Friday, January 30, 2009

Morning Observations 01/30/09

No buyers to move the market to higher highs. Selling momentum may be slowing as the $TICK thus far is making slightly higher highs than yesterday.

PreMarket View 01/30/09

The overnight market has stayed between yesterday's low and the 850 area. Stocks in Europe are doing well; while Japan is digesting bad economic news. The US well be getting a large dose of bad economic news between 0830 and 1000 ET, but the market should have most of this news built in already. A potential negative is that the news could be worse than expected. A potential positive is that the news is better than expected. A positive sign is for the market to trade above 850 on high volume following the double bottom and "W" formation made in the last few weeks.
24 Hr Globex Pivot: 851.75
Day Session Pivot: 847
Largest 10-Day Avg Distance From 0930 ET Open: 22.3
Largest Distance Standard Deviation: 8.47
Smallest 10-Day Avg Distance From 0930 ET Open: 6.52
Smallest Distance Standard Deviation: 4.93

Thursday, January 29, 2009

End of Day 01/29/09

The 850 area failed to hold support in the afternoon, which made 850 resistance. The market did stay above 837.

The market tested the 850 resistance as the bond market close, but could not stay above this resistance.


Another Look at Market Structure 01/29/09


Morning Observations 01/29/09

The market this morning is staying in another tight range with support at 850. The first chart is the Smallest 10-Day Average Distance that the market travels from the 0930 ET open. In other words, any price travel within this range is unbiased, and just statistical noise. So far, the market has failed to travel beyond this average. The only interesting $TICK divergence occurred at 1115 ET as the European markets closed. The NYSE Advance - Decline Line also turned negative following correction phase. In summary, the market is slightly bearish on average volume with support currently at 850.

PreMarket Review 01/29/09

The market has stalled just above the 50% correction of the last down wave. Bullish traders will be looking for support near 850; however, the 50% correction of the 50% correction is near 837. Support at 850 would be more bullish, especially since this is close to the Christmas pivot low of 852.75.

24 Hr Globex Pivot: 861.75

Day Session Pivot: 867.50

Largest Distance From Open 10-Day Avg: 22.53

Largest Distance Standard Deviation: 8.34

Smallest Distance From Open 10-Day Avg: 6.45

Smallest Distance Standard Deviation: 5


Wednesday, January 28, 2009

End of Day 01/28/09

Didn't do any trading today due to a power failure as a result of an ice storm this morning. Power is back on, and the driveway and street is clear of ice. Quoting HellBoy, "I'll be sore in the mornin!"

PreMarket 01/28/09

The index is rising on news that the Obama's administration is preparing to absorb toxic bank assets. Next line of resistance is 866. Let's see if 844 now acts as support.

24 Hr. Globex Pivot: 839.25
Day Session Pivot: 840.25
Largest 10-Day Avg Distance From 0930 ET Open: 21.98
Largest 10-Day Standard Deviation: 8.97
Smallest 10-Day Avg Distance From 0930 ET Open: 6.65
Smallest 10-Day Standard Deviation: 4.91

In addition to using Relative Volume as described by Dr. Steenbarger in his recent post, you can also use a statistical analysis similar to the one that I have been using to show how far the market typically moves from the 0930 ET open. Instead of analyzing the largest distance from the open, analyze the smallest distance the market typically moves from the 0930 ET open. This is what is shown in the chart above.

As was described in an earlier post titled "Statistical Open Range and SpreadSheet Analysis", 70% of the time the open will be a lot closer to one range extreme than the other. In Tuesday's market, the market spent most of the morning within a narrow range limited by the statistical 10-day smallest distance from the open. The market never did trade beyond the +1 Standard Deviation in the positive direction of the open. The market will have a higher probability of trading to the largest distance from the open if it trades beyond the 10-Day 1 Standard Deviation of the smallest distance on above average volume.


Tuesday, January 27, 2009

End of Day 01/27/09

The market remained in a tight range, and awaits the FOMC announcement tomorrow.

844 Finds It Difficult To Act As Support 01/27/09

The 844 area is finding it difficult to act as support. This is the second time in two days that 844 has failed to hold support.

Morning Observations 01/27/09

As you can see, the market remains in a tight, narrow range while awaiting tomorrow's FOMC announcement. Why? I really don't know, since most central banks have been ineffective in the past year and a half to affect the world's economies.
Above are some examples of divergences that worked in this narrow range market.

PreMarket Review 01/27/09

Consumer Confidence at 1000 ET.

24 Hr Globex Pivot is 830.25, Day Session Pivot is 835.25. The 10-Day Avg Distance from the 0930 ET Open is 23.35 with a 8.02 10-Day Standard Deviation.

The overnight market has found resistance near 844, and is currently testing yesterday's close.

844 is current resistance.

Monday, January 26, 2009

End of Day 01/26/09

The only good $TICK divergence was the one the occurred early in the day. The remainder of the day was simply a slow decline until after the energy market closed. Market Structure was the one clue to where the market wanted to go. As soon as the market climbed slightly above the 38-period EMA on the 620 tick chart, sellers jumped back into the market. We did not get a higher high until just before the close of the Bond Market at 1500 ET.


Morning Observation 01/26/09

Got a nice bounce to the upside with a bullish Leading Indicators Report at 1000 ET. The market could not quite get to the 10-Day Average Distance from the open, but it did trade into the 1 Standard Deviation Zone. The market is still above Friday's high.

PreMarket Review 01/26/09

The market is currently above the (H+L+C)/3 pivots, which are 819.75 using 24 hr Globex data or 821.5 using day session data. The market is also currently within the trading range of Friday's last hour of trading, which usually sees the results of hedge fund and mutual fund redemptions or asset accumulations.

We get a FOMC announcement this Wednesday, Consumer Confidence tomorrow, and Consumer Sentiment on Friday.

The 10-day average smallest distance that the market travels from the 0930 ET open is 5.5 points, and the 10-day average largest distance that the market travels from the 0930 ET open is 24 points.

844 and 797.5 are two key points to watch as the market possibly attempts to form a bottom.

Friday, January 23, 2009

End of Day 01/23/09

Let's see if this bullishness can carry over into next week.

Morning Observations 01/23/09

This is the second time this week that buyers have entered the market near 800 for the S&P 500 Futures. Double Bottom?

Following a 50% correction, the market closed the gap while going into the European market close.

Thursday, January 22, 2009

End of Day 01/22/09

I'm not sure what the last two and a half hours of trading was all about. We did have one nice divergence signal at a resistance point that occurred around 1305 ET.


Morning Observations 01/22/09

What is an equity trader to do? IBM and Apple are doing better than expected, but Microsoft is not. I was beginning to think that the market was just going to sit on top of yesterday's volume ledge all day. However, the market is currently trading into that area with the European markets finished for the day.
At around 1020 ET, the market was testing the resistance level of the day. It turned out to be a good place to short the market, but I was concerned as the $TICK made a higher high and the VIX was not as bearish as I thought that it should be. But, the market did trade down from that test of resistance.

Wednesday, January 21, 2009

End of Day 01/21/09

A much better day for the bulls than yesterday. The market found support at yesterday's 0930 to 1600 ET low, and kept advancing throughout the afternoon. The market also had well defined support and resistance zones throughout the day.

Morning Reversal 01/21/09

If you use the 0930 to 1600 ET range of yesterday, this morning's market stalled right at the 50% correction of that range. We got several bearish $TICK divergences at this point, while the market formed a type of head and shoulders pattern.