Tuesday, March 11, 2008
Before: CAS, BONT, DKS, ESLT, ENG, GIGM, GSOL, GPX, KR, PLUG, QXM, RCNI, SGK, SEH, SSI, STEI, SWSI, BKE, VOL, WMAR
During: SAM, PNY, THO
After: BLTI, BUCA, PSS, DMNS, DIVX, EXLS, ICFI, JCG, JRT, MBLX, NGAS, OPMR, PBY, SVNT, SOMX, TTWO, UBET

Wednesday, March 12, 2008
Before: AES, AEO, CTIC, CGPI, JASO, JMP, MTCT, PMI, SMTS, SBSA, TRK, TTES, TLB, TLCV, VSE, VIP
After: AFCE, AIRM, GRRF, CHCI, DDS, GDP, GYMB, HOTT, JAS, JUPM, LEV, MW, MGI, NPSP, VITA, PRSC, SIGM, STAN, VM

Thursday, March 13, 2008
Before: KDE, AMT, ARD, BNT, BVF, BRNC, CCL, CRPY, CAO, DFS, EPEX, EFJI, GCO, GTOP, GLBC, HDIX, IFLO, IMAX, LNY, TMR, MEI, MNTG, NGPC, PEIX, SOLF, SURW, TICC, TRGL, ECG, WON, WSM, WPL
After: ACMR, ARO, ARTE, ABTL, CHDN, COGO, DEIX, DHOM, HILL, HRLY, HIBB, IFON, INTX, KNTA, MED, MRGE, NTN, PSUN, QOWR, QLTY, RDNT, SEAC, SRSL, TRLG, VIMC, ZIPR, ZUMZ

Friday, March 14, 2008
Before: ANN, GEL, LIZ, NVAX, STRL
After: PAY

Note: All economic numbers and earnings reports are in lines with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column. This list is not a complete list of earnings, so always double check your positions!


posted by Toni Hansen @ 8:53 PM 0 Comments

Market Faces Further Losses
Good day! The market was hit hard prior to Friday's open. U.S. payrolls fell by an unexpected 63,000 in February, making it the largest drop since March 2003. Economists had been expecting an increase of 20,000. Meanwhile, December and January payrolls were revised lower by 46,000. The unemployment rate also caught economists off guard, falling to 4.8% in February. Further pressure on the jobs market was brought about by the slow growth of average hourly earnings, which rose 5 cents to $17.80/hr, less than inflation. The indices plunged lower on the news and opened with a strong gap down, extending Thursday afternoon's closing selloff despite the Federal Reserve boosting liquidity ahead of the data.

Typically, when the market suffers an extreme loss in afterhours or premarket trading, leading to an extreme gap, then that gap will attempt to fill. It usually begins to do so within the initial 15 minutes of the day, often directly out of the opening bell. When the 15 minute highs hold, however, and the market is setting up a pattern on a larger daily time frame, such as on February 29th, then there is a greater chance that the gap will not fill. Since the markets were already selling off for over a day and a half by the time Friday's gap took place, and had been increasing momentum on the downside into the prior day's close, it made it easy for the gap to exhaust the market and allow it to hold the opening lows.

When a large gap in the indices attempts to fill out of the open, it tends to do so rather swiftly, often completing the closure of the gap with the 10:45 ET or 11:00 ET correction periods. The 5 minute 20 period simple moving average served as an initial resistance level coming off the opening rally, hitting at approximately the same time as the morning gap closed. The market stalled there for 15 minutes before breaking through the highs, continuing to the 15 minute 20 period simple moving average resistance level, as well as price resistance from Thursday's mid-day congestion.

The 15 minute resistance hit at the same time as the 10:45 ET correction period. Even though the volume was decent on the upside initially, the second wave of buying on the 5 minute time frame into that larger resistance was on lighter volume. Not only that, but the momentum also declined on the continuation move into that 15 minute 20 sma. These traits, combined with the resistance levels hitting at the same time as the correction period made it very easy for the market to roll over.

The downside was strong off intraday highs. I immediately began to watch for continuation moves for lower late morning lows. At the very least, the morning's action, combined with the weak daily charts, would push the indices into a wider range on the 30 minute time frame and test the zone of the opening lows. The continuation patterns on this late morning drop did not take long to form, correcting only about 15 minute between each drop before finally testing the opening price level in the indices between 12-12:30 ET.

If the market was going to hold the range, the mid-day lows should have held well, leading to a bounce into the early afternoon. Although the momentum attempted to increase on the upside into the 5 minute 20 sma, the volume remained light and the 5 minute 20 sma held as resistance. Instead of hugging that resistance level to break higher, the indices slid down it, finally letting go just after 13:00 ET to move last mid-day lows and back into the morning lows. The momentum continued to shift back in favor of the bears with a short-lived move back into the 5 minute 20 sma before the indices broke more strongly to new lows on the day heading into 14:00 ET.

Although not as choppy as Thursday's selling, the overall downside on Friday was not at all extreme. There was a lot of overlap in prices from one bar to the next and it didn't form the preferred bear flags and breakdown patterns to easily satisfy the bears. CME data problems didn't help matters and the chop left the door open to allow a late day rally to easily take over.

The market began to hint at a late day reversal a few minutes past 14:30 ET. The third wave of afternoon selling on the 5 minute patterns broke higher at that point and about 15 minute later the larger 15 minute downtrend channel also broke. This larger break attracted the bulls who had been waiting throughout the day for such an opportunity. The slower, choppy downside left the intraday bears tripping over each other to get out and the market jumped higher, all the way back to the highs of the mid-day rally attempt. It held as the market congested into the closing bell.

Despite the late-day recovery, the Dow Jones Ind. Ave. ($DJI) still closed lower by 146.70 points, or 1.2%, at 11,893. It lost 2.8% over the course of the week. The S&P 500 ($SPX) fell 10.97 points, or 0.8%, and closed at 1,293.37 for a loss of 2.8% on the week. The Nasdaq Composite shed 8.01 points, or 0.4%. It closed at 2,212.49, down 2.6% on the week.

Last week's action failed to really excite the bears, who would have preferred a stronger breakdown pattern instead of the slippery drop which took place. At the same time, the economic data and other financial news continues to weigh heavily on the bulls and the technicals continue to point to further downside to come. The makes it very difficult for short-term players since we are not likely to see an easy move lower without another range or daily correction lasting a week or two, but upside moves are not likely to last long. I didn't have much luck when scanning for new longer term positions over the weekend and all the potential swingtrades I located are on the short side, but need more ideal intraday activity. As a result, I'll be focusing primarily on intraday price moves into the early part of the week with few overnight holds.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 8:53 PM 0 Comments

hefeiddd

Thursday, March 6, 2008Market Staggers Lower Throughout Thursday's Trade
Good day! The market ended the day lower once again on Thursday with more downside than I had been expecting following Wednesday's close. The market had actually managed to return back to Wednesday's intraday highs in the afterhours trading in the index futures, but a strong reversal pattern into midnight led to a steady downtrend in the premarket during the wee hours of the morning. This led to a slightly lower open in the S&P 500 ($SPX) and Dow Jones Ind. Ave. ($DJI), but the Nasdaq Composite ($COMPX) was relatively unchanged.

Ahead of the open the Labor Department reported its current jobless claims data. Initial filings for state unemployment benefits fell to the lowest levels since January 19th last week, falling 24,000 to 351,000. Continuing claims, however, climbed by 29,000 to 2.83 million in the week ending in Feb. 23rd. This marks the highest level since Sept. 24, 2005. This news, while certainly not at all promising for the economy, had very little immediate impact.

The market was not able to hold up for very long, however, past the opening bell. The opening price action left the indices vulnerable to a breakdown from the 15 minute trend channel, which was now more gradual on the upside on the intraday charts. This created a 15 minute Avalanche pattern into Thursday morning. The first wave of intraday downside came at about 10:00 am ET when the pending homes sales data came out.

Continued negative news from the housing front weighed heavily on the market on Thursday. Mortgage Banks Association reported record foreclosure levels in the fourth quarter of 2007, hitting the highest levels since the history of its survey. Loans which were delinquent, but not yet in foreclosure, tested levels not seen since 1985. Tied to the housing market was data from the Federal Reserve, which reported that the net worth of U.S. households fell by $533 billion at an annual rate of 3.6% last quarter.

Merrill Lynch (MER) fell 7% on Thursday after it reported that it was raising the conversation of some of the securities it sells. This came shortly on the heels of its announcement to get out of the subprime lending business. Ambac (ABK) also broke strongly lower on the daily time frame after Wednesday's announcement to sell $1.5 billion in stock in order to try to hold onto its AAA rating. It lost another 14.7% on Thursday.

After heading lower into 10:00 am ET, the market managed to bounce back a little bit. The 5 minute 20 sma in the S&Ps and Dow held as resistance, while the stronger Nasdaq retested the morning highs before it once again continued lower. The session as a whole was a very choppy one for the market. It stair-stepped lower throughout the day with each upside move on light volume and greater chop than each of the downside moves. The upside also took longer and nearly reclaimed of the previous move's losses before turning lower once again. The Nasdaq led the decline, but all off the indices plunged into the close, returning to the support from Tuesday's lows into the bell.

The Dow ended the session lower by 214.60 points, or 1.7%. It closed at 12,026. The financials were particular hard-hit. In addition to Merrill's losses, J.P Morgan (JPM) fell 2.5%, while Citigroup (C) fell 4.4%. All but one of the Dow's 30 components closed in negative territory. The S&P 500 lose even more than the Dow, dropping 29.36 points, or 2.2%, to close at 1,304, while the Nasdaq Composite fell 52.31 points, or 2.3%. It closed at 2,220. On the NYSE declining stocks outpaced advancers by 4:1, while they were nearly 5:1 on the Nasdaq.

Despite the weakness on Thursday, I am still favoring a range on the 60 minute into next week. Even on slightly lower lower, it would be easy to pull back up into the prices of the past couple of days. Congestion in these levels would then allow for a stronger break of the support. Either way though, the bias in the market on the daily time frame remains bearish, so I'll be looking at upside moves from a short term perspective only.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 10:22 PM 0 Comments

Wednesday, March 5, 2008Crude Oil and Gold Hit New Record Highs
Good day! Volume was decent in Wednesday's session, but trade was choppy throughout. We experienced the continued correction off Tuesday's lows with wider 30 minute swings as anticipated. After gapping higher into the open and continuing higher for the first 45 minutes of the day, however, the market corrected from this intraday move by falling into a sustained trading range until the first half of the afternoon. The Nasdaq Composite hit my resistance target of 2,290 almost perfectly with a high of 2,290.01.

Early in the day, the Institute for Supply Management reported that nonmanufacturing sectors of the U.S. economy contracted at a slower pace in February. The index rose to 49.3 off 44.6 the month before, beating expectations. In other news, nonfarm payrolls grew by 2,000, compared to the 20,000 forecasted, productivity rose at a 1.9% annual rate last quarter, unit labor costs rose 2.6%, and the Commerce Department reported a 2.5% decline in factory orders.

I found it a bit more difficult than usual to locate decent intraday setups. Most of them I located in the late morning and into the early afternoon were in securities which were rounding off at morning highs, creating momentum reversal patterns that favored downside into the early afternoon. This left me more bearish as mid-day progressed, despite the base at highs in the indices.

The large, extended intraday move on the 15 minute time frame, beginning Tuesday afternoon and lasting into 10:15 ET on Wednesday morning, also made it necessary for the market to correct for at least a day to a day and a half before it would have rested long enough to sustain another strong momentum move on that time frame. Although the market attempted to pop higher into noon, it immediately whipped back into the range off the 20 day simple moving averages in the S&P 500, Dow Jones Ind. Ave., and Nasdaq 100 EMinis. The complete lack of confirmation and failure of the market to hold support in the middle of the intraday range increased favor for an early afternoon breakdown.

The breakdown into the second half of the session was confirmed when the market formed a strong 5 minute Avalanche pattern by pulling up off the lower end of the trading range, but holding the mid-day point of the range. Since the volume dropped despite the upside movement, it was easy for the indices to hold the 5 minute 20 sma resistance, and shortly after 13:00 ET the Avalanche triggered.

The 5 minute Avalanche gave way to the strongest move of the entire session. The indices plunged through their 15 minute 20 period simple moving averages, hit morning lows and gap closure support levels, and continued strongly until just a few minutes past 13:30 ET. At this point the indices had made it all the way back into late-day support from Tuesday afternoon, retracing to the 62% Fib level in the S&Ps and Dow and a more modest 50% in the Nasdaq. Fibonacci levels hold exceptionally well in the indices and are a great tool for adding a bit of additional visual clues to your charting.

The extreme downside momentum of the early afternoon descent meant that the market would favor a trading range throughout the remainder of the session on a 30-60 minute time frame. This increased the risk once again since it tends to indicate a more choppy trading environment to come.

Upon hitting support, the market bounced quickly back into the 5 minute 20 period sma as first resistance, holding there for about 20-25 minutes. By hugging that resistance level, it increased the odds that it would break through it to retest the early morning range, but it broke a bit earlier than was desired. The result was a more minor break of the resistance than would have been likely had it held the 20 sma for another 15 minute or so. Instead the market had to pull back into that support level to compensate for the early attempt and the continuation pattern followed through into the close and into afterhours trading. It made it well into that early morning range, but by that point the bell had already rang, so it didn't do intraday traders a great deal of good by that point.

The Dow Jones Industrial Average ($DJI) gained 41.19 points, or +0.3%, on Wednesday and closed at 12,254.99. 18 of the 30 Dow stocks closed higher with Chevron Corp. (CVX) leading the gainers. It closed higher by 2.5%. The S&P 500 gained 6.95 points. It closed at 1,333.70. The Nasdaq Composite rose 12.53 points, or +0.6%. It closed at 2,272.81.

Once again topping news wires, Ambac Financial (ABK) suffered a hit after it halted trading on news that the company would sell $1.5 billion in stock and equity in order to hold onto its AAA rating. It lost nearly all of the prior day's gains, closing lower by 18.8%. In other news, on the New York Mercantile Exchange crude futures rose 5% to hit a record close at $104.52/barrel. Gold futures also made new record highs. They closed at $988.50/ounce, up $22.60.

As the week progresses I am continuing to expect the lows made on Tuesday to hold. The 12,280 zone remains Dow resistance. 2,310 is the next Nasdaq resistance. A trading range on the 60 minute time frame, back and forth within Wednesday's range is quite likely, followed by a stronger trend on Friday as long as we do see that range hold Thursday.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 5:33 PM 0 Comments

hefeiddd

Tuesday, March 4, 2008Market Makes a Come-back
Good day! The market experienced some very nice trends on Tuesday, following through very well with our expectations once again heading into the day. It gave us a nice downside move initially, followed by the strong late day reversal we had been expecting. Although the Dow Jones Ind. Ave. ($DJI) was down more than 200 points intraday, by the closing bell it had recouped all by 45.10 points of that loss, or -0.4%. The Dow closed at 12,213.80. The S&P 500 ($SPX) lost 4.59 points on the day, or 0.3%. It closed at 1,326.75. The Nasdaq Composite ($COMPX) did so well on its late day recovery that it managed a tiny gain of 1.68 point and closed at 2,260.28.

After gapping lower into the open on Tuesday, the indices fell into a very choppy and narrow range. Little happened throughout the first hour of trading, but the 15 minute 20 sma served as resistance, and as soon as it hit the market began to move lower once again. This was the strongest downside of the day, taking the indices to new intraday lows and past Monday's lows. The selling continued into the 11:00 ET reversal period, but when that hit the buyers did not emerge right away. Instead, the volume remained light as the market slowly pulled into the 5 minute 20 sma, congested, and broke higher for a second wave of correction before heading lower into 13:00 ET.

