The Dollar may be done consolidating intermediate term and ready to move again. That means that Energy and Commodity stocks might stall a bit today. There is no significant news catalyst this morning that has pre-market futures down. We are still in the Stage 1 consensus I wrote about last week, which is the Earnings Warning season. The main difference between last week and this week is that we are more likely to get some volume in the markets, which means that Big Traders are now going to lay down their bets for Stage 1. Typical to Stage 1, the reasoning for the Bears today is a "concern" that corporate profits will stay in a slump. When we get the actual earnings in the middle of the month the market will transition into the Stage 2 consensus.
Long-term the markets are in a variation of a Descent Block pattern on the Monthly charts. So there are big battles happening on every time frame. Intermediate term the market is still neutral, and short term the market is still pushing through an upswing, which will see it's first real test this morning.
Here is a chart of the SPY:
(click on image to enlarge)
(click on image to enlarge)
You can see that the futures are showing a gap down of about .70 cents or so. The key to the day will be whether the Bulls fight through the gap or not. The Bulls have been trying to close the gap pre-market (probably on the news that Steve Jobs is healthy again.....), so this will be an interesting morning. The Naz broke out on light volume last Friday, and the SPX and Dow had minor breakouts on light volume. If the Bulls can't overcome the gap this morning, then the current upswing may be over. Expect volume to increase today.
Thanks Dwight,
ReplyDeleteNibbled a contract of the SPY Feb$92 Call based on the 5min candles end of flag down. Target $95 but I'm out like a flash if I'm wrong and the bulls give it up like Dwight says.
So far so good
My SU calls are also safe so far as we take a breather at $22.50 area of short term resistance.
Francis
Hi Dwight
ReplyDeleteGlad to be back in 2009 and reading your blog.
I have never heard of 'Descent Block pattern'. I assume it implies that there is a different trend in each time frame as context suggests. Does it often occur at a trend reversal? Do we recognize it from the three trends?
Thaks, Ken B
Happy New Year Everyone!
ReplyDeleteGlad to be back after a troubling month personally, now I am ready to get right back into trading. I have been following everyone's comments and just wanted you all to know how very helpful everyone's input truly is. Will be sharing mine again.........
Laurie thanks for that link
Happy New Year Margo!
ReplyDeleteGood for you in keeping your positive spirits up!
Sounds like you are consciously attracting great things that you want, well done.
Francis
Hey everyone,
ReplyDeleteI don't plan on doing much today or tomorrow, will probably get back into things Wednesday. Wish I was in that SU trade with you Francis, saw it too late. Thanks for that link Laurie! By the way, has anyone read any charting books? I want to really put some time into learning some more patterns and candlestick formations.
Joe
Thanks for the link Laurie
ReplyDeleteKen B
pulled the trigger with my SPY call when I saw 93 acting as resistance and the ESH9 future started dropping in advance.$30bucks for my efforts but I can't watch the screens so much this am and in retrospect, maybe could have put in a conditional order to sell at $95 target and $92 support.
ReplyDeleteStill learning.
Put a stop in for my SU calls at 50cents above my cost.
Always another trading opportunity Joe, remind myself to keep seeing the market as a place of abundance and not lack.
Francis
Joe - I like the book that Laurie provided the link to (Candlestick Charting Explained by Gregory Morris). It is a good reference manual.
ReplyDelete- Troy
Francis,
ReplyDeleteI like your New Year attitude!
Claudia,
Sorry for your troubles, but it's good to have you back. Hope the new year treats you well!
Joe,
Dwight has remarked that Morris' book is a good source. I think there are two texts; one is much more exhaustive(maybe unnecessary?) Both are listed at AMZN. I haven't purchased a copy of the Candlestick Charting, but I've asked my library to buy one!
I picked up an APR 35 Call on STR when it gapped up and the morning star on the 15s confirmed. STR showed up when I reviewed the stocks in the XNG sector Dwight told us about. Hoping STR will reach 38-40, ??? 45.
Question: When I heard Dwight last, he mentioned using longer timeframes. Is he still watching charts on the 30s?
Good trading all!
Thanks for the comments! Looks like the major indices are battling with the lower trendline in the upward channel we're currently in (15m). Break below 92 - 91.50 and I'd say we're gonna head down for a few days..what do you guys think?
ReplyDeleteFrancis,
Good call on SPY. I think you made a good decision because the chart seems to be weakening. I think SU has a good chance for 25 if not 26.
Laurie,
I like the gap up with STR and the break of resistance along with the upward trend line. Watch the 37.50 area and if we clear that the 40 - 42.50 area is next.
Joe
check out the hammer or shooting star forming on the SPY daily candles.
ReplyDeleteMight as well wait this flag bears out.
if $90 holds as new short term support, would be worth another call play.
Francis
Laurie, well done on your STR!
Thank you for the feedback, Joe. I'm happy to have another pair of "trader eyes" in on this speculation.
ReplyDeleteThanks, Francis. The story's not done on STR (I hope). At this point I'm b/e, but it held the gap and shows a bullish engulfing on the 30s.
Also, Francis, I was referring to your reminder "to keep seeing the market as a place of abundance and not lack", in my previous post. Good perspective,there.
Great learning from your feedback to Laurie!
ReplyDeleteInvestools were up in our neck of the woods for an Investing Foundation Workshop which I reattended and the instructor there also emphasized that there are always more opportunities and not to chase an entry if you feel you've missed out.
That hit home for me again not to focus on my perceived lost opportunities ( as I will only attract more of such ) and instead keep looking for more opportunities and have the attitude that the marketplace is a smorgasboard of a kazillion ways to make money! That way, we'll attract more of what we are wanting to see in a positive way! Been working so far.
So here's to profits for all!
Francis
Hi All,
ReplyDeleteJust went thru your chats today... Wow, you guys are "High Powered"! It is truly my priveledge to be in this with you. I can't wait to have some skills to be able to join in... I'll continue to be working hard get this. Thanks!
Scott L.
Hi Everyone,
ReplyDeleteSorry I was MIA today but business called and I wasn't able to watch the market closely until later in the day. I picked up another call on GILD as the Naz looks the best out of them all. Sold all but one SUN call today into the strength and am watching 44.50 cause I have a Jan position and theta is not my friend. I was a few days early when I was thrown out of MHS calls while it waited until last minute to break out of the ascending triangle.
Laurie,
I checked out that site and it looks very helpful...thanks!!
Nice trade on STR. April 35's I assume?
Joe,
Pretty smart on your part sitting out. I want to see what the big money does here too!
Hope to participate here tomorrow.
Looks like everyone's doing good so far this year! Great start!
ReplyDeleteGary,
MHS still doesn't look like it's broken out yet. It broke resistance at 43.50 but it's still in play for a breakout. Hopefully we can get some time of breakaway gap and ride that up for awhile, maybe 47?
By the way, I'm gonna go with Morris' book. I'm also gonna get the Encyclopedia of Chart Patterns by Bulkowski. It got great reviews and even though it's a bit expensive I think it will prove helpful.
Joe
Joe, This is what I'm looking at:
ReplyDeletehttp://www.screencast.com/users/BODYBOY/folders/Jing/media/09d96718-c2c9-4943-a428-c7c8d7efd59c
Ahh, my bad Gary! Sorry about that, misread your post. Isn't there a rising wedge in there also?
ReplyDeleteBy the way, has anyone read or heard of "Trade Chart Patterns Like The Pros" by Suri Duddella? From what I've seen it looks like one of the best charting books out there. Sorry for all the book questions..
Joe