Market commentary

Market commentary for 09/18/2007

Good day!
Monday brought another consolidation day with low volume. The day started with a gap down with the QQQQ being the weakest of the indices. It broke under Friday's low but that didn’t bring any continuation. In fact, the QQQQ got back into a 60 min range and stayed in it for the rest of the day. The SPY and the DIA's intraday and daily charts had similar action. Everyone is waiting for tomorrow's FED decision and that exasperated Monday's indecisive trading action. The daily charts stayed the same as discussed in the weekend column. On the DIA and the SPY daily charts I left the potential patterns we can expect to see, just for our imagination.

http://www.ivicacharts.com/diagrams/2007/09172007diaweekly.jpg
http://www.ivicacharts.com/diagrams/2007/09172007spyweekly.jpg
http://www.ivicacharts.com/diagrams/2007/09172007qqqqweekly.jpg

On the 60 min charts, we can see that the Indices stayed in a range and that kind of action will usually bring a high risk market. Scalp trades were the name of the game. The only change from Friday is that the Indices closed under their 20sma, which are now their resistance areas. I think that the Indices will stay in that 60 min range before the FED meeting.

http://www.ivicacharts.com/diagrams/2007/09172007dia.jpg
http://www.ivicacharts.com/diagrams/2007/09172007spy.jpg
http://www.ivicacharts.com/diagrams/2007/09172007qqqq.jpg

Since everyone is waiting for the FED decision, we could see a strong reaction after the 2:15 pm ET decision. It is quite possibly that the intraday range will not serve as either support or resistance. The action after the FED decision is always volatile. Usually, we see very strong moves with high volume and for me that is a very high risk time. It is not unusual to see 3 moves. The initial reaction goes in one direction, and then we see a 2nd wave in the opposite direction and a third and final wave in the original direction. Of course, this is a short, general explanation, because we can’t know what the market will do. The volume after a FED decision is usually very high and that can freeze chart platforms, so please keep that in mind. Lately I have noticed that we have gotten our direction on the 3rd move after the decision. The true direction might not occur until the following day. I want to say, that trading after the FED decision is very high risk and I tend to avoid that. I know that can sound frustrating, because most of us are already frustrated with the market action of late. But if we have enough patience to wait another couple of days for more healthy market action it certainly won't kill us and it can keep us from taking false breakouts. We can always take continuation patterns after the consolidations. If the train starts, and if it all looks good, we can hop on at the 1st station ,which is much better then getting on a train going the wrong direction.

Good luck trading today!!!!
Ivica Juracic
 
Market commentary for 09/19/2007

Good day!
The market loved the FED interest rate cut. After the FED's larger then expected half point cut in interest rates, the market bounced strongly to new highs. Everyone waited for the FED announcement and we finally got it on Tuesday afternoon. The day started with a gap up to the upper range line on the 60 min charts. As we expected, the market stayed in a range until the announcement. Interestingly, we didn’t see any reversal after the strong bounce. The Indices continued with their upward direction without any correction. On the daily charts we can see that the indices closed near their previous resistance areas. The DIA and the SPY have a small amount of room until their resistance, while the QQQQ closed right at its previous high and gave us a double top pattern possibility.

http://www.ivicacharts.com/diagrams/2007/09192007dia.jpg
http://www.ivicacharts.com/diagrams/2007/09192007spy.jpg
http://www.ivicacharts.com/diagrams/2007/09192007qqqq.jpg

On the 60 min charts, we can see that the QQQQ and the SPY are near equal move resistance areas and we can clearly see that there is not a lot of room for the SPY and the DIA to touch it. The breakout volume was high, however that is expected after a rate cut.

http://www.ivicacharts.com/diagrams/2007/09192007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/09192007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/09192007qqqq60.jpg

Now what? The charts are telling us that we could see a reversal to previous yearly highs because the breakout pace and volume are strong. Is that logical from an economic aspect, well that is a different story. We can follow the market action and the market suggests a long bias. The QQQQ is already close to its' previous high resistance area (50.50 areas), while the SPY and the DIA still have some room to reach it. That will be very strong resistance and also would be a weekly double top pattern. My bias is on the long side, but right now I don’t expect to see a new weekly bullish trend. The important thing to know is that when we have a strong breakout, with strong volume and pace, and that pace is stronger than before the consolidation (60 min charts), we can expect more then an equal move. On the 60 min charts, that means a move to previous weekly highs and right now that will be my focus. All looks great, but before I will be 100% focused on that scenario I want to see Wednesday's open. Lately, after the FED announcement I have noticed that we have gotten the true direction the day after the FED announcement. That is the reason I am waiting to be 100% with the bulls. We took a few swing trades and if the market will confirm its' strength today, I will add to my positions. After the strong intraday move it will be hard to find new swing setups and I will be focused on intraday moves and current swing continuations.

