Friday, October 31, 2014

Nikkei 225 looks to be "out of control"

The whipsaw in the Nikkei 225 in the daily time frame is practically unreal.  Since the failed break on the lower trendline support, which I highlighted with a blue oval, this market has rallied over 2,000 points in less than a month.  But prior to that there was a wicked sharp sell-off as well.  This market is a powder keg of TNT explosives.

The weekly timeframe takes out as much noise as possible and the Nikkei 225 is heading toward trendline resistance.  This resembles a "rising flag" after the big move off the initial trendline breakout nearly two years ago.  More fireworks to come?  We shall see...

Monday, September 29, 2014

A look at the Nasdaq Composite Index underneath the hood

The Nasdaq Composite Index breadth indicators are jumping off the pages these days.  I have two charts below, but first of all going back to Friday September 19th, 2014, over the past six trading sessions there have been more "new" 52 week lows in this index than new 52 week highs, and there have been days that saw this market rally.  Now put that in context of where this Index is trading when you look at the raw numbers.

According to Markets Diary (Which I get from ETFDigest):

September 19 - 90 New Highs and 149 New Lows
September 22 - 31 New Highs and 147 New Lows
September 23 - 22 New Highs and 135 New Lows
September 24 - 29 New Highs and 136 New Lows
September 25 - 24 New Highs and 167 New Lows
September 26 - 30 New Highs and 96 New Lows

Next I am sharing the chart of the Nasdaq Advance Decline Cumulative Line. This Breadth indicator is making new lows.  When studying this chart by itself, without knowing the year one would think this was a market that was in a downward trend and confirming new lows.  I would say this is serious Bearish Negative Divergence.

This market may repair itself, but in my opinion it should get to work on doing so soon.

Here is the last chart of the Nasdaq Composite Index for some perspective.

Friday, July 4, 2014

The dichotomy in Volume to Price in the Nasdaq 100 is jaw dropping

This chart pattern to me is unfathomable as I see it, but in the day of QEternity anything is possible.  The Volume in the Nasdaq 100 has been below average nearly every day for the last six weeks as the index is in a moonshot launch type mode.  The 50 period simple moving average volume traded in a day over that time period is down nearly 100,000 contracts.    

(Click on chart to expand)

Tuesday, July 1, 2014

Silver is at a key reference area to trade from

Silver is at a significant trendline here on the Daily chart.  In my opinion the Bulls would rather see that recent above average Volume expanding on a breakout rather than coming into resistance. 

Tuesday, May 27, 2014

Things got exciting as expected in the Gold Futures with the nasty breakdown from an obvious pattern

The Gold futures had a ripe looking Triangle on the 3 month Daily chart, and there was nothing random about what took place today from this chartist's perspective.  The higher probability trade is with the previous trend coming into a consolidation range, and the path of least resistance in Gold's case was lower.  There should be no surprise that the breakdown was sharp today as the high volume node that built up in this range was a sign that a heavy amount of recent open interest on the wrong side of a break was going to be running for cover and in pain with any surge in price.  Notice the monster volume today on the lower sub-graph as the Bears took advantage of the situation.  It is best to be prepared whether a trader is on the sidelines looking to get in a position, or has a position on and is looking to add to a winner (for the short) or exit a long (risk management).  Nothing is certain with chart analysis, but understanding the phase of development a market is trading is as important as it gets in my opinion before doing anything, followed next by having a plan at "key reference areas" to trade from once that phase of development has been correctly identified. 

A previous post just the other day on this blog outlined this pattern and potential for the fireworks ahead of time as can be seen here.

(Click on chart to expand)

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Thursday, May 22, 2014

Things might start getting exciting again in the Gold Futures

The Gold futures are Coiling up on the Daily chart which I have highlighted with blue trendlines.  This has been a boring market for quiet some time, but she looks ripe for fireworks and a potential trend coming out out of a pattern such as this one.  The high volume node on the 6 month Daily chart is right here and there is plenty of open interest that can get burned real good on the wrong side of the trade if she takes off.

Saturday, April 26, 2014

Blog Update

I will be taking some time off from Blogging.  Stay in touch via email.  Thanks for checking in.


Monday, March 31, 2014

Failed Breakouts are strong signals

Here is a quick look at the recent breakout and failure of the Gold futures on the Hourly and Daily charts.  First notice the four points of contact on the left hand side hourly chart which solidifies this trendline as significant.  On the right side Daily chart the oval highlights the reversal above trendline resistance.  The lack of surging and sustained expanding Volume didn't help the Bulls on the breakout.

(Click on chart to expand)

Next the Hourly chart also has a breakdown and back-test as well.  The new swing low on the hourly chart opened the flood gates a bit after losing trendline support.  There was the re-test of the significant trendline on the above chart, but the Bulls failed to make a new swing high afterward which might have had the Bears scrambling.  The lack of follow through from the bigger picture Daily chart hurt the Bulls in this case for the time being. 

(Click on chart to expand)

This horizontal zone at $1275 is a major level in the Big Picture.

Saturday, March 15, 2014

Nasdaq 100 is in a bad spot for the Bulls near term

There has not been many reasons to favor the short trade intraday when trading the Nasdaq 100 futures, but now the Bears are in control of the path of least resistance in the near term picture, which can be seen by the breakdown of the Hourly chart pattern, see left hand side below.  This details of this pattern was laid out in a prior post here before the breakdown.  The Daily chart looks overextended to the upside with the volatile expanding triangle or megaphone pattern, see right hand side below.  The details of this pattern and the implications were also laid out in a prior post here.

Until the Nasdaq 100 can re-take the 3640 level to the upside, and preferably on surging volume, I believe the better day-trade for now is going to be on the short side with any failed breakouts to the upside intraday or with any bearish reversal patterns or bearish continuation patterns.  The opportunities to short this market have been so few and far between for years, but until this market reverses back above this prior support level on the hourly chart the probabilities favor that trade in my opinion.  This horizontal level should now act as a decent overhead resistance level.  If the Bulls rip it higher from here what can you do but step aside and take the small loss if trading is on the short side. 

(Click on chart to expand)

One thing to point out that has been a huge concern for me with the health of the Bull market is the pattern in Volume in the Daily timeframe, which can be seen on the lower sub-graph of the Daily chart.  That chart is dominated with large red bars, which means it was accompanying Bearish Price action.  The supply side pressure is much more intense.  If I remove the upper graph, and a non-biased trader spent time looking at only the chart in Volume, without knowing price, one would swear this was a Bear market with every rally getting crushed.  It is a must to click on the charts and spend time observing.

The fact that this is a Bull market screams that this is a pattern of Distribution.  Smart money accumulated a long time ago, and what it looks like from a historical perspective is the smart money is dishing it out to the "late to the party misinformed public" who has been whipped up by greed.

(Click on chart to expand)

Wednesday, March 12, 2014

Gold is breaking out on multiple timeframes

Gold futures broke out from trendline resistance on the 30 min chart and this also coincided with the breakout in the Daily timeframe as well.   Will we see confirmation in Volume and with continuation patterns developing from here?  We shall see, and I know what I am looking for.

Notice the three points of contact at trendline resistance on both charts below.  Any trendline with three points of contact is a significant key reference area to trade from in a given timeframe.  This provides a favorable trade location in terms of probabilities for an increase or decrease in the supply and demand probabilities.  Should the Volume start expanding with the bullish price action from here the Bears are going to start feeling some heat.

Bears want to see a failed breakout and reversal back below the prior resistance.  These levels may act as support on any pullback and that would likely be a big test between the Bulls and Bears.

(Click on chart to expand)