Market commentary for 03/02/2009
Good day!
Plain and simple the news has been bad, GDP the worse since 1982, housing starts, the worse since WWII, Citigroup government takeover, car sales awful, GE and JPM lower dividends, Obama's budget and the news goes on.
Friday started with a strong gap down. Since the monthly strong support area is still valid and daily equal move for the SPY and the DIA I was looking for a bounce after 5/15 min. We took SSO at that point and it worked well. Trading gaps can still work. I still think we are seeing a rounding bottom pattern on the daily charts, but that does not mean we won't see a lower low, which was the case on Friday. I’m still uncomfortable with swing short setups because of the strong monthly support area and because of possible weekly CCI setup which is another reason that we could see a strong bounce any time. Since the strongest bounces come in bear markets I will wait it. Maybe I will miss a move down for short setups, but I’m ok with that because it is very important that as a trader I am comfortable with trades that I do get.
On the 60 min charts we can see the indices have room for continued weakness. For the SPY and the DIA those are not big support areas and first need to deal with double bottom. The most room for a move down is on the QQQQ chart. Same is for the daily charts. Since Friday closed at lows, it suggests for more weakness on Monday, while the QQQQ is coming closer to the previous daily low and a support area that can be clearly seen on the weekly charts. The DIA is in the channel and near $70 number support area. If that doesn't hold the next channel support will be the $60 area, but in that case it will be much more than a daily equal move and slightly lower low. The SPY is still at previous low support area and on both charts CCI divergence is in line. .
When the crisis started I noticed that for swing trading bigger time frames are working better than the daily chart. So for direction I will use weekly setup. For trading that will mean less activity and more patience. I will follow the market action every day by day and I will look for daily or intraday signals for possible recovery, but truly a setup will be on the weekly chart. Remember that we can try to a pick bottom which is always risky because we can be stopped several times before we will really find it and that will cost us. But also we can leave the initial bounce and wait continuation. I will look for initial bounce on intraday charts and I will try to catch that. That will be my focus next few days or weeks because that is what interests me. Again, I’m not interested shorts right now. Another way to trade this market is scalping, based on small time intraday charts and that can be very tricky because market action doesn't favor it right now. It is enough to look 5 min charts.
So generally, my focus will be on reversal. If market continues with the selling pace and if monthly support won’t hold, I will be just a watcher. I will send a watch list every day, forex list and I will work on ETF’s so everyone who is interested can follow my work.
Also for those of you that used to come into the trading room and stopped, I want to tell you the I am back full time and welcome all of you to come again. There is nothing to lose since there is no charge for the service right now. I look forward to seeing you all there.
Good day!
Plain and simple the news has been bad, GDP the worse since 1982, housing starts, the worse since WWII, Citigroup government takeover, car sales awful, GE and JPM lower dividends, Obama's budget and the news goes on.
Friday started with a strong gap down. Since the monthly strong support area is still valid and daily equal move for the SPY and the DIA I was looking for a bounce after 5/15 min. We took SSO at that point and it worked well. Trading gaps can still work. I still think we are seeing a rounding bottom pattern on the daily charts, but that does not mean we won't see a lower low, which was the case on Friday. I’m still uncomfortable with swing short setups because of the strong monthly support area and because of possible weekly CCI setup which is another reason that we could see a strong bounce any time. Since the strongest bounces come in bear markets I will wait it. Maybe I will miss a move down for short setups, but I’m ok with that because it is very important that as a trader I am comfortable with trades that I do get.
On the 60 min charts we can see the indices have room for continued weakness. For the SPY and the DIA those are not big support areas and first need to deal with double bottom. The most room for a move down is on the QQQQ chart. Same is for the daily charts. Since Friday closed at lows, it suggests for more weakness on Monday, while the QQQQ is coming closer to the previous daily low and a support area that can be clearly seen on the weekly charts. The DIA is in the channel and near $70 number support area. If that doesn't hold the next channel support will be the $60 area, but in that case it will be much more than a daily equal move and slightly lower low. The SPY is still at previous low support area and on both charts CCI divergence is in line. .
When the crisis started I noticed that for swing trading bigger time frames are working better than the daily chart. So for direction I will use weekly setup. For trading that will mean less activity and more patience. I will follow the market action every day by day and I will look for daily or intraday signals for possible recovery, but truly a setup will be on the weekly chart. Remember that we can try to a pick bottom which is always risky because we can be stopped several times before we will really find it and that will cost us. But also we can leave the initial bounce and wait continuation. I will look for initial bounce on intraday charts and I will try to catch that. That will be my focus next few days or weeks because that is what interests me. Again, I’m not interested shorts right now. Another way to trade this market is scalping, based on small time intraday charts and that can be very tricky because market action doesn't favor it right now. It is enough to look 5 min charts.
So generally, my focus will be on reversal. If market continues with the selling pace and if monthly support won’t hold, I will be just a watcher. I will send a watch list every day, forex list and I will work on ETF’s so everyone who is interested can follow my work.
Also for those of you that used to come into the trading room and stopped, I want to tell you the I am back full time and welcome all of you to come again. There is nothing to lose since there is no charge for the service right now. I look forward to seeing you all there.
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