Make or Break....

The S&P emini shown below is at a point where a break in either direction should provide good trading opportunities. A break below 1460 would likely lead to a re-test of the recent lows near 1406. A move up past the last pivot would likely lead us up to the 1560 area. Volatility is high with the wide range bars after the Fed decision on Tuesday. Todays inside bar is generally viewed as bearish but the ES is sitting at MA and is right between the 50% and 38.2% fibbo levels. The next day or two should tells us more.

Happy Trading and God Bless.

Retracement likely...but follow through possible

The Dow and S&P, illustrated below with the YM and ES emini futures indices have both risen up near resistance areas. The Dow has moved up through the declining trendline and is now near both a price level top and the 61.8% fibbo, all pictured below noting the white arrow dawn on the chart.
The S&P kissed the down trendline today and is nearing it's 61.8% fibbo. These resistance points will likely cause a near-term pullback from recent this move up. However, looking at the graphs, you'll notice the three moving averages are close to crossing over which could mean the markets are headed for higher highs. Interestingly, the Nasdaq (not pictured) seems to be lagging a bit behind the other indices.

Happy Trading!

God Bless!

Waiting for next week....

So far, the pull-back today is orderly coming down into support with the graph of the Diamonds (DIA) shown below. Next week will tell us more about whether this is a trend change or failed retracement.

By the way, what do you think of my system illustrated below?

Happy Trading & God Bless!

Why I'm not buying....Yet!

In the graph of the Dow emini below we see that it has retraced passed the 68% fib mark but is moving up towards the 50% fib mark which will likely be a stiffer test. We also see the trendline drawn and is still significantly higher than the current price. The S&P emini is in a similar situation. Given these high resistance areas yet to come, I would not be a longer term buyer just yet. It is likely that we could see some more retracement up here to the resistance points in the short term. One encouraging note, there is positive divergence on the indicators shown. I will be looking for a break of the resistance areas before feeling like we'll have room for more significant upside.

Breakdown on multiple sectors

We have now gotten a breakdown of multiple sectors. The XLI, XLB, and XLY have all broken support to the downside. The semiconductors have also broken down. Interestingly the XLE, or energy, have held up along with the S&P which has created a dbl-bottom. We'll see what kind of bounce we get and will be watching the volume as well.

Look who's leading down

Below is a chart of the XLE energy ETF. It is now the leading sector moving down after making lofty highs.

Know the Bias

As you can see with the picture below of the S&P emini contract, the volume is leading the way down through support. This would indicate a bias for another lower low. The volume on this last bounce was very weak and was faded intraday over the last couple of days. Watch for a break of the last low.

By the Volume

Below is another example why volume is important to watch.
Watching both the 1hour and the 1minute timeframes gave this view last Thursday 10-4-07, prior to the pop. Notice how the intraday volume steadily rose, while price consolidated. Then turning to the 1hour time frame shows the price forming a declining pennant or wedge while creating divergence in the indicators. This combination provided higher odds for a move up on Friday.

Follow the leader

A tip off that the price was moving higher intraday today-usually volume.
Below is a 1-minute chart of the YMZ07 (Dow emini futures).
Note the horizontal level from the preceding peak to the peak highlighted
in the oval. Volume was breaking out prior to price, which on a strong day
was a leading indicator of price movement.

Chinese takeout

Below is a daily chart of CHCG.
Notice the ovals in white in the price pane show previous areas of price congestion which act as support, or in this case resistance. Also notice the fibbonacci levels which fall near this
price congestion. At the bottom is a display of the OnBalanceVolume calculated as up-volume minus down-volume. The current on balance volume is rising but at a slower
rate than price. Notice the August OBV levels are higher than the current levels but the current price has surpassed the August price suggesting that volume is not rising at the same rate as price.