The early to mid-afternoon action in the market was very choppy. Even though the indices made steadily lower lows, none of the moves adequately broke through the previous low. Instead, a series of three lows merely created the reversal pattern we were looking for to favor that upside reversal into the afternoon. The market had begun to chop along under the 15 minute 20 period simple moving average ever since the mid-day bounce into about 12:30 ET. This resistance held until the market finally broke higher after reversing a final time out of the 14:00 ET reversal period.

The momentum bias shifted on a 5 minute time frame just before the bulls took off. Just prior to 14:30 ET the indices had popped back up into the 5 minute 20 sma. At that point they congested along that resistance for a couple of minutes, creating that momentum shift before finally breaking higher just after 14:30 ET. The rally was extreme and fueled once again by news from Ambac Financial (ABK), which the Financial Times reported would receive an infusion of capital as earl as this Wednesday.

Some of the other top gainers on Tuesday included Genentech Inc. (DNA) (+1.79%), Entergy Corp. (ETR) (+2.86%), Applied Materials (AMAT) (+7.63%), and Amazon (AMZN) (+4.66%). Among the top losers on Tuesday were Monsanto Co (MON) (-5.82%), Freeport-McMoran Copper & Gold (FCX) (-4.37%), Tessera Tech. (TSRA) (-38.99%), and Pan American Silver Corp (PAAS) (-5.54%).

On Wednesday I am anticipating continued corrective action off Tuesday's lows, but with greater back and forth moves on the 30 minute time frame, as opposed to one swift upside continuation. 12,380 will be initial resistance in the Dow once Monday's congestion level breaks. 2,290 is resistance in the Nasdaq Comp.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 9:22 PM 0 Comments

Monday, March 3, 2008New Week Begins on a Choppy Note
Good day! The market had a rough session on Monday to kick off the new trading week. The indices chopped back and forth throughout the majority of the session with the tech-heavy Nasdaq leading downside momentum. This is creating that build-up at the daily support from previous lows I discussed yesterday and is allowing for the market to correct from Friday's extreme downside move.

As the session began, the bears were still out in full swing. The market opened with only a minor difference in prices compared to Friday's close, but it immediately flushed lower following the bell. The momentum stalled as the first reversal period hit at 9:45 am ET, but it wasn't until the 10:00 data came out that the market saw its first real intraday correction off support.

The 10:00 data was mixed. On the one hand, the Commerce Department reported that spending on U.S. construction fell in January by 1.7%, which was a full percentage point more than had been anticipated. On the other hand, The Institute for Supply Management, while it still showed contraction of the U.S. manufacturing market in February, saw its index fall to a lesser degree than expected. Analysts had forecast a reading of 47.5% and instead it fell from 50.7% in January to 48.3% in February.

The post-data rally took the indices back to the upper end of the day's range where it found resistance and rolled over for a second time on the day into 10:30 ET. The Nasdaq broke to new lows into the 11:15 ET correction period, but the S&Ps and Dow managed to hold the morning's support and pulled higher mid-day. Three waves of upside on the 2 minute time frame exhausted the mid-day rally right into earlier highs and 15 minute 20 period simple moving average resistance.

Although the afternoon reversal pattern at 12:30 ET was nearly textbook, and the immediate follow-through was perfect, the market had difficulty maintaining a steady move for long and the indices began to chop around even more. This greater volatility was most pronounced in the S&Ps and Dow, but even the Nasdaq experienced a lot of overlap from one bar to the next on the 5 minute time frame as it headed lower into the afternoon.

The market hit support at the 15:00 reversal period, holding the zone of the previous lows in the S&Ps and Dow intraday and on the daily time frame in all three indices. The bounce off this support was just as sloppy as the move into it, however, and made it difficult to time additional entries if you happened to have missed the initial trigger zone.

The session ended on Monday with the markets relatively unchanged. The Dow lost 7.49 points, or 0.1%, and closed at 12,258.90. The S&P 500 gained 0.71 point, or 0.1%, and closed at 1,331.34. The Nasdaq Composite lost 12.88 points, or 0.6%. It closed at 2,258.60, which was its lowest closing price since early October, 2006.

My outlook for this week remains the same as it was heading into yesterday. As long as there is not a strong, or sustained, rally off this support, and it holds the upper end of last week's range, then we are going to easily see new lows in the Nasdaq this month and a retest of the lows in the S&Ps and Dow. The momentum on that move, however, will determine the action from that point forward. If the descent is swift, the market can push further, but retrace with more chop. If instead it slowly chops lower from one day to the next into that support, which is currently more likely, then it can pop quickly for a few days to a week once that zone hits. On Tuesday the best setup will be a slightly lower low on the 30 minute charts in the morning. This can then create a strong bounce back higher in the afternoon.


Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 8:50 PM 0 Comments

hefeiddd

Sunday, March 2, 2008Market Begins the Month in Strongly Negative Territory
Good day! The market took quite a beating on Friday following the 60 minute reversal pattern we were following heading into the day. The Dow Jones Industrial Average ($DJI) lost a staggering 315.79 points, or 2.5%, and closed at 12,266. American Intl. Group, Inc. (AIG) led the losses in the Dow, falling 6.7%. The S&P 500 ($SPX) lost an even greater percent, dropping 2.7% on the day, or 37.05 points, to close at 1,330. The Nasdaq Composite ($COMPX) gave up 60.09 points, or 2.6%, on Friday. It closed at 2,271. Only about a half a dozen of the Nasdaq 100 closed in positive territory, with only a handful of the S&P 500 managing gains as well.

On the week as a whole, the Dow was down 0.9% (3% in Feb., and 7.5% ytd), the S&Ps lost 1.7% (3.5% in Feb., and 9.4% ytd), and the Nasdaq fell 1.4% (5% in Feb. and 14% ytd).

When the opening bell rang on Friday, the market was already priced lower with a larger-than-average gap. Most of the time gaps of this size will attempt to fill, but they tend to begin to do so within the first 15 minutes or so out of the open. On Friday, however, as the market went past the first 15 minutes of the day, it failed to hold the opening lows and attempt a break higher. Instead it moved to new intraday lows and then based along those lows past 10:00 am ET.

With the momentum bias favoring the bears, the market had very little chance of recovering its early losses. The market instead fell into a trading range when 10:45 am ET correction period hit. Originally I was expecting a wider range intraday with some better swings and then a breakdown into early this week to take the market back into previous daily lows from just over a week ago. Instead, the range remained very narrow and volume declined steadily throughout. This created a strong low-level base with a continued bearish bias into the afternoon.

The momentum shifted to lead into the breakdown at 13:30 pm ET by first coming into the lower end of the trend channel and then breaking through it after an early reaction to the 15 minute 20 period simple moving averages in the indices. Volume began to pick up at this time and within just a couple of minutes the market was breaking to new lows on the day.

The base on the 15 minute time frame created a short pattern that had high potential to trend throughout most of the remainder of the session. In the indices themselves though, this trend ended up being a rather choppy one. It did still hold the 5 minute 20 sma resistance, but a number of individual stocks within the indices themselves experienced much smoother breakdowns.

Dow Jones Industrial Average ($DJI)



Heading into the new week, the market is still favoring the bears. The indices triggered 2 and 3 wave triangle breakdown patterns on the daily time frames late last week. The selloff on Friday was such a strong confirmation of that trigger in terms of momentum that it was able to continue into afterhours trading on Sunday. We still have not see the volume confirmation, but if the momentum can continue to hold strong on the downside this week, then we should see that confirmation accompany it with a spike in volume as support hits.

S&P 500 ($SPX)



Before that move can happen, I would like to see some congestion form on the 60 minute time frame. This would allow for a bit of a build-up at this lower channel support on the daily time frame and compensate for the slower afternoon selling on Friday as compared to earlier in the day. This leaves me favoring a choppier start to the week with a bit of corrective action off the lows.

Nasdaq Composite ($COMPX)



If the market slides lower with chop from one day to the next instead of increasing in momentum, then the odds will build for a stronger bounce into next month. The Nasdaq will have a relatively easy time breaking January's lows by at least a hair, but the Dow will find that zone to be very strong support and will have a more difficult time even testing it exactly before pulling up on the daily time frame again.


posted by Toni Hansen @ 11:39 PM 0 Comments

hefeiddd

Wednesday, April 30, 2008Market Gives Back Gains Following Quarter-Point Fed Rate Cut
Good day! A typical Fed day begins with upside in the morning. On Wednesday the market held that bias quite well. After a slight gap higher, the indices formed a two-wave continuation pattern along the highs on the 5 and 15 minute time frames. They began the previous afternoon at highs on the intraday time frame and at 8:30 am ET on the all sessions time frame, so the pattern formed on several levels. I drew the 15 minute ES setup on the chart below.

The Commerce Department released the first quarter gross domestic product data ahead of the open on Wednesday. First quarter estimates came in with a 0.6% growth, larger than the 0.2% anticipated. The number was a bit deceptive, however, because 0.8% was attributed to inventory building and final sales of domestic product fell 0.2% with final domestic sales falling 0.4%. This was the first decline since the 1991 recession.

In other news, Procter & Gamble (PG) and GM (GM) both posted better-than-expected earnings. This helped set the tone for the Dow, which would end up leading the market higher throughout the morning. The early buy pattern in the indices triggered at 10:30 ET. The S&P 500 lagged ($SPX), but it also broke higher out of the 11:00 ET correction period while the Nasdaq Composite ($COMPX) and Dow Jones Industrial Average ($DJI) each formed continuation patterns at that time.

Once the Nasdaq broke, it moved steadily into new intraday highs, thus making new highs on the month as well. The Dow used its late morning strength to propel it back into Monday's highs. This served as a solid price resistance level in the indices and it hit at the same time as the 11:15 ET correction period, helping to trigger a pullback into the early afternoon.

Volume began to decline sharply following the late morning reversal. Many market participants began to take to the sidelines ahead of the afternoon Fed announcement. The mid-day correction was fairly gradual overall, first leading to a pullback into the 5 minute 20 period simple moving average, followed by an avalanche on the 5 minute time frame at 12:00 ET that created a second wave of selling into the early afternoon. Corrective moves within a larger trend often take the form of two waves, so this created a buy setup into the 13:00 ET correction period, but the market was not too enthusiastic given the looming interest rate news.

The market fell into a trading range on the 15 minute time frame with the 15 minute 20 sma as support until 14:15 ET. The Fed once again lower the interest rates, cutting it by another quarter-point to 2%. This was what the market had been expecting, although there was speculation that they would pause rate cuts for the time being. This speculation helped create a bit of a relief rally immediately following the announcement, but as soon as the news settled the bottom began to give way. The old "buy the rumor, sell the news" adage comes to mind.

The Dow had shot back into the 13,000 price resistance level immediately after the rate cut was announced, but this price level merely served as resistance. The S&Ps were also hitting Monday's highs immediately following the news and this resistance level provided another reason for the buyers to start to hold off. A bearish triangle quickly formed on the 2 minute time frame along the 5 minute 20 sma. It triggered at about 14:45 ET and as soon as the lower channel gave way the bears returned with a vengeance.

As I warned throughout the week to date, whenever the market creeps higher, such as it has done over the past two weeks and as it did on the 15 minute time frame coming off Tuesday's lows, the odds are quite high that the downside will be extreme once the channel gives way. The 15 minute channel did so with almost no hesitation, quickly plunging the indices back to Tuesday's lows and their 15 minute 200 period simple moving averages. The weaker S&Ps managed to break through these support levels a bit, but the Dow and Nasdaq held them quite well and these price levels stalled the descent at about 15:10 ET. The market did attempt to breakdown once again into the close, but the move did not have much time to follow through and did not go too much further immediately after the closing bell either.

The Dow ended the session on Wednesday at 12,820.13, down 11.81 points, or 0.1%. 16 of its 30 components posted losses on the day with Citigroup (C) (-3.99%) and Hewlett Packard (HPQ) (-3.11%) leading those losses. On the month as a whole, however, the Dow gained 4.5%. The S&P 500 ($SPX) fell 5.35 points, or 0.4%, and closed at 1,385.59. This brought its monthly gains to 4.8%. The Nasdaq Composite ($COMPX) lost 13.30 points, or 0.5%, on Wednesday and closed at 2,412.80 for a 5.9% gain in April.

Although the post-Fed drop took the indices through their 15 minute channel lows very quickly, the daily channel remains in place. The market tested the lows of that channel on the late-day decline, as shown on my charts below. It still remains very easy for the same type of action which took place intraday on the 15 minute charts to now form on the daily time frame. As a result, I am very cautious on any plays on the long side at this time and will be favoring shorts. It would not take much for the 20 day sma to break to the downside.


Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 9:44 PM 0 Comments

Trade Wrapup - 20080430
Trade Wrapup - 20080430

10:28 YM (12873) and ES (1395) forming 5 min "D" patterns which begin at 15:00 yesterday
Breakout Template: For information on A, B, C, D, or Z template patterns, please see The green circle is the entry with the red bar as the stop.
also at about 8:30 am this mornign all sessions charts
NQ also (1945.50)
10:33 NQ triggered... good start... YM also moving well
10:38 first resistance showing (1948.5 NQ, 1396.25 ES, 12887 YM)
10:45 futs reacting here to that first resistance levels... congestion
10:54 futs second resistance hitting (1950.5 NQ, 1396.75 ES, 12905 YM)
11:02 YM is certainly the leader on this "d" cont pattern. it is coming into price resistance from the 28th with that congestion at highs
11:05 (1950.5 NQ, 1397.25 ES, 12915 YM)

10:30 GPRO still basing (at highs from previous session)

10:30 Fed today so expect even slower action into early afternoon

11:12 RESISTANCE coming into 11:15 correction period

11:44 RAI is basing at lows.... not too fond of the slightly lower lowe in the base.. that is a con - 54.24-54.44 entries, 53.25 target
12:28 want rai to hold 5 min 20 sma resitance which iw about 54.42
12:43 RAI is testing the 5 min 20 sma... need to see it hold
14:23 was not brave enough to hold bmrn and rai through the fed but both actually holding the pattern still and rai making new lows.. could have easily re-entered... i missed it though just now
14:46 first support here on RAI' - note: "managed to get some RAI short at 54.97 at 14:37 ET.. just protected part at 53.54... looking for 53 rest... 5 min 20 sma is resistance"
15:15 53.93 RAI trailing stop

11:51 BMRN base at highs 36.50-36.60 entries, 37 initial target
14:23 was not brave enough to hold bmrn and rai through the fed but both actually holding the pattern still and rai making new lows.. could have easily re-entered... i missed it though just now
14:29 BMRN i'd go ahead and exit if not already done so ahead of the fed.. forming 5 min avalanche (36.35)

12:04 RESISTANCE YM is hitting prior highs on the 5 min here

Jacob : Toni, I hope you don't mind my asking a question. Is your "D" pattern mentioned this morning the same thing as your "2B" from your Pattern Reference Guide?
Toni : no.... the D can be found on this template:
http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif The green circle is the entry with the red bar as the stop.
a D setup can have a 2B in it though. if the second low is slightly lower than the first and its a reversal pattern off lows, but it is also a continuation pattern. essentially its a two-wave pullback pattern

11:55 hmm.. i may be done until after the fed... not finding much
12:18 risk is going to remain higher on anything into the fed

12:30 SUPPORT this is 15 min 20 sma on the es and nq
13:10 this is some initial resistance on the bounce off that 15 min 20 sma zone

14:14 RESISTANCE ES hitting monday highs

14:26 SUPPORT ES and NQ both pulled back to the 30 min 20 sma levels off that resistance and these are serving as support

15:15 SUPPORT: this is NQ 29th lows as support btw


posted by Toni Hansen @ 7:30 AM 0 Comments

Tuesday, April 29, 2008Market Holds Trading Channel
Good day! As discussed in my last several columns, the market has been in a choppy trading channel on the daily time frame since the 18th. I had been expecting the market to continue to hold that channel at the beginning of this week and so far the market has obliged. On Monday the indices had tested the upper end of that channel on light volume and with slowing momentum. This allowed the indices to break lower into the close. The pattern was large enough on the 15 minute time frame that it was also able to continue into Tuesday morning, bringing the market back to the lower end of that larger channel within the first 90 minutes of trade.

