An overall very low volume day. Feels like everyone took a breather and a back seat trying to see where this was going. A complete loss of momentum is not what you want in the middle of what people considered a recovery. As usual, main stream media was very quick at making the last three bars poster boys for bull markets but the reality is not this clear. I guess up and down sells news more than indecision.
Lets look at the daily chart to see where we are:

The DOW is sitting right at 12,530, barely passed the 50 days EMA. We had two strong and long candles but today, we traced a very short candle with low volume. We just barely broke to several key marks on my chart (EMA-50, downtrend line) and we are reaching for two more (EMA-200 and top b-band) but we will not make it with volumes like this. Nothing on the ADX/DMI indicates a trend yet so I still consider us sideways. When sideways I pay more attention to the oscillators and in this case, the Slow Stochastic is getting near overbought. Overall, I am losing a little faith in the current market.
Similar concerns on the SPX:

Dropping volume coming to the trendline and the 50 day EMA is nothing to build confidence in the market. Nothing on the ADX/DMI and Slow Stochastic also getting oversold. We are losing steam.
Lock in some profits on your swings and position trades and keep your stops tight.
Happy Trading!

Big day on the board. There was a fed announcement today and another rate cut. 75 basis points this time so the new rate is 2.25%. I didn’t read the entire policy but it seems like the decision was far from unanimous and that 2 member wanted even less the 75 points, making 3/4 the compromise. The wording is being picked apart everywhere so I am not going to bother here.
Overall, things are not looking too too bad. The market showed resilience yet again when the fed delivered a cut under expectation. It was widely known that the full-monty was priced into the market by 2pm.
On the other hand, the dollar is still very weak, the oil is still high and I see no clear sign of recovery in the near term for the housing market.
Clearly we are not out of the woods yet because if things do not turn around soon, the Fed will eventually run out of bullets and we will see what many believe has already started and is just being delayed by the Fed actions: the recession.
I am not overly negative though and still pretty 50-50 on the issue. I would rather be ready to ride whatever comes than to try and predict what is coming and miss the target.
Lets look at the weekly chart for the Dow:

The weekly chart helps me get the big picture. We can see the down trend that prevailed starting last October. The way I read the chart, the downtrend ended when ADX turned upwards around the second week of January. Although January was a difficult month, the consolidation phase or sideways phase had started. The ADX has been climbing since but not strong enough to define a direction yet. A strong trend would need the ADX above 30. If the current up movement continues, we could end up crossing through 12800 with a strong ADX which would be an excellent bullish indicator for the market. But overall, the chart is also very telling with regards to market movement and volatility. We see a lot of very long bars going both ways.
Now for the daily chart:

The daily chart show the current consolidation phase. The first push at the end of January was strong but no enough to break out. Now we have been bouncing back and forth and we can clearly see how the ADX shows the lack of trend in the current market.
And finally the 15-minutes chart:

And think the chart says it all. The swing like yesterday’s two long 400 pts bars and today’s big 150 pts drop and quick recovery following the Fed announcement. Anyone trying to predict anything here must be having a field day.
Happy trading!

I am again still not going to post everyday but when I post, I will now split my homework in two: pre and post-market. Pre-market is the morning prior to trading with overnight news and futures. Post-market is after the trading day, mainly charts and reviews. Again, I fully understand this may not be useful to anybody else. This is basically my notebook first and foremost.

Roller coaster session today will a lot of activity and a lot of different opinions on the current situation. Everyone is trying to speculate on the markets mood: bearish or bullish. The fact that everyone opinions differ demonstrates are unclear signals are at this point. So be cautious out there.

Even short term trading gets tricky in these choppy markets. Market opens up down you end-up with a few good shorts and get squeezed out at lunch time. The reverse also applies.

Here is the trend table for today:

Only DOW charts today:

Continue reading →