Market commentary

Market moment

NOTE:; apologies for every grammar mistakes

I like write few words about actual market moment. Lately trading was difficult and trades didn’t work well as usual. There are several reasons for that. I think that market is at important moment when we could see reversal on the daily charts what can result with swing daily move down. If we will staying in line and trying to find lower risk setups, for that possibility we need to see daily reversal pattern. That mean sharp break down on bigger volume and strong selling pace. That will be daily initial move for swing move down possibility. Something what should look like this:

http://www.ivicacharts.com/diagrams/2008/05082008diad.jpg

I used DIA daily chart, but can use SPY or QQQQ it is same. Without those action indices will very possible just jump around on daily chart without trend what will result with daily range and could look like this:

http://www.ivicacharts.com/diagrams/2008/05082008diad1.jpg

On the daily chart indices already saw four buying waves; no matter how choppy they was it was daily up trend. Reason why trading is more difficult lately is daily choppy or whippy action with many open gaps at the open what ask to us to use bigger stops to not be stopped by inch and then see how chart back to main direction. That is one way how to trade when action is choppy. It means using bigger stops. That will result with less risk/reward trades and higher risk. Another way is to not to trade or be very very fast scalper and don’t expect great r/r result. Unfortunately I can’t change market action; I just can give open options.

Why market act on this way lately? Reason is sharp move down what we had on weekly charts, also you can use monthly charts for that:

http://www.ivicacharts.com/diagrams/2008/05082008diaweekly.jpg

http://www.ivicacharts.com/diagrams/2008/05082008spyweekly.jpg

http://www.ivicacharts.com/diagrams/2008/05082008qqqqweekly.jpg

We can see that after double bottom, the DIA and the SPY break above previous high what destroyed possibility for weekly continuation pattern. Right now, what we present is fight between previous high (now support area) and resistance area what we can see on the chart. The QQQQ weekly chart right now just staled on resistance area (previous support) and as I mention several times we will see what action this week will bring. Problem on weekly move up from lows is decrease volume what all make more tricky. For swing move down possibility there are several close support areas (10/20sma) and all will server support areas.

Summary of all this is that right now (unfortunately) I don’t see big change in market action from trading risk view. I hope that indices will start with daily trend down because that will be opportunity for continuations. If charts will start with range (no trend action) then risk will remain higher.

I hope that this market view helping a little to see market moment right now.
If anyone have any comment or any question please feel free to contact me

Kind regards
Ivica
 
Market commentary for 05/12/2008

Good day!

Friday started with a gap down and stayed in a range once again. It was the same as Thursday's action. The move we expected to see on the DIA and the SPY's 60 min charts was gone with the morning gap down. We can see that all three indices stayed in range. The market looked weak all day but intraday long trades did much better than short trades. I kept expecting Wednesday's continuation to start, but that never happened. The DIA found support at it’s' 200sma 60 min.

http://www.ivicacharts.com/diagrams/2008/05122008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/05122008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/05122008qqqq60.jpg

The SPY is at its' daily 20sma support area, while the QQQQ found support area at its' daily 10/200sma support area. For the SPY and the DIA we saw a leg down on the daily charts. I still think that we could see a weekly reversal, but that can happen with more daily jumpy action and in that case we could see a head and shoulder pattern, but for now that is just guessing. The Indices haven’t formed any low risk patterns on the daily charts and we can expect that this type of action with gaps and range action could continue next week too.

http://www.ivicacharts.com/diagrams/2008/05122008dia.jpg
http://www.ivicacharts.com/diagrams/2008/05122008spy.jpg
http://www.ivicacharts.com/diagrams/2008/05122008qqqq.jpg

After the market opens we can start with fast trades (scalps) which work best in this kind of market action. Since continuations aren't working well lately, my focus will be on swings with larger stops and scalp trades. Scalps are not my favorite type of trading but for now that is what market giving us.

