waiting

A method I employ to allow momentum time to digest is by trading on the "right side" of the 3/10macd fast and slow lines.  "Right side" meaning, if I'm looking for a long entry I prefer to have the fast line greater than the slow line, or at least close enough to where I can anticipate this to happen.
In this Daily chart below of the SPY the fast line went under the slow line (most recently) on Oct. 30th, so before entertaining a long entry I prefer to wait until the fast line and slow line catch up to one another again.  This isn't to say that price can not go higher, it's just a way of allowing previous momentum time to digest.
Other examples are highlighted in the chart below coinciding with potential long entries.  There was a faded breakout in June, but it is a good reminder that nothing is ever perfect in this game.

patience

  A trade in FCX today which demonstrates the importance of patience (and FCX can teach a graduate course in patience).  Price showed an ascending consolidation triangle after a momentum gap fill move.  I measured the momentum from the 9:15 (CST) breakout up until price consolidated to arrive at potential targets (50% & 100%) which were both hit (as soon as I got out). 

measure momentum for targets

  The general idea behind the Fibonacci price retracement tool is to measure momentum and segment it into proportions or ratios.  So if we have a momentum, consolidation, continuation pattern what we're looking for is a proportionate continuation.   If we have momentum and are looking for a measured move after consolidation we would look for AT LEAST half of the original momentum move for our first target.  Speed of achieving our 50% target and rejection or acceptance of this move can help gauge an expectation of a further extension, where we then look for a 1:1 target or 100% extension, or a "measured move".

So, with that said, here are some examples of the above explanation which took place today.

 The SPY triangulated for most of the day before breaking out

When price finally did break out you can measure the initial momentum (in this case I used the breakout bar) to get extensions beyond this price range:

In the above chart the 50% and 100% were achieved quickly, while the 150% extension took a steeper retracement before extending further.

Here's another example using a trade I actually took today in CREE.  The Fib.s were based on the momentum prior to a basing consolidation pattern, with the expectation of a measured move beyond $64.20.  The two blue arrows were exits taken, but I set them slightly under the actual price target.

Taking half off at 50% could at least increase the probability that we'll get filled on something, just in case our Fib. measurements were off ;)

weekly SPY

The week ending 11/05 the SPY printed a large momentum bar (teal candle).

Here is how the mipoint (blue horizontal line) acted as a pivot for the following 8-days where 100% of the momentum impulse has been retraced.
Also on the chart below (green horizontal) is the midpoint (as measured from the Close on 11/03 to the Open of 11/04) of the impulse gap up.  Support becomes Resistance:

The Original Amateur Hour

Down and Down she goes, and where she stops nobody knows:

midpoints

Here are a couple of 2x-bar midpoints that were tested today. 
11/10 RIMM showed a 2x momentum bar

This morning price gaped down within $0.03 of this midpoint and bounced strongly, filling it's gap within 5-minutes.  Once the intra-day momentum bar (second 5-minute candle) went beyond it's 50% midpoint, it became apparent that the opening drive was just a short covering.  Price returned to this 11/10 midpoint and measured a 50% extension beyond it:

V exhibited a 2x momentum bar back in October, however, it was already tested once before:

This morning we gaped down and an attempted gap-fill failed, which coincided with the 10/13 midpoint.

Most recently, OXY had a strong session 3-days ago

This morning a gap-down lost momentum right around this midpoint level, leading to a short shakeout

using momentum

  An issue I've always had when in a trade, or looking to enter a trade,  was trying to project where my price target should be.  I'm flipping through daily charts, looking at wicks, moving to 30min chart bollinger bands, getting a target number in mind and then wondering, "Why'd price stop there and not my arbitrary target?"
One of the easier methods I have found for projecting a target (for at least half position) is simply projecting a Fib. Retracement off of the most recent momentum impulse and using the 50% extension as my "at least" target.  In other words, a measured move, dur!

Momentum Impulse
     A movement in price that exhibits a wider range in a shorter period of time.  Of course this is relative to the issue and timeframe you're looking at, but it should be obvious when you look at a chart and see big versus not so big bars, and sideways versus linear movement.  Especially obvious in the opening session where there are gaps with continuation or rejection.

Here are two examples from today:

APA gaped up this morning and within 10-min retraced half of the Close-Open gap range.  Normally I would look for support from this 50% level, so a failure can tip off weakness.

The 50% retracement  failure led to a gap fill, giving us a momentum leg.  I'll then measure these 3 candles, as it represents momentum.

  At this point I wait and see how/if/where price is going to retrace this momentum impulse.  APA showed a wick rejection close to the 50% retracement (an excellent confirming signal!) so I'm thinking short and looking for any further retrace testing.  What followed was increasingly narrow price contraction before a failure of the lows.
  My primary target = 50% extension off of the initial impulse.  Afterwards you can judge strength of price for potential further downside.  As you can see, each extension level (50% and 100%) was sliced through on a solid bar, while the 150% extension was wicked and followed by short covering.

RIMM had a similar open this morning.  Momentum on the gap up, but the 50% failed to hold any support, instead showed strong downside momentum.

  Following this downside momentum price wicked no more than 38% of it's previous  momentum.  Price then broke down, hitting our primary and secondary targets (50% & 100% extensions), though instead of slicing through them (as they did in APA) they were wicked (not necessarily a sign of continuing momentum).

So, once we can pinpoint momentum we can at least determine a primary target and size our position accordingly.

