Market commentary for 12/01/2008
Good day!
Thanksgiving brought us a shorted trading week and with it came so welcome advances in the indices to also be thankful for. While the indices were up around 10 percent for the week several individual issues had a spectacular week. The naming of the economic team, the bailout of Citigroup, the added funding to get credit flowing again, the 200 billion added to the fannie and freddie fund drove mortgage rates lower and it seemed even the auto companies moved up hoping to get some the money the government is printing.
The day after Thanksgiving is not only shortened but it really is a light day of trading. Friday probably was the narrowest day we have had in probably months. On the 60 min charts we can see that buying pace which started the 21st November continued into last week, it is slower and slower which suggests that every new long setup longer than an intraday move will be higher and higher risk. The indices need rest for next low risk setup. The indices have room for another move up, but without a good 60 min consolidation risk will remain higher. Now the question will be if we see some consolidation which will decrease risk for a continuation or will we just see a continuation without rest. That is good for open trades but bad for new setups. I think the markets have room for more buying which we can see on the weekly charts. CCI 2d weekly started and usually we will see move in to 20sma. But I want to say we remain in a strong downtrend market and because of that I don’t expect to see an easy and “healthy” bounce. I hope I’m wrong, but I expect to see very tricky action with intraday sharp pullbacks and then back to new highs. On the daily chart we can see the volume decline on this bounce, which is not a good sign and because of that I will be caution with longs. I know the market is very volatile and we have big % moves every day, but don’t forget that with big % profit you can be wrong and see big % loss. Because of that we must have a good trading plan before we take any trade. Right now, I expect whippy action and I would use bigger stops to avoid fake moves that will stop us out. I use smaller lots and unfortunately the profit is smaller. The risk is smaller and I think that way we all will remain in the game.
I will expect the weekly CCI setup continuation next week and question is will that be without or with rest. Daily rest could form a phoenix pattern which will be the best option for us. First we must see correction pace before we can hope for the phoenix.
Good day!
Thanksgiving brought us a shorted trading week and with it came so welcome advances in the indices to also be thankful for. While the indices were up around 10 percent for the week several individual issues had a spectacular week. The naming of the economic team, the bailout of Citigroup, the added funding to get credit flowing again, the 200 billion added to the fannie and freddie fund drove mortgage rates lower and it seemed even the auto companies moved up hoping to get some the money the government is printing.
The day after Thanksgiving is not only shortened but it really is a light day of trading. Friday probably was the narrowest day we have had in probably months. On the 60 min charts we can see that buying pace which started the 21st November continued into last week, it is slower and slower which suggests that every new long setup longer than an intraday move will be higher and higher risk. The indices need rest for next low risk setup. The indices have room for another move up, but without a good 60 min consolidation risk will remain higher. Now the question will be if we see some consolidation which will decrease risk for a continuation or will we just see a continuation without rest. That is good for open trades but bad for new setups. I think the markets have room for more buying which we can see on the weekly charts. CCI 2d weekly started and usually we will see move in to 20sma. But I want to say we remain in a strong downtrend market and because of that I don’t expect to see an easy and “healthy” bounce. I hope I’m wrong, but I expect to see very tricky action with intraday sharp pullbacks and then back to new highs. On the daily chart we can see the volume decline on this bounce, which is not a good sign and because of that I will be caution with longs. I know the market is very volatile and we have big % moves every day, but don’t forget that with big % profit you can be wrong and see big % loss. Because of that we must have a good trading plan before we take any trade. Right now, I expect whippy action and I would use bigger stops to avoid fake moves that will stop us out. I use smaller lots and unfortunately the profit is smaller. The risk is smaller and I think that way we all will remain in the game.
I will expect the weekly CCI setup continuation next week and question is will that be without or with rest. Daily rest could form a phoenix pattern which will be the best option for us. First we must see correction pace before we can hope for the phoenix.
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