Although Tuesday's session began with the weaker bias thanks to the 15 minute reversal pattern which had triggered the prior afternoon, the selling did not increase again until the Conference Board released its April consumer confidence reading. The consumer confidence index fell from an upwardly revised 65.9 in March to 62.3 in April, which is its lowest level since March 2003. It was higher than the 61.0 expected, but it was not enough to hold up the the market and a second wave of selling began immediately.

In other news on Tuesday, U.S. home prices continued to fall, down 2.6% from January according to the Case-Shiller home price index measuring 20 key cities. This means that for the past year home prices have fallen a record 12.7%. Prices are expected to continue to decline with the largest losses in Las Vegas and Miami, both of which have fallen by more than 20% in the past year.

Following the morning's economic data, the downside continued in the market until the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) both hit their 15 minute 200 period simple moving averages at the same time as the 10:45 ET correction period. The Nasdaq Composite ($COMPX) found support a bit sooner at the opening lows at 10:30 ET. The reaction off these support levels was decent, but not extreme. The Nasdaq experienced the strongest reaction, popping quickly to the 5 minute 20 sma. The greater strength throughout the morning, as well as this earlier and stronger move off support, made it easier for the Nasdaq to show the greatest strength throughout the afternoon as well.

After the initial move off support took place, hitting highs around 11:30 ET, the market began to pull back once again. This time, however, the momentum was very gradual and volume dropped on the pullback, creating a nice 5 minute buy setup that triggered early on in the afternoon. A continuation of this setup took place out of the 13:00 ET correction period and took the indices through their 15 minute 20 sma resistance levels. The Nasdaq also used this breakout to move to new highs on the day. It rallied all the way back into the zone of Monday's highs.

The market stalled once again shortly after 13:30 ET, but the correction was once again a mild one. The 5 minute 20 sma held as support, as did the lower trend channel, and at 14:30 a final wave of buying took place, bringing the S&Ps and Dow back into Monday's close as price resistance. This hit with the 15:00 ET correction period. I had been watching for a final move higher into the close, but the market rounded off at highs before pulling back and nullified that possibility. Although the 5 minute 20 sma and lower trend channel stalled the move on the downside at 15:30 ET, the roll over off highs made it easy for the support to break and the market to continued lower into the close and afterhours trade.

Both the ES (S&P 500 Emini futures) and YM (mini-Dow futures) were able to return to the zone of the intraday lows at about 16:15 ET, although the Nasdaq still managed to hold up well and only retraced to the 38% fibonacci level. The upside was then able to resume and the indices futures performed well into the late evening hours.

At the closing bell, the Dow had fallen 39.81 points, or 0.3%. It ended the day at 12,831. The S&P 500 lost 5.43 points intraday, or 0.4%, and closed at 1,390. The Nasdaq Composite gained 1.7 points, or 0.1%, and closed at 2,426. Top sectors included airlines, telecommunications, health care, and technology. Sectors performing poorly on Tuesday included gold, oil, pharmaceuticals, and natural gas.

Several big-name companies reported earnings ahead of the open on Tuesday, but they had very little impact on the market as a whole as the session began. MasterCard (MA) more than doubled its profits, reporting a 29% increase in revenue. It gapped sharply higher to break the upper trend line of its daily uptrend channel and closed higher by 13% (+$31.48). Corning Inc. (GLW) also rallied into Monday's open after it tripled its first-quarter profit on LCD sales. It pulled back off highs about 35 minutes into the session, but still gained 3.3% (+$0.85) on the day. BP (BP) has also been on a run lately with oil hitting highs and it jumped another 4.6% (+$3.20) on Monday after it beat analyst estimates.

Offsetting the gains made by the likes of MA, GLW, and BP was the rejection of Merck's (MRK) cholesterol drug Cordaptive by the Food and Drug Administration. MRK has been suffering a sharp decline since the beginning of the year and it took a hit with another 10.4% (-$4.30) loss by the end of the trading day on Monday after trying to find a foothold over the past month at lows.

Wednesday's session brings with it another Fed rates announcement. Expectations are for another quarter-point rate cut. Odds are beginning to increase that the Fed will pause its rate cut trend into the summer. There is some speculation that they will begin to do so on Wednesday, but overall most anticipate this to begin with the next meeting instead.

With any Fed day, however, the market tends to begin the session with an upside bias intraday and then a slowdown over noon and into the rate announcement. Then the market will experience several reactive waves, typically in groups of three with an initial reaction, followed by a counter-reaction, and then continuation of the initial move. Use a great deal of caution in pre-Fed and immediate post-Fed trade. The market is still in the trading channel it has been stuck in for the past two weeks. I am favoring a sharp breakdown once the channel gives way, but it can still hold for a few more days if there is not an extreme negative reaction to the Fed.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)





posted by Toni Hansen @ 4:05 PM 0 Comments

hefeiddd

Trade Wrapup - 20080428-29
20080428 - I was out of the office on Monday, so hence there were no trades or commentary for this day.

20080429 - Trade/Commentary Wrapup

11:28 NQ resistance here at prior highs (1931)
11:57 NQ first support coming off that pivot high (1927)
12:10 second support NQ (1925.25) "this is for the reversal off highs, not a buy"
12:18 "covering last of NQ" (1924.5 .. 1923.25 was low)

NQ Correction off highs


11:52 CF base at lows ($138.80) 5 min.
11:54 Mykonos : CF dying
12:13 CF 131 is initial target (hit 131.05 shortly thereafter)
12:14 hitting target zone
13:17 trailing stop hit on rest of CF (lows 130.52)

CF Short Setup


13:00 FLS watch for 5 min bull flags this afternoon
14:20 FLS off watch

FLS Desired Buy Setup - No trigger


15:03 GPRO base at highs 15 min on daily channel breakout looking to close feb gap
15:50 gonna watch that GPRO for tomorrow.... see if we can get a morning play on it

GPRO Buy Setup - Not yet triggered... watching for Wed. morning


15:05 YM hit yesterdays closing prices and serving as resistance on the 5 min

YM Resistance for correction


15:06 looking at 5 and 15 min indices for chance at another push higher before the close for a bull flag
15:06 the 5 and 15 min 20 sma is the support for a flag - nas will have the hardest time - has the greatest extension already
15:21 got rounded highs a bit here on the futs... that is not what i wanted to see for a flag


posted by Toni Hansen @ 8:53 AM 0 Comments

Monday, April 28, 2008Market Pushes Higher on Light Volume
Good day! Trading was quite slow on Monday. Volume was light and the indices were stuck in a narrow uptrend channel throughout most of the session, creeping higher without any strong overall bias. We had been expecting the daily channel to hold early this week and Monday's session did not disappoint in that regard.

The week began relatively unchanged from Friday's closing levels. A bullish range formed out of the open with a slow retracement to the 5 minute 20 period simple moving average, but the market was unable to get going when the range attempted to break higher at 10:10 ET. Volume remained light for morning trade and the indices appeared glued to their 5 minute 20 period smas.

When the 11:00 ET correction prior hit the market attempted to break the support. This move also lacked conviction, however, and the morning congestion held. Momentum failed to shift to any significant degree and, although the indices returned to highs and even pushed through them into the early afternoon, they failed to to confirm any larger directional bias. The 5 minute 20 sma again became support and the market slowly crawled higher into 14:00 ET.

At 14:00 ET the indices hit their first substantial intraday resistance when the Dow tested the zone of last Thursday's highs. This corresponded to that 14:00 ET correction period and the market attempted another correction off the upper end of the day's trend channel. Although the downside momentum increased somewhat, it was even more nominal than the 11:00 ET pullback and found support at the 15 minute 20 sma.

This 15 minute 20 sma level had been keeping pace with the prices action since late morning and prevented the market from quickly breaking lower into the final two hours of trade. It was not enough, however, to prevent a larger correction from taking place. Whenever the indices creep higher the risk is also high that once support gives way it can do so rather quickly. Although the 15 minute 20 sma held at first, the indices congested along that level and at 15:15 ET the market broke down. In the final 45 minutes of trade the indices displayed the strongest momentum of the session, taking the market back to the lower end of the day's range with the S&Ps leading the selloff. The 5 minute 200 sma served as support just prior to the closing bell.

The Dow Jones Industrial Average ($DJI) fell 20.11 points on Monday, or 0.2%, and closed at 12,871 with 17 of its 30 components lower. The S&P 500 ($SPX) also lost ground, falling 1.47 points, or 0.1%, to 1,396. The Nasdaq Composite gained 1.47 points. It closed at 2,424.

Leading the news on Monday was an announcement by privately held Mars, Inc. to buy Wrigley Jr. (WWY) for $80/share. The purchase is to be backed by Warren Buffett's company, Berkshire Hathaway Inc. (BRK.A/BRK.B). WWY had closed on Friday at $62.45/share. The purchase price is based upon four times sales and 35 times WWY's 2007 earnings per share. Wrigley will become a subsidiary of Mars with Berkshire Hathaway making a minority investment. Additional financing will be provided by Goldman Sachs (GS) and J.P. Morgan (JPM).

Ford Motor Co. (F) was also making headlines on Monday. F has been in a strong uptrend since mid-March. The stock pushed past $8.50 on the 24th after it reported earnings for the quarter of $100 million, or 5 cents a share. It blew away estimates, gapping higher and continuing to run throughout the morning. Although it pulled back following this exhaustion move into the weekend, it jumped higher once again on Monday when Kirk Kerkorian's Tracinda announced that it planned to offer $8.50/share for up to 20 million of Ford's shares.

The focus over the next two days will be on the Fed. on Wednesday it will be announcing its latest rate decision. While many expect them to lower rates by another quarter of a point, it is quite possible that they choose to halt the rate cuts at this point. My stance on the market's outlook this week has not changed. I continue to expect back and forth action with a slight bullish bias pacing higher with the 20 day sma. This will leave the market vulnerable for a more rapid breakdown when the next daily correction off highs gets under way.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 7:15 PM 0 Comments

Sunday, April 27, 2008Heavy Earnings News and Economic Data to Influence This Week's Trade
Good day! The market is going to be heavily influenced by another week packed full of earnings reports as well as some very hefty economic data. Stocks to watch on Monday include Verizon (VZ), which is expected to report first-quarter earnings of $0.62/share; Humana Inc. (HUM), which expected to report Q1 earnings of $0.48/share; and Tyson Inc. (TSN), which is expected to report a fiscal Q2 profit of $0.02/share. Visa (V) also reports on Monday and expected to report earnings of $0.45/share for fiscal Q2. ADM, BP, BNI, CFC, ODP, X, and VLO are top names which report on Tuesday.

The most notable event on the economic front will be Wednesday's Fed interest rate decision. It is anticipated by many that the Fed will once again lower interest rates, this time by a quarter percentage point to 2%, although there is no strong consensus that the the Fed will in fact make another cut at this time. Speculation is increasing that the Fed will hold off on further cuts for the time being as a result of the rather worrisome increase in the price of food, energy, and commodities. The continued decline in the value of the dollar is also widely cited as a reason for the Fed to halt rate cuts.

Early in the day on Wednesday, the Commerce Department will be releasing the first estimates for the first-quarter gross domestic product. Economists as a whole are expecting very little change in the overall numbers for this past quarter, with perhaps an exception in terms of some growth in exports and declines in residential and business investment.

On Thursday the Institute for Supply Management will be reporting its latest index reading. The monthly ISM index report is a national survey of the manufacturing sector which examines new orders, production, employment, deliveries, and inventories, and is one of the widely watched economic indicators. Overall, a reading over 50% indicates expansion, whereas a reading under 50% indicates contraction in the manufacturing sector. A reading in the low 40s tends to correspond to periods of recession. The ISM index for April is expected to drop to 48.0%, as compared to 48.6% in March. Since exports factor into the monthly reading, they will likely assist in holding that number above the low 40s for the time being.

The week will end with the latest unemployment data. During a recession, payrolls fall and unemployment levels rise. April marked the fourth month in a row that payrolls have declined. Job losses are expected to be most prevalent in manufacturing, construction, financials, and retail. Once again, strong exports are expected to inflate the numbers. The unemployment rate for April is expected to increase only slightly from 5.1% to 5.2%.

Going into Friday session I had been anticipating another day of back and forth activity without a strong intraday trend. Given the failed early upside breakout attempt the day before, I was particularly leery on the side of the bulls. The day began with very little difference between Thursday's closing and Friday's opening price levels in the major indices. Within the initial 15 minutes of trade the market held those levels. As the 9:15 ET correction period hit, however, the bears again regained control, continuing the selloff pattern which had began late in the prior session. This selloff continued into 10:00 ET.

At 10:00 ET the University of Michigan released its U.S. Consumer Sentiment index. It is currently at its lowest levels since 1982, falling from 69.5 in March to 62.6 in April. The data was no worse than had been expected. From 10:00 to 10:30 ET the indices corrected somewhat off their early morning lows. The 5 minute 20 period simple moving average served as resistance, but a 30 minute correction following 30 minutes of selling is typically not quite enough time to allow for the market catch its breath. The previous lows held as support and the indices fell into a base along those lows into the 11:00 ET correction period.

The downside continued at 11:00 ET, taking the indices to new intraday lows. This late morning breakdown brought them into the range from earlier in the week. I had been looking at the lower end of that range as support. The Nasdaq did make it back into the lower end of the range from Wednesday into Thursday morning, but the other indices held mid-range. The S&Ps had hit equal move support at that time on the morning's continuation when compared to the previous afternoon. This is a rather significant form of price support and the market was able to bounce off this level and back into the 5 minute 20 sma.

The shallower price retracement aided in the formation of a stronger late day reversal. It began with a large shift in momentum mid-day. The indices congested along the 5 minute 20 sma zone for two hours. The Nasdaq formed a double bottom on the 15 minute time frame and the market took off as the 14:00 ET correction period hit. This is a very common time of the day for major market moves to begin as well as end. The upside built on itself throughout the remainder of the afternoon with the Russell 2000 ($RUT) leading. The S&Ps and Dow followed, but the Nasdaq lagged.

The Russell 2k and S&P 5000 were able to make new highs on the session in the final hour of trade. The Dow Jones Ind. Ave. ($DJI) hit resistance at the morning highs with about 40 minutes of trade left. At this time the S&Ps had also ran into resistance at Thursday's highs and the Nasdaq Composite ($COMPX) was testing its open. All of these resistance zones hitting at once put a damper on the bullish sentiment and the buying stalled with the afternoon highs holding into the close.

