Wisdom

A trader should have no opinion. The stronger your opinion, the harder it is to get out of a losing position.

S&P analysis for 4/29/2010

The market had a strong day today on decent volume closing above the 20 day moving average, the 1185 level is holding as support after a couple of tests on heavy volume the last two weeks and unless we brake below it, we shouldn't fight the trend.
If 1185 is broken down we are looking at the test of the rising 50 day moving average around 1172 for next support and after that 1153.
For tomorrow, we probably will be looking at testing the previous highs, but also the top of the trading range.

Market Sell Off

Following yesterday's weakness, the market opened with a gap down which was quickly filled up to yesterday's lows around 1211.50, after that the market sold off hard, bringing the index down 24 points breaking below the daily 20 day moving average before finding initial support at 1187.50, from there it bounced 11 points to resistance at 1198.50 before the 2nd sell off wave came in leaving the S&P at 1183.71 that's 27 points below!
The market has broken the raising trend line and the 20 day moving average on the daily chart, those are strong levels of support and big damage has been inflicted, for the uptrend to remain intact we needed the market to stay above 1185
The next level of support is the rising 50 day moving average on the daily chart around 1167 and then 1155
Notice the big volume days on the two selloff's days, which indicate institutional distribution.
The VIX had a 25% pop putting it back above 20 at 22.81
Tomorrow is Fed's day so the market could bounce after the FOMC announcement, we'll see.

S&P weakness

Today the market posted new highs at 1219.80 but quickly sold off breaking the short term support around 1214.
The financials were specially weak, contributing to the S&P pullback.
Next levels of support are first 1200, then the rising daily 20 day moving average around 1195 and then 1185.
Another important sign of weakness was the VIX which spiked 5%

Wisdom

Letting Winners Turn in to Losers

Many of us have probably had a time when a trade was making big loot, and we started to count the profits like they were ours before we exited the trade. When the stock started to lose the ground it had gained, we avoided selling because we had built up an emotional attachment to the paper profits we had seen. Instead of selling the stock to lock in some gain, we opted to hold out for the stock to go back to where it used to be, promising to sell when it came back to the point where we felt good about the trade. The stock drifts lower, and eventually the gain turns in to a loss. We ultimately sell it at the bottom, swearing never to do it again. But without some reprogramming, we probably will.

S&P and the VIX

The S&P rises again on Friday to new highs closing at 1217.28, but I noticed that the VIX rose along with it, which means that heavy put buying was hedging against the market.

S&P bounced back

Yesterday's doji on the daily chart was forecasting the market's sell off that started right after the closing bell, and continued until 10:00 AM this morning, bringing the S&P down 17 points from yesterday's close.
The 20 day moving average on the daily chart at 1190 proofed to be strong support where the bulls took over the weakness offered and brought the index back up to overbought territory at 1210 resistance, if we continue higher tomorrow and break through resistance at 1213.50 the next resistance is at the upper raising trend line at 1226 and on the way down support is at 1202.50 and then around 1193
Intraday volatility has increased substantially this week, providing plenty of opportunity for day traders.
Today's speech from president Obama saying that he believes in a free market also helped the bulls.

SPX Candlestick

On Wednesday the market had a wild ride, perfect to make big $$.
The S&P opened and quickly went to a high of 1210.99 up 4 points stalling around 10:00 AM , to then sell off 8 points to support around 1202, back up again 6 points to 1208.50, establishing resistance at that level (yesterday's highs), to then fall 10 points to 1198.85 breaking yesterday's lows, to then retrace back up a little over 50% to finish the session at 1205.94, in total the index traveled 36 points! Kashing!!!
After all that action the S&P made a higher high and a lower low closing almost flat creating a doji on the daily chart, so at this time anything goes.
Support is still at Friday's lows at 1185 and levels of resistance first at 1210 and then at 1213.50

S&P Analysis for 4/20/2010

Well folks, looks like the market is determined to break new highs as it completely ignored the Goldman Sachs saga, and being in a bull market it quickly recovered from Friday's pullback.
Last week highs on the SPY were 121.57 and today in after market the SPY reached 121.31, not much effort from here to gap up tomorrow and open at new highs.
Resistance is around 121, which was broken in after market, let's see if it holds, and of course the next level of resistance is around 121.50
On the way down we have levels of support at 120.60, then 120 and  strong support at 118.50 which was yesterday's low.

Wisdom

Technical Analysis relies upon the idea that smart money will move into a market and give advance warning that a position should be taken. This often occurs when the true major fundamentals are unknown.
While Fundamental Analysis may help you understand how things work, it does not tell you when, or how much. Also, by the time a fundamental case presents, the move may already be over.

SPX bounce

As indicated on Friday, the S&P found support on the daily 20 moving average around 1184, nicely bouncing from there retracing 50% to 1197.52
On the 60 minute chart, the S&P has resistance on the 20 & 50 moving averages, but oscillators on this time frame remain bullish.
On the daily chart oscillators remain bearish.
Citibank reported positive earnings, along with market comments that Friday's sell off due to GS was overdone helped change the market's sentiment.

