Monday, August 31, 2009

End of Day Review 08/31/09

I didn't trade this afternoon's market, and it was probably just as well that I didn't. Not much happened until the last hour. The 1015 area did hold as support, but the market did not have enough bull strength to close the opening gap. The market remains below Friday's range, and traders are waiting for Friday's Employment Situation Report.

Morning Market Review 08/31/09

The Financial Sector is holding the market up as it test the 1016 support area.

The 1015 - 1016 area is still trying to be support.

However, the overnight low and 0930 ET Open Price is providing some resistance.


Friday, August 28, 2009

End of Day Review 08/28/09

Well, the market is deciding to stay between 1039 and 1015. Fading the test of the range highs was the trade of the day. It will probably be an exciting day when the market decides to break from this range.

Key Market Landmarks 08/28/09

This morning the market is doing a good job trading off of the Key Market Landmarks - Overnight High, VWAP Line, Yesterday's Day Session High and the Overnight Low.

Thursday, August 27, 2009

End of Day Review 08/27/09

A Volume Distribution formation that you won't see too often.

The 1016 did prove to be support, and better support than I antivipated. On the way up, On Balance Volume confirmed each up swing.

There's that 1220 ET move again bouncing off the overnight low price.


Morning Market Review 08/27/09

The market is trying to find some support near 1016.

Notice on a strong, down trend day, the market didn't go more than 0.5 points above its VWAP Line.

Wednesday, August 26, 2009

End of Day Market Review 08/26/09

Looks like the market will stay in this narrow range until it finds a reason to leave.

In this narrow range market, combining "On Balance Volume" divergences with $TICK divergences adds some confidence in the signal.

These divergences work will as long as the market stays in a narrow range.


Morning Market Review 08/26/09

The market is staying in this small range just above 1018.

As the market tested the recent lows, $TICK was not confirming the lows, and gave us a bullish divergence.

The New Home Sales encouraged the market to continue its bullish bounce off of support. However, at 1032 we got a bearish $TICK divergence on decreasing volume. This sold the market back to the VWAP Line.


Tuesday, August 25, 2009

End of Day Market Review 08/25/09

After the market found support in the 1027 area, it started to treat the 0930 ET Open, VWAP Line and the Overnight High Price as support until it met resistance at Yesterday's High. On its way up, the market advanced to the next level after the second test of support, and after the $TICK hit the -1.5 Standard Deviation Line. It is also not uncommon for the market to move somewhere between 1215 and 1245 ET following the lunch time snooze. Not sure why, but it does.

The afternoon down trend was quicker than the morning uptrend, which is typical. After hitting support again, the market met resistance each time the $TICK came near 800. After the bond market close, sellers jumped in as the market tested the VWAP Line.

The $TICK moving averages made a lower high. No change in negative momentum yet.

We now have two days of small ranges. We are do for a range above average.

Today was a balanced day with a slight bias to the bottom of the range. The market is sitting just below the 1027 level, but above Friday's Point of Control. Watch for a break of today's range.

Morning Review 08/25/09

The quick surge to the upside following the Consumer Confidence report was followed by a rejection of all support levels except the 1027 support level. Some are selling perhaps to build up some cash in anticipation of a weak September.

PreMarket Review 08/25/09

Consumer Confidence at 1000 ET.
The Bernanke re-nomination may boost the market. However, the current overnight uptrend is a normal 50% correction. 1027 is still resistance.

Monday, August 24, 2009

End of Day Review 08/24/09

Momentum changes before price does. We started to get a $TICK momentum divergence on Friday. Today, we didn't get significant selling until after the European market close. Then price had to catch up with momentum.

First the overnight high became resistance, and then Friday's high became resistance.

The market is still above the bottom of Friday's Value Area. 1027 is still resistance.

Morning Market Review 08/24/09

The market is making higher highs, and is trading above its VWAP, Friday's high and the overnight high. However, the range is much smaller than most of last week's ranges.

Both the NYSE Advance - Decline Line and the TRIN are bullish, but not quite as bullish as Friday.

The $TICK moving averages are indicating a weakening of upward momentum.


