Market commentary

ivica · Aug 3, 2007

Market commentary for 08/03/2007

Good day!
A summer day at the beach would have been more productive than the summer day of trading we had. We didn't even have the volatility of the past few days. Basically a day of zzzzzzzz's. On the daily chart we can see that the previous support areas now become support areas and those held for now. Trading volume was lighter than the past few days.

http://www.ivicacharts.com/diagrams/2007/08032007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08032007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08032007qqqq.jpg

Those who follow intraday market action witnessed a very choppy high risk trading day without a clear direction most of the day. Very similar action as we had on Wednesday. The last 30 min the Indices bounced (much weaker than Wednesday), but most of the action before was choppy without intraday trend. For me this was a day not worth trading. During these type days, I will trade with very small risk and if the first and second trade won't go I will quit for the rest of the day. Risk was to high and I am not the best in a scalp market. Exactly the kind of market we had yesterday.

http://www.ivicacharts.com/diagrams/2007/08032007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08032007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08032007qqqq60.jpg

Unfortunately I expect the same type action today. Perhaps the job report before the market opens or a bunch of unexpected earnings will move the market but I doubt it. August in my experience is the worse trading month. Most days we see very sloppy action without a trend or with very slow intraday trends and very small volume. I guess that is why all the traders are at the Hampton's on vacation. I will be out next week (not a the Hampton's) and I will be back at August 13, 2007.

Remember, today we have summer Friday and market correction from strong move down. If in the morning we will have similar action as yesterday, I will quit trading after the first 90 min.

Good luck trading today!!!!
Ivica Juracic

ivica · Aug 13, 2007

Market commentary for 08/14/2007

Good day!
It looks like I didnât miss a thing last week. I did notice the market was quite volatile with a nice bull trap on Thursday. That action brought volume and strong selling pressure which closed today with a morning gap up. The daily bull trap could bring more selling pressure and that is the scenario which I will follow. Since the market didnât have enough time for a good low risk setup risk will remain higher.

http://www.ivicacharts.com/diagrams/2007/08142007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08142007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08142007qqqq.jpg

Back to yesterdays action. I didnât have much luck with my vacation and obviously I didnât have luck with my first trading day after vacation. The Indices stayed in a range which we can see on the 60 min chart. Action was from high to low and all days time frames. The didnât have strength to break 20sma 60 min and didnât have the weakness to back on daily low support area. Selling pressure and some intraday action came too late for us (before close) and I wasnât interested in scalps before the close.

http://www.ivicacharts.com/diagrams/2007/08142007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08142007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08142007qqqq60.jpg

Since we had market that supported only fast trades our action was the same (PRU, GOOG, PHTN). If we look at the 60 min charts we can see a divergence between stronger QQQQ chart and weaker DIA chart. The QQQQ suggest that we could see break up and equal move as target area. On the other side the DIA is weak and before close broke 60 min triangle as a short setup. That clearly is a direction that will bring more risk in an already high risk market. The QQQQ made NR7 bar yesterday that usually suggests a possible trend day. I will look for that possibility but I want note that we are right now in a high risk market and we must trade with small risk to save our capital for better days. I think that will be next month, so please keep that in mind. We are still in August the worst trading month. My bias is on short side, and the daily bull trap can bring more selling pressure. But my focus will stay same, and that is on intraday moves and I donât plan to stay in any trade over night, unless we will find an âown wayâ chart.

Good luck trading today!!!!
Ivica Juracic

ivica · Aug 15, 2007

Market commentary for 08/15/2007

Good day!
A good trading day for us is when we get what we expect. If you look at yesterday's market commentary you will see that we got exactly the action which I expected. There are several reasons for that. One is the daily bull trap that we can see last week on August 09, 2007. Next is Monday's narrow range day which suggests the possibility for a trend day. When we look at those reasons you will see why my expectations were more on the down side. On the daily charts we can see the Indices are back to the previous daily low support area. From the open we got trend day and it is important to follow 10sma and 20sma on the 5 and 15 min to feel and see pace.

http://www.ivicacharts.com/diagrams/2007/08152007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08152007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08152007qqqq.jpg