The Dow ended the week higher by 0.4%. On Friday it gained 42.91 points, or 0.3%, and closed at 12,891.86. American Express Co. (AXP) was one of the top gainers after it reported a first-quarter loss that was less than had been anticipated. The S&P 500 closed higher on the week by 0.5%. It had been in negative territory, but the 9.02 point gain on Friday added 0.7%. It closed at 1,397.84. The Nasdaq Composite gained 0.8% on the week as a whole, but it closed lower on Friday by 0.2%, or 5.99 points, at 2,422.93. Leading sectors on Friday included energy, broker/dealers, and banking, while technology stocks led the decliners.

I think that we can continue to see the market step higher early this week. I expect that there will still be a great deal of overlap in price from one day to the next without the indices adding much difference between the current price levels and the 20 day sma. This is about 35-40 points on average in the Nasdaq and about 120 points in the Dow. A market which creeps higher can turn very quickly, so this is something that should be kept in mind given this scenario.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 11:15 PM 0 Comments

hefeiddd

Thursday, April 24, 2008Market Rallies in Thursday's Trade
Good day! Over the past week the market has been correcting off this month's highs. The market had established a two-wave pullback on the 60 minute time frame into Tuesday's lows. This created the beginning of a buy pattern on that time frame. The activity from Wednesday upheld this pattern's development despite the downturn off the morning highs and gradual momentum on the upside into the close. What this did create, however, was a smaller 15 minute short setup in the form of a type of Avalanche setup. When the market hugs a support level with a lot of choppy trade, it become easier for that support to break.

The market opened relatively unchanged on Thursday. The channel from the prior afternoon along the 15 minute 20 period simple moving average gave way early in the session. Now, in addition to the larger 60 minute two-wave buy, the market was also forming a smaller setup of the same type on the 15 minute time frame. The drop for the second wave of selling on the 15 minute, however, was not as severe as it had been on the 60 minute. The indices rolled over at intraday lows between 10:00 and 11:00 ET and broke sharply higher at that time.

Whereas the market had stalled on the 60 minute time frame before offering a continuation of the larger buy setup, the indices did not experience any similar misgivings on Thursday and once the pattern triggered it continued to move decisively higher into the early afternoon. At about 12:15 ET the Dow Jones Industrial Average ran into the targeted highs from Friday. The Nasdaq had already tested those highs on Wednesday, so this breakout was from a third test of that resistance level. As many of you may already know, a third test of support or resistance is the one which is most likely to break.

At 12:30 ET the Nasdaq Composite began to correct. Volume dropped off as it slowly pulled back to form a bull flag on the 5 and 15 minute time frames. The S&Ps and Dow also had slowed their ascent at this time, however, they made two more tests of highs into 13:00 ET. Often this pattern will create a larger reversal, however, the market was still dealing with larger time frame bullish patterns. Volume dropped off sharply as the market pulled back slightly into 13:30 ET. Soon afterwards the correction broke higher to trigger another wave of upside on the 5 and 15 minute time frames.

The afternoon breakout was too premature to allow the market to create as strong of a continuation move as the initial late morning rally. It was enough, however, to bring the S&P 500 into its highs from Friday. That resistance hit just before 14:30 ET and all three of the indices rounded off at highs once that occurred. The momentum shift confirmed at 15:00 ET when a slower ascent off the 5 minute 20 sma began, leading to a breakdown in the final 45 minutes of trade which continued afterhours until all three of the major indices had given back a large percentage of their gains off the morning lows. The S&Ps and Dow fell back 50%, while the Nasdaq returned to approximately the 62% Fibonacci retracement level. These support levels held throughout the remainder of Thursday's afterhours trading.

Thursday's primary session closed with a gain of 85.73 points, or 0.7%, in the Dow ($DJI). It ended the day at 12,848.95. American International Group, Inc. (AIG) led the gainers with a 7.09% rally after it lifted its profit forecast for the year. General Motors Corp. (GM) followed with a 5.59% gain following the surprise earnings from Ford Motor Co. (F) (+11.7%). The S&P 500 ($SPX) closed at 1,388.82, up 8.89 points, or 0.6%. The Nasdaq Composite gained 23.71 points, or 1%, and closed at 2,428.92. I am expecting Friday to be another choppy day. A pullback into the lower end of the daily channel again is quite possible by mid-day. Strong upside will be difficult in the indices as a whole.

In economic news on Thursday, the Labor Department announced that first-time claims for state unemployment fell 33,000 to 342,000. This is its lowest level in two months. U.S. durable goods orders gell 0.3% in March. This was as anticipated and February's data was revised higher. Meanwhile, sales of new homes fell 8.5% in March. This hit a 17-year low and was weaker than anticipated.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 9:48 PM 0 Comments

Market Post Gains, but Fails to Hold Highs
Good day! Tuesday's trade left the market with a bullish bias into Wednesday morning. With the first-quarter earnings season now fully underway, however, the bias from the previous afternoon does not always follow through well into the next day. This time, however, earnings assisted this bias. Boeing Co. (BA) led the Dow's gainers after it reported a 38% profit increase. It gained 4.49% on the day. Broadcom (BRCM) was another major winner on Wednesday, adding 16.3% following its first-quarter results Tuesday afternoon.

The session began on Wednesday with another modest gap. This time it was on the upside. The open took place at price resistance from the late-morning congestion on Tuesday. This resistance held and the gap began to close. The S&P 500 ($SPX) and Dow Jones Ind. Ave. ($DJI) both closed their morning gaps rather quickly. The Nasdaq Composite ($COMPX), while it also fell out of the open, did not quite fill the gap completely, but it made an honorable attempt.

The S&Ps and Dow found support about 20 minutes into the day at the 5 minute and 15 minute 20 period simple moving averages. Prices rounded off at this support over the next 20-30 minutes. 5 minute bull flags triggered in the S&Ps and Dow out of the 10:15 ET correction period, while the Nasdaq triggered a two-wave continuation pattern in the form of a small cup-with-handle on the 2-5 minute time frames. This continued the upside bias that the market had in play heading into the day and the indices rallied steadily higher to close Tuesday's morning gap.

The morning rally took the Nasdaq back to its highs on the daily time frame which we had been targeting as resistance. The S&Ps and Dow did not quite make it back to Friday's targeted highs, however. After closing the gap around 11:45 ET, the market began to pull back. The momentum shift was enough on the smaller time frames to create a larger reversal. It confirmed when the indices formed a 5 minute Avalanche pattern between 11:30 and 12:00 ET and triggered into the 12:00 ET correction period with swift and decisive downside follow through.

The mid-day descent continued without interruption for more than half an hour. The momentum was some of the strongest we have seen on the downside in several weeks, but the volume was not substantial. The degree of the selling was still enough to take the market back to the area of the morning lows. The S&Ps surpassed them with a strong flush, but the Nasdaq slowed as it came into the early morning congestion and its 15 minute 20 sma and 5 minute 200 sma support.

The remainder of the session on Wednesday was quite choppy. The S&Ps and Dow hugged the lower end of their 15 minute 20 smas, while the Nasdaq hugged the upper end of its own. All three indices crept higher along the 5 minute 20 period sma, weaving back and forth, above and below it, into the close. This made afternoon trading in the indices themselves difficult throughout the majority of the afternoon.

The Dow closed higher on Wednesday by 42.99 points, or 0.3%, and 12,763.22. 18 of its 30 components were positive. The S&P 500 also gained 0.3%, or 3.99 points. It closed at 1,379.93. The Nasdaq Composite rallied 1.2% (28.27 points). It closed at 2,405.21.

The slow ascent throughout the afternoon made it easy for the indices to fall apart immediately in afterhours trade. The index futures on all three of the indices dropped to the zone of the session's lows before finding support around 21:00 ET. They were then able to turn over coming off that support and gained ground throughout the early morning hours on Thursday. With things where they stand now, the S&Ps and Dow are still within grasp of a retest of those Friday highs, however, it would not take much of a momentum shift for the correction off those highs to accelerate as they did several weeks ago.

Some of the names to watch out for on Thursday are as follows. Apple (AAPL) and Amazon (AMZN) both posted quarterly earnings on Wednesday after the close. AAPL forecast Q3 earnings of $1/share, which was under estimates, as were its quarterly sales expectations. AMZN's net earnings rose 30%, or 34 cents a share as compared to the 33 cent/share estimate. Its revenue also came in slightly ahead of expectations. Both stocks should be more active on Thursday followed this data.

A number of companies will also be reporting ahead of the open on Thursday and likely to experience strong intraday reactions. 3M Co. (MMM) is forecast to report a $1.36/share profit. ConocoPhillips (COP) is anticipated to report a $2.40/share profit. Dow Chemicals (DOW) is expecting a profit of 94 cents/share. For other earnings to come, please check the list below.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 12:53 AM 0 Comments

hefeiddd

U.S. Market Falls on Slew of Disappointing Earnings
Good day! The market had a tough session on Tuesday on the heels of disappointing earnings reports. The top Dow decliner was DuPont Co. (DD). The chemicals company beat by $0.03/share, reporting revenues that were in line, however, the company also warned that weakness in construction and automotive markets would hinder growth. DuPont fell 4% by the end of the day. Texas Instruments (TXN) was another major player to announce early this week. It had reported earnings after the close on Monday. A poor outlook for the second quarter led to a drop of 5.8% on Tuesday. Telecommunications networking company Tellabs (TLAB), which has been in a steady decline since the middle of last year, was hit further after it reported lower first quarter profit and a disappointing second quarter outlook. It lost 13.8% of its share value on Tuesday.

The cumulative effect of the earnings data which came out between Monday afternoon and Tuesday morning created a modest downside gap in the indices. This gap took the Dow Jones Industrial Average ($DJI), S&P 500 ($SPX), and Nasdaq Composite ($COMPX) under the 15 minute 20 period simple moving average. This was the same zone as the afternoon lows in the S&Ps and Nasdaq from Monday and served as a solid resistance zone to begin the session. Early activity in the S&Ps and Dow also brought those two indices under their 5 minute 200 period smas.

The indices fell into a period of congestion following the morning gap which lasted throughout all but the final 15 minutes of morning trade. Volume dropped as the congestion narrowed following 10:30 ET with the indices basing at the intraday lows. The congestion finally gave way at 11:45 ET on strong downside into new intraday lows. This created a second wave of selling on the 30 minute time frame for the S&Ps and Dow. The downside continued until these indices had established an equal move as compared to the selloff from Friday afternoon into Monday's morning lows.

The mid-day downside also took the form of two waves of selling. The first wave took it into the 12:00 ET correction period. It stalled there for about 15 minutes and then continued into the 13:00 ET correction period. This was where the larger equal move level hit and the S&P 500 and Dow were able to test the closing highs from the 17th, ahead of Friday's upside gap. This price support, the equal move support, and the correction period aligned with slowing downside momentum to create a high probability that the market would form another correction off support on the 15 to 30 minutes charts as the afternoon progressed. Since the prior correction took most of Monday's session to form, the odds were high that the correction on Tuesday afternoon would hold into the close. It could either create a bear flag to continue the downtrend, or this could be the second wave of a two-wave pullback and lead to a move back into highs on Wednesday.

The market did congest throughout the remainder of the day. There was a slight upside bias, but nothing to suggest the correction could not be leading into a larger bear flag. This was true, at least, until the final hour of trade. At that point the upside momentum picked up somewhat and the indices congested near afternoon highs until the final 15 to 20 minutes of the day. At that point a Phoenix pattern on the 5 minute charts broke higher.

The Dow closed lower by 104.79 points, or -0.8%, at 12,720.23. The S&P 500 fell 12.23 points, or -0.9%, to end the session at 1,375.94. The Nasdaq Composite lost 31.10 points, or 1.3%, and closed at 2,376.94.

The late day Phoenix setup followed through into afterhours trading with a strong surge higher that took the indices back into the congestion from the morning's activity. The bias remains bullish into Wednesday morning with Friday's highs as the larger time frame resistance. Once again, however, opening data is going to be much more reliable in offering a more accurate intraday bias than the afternoon data from the previous session.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 12:41 AM 0 Comments

Tuesday, April 22, 2008Trade Wrapup - 20080421-22
Hey gang... I am out most of the week, but have been popping in every once in awhile to post some things I'm seeing as I work on other projects.

Yesterday the only call I posted was Ryder Sys Inc. (R) for a breakdown short. It triggered early this morning after basing throughout yesterday at lows despite larger market strength.

R Short Setup


Today:
10:32 Futures support call for a reversal off lows as a bounce. This call was based upon a 100 tick momentum reversal pattern forming in the S&Ps and Dow and went on to hit the second target objective on this type of play.

Support


10:38 FCX given as base at highs for an upside breakout. Pattern breakout type A. It rallied for more than a point to hit initial target objectives at $121, but larger target of $122 was not met and the remainder was closed with a trailing stop. (This update posted at 11:22 ET)

FCX Buy Setup


12:28 Notice that IPI triggered a "D" style breakout. It triggered over $49.30ish and was trading about $49.75 when I posted, but was given as to watch for cont. of the pattern since this often will pullback a little and then go again. It is currently 12:31 and it it pulling back. $52.35 was given as target zone. This is an IPO though, so it can be rather volatile.

For information on A, B, C, D, or Z template patterns, please see http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif
The green circle is the entry with the red bar as the stop.

IPI Buy Setup


12:34 ET - ES Support Levels:
1373.68 ish is ES 62% fib retracement back to 17th lows
about 1370.31 is the 38% retracement back tothe lows of the 15th on the ES
it is also the zone of lows from the 18th
so those are some upcoming support levels to watch coming up
1366.75 is close from the 17th for the gap closure on the ES

13:14 YM Support: "YM just hit 38% retracement back to the 15th lows... also the price congestion from 16th highs and 17th afternoon into 18th morning... this was also equal move support in YM compared to drop from Friday highs to Monday morning lows"

13:33 NFLX low level base at whole number support from $30 with pattern for more downside.

NFLX Short Setup


Larger correction on 15 min time frame
13:33 charlie1 : Toni..do u see a rally this afternoon? inquiring minds want to know!
13:34 Toni-WeekOff : well we have a two-wave pullback now on the futures on the 15 min time frame
13:34 Toni-WeekOff : equal move levels hit 13
13:34 Toni-WeekOff : so this is a major support zone 13:34
Toni-WeekOff : need momentum to shift though
13:35 Toni-WeekOff : a 2B at lows would be good
13:35 Toni-WeekOff : if it can do that then the odds will be higher for an afternoon rally that is not quite as choppy
13:35 Toni-WeekOff : that is a risk if it just goes from here since the selling pace was pretty steep
13:36 Toni-WeekOff : the 15 min 20 sma is going to be resistance as it was yesterday

hefeiddd

Monday, April 21, 2008Market Corrects Following Last Week's Run
Good day! Although the Nasdaq Composite ($COMPX) held up rather well in Monday's session, the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) struggled to recover early losses. Both had gapped lower by a decent amount at the open following weaker-than-expected earnings from Bank of America (BAC). BAC fell 2.5% after reporting that earnings fell 77% for the first quarter. By the close of the day the Dow had still lost 24.34 points, or 0.2%. It ended the session at 12,825.02.

American Intl Group Inc. (AIG) (-3.5%) and BAC were the two largest losers in the Dow, but Caterpillar Inc. (CAT) also posted losses over 2% (-2.29%). General Motors Corp. (GM) was the brightest of the bunch. It gained 5.7%. Microsoft (MSFT) came in second with a gain of 1.4%. In the other indices, the S&P 500 lost 2.16 points, or 0.2%, and closed at 1,388.17, while the Nasdaq Comp. gained 5.07 points, or 0.2%, and closed at 2,404.04. While financials dragged down the Dow and S&Ps, tech stocks helped the Nasdaq stay above water.

