end of day analysis

See my last post (below) for today's comments, but I also wanted to add some additional comments after performing my end of day analysis.  I actually just lightened up on my positions in preparation for tomorrow.

Wow! An aggressive move back to the November center line

Wow ... I think that is all I have to say.  Market was up over 4% today with strong news over a joint international banking effort to help the euro stay in existence.  Many traders spent most of the morning skeptical and were shorting this market, but I assume in the last hour they were stopped out as the market jumped another 1% into the close.

We are firmly seated in the same trading range I spoke about over the past month.  Right at the middle of the range as a matter of range.

our bounce arrived, now what??

in my last post (2 trading days ago due to the shortened Thanksgiving trading week), I suggested a bounce would be coming and today we clearly received it.  I think Thanksgiving week with the low volume associated with it delayed the bounce, but it came today and it came big ... up almost 3% on all indexes.

bounce likely tomorrow

Although most of my end of day indicators are confirming this downtrend with little indication of a turn around, one of my indicators related to the VIX is flashing a strong buy signal. Although I will not be acting on this signal, I would expect a bounce tomorrow and possibly Friday as well.

island top completion

I wrote a few weeks ago about a candlestick pattern called an "island top" which is a bearish pattern.  Today we completed the pattern, by opening and closing completely below the trading range of the previous month.

fumble ...

On Monday, I suggested that if the Bulls 'want it', they better get on with it ... and well, we saw the outcome ... the major indexes have lost 2.84% since then.  Complacency is the enemy in the markets.

If you want it ... you better take it ...

The market continues to be news driven and Europe is causing a lot of concern right now.  We still sit in the trading range that I have spoken about much over the past month.  We seem to be spending more and more time in the bottom half at that range these days, which isn't an encouraging sign.

home, home on the range

today calmed the fears that I had expressed yesterday.  Going into a weekend with the numbers we had yesterday would have probably created a lot of concern on the face of investors, but with a strong close today we have removed that fear factor.

Are we out of the woods yet ... nope ... just back in the trading range that we have spoke about for weeks.  Today though we sit boldly in the middle to upper range for the Nasdaq and Russell whereas two days ago we were very near the very bottom hanging on the precipice. 

The SPY is fairing better and actually broke out of the trading range today and closed above it, but it is getting very close to the 200 day moving average above, which as we have mentioned before could provide resistance.  We have tested (broke through and then fell back below) this 200 day MA twice in the past month and look to be doing this again in the coming week.  Although we will probably fail a few more times, the more any resistance (or support for that matter) gets tested ... the more likely it will break.  If you think about it, if the moving average above keeps getting breached, this means that buyers are not giving up and shows strength.

have a great weekend!!

getting skeptical

Yesterday's weakness coupled with today's lackluster response makes me very nervous.  We are still sitting directly in the middle of the trading range I have been speaking of for a few weeks, whereas yesterday we were at the bottom of this range ... so currently we are still ok, but ... I am seeing little strength in my analysis.

not so fast George Banks ...

For any of you that has seen the movie "Father of the Bride", one of my favorite lines in the movie is when Steve Martin is talking in the first few minutes of the movie about how as soon as he 'thought he had it made', he heard a voice call out, "not so fast ..."

My wife came up about an hour ago and saw what the market was doing today and said "wha, wha, whaaaaa".  Think a horn sound effect when something bad happens in a cartoon.

important resistance finally broken

today was a great day in the market.  A number of important resistance levels were broken and prices held above them into the close which is psychologically important.

dojis and triangles

The market seems confused, doesn't know if it wants to go up or down...

short term bullish signal - end of day comment

Today was a very strong day in terms of the tone it set.  Yesterday we had the makings of a potentially very bearish situation, but today the market spoke loudly that we want to go higher.  we closed on the SPY and IWM above yesterday's high which means that all people that shorted yesterday are going home negative tonight.  The longer we can stay above this level, the more of these bears will close their positions and provide fuel to the upside move.

short term good signal - intraday comment

minutes ago, we opened up roughly 1.5% higher than the close yesterday (spy and iwm) ... almost completely erasing yesterday's movement.  We will see if it can hold, but this is a fantastic bullish start to the day.

mixed signals

A pretty nasty day today with a lot of volatility.  Good news is that the low of the day was put in within the first few minutes of trading, but the bad news is that it basically closed at the same level (higher, but at the lows of the day nonetheless).  I was hoping to see a large drive in prices back up and that it would hold into the close, but that obviously did not happen.  In the middle of the day, we had a nice push up, but selling forces overpowered and finished the day off poorly.

island top completion - intraday comment

In Thursday's post I 'warned' of a potential 'island top', and this morning the signal was unfortunately completed.  We completely reversed the gains of the past four days at the open and are down almost 8% from the high 4 days ago. 

Today will be critical to see if how much we can recoup from the downside and as a result should reveal if this is just a healthy pullback OR if this is a deeper correction.  Many smaller traders use approximately an 8% stop loss on their trades, so if we move down much further the selling should start accelerating.

My assumption is that we will move up from here and that this is a buying opportunity, but I will not put my money where my mouth is, until I see evidence to prove this.