Wisdom

• The reason for using a trendline or moving average is to get an objective assessment of the price direction.

• Disciplined trading is most important because it clearly tells you when to get out of your trade and take your profit or loss.

• You can’t follow the trend and take profits at the same time. Profit-taking works with short-term trading, but profit-taking fights with the long-term trend. You can’t hold onto a trend trade to get a big profit and at the same time take a small profit when things go your way for a few days. You’ll need the big profits to offset lots of small losses.

• Trend analysis says (à la Yogi Berra) the market is going up when it is going up. There’s no hocus pocus. Fundamentals, or value investing, may say that the company is in great shape while prices are falling. You’ll do much better trading technically.

SPX 5/28/2010

The market closed the week positive up 0.16% as is really trying to repair the damage created by the strong sell off.
As you can see on the daily chart this week the market posted higher lows, but still was unable to break above the 200 day moving average.
Still a very volatile market to trade as there is no real direction to follow as all the movements are driven by news.
We have support at 1085 and resistance around 1105 at the 200 day moving average, and until that level of resistance is not broken and the index closes above it, the bears still have an edge on this market.

Wisdom

The trend is your friend, but which one? Opposing trends can be found on various time frames in the same security, at the same time creating confusion and worse, unnecessary losses.

Understanding market structure and trend alignment allows you to put emotions aside and focus on the right trade at the right time. Brian Shannon

SPX 5/27/2010

Volatility at it's max, the market closed down yesterday and continued selling into the aftermarket session reaching 1055, but this morning it had turned around and was gapping up +20 points into the opening bell and the buying continued all day long into the closing reaching 1103 right at the 200 day moving average resistance level, a gain of 3.25%
The ADVN/DECN index remained at the same level all day around 13 to 1
The good news is that closing above the 1100 level should attract some buyers, but with the volatility we've had lately, there are a lot of bag holders that were short trying to get out at this level and that could cause the index to turn around.
Monday is Memorial day, so expect low volume tomorrow as most traders will be leaving early for the Holiday.

SPY 5/25/2010

The market sold off hard in pre-market session with more bad news from Europe, which led to the huge gap down on the SPY. Furthermore right after the opening bell, the SPY touched 104.38, which was lower than last February lows of 104.60
The new lows and support around 105 triggered several buy signals and short covering, which started working right away towards filling the daily gap, which by the way was accomplished by the end of the day, closing at 107.81 and created a nice hammer on the daily chart.
Resistance is at the 200 day moving average around 110.50 and support at today lows of 104.38

SPY 5/24/2010

Today the market closed for the third consecutive day below the 200 day moving average, and until that level of resistance is broken all the market intentions to rally should be shorted.
Volatility declined in low volume trading as the market continues to settle after the latest selloff.
Resistance is at 109.50 and support at 105.50

Wisdom

Predicting The Markets
I have no idea what stock, bond, currency and commodity markets will do over the next six months. How many of the great fundamental analysts had calls that made their clients money over 2008? Not many as trillions of dollars were lost through buy and hold prediction nonsense. Sure, some very smart analysts will get the next six months of predictions right, but then again when you flip a coin, you have a 50% chance of being right too. Does that mean there is no hope for profit? No, if you can put aside the need to try to predict the future and if you can instead trade as a technical trader. Like trend followers who made fortunes in 2008, you will have a chance to make money going forward. Bottom line, if we can't know the future and if we can't know what direction any market will trend, it is far better to have a plan to systematically profit by reacting to market moves versus a reliance on the false hope of predictions.

% of S&P 500 Stocks Above 50-Day Moving Average Since 7/06

SPX - Daily

The SPX gapped down huge in pre-market, opening 20+ points below the close, on a normal day, that gap would have been filled, but we are not in a normal environment and the market continued the selloff not even getting close to the 200 moving average, which is now resistance.
The SPX is at support at the lower long term rising trend line, and is in oversold territory, also closed below the 200 moving average for the first time since July 2009.

SPY

The market opened down hard today, the pre-market low for the SPY has been 109.42 which is a penny above the intraday low from Friday May 7. Just under 110 is the 61.8% retracement from May 17 highs and now that level has been broken. If the market keeps falling next level of support is at 109.22. Don't rush trades today, let the markets settle first.

SPY at 200 MA

As expected the market found short term support at the 200 day moving average, were buyers stopped the selling and helped to bring up the market from the session lows.
Volatility is still very intense, making trading very difficult for everybody.
This week is options expiration week so I expect the volatility to intensify even more.
Resistance is now around 114.50 and support still at the 200 day moving average.
Keep shorting the bounces to 20 EMA as those are the trades in the money.

SPX pop and drop.

The market continued to rise this morning and opened with a 10 point gap, which took the index to a high of 1148.66, before the sellers took over.
The market sold off all day closing at 1120.65, but the selling continued in the after market session.
The next logical level of support is around 1100 at the 200 day moving average where most of the buyers could be waiting.