Most of the gains established by the market and the recovery from early morning losses took place in the second half of the trading day on Monday. The session began with a correction off last week's highs. The market bounced slightly following the downside gap and the Dow and S&Ps made it back to Friday's lows, while the Nasdaq closed its gap and found resistance at the 5 minute 20 period simple moving average. These price resistance zones hit about 20 minutes into the day and since the momentum was about average the indices held that resistance and were able to again push to new intraday lows.

The morning downside continued into 10:30 ET. The Nasdaq slid down its 5 minute 20 sma throughout the move, creating higher odds that the resistance would break to the upside. The S&Ps and Dow had a bit stronger downside momentum, but the selling stalled at the same time. A double bottom followed and when the 11:00 ET correction period hit the market reversed and began to move higher.

Most of the action on Monday was rather choppy in the indices as a whole. Although the market moved higher throughout the remainder of the morning and most of the afternoon, there was a lot of overlap in prices from one bar to the next on both a 5 and 15 minute time frame. The Nasdaq broke to new intraday highs very early on in the afternoon. When the S&Ps and Dow came into morning highs, however, and the Nasdaq hit the zone of Friday's highs, the bulls retreated. The market pulled back quickly off the afternoon highs, but was able to round off again at morning support between 14:00-14:30 ET and make their way to new highs on the day once more before the bell.

Although the index futures are down again afterhours, there is still some room for upside on Tuesday. The Nasdaq already began a third wave higher on the 60 minute time frame, so it has room to complete that move, but then I expect things to turn over into the afternoon and head back to the downside. Earnings are a major influence at present when it comes to where the markets are opening each morning, so I would suggest not relying as heavily upon postmarket analysis in the evenings,. Instead, come in ahead of the open each day to get a feel for where things stand as a result of the earnings and economic data that comes out each morning.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 10:08 PM 0 Comments

Note
Hey Gang,

I'm taking the week off from trading to deal with some other things that have come up, but will be back next week with the wrapup! I will still be doing the nightly action letter, however.

All my best,
Toni


posted by Toni Hansen @ 6:42 PM 0 Comments

Saturday, April 19, 2008Market Soars on Earnings Data into Friday's Open
Good day! The market action on Friday was quite a contrast to a mere week ago. A disappointing earnings report early this earnings season from General Electric (GE) had sparked concerns that the current economic slowdown would negatively impact earnings across the board this past quarter. Over the course of the week, however, a number of top-name companies reported better than expected earnings and the indices made a strong recovery.

Strength on Wednesday was followed by a resting period on Thursday, but the upward momentum returned into Friday on the heels of earnings from Google Inc. (GOOG). GOOG had reported afterhours on Thursday and was up 10% immediately following the news. By the close on Friday it had gained 89.87 points, making a stellar 20% move. The earning results from equipment-maker Caterpillar Inc. (CAT) also helped boost the Dow Jones Ind. Ave. ($DJI). It led the Dow and closed higher by 8.51%, nearly retaking last year's highs. Another company which moved well on Friday was Honeywell Inc. (HON). It gained 6.3% on Friday.

In this coming week, 157 of the S&P 500 companies are due to report. This will be the busiest week for first-quarter earnings this season and expectations are for a drop of 14.6% as compared to the same quarter last year. Some of the major names to watch for early this week are Merck (MRK), Texas Instruments (TXN), Halliburton (HAL), and Eli Lilly (LLY) on Monday. On Tuesday Yahoo (YHOO), Dupont (DD), Fifth Third (FITB), SunTrust (STI) JetBlue Airways (JBLU), and Kimberly-Clark (KMB) are just a few that will be announcing. Apple (AAPL) and Amazon.com (AMZN) then report on Wednesday following the close, while Motorola (MOT), Amgen Inc. (AMGN), Microsoft (MSFT), and ConocoPhillips (COP) announce on Thursday.

The session began on Friday with an extreme upside gap. The futures had broken higher once again in the premarket around 6:00 am ET after having already posted substantial upside following the close the afternoon before. This activity took the market into the highs from the 7th, which we had been monitoring as resistance. In fact, it brought them just above that level, so instead of being resistance as expected, it became intraday support.

Typically a gap such as this will begin to close within the first 15 minute of the day, and if it does not and ends up holding during that time, then the odds are higher that a trend day in the direction of the gap will occur. On Friday the market defied the odds. It began to close within the first 15 minutes, but the pace of the selling was moderate and there was a great deal of overlap from one bar to the next on a 5 minute time frame.

The market popped when the 10:15 ET correction period hit, breaking the trend from the pullback with more strength than the overall downtrend. A bit of congestion followed as the momentum continued to roll over. By 10:45 ET the market was already coming back into the morning highs. The pace of the buying accelerated and this supported an uptrend bias into the early afternoon.

Since the market had plenty of room to move before hitting an equal move compared to the rally which took place into mid-day on Wednesday, it was easy for the trend to continue throughout the morning, although the buying was rather choppy overall. At 12:30 ET the indices were hitting that equal move level, which, given the 60 minute time frame, was very strong resistance. They began to turn over off highs, but the 13:00 ET correction period held as the indices hit their 5 minute 20 period simple moving averages for support and slightly higher highs were hit into 13:30 ET before the market finally reversed course into the second half of the afternoon.

Although the selling was still on the choppy side, the 5 minute 20 sma served as resistance throughout the move lower and the market experienced several strong, albeit short-lived, bouts of selling. The morning pivots on a 5 minute time frame served as support, stalling the move from time to time throughout the afternoon downtrend. The indices did pop slightly into the close with traders covering positions ahead of the weekend, but turned lower again at the bell.

The Dow Jones Industrial Average ($DJI) closer higher by 1.8% on Friday with a gain of 228.87 points, ending the session at 12,849. On the week as a whole, the Dow climbed 4.3%. The S&P 500 ($SPX) rose 1.8% as well on Friday, amounting a gain of 24 points on the day. It closed at 1,390 and also advanced 4.3% on the week. The Nasdaq Composite ($COMPX) posted the strongest performance on Friday, adding 2.6%, or 61 points, to close at 2,402. This resulted in a 4.9% gain for the week. Gainers outpaced decliners by 4 to 1 on the New York Stock Exchange and 3 to 1 on the Nasdaq on Friday, although overall market volume was typical to that of recent sessions with 1.5 billion shares exchanged on the NYSE and 989 million on the Nasdaq.

The market still offers the potential that another reversal off highs on a daily and weekly time frame may be forthcoming. Although speculation abounds that the economic slowdown may be short-lived and that things are not as bad as feared, it would not take a lot for the market to again drop sharply and continue lower in the summer or early fall. I would expect the Nasdaq to suffer the least compared to the S&P 500 and Dow Jones Ind. Average in terms of the extent of retracement back into the lows of the year thus far. The S&Ps and Dow will be more likely to hit new yearly lows should this occur, whereas the Nasdaq would more likely find support in the congestion from March initially.

Since trading over this next week will be greatly impacted by earnings, I'll be taking things a day at a time based upon how the market begins each session instead of relying as heavily on my evening analysis. That said, however, the market has had two waves of buying on a 60 minute time frame since the 15th and has room for a third, but I do not expect similar momentum and the market can easily begin to shift pace at highs once again to pullback into the latter half of the week. The 20 day sma will once again be support, but the next time it hits it will be more likely to congest along it and can more easily break through it if the market turns over following slightly higher highs on the 60 minute charts, as opposed to if it holds Friday's highs and then chops lower from that point.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 8:16 PM 0 Comments

hefeiddd

Thursday, April 17, 2008Market Experiences Another Day of Mixed Trading
Good day! The market struggled to find a strong directional fit on Thursday following mixed earnings from top names such as International Business Machs. (IBM), Ebay Inc. (EBAY), and Altera Corp. (ALTR). These three had announced earnings after the close on Wednesday and were followed by large upside gaps in IBM and ALTR and a strong downside gap in EBAY. Nokia Corp. (NOK) and Merrill Lynch (MER) both announced ahead of Thursday's open. NOK was severely beaten, while MER managed to recover from a slight downside gap.

After heading sharply higher Wednesday in afterhours trade, the index futures slowly, but steadily, reclaimed most of the gains during the premarket hours. The premarket economic data had very little impact, but were not helpful in providing a further upside boost. Jobless claims rose 17,000 last week to hit 372,000. This was pretty much in line with expectations.

When the session began, the Nasdaq 100 EMinis (futures symbol NQ) were in positive territory by a hair, while the S&P 500 EMini (ES) and Dow Jones Industrial Average (YM) was slightly negative. Not a lot of action took place within the first 15 minutes of trade, but all three indices did close their gaps during that time and then fell quickly lower for several minutes at 10:00 ET. This two-wave pullback on the 5 minute time frame created a buy setup into 10:15 ET.

Although the Nasdaq had the stronger open, the S&Ps and Dow took over coming off the early morning lows. Both indices pushed quickly into the prior afternoon's intraday highs, breaking them by a hair and then retesting them a second time about 15-20 minutes later. This rapid retest created a 2T pattern on both the 5 minute and 2 minute time frames, resulting in a trap for the bulls that allowed the market to pull back throughout the remainder of the morning.

The Nasdaq suffered the most on the late morning correction. Although it found support initially at the morning lows around 11:00 ET, a small continuation pattern formed in the indices into 11:15 ET and was followed by another wave of selling into 11:40/12:00. The S&Ps and Dow both came into support at the morning lows at that point, but the Nasdaq was already back to where the morning momentum had slowed the previous day and had even fallen through Wednesday's afternoon lows.

As noon hit, the momentum slowed on the downside. This is a common reversal period for the market and the indices made an attempt to bounce off it. The momentum had not rolled over quite well enough to break the 5 minute 20 period simple moving average, however, and a second test of the lows took place into 12:30 ET. This time the indices had slid down the 5 minute 20 sma and the retest of lows created a stronger reversal pattern into the early afternoon.

While the stronger Dow found support at morning lows at the 15 minute 20 sma, this same moving average acted as resistance for the Nasdaq on its early afternoon rally. It hit at the same time as the 13:00 ET correction period and pushed the Nasdaq into a trading range. The S&Ps and Dow were able to still continue higher without worrying about resistance other than the morning highs. This resistance zone hit shortly before the 14:00 ET correction period, although the indices did not quite test the exact highs. The Nasdaq had begun hugging its 5 minute 20 sma at that time and it fell apart at the same time as selling hit in the other two indices.

This second pullback on the afternoon lasted until about 14:10 ET. The mid-day congestion zone served as support and the market bounced quickly back to the early afternoon highs. Since this created a "V" formation on the 5 minute time frame, those highs again served as resistance, creating another smaller pullback into the 15:00 ET correction period. After being held back all day, the Nasdaq really owned this afternoon breakout. It spiked to hit a move equal to that which had taken place into 13:00 ET, but it didn't stop there.

While the S&Ps and Dow stepped to new highs on small 1 minute bull flags, the Nasdaq based and then broke higher just before the close in the final 15 minutes of trade. It returned to opening price levels. Although not as impressive overall compared to the S&Ps and Dow which made higher highs in the afternoon, this was quite an accomplishment given how much farther it had to move in order to even come close to hitting earlier highs. Unfortunately, the stair-stepping was an issue for the S&P and Dow because it opened the door for a rapid, as opposed to gradual, correction into the close. This made it difficult for any of the indices to hold onto their late day gains.

The S&Ps and Dow closed relatively unchanged on Thursday, while the Nasdaq posted small losses. The S&P 500 ($SPX) ended the day higher by a fraction of a point, up 0.85. It closed at 1,365.56. The Dow Jones Industrial Average ($DJI) gained 1.22 points. It closed at 12620.49. The Nasdaq Composite ($COMPX) lost 8.28 points. It closed at 2,341.83.

Leaders in the Dow included Citigroup (C) (+2.52%), American Express (AXP) (+2.17%), and IBM (+2.17%). Top losers were Pfizer (PFE) (-3.32%), Merck & Co (MRK) (-2.70%), United Technologies (UTX) (-2.53), and Procter & Gamble (PG) (-2.47%). In the Nasdaq, standouts included Altera Corp. (ALTR) (+8.65%) and Level 3 Comm. (LVLT) (+5.16%) on the positive side and Ericsson L M Tel. Co. (ERIC) (-4.5%), Wynn Resorts (WYNN) (-4.06%), Gilead Sciences (GILD) (-3.55%), and EBAY (-3.46%) on the negative side. Additionally, Merrill Lynch (MER) closed higher by 4.4%.

Google (GOOG) announced earnings just after the market close on Thursday and sent the index futures sharply higher. The company says that its first-quarter profit climbed 30% with net income up $4.12/share, surpassing analyst expectations. Its revenue rose 42% in the past year. GOOG itself was trading higher by more than 10% in after-hours trade.

This news alone can easily create continued upside in the market as a whole into Friday morning to help take the indices back to those highs from the 7th that I had mentioned yesterday as resistance. Thursday's highs were price resistance from the 10th. It was a gap closure level in the Nasdaq and highs for the S&Ps and Dow. The NQ went on to hit those highs itself within 15 minutes of the close on GOOG's news. I am a bit leery that the S&Ps and Dow stair-stepped into this level after Wednesday's gap, so while I'm bullish for opening action, I am pretty open as to what the intraday trade with bring and do not have a huge bias for intraday trading on Friday.


Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 5:30 PM 0 Comments


posted by Toni Hansen @ 6:25 AM 0 Comments

Wednesday, April 16, 2008Market Soars on Heels of INTC and JPM News
Good day! The market once again experienced an extreme gap on Wednesday. As on Tuesday, the gap was to the upside. The index futures had popped sharply following Tuesday's close. Intel Corp. (INTC) had announced that it expected revenue to beat analyst expectations and predicted a 56% gross margin for the second quarter. J.P. Morgan (JPM) also provided a boost for the bulls. The first-quarter profit cut that had been anticipated ended up being less than analysts had predicted.

I underestimated the impact of the INTL news when I wrote last evening's column, but the market has some fairly stringent guidelines for gaps such as this. If it starts to close within the first 15 minute of the day, then it will typically fill within the first couple of hours. If it holds, such as bases or pulls higher, then the gap will have significantly lower odds of closing and trend days in the direction of the gap become more likely. Since this particular gap was also off that 60 minute support zone we had been looking at over the past couple of days, it made it even easier for the market to hold up once the initial opening trade action had passed.

After slight upside at the open, the market headed a little higher after the first 15 minutes, but then fell into a trading range along the highs for half an hour. The 10:15 ET correction period held and the indices broke sharply to new intraday highs. This was the strongest move of the session, but the momentum slowed between 10:30 and 11:00 ET. The 11:00 ET correction period held in the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI), but the Nasdaq Composite ($COMPX) continued to push to new highs intraday.

From 11:00 to 12:00 ET, the S&P 500 and Dow corrected by falling quickly off highs for several minutes and then hugged support, creating a small 5 minute Avalanche pattern into noon. This resulted in a two-wave pullback for a continuation buy setup in the to the early afternoon. The market again moved to new highs, albeit barely, into 12:30 ET before falling into a larger correction throughout the rest of the first half of the afternoon.