If we look at 60 min charts we can see that the DIA has room for an equal move to the target area. The double bottom possibility brings caution and so we can not go blind with shorts. Same situation is with the SPY and the QQQQ. They are all on their support area but have room for more selling pressure.

http://www.ivicacharts.com/diagrams/2007/08152007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08152007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08152007qqqq60.jpg

That is exactly the scenario which I will follow today. My bias is still with shorts. I think the indices have additional room for daily equal move and the reason for that is the daily bull trap. You can see that I repeat several times the bull trap. That is because after that action and after daily consolidation a lot of time we will see a continuation and that is the direction which I will look. All that sounds great, but I will repeat that risk is higher and we must stay with very low risk in our trades. We had a nice trading day and MICC, MO, EXC and for patience traders DRIV did great yesterday. We didnât get a big profit for them because I reduced my risk to the minimum. I will stay with the same risk for the rest of month. Intraday market is very whippy and can easily have us stopped out of every trade if we use small stops. I am using bigger stops with less shares to avoid that possibilities.

This morning we have the CPI reporting. That can be a market mover. If it is hot the market will probably sell off hard signaling the FED will do nothing. I tame number (less inflation) and we are off to the races saying the FED will cut in September.

Good luck trading today!!!!
Ivica Juracic

increasenow · Aug 15, 2007

Quote from ivica:

Market commentary for 08/15/2007

Good day!
A good trading day for us is when we get what we expect. If you look at yesterday's market commentary you will see that we got exactly the action which I expected. There are several reasons for that. One is the daily bull trap that we can see last week on August 09, 2007. Next is Monday's narrow range day which suggests the possibility for a trend day. When we look at those reasons you will see why my expectations were more on the down side. On the daily charts we can see the Indices are back to the previous daily low support area. From the open we got trend day and it is important to follow 10sma and 20sma on the 5 and 15 min to feel and see pace.

http://www.ivicacharts.com/diagrams/2007/08152007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08152007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08152007qqqq.jpg

If we look at 60 min charts we can see that the DIA has room for an equal move to the target area. The double bottom possibility brings caution and so we can not go blind with shorts. Same situation is with the SPY and the QQQQ. They are all on their support area but have room for more selling pressure.

http://www.ivicacharts.com/diagrams/2007/08152007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08152007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08152007qqqq60.jpg

That is exactly the scenario which I will follow today. My bias is still with shorts. I think the indices have additional room for daily equal move and the reason for that is the daily bull trap. You can see that I repeat several times the bull trap. That is because after that action and after daily consolidation a lot of time we will see a continuation and that is the direction which I will look. All that sounds great, but I will repeat that risk is higher and we must stay with very low risk in our trades. We had a nice trading day and MICC, MO, EXC and for patience traders DRIV did great yesterday. We didnât get a big profit for them because I reduced my risk to the minimum. I will stay with the same risk for the rest of month. Intraday market is very whippy and can easily have us stopped out of every trade if we use small stops. I am using bigger stops with less shares to avoid that possibilities.

This morning we have the CPI reporting. That can be a market mover. If it is hot the market will probably sell off hard signaling the FED will do nothing. I tame number (less inflation) and we are off to the races saying the FED will cut in September.

Good luck trading today!!!!
Ivica Juracic

Awesome posts...I sent you a private message...thanks!!!

ivica · Aug 16, 2007

Market commentary for 08/16/2007

Good day!
The market made a couple of low volume attempts to rally into resistance before the indices gave way to selling pressure that brought the DIA to the daily 200sma and equal move support area. On the daily charts we can also see the SPY and the QQQQ still have room for continued move down in the morning. One possibility is that we can see that area with a gap down since the indices closed at their lows. The selling pressure was within our expectations. Since the market closed at its low and was already on the move I used only day trades to take advantage.

http://www.ivicacharts.com/diagrams/2007/08162007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08162007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08162007qqqq.jpg

On the 60 min chart we can see that morning possibility but I wonât use it for new short trades. This is more for those who stayed over night with open positions. The DIA is already on the support and the daily CCI is in an oversold area. Right now every new short trade will be to high risk for me and my focus today wonât be on that side.

