50-day reject

Aside from price being now below all three key Moving Averages, and the curiosity brought up in THIS post, there is now a potential First Cross sell signal in the making on the SPY (just a fancy term used to highlight a confirmed lower high or higher low). The trigger would be a lower reading on the 3/10 line (histogram).

no news necessary

With the Fed announcement after the close on Thursday I found myself reading various threads on a few web sites, and the consensus seemed to be impending doom for equities come Friday. Well, it sure seemed to start off that way, but perhaps some perspective and ignoring all of the news might have kept you out of some trouble. I'll admit that I didn't take any trades on Friday, the result of a head cold and it being OpEx mixed with the news from Thursday that was sure to make for a tricky day, but I did sit through the session in watch and learn mode.
Allow me to digress:
First of all, I plot Moving Averages on my charts for a reason. That reason being as a determinant of intraday trend direction and strength (and perhaps to a lesser degree for Support/Resistance potential). The length Moving Average you use and whether it's Exponential or Simple is less of a consideration than those points mentioned above. For me, the 20- & 50-EMA works just fine. Now a consideration which goes hand-in-hand with the choice of Moving Averages, is what time frame do you trade? The 15-minute works good enough for me (though I'm finding it a little too "slow" for me these days, but that's neither here nor there). So, take a look at this 15-min chart with 20- & 50-EMA's and you tell me, what's the intraday trend here?
Based on what I just explained, the moving averages are sloping up with some healthy space between the fast and slow average (the more space between the averages the more momentum behind the previous moves). So, even before going into Friday's session we have a clear instance of higher highs and higher lows, telling us the trend (for our traded time frame) is up.
Now, let's go to the open.
Internals started off fairly negative. We had Advancing/Declining issues within a fairly bearish range, while Up/Down volume was below zero, but not in what we should consider a clearly bearish level, more of a neutral-bearish level.The gap down open was nearly filled before selling off, but the most negative TICK reading was quickly faded. The strong extension above and beyond vwap was a no looking back move that happened to occur right within intraday trend support (see the 15-minute chart above).
Towards the early afternoon price began to stall at a level that was reasonable to expect potential resistance.So, depending on what type of trader you choose to be, a possible short setup was taking shape (Head & Shoulders pattern on the trigger chart). So long as you keep in mind that this short setup is a counter-trend trade you have some decisions to make.
- Sit on your hands if you prefer to only trade with the trend
- Be aggressive and go short on a high a TICK reading with a stop at the highs of the day
- Wait for a move to take shape (break of a range) and enter on a pullback
Keeping in mind that this is a counter-trend trade (and that this is a very volatile OpEx session) a clear target (or targets if scaling) should be in mind. What might those targets be?
- VWAP
- Previous day's High (PDH)
- Previous day's Close (PDC)
- Moving Average or Bollinger Band Support
This was a session that rewarded quick profit-taking. The most important concept to take from this as an intraday trader was knowing whether you were going with or against the higher time frame trend. In the early morning you were buying a dip in a prevailing up trend. While in the afternoon you were recognizing weakness at a higher time frame resistance level while the broad markets were showing bearish TICK divergences, and fading breadth (see the $ADD/$VOLD chart above). However, because those weakening breadth internals were still above zero and the higher time frame was bullish, you should have been aware that a counter-trend trade required clear targets and quick profit-taking.
Keep your perspective and ignore the news.

Here's where it get's interesting

So, provided Friday was the "bottom" of the most recent correction, here's where the S&P500 Index stands on a weekly basis since March of '09:Price has put in a higher low and sold off around 6.3%. Fairly average in the context of the '09-'10 rally.
Off of Friday's low, price has recovered nearly 40% in two days. Directly overhead is a key level of potential resistance wedged right between the 50% - 61.8% retracement zone, the convergence of the 20- & 50EMA's (Yellow and Red line) and for argument's sake of which is better, the Exponential Moving Average, or the Simple Moving Average, I've included both (20- & 50-SMA are in Green and Blue).However, we have seen this before....there was July '09, when price blew right through this confluence.
Everyone seems to be anticipating January 19th as being the "top," but there's a fine line between retracement off of a momentum move and a (yet another) run-the-stops short squeeze up to fresh highs. It shouldn't be long before we find out which it will be.

June End of Week 2

Not much was resolved this week, as we grind along in this channel of ours.
The S&P (and in turn, the SPY) registered the highest close of this range, but the volume was practically non-existent.
Here are the weekly charts:
RussellDowJonesNasdaq
And the S&P500Today's activity in SPY was purely sideways, until late in the day where we got two errant TICKs in both directions, with zero follow-through.This 15-min chart illustrates how unwilling price is to have any bearish tones. When our 20- & 50-EMA's crossover to a bearish orientation, they quickly recover (within the same day even!).And, yet again, we are left within this range of ours.