In my opinion, volume is the main market problem. Without volume we can’t see “healthy” moves in any direction which can result in the same kind of jumpy action we have been seeing without strong direction and pace. On the weekly charts we can see that the indices made a red bar and the DIA was the weakest and broke down, under its' previous weekly low. The QQQQ was the strongest and closed above its' 20sma support area. The DIA and the SPY reached their support areas (previous resistance is now support). Last week's volume was light and it was just the first correction week after the indices reached resistance last week.

http://www.ivicacharts.com/diagrams/2008/05122008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/05122008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/05122008qqqqweekly.jpg

For the longer term, I’m staying with the same opinion that I have repeated several times in last week's commentaries. We have seen only the start of a correction from the weekly/daily trend up. I didn’t like the daily uptrend on decreased volume and I didn’t trust it much. But also I don’t like last week light volume on the correction start. The DIA broke under its' previous bar’s low (weekly chart) but on very light volume. The SPY and the QQQQ's volume was slightly higher. We can see many support areas in case the indices go down but we can also see resistance overhead. I know this all sound messy, but I am just trying to explain why we can continue to see the kind of choppy action we had over the last few weeks. My focus will stay the same until the market action changes.

If anyone has any questions or comments, please feel free to contact me.

Wish you all good trading!!!
Kind regards.
Ivica
 
Market commentary for 05/13/2008

Good day!
Monday opened a little higher and didn’t bring much weakness, especially after the 10:00 am reversal period. Obviously the 60 min continuation consolidations didn’t work. In spite of that we saw a strong intraday reversal on light volume. The QQQQ was the strongest again and traded back to its' daily highs, while the DIA and the SPY's previous 60 min highs were too strong for Monday. Unfortunately, the continuation didn’t work again, but I’m not ready to trust the bull side for more than just fast trades just because of Monday's action. Traders who know me know that that is not my style, but right now that is the only safe area for lower risk trades because continuations aren't working lately.

http://www.ivicacharts.com/diagrams/2008/05132008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/05132008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/05132008qqqq60.jpg

Lets look at the daily charts to see why I’m still not a fan of the long side, at least not yet. The daily volume was light. On the SPY and DIA charts I drew a scenario that is possible right now. The QQQQ's action is too strong, however, $50 is strong number resistance and it is close and we could see a correction after that. I’m still not a fan of that scenario either, but I mention it because right now the odds for that look reasonable to me. After four daily buying waves and with strong resistance area overhead I am not comfortable with the long side for more than fast intraday trades. The DIA and the SPY will have strong resistance around their previous daily highs and if they won’t form lower highs and H&S patterns, than double tops will be another open pattern possibility.

http://www.ivicacharts.com/diagrams/2008/05132008dia.jpg
http://www.ivicacharts.com/diagrams/2008/05132008spy.jpg
http://www.ivicacharts.com/diagrams/2008/05132008qqqq.jpg

I don’t know what will be, but I just know that tomorrow's action will help us to determine future direction. I mentioned in the trading rooms several times that lately setups have been working on the weekly charts and on the 5 min charts. That means swing trades with larger stops and scalp trades. Since I’m not a fan of larger stops I have been trading faster trades. If we use the same scenario for the indices charts, than I would like to see patterns on the weekly charts and that means we could see jumpy action on the daily charts which will result again with difficulty with overnight trades. Generally, I want to say that for lower risk setups it is better to follow a setup on the weekly charts than on the daily charts, for swing trades. Because of that for tomorrow my focus is the same. ..fast intraday moves. I truly hope that the market will change soon and will once again support swing trading.

If anyone has any questions or comments, please feel free to contact me.

Wish you all good trading!!!
Kind regards.
Ivica
 
Market commentary for 05/19/2008

Good day!

After mixed intraday action, the indices closed barely flat on Friday's session. During this session we saw similar action to what we saw on Wednesday and Thursday. The day started with strong selling pressure and during the morning the indices lost most of Thursday's gains with the DIA found support at Thursday's low. On the 60 min charts we can see that the selling pace was the same strength as it was on Wednesday and the reversal after lows was again similar to Thursday's buying pace. The only difference was on the DIA's action because it wasn’t strong enough to close at Thursday's high. We can see that the DIA stayed in a 60 min range with the same support and resistance areas. The SPY stayed in trading channel, while the QQQQ forming a 60 min pennant what is usually a bearish pattern.

http://www.ivicacharts.com/diagrams/2008/05192008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/05192008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/05192008qqqq60.jpg

On the daily charts we can see that the DIA closed at the same area and that is under its' 200sma resistance area, which is the same as the SPY. Both have room for another daily move up to reached their previous resistance areas. For the SPY that is its' gap area from 01/03/2008 (blue arrow) and for the DIA that is its' previous high (red arrow). We can all see that the QQQQ is showing the strongest daily uptrend and every touch of its' daily 10sma finished with new highs. From our moving averages class we know that this is a sign of a strong trend. Also we can see that the QQQQ already filled its' 01/03/2008 gap and reached its' strong resistance area. With a strong close at highs and with the DIA/SPY's room for a move up, the odds for another move up on Monday are quite possible.