SPY volatility.

This chart shows SPY with the 20-day Standard Deviation and 20-day Average True Range. 20 days is about one month. Both indicators moved lower through 2009. The Standard Deviation experienced a few hiccups with surges in March and late July, but ATR marched steadily lower. Both broke to new lows for the year in December.  The S&P 500 Volatility Index ($VIX) is overlaid on the SPY price plot. Notice that it fell along with these volatility indicators, which makes sense. Also notice that SPY advanced while all three volatility measures declines. It appears that the stock market likes falling volatility.

Wisdom

Many times, when the going gets tough, tough traders get lazy. You must always be picky about the kind of trades you make, particularly when the market is weak. Working hard to find opportunities will not make you more money, working hard at being disciplined will. Teach yourself to look forward to the slow times. Make a list of things that you are going to do when the market slows down. Perhaps most importantly, if you depend on the market for a paycheck, make sure that you bank money when the market is good so that you don’t have to trade when the market slows down.

S&P Sell-Off

Finally a day for traders to have some fun.
The market opened with a small gap down, but nobody was expecting what was coming next.
At 10:30 am news that the SEC was charging Goldman Sacks with mortgage fraud came out and the market reacted with an initial 7 point drop, that caught most traders by surprise.
After the initial leg down, the market retraced 50% to the 5 EMA giving traders the opportunity to jump in short for a very nice day.
All together the market dropped 23 points, breaking support levels across the board, until finally finding support at 1186.80
After the closing bell the S&P finished the day at 1192.35
The next level of support to watch is the daily 20 moving average at 1182

S&P 500 best six months Strategy + Timing

According to the Stock Trader's Almanac, this chart shows the S&P 500 best six months strategy and timing using the MACD.

S&P 500 Analysis for 4/15/2010

The S&P continue it's way higher, breaking new resistance levels along the way, which then become support, posting a new high of 1213.92 today.
Obviously the smart thing to do, is to keep trading what the tape is offering us, instead of questioning it.
The market is quickly approaching 1230, which is the 61.8% Fibonacci retracement level of the 2007 high's, that will offer some serious resistance, and it seems that there is where the market is heading.
Tomorrow is options expiration and some volatility should be expected.

SPX at resistance

After today's run the S&P is sitting at resistance on the upper trendline channel, a pullback to the lower trendline would be the obvious thing to happen but lately the market is leaving everyone puzzled, so expect the un-expected.

SPX

The bulls won't let go, INTC, JPM, UPS all reported good earnings helping the market keep going with full force for another 10 pointer day.

Tomorrow is income tax deadline and the market has been up 83% of the time in the last 30 years.

And Friday options expiration day, the market has been up 85% since March 2009

The trend is up, up..................

SPX Volume

I can't stress the importance to notice that the S&P volume is at it's lowest in years, which can be caused by several reasons.
Complacency, causing traders and investors to feel comfortable with their positions, therefore reducing turnover.
Fear that the market could crash hard, so they are staying on the sidelines.
Prices are to high, they missed the rally.
Lack of capital, believed or not we are still in a distressed economy.

S&P

The market opened with a small gap down of 50 cents at 1195.95, which became initial resistance after bouncing from a 2.70 point drop. Then after breafly touching resistance it quickly sold off 7 points finding support at prior's intraday pullback of 1188.80 , bouncing from there the rest of the day, first going through initial resistance at 1195.90, then 1196.50 to finally reach 1199 which was yesterday's high, very nice play for a multi-point day, 7 points down and 11 points up.
Volume again was on the low side and resistance remains at 1200

VIX

The S&P volatility index closed at it's lowest levels in a year, at this point traders are trying to figure out if complacency is a sign that the bears are around the corner or that the market recovery will continue with the bulls buying any attempt to pullback creating more short squeezes for the bears frustation.
The reality is that the low volume we have been experiencing shows a complete lack of commitment from either side.

Low volume and indecision

Today the market opened up by around 0.55 cents at 1194.95 which became a good level of support for the rest of the day.
On the 5 minute chart we can see that the market rallied at the opening into the level of resistance around 1197.75 - 1198 that we talked about this morning, it even went a little higher, before retracing back to support at 1194.75, before retracing back up to resistance around 1198.
Those levels of support and resistance were good for 3 points each way.

The rest of the day, the market stayed in a low volume range but regardless it made a new high almost touching the 1200 mark, before pulling back to close almost flat.
The trend is still up while the earnings season starts with good expectations on the financials, we'll see.

Wisdom

"Fundamentalists and anticipators may have difficulties with risk control because a trade keeps looking ‘better’ the more it goes against them. " Ed Seykota

S&P Monday 4/12/10 AM

The Market gapped up 5+ points overnight with the news that Greece was being bailed out, but as 8:00 AM this morning, the market has giving back all those gains.
For today's trading day, we have the  S&P first resistance at 1194.66, 2nd resistance around 1196.75 and 3rd resistance at 1205, on the way down support is at 1192ish, then 1189.60 and 1187 which was Friday's low. Trading along those lines for entries and exits should keep you in the money.
There are no major news to be concerned about today, other than the Treasury Budget which is released at 2:00 PM and that earnings season starts today with Alcoa reporting after the close.