SPY Hammer in the house

On a very volatile day the SPY reversed all the morning loses, filling up the intraday gap creating a nice hammer on the daily chart, closing below the 100 day moving average.
We have resistance at 115.20 and support levels around 111.75 - 112

Wisdom

Great Traders Offer No excuses
Do everything you can to develop a professional trader's mindset. Think independently. Watch the charts, listen to them and position accordingly. Repeat the process over and over. Always be willing to adapt to the changing personality of the markets. as lots of traders like to say: "Bend like a reed, don't be obstinate and break like a twig." Above all, never ever offer excuses. Instead, learn from your mistakes, adapt and improve your trading and move on to the next level.

SPX at Support

Actually today's market action wasn't a surprise, as yesterday I mentioned that the volume had dried up and that the SPX was consolidating and having problems breaking above the 20 and 50 day moving averages in addition that it had bounced back too fast after last week's crash and was in need of some rest, despite all the uncertainty between traders the S&P managed to close the week up 2.23%
How nice is to see the technicals working, as the index closed right at support at 1135 which coincides with the 61.8% retracement of the bounce.

SPX analysis for 5/13/2010

The 50 day moving average proved to be strong resistance as the SPX was unable to break above it, trading most of the day in a range between 1165 and 1173, before selling off in the afternoon session, closing at 1158
Volume declined again as internals returned to more standard levels.
Resistance stands now at 1180 and support remains at 1135

SPX Rally

The market was strong today in choppy session closing at 1171.67, but it's interesting to see that it closed right at the 50 day moving average along with the decline 20 day moving average, which could mean some short term resistance here, still major resistance is at the 1185 level.
The volume has been decreasing this week which could also mean the start of some consolidation.
We have support in the 1135 area.

Wisdom

To avoid being whipsawed, stop trading.

SPX analysis for 5/11/2010

The market had a pretty good run up of 25 points to 1170 today before retracing and giving back 15 points to close at 1155, overall that was a total 40 total points today!
After all the run around the market closed below the 20 day moving average.
We have resistance in place at 1185 which was previous support on the strong pullbacks we had with higher than average volume and support is in the 1135 - 1140 area.

SPX holding support

The SPX closed the week down 7.5% but still above important support at the 200 day moving average.
The market in one week went from being very overbought to severely oversold due to the drastic correction we had last week.
The technicals are completely out of range and it is difficult to trace short term levels of resistance and support, but the 200 day moving average should provide strong support for a short term bounce, and 1150 and 1180 levels of resistance on the way up.

Wisdom

Hesitation

You are watching a stock that has all the signals you look for in an opportunity. The proper point to enter comes, but you wait. You second guess the opportunity and don’t buy the stock. Or, you bid for the stock at a price that is not likely to get filled if the opportunity does pan out the way you anticipate it will. As a result, you get left behind while the market pushes the stock higher. A short while after the initial entry signal, when the stock has made a decent gain, you decide to finally enter the trade. After all, the market has proven your analysis correct, so you must be smart, and right! Not long after you enter, the stock turns south and you end up with a losing trade. If only you had bought when you first thought about it.

Crazy day!

The market had the craziest day in years as the SPX plunged 100 points in a frenzy of panic before bouncing back to settle at 1128.15 almost a 40 point loss.
Going back to the technicals the market broke important support at 1150, which opened the possibility of further selling of the next level of support of 1140 the weekly & monthly 20 day moving average, both were taken out as the market fell all the way to 1065
After the panic selling stopped and the buyers jumped in, the market bounced back 62 points in the last hour of trading closing below the weekly 20 day moving average.
The chart shows the SPX closing at 1165.87 but that is incorrect, as most charts were overwelmed and messed up by the excessive volume triggered by the selloff and are still unreadable.
We have resistance at 1140 and support at 1125, after this frenzy expect some kind of a rebound, before the selling pressure resumes.

SPX Volatility

The volatility is back, as the SPX sell off continued today initially bringing the index down 17 points before founding support at 1158.
The daily chart shows a reversal morning star candle, which could set the stage for a bounce tomorrow still 1185 is the point of resistance, on the other hand if the sell off continues 1150 is the next support and after that important support on the weekly 20 day moving average at 1141
Today the market closed below the daily 50 day moving average for the first time in 2 months.
Also notice the MACD, just 3 points away from crossing down the zero line, very bearish winds.

Wisdom

Pure technical traders are completely unconcerned with the fundamentals of a company.
They place their trades based on chart formations using price, volume and indicators in making their decisions.

SPX selloff

The market dropped hard 2.5% today breaking the last two weeks support at 1185 which could mean that the trend is changing.
Resistance now is at 1185 and support around 1150
The previous weeks pullbacks have been quickly met by buyers, bringing the index back up within a range, let's see if that is the case now.
The most likely scenario would be a bounce to the 20 ema on the daily chart at 1185 and if resistance is strong, short the break below it.

SPY Merry Go Round

It's kind of predictable what the market has been doing the last 2 weeks and it's easier to see it on the 60' chart.

The trading range is obvious with support on the SPY at 118.50 and resistance at 122 and the 2o day moving average right in the middle.

Every pullback keeps being bought as well as every rally is being sold, once we break and stay at least an hour above 122 or below 118.50 we could follow the trend, but in the meantime there is sckepticism around traders.