Friday, July 18, 2014

Dow Chart II

Dow had the failed breakout and sharp move back inside the current pattern on the Daily chart with heavy volume yesterday.  I have highlighted the failed breakout with the blue oval.  Notice the lower sub graph of volume, although this has been nothing new in Equities in the days of QEternity.

Interesting to note how the Hourly chart saw the Dow get rejected at rising resistance.  For now the Dow is in a zone of chopfest/noise.  But there was a high reward to risk ratio short trade yesterday, and those have been almost extinct the past few years.  More to come on the Dow in the coming days.

(Click on chart to expand)

Tuesday, July 15, 2014

Dow Chart

Like the other major Equity Indexes the Dow Futures Chart is dominated with poor Bullish Volume (green) on the lower Sub-Graph compared to the Bearish Volume in red.  Now we have an interesting pattern in the Dow since early June with three points of contact on the Daily chart for both support and resistance trendlines in this time period.  If there is a failed break and reversal back inside the constricting trendlines it could set up a large reward to risk ratio. 

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)

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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. 

Saturday, June 7, 2014

Equities futures break resistance. What I will pay attention to in the Charts now.

This is a follow up on yesterday's post outlining the key chart developments here.  Well the shorts must be nervous going into the weekend as the Russell 2000 and S&P 500 broke out from minor resistance in the Daily timeframe and closed near top tick on the session.  Volume was down from the previous day.  A Monday bearish day and close back beneath these trendlines with increasing Volume might set up an opportunity for a near term reversal and an entry to go short with well defined risk above the swing.  In the meantime the trend might be up near term so those sitting with a losing short from down below and praying is one really bad spot to be in as it usually leads to pain when holding onto the wrong side of a breakout.

(Click on charts to expand)

S&P 500 (ES) - Notice the Volume Moving Average which has been going south while the market goes parabolic here.

Russell 2000 (TF)

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Friday, June 6, 2014

Potential short trade setups or potential breakouts in Equities on these charts

The S&P 500 and the Russell 2000 futures both have some minor resistance approaching in the Daily timeframe and a breakout with surging Volume at the end of the day I would imagine is going to have the stubborn and leveraged Bears in an awful position to ponder over the weekend.  However the failed breakout and sharp reversal with increasing Volume can setup the reversal in a given timeframe with well defined risk. Japanese Candlestick Analysis/Confirmation may be something to pay close attention to along with the Volume at these key reference areas.

(The one thing I have come to believe in the business of trading is that trade location for entry is the single most overrated aspect of trading or focus of a trade plan.  How many traders spend all their time on it and still go broke?  Seriously, that is my strongest belief and I mean no offense or disrespect to those who believe otherwise.  I believe how you exit a trade is much more important, but even more so the trade management (where to add, where to reduce, where to flatten, when to cancel, trail a stop, etc) is far more important for a discretionary trader.  Let's not forget that there is no entry/exit/trade without first becoming an expert on your position sizing/money management/risk management principles compared to your account size/capital.)

Prior to yesterday the Volume has been mostly below average with the most recent rally over the past two weeks which can be seen clearly on the vertical axis in these two Equity futures.  Also the Volume Profile is an interesting read in the TF with the bulk of trading in this timeframe in a range between 1090-1135.  There are two ways to looks at that for me.  One, the perceived value or fairest place to do business is in here at the high volume node (purple horizontal line) and markets tend to migrate back to value with weak breakout attempts to move away from value.  Two, the current open interest is likely very high in here and a breakout will bring pain for a majority of those on the losing side of the contract.  If the losers are "weak handed/overly leveraged" things could get explosive in TF at some point as the stop losses get hit and panic fever gets high in those who have no stops in place.

Anyway these Equity markets look quite interesting to me here.  There is also a potential "H&S" in TF brewing (neckline dashed) should a right shoulder develop.  It's early and a meaningless pattern at this point, but one worth paying attention to should the conditions become "ripe". 

Russell 2000 (TF)

S&P 500 (ES)

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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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Saturday, May 24, 2014

Nasdaq Composite Index is showing some Divergence in the NH-NL's Indicator

The Nasdaq Composite Index was breaking out the past two days from a consolidation pattern on the Daily chart, but what is interesting is the Breadth Indicator for 52 Week New Highs Minus New Lows is lagging.  Going back to the most recent swing high on April 24 the Breadth Indicator rolled over on the this Cumulative Indicator.

Nasdaq Composite Index

 New Highs Minus New Lows

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.

Sunday, May 11, 2014

Nasdaq 100

Quite an interesting pattern in the Nasdaq 100, with the lower subgraph in Volume about as glaring as it gets.