As an aside:
   I've noticed that when you have strong directional momentum that isn't immediately tested (like in the APA chart where we had a wick test near the 50% almost immediately) then price tends to drift back in that direction for a test.  Case in point, AGU today, notice how we have 15-minutes of downward price momentum and zero testing of the previous bar's range.  Once price found support it then drifted up to test the range that it previously sliced through:

Divergences

A momentum divergence is a momentum divergence, and SO FAR, these issues at least have that going for them.
RIMM; in it's 3rd push down on lighter momentum. It spent most of the day in a very narrow range and sold off later in the day due to the weight of the overall market (margin calls).FCX; has had the feel like people are anxious to jump aboard this one for "the bounce."
POT; though technically not a momentum divergence (yet), it to has had a similar feel like people are waiting to ride this for a bounce. Of interest is the inverted hammer candle today.

RbS

Resistance becomes Support (RbS) in the SPY as price gaped down (on scant momentum and returned back to a previous consolidation level.Looking at the Volume Profile of the past few days, watch areas of previous large volume levels, particularly those not yet tested (VPOC). Below we see some levels of potential Support/Resistance, I also marked the gap created on Wednesday last week. This perspective highlights the concept that price often tests areas where it previously sliced through.
Now look at how it translated onto a 5-min price chart with the same price levels highlighted:
Not labeled on the above charts is the overhead resistance level (in terms of the volume profile) between $116.90 - $117.15.

fear sets in

Things were moving along nicely today until it all fell apart. Resistance at the previous day's high held (also 50% retracement off of Friday's long range bar), and a double top (a triple top even!) was catalyst enough for a collective dumping of shares and ending the day right where we started. Bulls were likely looking for a strong close today in order to gain confidence that a bounce was in motion (also would have confirmed the Homing Pigeon bullish reversal candle pattern from yesterday). We're back inside a previous consolidation range. A breakdown from here would be significant, but we'll have to wait and see how enthusiastic buyers are at the $109 area.
Of particular interest;
The recent momentum down has registered the lowest momentum reading since the March "bottom"Also, looking back since March, there haven't been many occurrences where price attempted to rally following a sell-off, only to be sold into a long legged doji and closing below the previous day's close. It's actually been quite rare for price to retrace so little of a previous sell-off move.
And, just for the fun of it, here's a look at the cycles spanning these past few days in the SPY:

Friday 11/13

In the last 8 sessions the SPY has gained 6.98% and in the last 3 sessions it retraced no more than 1.87%. Things can go either way, but mostly feels like it's hanging by a thread as it waits for the next surge of buying.
This morning's test of the previous day's low was met with very strong volume:
The chart below has horizontal lines indicating the previous day's Open/High/Low/Close.
Of particular interest are the day's momentum divergences and First Cross entry signals. Also the fact that price was rejected from the PDO after basing around it for an hour.It's also interesting to observe how much price has moved in these last three days. Key in on the 78.6% retracement zone.On the 15-min chart we closed above our bullishly oriented Moving Averages (though if you use Simple Moving Averages price is wedged between the two MA's, so whatever). Price has retraced over 38% from our lows by today's close. Perhaps Monday we'll see a gap or move up to test the $110 price, being that we spent so much time around it today and Wednesday.
The weekly is interesting; showing those momentum divergences since March. March through July gave two divergent impulse pushes following a small window of downside momentum (which only amounted to a 7% correction). From mid-July to the end of this week, we have had two similar (and smaller still) divergent impulse pushes, and while price closed at it's highest price since October '08 it has barely any momentum left in it. Either we get more impulse up or correct another 7%, but something's got to give.

chop

Another low volume choppy day today.
The SPY continues to hover at the highs (almost looks like a tri-star pattern on the daily). Take note of the 3 most recent momentum pushes up creating a bearish divergence, while the most recent two momentum pushes down gave us a bullish hidden divergence, yada yada yada.
We'll see what we get tomorrow in terms of a momentum push, but right now the 30-min is looking a little like a Head & Shoulders pattern.
And finally today, the 1-min SPY with TICK (molestor). A couple divergences that could have been good for scalps or even intra-day swings. Nice job Richard!

silly

All you can say about this market is that it's just plain silly. Are we seriously just going to gap our way back up to '07 levels and beyond? They could have at least gaped it beyond the '09 highs!
At any rate, we're basing around our highs, and the SPY this morning put in a slight bearish momentum divergence, which told me to remain bearish-leaning until proven wrong.The sell-off just barely filled the gap before turning around to close nearly at the open.
Here's the 1-min with TICK (molestor). Some hidden divergence, some bearish divergence, some bullish divergence, gotta love it!

Fri. 10_02

A big gap down on the SPY this morning that had a number of reasons to look to buy the open.
(a) The gap from the previous day's close to the open was just about 1%, quite a large deviation that should tell you to pay attention to the lows and how they're being tested.
(b) Price gaped down right on top of the 50-EMA on the daily chart
(c) the gap also coincided with a number everyone was looking at for support, $102
(c) the momentum divergence on the 30-min chart that I mentioned yesterday.
Take a look:
Other than that, price just chopped around my support pivot all day long.A curious observation about today is that the TICK had a lot of large positive readings, not sure what that's saying about the market breadth.
After all is said and done we closed the day up, on top of the 50EMA as a gap-down (but filled) inverted hammer. While the weekly chart doesn't look overly bearish, yet. The 20-ema has just caught up with the 50-ema and price sits right on top of a 38% retracement from the highs of '07 to the lows of March.

next stop 50EMA

Watch to see if we get a bounce at the 50EMA on the SPY ($102). Another trend day down today. Market breadth was bearish the entire day, yet there were times I found myself fighting the trend.
The first 30-minutes of the morning SPY based at my support pivot before failing. That big freakish candle at 10:01a.m. was ominous indeed.Watch the first hour tomorrow morning to see if any buying is triggered. Check to see if the 30-min SPY chart puts in a momentum buy divergence.
Watch for a potential test of $104 tomorrow as that is within today's value area ($103.50-$104.00) and is also the last hour's high (day after a trend day down look at the last hour's high as good resistance).