S&P Selloff

The S&P 500 sold off since early on, losing 25 points, before the buyers stepped in at 1160 around the 20 day moving average.
1150-1160 is the threshold for the bulls and bears.

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.

• In Trend analysis 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.

Wisdom

Overtrading
There are stock traders who make 150 or more trades in a single day. I am not sure they make a lot of money. I firmly believe that you can make more money by making fewer trades because it will make you focus on only the best of opportunities, and play them with a larger amount of capital so the pay off is better. By being patient and disciplined with the really high probability trades, you can maximize profitability.

SPX Jobless report selloff

Today the market lost all of this week gains after a disappointing jobless report which came at 500,000, selling pressure brought the index below it's 20 and 50 day moving averages, but at least closed above the 1070 level.
The whole week the market has traded in a range between 1070 and 1100, so let's use those levels for initial support and resistance.

Wisdom

The market is an irrational creature. To rationalize the market can be fatal.

SPX analysis for August 13, 2010

On the weekly time frame we can clearly see that in July the market tested the 38.2% Fibonacci retracement of the May highs and now it looks like it is heading again that way, below the 38.2% retracement level, there is not much support and the index can easily go down and test the 950 mark at the 50% Fibonacci retracement level.
In order to avoid this scenario, the bulls will need to bring the index to 1090 above the daily 50 day moving average, close and remain above it.
Support remains at 1060 and resistance at 1090/1100 area.

Today the market broke down the upper trend line crashing down 30 points below the 1100 mark all the way to support at 1090 and resting at the 50 day moving average.
This action broke the uptrend that started the beginning of July and opened the doors for more selling ahead.
The next level of support is at 1060 and resistance is at 1100 first and then at 1120 at the 200 day moving average.

SPX analysis for 8/9/2010

Since the begining of July the market has been in a rising wedge, which can spell trouble for the bulls as it has been stalling around 1130 at the June highs.
Technically everything looks good as the index has been closing above both the 50 & 200 day moving averages.
Tomorrow's FOMC meeting results will definitely tell us which way the market should follow.
1150 is the next resistance level and on the way down support is at 1107 first, then around 1090

Wisdom

Taking small losses is part of the game. Taking large losses can take you out of the game.

SPX analysis for 7/30/2010

After disappointing GDP numbers, the market sold off early on, but managed to gain back all the loses to close flat, still the SPX closed below the 200 day moving average for the 3rd consecutive day in a row, but is holding above the 1100 mark and above the 20 and 50 EMA's as well.
If the bulls are going to take charge, they will need to do so quickly, before more damage is done, which could bring the index down to 1060.
Resistance is first at 1120, then at 1130 and support at 1060

SPX analysis for 7/27/2010

The market opened with a gap up but started selling off right after the opening bell, and closed red forming a bearish reversal candle.
It is sitting at support right at the 200 day simple moving average around 1114, a pullback should find support first at 1100, then at 1080 at the 50 day moving average and if that one is broken next is 1060.
Resistance is June highs around 1130

Wisdom

It’s OK to be wrong; it’s unforgiving to stay wrong.

SPX on Europe Banks Stress Tests

Well folks, today the market finally closed above the 1100 mark area, signaling some strength as we can see on the daily chart, the index is clearly posting higher highs and higher lows.
Also the SPX has broken above the downtrend line and closed above the 50 day moving average as well, all signs of strength.
If the market can hold above the 1100 mark, it most likely will trigger the bears stops and easily reach the next resistance level at 1120 at the 200 day moving average and then June highs at 1130
On the way down support remains at 1060

SPX, Earnings + Bernanke

The 50 day moving average around 1090 proved to be strong resistance for the market, coupled with Bernanke's comments about the economy was enough for the sellers to step in and started the afternoon sell off which ended 20 points below the hod.
Support level is around 1060 and resistance at the 50 day moving average at 1090.

Wisdom

"If you are confident in your ability to make money, you will not fear missing market moves."

SPX Rally

A beautiful day for the market, the S&P opened above yesterday's close and rallied 30+ points on average volume, breaking 1st resistance level at 1040 and then 1050 to close at 1060, setting the stage for a continuation of this rally for the next couple of days.
The 50 day moving average is at 1100, which is the next logical resistance level, support is now at 1050
Keep an eye on the markets reaction on tomorrow's Jobless Claims news.

S&P Volatility

Very volatile day for the market, the S&P touched support at 1010 during the overnight session and from there rallied 30+ points to a little over resistance at 1040, most of the bounce was in the pre-market session though.
Once the buyers were exhausted, the market sold off 24 points filling the opening gap, which was very profitable for the ones that went short.
Note that the moving average death cross is firmly in place, but despite that occurrence, the market managed to post a higher high and a higher low.
Support remains at 1010 and resistance at 1040

Wisdom

Emotions are the enemy in trading, and as such they should be eliminated (or controlled) from the decision making process.

