YM, ES and DJIA Analysis

[brownsfan019]

James,
We got another bullish hammer today. You'll note that the low of our buy hammer was retested and while it actually ticked below this hammer, proper stop placement (as I mentioned earlier) should have kept us in this trade.

Now, today was not an overwhelming great feeling on this trade. Depending on the entry technique being used, we are either long at some point, or still waiting for the high to be broken.

Through quote.com, the volume today was actually higher than yesterday:




That may be incorrect, but it's quick and easy for me to pull that up.

Currently we are feeling good about this long, but would feel better to get a bullish day here Tue or Wed. You'll note that we had similar price action in this post. Mainly multiple high volume hammers. So once again we have some serious buying/selling taking place here. Someone, somewhere is loading on longs and someone, somewhere is loading up on shorts. Our analysis here is saying the bullish stance is the correct one, but time will tell.

[Nick1984]

What I notice on the ES chart is that the hammer closed just below the 100 MA. If you're a late to the party Charlie, then a good entry point would be a limit order at the 100 MA which is within the body of the first bullish hammer 10 periods ago.

[brownsfan019]

Today was what we wanted to see:




Good bullish move after our 2 hammers.

Now we'll want to see a run for the 1540 level.

[Nick1984]

The volume on the up move today was also very strong and significantly higher than previous days which shows a healthy level of bullish activity. I wouldn't be surprised if we blast through the 40 mark.

[brownsfan019]

What a bearish day today! The bears were in full effect!




Just in case anyone traded this blindly, all longs should be exited by now!

This one just didn't have it and this was a very convincing close below the 1500 level, which is a major psychological level.

You could also view this inverted hammer as a reason to short. I gotta get to bed here, but the idea being that you have a close below our new resistance (old support that the long was based on) AND we are below the 1500 psychological level. I'd have to see where a realistic profit target would be to see if this is worthwhile or not, but there could be an aggressive setup here.

Side note - days like today are why I really enjoy the day-trading part of this business. Today was just a great day to be grabbing points all over and while I knew the drop was not good for our long here, it was a great money maker on an intra-day chart.

[Nick1984]

Brown how would you interpret this candle? It has a very long buying tail yet closes very close to its open. The volume on the candle is also very high. I notice that we closed below the 200 MA.

As for going short, there seems to be visible support but its quite a while down to levels reached a few months back.

Was there any economic news recently in the US that made this move happen?

[ckait]

We just came out of a multi day balance area ,weakest dollar ever and record oil and the 4.3 trillion owed to china probably helped to.Good thing plung protection doesnt want you to know how scary things really are.

[brownsfan019]

Nick,

Here's what I see:




Bullish looking hammer/spinning top on nice volume.

I don't really see any strong support that the low touched or came close to. I would like to see an attempt to run at 1440 or so.

To go long here would require very close monitoring at the 1500 level (note large, thick line representing STRONG resistance). There's so much that could happen at the 1500 level. We've seen it try to bust through and get rejected and then we saw strong push right through it.

In summary, a long here is aggressive. If trading multiple lots, this could be a 'put your toe in the water' type trade, ie do not bet the house on this one. Assuming we get in around 1480, we'd be looking for about a 20 pt move. You are going to have to risk more than 20 however to get there. Not the risk/reward I am looking for.

As for why we've seen some bearish movement, who knows. We can all sit here and speculate, but the bottom line is that no one knows for sure. More than likely a combo of events. I recall reading something here today or yesterday about the Chinese possibly dumping their dollars... not good. Who knows. Sometimes the market just wants something, anything, to move. As a trader, I don't care why it's moving just as long as it is moving.

[Nick1984]

If the Chinese dump their currency from its already low levels the WTO will eat them for breakfast!

Thanks for the analysis Brown

I picked that support as well and at the moment I'm inclined to agree that going long now would be pretty risky as the Risk/Reward is not to pretty.
If the price does inch bakc to 1500 then it will be interesting to see how the volume plays along. A rise up on weak volume is sure to spell disaster. If it does get to 1500 then it will be interesting to look at the L2 to see if the Ask is overloaded with punters wanting to get in at a great price. Might be a great day to play on the intraday charts there hehe.

[TinGull]

As I had posted on my credit spreads thread, this is a large area of congestion that SPX has entered into (ES, too). There is a lot of money that changed hands and people have a bit invested at these levels for sure. I love looking at areas of resistance rather than one simple price level. You can think of it as a value area. If price were to break down that 1440 and stabilize under there, that's the time to really worry. Right now, I'm semi-bullish on the patterns yesterday and where are on the chart.

I think that if price were to test the lows (which it looks like it could based on premarket) and get rejected and today happens on lower volume...that'd be good for the near term.