Market volume was high on Wednesday, but it declined somewhat as the indices pulled back, forming a series of tiny bear flags into 14:30 ET. The gentle pace and the lighter volume, in addition to the 15 minute 20 period simple moving average support created the high probability that the market would hold its bias and remain bullish into the close. The indices formed a small congestion after breaking the gradual downtrend along the 5 minute 20 sma. This broke at 15:00 ET, first leading the market to a retest of the afternoon highs and then pushing through them. The S&Ps took over the lead, while the Nasdaq faltered somewhat in the final 30 minutes of trade. All three indices, however, closed near the intraday highs and the index futures busted through those levels following the closing bell.

The Dow gained 256.80 points on Wednesday, or 2.1%. It closed at 12,619 with 28 of its 30 components in positive territory. The S&P 500 rose 30.28 points, or 2.3%, and closed at 1,364. The Nasdaq Composite advanced 64.07 points, or 2.8% and closed at 2,350. The Russell 200 outpaced them all, rising 21.33 points, or 3.08%, to close at 713.21. I am expecting the market to continue to push higher in Thursday's session with the highs from the 7th serving as strong resistance. If the market moves higher in the morning, however, it will have a difficult time continuing into the afternoon, so a correction on a 30 minute time frame would then be something to look out for. If it opens relatively unchanged, pulling back again in premarket trading, then it can congest throughout the morning and break higher into the afternoon.


Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 9:18 PM 0 Comments

hefeiddd

Trade Wrapup - 20080416
Trade Wrapup - Wednesday, April 16, 2008

9:49 - 30 min 200 sma is index resistance (1352.21 is ES 200 sma on 30 min1351.3 is also fib resistance)(1831.15 is same zone on the NQ)

9:59 - AIG basing at highs
10:07 - AIG off watch for now

10:07 - ITRI swing is back in play today finally

10:15 - FSLR base at highs ($293.80)
10:30 - FSLR first resistance ($296)
FLSR hit equal move target into $297

FSLR Buy Setup


10:49 NQ hit highs from 4/11 price resistance
10:50 ES hit lows zone from 4/10
10:50 these are the ressitance levels hitting here
10:51 ES also had 1356.92 area as -38.2fib level from initial morning rally

12:28 - SWY keep on watch for short setups this afternoon sucah as "D" pattern on 5 min
Breakout Template: For information on A, B, C, D, or Z template patterns, please see The green circle is the entry with the red bar as the stop.
UPDATE: "D" pattern and other breakdown template setups failed to form.

14:47 - NTRS and WYNN attempting to form avalanches
5 min
15:16 - wynn and ntrs off watch

14:50 - futures are still holding up pretty well
thinking they will continue to do so but overall more choppy into the close


posted by Toni Hansen @ 7:01 AM 0 Comments

Thanks to the late day rally all three indices managed to close in positive territory. The Dow gained 60.41 points, or 0.5%, to close at 12,352. Alcoa Inc. (AA) posted the largest gains with a move of +2.68%. WalMart (WMT) was a close second with a gain of 2.03%. AIG, JPM, C, XOM, UTX, INTC, and AXP all gained more than 1%. Boeing (BA) was the top losers, falling 1.97%. Airlines overall were very hard hit on Tuesday. Delta (DAL) lost 12.6%, while Northwest (NWA) fell 8.4% on news of a proposed merger. The Amex Airlines Index fell 4.34%.

The S&P 500 gained 6.11 points, or 0.5%, on Tuesday, ending the session at 1,333. The Nasdaq Composite rose 10.22 points, which was also 0.5%. It closed at 2,286. Other sectors under pressure were banking and biotechnology. Top performers included gold, oil, health care, and housing stocks. The market came into the support zone between the lows of the 28th and gap of the 31st of last month in Tuesday's session. Event though the market bounced into the afternoon, another test of that support zone is still quite possible. At the very least I am expecting congestion with a slight pullback on Wednesday morning. This week so far has been a tough one and Wednesday is likely to continued to be so as well.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)



posted by Toni Hansen @ 8:39 PM 0 Comments

hefeiddd

Market Struggles After Friday's Meltdown
Good day! After the sharp return of selling on Friday, the market was mixed as the new trading week began. Still reeling from the blow inflicted by General Electric's (GE) disappointing earnings and annual forecast, the bulls were hesitant to commit and remained so throughout the session. The S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) had the most difficult time throughout the morning due to continued weakness from the financial sector.

Even though a few stocks did manage to trend nicely on Monday, the day was a difficult one when it came to locating solid setups for strong follow-through. I had managed to find WB and APOL early on for continued selling early in the session, ZION for a mid-day breakdown, and STI for a late day breakdown (all on the short side), but also ended up stuck in CRS, which attempted to continue lower early in the afternoon and failed. Of course, the higher risk from the early morning extension was a main contributor to this. The problem on Monday, however, was that most of the potential setups I came across intraday had similar risk factors and pickings were much slimmer than usual.

Volume was on the light side of average in Monday's session and the market was unable to establish a strong trend bias intraday. The morning began with some continued weakness and downside follow through from the prior session, but the main trait was that the choppy trading from the final two hours on Friday also followed through. Ahead of the open, the index futures managed to cut some of its premarket losses when the the Commerce Department reported a slight increase in March retail sales data, beating expectations. It was not enough to hold, however, and the market opened relatively unchanged and still faced with the downtrend set in play Friday morning.

The Nasdaq Composite ($COMPX) hit support early on in the day when the NQ, which is the Nasdaq 100 EMini, hit its -38.2% fibonacci retracement level from the downside move which took place between April 7th and 9th last week. This support held perfectly and the NQ reacted accordingly. The next major fibonacci level for the NQ was just over 1816 and became my target price zone.

The S&P 500 and Dow Jones Ind. Ave. did not have as strong of support levels hitting. Although they both pulled higher out of the 9:45 ET correction period with the Nasdaq, they fell sharply at 10:00 ET when the February Business Inventories data came out. U.S. business inventories rose 0.6% in February from a revised 0.9% increase in January.

Although the Nasdaq was able to hold support at 10:15 ET, the S&Ps and Dow fell to new intraday lows. The correction off that support was more gradual than the descent into it and created an Avalanche short pattern in the Dow. This triggered out of the 11:00 ET correction period. All three of the indices also held this correction time period and began to fall. The Dow and Nasdaq were also reacting to the 15 minute 20 sma resistance at this time. Both the S&Ps and Dow once again made new lows, but held the equal move zone from the prior 5 minute decline, while the Nasdaq again held the morning lows.

The market began to move higher once again at 11:30 ET. The move was on the gradual side into the 5 minute 20 sma. At that point, however, instead of reacting to the resistance with a bear flag on the 5 minute time frame, the 5 minute 20 sma zone held and a congestion area formed. The congestion created a Phoenix pattern, albeit a very premature one. It triggered at about 12:30 ET and the market moved steadily into the day's highs. These served as resistance in the Dow, but the S&Ps and Nasdaq were able to break them before the 13:00 ET correction period hit and turned the market around once again. This also corresponded to a number of other resistance levels. The ES (EMini S&P 500) had returned to its own -38.2% fibonacci level from last Monday to Tuesday's drop and the NQ was hitting its 30 minute 20 sma and the target zone from the bounce (although it did fall a few ticks short).

The light volume on the rally did not sit well with the bulls. The pullback off the highs, while not as sharp as the rally itself, was still on the strong side. Within that pullback the market lacked any strong upside moves to shift the momentum in favor of a triangle or longer congestion to allow the bulls to maintain control throughout the afternoon. As a result, the indices just chopped lower throughout the remainder of the session with the 5 minute 20 sma serving as resistance. The day's lows held as support, but there is not much to suggest that the bulls will be able to regain control in Tuesday's session either.

The Dow Jones Industrial Average closed lower by 23.36 points on Monday, a loss of 0.19%. It ended the session at 12,302.06. The S&P 500 fell 4.51 points, or 0.34%, and closed at 1,328.32. The Nasdaq Composite dropped 14.42 points, or 0.63%. It closed at 2,275.82. The Russell 2000 lost 2.09 points, closing at 686.07, down 0.3%.

The top declining sector on Monday was the banking sector. The Philadelphia Banking Index closed lower by a whopping 4.23% on Monday. The AMex Securities Broker/Deal Index fell 2.78%, while the PHLX Housing Sector Index dropped 2.17%. The gainers on the day came primarily in oil and energy-related stocks. The PHLX Oil Service Sector Index rose 2.36%, while the Amex Oil Index climbed 2.78%. The Amex Airlines Index also rose. It closed higher by 2.87%. The Amex Gold BUGS Index climbed 0.61%, while the Amex Natural Gas Index gained 2%.

In the financial arena, Wachovia (WB) reported that it would raise $7 billion in capital and cut its dividend after reporting a large first-quarter loss. It fell 8.1% on the day. The gap lower from the daily triangle is what had caught my attention earlier in the session. Also hit were Bank of America Corp. (BAC), which fell 3.7%, and Citigroup Inc. (C), which lost 3.6%. American Express (AXP) fell 1.5% on Monday.

The momentum on the 60 minute time frame remains bearish with the gap level from the close on March 31st as the next major support in the indices. After that the lows from March 28th are price support. I expect the momentum to slow coming into the zone between these two levels to allow for a larger correction off these lows on the 60 minute time frame. Until then, however, I urge a great deal of caution on the long side for the most part.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 5:21 PM 0 Comments

Toni's Little Vampire
Over the weekend we went to a b-day for the son of a trader friend of mine. My little guy has lost both of his front teeth. He is quite fond of making goofy faces at the camera and my daughter caught this lovely pose. He is my little Count Dracula (the vegetarian version of course!!!)




posted by Toni Hansen @ 3:04 PM 0 Comments

Toni's Trade Wrapup - 20080414
TRADE WRAPUP - Monday, April 14, 2008

All times are Eastern.

9:36 FSLR upside watch list (This means continuation patterns on the upside)
At 9:43 FSLR was removed from the watch list.
UPDATE: This did give a buy setup later on in the morning, but I did not return to this chart in time to take advantage of it. I have posted the chart here, however, to show how the daily caught my eye and how the intraday trigger would have taken place.
The daily remains bullish.

FSLR Buy Setup


9:41 WB watching for short side (This means continuation patterns on the downside)
WB triggered under $25.66 at 9:48.
WB first support for initial partials was given as $25 at 9:51. It hit at 9:52.
WB hit trailing at 10:20 over $25.72.
The daily remains bearish.

WB Short Setup


9:44 NQ support (This holds as the morning lows)

NQ Support


9:57 1816.25 given as next NQ resistance on the larger time frames.
At 12:55 this is updated because the NQ was hitting the 30 minute 20 sma when the ES was hitting resistance at that time (This ES is given at 12:50).

10:10 APOL given to watch for more downside. Nice daily cited, but also had intraday bear action and was triggering a breakdown at the time. It made a $0.70 move before hitting support. The daily continues to remain bearish.

APOL Short Setup


10:26 TSL forming 5 min Avalanche.
This did not trigger and was not shortable on IB, hence removing it from watch.

TSL Potential Short Setup


10:40 ISRG base at lows.
This also did not trigger. ISRG was given as a momentum short setup as a swingtrade on Friday morning between $338-340. It hit lows on Monday of $315.

11:06 MTB alerted as swingtrade short on corrections off intraday support. Earnings cited as something to watch out for. It was trading $81.48 at the time of the alert. It closed at $80.75 after several upside corrections intraday into the $81.80 area.

MTB Short Setup


11:07 ZION base at lows.
11:28 ZION first support $42.50 with $42 target.
13:49 "ZION hitting target zone."

ZION Short Setup


12:12 STI base at lows. (Reaffirmed several time throughout the session as remaining on watch for short ops, incl. at 14:08 ET.)

STI Short Setup


12:50 ES resistance is 1336.75 ES holds this by two ticks.

ES Resistance


13:02 CRS basing at lows. Remainder of this position was stopped out.

CRS Short


And that's all for today folks!!! I will try to update this every day, but please forgive me if I am not able to (2 kids and other projects to work on!). For those that stop by the room, you can also turn on logging to save transcripts for review under the mIRC options. Take care and have a wonderful evening! Time to go for a stroll with the munchkins and then will get you guys the Market Action Letter for today. Later!!!


posted by Toni Hansen @ 2:45 PM 0 Comments

hefeiddd

Sunday, April 13, 2008Market Suffers a Blow When GE Disappoints
Good day! The market suffered a strong setback on Friday when the recent strength gave way to a strong breakdown set in motion by a disappointing quarterly report from General Electric Co. (GE). GE reported that profits fell 6%. It said that its financial-services divisions bore the greatest responsibility for the shortfall, citing the U.S.'s slowing economy and the challenging capital market. GE's wide reach into other sectors, such as entertainment, manufacturing, and health care have increased market concerns. In addition to the earnings shortfall, GE has lowered its forecast for the year as a whole. The news came as a surprise, fueling concerns over what's to come this earnings season. GE lost 12.8% on the day. This was its greatest one-day decline since the 1987 stock market crash.

The market opened significantly lower on the heels of GE's blow. Typically the extreme gaps in the market, such as the one which took place on Friday, will fill within the first several hours of the day. To do so, they must begin that ascent within the first 15 minutes of the regular trading session. Otherwise, they are most likely to hold the gap and experienced continued weakness throughout the session.

The market had begun to show some signs of a recover attempt even before the opening bell, primarily in the S&P 500. The index futures had started to round off at lows, creating a momentum reversal pattern. The pattern held into the opening range, but the market was not able to move higher within the first 15 minutes of the day, creating a larger concern that the opening weakness would cloud the market's performance throughout the day.

The S&P 500 held the momentum reversal pattern, offering a decent setup heading into the 10:15 ET correction period. Although the S&Ps hit the first target on this pattern at 10:45 ET, based upon a plethora of resistance such as Wednesday and Thursday's lows and premarket levels, it was not able to push through that level. The resistance held and the indices began to reverse course, giving way to the larger odds that since the gap did not begin to close within 15 minutes that the bears would control the session.

The market shifted slightly into 11:00 am ET. It held congestion, however, until noon. Volume was light as the market attempted to hold up, but this simply meant that even though prices were moving slightly higher, there were not many willing to commit to it. At 12:15 ET the shift in momentum was very apparant. The Nasdaq was forming a short pattern and the S&Ps and Dow were also holding the lower end of the morning channel. This channel broke quickly, confiming the bearish bias for the afternoon.

The 12:30 ET correction period held as the Nasdaq hit support from Wednesday's lows. The market was unable to find any relief other than a stall in the selloff. Volume was light as the market rested within a congestion zone along the day's lows. When the 5 minute 20 period simple moving average hit at about 13:30 ET it triggered the next phase of selling. From that point onward the indices did not have as clear cut continuation patterns, but the market held the 5 minute 20 sma as resistance and continued lower in a steady trend into the close.

The breakdown on Friday signaled an end to the uptrend that had been in play since Bear Stearns (BSC) crashed on the announcement of its buyout by J.P. Morgan Chase (JPM) on March 17th. Investors had hoped that the worst was behind them, but the momentum on Friday has triggered what could very well be a two-wave continuation pattern on the downside on the weekly time frame in the indices. The Nasdaq is going to have the best time trying to defy those odds, but the door has been opened for the S&Ps and Dow to make new lows over the summer.

In order to break this latest pattern, the market would have to chop lower for several months, overlapping price levels a great deal along the way. I do not think this is highly probable. On the plus side, since we are now in earnings season, a lot of individual stocks should offer strong momentum moves in response to earnings to play with. Earnings season will accelerate on Thursday. I will be much more cautious on anything longer term on the bullish side though for the time being until we begin to see how this pullback continues to play out.