http://www.ivicacharts.com/diagrams/2008/05192008dia.jpg
http://www.ivicacharts.com/diagrams/2008/05192008spy.jpg
http://www.ivicacharts.com/diagrams/2008/05192008qqqq.jpg

Now, let’s take a look at the weekly charts. We can see that the DIA and the SPY are at their resistance areas, as is the QQQQ. From the weekly charts I don’t see room for another swing move up without resistance. There is a bit of room and that move could happen on Monday. On the DIA and the SPY charts the bounce from lows is strong, not as strong as the selling pressure into lows, but much stronger than we like to see for any possible continuation. The primary trend is still down and we must respect that. On the other side, when we look at the QQQQ chart, it is hard to talk about trend because the bounce is very strong and it is on lower volume, but it’s gone too far for any downtrend continuation.

http://www.ivicacharts.com/diagrams/2008/05192008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/05192008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/05192008qqqqweekly.jpg

Now what is the general conclusion? The weekly trend is down, but bounces from lows are too strong for us to expect a move down into new weekly lows. The daily trends are all up and all are near or at strong resistance areas. The indices have a bit of room for a move up in the first part of the week and that is what I will look for. We all know that after a trend is done, and I think that the indices have come to that point on the daily charts, we never know if we will we see a pullback or if we will see range action before any new trend. So, we don’t have any new swing signals right now. My focus will be on individual names (strongest and weakest) and for now I will look at both sides with a slightly stronger focus on the short side (weakest charts), something like XLV's weekly bear flag. Also I will scan for intraday setups after the market opens.

If anyone has any questions or comments, please feel free to contact me.

Wish you all good trading!!!

Kind regards.
Ivica
 
Market commentary for 05/27/2008

Good day!

A quick view of the indices' table shows us a lot about the divergence that we had during Friday’s session. I expected selling pressure and the DIA filled those expectations and reached the support area that was marked on Thursday's commentary chart. That was the 3rd selling wave on the 60 min chart. Also the DIA closed at lows and I think that it will still have room for weakness on Tuesday morning. The QQQQ had the strongest action with the SPY being between the weakest DIA and strongest QQQQ. We can see a third selling wave there too, and the SPY has room for another move down until it’s' 50 or 100sma on the daily chart. After the open the move down was the same as the DIA, a consolidation at lows, which suggests for another move down. When we carefully look at the 60 min charts we can see that every new selling wave is shorter, which can result with a gap down or weakness at the open on Tuesday but not with a stronger selling wave. The QQQQ was strongest and with the DIA formed a divergence all day. We can see on the 60 min chart that it barely broke under Thursday's low and traded back into a range, above its' 200sma support area.

http://www.ivicacharts.com/diagrams/2008/05272008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/05272008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/05272008qqqq60.jpg

On all three 60 min charts we can see that the brown line (10sma) is the key resistance area for trends. The SPY and the DIA are still under that level, while the QQQQ closed above which resulted with a divergence continuation into Tuesday's open. On the daily charts we can see the same story about weakness and strength. The QQQQ is still holding above its' 200sma, while the DIA is already under all of its' moving averages and the SPY (again in the middle) closed above its' 50/100sma. Another important thing is volume. Wednesday's selling pressure increased volume and with obviously stronger selling than buying pace we can expect more of a correction in the future.

http://www.ivicacharts.com/diagrams/2008/05272008dia.jpg
http://www.ivicacharts.com/diagrams/2008/05272008spy.jpg
http://www.ivicacharts.com/diagrams/2008/05272008qqqq.jpg

Weekly volume supports that possibility. The DIA formed a large red selling bar and closed right at its' 20sma support area, the last support area before its' previous low (red line on the chart). The SPY closed near its' 10sma and its' 20sma is not that far, so with weakness in the early part of the week, that area can be reached. The QQQQ is holding its' 50sma (green line) and if that doesn’t hold than the next strong support area is its' 10sma. Obviously the DIA has the best chance to see its' previous lows again.

http://www.ivicacharts.com/diagrams/2008/05272008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/05272008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/05272008qqqqweekly.jpg

OK, now what are the expectations for this short upcoming week? I think that the indices have room for weakness in the morning, but I won’t be interested in new short trades. That weakness will be a good chance for exits on open trades. The reason why new short trades are too risky is we have already had three selling waves, we have a small amount of room until support areas, and the daily has extended action. I will look for a selling correction on the daily charts. Possibly a correction until we reach the 10/20sma, now resistance areas, which could be a new opportunity for swing trades. Of course that is guessing for now, but for sure new short trades are high risk and odds for a daily correction are probable. For that I will look for possible 15/30/60 min reversal patterns.

