30min

A 30-minute chart of the SPY with a 20- 50- & 117- period Simple Moving Average.  I know, I know, you're thinking; "A 117-SMA is just stupid."  However, I use it on a 30-minute chart to closely approximate where the 10-day Moving Average is located.  Likewise, the 50-SMA closely approximates (technically 52) where the 5-DAY Simple Moving Average is located.

What is illustrated above is the following:
"BD" means Break Down point.  In other words, Price breaks down from previous support pivot.
"T2R" stands for Tries to Recover.  In other words, Price tries to recover the Break Down pivot.
Also highlighted is the "3d" criteria on the 3/10macd.
As a reminder, the slow line crossing below (or above) the zero-line often precedes a 20-50 Moving Average crossover (which in the above 30-minute chart approximates the 1.5- & 5- Day Simple Moving Averages, the Green and Blue moving averages).
Also, the "3d" criteria can define areas of important support (later on being resistance).

Just for illustrative purposes, below is a daily (left) and 30-minute chart for comparing the 5- & 10-SMA on the daily with the 52- & 117- SMA on the 30-minute chart.

DJIA 10300

The Dow Jones Industrial Average tested 10,300 today and was quickly sold. A nice example of Support turned Resistance turned Support turned Resistance

RIMM at pivot

RIMM is testing a long-standing pivot in the $60 range.
weekly chart:
First sensible area of support is underneath at $58.
Daily Chart:
That is, if it's not ready to bounce on tomorrow's opening range
30-min chart: $58-ish looks to have some solid support, unless there's broad market mayhem in bounds.

Here's another little gem I found

Looking for Support

...or is it resistance?
Looking for support in a strong momentum move can be pretty straightforward (so long as support holds ;). What we had to go on in today's SPY sell-off were prior consolidation ranges, between $117.50-$119 (Resistance-becomes-Support). After having potential targets in mind, it becomes a matter of watching for selling exhaustion (TICK divergences and higher lows within your target boundary).Here's a look at the SPY daily price congestion rangesHere's a look at the volume profiles, showing the primary congestion range
What's really interesting is the following monthly chart of the SPY. The $119-$120 level (where we found support today) coincides with a mid-point of the S&P500 going back 12 years. Also interesting is how the above chart looks a lot like the one below...so, is the current phase finished, or only half-finished? :)


The QQQQ closed the week just under the $50 mark:One further observation;
The Dow closed just barely above the 11,000 mark. Take note of how long price has previously bounced between the 10,000 and 11,000 levels before:

The battle rages

I've posted this chart a number of times;The Q's have been testing these July '08 highs for the past 3 weeks now. Two weeks ago they were extended tests that were quickly (and with reasonably large volume) rejected. Last week, price nudged a little higher and swiftly sold off, all the way back down to the $47.80 support level (even put in a higher low). This week, however, price has turned that resistance pivot into support. Price attempted a breakout yesterday only to turn into a reversal. Today, as price tested yesterday's highs selling again ensued, only this time price turned around at the previous day's low (Resistance becomes Support). Worth noting is the large volume surge that came into this rejection. It appears there was even greater volume keeping price above $48.40 (prior resistance last week) than there was bringing price down to that level. As an aside, the Q's are only 11.7% off of their 2007 highs!

continuation

I posted this chart yesterday, so keeping with the previous day's levels we move forward into today extending the gap range area and watching for Support/Resistance at previous strong volume points.
Previous Resistance turned Support held today (coming very close to previous day's VPOC).
Resistance throughout the day was the $116.90 area ( a previous area of strong volume support).Here's a look at the most recent Volume Distributions, today's lows came right into the zone of yesterday's VPOC. The indexes have some formidable resistance ahead of them (as they have since getting beyond their 38.2% retracements. The Q's being in the lead in terms of a recovery, it is a mere 12% off of it's '07 highs. Between it's close today and the $50 level, there's a 78.6% retracement zone and a prior swing high to contend with, if there's some selling on the horizon me thinks it should come with a test of these levels.IWM overhead gap fill scenario in play (same goes for DIA and SPY)

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.

