Tuesday, March 31, 2009

End of Day Review 03/31/09

The market did break the 800 barrier but not for long. The VWAP kept acting as support until 1530 ET.

Mid-Day Review 03/31/09

The $TICK has trended up all morning with the VWAP above the 78-Period Pivot, which in early trading acted as support. The market is staying in a narrow range during the day session, which is typical following a strong trend day.

Momentum may be easing as the market test the 50% correction of yesterday's range.


PreMarket Thoughts 03/31/09

Yesterday's market definitely was a weak day, but the pace to the downside during the day session was slow relative to the down markets of the last 6 months. As can be seen in yesterday's 5-minute chart, the market could not make it completely to the 10-day average distance that the market travels from the 0930 ET open. Also, the market has yet to correct 38% relative to the last up Impulse Wave. So, yesterday was a weak day, but not a panicky, massive sell off.

Interestingly, the market started accumulating Discretionary Stocks over Staple Stocks after the open. Typically in a down market, the Discretionary / Staples Ratio will lead the market down. Yet yesterday, the Discretionary Stocks was the better performing sector of the eight sectors.

Overnight, the market has corrected about 38% of yesterday's down Impulse Wave. The 800 area is still resistance, and is also the 62% correction point of yesterday's Impulse Wave.

NAPM Report at 0945 ET, and Consumer Confidence Report at 1000 ET.


Monday, March 30, 2009

End of Day Review 03/30/09

The VWAP remained resistance all day with the market closing at the VWAP.

Mid-Day Review 03/30/09

The market is weak, but we still have not reached the 10-Day Average Distance from the 0930 ET Open; however, the market did trade within 1 standard deviation of that average.
The intraday VWAP is acting as resistance.

PreMarket Resistance Zones 03/30/09

No Economic news today. We get the monthly Employment Situation Friday. The overnight market has traded below the 800 level. That will be the first hurdle for bulls.

Saturday, March 28, 2009

A Look at Friday's Market Structure 03/28/09

I wasn't very focused yesterday. I also did not mark up the 620 tick chart as I usually do to better visualize throughout the day the market structure of trading activity.
You should always watch how the market reacts to 38 - 62% corrections of an Impulse Wave. The market will either trade through this zone to reverse the direction of the Impulse Wave or continue the trend of the Impulse Wave. Yesterday, the market continued the trend of the Impulse Wave created in the overnight market. However, we only got a 62% Extension (Swing Wave) of the Impulse Wave. For market symmetry, you like to see a 100% Extension n(Swing Wave). If the market gives you more than a 62% minor correction during the formation of the Swing Wave, you probably will not get the 100% correction, as happened yesterday afternoon. So we ended up with choppiness during the last part of yesterday's session.

Friday, March 27, 2009

End of Day Review 03/27/09

I thought that a lot of today's action, especially in the morning, in this relatively narrow range was similar to trying to catch a Knuckle Ball. I was never really sure where the market wanted to go. We did get some good downward trends, three 5-minute bar trends, after lunch.
In hindsight, with the VWAP below the 78-Period pivot and the Discretionary / Staple's Ratio slightly bearish, the best setups were to the downside after lunch.

Mid-Day Review 03/27/09

Not much to talk about this morning. We had a nice three-bar down move around 1000 ET, and the market slid a little going into the European close. Other than that, the market has been bouncing between the VWAP and the 78-period pivot on the 5-minute chart. On Monday, the European close changes back to the 1130 ET time.

Thursday, March 26, 2009

End of Day Review 03/26/09

The thick green line is the 5-Minute Chart version of the daily cumulative VWAP. The starting point for the daily VWAP is the first bar.

The market is still testing the resistance near 830, but so far as been unable to cross over that point.


Morning Review 03/26/09

The market is favoring Discretionary Stocks over Staples Stocks this morning, which is typically bullish for the market.

The Cumulative Daily VWAP is acting as a sell and buy point during intraday up and down moves.

Geithner is still talking about increased regulation. The one thing that they will not regulate, however, is the behind-the-scenes calls from politicians convincing investment bankers to invest money in risking investments to continue making money available to low income households that can not afford these risky loans. Unfortunately, that will continue, and we will see this problem again in the future.


PreMarket 03/26/09

Some key support and resistance numbers on the 240-Minute Chart. Part of the markets up and down move yesterday was due to a supposedly misinterpreted Geithner comment about currency, which was later clarified. It was one of those "I did not mean what I said" type of statements.

The dotted green line on this 10-minute chart is what I call a Midas VWAP. The term "MIDAS" comes from the "MIDAS Method of Technical Analysis by Paul Levine." On the 10-minute chart, the first bar has a 1-bar VWAP, the second bar has a 2-bar VWAP, and so on until the last bar which has a 39-bar VWAP. So the green line is the cumulative VWAP for that day. I may do the same for the Pivot line, and come up with a MIDAS moving average. Stay tuned.


Wednesday, March 25, 2009

End of Day Review 03/25/09

A strange market today. A sell off after the European close, and then rapid buying as soon as the bond market closes. I have no idea as to why.


Mid-Day Review 03/25/09

The 800 area did hold as support overnight, but now the bottom of the high volume area of the large resistance range is acting as resistance. So the market is currently stuck between 800 and 824. The market was staying above both the 78-Period Pivot and VWAP, but is now showing some weakness at the close of the European markets.

Tuesday, March 24, 2009

End of Day Review 03/24/09


Mid-Day Review 03/24/09

You can usually expect a narrow range day following a strong trend and wide range day like yesterday. In this type of market, divergences at the narrow range extremes become common and creates some high probability fades.

Monday, March 23, 2009

End of Day Review 03/23/09

As MAXFACTOR correctly pointed out, the 800 area is now support.


Comments on Comments

MaxFactors comments in the last post are good. But with any trading plan, make sure you know how much you want to risk in any trade. As we just experienced, short-term trends can change suddenly, as just happened as the market still sees the 800 level as resistance.

Here is the Discretionary / Staples Ratio with the 200-period EMA.

However, be aware of days like above. Use these tools as tools, and not as a mechanical trading plan.

Mid-Day Review 03/23/09

Trader are again favoring Discretionary Stock over Staple Stocks, which confirms the bullish sentiment in this morning's market.

The 1000 ET Existing Home Sales Report (4.72 M) was better than consensus (4.5 M). The market is also bullish over the Administration's plan to eliminate the toxic assests of US banks. Perhaps they actually have a plan this time rather than just talking about a plan.

One negative is that the market has been unable to trade past the lower 1 Standard Deviation Line of the 10-Day Average Distance that the market typically travels from the 0930 ET open.

As the market traded higher, the previous high pivot became support.


Saturday, March 21, 2009

End of Day Review 03/20/09

As the broad market kept testing the pivot low during the morning trading, equity traders were continuously selling more Discretionary Stocks than Staple Stocks seeking safety, which is a negative for the market.

On the 5-Minute chart, each time the market tested the 78-Period Pivot and VWAP, the $TICK showed weakening upward momentum. The Standard Deviation line tried to act as support but failed. The only true support came as the market hit the 10-Day Average Distance From the 0930 ET Open Line. On the Test of that low, upward momentum started to show after the Energy Market close at 1430 ET.

On the 1 minute chart, we can see that as upward momentum decreases, the market quickly breaks the low pivots as can be seen just after the European market close at 1230 ET. After each break, the pivot lows become resistances. The same quick break to the upside can be seen just as the bond market closed at 1500 ET, as the market was showing increasing momentum to the upside.

The end of March is statistically weak. Let's see if the market test the VWAP line near 740 or the month's open at 729.50.