Low volume market action

The low volume market action that we had lately is common when the market is either consolidating quietly or in a slow-motion melt-up and that isn’t as conducive to finding extremes to make us take immediate action, kind of boring trading days where our patience is tested.
Your trading system should be simple, If there's an edge, get in, If it is no longer there, get out. Everyone has ups and downs, just don't abandon what has been working .
Our mission as day traders is to participate in the market when it moves or is trending and to avoid sideways or range bound markets, where the whipsaw action defeats the purpose.

New highs

Not much to say other that the market keeps going higher, again after trading most of the day in a range, in the last 15 minutes of the trading session, the S&P broke up through resistance around 1192 to close at a new high of 1194.66
Since November to date all Mondays but 2 have have been bullish, so with that edge the S&P at 1200 is a real posibility.

What is your Bias

Trading with a market bias can be profitable specially if the market moves your way.
On the other hand, having a strong bias can affect your trading decisions, as traders will defend their bias against the market movements.
Having a neutral bias is the position to be in, as you don't care which way the market will go.
Having no bias will allow you to follow the market signals with ease instead of being stubborn and try to fight the trend.
As the wisdom says:
"Don't ever let your bias on the stock market take over your trading, always follow the tape"

Wisdom

When one door closes, another opens. But we often look so long and so regretfully at the closed door that we do not see the one which has opened for us.

Buying the dip

Yesterday's late institutional buying action, was a forecast of today's action as well.
Lately, every time the market pulls back, it is met by buyers ready to take it back up, and that is one of the reasons there is no correction yet.
With any bad news the market pulls back, but there is no continuation as it bounces right back up, I don't know for how long it will keep doing it, but it is way overdue for a long awaited correction.
In the meantime, there is nothing else to do but to follow the trend up.

S&P 500 40+ Day Rallies

Here are two charts showing a study of the S&P 500 since 1990 of how many 40+ day Rallies, without 1% single or multiday pullback.

Pullback

Interesting action today in the market, since the opening the bears where in control, until around noon time, where the index broke above it's daily range and yesterday's close, before a Fed's official mentioned that interest rates should be raised to prevent another collapse in the economy.
The market reacted quickly selling off 12 points from the high of 1189.60 to 1177.25, but interestingly enough, heavy institutional block buying, brought the index back up 5 points from it's low's to close at 1182.53
On the 60' chart a long tail caused by the heavy buying is visible.
Jobless claims tomorrow morning should dictate the market's direction.

S&P 500 Percentage of Stocks Above the 200 Day Moving Average

96% of the stocks in the S&P 500 are above their 200 day moving average, it's no surprise then that the market keeps going up, but complacency spells out to be cautios, despite that the market has been overbought since July 2009.
The FOMC left interest rates unchanged, which is good news for the bulls.
In the meantime all we can do is continue to trade the path of least resistance, which is up, until the trend is violated.

S&P Futures

The S&P futures gave a nice entry this morning after filling up the pre-market gap almost completelly.
Trigger on ES was at 1176 and was good for 7.75 points.
Positive Pending Home Sales and ISM Non-Mfg Index numbers gave another reason for the bulls to take charge.

Wisdom

The market is the sum total of the wisdom, and the ignorance, of all of those who deal in it.
Never argue with the market's "wisdom." If we learn nothing more than this, we've learned much indeed.

Fundamentals Vs Technicals

Fundamentals will show the investor the health of a company, earnings, cash flow, dividends, balance sheet, etc., and are the basics for long term investing, but it won't show the investor where to enter his positions.
On the other hand, technical analysis is the only tool that will tell you when and where to buy or sell a stock.
It is the perfect tool for day traders, specially the ones trading the S&P 500 as you know that you are trading a poll of the 500 biggest companies in the USA, so fundamentals aren't that important.
So I'll leave all the fundamentals chit chat to the economists and CNBC talking heads and concentrate on the technicals for my day trading.

Market Breath Indicator

The NYSE percent of stocks above the 50 day moving average is in overbought territory and is a good indicator as where the market is heading next.
Interesting to see that the MACD histogram is going the opposite way though.

Wisdom

The hard trade is the right trade to execute.
If it is easy to sell, don't; and if it is easy to buy, don't.
Do the trade that is hard to do and that which the crowd finds objectionable.
If your execution was easy, it was probably the wrong trade to take.

SP-500 new highs

The first day of the month + Good Friday Holiday assumption played out good as the market gapped up almost 8 points at the open and kept going to post a new high at 1181.43.
Positive jobless claims and ISM Mfg. Index helped fuel the rally.
Later in the day the market gave back almost all it's gains after Goldman trimed March US Payrolls Forecast to 200,000, but in the last 30 minutes of trading, the market rebounded to close 8 points higher at 1178
Tomorrow's Employment report will be critical to next week's market direction.
The trend is still up.