YM, ES and DJIA Analysis

[TinGull]

I see exactly what you see and am really looking forward to some sort of downturn in the market as SPX is getting a tad bit close to short strikes on one of my positions and I'd rather not have to adjust. 10 days for the SPX to move 40 points...that's my cushion. Got a 100 point SPX move cushion to the downside so I'm cool there...

[TinGull]

	Quote:	brownsfan019
	We can start a new thread dedicated to drawing S/R levels based on the candlestick analysis and nothing else. I'm guessing it will just be you and I discussing (maybe Tin will chime in ).

Maybe?? Of course I will!

[TinGull]

And to note...on a MONTHLY chart...of the DIA...



October is looking like a higher volume spinning top at resistance, huh?

[james_gsx]

Good catch on the Monthly Tin.

I said in my blog and on here that I was bearish going into today. We did get a bullish engulfing candle, but it ran right into resistance so I am holding my bearish stance until I get confirmation that a long position will hold less risk. That doesn't mean I would go short, it just means I don't like the idea of going long right now.

I think the NQ is the best play out of all the indexes. As you can see the NQ clearly broke resistance and with strong volume. Let me know what you guys think.

[Mitch]

Hi All,
Just came in on this today; great thread if you dont mind me saying.Has rekindled my interest in candle analysis.
Just thought I,d let you all know.
Keep up the good work.
Cheers
Mitch

[james_gsx]

I made a bunch of fake money with my DIA and SPY puts today

YM closed right at support today, not surprising but definitely a bearish candle. There is one thing I wanted to bring up though since I have seen it a few times. Wednesday we got a bullish engulfing pattern but it closed right at resistance, which is why I was bearish going into today. Was that technically the right decision? By that I mean, did I get lucky or is that something I should look at more often. And what is stronger, a bearish candle closing at support or a bullish candle closing at resistance? Or should I just wait for confirmation on both if I want a less risky play? Sorry for the thousand questions

The NQ continues to be my favorite index, it closed right at support which was prior resistance of it's small trading range. I think if the YM and ES continue to the downside that the NQ will easily follow and break that support level.

[Nick1984]

	Quote:	james_gsx
	Wednesday we got a bullish engulfing pattern but it closed right at resistance, which is why I was bearish going into today. Was that technically the right decision? By that I mean, did I get lucky or is that something I should look at more often. And what is stronger, a bearish candle closing at support or a bullish candle closing at resistance? Or should I just wait for confirmation on both if I want a less risky play? Sorry for the thousand questions

I might be more conservative but I reckon you'll end up shooting yourself in the foot if you go into a day with a pre-conceived notion of what the market will do. On the NQ daily you posted up the bearish engulfing pattern is at the top of a up trend so it is a very valid signal for a reversal, and it does close at support.

However, I would personally still be reluctant to go on into the next day thinking that it must come down more cause the candle says so. A safe play would be to watch the open and then place a limit trade a few ticks below the support level of the uptrend and see if that's taken out.

[james_gsx]

Nick that's what I mean by getting a certain signal to go either direction. If I was bullish going into a specific day that wouldn't stop me from making short or long plays on a day-trade basis. I would also look for a candle on say the 15 minute chart that would tell me what direction the market might be heading. For example if I saw a bearish engulfing pattern on the daily, then a strong hammer or other bullish candle on the 15 I obviously wouldn't fight that.

You are also right about the NQ, I wouldn't go long on that chart on a swing basis but if I got something to tell me to go long during the day I would and I would possibly hold it for a swing play. I would be more reluctant too though, because like I said the YM and ES don't look strong at all. It would pretty difficult for the YM to fall 150pts, the ES fall 13 pts, and the Nasdaq somehow go up.

[brownsfan019]

Hey guys,
What a week, huh?

Here's the short we were looking at:





We learned two things:

1) Holding during the Fed can pay big time or hurt big time.

2) Stop placement on this trade was absolutely critical AND you had to take some heat on the trade IF you held through the Fed.



So this short had 3 possibilities as far as I see it:

1) Exited at the close on Tue b/c you did not want to hold during the Fed. End result: +4.25 (bought beginning of Tue and sold end of Tue).

2) Got stopped on Fed day based on where stop was. End result: -10.75 pts

3) Held and kept your short, but now exited based on new buy (more below). End result: +23 pts.

So, as you can see, where you place that stop was just critical. In this scenario, as I mentioned in another post, the stop would need to give the trade some room to work due to the Fed announcement coming.

--------------------------

NEW TRADE SETUP AS OF FRI!




Wow, this is a nice one.

Here's what I see:

1) Strong support @ a strong psychological number (1500 even).

2) Look at the volume on this spinning top at this strong support level.

3) We saw a very similar pattern recently that produced a decent profit.


If we add the 50 and 200 SMA, here's what we now see:



I'd prefer it to be touching the 200, but close enough.


Here's a long that has 2 possible entry points:

1) Enter @ market Sunday evening to go long.

2) Wait until price breaks the high of this spinning top. The high was 1525, so once price breaks this level, go long.

There's good and bad of each, which has been discussed here.



One last note - as we saw earlier, stop placement is critical.

In our trade here, note that this spinning top's low is not quite the low of the previous hammer:




As we also saw previously, the hammer's body/low can be retested so your stop placement is critical here as well.

Good Trading and Do Your Own Due Diligence At All Times Before Placing Any Trades!

[james_gsx]

I like it brownsfan, if you look at the DIA there is a nice hammer. I know I shouldn't be hunting for hammers, but it is what it is.

Thanks for the lengthy input, it helps a lot!