SPX analysis for 7/2/2010

The market had an initial negative reaction to the employment numbers, but rallied after wards reaching the 50 day moving average, unfortunately the rally didn't hold and 15 minutes before the closing bell, sold off closing at 1022 .
So far the S&P has closed down 9 days in a row and everyone is saying that the market is oversold, (which it is) and due for a bounce, but we know how the market works and never does what everyone is expecting.
Support remains at 1010 and resistance at 1040
The 50 day moving average is already touching the 200 day moving average, which entails what's coming next.

SPX New lows

The S&P touched the mentioned support at 1010, before bouncing off to close at 1027, creating a red hammer, still closed negative, but gave some hope to the bulls for tomorrow's trading day.
Everyone is keeping an eye on the employment report, which will decide tomorrow's market direction.
Volume should be low as most traders are getting ready for the long holiday weekend.
Support still is at 1010 and resistance at 1040

SPX End of 2nd Quarter

With today's closing of the SPX below the 1040 level of support, we officially can say that we are in a bear market.
Also today was the last day of the 2nd quarter, and the majority of the institutional investors during their "window dressing" they sold their holdings, which helped to the downturn and corroborated that they weren't interested in holding positions in this type of market.
As I mentioned yesterday, also notice that the 50 day moving average is closer and almost ready to cross the 200 day moving average, which is major sign for technical analysis.
The next level of short term support is 1010 and resistance now is 1040
Looking at the bigger picture, there is nothing to really hold this market until around 875 - 900

SPX Sell Off

The market selling continued today, as the S&P opened this morning with a 15 point gap to the downside and didn't stop until reaching 1040 which was the previous lows from February, May and June.
And area of concern is that the 50 day moving average is quickly approaching the 200 day moving average and we all know what a death cross means for the market.
Next level of support is at 1010 and resistance at 1050
Watch for more end of quarter window dressing volatility tomorrow.

Wisdom

The market is the ultimate arena.
As traders we do battle with other market participants every day.
As traders we do battle with ourselves every day.
Our toughest opponent is our self.
It’s one thing to have a set of rules, it’s another thing to master ones personal psychology, to have the discipline to follow our rules.

SPX analysis for 6/25/2010

The market had a rough week, ending down 3.5% for the week.
Today the S&P sold off early on the trading session, posting a new low for the week at 1068, before the internals turned around and the index rallied 15 points to 1083.50 where it found resistance.
Today was the index's first green day for the week as is showing some form of stabilizacion, but still couldn't close above the 20 day EMA.
Support and resistance levels remain the same at 1040-1050 on the way down and 1100 to the upside.

SPX analysis for 6/24/2010

The market continues to lose ground as the selling took the index down 18 points to 1073.69 closing below the 20 day moving average.
The next level of support is at the 1040 - 1050 area, resistance levels are at 1090, then at 1100 and 1110 at the 200 day moving average.
The bulls should defend the 1040 area level of support, otherwise 1020 is next and 1000 after that.

SPX analysis for 6/22/2010

Yesterday's huge market gap up and sell off afterward, draw some nasty candles on the SPX chart, setting the pace for today's action.
The market broke the 10 day uptrend line and closed below the 200 day moving average, opening the doors for more selling if the bulls don't recapture 1110.
Initial support is at 1070 level and then around 1050 - 1040, resistance once again is at 1100 where the 20 EMA and 200 day moving averages meet.

Wisdom

Using Technical Indicators vs Trading Based Purely On Price And Volume Charts

The debate among traders over advantages and disadvantages of using indicators will never cease. There is no correct answer or absolute truth regarding the use of indicators. It all comes down to your personality and the way you see the markets.
Some traders plot Bollinger bands, OBV (On Balance Volume), plenty of moving averages and Fibonacci retracements on their charts. Then they tried to be even smarter and then added MACD, Stochastics, RSI, ATR and ADX to the mix. You get the picture. They ended up with ‘Spaghetti Charts’. You take a clean chart and literally throw spaghetti onto the chart until it becomes completely unreadable. The result is the well known ‘analysis paralysis’.
While I can’t seem to trade based only on Price and Volume Charts, some traders seem to be able to pull money out of the market with this approach.
The solution is to keep things simple, the fewer the better, use what works for you, a couple of indicators should do the trick.

SPX before Quad Witch day

The market had too many bad news to digest this morning as the CPI, Jobless Claims, Current Account and Philly Fed Survey all came worse than expected, but the one that really set the tone for the opening was the Philly Fed Survey which came 62.6% worse than the previous month.
The SPX sold off right at the opening to a low of 1105.90 before founding support, that was 8.75 points from yesterday's close at 1114.60 and stayed red most of the day in a range between 1106 and 1114, but the market managed to rally in the last 30 minutes of the trading session to close positive and for the third consecutive day above the 200 day moving average, creating a 10/20 simple day moving averages "mini" golden cross.
Interestingly enough the ADX is not participating with this move which tell us that the uptrend is no strong enough.
For tomorrow's quadruple witching day we can expect a very volatile day, so trading with smaller positions than usual would be the safe way to go.