If anyone has any questions or comments, please feel free to contact me

Wish you all good trading!!!

Kind regards.
Ivica
 
Market commentary for 06/02/2008

Good day!

Friday's action was more or less range type action. Trading risk was higher because of this range action and we once again had divergences between the weaker DIA and the stronger QQQQ. We can see that on the 60 min charts. The DIA formed a kind of bull flag; the SPY stayed in a range without any intraday trend, while the QQQQ broke up to new intraday highs but barely closed in positive territory. If we look at the above table, we can see that the changes were very small and that is another reason why trading risk was higher. After the 4th QQQQ buying wave, I will look for a reversal. We can see that the last buying wave was very slow which also suggests a correction. The DIA broke down from its' consolidation before the close and the SPY stayed in it’s range without changes.

http://www.ivicacharts.com/diagrams/2008/06022008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/06022008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/06022008qqqq60.jpg

On the daily charts we can see that the DIA stayed under its' 10/50sma resistance areas, the SPY closed right at its' 10/20sma crossover try and the QQQQ is get closer to its' previous daily high and forming a possible double top pattern. After Thursday's move up, Friday's volume was low. Since the QQQQ didn't form the H&S possibility we had been looking at, it is now possible it might form a 2T pattern. The SPY H&S pattern is still in line, while the DIA is forming bear flag. When I look at all three charts, I will expect more weakness next week, because if those daily pattern will work all three will have short signals.

http://www.ivicacharts.com/diagrams/2008/06022008dia.jpg
http://www.ivicacharts.com/diagrams/2008/06022008spy.jpg
http://www.ivicacharts.com/diagrams/2008/06022008qqqq.jpg

Let’s take a look at the weekly charts. First what I look at is volume. Last week's volume was low on the reversal, while the week before had strong volume with the selling pressure. This is a signal that we have more sellers than buyers right now, and more short interest. We can also note how the DIA's reversal was much weaker than the QQQQ's reversal.

http://www.ivicacharts.com/diagrams/2008/06022008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/06022008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/06022008qqqqweekly.jpg

When we include the possible daily patterns and volume, I will expect more weakness than strength in the future. Volume will be very important. It will tell us about interest. If the market will decide to go up and if volume will increase than it will be a signal for more of a recovery, but if volume will be light as it was last week then trading risk will increase and my focus will be on intraday setups and fast trades. Since the charts suggest that volume is stronger on the short side, my focus will be on short setups during my weekend scanning. Note that the month is over and it is great opportunity for scanning over monthly charts which can give us a list of what we can follow longer time for all kind of trades.

If anyone has any questions or comments, please feel free to contact me

Wish you all good trading!!!

Kind regards.
Ivica
 
Market commentary for 06/03/2008

Good day!
As we expected, the week started with selling pressure which was the result of daily patterns. The DIA bear flag, the SPY H&S and the QQQQ double top. The morning selling pressure was strong with higher volume. We can see that the indices reached their daily support area which was too strong to be broken on the first try. We can see those support areas on the 60 min charts as previous support areas and we can see them on the daily charts as moving averages support areas.

http://www.ivicacharts.com/diagrams/2008/06032008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/06032008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/06032008qqqq60.jpg

For the DIA that was its' previous low support area (this bar is not correct and we can see that on the 60 min chart. The DIA reached its previous low and bounced). The SPY reached its 50sma daily support area, while the QQQQ reached its 10/20sma support areas. Since intraday action was extended with the morning selling pressure, trading risk on new short setups during the afternoon increased. On the other side, the correction was slow but still enough for a good fast long trade (WNR).

http://www.ivicacharts.com/diagrams/2008/06032008dia.jpg
http://www.ivicacharts.com/diagrams/2008/06032008spy.jpg
http://www.ivicacharts.com/diagrams/2008/06032008qqqq.jpg

You know that I look at the market action this way: move-rest-move. We got a move and the rest started and I won’t be surprised if this rest period will continue during the Tuesday session. Because of that I think that trading risk will increase and that it will be higher than on Monday when we expected a break down from the daily patterns. Now the move is behind of us and for low risk setups we need a good rest and for that we need time. The best case scenario will be if we will see a small range type action near Monday's lows which will lead to a continuation pattern. But that is just speculation at this point. We will see what the market brings us, but this time I will be focused on faster trades and “own way” charts. I think that we will see more selling pressure in the future and I think that the weekly correction isn’t over. If anyone took PAYX, from the chart of the week session, you can look to move your stop on it. I missed that one but I will look for an intraday setup based on the 15/30 min base.

