YM, ES and DJIA Analysis

[james_gsx]

Speaking of well... the ES. Any man will see what I see in the monthly chart.

Now while I was looking at this and laughing, I quickly changed my tone to an, "Oh shit!" Check out the 50sma (green) - it's around 1308. Now over to the daily, the 8sma is around 1305. That's pretty damn close, and could be a major point to watch for this week. Going back to 2001 when we crossed below the 50sma, bad things happened.

So I think this will be a very important area to watch for this week.

[OAC]

I am looking at the daily chart of S&P cash. I noticed that the last two candles formed a bearish engulfing pattern. Normally in an uptrend, this pattern would be rather bearish by showing possible buying exhaustion.
But in this case, being that we are in a sharp downtrend, this pattern can actually be bullish. It actually shows an expanding triangle formation on the lower time scale which can often be a reversal pattern especially when we are near previous major support. Thoughts anyone ?

[james_gsx]

OAC - here is what I see.

There is actually a technical term for this, I want to say it's a "tweezer" but I am not 100% sure. Whatever the name, it can prove to be a nice setup for a quick retracement play. Since the lows are the same, it shows someone came in and bought and didn't allow price to go any lower. Since there was previous support there, it makes for a nice risk/reward setup. A personal trade I would use would be a morning gap play. I would check out the TRIN which closed at 1.71 which is fairly bullish, and I would go long at the close then sell at the open with a gap higher.



Switching over to the ES, a lot of volume came in the last two days. We had a few small body candles and a "hammer" followed by this candle today. But the low of the hammer was never taken out, thus that is still a valid trade if you entered at the close (Personally I took this trade, but got out with a gap up this morning). I have talked about a retrace to the 8 ema, and we got that today as you can see on the chart. In a case such as this with such a favorable risk/reward I would actually setup a position to take out a portion with a move back to the 8ema where I would exit half, then hold on the other half to test the 21 ema. With such an exhaustive sell off and major support, I wouldn't be surprised to see a sharp rally to this level. We are 1266.50 now, so a move up to 1300 would be substantial, and the potential risk would be very little.

[firewalker]

	Quote:	james_gsx
	OAC - here is what I see. There is actually a technical term for this, I want to say it's a "tweezer" but I am not 100% sure. Whatever the name, it can prove to be a nice setup for a quick retracement play. Since the lows are the same, it shows someone came in and bought and didn't allow price to go any lower. Since there was previous support there, it makes for a nice risk/reward setup. A personal trade I would use would be a morning gap play. I would check out the TRIN which closed at 1.71 which is fairly bullish, and I would go long at the close then sell at the open with a gap higher. Switching over to the ES, a lot of volume came in the last two days. We had a few small body candles and a "hammer" followed by this candle today. But the low of the hammer was never taken out, thus that is still a valid trade if you entered at the close (Personally I took this trade, but got out with a gap up this morning). I have talked about a retrace to the 8 ema, and we got that today as you can see on the chart. In a case such as this with such a favorable risk/reward I would actually setup a position to take out a portion with a move back to the 8ema where I would exit half, then hold on the other half to test the 21 ema. With such an exhaustive sell off and major support, I wouldn't be surprised to see a sharp rally to this level. We are 1266.50 now, so a move up to 1300 would be substantial, and the potential risk would be very little.

I'm under the impression you guys are looking for something you confirm your bullish bias. I can't see how this is a "nice risk/reward setup". The 'reward' is entirely hypothetical and why should price - if it reacts to support - bounce up to 1300? The risk however is worth paying some more attention to. Why did you draw your horizontal line at 1260? Because price reacted at it this week? If you connected the lows from January & March you'll end up with support at a slightly lower level. So where would you place your stops? Somewhat below 1260 or somewhat below the Jan/March lows?

Sure, there was potential for a long trade intraday. But anyone who looked at yesterday's price action will notice price failing to break clear of resistance at 1290-1292. This is much more significant, and if you got long on potential support that's where you should've taken profits (or at least scale out if you wanted to wait for more confirmation to upmove was over).

Of course, all of this assumes you entered not at the close of the daily bar (which was around 1285), but at or very close to 1260. Otherwise the potential reward is absolutely not worth the risk, with resistance so close.

As for volume, yes it was higher, but notice how the downtrend is actually accelerating. Momentum is picking up to the downside and VIX is still not anywhere near 'panic' or capitulation levels. This is not an 'exhaustive selloff' and should break the lows easily.

[james_gsx]

Frankly, I'm not even going to respond to that right now, maybe in the morning. I'm sorry, but I just don't feel like going through to explain myself again to someone who will just decide to rip it apart to whatever suits their own trading views.

Edit: Since I know most people will take that the wrong way and I don't feel like getting spammed with hatemail I'll do a quick run down for you.

It's a tweezer bottom setup, the risk would be just below the low. The reward in this case is the 8 ema or potentially 21ema - shit you could even use Fibs and a 50% retracement I really don't care. I simply estimated that by the time price could potentially hit the 21ema it would be around 1300. Yes, I pulled that fresh out of my ass. It's a simple counter trade setup to help OAC and what he saw in his chart. There are many ways to take this trade, you could wait for confirmation or you don't, it's all up to you. Or, you could short, it all depends on how you trade. Feel free to tear this apart.

[OAC]

	Quote:	firewalker
	I'm under the impression you guys are looking for something you confirm your bullish bias.

No bullish or bearish bias here. Just pointing out the interesting candlestick pattern here on the daily chart. Psychologically speaking, the fact the market open gap up and close below the close of previous day after two weeks of long decline would scare the living s**t out of any remaining longs and market has a nasty habit of rallying after exerting maximum pain. If any trading advice can be given here is probably to be cautious if you are initiating a short swing position here.

[MC]

IMO yesterday at the highs had shorts covering as well as longs ditching in anticipation for a short day today and the long weekend.

The pullback EOD was on relative low volume showing no pro interest in either buying or selling. Today should be wild with seemingly mainly retail running the show.

We'll see should be some fireworks in the market to get us ready for tomorrow.

Always JMHO

[firewalker]

	Quote:	james_gsx
	Frankly, I'm not even going to respond to that right now, maybe in the morning. I'm sorry, but I just don't feel like going through to explain myself again to someone who will just decide to rip it apart to whatever suits their own trading views.

No need to feel defensive... I wasn't attacking your view, but I am nonetheless curious how such a countertrend trade can offer a decent risk:reward trade, given you are basically rowing against a very strong current.

	Quote:	james_gsx
	It's a tweezer bottom setup, the risk would be just below the low.

So what exactly is the risk in terms of net points, given that you wait for the bar to close?

[firewalker]

	Quote:	firewalker
	This is not an 'exhaustive selloff' and should break the lows easily.

I'll just let the chart speak on that one...

[MC]

HRMMMM Could it be???? A longer period intraday chart with a test sans the 1 minute noise and micromanagement we all thrive on???

Yep...now back to my 5 minute noisy chart.