http://www.ivicacharts.com/diagrams/2007/08162007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08162007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08162007qqqq60.jpg

With that in mind I will look for a reversal today. That usually wonât come first thing in the morning so I will look for that possibility during lunch period or after 13:00 pm ET reversal period. When we have that strong pace usually we wont see âVâ bottom. I will look for rounding bottoms on the 15 min charts or for reversal patterns. Moving averages give us help to determine pace. Yesterday, for selling pressure, the 5 min 10sma was very important and for reversal pay attention on 20sma on the 15 min charts for day trades and 20sma on the 5 min chart for scalp trades. Again, it is very important to follow pace, which is key for possible continuations. Reversal possibility I will use mostly for day trades, because right now swing trades are to risky and every over night position will bring added risk. Note that we have option expiration Friday and that we are still in August (worst trading month in the year)

Good luck trading today!!!!
Ivica Juracic

ivica · Aug 16, 2007

Market commentary for 08/17/2007

Good day!
Is yesterday's low the bottom? After all the short covering and yesterday's close we might suspect that it is. Indices got a daily pivot bar with strong volume and the DIA and the SPY closed in positive area, which all suggests a bottom area. The day started as expected with gap down and then the selling pressure continued. I personally did not expect that much selling strength. Because of that, I avoided new short trades after SIMO, LBTYA and PMTC, which I had on the short list. I tried to stay with the strong names but every try to bounce finished with new low. Most of day was played out like that until last 30 min when we saw strong bounce and short covering. All said the daily equal move held and the DIA and the QQQQ closed above 200sma daily support area, which is always strong support.

http://www.ivicacharts.com/diagrams/2007/08172007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08172007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08172007qqqq.jpg

I was expecting the 15/30 min rounding lows for the bottom. Regardless of that on the 60 min charts, we can see that we got âVâ bottom and that brought Indices to the highs. Maybe Iâm wrong but usually after that strong selling pressure which we saw last weeks the selling pressure is not over with âVâ pattern. Next days/weekly I will expect whippy market action from day to day and because of that possibility, I will stay with day trades. Swing trades are still in high risk zone and I will expect that will be case for some time.

http://www.ivicacharts.com/diagrams/2007/08172007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08172007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08172007qqqq60.jpg

Today is option expiration Friday and that will increase risk. This is a day for fast trades and hopefully for fast profits. To avoid intra day whippy action and possible stops by whip saw action we have to options. One is to have larger stops and trading with smaller lots and be fast with profit. Donât expect usual gain and be fast with exits. Second, which I will use is to use patience and wait better days for trading. Friday in the summer and option expiration day are enough reasons to stay with patience and maybe going to the beach as my best friend today. Every over night trade is high risk and I would stay with day/scalp trades for some time at least until the market calms down and brings us possible direction after consolidation. Focus is again on strongest and weakest names for intra day moves.

Good luck trading today!!!!
Ivica Juracic

ivica · Aug 20, 2007

Market commentary for 08/20/2007

Good day!
Including the last 30 minutes on Thursday and Friday's gap in the morning, we saw a huge bounce from weekly/daily support areas. Friday started with big gap up, but unfortunately that was all we saw on the long side. On the daily chart 200sma resistance area was to strong for the SPY. On the other side the DIA found strong resistance on daily 10/100sma. Market was weak after the open and we saw that opening gap filled very fast. Thursday's close was strong enough and Indices bounced form there. Unfortunately the bounce was very choppy and slow and the risk was to high for more than scalp trades. Friday's action was as we expected. High risk and not worth it for serious trading. It was good only for scalp traders. It is very important that traders recognize when there is good market action for trading and when it is good for waiting.
Letâs take a look on weekly charts to see what we can expect next week.
We can see a big extended bar with huge volume which indicates extreme action on smaller time frames charts. Finally the Indices found support after selling pressure all week. Volume was big last week and that suggests the market finally found a bottom for now. Closer inspection of the volume on Fridays actually was quite light after options expiration and opening short covering. That does not mean that we will see an uptrend again. The 50sma was strong support area and usually will hold first try for breakdown. Right now the big weekly resistance will be 10and 20sma

http://www.ivicacharts.com/diagrams/2007/08202007diaweekly.jpg
http://www.ivicacharts.com/diagrams/2007/08202007spyweekly.jpg
http://www.ivicacharts.com/diagrams/2007/08202007qqqqweekly.jpg

