From a technical standpoint, today was very bearish. Open the 5 minute chart for the last 10 sessions.
The yellow lines show the top and bottom trend lines in a channel that started about 9 days ago. Note how strong the rally was during the first half. The price action ran pretty tight to the top trend line. Then, starting this week, we see it sag and drag along the bottom trend line. The market gave it all it had on Tuesday, Wednesday and the open today, but failed to reach the top trend line. Price action was firmly rejected in the 1073-74 range twice and straight down to the bottom trend line.
Note how well the fib grid aligns with the price action in this last rally leg. We retraced to the 38% line which happens to intersect with the lower trend line of the price channel. This gave the action enough strength to bounce, however there just was not enough support to climb above the highs of yesterday. In other words, we struggled to get back to scratch, and failed. That is bearish. It is also bearish that we crossed the bottom trend line twice in such a short period of time.
Look tomorrow for a possible reversal. If we see a break of support at 1062 we could see a significant down leg begin. The RSI negatively diverged from price action during this last rally leg - which means that we can quickly see 1044 (start of this leg on Tuesday). If we gap down hard in the morning, this full retrace becomes very likely.
Alternatively, we are in a furious up trend and this may simply be a rest/consolidation step. It is entirely possible to break through 1068 then 1072 and of course 1074 to go on to new highs. Unfortunately, those highs might be near to 1080-84 range. This target is determined by the slope of the top trend line of the channel - which is showing an average rise of 8 point per session. If we see the high early morning figure, 1080 - later in the afternoon 1084.
Good luck!
Good luck.
7 comments:
Hi David , good to have you back up
Lets hope for a Gap down , up 1062 that would make it easier for us , and easy this has not been lately .
I picked up some more Faz to edge my currant position down some. So I am hoping we bounce down off that 68% fib .
Monday fooled me , Tuesday and Wed scared me , seemed to be a whole new source of liquidity.
Gold up , Market up , C up , Rates down , all at the same time ...
scary
Best for all
Thoughtful post David. Glad you did well today. I've been on the long end recently, but am keenly looking for a breakdown We got a bunch of High-Price Bearish Harami's today for TNA, URE & FAS. I discussed it in a little more detail...
Jordan
Hey Payline,
This has been a tricky market. Also the most difficult market to trade. I have had to make major adjustments to my techniques - there is no easy money for day or swing traders.
For this reason, I have tried to stay focused on the big picture with my cash instruments. At this point, I am relying on profits on intraday ES future trades to ease the pain of my short position. (Also a rough climate).
Unfortunately, I must say that I am not a fan of FAZ. Triple inverse leverage is a very tough play right now. You have to be in and out of that instrument. I know from my own experience.
I will be posting a 10yr chart - perhaps later. I find an uncanny similiarity between our run since March and a run the market made in March 2003. It is a bit scary, as it suggests that we can run much longer, but I think it is relevant. Regardless, we will see some form of correction shortly.
Good luck out there!
Hi David , I have looked at the 2003 run, and the 380 or so run from March to Feb , and you are right it looks a lot the same. and there could be more room to run. This could be a touch of 1932 and 2003 put together.
Good Luck to everyone .
Of course today's action was just enough to tell you absolutely nothing about where we are headed near term. I am glad that I got in (short) at a great price Thursday, even if I have not been doing much else worth a c lately. Of course I had to take some losses earlier in the week. Def. an interesting situation.
KPH
I found today interesting , some volume , 1066 to 1070 most of the day . Lots and Lots of juice to try to move above 1070 , est late in the day. could not get it done , even with money pouring into banks , it couldnt get done.
The sell off at days end was bigger then the ticker showed.
Take a look at Fas chart for today .
Its like we started to correct but the tape doesnt know it yet.
payline, the thing is this was options expiration and we still could not get a sell off to take us to anywhere near max pain. I think that most of us have a general idea of what is going to happen over the next5 or so years; basically we'll have trouble as we work off debt. The thing is, credit markets are currently behaving.
(I think that certain players- esp people who massively bought CDS's, are getting killed, and the market is melting up as they get murdered. Credit markets are looking artificially healthy as they burn.)
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