Good luck trading today!!!!
Ivica Juracic
 
Market commentary for 09/20/2007

Good day!
The DIA and the QQQQ touched their previous highs. After a strong close on Tuesday, Wednesday opened with a gap up, which was in line with expectations. Unfortunately that was it for the market action. The rest of the day we saw a correction from highs which finished with a pivot bar on the daily charts. The QQQQ and the DIA touched their previous high resistance areas after their big moves, and I expect that this area will hold for now. The SPY and the DIA daily CCI is above 200, what suggests an overbought market. This coupled with the extended move makes the market ready for rest (consolidation). On the weekly charts, we can see that the Indices formed a cup, so right now we must wait for the consolidation to see where the market will go. That means, again, patience for swing traders. I know that sounds frustrating, because we all waited for a day and half for market action, but there is no other option for healthy low-risk setups.

http://www.ivicacharts.com/diagrams/2007/09202007dia.jpg
http://www.ivicacharts.com/diagrams/2007/09202007spy.jpg
http://www.ivicacharts.com/diagrams/2007/09202007qqqq.jpg

We don't know what the market will do, but we can still recognize risk. For low risk setups, the key is consolidation, rest, and patterns. For that (on the daily/weekly charts), we need time. Our open swing trades are already going very well, but right now new swing setups remain risky. On the 60 min charts, we can see that the Indices started with a correction. Wednesday's high is resistance and the first supports area is Tuesday's close and the 20sma 60 min. For Thursday, I will expect to see market action between those two areas.

http://www.ivicacharts.com/diagrams/2007/09202007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/09202007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/09202007qqqq60.jpg

The extended daily and intraday action does not mean that we won’t have opportunities, but for low risk setups we must focus on smaller time frames (5/15 min charts). I will look for the strongest and weakest names for both intraday directions. For long possibilities, I will pay attention to consolidations near highs and 15/30 min 20sma. When the chart comes to the 20sma I would like to see a bounce and the setup is above the consolidation high with a stop under the 20sma. For low risk setups and good risk/reward possibilities, the 20sma is a very good tool and it is always important to pay attention to it. Since charts are always better than a thousand words, I will show you an example.

http://www.ivicacharts.com/diagrams/2007/09202007cree.jpg

We can see a nice consolidation (triangle) and bounce from the 20sma on the 60 min chart. The setup is above the previous bar's high and the stop under the 20sma. Of course it is important to see other time frames (whole picture), to see if CREE has room for a possible move. If there is strong resistance close to the breakout area, then the setup is too risky and not a good risk/reward trade. I use a lot of this kind of setups, so I think it is worth paying attention to. Since the Indices are extended and need rest for low risk moves, my focus will stay the same, but this time it will be on smaller time frames.

Good luck trading today!!!!
Ivica Juracic
 
Market commentary for 09/21/2007

Good day!
Well another consolidation day!!! That pretty much sums up yesterday's action. Wednesday's resistance area held and the market continued its’ correction from highs. We can also see that volume is decreasing during the consolidation. Thursday's action was very choppy and slow with a downward pace. But because the action was so slow, the only tradeable patterns were with individual names. The market action didn’t bring support in any direction. On the smaller time frames, we can see that during this consolidation risk is higher and really only good for scalp traders.

http://www.ivicacharts.com/diagrams/2007/09212007dia.jpg
http://www.ivicacharts.com/diagrams/2007/09212007spy.jpg
http://www.ivicacharts.com/diagrams/2007/09212007qqqq.jpg

On the 60 min charts, we can clearly see Thursday's action. Yesterday I explained that the 20sma is a strong support area, and Thursday's action closed exactly on it. The SPY and the DIA are forming 60 min bull flags, while the QQQQ is forming a triangle pattern. For Friday, I will look for a bounce possibility from the 20sma. The correction is with a weak pace, much weaker then the buying into the daily highs. This volume decrease coupled with the fact that the Indices are at strong support, indicate that we could see a bounce.

http://www.ivicacharts.com/diagrams/2007/09212007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/09212007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/09212007qqqq60.jpg

Since the rest period isn’t long enough for an equal move, I will look for Thursday's high or even for Wednesday's high as a good target area. If we see a bounce, I would like to see a stronger bounce with higher volume then the consolidation volume. If that is not the case, we could see whippy intraday action without clear direction. It will be important to follow the action in the morning. If the Indices 20sma 60 min support area doesn't hold, then we could see more of a correction from highs. I know most of us waited on the FED announcement with hope that market would bring more healthy action. After the strong reaction we had, we again have a slow market with which to contend. Another important thing to remember for Friday is that it is option expiration day. Usually that is a whippy day and risk is higher. We will see more stops and false breakouts then usual. One way to avoid that possibility is to use larger stops and be faster taking profit. To stay with reasonable risk, we must take smaller lots that will bring less risk/reward possibilities. Another way is to be patient and wait until next week. This, of course, applies to day traders.