On the daily charts we can see that previous support areas now become resistance and that stalled Friday gap action. For the DIA that is 10/20/100sma area, for the SPY 200/20sma and for the QQQQ that is 100sma.

http://www.ivicacharts.com/diagrams/2007/08202007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08202007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08202007qqqq.jpg

On the 60 min chart we can see clearer resistance and support areas. With Friday gap âVâ bottom still holding and 20sma resistance now become to first support area. Look at 60 min volume which mentioned earlier is declining and that is not what we like to see. Because of that I will expect that we will see correction from bounce and more selling pressure.

http://www.ivicacharts.com/diagrams/2007/08202007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08202007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08202007qqqq60.jpg

I do expect the indices will hold last week lows for some time, which does not mean that they wonât try to retest the lows. After the strong move last weeks and the big and extended bars everywhere the market needs rest. If we look again on the weekly chart its been a long time since we have seen that extended action and things must calm down before we can see low risk setups again . Huge moves generally need time for a huge rest. I expect that next weeks market will be all around between weekly support and resistance areas. Right now the market is very nervous with all economic news and with extreme move and that will reflect on risk. Iâm sure that we will find trading opportunities, but staying in trades over night will be higher risk. Especially for several days/weeks and that limits our swing possibilities. Maybe some of you are frustrated because you are thinking you missed the huge moves. Look on this way, extreme move = extreme profit= extreme risk. I have been at this long enough to know that only way to be long term and successful is to stay with reasonable risk.
Right now it is very important to compare stock charts with market charts to determine strongest and weakest names. I will use them for intra day moves and possible trades. It will be very hard to find âown wayâ stock, but if I will find it, that will be good candidate for swing.

Good luck trading today!!!!
Ivica Juracic

ivica · Aug 21, 2007

Market commentary for 08/21/2007

Good day!
We didn't see much of anything yesterday other than indecision and some consolidation. If we look in the past we can see that yesterday's bar is a narrow bar and comparing it with the bars of the last few days it suggests some consolidation on the intra day charts. On the daily charts we can see that the volume declined and the indices stalled at the resistance area. That suggests we can see a reversal, however on the 60 min charts we can see nice 3rd try triangles which can suggest continuations.

http://www.ivicacharts.com/diagrams/2007/08212007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08212007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08212007qqqq.jpg

I think the indices are on a very important resistance area. Usually 3rd try can be the very charm, and can bring Indices to new highs. But since Indices are at daily the resistance area with a decline volume and if the 3rd try wonât go we can see strong intraday reversal (red arrow).

http://www.ivicacharts.com/diagrams/2007/08202007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08202007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08202007qqqq60.jpg

Taking all that into consideration it will be very important to see the action at the open today. Swing trades are still extremely high risk and over night trades are higher risk than usual. If we see a reversal in the morning, pay attention to the 20sma 60 min support area. If that doesn't hold the DAI and the QQQQ could easily go back to the daily 200sma support area. My focus will stay with intra day action for day trades. Yesterday we had several breakeven trades which is proof that we had scalp market (consolidation). Until we see a definitive market direction I think that we will stay in the same mode. I will watch for strongest and weakest names in both directions. Risk is still higher and we must respect that. We need to be patient and wait for opportunities the market allows. I believe we will have same consolidation and chop action for rest of the week.