If anyone has any questions or comments, please feel free to contact me

Wish you all good trading!!!

Kind regards.
Ivica
 
Market commentary for 06/09/2008

Good day!

What a day. I am very rarely trapped in stocks but I must admit that Friday's action surprised me. I think that we don’t need to explain much about Friday's action because it is obvious. After some bad news, the indices opened with large gaps down and for the rest of the day we saw continuation with a strong selling pace and extremely heavy volume. This bad news with the trap helped to see large red selling bars on the daily charts. From a technical view we can now say that Thursday's action was a false break up from the daily bearish mode and weakness. Thursday's action stopped many short traders and brought them into long mode and then Friday did the opposite. After all we can see that the indices followed thru with the expectations that we had from the start of the week. On the 60 min chart, I drew blue lines which will explain why this week's trading risk was very high. We can see that the move-rest-move scenario didn’t work. Continuations didn’t work. There were many sharp moves in both directions which was a result of the large weekly divergences, which we can see on the weekly charts.

http://www.ivicacharts.com/diagrams/2008/06092008dia60.jpg
http://www.ivicacharts.com/diagrams/2008/06092008spy60.jpg
http://www.ivicacharts.com/diagrams/2008/06092008qqqq60.jpg

We can also see it on the daily charts. After Thursday's action and the nice bear trap, Friday’s bull trap brought the DIA's 3rd selling wave. It was the strongest one. Usually when we have that strong of a move down we can expect more selling pressure and that is what I will look for over the next few days. The DIA reached its' previous support area, the SPY reached its' 100sma daily support area while the QQQQ traded back to its 200sma 60 min support area. I believe that this is not the end and that the QQQQ will reach the bottom of its range support area. The DIA the SPY have good odds to see their previous weekly lows.

http://www.ivicacharts.com/diagrams/2008/06092008dia.jpg
http://www.ivicacharts.com/diagrams/2008/06092008spy.jpg
http://www.ivicacharts.com/diagrams/2008/06092008qqqq.jpg

I don’t want to go too far but the correction on the weekly charts can be the start of a larger weekly/monthly selling wave. Of course that is for the DIA and the SPY. For now the QQQQ has its' own way and is basing at highs which we can see on the weekly chart. It is sitting at its' 50sma support area and since the bounce from lows was much stronger, the odds for the weekly divergence continuation is very high. I believe that because of that trading risk will remain higher for some period, but that will be something that we can measure in weeks, not days.

http://www.ivicacharts.com/diagrams/2008/06092008diaweekly.jpg
http://www.ivicacharts.com/diagrams/2008/06092008spyweekly.jpg
http://www.ivicacharts.com/diagrams/2008/06092008qqqqweekly.jpg

Unfortunately my view on the market action is not optimistic, but our job is to find a way to work with that. Some things have changed from last year. Some patterns aren't working as they did before etc etc. But that is not unusual. Some patterns work in this market action some work in others. On the 60 min chart I illustrated how we didn’t see much follow thru over the few last days and how that made trading with the 60 min charts very hard and high risk. But technical analysis doesn't change. It remains the same. We just must find timeframes where trading works best for us. Since we have a large weekly divergence for now that means the smaller timeframes will be the safest place. Should the QQQQ loses its' daily range and start have confluence with the SPY and the DIA, than risk on weekly setups will decrease. My opinion is that this weekly divergence is something that is killing the market right now. Since I am a technical reader and I translate bad or good economic news into a technical view, I trade reactions .... I don’t trade news, just their reaction and then trying to go with the market. Of course that all can change with good news, because it is much easier to make money in a bull market. For now, however, with oil, the weak dollar and other bad news around the world, this translates through my TA to give me a bias down and that is what I will be looking for. My mentoring course staring at Monday and my activity will be more focused there but remember that for low risk setups we need rest (consolidation, pattern) and after Friday's huge move down, I don’t see much of a chances for new low risk setups (unless they will be scalp trades).

If anyone has any questions or comments, please feel free to contact me

Wish you all good trading!!!

Kind regards.
Ivica
 
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