The Dow Jones Industrial Average ($DJI) lost 256.56 points on Friday, or 2%. It closed at 12,325. The only one of the Dow 30 to stay in positive territory on Friday was WalMart (WMT), and that was only with a 0.24% gain. The S&P 500 ($SPX) lost 27.72 points, which also amounted a 2% decline on the day. It closed at 1,332. Safeco Corp. (SAF) (+2.39%), Clear Channel Communications (CCU) (+1.90), and Bed Bath & Beyond (BBY) were the top leaders. GE, Circuit City (CC) (-8.02%), and Countrywide (CFC) (-7.72%) were top losers. The Nasdaq Composite, which had the strongest upside in the prior session, had the most to loose. It fell 61.46 points, or 2.6%, and closed at 2,290. Among the top leaders were Fastenal Co. (FAST) (+4.06%), UAL Corp. (UAUA) (+2.23%), and BBBY. Some of the largest decliners were Nvidia Corp. (NVDA) (-6.70%), LAM Research (LRCX) (-5.86%), and Intuitive Surgical Inc. (ISRG) (-5.74%).

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 9:22 PM 0 Comments

Economic Reports and Earnings Events This Week
Economic Reports and Events This Week

Monday, April 14, 2008
8:30a.m. Mar Retail Sales. Previous: -0.6%.
8:30a.m. Mar Retail Sales, Ex-Autos. Previous: -0.2%.
10:00a.m. Feb Business Inventories. Previous: +0.8%.

Tuesday, April 15, 2008
7:45a.m. ICSC Chain Store Sales Index. Previous: +0.7%.
8:30a.m. Mar Producer Price Index. Previous: +0.3%.
8:30a.m. Mar PPI, Ex-Food And Energy. Previous: +0.5%.
8:30a.m. Apr NY Fed Manufacturing Index. Previous: -22.23.
8:55a.m. Redbook Retail Sales Index For Apr 12. Previous: +1.6%.
9:00a.m. Feb Treasury International Capital Flows. Previous: $47.2B.
1:00p.m. Apr NAHB Housing Market Index. Previous: 20.
5:00p.m. ABC/Wash Post Consumer Conf For Apr 13. Previous: -34

Wednesday, April 16, 20087:00a.m. MBA Mortgage Refinancing Index. Previous: +3.4%.
8:30a.m. Mar Consumer Price Index. Previous: +0.2%.
8:30a.m. Mar CPI, Ex-Food And Energy. Previous: +0.2%.
8:30a.m. Mar Housing Starts. Previous: -0.6%.
8:30a.m. Mar Industrial Production. Previous: -0.5%.
8:30a.m. Mar Capacity Utilization. Previous: 80.9%.
2:00p.m. Federal Reserve's Beige Book.

Thursday, April 17, 2008
8:30a.m. Initial Jobless Claims. Previous: -32K.
10:00a.m. Mar Conference Board Leading Indicators Previous: -0.3%.
10:00a.m. Apr Philadelphia Fed Business Index. Previous: -17.4%.
10:00a.m. DJ-BTMU Business Barometer For Mar 29. Previous: -0.2%.

Friday, April 18, 2008
There are no economic indicators scheduled for today


Key Earnings Announcements This Week:

Monday, April 14, 2008
Before: BLK, SCHW, ETN, WERN, GWW
After: AMLN, ELS, INFY, JBHT, STLY

Tuesday, April 15, 2008
Before: ADTN, BKRS, BHP, FRX, GMTN, IIIN, JNJ, JOSB, LCBM, MTB, MI, MTOX, NTRS, OXPS, PII, QXM, RF, STT, SVU, USB
After: CHB, CSX, HCSG, INTC, LLTC, RLRN, RUSHA, STX, SORC, SPSN, WM

Wednesday, April 16, 2008Before: AMB, AMR, ASML, BMI, KO, ITW, JCI, JPM, NITE, LUFK, EDU, PJC, SSW, STJ, MDCO, WFC, WWW
After: ALTR, ATR, AVCT, CAVM, CNW, CCK, DTLK, EBAY, GILD, GKK, IBM, ISIL, KMP, KNX, LEG, RMBS, SOV, TER, UFPI

Thursday, April 17, 2008
Before: SMLC, AMFI, ECOL, AM, APH, BK, BAX, BBT, BGG, CHKP, CIT, CMA, CBH, CY, DHR, DSL, FCS, FHN, GPC, HOG, HSY, HNI, RX, IGT, JRC, KEY, LSTR, MAR, MMR, MEG, VIVO, MER, MLAN, MEH, NYT, NOK, NUE, ORB, PFE, PNC, BPOP, PPG, RS, SGP, SHW, SLM, SON, LUV, SPNC, SXCI, BRLC, AMTD, TTEC, TXT, UTEK, UTX, USK, WSO
During: HTLD
After: AMD, DOX, ARNA, BKUNA, CHP, COF, CX, GRRF, CYN, CTCT, CPSS, CBST, CYBS, CYT, ETFC, FNB, FCF, GOL, GOOG, HIFN, ICUI, INFA, IUSA, INPC, ISRG, KKD, LHO, MCGC, MELI, MHK, MGI, PKTR, PNFP, LGBT, PGI, QMED, RLI, SNDK, SEP, SYK, SRDX, TEK, TPX, TMA, UB, VASC, ZION

Friday, April 18, 2008
Before: ACO, CAT, C, HON, MAN, NVR, PRSP, SLB, WB, WL, XRX
After: WIT

Note: All economic numbers and earnings reports are in lines with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column. This list is not a complete list of earnings, so always double check your positions!
Labels: earnings, earnings this week, economic calendar, economic reports


posted by Toni Hansen @ 9:20 PM 0 Comments

Thursday, April 10, 2008Market Rally Falters in Afternoon Trade
Market Rally Falters in Afternoon Trade

Good day! Most sectors finished in positive territory on Thursday after strong upside momentum throughout the morning's trade, giving us the morning rally we had been looking for heading into the day. The session had began rather mixed. The Nasdaq was strong and the Dow also opened higher, but the index futures had fallen around 4:00 am, taking back the earlier evening's gains and the S&P 500 had trouble holding on. Ahead of the open some economic data shook things around a little bit. The U.S. trade deficit has widened dramatically, while weekly jobless claims fell 53,000 to 357,000 last week.

Although the futures were rounding off at the premarket lows, they still managed to pull back one more time out of the open. The S&P 500 ($SPX), which was the weakest of the three, moved all the way back for a retest of Wednesday's lows where it finally found support. The stronger Nasdaq Composite ($COMPX) held the 5 minute 20 period simple moving average. These support zones hit at 10:00 ET and from that point forward the morning was under the command of the bulls.

The indices barely paused to breathe between 10:00 and 11:00 am ET. Small continuation patterns off resistance levels lasted only a matter of minutes before buying set in once again. It did not take long for the indices to recover a substantial portion of the week's earlier losses. The momentum began to slow around 11:00 am ET, but this reversal pattern off lows made it unlikely that the remainder of the day would experience another strong trend.

The indices rounded off at highs over mid-day on Thursday. The Nasdaq had taken back about 62% of the week's losses, hitting Fibonacci resistance at highs, while the S&Ps reclaimed approximately 50% of the prior three day's losses. Although the market was rounding off, my bias remained primarily range bound with expectations that the market would hold onto the majority of the move off Wednesday lows. There were still some strong moves on the 5 minute time frame as the afternoon passed by. It was enough to offer futures traders some decent setups since support and resistance levels and trend action was very orderly.

The S&Ps and Dow both displayed the greatest weakness in afternoon trade, but then again, the only sectors to post losses on Thursday were concentrated on the NYSE in telecommunications, oil, utilities, banking, and particularly in the broker/dealers. The strongest sector was biotechnology, which is heavily concentrated on the Nasdaq. The biotechs gains nearly 5% in Thursday's trade on average. Other technology-related sectors also posted strong gains. Additionally, the airlines made a nice recovery, adding nearly 3% on average after sharp downside on Wednesday.

When the closing bell rang on Thursday the Dow Jones Ind. Ave. was still up 54.72 points, or 0.44%. It finished at 12,581.98. INTC, HD, MRK, IBM, DIS, UTX, DD, and HPQ all gained more than 1%. Although AA was the only stock to close lower by more than 1%, JPM came close. The S&P 500 rose 6.06 points, or 0.45%, and closed at 1,360.55. The Nasdaq Composite climbed 29.58 points, or 1.27%. It closed at 2,351.70. Stocks gaining over 5% on Thursday included ROST, UAUA, AMGN, PETM, and ISRG. XRAY and ESRX were among the top losers. Meanwhile, the Russell 2000 also posted strong gains. It rose 9.04 points, or 1.29%, and closed at 707.42.

On Friday the market is favoring congestion in the morning, followed by upside once again into the afternoon. Monday's highs will serve as the resistance zone in both the Dow and Nasdaq Composite, while last Wednesday's and Thursday's highs will be strong resistance for the S&P 500.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 1:35 PM 0 Comments

hefeiddd

Wednesday, April 9, 2008Correction Gains Momentum
Good day! Heading into Wednesday's trade, we were looking for the range to open up and for a continuation of the correction stage of the market which began on the 2nd in terms of a slowdown in upside activity, and really got under way on Monday afternoon with a pullback in price. Tuesday's session was quite narrow and very choppy, making the odds higher for stronger trend action on Wednesday. This began right away out of the open. The indices had gapped slightly higher, but the 15 and 30 minute 20 period simple moving averages, which were resistance the prior day, continued to hold and the market began to sell off just minutes ahead of the opening bell.

At about 10:00 am ET the market began to fall into its first congestion of the day. That congestion tried to break lower initially at 10:30 am ET when it was announced that crude inventories had fallen, leading to a new record high in crude futures at $112.21/barrel. It closed at $110.87/barrel. The breakdown attempt was a bit too early given the morning drop thus far, however, so the congestion continued with the 5 minute 20 simple moving average serving as resistance at 11:00 ET. Another strong breakdown followed into noon.

The second congestion move of the day took place heading into the early afternoon. With a downtrend firmly in place and the 5 minute 20 sma as resistance, it did not take much for the bias to remain on the bearish side. Volume dropped as the indices congested, supporting the bears through a lack of buying despite slight upside price movement.

Even though the Dow and S&Ps established new intraday lows into 13:00 ET, the prior 5 minute lows held as support on the Nasdaq and a longer congestion move formed into the 14:00 ET correction period. This is a typical time of the day for a late day move to occur and it corresponded to the 15 minute 20 sma once again. Volume had also remained light going into that resistance level, making it every easy for the bears to remain in control.

The downside into the final two hours of trading experienced a momentum shift that had not been seen earlier in the session coming off support levels. After making only slightly lower lows in the S&Ps and Nasdaq, the slowdown in the selling was enough to create a reversal pattern into the final hour of trading. The S&Ps and Nasdaq had both established three intraday lows, hence exhausting the intraday downtrend, and the Nasdaq had also hit equal move support on a 15 minute time frame as compared to the drop into Tuesday's lows. The 15:00 ET correction period helped as well.

I had looked for 1351.5 to hold as support on the ES (S&P 500 EMini). It was close though with a low of 1351.25. Notice how the ES and YM both hugged the 5 minute 20 sma before breaking higher into the last hour of trade. This is a key trait for a strong reversal. The stage was set for a rally into the close. It actually continued well past the closing bell, but the market was able to regain some of its intraday losses. The Dow closed lower by 49.18 points, or -0.4%, at 12,527. The S&P 500 lost 11.05 points, or -0.8%, and ended the day at 1,354. The Nasdaq Composite was again hit the hardest, falling 26.64 points, or -1.1%, to close at 2,322.

In the news, UPS (UPS) (-3.7%) cut its first-quarter earnings expectations, citing a weak economy and rising fuel costs. This led to widespread weakness in the transportation sector. The Dow Jones Transportation Average fell 3.52% on Wednesday. Even harder hit were the airlines. The Amex Airlines Index lost a whopping 5.24% with JetBlue (JBLU) down 6.4% and Continental Airlines (CAL) down 7.6% by the closing bell. The PHLX Housing Sector Index was another exceptionally poor performer, falling 3.87%. The Amex Gold BUGS Index, however, rose 2.02% and the PHLX Semiconductor Index also climbed, rising 1.54% on the day.

The market is looking bullish into the open on Thursday. The 60 minute time frames were all hitting support Wednesday afternoon and favoring a larger bounce off those support levels. This bias will be minimized if the indices manage to gap significantly higher, since larger than average gaps tend to fill within the first two hours. On the whole, however, I will be favoring the bulls for the first half of the day at least. 12600 will be Dow resistance, with 2350 as resistance in the Nasdaq Composite.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 9:35 PM 0 Comments

Gradual Ascent Gives Way to Selling Pressure
Good day! Tuesday was one of the narrowest and most choppy sessions the market has seen in months. Volume was light despite the modest downside gap, which would typically bring in additional volume. This suggested that despite the size of the gap, the bulls were not overly concerned, nor were the bears quick to jump. Instead the general mood was "wait and see."

Large gaps in the market overall tend to begin to close within the first 15 minutes of the day. The market maintained this bias on Tuesday as well, but the upside out of the opening bell was not very convincing. The Dow Jones Industrial Average ($DJI) and S&P 500 ($SPX) both established three waves of buying on the 5 minute time frame before hitting resistance at the 10:45 ET correction period, but the upside was not very steady and prices experienced a strong degree of overlap from one bar to the next on the way. While my bias was bullish out of the open as I expressed in the prior evening's column, I stayed away from the indices themselves and focused upon individual equities instead in order to avoid the volatility.

The market continued to hold up as the morning progressed. It took another 45 minutes for the Dow to close its morning gap. The Nasdaq and S&Ps also played around in the zone of Monday's close while momentum on the upside shifted. This was most noticeable in the Nasdaq which crept higher into 11:30 ET before giving way to a strong pullback off the 15 minute 20 period simple moving average. This same resistance level also held in both the Dow and S&Ps and helped the market turn lower going into the afternoon.

Even though the market reversed course, it still ran into the same trouble it had on the upside for the most part. After the initial 20 minutes of downside the indices fell into a congestion zone. It crept somewhat lower into the opening price level around 13:30 ET, but trade remained on the choppy side. The 5 and 15 minute 20 period simple moving averages held as resistance with the indices sliding down them throughout much of the afternoon. A strong drop took place following the 14:00 ET FOMC Minutes, but even the Fed's lack of enthusiasm (to say the least) about the economy failed to lead to a sustained selloff.

The market took back a lot of the early afternoon losses in the Dow and S&Ps in the final 90 minutes of trade. The Nasdaq had a more difficult time. Although the Dow and S&Ps closed above their opening levels, the Nasdaq was relatively unchanged from its open. The Dow closed at 12,576.44, lower by 35.99 points, or 0.3%. The S&Ps ended the day at 1,365.53, down 7 points, or 0.5%. The Nasdaq Composite lost 16.07 points, or 0.7%. It closed at 2,348.76. The market remains in a corrective stage on the daily time frame heading into Wednesday. The 20 day sma is still going to be support. The market should open up, however, as compared to Tuesday's action and offer some more decent intraday moves.

Semiconductors (-2.77%), housing sector equities (-2.37%), and banking stocks (-2.15%) were the worst performing sectors on Tuesday. Oil-related equities (+0.75%), natural gas (+1.56%), health care (+1.72%), and airlines (+0.41%) led on the upside.

