YM, ES and DJIA Analysis

[smwinc]

	Quote:	james_gsx
	I'm still waiting for 1400 to be broken. It's against my rules to buy in front of resistance. Until then, I still view this as rangebound. Sure there are plenty of things that are in place that SUGGEST price COULD break 1400. But it hasn't happened yet. Price is king, and price is yet to break that level.

Yes. I realise I'm getting a little off-topic here, but there is a financial writer than I'm a real fan of, John Mauldin. He continues to refer to the U.S as a "Muddle Through Economy". He is usually right on the money, and I think it's a good way of explaining what is going on.

The ES has been "grinding up" since the 22nd January - this entire year to date.

Since this is the Candlestick forum, I better refer to them :-)

To mix it up a little, I thought we could look at the Bund. Different market, but still clear implications for the ES/YM.

I've attached 3 charts of the Bund that I referred to in the Chat yesterday.

Chart 1 - 3 pictures of the same Daily chart, "scrolling through" the days. You can see that at the time, there was very clear strength, however as we progressed the strength was broken, Hammer after Hammer. Difficult entires.

Chart 2 - basic picture of the Daily Bund chart as it stands. We keep seeing strength, followed by failure. To me, this chart looks like it just wants to rally, but for whatever reason, it's not. You can literally count 3-5 strong bullish hammers that would be a normal "get ready to buy" signal, that failed.

As the Bund is (all else being equal) inverse to equities, the implications is similar for the ES but in opposite. The US market is weak, but it keeps limping higher.

Chart 3 - taking a step back and looking at the monthly Bund chart, you can see this is still a very clear long-term trend UP. If the US is really recovering for the long-term, this chart needs to be bearish. As I mentioned on the chart, I'll be keeping an eye out for any signs of a breaking of a building triangle to the upside.

Cheers

[james_gsx]

I definitely agree with your analysis, and to be honest I think we will break 1400. The US Dollar is looking stronger, and energy is actually starting to look a little weak. All of this has been setting up the markets to pop, but as I've said my rules won't let me buy until we break that resistance. Once we break it, I am all in.









Should get interesting in the next week or so.

[erierambler]

	Quote:	james_gsx
	I definitely agree with your analysis, and to be honest I think we will break 1400. The US Dollar is looking stronger, and energy is actually starting to look a little weak. All of this has been setting up the markets to pop, but as I've said my rules won't let me buy until we break that resistance. Once we break it, I am all in. Should get interesting in the next week or so.

Using charts that everyone else is watching could put you behind in trading.
The actual breakout occurred on April 16th and was tested on the 22nd. Be careful going all in when the crowd sees fit. Of course the move up could be very real , but it is too early to tell for sure. We will be approaching a previous top in the future to challenge.
erie

[james_gsx]

	Quote:	erierambler
	Using charts that everyone else is watching could put you behind in trading. The actual breakout occurred on April 16th and was tested on the 22nd. Be careful going all in when the crowd sees fit. Of course the move up could be very real , but it is too early to tell for sure. We will be approaching a previous top in the future to challenge. erie

By all in I meant I would be bullish. Not that I would put money in the market.

You could argue that the breakout was on April 16th, but then why the sudden resistance at 1400? Not to mention the psychological significance of 1400, I would rather wait for that. But that's just me.

[erierambler]

	Quote:	james_gsx
	By all in I meant I would be bullish. Not that I would put money in the market. You could argue that the breakout was on April 16th, but then why the sudden resistance at 1400? Not to mention the psychological significance of 1400, I would rather wait for that. But that's just me.

No argument that the breakout was on the 16th, not looking at my own chart. You are looking at your chart. Depends on one's perspective.

[james_gsx]

Yup, each perspective is different. Weekly on my chart shows 1400, so I'm going with 1400

No trade setup yet, will be patient and wait for one. Good news for the bulls that we closed above the 100 EMA on the weekly. So the possibility of more upside next week is pretty good IMO. But what do I know.

[erierambler]

	Quote:	james_gsx
	Yup, each perspective is different. Weekly on my chart shows 1400, so I'm going with 1400

Good trading to ya......
erie

[zeon]

	Quote:	erierambler
	No argument that the breakout was on the 16th, not looking at my own chart. You are looking at your chart. Depends on one's perspective.

And what about the strength in the transports? There doesn't seem to be a downtrend here...

[erierambler]

	Quote:	zeon
	And what about the strength in the transports? There doesn't seem to be a downtrend here...

Yes, but the topic may well not be suited for this thread.
erie

[DbPhoenix]

	Quote:	erierambler
	Yes, but the topic may well not be suited for this thread. erie

Given that the thread is in the candlestick forum, a more appropriate focus might be how candles would have prompted a trader to buy the reversal in March. BF revitalized the thread at that time by noting the test, but there seemed to have been a concern about all the resistance. Of course, there's also a lot of resistance facing anyone wanting to trade any sort of BO of this range, and failure is much more likely not only because of all the overhead but also because those who bought the reversal will be scaling out.

There was also a concern about holding overnight, but this will all happen again, so I suggest for the future that anyone trading the ES consider buying SPY alongside in order to take advantage of those opportunities which he might otherwise feel forced to pass by from a daytrading perspective.