Good luck trading today!!!!
Ivica Juracic
 
Market commentary for 09/24/2007

Good day!
The Indices moved back to their previous highs. That is a summary of last week's action. Of course, the FED rate cut helped a lot. I had a bullish bias for Friday, but the morning gap up destroyed that idea and most of the move that I expected from the 20sma 60 min bounce possibility was gone right at the open. The rest of the day was a classic option expiration Friday: choppy without any true direction. The DIA and the QQQQ opened with a nice gap up, while the SPY showed weakness right at the open and filled its' gap right away. Let’s look at the weekly charts. The QQQQ is the strongest and closed at its' previous high forming a double top. The DIA's situation is similar because it closed near its' resistance area. The SPY is the weakest because it touched its' resistance area, but also closed much lower which could result in a lower high. All the Indices are forming a “v” or kind of cup pattern and all three are extended. This is not good news for new swing trades.

http://www.ivicacharts.com/diagrams/2007/09242007diaweekly.jpg
http://www.ivicacharts.com/diagrams/2007/09242007spyweekly.jpg
http://www.ivicacharts.com/diagrams/2007/09242007qqqqweekly.jpg

On the daily charts we can clearly see the situation from last week's action. We can see that the DIA and the QQQQ started with consolidations near their highs, while the SPY's correction was stronger and could result in a possible weekly lower high. Volume during the last three day consolidation decreased. For now the correction looks good for possible future strength, but for low risk setups we need to see more consolidation days and the pace needs to stay weak. Any strong pace pullback will decrease the breakup possibility. This is a classic situation when we must see a consolidation after a move. All who follow my work know that the basic rule for me is move-rest-move, and right now the Indices are in a rest period. The pattern during the rest period can help to predict the future action. If it is a strong pullback, then we could see triangle action or a reversal pattern for more of a downside move. If the Indices will stay in the formation as the DIA and the QQQQ right now, then we will look for another move up.

http://www.ivicacharts.com/diagrams/2007/09242007dia.jpg
http://www.ivicacharts.com/diagrams/2007/09242007spy.jpg
http://www.ivicacharts.com/diagrams/2007/09242007qqqq.jpg

The rest period if easily seen on the 60 min charts. The DIA and the QQQQ touched their upper range line after Friday's gap up, while the SPY stayed in a bull flag pattern and is slowly moving down. This chart proves again the SPY's weakest action as it broke under its' 20sma 60 min and its whole number is its' next support area. The DIA lost its' 20sma 60 min at the close, but it is still in a range. On the chart we can see that the DIA has already tried to break up twice. If the pullback that started on Friday after the high stays in a range, the next try for highs will be the third try. We all know this will be a good opportunity for more upside. That is one scenario that I will follow for an upside move. The QQQQ 60 min chart is the strongest and after Friday's gap up touched its' previous high and stayed in that range for the rest of the day. For any upside possibility, it is important to stay above its' 20sma.

http://www.ivicacharts.com/diagrams/2007/09242007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/09242007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/09242007qqqq60.jpg

I hope that from all the charts above you all can see the situation that we have now. Several things are important to know. If the Indices will break to new highs, that will be a higher risk breakout because the rest period didn’t hold long enough. The ideal situation will be to see a whole week of consolidation near highs, which will form a weekly continuation pattern. But can we expect an ideal situation? We can only follow the market action. In the case that the Indices break to new highs, then we can’t expect to see an equal move (60 min charts), because that is not enough rest. If Indices will break down, we have many support areas and for swing moves that will be a difficult time. The best cases scenario is the second one and that is the weekly continuation pattern. In that case, next week will be very hard for trading, as is always the case when the market is in a range. All this is telling us that swing trades still don’t have a clear situation, and focus will continue to be on intraday moves, and trades with one to three day maximum holds.