On the news front, the National Association of Realtors reported data on pending home sales at 10:00 ET. The index for sales contracts on previously owned homes was down 1.9% in February. This is 21.4% lower than February of last year. January's levels, however, were revised slightly higher, which took some of the sting out. The South remained the hardest hit, falling 5.5%, while the Northeast saw an increase of 3.2%.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 12:01 AM 0 Comments

hefeiddd

Monday, April 7, 2008Market Inches to New Highs Intraday, but Remains Relatively Range Bound
Good day! Market action was choppy on Monday as the indices attempted to push higher, but struggled with last week's range. The session began with a strong upside gap following a steady trend higher in Sunday's futures session and an early morning breakout in premarket trading on Monday. The gap and opening trade action led to a retest of Friday's highs in both the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI), while the Nasdaq Composite ($COMPX) also found resistance from the prior 5 minute highs on Friday. These resistance levels, along with the extent of the gap, made it very difficult for the market to continue higher right away out of the open and a corrective move began on the 15 minute time frame which lasted for the first half of morning trade.

Initial support hit in the indices at about the same time as the 9:45 ET correction period. The Nasdaq popped enough off these levels to retest the premarket highs, where the Nasdaq futures found resistance once again. This created a new intraday high for the index, albeit a minor one. The S&Ps and Dow, which had already been further extended, held earlier congestion and the intraday highs. They rolled over once again at approximately 10:00 am ET, coming off the 5 minute 20 period simple moving average on the all sessions time frame.

Two waves of selling on a 5 minute time frame brought the three indices into support once again at 10:30 ET. At this point they were hitting the 5 minute 20 sma intraday, as well as the 50% retracement level in the S&P 500 and 62% retracement level in the Dow and Nasdaq. These levels are based upon the rally off Friday's afternoon lows and into the morning highs. Fibonacci levels hold very well in the indices and can be extremely helpful in timing intraday corrections and reversals. In this case, it meant support for the morning's lows.

For the remainder of the morning the indices climbed higher. They retraced 62% of the selloff, stalled for about 20 minutes at 11:00 ET, and then continued at a steadier pace pace into and beyond the morning highs. The move lasted until 11:45 ET. At that point the Nasdaq was hitting Friday's highs, stalling the buying once again. The Russell 2000 also found resistance at this zone, hitting 10:00 ET highs. The Russell 2k had been lagging throughout the day and was the only index of the four to close its morning gap around 10:30 ET.

The market held the highs and price resistance for nearly an hour, basing steadily on declining volume. This created a nice bull flag forming as the indices approached their 5 minute 20 period simple moving averages for support. They broke higher once again right after 12:30 ET. The S&P 500 led the move, pushing quickly into the -38% retracement level from the move off Friday afternoon lows into the morning highs. This level held to the tick and the market turned around once again, gaining momentum on the selloff with the Nasdaq leading the downside.

Since the bull flag was not able to hit a move equal to the prior 5 minute rally and the momentum on the pullback off the resistance was on the strong side with the resistance hitting on multiple time frames, the odds were very strong that the market had seen the highs of the day. My bias flipped quickly to the bears, focusing on a move lower for the remainder of the afternoon.

The market was actually quite strong on this downside. Once it began to selloff it didn't even manage to make it back to the 5 minute 20 sma on any of the corrections and instead only formed continuation moves on a 5 minute time frame. Volume spiked with some initial support at the Nasdaq prior lows at about 14:30 ET, but a bear flag took the indices into new intraday lows at 15:00 ET. Continuing the trend of Fibonacci levels holding well, both the S&P 500 and Dow sold off until hitting their -138% retracement levels from the late morning uptrend. This strong support allowed the market to hold those lows into the closing bell.

Once again the market remained relatively unchanged on the day despite the intraday swings. The Dow gained 3 points, closing at 12,612.43. The S&P 500 rise 2.14 points and ended the day at 1,375. The Nasdaq Composite closed lower by 6.15 points at 2,366. As we head into Tuesday's session, the market is favoring a bit of upside in the morning, but the larger bias is now somewhat more bearish due to the series of slightly higher highs on the 60 minute time frame. The 20 day sma will still remain support.



Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 6:11 PM 0 Comments

Server Side vs Client Side Brokers
Regarding a question sent via email:

Hey ----,

I think what you are asking is in terms of the platform type. Some execution platforms will store your order information on your own computer as opposed to on their servers. So, if your internet goes down or your computer gets turned off, or even if your browser just gets closed accidentally, then your order is lost and will not be executed. If the order is server side, however, you have greater protection in terms of being able to keep stops in play as well as orders for protecting gains, etc. Most brokers these days are now server side, but it certainly never hurts to ask to be on the safe side!




posted by Toni Hansen @ 7:36 PM 0 Comments


Market Closes Mixed on Friday, but Advances on the Week
Good day! The market posted nice gains last week. Although most of those gains were made early on with a strong gap and trend day Monday with continuation into Tuesday morning, the S&P 500 ($SPX) and Nasdaq Composite ($COMPX) still closed higher on Friday as well.

After a mixed session, the Dow Jones Industrial Average ($DJI) was the only one of the top indices to close lower, but it did so by only a hair, losing 16.61 points, or 0.13%, to close at 12,609.42. On the week as a whole it rose 3.2%. The S&P 500 gained 1.09 points, or 0.08%, and closed at 1,370.40. It gained 4.2% last week. The Nasdaq Composite performed the best, gaining 7.68 points, or 0.33%. It closed at 2,370.98, up 4.9% on the week with technology leading the market. Finally, the Russell 2000 ($RUT) added 0.16 point or 0.02%. It closed at 713.73 on Friday.

There were not a lot of standouts in terms of sector performance on Friday. The leaders were in biotechnology, pharmaceuticals, commodity related equities, and oil services. The AMEX Biotechnology Index, which was the strongest sector, rose 1.82% on Friday. Telecommunications, broker/dealers, banking, and housing related equities were the poorest performers as a whole. The Philadelphia Banking Sector was the weakest, losing 2.22%.

The index futures were trading higher in premarket action on Friday, breaking out of a range around 7:00 am ET. At 8:30 am ET, however, March employment data hit the wires and the futures quickly reclaimed the earlier gains. The Labor Department reported that nonfarm payrolls fell by approximately 80,000 in March. This is the largest decline since March 2003. Economists were expecting payrolls to fall by about 60,000. Adding to the disappointment was a revision lower by 67,000 in January and February payrolls. This was the 4th consecutive monthly loss for private sector payrolls. The economy has lost an estimated 232,000 jobs on the year to date.

The only sectors to add jobs last month were education, government, mining, and food services. Positions in manufacturing dropped by the largest number since July 2003, while General Motors Corp. (GM) reflected losses in the motor-vehicle sector. It fell 4.7% on Friday when word hit that a plan to help auto-parts manufacturer Delphi Corp. (DPHIQ) emerge from bankruptcy fell through.

As payrolls fell, the country's unemployment rate climbed to 5.1% last month. This is the highest it has been in over 2 1/2 years. Federal Reserve Chairman Ben Bernanke had given testimony last Wednesday on the state of the economy, expressing a view that, while a recession was possible throughout the first half of this year, they are expecting things to turn around over the summer. Of course, who really expects the Fed to truly express any negativity as far as the economy is concerned. It appears that the recession which they deem possible is already well underway. Friday's jobs data is going to be factored into this month's upcoming federal funds interest rate decision and has increased speculation of yet another rate cut coming out of this month's two-day meeting on April 30th.

Although the market opened relatively unchanged on Friday despite the weak jobs data, the indices continued to digest the news following the open. The market congested for the first 30 minutes of the day, but then broke lower once again out of 10:00 am ET. It fell sharply for about 15 minutes, but then the momentum began to shift. After retesting the lows on a 2-5 minute time frame the market was able to turn back around. The S&P 500 and Nasdaq Composite had found support from Thursday's morning congestion, while the Dow hit support at Thursday's lows. These levels assisted the market recovery in the second half of the morning on Friday.

The indices were back at the morning highs by 11:30 am ET. At that point they began to pullback a bit off the intraday highs. The 5 minute 20 period simple moving average held as support, as did the 12:00 p.m. ET correction period. A second wave of buying kicked off on the 5 and 15 minute times frames into the early afternoon.

The upside was strong to begin with on Friday afternoon, but within 15 minute the S&Ps and Dow were hitting Thursday's highs. This resistance slowed the ascent, but it stalled for only about 15-20 minutes before the market again began to push to new intraday highs. This push gained momentum briefly into 13:00 ET, but the market was not able to sustain that pace. The market had hit the equal move zone as compared to the late morning rally, but it managed a third early afternoon push to complete a 5 minute trend move into 13:30 ET on the continuation. This move took the indices into equal move resistance on the 15 minute time frame as compared to Thursday's rally and the momentum shift on the 5 minute time frame, opening the door for a late day reversal Friday afternoon.

When the market turned, it did so rather quickly. The 5 minute 20 sma barely stalled the selling and the indices easily moved lower into earlier congestion and 5 minute highs for support at 14:30 ET. The 5 minute 20 sma then served as resistance and the light volume into that level allowed the market to continue lower into the final 30 minutes of trade, reclaiming most of the session's gains before the closing bell. Support once again hit with an equal move. This time it was on a 5 minute time frame on the downside. Each of these measured moves are shown in blue on the 5 and 15 minute time frames and offer very strong levels for both support, as well as resistance, within a trend when a continuation move is underway.

We are heading into the beginning of earnings season this week. Alcoa Inc. (AA), which traditionally kicks off earnings season, annouces after the closing bell on Monday. The indices are favoring a continuation of this relatively sideways congestion zone on th 60 minute charts as the week begins, but the market bias as a whole remains bullish at this point. The 20 day simple moving average in the indices is going to serve as support, but a gradual pullback into that level would be more favorable for continued upside as the month wears on.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)




posted by Toni Hansen @ 4:51 PM 0 Comments

Economic and Earnings Reports This Week
Economic Reports and Events This Week

Monday, April 7, 2008
3:00p.m. Feb Consumer Credit. Expected: $6.0B. Previous: $6.9B.

Tuesday, April 8, 2008
7:45a.m. ICSC Chain Store Sales Index. Previous: -0.2%.
8:55a.m. Redbook Retail Sales Index For Apr 5. Previous: +1.7%.
10:00a.m. Feb Pending Home Sales Index. Expected: -1.5%. Previous: Unch.
2:00p.m. FOMC Minutes.
5:00p.m. ABC/Wash Post Consumer Conf. Previous: -33.

hefeiddd

Saturday, May 31, 2008Market Ends Week With Mixed Trade
Good day! The market lacked a strong trend bias on Friday. After several days of strong upside, the indices had hit decent resistance at afternoon highs on Thursday, particularly in the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI). As I stated over past several days, the Nasdaq Composite ($COMPX) has had more room to push higher and we saw that occur from the start of trading on Friday. It was the only one of the four major indices to break Thursday's highs. The Russell 2000 had a very gradual upside intraday on Friday, but it had fallen further on Thursday afternoon and was not able to push through those highs.

As I mentioned in Friday's column, I was looking for a larger correction off Thursday's highs heading into the weekend. Initially I was expecting this to come more in the form of price correction, but instead the indices fell into a congestive type of correction. Both the S&P 500 and Dow merely chopped sideways throughout the entire day. Meanwhile, the Nasdaq crept higher along the 15 minute 20 period simple moving average.

The indices turned over a final time into the last hour of the day, moving off the upper end of the day's channel and back into the lower end of it. The flush was the steepest action of the day, particularly the final move of the last 5 minutes into the close. This was perhaps a bit of a response created by profit-taking following the week's gains and concern from the mediocre performance throughout Friday's session which would have created some hesitation from bulls into the weekend.

Dow Jones Industrial Average ($DJI)


A number of individual stocks stood out on Friday, making the day easier for equity traders than those looking for anything more than a scalp in the indices. The energy sector led gainers, up 1.5% on average on the day. Information technology rose an average of 1%. Petrohawk Energy Corp. was up 13.22% on Friday, leading gainers on the NYSE. Patriot Coal Corp. (PCX) rose 8.85%. Arch Coal Inc. (ACI) was another that trended higher throughout the day, gaining 5.34%. Forest Oil Corp. (FST) had a strong intraday trend and rose 4.56%. Other top gainers were PVA (+18.91%), GSP (+15.48%), HXL (+12.26%), and CRK (+11.06%).

On the Nasdaq the major gainers for the day were Marvell Technology Group (MRVL) (+29.3%), Wind River Systems (WIND), Energy Conversion Devices (ENER), and Infosys Technologies (INFY) (+8.27%). MRVL's 6-month highs were thanks to a better-than-expected earnings report late Thursday brought about in large part by sales of Wi-Fi and 3G chips. WIND's upside was also due to strong earnings. ENER's upside was fueled by strength among solar companies, particularly those with exposure to the German market, which is the larger market for this type of power. INFY rose on heavy volume after it raised its price target by 27%.

S&P 500 ($SPX)


As is obvious by the overall market performance, however, not as many stocks were as lucky as those listed above. J Crew Group (JCG) was a notable loser, falling 20.55% on Friday after it cut its outlook for the remainder of the year. It gapped sharply lower, but then ended up stuck in a range for the rest of the day due to that extreme open. Those that established strong losses with the advantage to traders of also having strong intraday trends included Ashland Inc. (ASH) (-7.91%), Weyerhaeuser Co. (WY) (-7.58%), and New Oriental Ed & Tech Group (EDU) (-5.48%) on the NYSE. Medical Action Inds. Inc. (MDCI) led the losers on the Nasdaq after they announced Q4 and fiscal year-end earnings that were 12.5% lower than a year earlier. It fell 21.65% by the close. Sigma Designs (SIGM) was another huge loser, falling 15.56% after its fiscal first quarter profit fell 13% and failed to meet estimates. Both of these traded in a range throughout most of the session after the opening gaps.

Nasdaq Composite ($COMPX)


Volume was light on Friday amid the congestion. The Dow Jones Industrial Average fell 7.9 points on Friday to close at 12,638.32. This amounted to a gain of 1.2% on the week, but it was still a 1.4% loss on the month. The S&P 500 rose 2.12 points and closed at 1,400.38 for a weekly loss of 1.8%, but a monthly gain of 1.1%. The Nasdaq Composite gained 14.34 points and closed at 2,522.66 on Friday. This gave it a 3.2% increase on the week and 4.6% on the month.

The month was saved after falling off highs two weeks earlier due in part to the upside exhaustion of oil prices when crude hit the $135 a barrel zone. Over the past week it has been pulling back while


Trade and Commentary Wrapup 20080530
Hi gang, Here is the initial wrapup from Friday. I will clean up the logs a bit this weekend and post some additional charts as well as soon as I get a chance, so please check by and refresh your page later this weekend to view...


09:35 Toni: wicked open in the NQ... was up nice premarket but crashed into the open.... still managed a gap but down a lot from premarket highs
09:35 Toni: has some support in here
09:38 Toni: as i mentioned in the mraket letter, i have a bearish bias into the morning today ... want to see a larger correction off yesterday's highs, even if its a range



09:39 Toni: great daily chart on NVDA for more upside.. will watch for a correction



09:47 Toni: futures are still dealing with that earlier support .. pretty choppy again so far
09:53 Toni: 5 min time frames are holding up well off the support in the indices
09:54 Toni: going to have to get a momentum shift in order to get much downside agan
09:55 Toni: 2 min resistance in here

09:56 snarfieag: TIF more upside today?
09:57 Toni: yes but best if it bases a little here first
09:58 snarfieag: thanks toni