This was one of the more volatile choppy sessions in recent memory. We've certainly had our share of intraday chopfests but they've mostly been thrashing around in very tight ranges. Today things oscillated much more and it really felt like things were getting overdone on the downside. Today's volume surge also makes me think that we've seen a selling climax, at least in the short term. As on Monday, there were a lot of bullish reversal candles made today. I like today's candles better though because most had much longer lower wicks, volume was higher and things are more oversold than Monday. However, the prevailing trend on most stocks is still down so I think the bounces are probably shorting opportunities. Of course, at this time of year you've got to know when any given stock is reporting earnings as those reports and guidance can easily trump any short term technicals.
The S&P 500 probed that 875 support zone that everybody's watching. I think it's too extended to breakdown here without some bad news to drive it.
Here's the Nasdaq chart:
OIH looks like it wants to bounce off of its 200-day moving average. I just question how far that bounce can go before hitting a wall.
FCX sttod out to me because it's right at support near 45. It's another chart that looks primed for a bounce back toward a downward sloping trendline.
No changes
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Lat | Lat |
| Intermediate | Down | Down | Down |
| Short-term | Down | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Mike,
You comment that you like the candles today because of the longer wicks -- doesn't that mess up your risk/return ratios? If you set your stops below the low of the wick (assuming you are looking to go long), you will need to have much more head-room on a long lower wick, correct?
-Matt
Matt,
I wouldn't say that the longer wicks "mess up" the risk/return ratio, unless the wicks were really long. The longer wicks give me more confidence that the sellers have actually been shaken out. Many of the candles made on Monday were very short, almost closer to stars or spinning tops than hammers. Mind you, I don't like candles with ridiculously long wicks either b/c then the bulls who bought the lows are likely ready to bail by the time I'd be getting in (above the candle's high).
Mike
OIH and FCX appears to have formed an head and shoulders pattern. Do you take chart patterns into account when making trader decisions?
Andrew
Hi,
Love your blog. I'm looking for some really basic advice. I'm having trouble finding software that gives volume for a minute chart of the SPX.
On eSignal for example it comes out even every minute. Sharescope not at all and so on. So rather than waste any more money I thought I'd ask.
Failing that can the SPY act as a proxy. I know the SPY is an ETF at 1/10th SPX but is the volume directly proportionate. IE the proportional change minute to minute is the same.
Thanks In Advance
AC
Andrew,
I guess I'd have to answer that with "sometimes". The only way I would take those head & shoulders patterns into account is if they broke the necklines. Then I'd use the patterns to try to find a downside target.
AC,
I can't even get my charting systems (Quote Tracker using data from IQFeed and the charts in my Terra Nova trading platform) to display volume on any SPX charts. It's not even an option.
I'm not sure how well SPY tracks SPX volume minute-by-minute -- or even day-by-day. Your best bet may be to try to look at some futures data, like the e-Minis or something.
Nice point on earnings being able to trump technicals. I had my support on 877 and it still held amazingly. My opinion is that there is lots of bullish indicators, however the is too much significant downside risk to be buying at these levels.
I feel everybody see this SHS pattern and it will not work.
we will see.
greetings