115.14

January's monthly high for the SPY was $115.14. Seemingly insignificant, but look at what this level has meant to the SPY for well over 12 years. Red arrows = resistance, Green arrows = supportDon't get caught up on the exact penny of $115.14, rather use that level as a suggestion of possible support/resistance.
So, starting with 1998, here's the intraday $115.14 level:
July 1998-Dec.1998:
March 2001 - May 2002: January 2004 - May 2005: September/October 2008:
And last but not least, 2010:
And if that doesn't get you excited, take a look at yesterday and today on the 5-minute time frame:

rally fail

A gap into support and the market seemed like it was on course for a trend day. By looking back to Friday we could see potential for support around the $113.90 level (Resistance becomes Support (RbS).Another concept I have been learning more of lately is that of Point of Control (POC), and theories grounded in the market profile approach. Using the volume profile as a guide for potential Support/Resistance (the largest volume areas representing a point of balance in the market) here is what we get:Now take a look at the intraday 5-min chart with those horizontal levels (POC's) marked ($114.36 & $113.87):Also indicated is an Avalanche setup, where selling took place on higher volume, made an attempt to test the highs, then failed. Things looked promising for the bulls, though NYSE Advancing/Declining issues were under 1000 (not overly strong) and when Up-Down Volume broke down it was all over.The catalyst? Perhaps the selloff in GS helped contribute to the profit-taking dash for the exits.

nothing fancy

A low volume move up to fill the gap (on the SPY) left from Feb. 4th. The initial gap up was faded down to the 50% level (Fibonacci retracements snapped from the previous close to the open). Market internals were bullish all day, no reason to be leaning short:It was a sleeper of a day, but price did display some high probability setups in the form of (1) Price testing/finding support at the Open range high, (2) Resistance becoming Support and (3) a base break leading to a gap fill.

LOL

Predictable, no?
If it wasn't for that mentally significant level of support below, this market looks rearin' for continuation. A First Cross sell signal being triggered across the board, on higher volume today:
Gold was down big today. With all the news of Dollar strength bringing down commodities, Gold just naturally seemed due for a pullback, and this chart (using GLD as a proxy) still looks fairly healthy.
and should it pull back further, $100 ($1000/ounce spot market), or even $96, could bring in renewed buying on a Resistance becomes Support bounce test.

RIMM setup

Taking a look at RIMM from this morning we can see a lot of similarities in price structure, like those I mentioned in yesterday's post with POT.
First we start with the opening range gap up that was above 50% of the previous day's range.
Price rallied for 20min of the open, forming an ascending wedge. The correction off of this pattern was quick, but found volume support at the Fibonacci 78.6% retracement level (measured from the low of the day to the high of the ascending wedge).
Chop ensued, but the 61.8% retracement level held with volume (this 61.8% retracement is measured from the opening low to high) and coincided with the 38.2% retracement measured off of the previous day's range.
So, we had:
- a gap up followed by 3 higher highs and 2 higher lows before a correction
- the retracement barely tested the 78.6% level and strongly held on to the 61.8% with volume
- the pattern that price created for the first 90-min was a bullish wolfe wave/triangle breakout
- the opening highs acted as support later in the day (RbS)
So, if you're long at this point, where can we look for potential targets/resistance?
-First suspect would be highs of the morning and if we could break out of those highs next would be the previous day's high (in the $59.50 level).
-Next, we could draw some 3-point Fibonacci extension lines drawn off of impulse moves.
The first extension can be drawn from the LOD to Opening range high and measured off of the beginning of the move up.
Once we had another impulse move and correction we could draw another extension line so we can look for possible confluence levels/targets. Here's what we got:
So, lessons learned:
-Watch how price gaps compared to the previous day's range
- Watch the 61.8% & 78.6% levels (if it's a deep correction) to hold on volume for a higher low and possible test of the highs or previous day pivot levels
- Fibonacci extensions drawn off of impulse moves can give clues to possible consolidation levels.

GS wolfe setup

Here's a trade I took this morning in GS based on the Wolfe Wave setup.The green horizontal line was my entry price. The white arrow was my entry bar. Again, I need to display some patience and enter on a green bar with some range in it.

Take note of support levels going into the #5-point in a bullish Wolfe Wave. Today's example in GS saw the 5-point come into a resistance level from the previous session (also the PDO!). More simply put, the entry was merely a pullback after a momentum impulse that coincided with a Resistance-turned-Support level (similar to the Holy Grail setup).