Good luck trading today!!!!
Ivica Juracic

ivica · Aug 21, 2007

Market commentary for 08/22/2007

Good day!
From a risk perspective, Tuesday's action was waste of time. The QQQQ showed strength on low volume, but the DIA and the SPY didnât follow that action at all. That didn't surprise me looking at the daily charts the QQQQ had room to meet the resistance area (10/100sma). On the other side, the DAI and the SPY formed NR7 bar (narrowest bar in last 7 days). That suggests a possibility for a trend day and that is what I will be looking for Wednesday. When we have strong move down like last week the weakness determination is the 10sma resistance area. If down trend is really weak we will see a bounce from 10sma and that is the situation we have on the daily charts. The QQQQ also have 100sma, the DIA 20/100sma and the SPY 20/200sma resistance areas very close. Because of that, Tuesday was slow for me. I couldnât bring myself to be in a bullish mode with that strong resistance overhead and all day I was looking for a daily reversal.

http://www.ivicacharts.com/diagrams/2007/08222007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08222007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08222007qqqq.jpg

If we look at 60 min charts we can see the DIA try to break up on the 3rd try (what is often charm), but didnât work and day closed with 3rd try to break down. With daily resistances that will be direction, I will look for on Wednesday. It is same with the SPY 60 min chart. Key support area now is 20sma and if we will see selling pressure with good pace, I think that we can expect down trend for Wednesday. In that case, daily 200sma will be good support area for the DIA and the QQQQ, while the SPY can look for previous support area on the daily chart.

http://www.ivicacharts.com/diagrams/2007/08222007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08222007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08222007qqqq60.jpg

Of course that is one scenario that I will expect will play out. We must be open for anything so we must follow the market action. In the case we see strength, the daily resistance over head is quite strong and I will go with very small risk on long trades. When we expect trend day possibility it is important to mark high and low after 60 min and the direction that is broken first is the direction we can expect. We must pay attention to the pace and consolidations on smaller time frames. That action can help us to determine future action and risk. We must also pay attention to volume. We want see proof and volume helps us with that. If we have breakout in any direction and it is with larger volume than usual, with a strong pace, that is the direction we want to follow. If pace is very weak, then risk will increase and we want use proper risk management in that situation.

Good luck trading today!!!!
Ivica Juracic

ivica · Aug 22, 2007

Market commentary for 08/23/2007

Good day!
What I expected yesterday did not happen. The market opened with a gap up and kept on going. The QQQQ started the day under daily 20sma, the SPY above 20/200sma and the DIA above daily10sma. All the Indices have room for a move up and I hope they will do that. Unfortunately, we saw another very slow range trading day. Indices closed again under resistance which can be seen on the daily charts. Low volume on this bounce from the daily lows is something we must worry about with long positions. Since the Indices didnât bounce from the daily 10sma which will determine the strong daily trend I think we are coming in a zone where we can expect daily whippy range action in the near future. The daily moving averages now become support areas.

http://www.ivicacharts.com/diagrams/2007/08232007dia.jpg
http://www.ivicacharts.com/diagrams/2007/08232007spy.jpg
http://www.ivicacharts.com/diagrams/2007/08232007qqqq.jpg

The DIA is forming a pennant on the 60 min charts. Compare the buying pace from the daily low and buying pace which we have now. Obviously, it is weaker than the buying pace from the daily low. . On the SPY chart, we can see the same situation. A buying channel is what we have right now and it is weaker than the bounce pace. The daily volume declining is not helping. I didnât expect the QQQQ be the strongest index and the 60 min chart 3rd try triangle would work that nice. On all three charts we can see that Indices have more room for Thursday possible move up, or gap up. The indices closed strong and a gap up is possible in the morning.

http://www.ivicacharts.com/diagrams/2007/08232007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/08232007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/08232007qqqq60.jpg

I still donât trust to move up with lower volume and a weak buying pace, but that is the action which we have. Since the SPY and the QQQQ closed above 20/200sma and the DIA above 10sma my short bias is now gone. I think we will see a move down, but that will be more for intra day purposes. Reason for that is there is too big a bounce from the daily low and closing above previous resistance areas which now becomes the support areas. Of course we will still follow the market action and then we will decide what to do, but from this view I will expect high risk whippy daily action without a trend. This week is a good example of why August is a very difficult month for trading and why the risk is very high. The only way to protect ourselves is to use our old friend, PATIENCE. Be smart and save trading capital for better days. In the mean time I will cut number of trades and trading risk.

Good luck trading today!!!!
Ivica Juracic