Good luck trading today!!!!
Ivica Juracic
 
Market commentary for 09/25/2007

Good day!
Monday brought us another consolidation day for the SPY and the DIA. Most of the day had divergences between the weaker DIA and the stronger QQQQ. The day started with a small size gap up and usually gaps that size will be filled right at the open. Mondays wasn’t as expected. The QQQQ bounced strongly to new daily highs and pulled up the DIA and the SPY. Unfortunately they couldn't keep up with the QQQQ and lost all their morning gains. On the daily charts we can see that the DIA and the SPY continued with their consolidations post the rate cut.

http://www.ivicacharts.com/diagrams/2007/09252007dia.jpg
http://www.ivicacharts.com/diagrams/2007/09252007spy.jpg
http://www.ivicacharts.com/diagrams/2007/09252007qqqq.jpg

Intraday selling volume was stronger and that suggests further correction on Tuesday. The SPY and the DIA still have time to reach their first moving average support areas (10sma) and I will expect they will do so before any possible bounce up. On the 60 min chart, we can see that the DIA stayed in a range and closed at its' lower support line. The 20sma is resistance now. The SPY continued with a bull flag, while the QQQQ doesn’t have as clear a situation after Monday's break to new highs. The QQQQ didn’t rest enough for a larger move up and because of that the 60 min equal move was too strong of a resistance. $51 is the number resistance area.

http://www.ivicacharts.com/diagrams/2007/09252007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/09252007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/09252007qqqq60.jpg

On the SPY daily chart one scenario that we could expect is a few more consolidations days, especially if this correction continues with the same volume and pace. For that possibility I would like to see a bounce from the 10sma on the daily chart as trend strength measure. The DIA is consolidating at highs and for a low risk setup needs more consolidation days. It will be best if will stay in this range for the rest of the week. In that case we will have the possibility of a continuation pattern on the weekly chart. I don’t have a strong bias for Tuesday, but will expect more weakness than strength. I will expect that the SPY will continue with this correction until its' 10sma support area. If the correction pace gets stronger with higher volume, then this idea on the SPY chart will be history and the focus will be on a longer correction on the weekly charts. Risk reminds high and intraday moves are still the safest place for making profits.

Good luck trading today!!!!
Ivica Juracic
 
Over the last few weeks/months the markets have been anything but clear and rational, but your commentary has serverd as a great guide to anyone who will take the time to follow it. Keep up the good work pickles.

Brandon
 
Quote from Brandonf:

Over the last few weeks/months the markets have been anything but clear and rational, but your commentary has serverd as a great guide to anyone who will take the time to follow it. Keep up the good work pickles.

Brandon
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Thank you very much Brandon. Hope others think same.:)
 
Market commentary for 09/26/2007

Good day!
The QQQQ closed at new highs. On Tuesday, the indices opened with a strong divergence. The SPY and the DIA gapped down, while the QQQQ held Monday's low. The problem with the intraday action was the divergence that continued all day, which we can see by looking at the 60 min charts. Over the last few days, the QQQQ has been much stronger than the DIA and the SPY. From the small morning gap down to Monday’s low, the QQQQ showed a trend move to new yearly highs. The daily volume is not that strong and consequently does not confirm the action, bringing concern to the long side. As we expected, the SPY held its' 10sma support area, but for now we didn’t see a strong reaction from this support.

http://www.ivicacharts.com/diagrams/2007/09262007dia.jpg
http://www.ivicacharts.com/diagrams/2007/09262007spy.jpg
http://www.ivicacharts.com/diagrams/2007/09262007qqqq.jpg

The 60 min charts show the SPY and the DIA's buying pace after the gap down was choppy and weaker then the selling pace into the lows. This is not what we like to see for bullish action. Both are still under their 20sma support areas, which are very important areas on the 60 min charts. On the other side we can see that the QQQQ's action is much stronger, which resulted in the intraday divergence. Risk is always higher then usual with these divergences because we don’t have synergy in the market action.

http://www.ivicacharts.com/diagrams/2007/09262007dia60.jpg
http://www.ivicacharts.com/diagrams/2007/09262007spy60.jpg
http://www.ivicacharts.com/diagrams/2007/09262007qqqq60.jpg

Despite the QQQQ closing at new highs, I don’t have a strong bias for Wednesday. On one side we have the strong QQQQ daily action without strong volume. On the other side we have the weak action of the SPY and the DIA. I will wait to see the action at the open and the market breath before taking any new trades. It will be interesting to see if the QQQQ can take control and bring buyers into the market and pull the other indices along. Don’t forget that on the weekly charts the Indices are still in double top patterns and right now swing traders still don’t have support from the market action. My focus is still on intraday moves and that will stay the same until we will see market synergy in any direction. I don’t trust the long side right now, but all that can change if the volume increases and the SPY and the DIA decide to follow the QQQQ action. One more note is that the COMPX still didn’t reach its' previous high, and this action can result in a weekly QQQQ slightly higher high.

Good luck trading today!!!!
Ivica Juracic
 
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