SPX Analysis for 6/15/2010

The market opened with a gap up and the bulls kept it going for a 20+ point gain, closing at 1115.23
Right now the market is at a major inflection point where the buyers and sellers will be watching their next move.
We have the 200 day moving average at 1108.50, the 38.2% Fibonacci Retracement from May and June lows and Resistance level around 1105-1108
If buyers exceed sellers and push the price above 1110, we will most likely have a short squeeze as sellers will run to cover their shorts, on the other hand if sellers exceed the buyers and push the price below 1110, the buyers stops that were expecting a breakout above 1110 will trigger and help push the index down.
Major Support is at 1040 and Resistance at 1150

SPX Analysis for 6/14/2010

After opening with a nice gap to the upside, the market had an early run to 1106, breaking momentarily above the resistance level of the 200 day moving average around 1100, this is the 3rd time in 3 weeks that the market tests that level of resistance, and history has showed us that when a level of support or resistance is tested frequently, at the end it gives up. Unfortunatelly the sellers stepped in around noon time triggering a sell signal at 1104 to short the market for a nice multipoint gain do the downside. The SPX closed red for the day below the 200 day moving average at 1089, but above the downtrend line.
Resistance continues to be the 200 day moving average at 1101 and support around 1040-1050

Wisdom

In bull markets the market climbs “a wall of worry” and in bear markets it slides down a “slope of hope”.

SPX Rally

Not much to say, other than that the market opened with a 20 point gap for whatever reason and that it was sustained for the rest of the day, even closing into strength at 1087 right into the descending upper trend line for a 30 point gain from yesterday's close.
A very nice run that could open the road to the 1100 resistance level at the 200 day moving average if the bulls can keep the momentum going.
The market is right in between 1040 bears and 1100 bulls territory, let's see if it can resolve to either side, so that we can return to a more normal trading environment.

SPX Analysis for 6/9/2010

The market closed on strength yesterday and today opened with a gap up that continued running until around 1077 where the S&P encountered an area of congestion that is clearly seen in the 60 minute chart.
The bulls gave up and the sellers brought the S&P down 20+ points to close at 1056
Regardless the morning run was good for 12 points + 20 points in the afternoon sell off, that's 30+ points to play.

SPX Analysis for 6/8/2010

The S&P traded in a range between 1040 and 1058 ending the day at 1062 up 12 points.
Support at 1040 was sustained and defended by the buyers but it's also interesting to see that the index is trading at a level 5% below it's 200 day moving average and the last time that the S&P broke this level of support was in January of 2008
Another observation is that the 200 day moving average trend line started to decline which is a bearish sign.
Support still is at 1040 and resistance at 1100 where the declining 20 and 200 day moving averages meet.

SPX Analysis for 6/7/2010

The market had another rough day today as the sell off from Friday continued this afternoon, leaving the S&P close to this year lows.
It looks like the market next area of major support is at the 38.2% Fibonacci retracement of the April highs, which would put the index at 1010, resistance continues to be at the 1100 area at the 200 day moving average.
So far the most profitable trades continue to be shorting the rallies.

Wisdom

Learn from your losses, you paid for them.

SPX back in correction

The market didn't like the negative Employment numbers and lost 40 points closing at 1064.88 back in correction territory.
The 1100-1106 resistance area proof to much to break, as there are several levels of resistance together.
Coincidentally the 200 day moving average at 1103, the descending 2o day moving average at 1108 and the upper downtrend line at 1100 were a big wall for the market as it kept breaking support levels all day, first at 1085, then 1070.
From here support now is at 1040 and resistance in the 1100 - 1105 area.

Market Oversold

A look at the NYSE % of stocks above their 50 day moving average, indicates that the market is short term oversold.

SPX 6/2/2010

Well, the market rallied all day long and ended up almost at the 1100 level, if we can break 1100 and keep it up, the bulls have a chance to claim back the 200 day moving average.
Support is at 1070 and resistance at 1105
Basically today's rally was a short squeeze that kept triggering short sellers stop losses.

S&P 500 6/1/2010

The market remained weak most of the day, unable to regain the 1100 level, selling off late in the session closing at 1070.
1085 was the level to maintain the short term uptrend and was broken today, so the odds again benefit the bears.
Also notice that the 50 day moving average is beginning to turn down and that could mean a possible death cross in the days ahead.
Resistance is at the 200 day moving average which coincidentally meets the upper downtrend line around 1106

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.

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.