Morning Review - 08/21/08

1030 ET - Traders are still working the narrow range that we have been in for over two days now. We are still in a short-term up cycle, but the upward push is weak. We are also still inside yesterday's range, which apparently is the market's current happy zone!

1137 ET - We are still in a narrow range. Even though the market is not moving very much, the tendency is more toward the upside than downside, since we are still in the upside part of the short-term cycle.

Charles

Early Morning Reading - 08/21/08

An interesting article on how "A Few Speculators Dominate Vast Oil Market".

Should we rescue Freddie Mac and Fannie Mae?

What is a GSE anyway?

Charles

PreMarket Review - 08/21/08

The market is trying to establish the two-day uptrend part of the cycle.




However, the dollar is continuing to weaken, which is preventing the ES market from advancing very far to the upside.

So right now, we are stuck in a narrow range between 1276 and 1261 for the ES Futures.

Charles

Afternoon Review - 08/20/08

1315 ET - The lunchtime correction was larger than I expected. There was no thought of going long, since all indication have remained negative since 1138 ET.

1400 ET - Indicators started looking positive around 1315 ET, however, market is just below the 0930 ET open, which by many is a resistance point. Not looking for a break above this point, since the market feels weak. Also, the market usually does not show its true intention until after 1400 ET as the energy and bond markets start to wind down.

1430 ET - Good down trend into the energy market close. Psychologically, it is the most difficult for me to enter a trade when the momentum first change from postivie to negative or vice versa, but that point is also when the most profit can be made.

1500 ET -After the energy market close, momentum change back to positive, as the market failed to make a new low. Today has been an interesting tug-of-war between the bears and bulls. The 0930 ET open is still providing resistance.

1600 ET - Nice strong finish at the close, and finally broke the 1271 barrier this afternoon. Crude may go to $150, but not today.

Charles

Morning Review - 08/20/08

1010 ET - The sell-the-dollar, buy energy and sell equities crowd is back, probably due to the Goldman Sachs Report this morning. Will wait and see how the market reacts to the 1035 ET crude report.


1143 ET - The crude report showed a larger increase in crude inventory than was anticipated. The report gave us a nice uptrend in equities, which should have happened in the first place. However, it is not uncommon for the market to retest the lows before reversing trend.

Charles

PreMarket ESU08 Review - 08/20/08

We indeed got a more narrow range day yesterday as expected. However, the trading range of the day occurred below the previous day's low rather than above it due primarily to the PPI report, which did not include the recent down turn in commodity prices. It was a day, though, where swing traders typcially liquidate short trades and start to initiate long trades.




In the above chart, you can see that the (High - Open) difference has been below 10 points for three days, which usually sees a reversal in the short-term trend. Overnight, the market has indeed traded to the upside.

One fade trade yesterday occurred at 1510 ET as the market tested the noon low. As the futures was trying to make a new low, the $TICK was climbing to higher lows. This was a good place for swing traders to start taking long positions, with both the energy and bond markets closed.

Fay apparently doesn't want to leave Floriday!

Charles

Following "S" Days

Yesterday was an "S" day with a large range. The next day typcially has a more narrow range.




7/24/08 is a day with a similar chart pattern as yesterday, and was also an "S" day. The following day was a narrow range day, which tested the previous day's low several times.




Mid-day 8/12/08 to mid-day 8/13/08 also has a similar chart pattern as yesterday. The following period had a bigger range than 7/25/08, but the market still tested the previous low at least once.




Late 7/31/08 had a sell off period, again followed by a narrow range period, which tested the previous low several times.

Oil is currently dropping in price as Fay becomes less of a concern.

Charles