YM, ES and DJIA Analysis

[brownsfan019]

James,
My thought is this - if you went long on the hammer, you remain long as price continues to rise. You made an excellent observation that the volume is decreasing, so I would be watching this closely. I personally would consider staying long until a bearish pattern formed AND confirmed the following day.

Excellent observation.

[brownsfan019]

	Quote:	james_gsx
	Sorry, I zoomed in on the candles on snagit but for some reason they aren't posting like they were when I saved them.

SnagIt is a little tricky on the zooming thing...





Let me know if that's not clear.

[james_gsx]

Thanks Brownsfan, and good feedback - just follow the market and listen to what it's telling you. AKA confirmation.

[brownsfan019]

	Quote:	james_gsx
	Thanks Brownsfan, and good feedback - just follow the market and listen to what it's telling you. AKA confirmation.

Whether you planned it or not James, you found a great example here in the DIA/YM potential plays. I just wish now we would have discussed this BEFORE the hammer appeared!

Here's one piece of advice - when there's a large rally or selloff, watch those daily charts like a hawk. We all know that those rallies/selloffs are usually the result of some news and people overreacting. Candlestick analysis can help immensely at giving you some idea when that overreacting may be ending. These hammers we found are perfect examples. Candlestick analysis will never get you long at the bottom or short at the top, but it can get you pretty close to those levels in my opinion.

I have to say, after looking at some of these charts (I was looking at other indexes as well, just didn't post the charts here), it's hard to argue with taking a longer term approach on some of these trades - you pay a lot less in commissions and make more money. Think about it... if I played that hammer on the YM or ES, I would have to go into the trade with some acceptable risk parameters, but once I was comfortable with it, I could sit back and relax. I really don't know what I'd do with my time then! :unsure:

[brownsfan019]

James,
Check out this thread - http://www.traderslaboratory.com/for...ures-2325.html

Interesting... with price rising on low volume and the amount of shorts increasing, the question becomes who wins and when? Were 'they' increasing price so to be able to load up on short positions? Are 'they' going to then unleash the fury on the bulls or will those bulls step right in and do what it takes to find the stops of the bears?

[james_gsx]

One thing that could explain the light volume is the vast array of economic news coming this week. For example we have the GDP, CCI, FOMC minutes, and Consumer sentiment all in the same week, so I would imagine volume is reflecting that and the rise in price is due to people buying ahead. Most likely we'll get a report that says, "everything is fine!" markets will rally then later shit will hit the fan. Should be an interesting week, good find on that candle btw.

I also believe that the charts can "tell the future" if you know what I mean. For example I've seen charts setup before earnings that give me an idea of which way the stock will move when it's announced. Sometimes I'm right and sometimes I'm wrong, usually once I'm wrong I see something in the chart that I should have noticed. I believe we're seeing the same kind of setup in the Dow right now.

Thanks about the technician job. That would be a fun thing to do since I love reading charts. For the record, I'm 19 and future plans are to move to a popular trading city and work at a fund or a big bank so I can trade.

[brownsfan019]

	Quote:	james_gsx
	Thanks about the technician job. That would be a fun thing to do since I love reading charts. For the record, I'm 19 and future plans are to move to a popular trading city and work at a fund or a big bank so I can trade.

I would STRONGLY recommend you start building a portfolio now then. Keep detailed notes, with annotated charts and print them on nice paper and start creating a binder of your work. You want to walk into an interview at the bank or hedgie and say 'I've been conducting market analysis since I was 19, here's my work, all of which is detailed out for you. While I know I have a lot to learn, I wanted to provide you an example of how serious I am about the markets and in turn, working for your firm.'

You think anyone else (esp younger candidates) would have a portfolio of their work since they were 19? As long as you aren't going up against me, I think you'd have a good shot at standing out. :tongue: And that's all the interview is about - standing out.

[brownsfan019]

James,
Let's look at today's candle on the DIA...




Some things we need to consider here:

1) Really low volume. How convinced are you that the bears had this or that the bulls took the day off?

2) We have a bearish shooting star in candlestick terms, near the SMA. Could be forming a classic pullback.

3) Assuming we were long on the hammer, do we exit the hammer? Do we initiate a new short?

Those are the questions any candlestick trader would need to answer here. I personally would consider exiting my long if the low of the shooting star was taken out tomorrow. I can't tell on stockcharts the exact price levels here. I need to see about getting EOD data into Multicharts as that would make things a lot easier.

[Vercingetorix]

I think we're going to get another wave down to shake any early longs out and suck some new shorts in. The weak volume rally is what is telling me that this recent move up is not the real thing. We'll form either a head and shoulders or double bottom and then rally to new highs. I'm of the persuasion that this is a correction and not the start of a bear market. The reason is simply the amount pessimism is too great for this to be a bear market. Bear markets don't happen when everyone expects one. Also the price action during this correction looks bullish from a vsa perspective so I would say that the pros are buying this correction like they did the last one in march.

[james_gsx]

I think a major difference after Feb 27th was that price kept moving higher after the initial major pullback. Here, we saw price top at 14,000 (it struggled to get there after 13,700). Then it fell and has been making lower highs since then, and there are clear trend lines and we are finding support against one now.

Although this isn't purely technical, some important things are going on tomorrow that may have an impact. We have CCI numbers being released and the FOMC minutes.

After seeing classic resistance today I would be very cautious about going long.

To Brownsfan.
1 - today I think everyone took the day off lol
2 - I agree, especially since we found immediate resistance at Fridays high.
3 - Personally I would exit a good portion of my long position and tightened my stop. Maybe buy a DIA put as a hedge in case of a pullback.