Market commentary for 12/19/2008
Good day!
After consolidation on the Wednesday indices broke down 60 min triangle. The DIA found support at 200sma 60 min and 20sma on the daily chart, while the SPY and the QQQQ found support at 10sma daily. In the yesterday commentary I told that we had 50/50 situation and unfortunately indices couldn’t hold after FED rally what is not good news for long direction. Look like records FED rate cut is not good to bring market up and odds for weekly bear flag now increase. On the daily charts we can see that all are still in the triangle pattern but if we wont see strong reversal at Friday odds for that will increase again. At Friday we have triple option day and it can bring very whippy market action. Usually I avoid that day for trading because safest will be to take very fast trades (scalps) and we could see many false moves what increase possibility for stops. There are two ways to trade that market action. First is to use bigger stops to avoid false breakouts and be very fast with profit taking, what again decrease risk/reward. Another way is to stay with cash what is for me better option because I’m not good with scalp trading. If indices will stay weak I will look for smaller swing short positions based on the weekly bear flag possibility with stop above Wednesday high. Important is to know that will be right now early weekly swing setup and we must use proper risk in case that selling continuation wont work. Thursday volume is higher and intraday selling pace was strong what suggest for more daily correction and without intraday change (big reversal) I will stay with more bear the bull mode.
Good day!
After consolidation on the Wednesday indices broke down 60 min triangle. The DIA found support at 200sma 60 min and 20sma on the daily chart, while the SPY and the QQQQ found support at 10sma daily. In the yesterday commentary I told that we had 50/50 situation and unfortunately indices couldn’t hold after FED rally what is not good news for long direction. Look like records FED rate cut is not good to bring market up and odds for weekly bear flag now increase. On the daily charts we can see that all are still in the triangle pattern but if we wont see strong reversal at Friday odds for that will increase again. At Friday we have triple option day and it can bring very whippy market action. Usually I avoid that day for trading because safest will be to take very fast trades (scalps) and we could see many false moves what increase possibility for stops. There are two ways to trade that market action. First is to use bigger stops to avoid false breakouts and be very fast with profit taking, what again decrease risk/reward. Another way is to stay with cash what is for me better option because I’m not good with scalp trading. If indices will stay weak I will look for smaller swing short positions based on the weekly bear flag possibility with stop above Wednesday high. Important is to know that will be right now early weekly swing setup and we must use proper risk in case that selling continuation wont work. Thursday volume is higher and intraday selling pace was strong what suggest for more daily correction and without intraday change (big reversal) I will stay with more bear the bull mode.
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