PreMarket Review 08/24/09

No economic reports this morning.
The overnight market is staying above the point of control, which is around 1022.50. It is also currently above Friday's high of 1027. The overnight high is 1032.50, and the low is 1024.50. May see a narrow range market today.

Sunday, August 23, 2009

Breadth Indicators 08/23/09

Breadth Indicators are suppose to involve the Advance - Decline Line. The theory is that if a trend is not broad based (the majority of stocks are not moving in the same direction as the overall market) then the trend is weak and may reverse. However, like all theories, there are many instances where reality likes to prove theory wrong.

You can construct an A/D Line of any market, such as the 30 Dow stocks, the 500 S&P stocks, or the 100 NASDAQ Stocks. But the one that I like to use is the NYSE Advance - Decline Line.

In the chart above, I compare the 10-period SMA of the (H+L+C)/3 of the NYSE Adv - Decl Line with the 50-period SMA. I also look for divergences of the 10-period SMA with the S&P 500 Index. A divergence, however, does not always indicate a market reversal. I find that the divergence is more reliable when indicating a possible end to a correction against the overall trend. A divergence with a strong overall trend is not as reliable. But it is a good indicator of possible momentum changes.

I also like to apply a 10-period SMA to the daily NYSE Adv - Decl Line and the TRIN indicators. The TRIN is bullish when it is below the average, and bearish when it is above the average. You can use this in several ways. It can confirm intraday bullishness or bearishness. However, it can also indicate strength in a trend. When the market is in a strong uptrend, and you have a day when both the Adv - Decl Line and TRIN are bearish, but the market does not make a lower low than the previous day, the next day will probably be a strong up day. The same holds true for a downtrending market. Also, these indicators sometimes lead the market by a day indicating a change in momentum in the cash market. These are subtle clues that sometimes help you to anticipate upcoming moves in the market.

Discretionary Stocks are considered more risky than Staple Stocks. Looking at the Discretionary / Staples Ratio can sometimes indicate a change in underlying sentiment. However, like all indicators, it can sometimes give false signals.

Above is Dr. Steenbarger's Cumulative $TICK Indicator. I liked this indicator at first, but I seldom use it anymore. I find that it simply confirms what the price is already telling me. I prefer divergences to indicate possible changes in momentum. This indicator will give a divergence, but seldom.

I think that applying a 20 and 50-period EMA to the 15-minute $TICK chart is a better indication of momentum. You will get more frequent, and possibly better quality divergences using these averages applied to the $TICK. These divergences simply alerts you to a possible change in market direction.

Saturday, August 22, 2009

End of Day Market Review 08/21/09

Both TRIN and NYSE Advance - Decline Line stayed on the bullish side of their 10-day average all day.

After the 1000 ET surge, the market did not move much. We did get a $TICK bullish divergence as the market tested the VWAP line.

The Volume Distrubution Profile formed a "P" shape, which sometime indicates that the market may correct to the downside.

I would expect the market to at least test the 1016 area as support.

The moving averages on the $TICK is indicating a bearish divergence.

Friday, August 21, 2009

Existing Home Sales Lifts Market 08/21/09

A 7% incresae in Existing Home Sales lifted the market past resistance. A good trade is to catch the 32 to 50% quick correction on these news events.

PreMarket Review 08/21/09

Existing Home Sales and Bernanke speak at 1000 ET.

The market may open with a different perspective this morning. Instead of opening near the overnight low, it may open near the overnight high.

Playing devil's advocate again, notice how the NYSE Advance - Decline Line during this recent advance is having difficulty making higher highs. Instead it has been making lower lows. Upward momentum in the equity market may be weakening going into the bearish September month.

Thursday, August 20, 2009

End of Day Market Review 08/20/09

Its not well formed, but I guess that we can call this a balanced day. The market has stayed below Wednesday's and Thursday's Point-of-Control, which is acting as resistance.

Both the NYSE Advance - Decline Line and TRIN stayed on the bullish side of their 10-day moving average.

The $TICK breadth indicator is still confirming the up move in the broader market.

We always need a devil's advocate. The Discretionary / Staples Ratio is not making new highs, which indicates that the market is not necessarily dumping safe Staples stocks for the more risky Discretionary stocks. This is a slight negative.


Alexander Trading/TradersAudio Webinar 08/20/09