Market commentary for 03/09/2009
Good day!
Another rough week is over. We still don't have a solution for the banks and economy lost another record amount of jobs. The news is all bad. We got a rally Friday afternoon 30 min before close, but can that be enough for hope? On the 60 min charts we can see that indices just reached previous high and that is not enough to say if the trend will change. Before I said the signals for a change we must look at the bigger time frames. Let’s start with daily charts. The DIA and the SPY formed doji bar which means indecision. After a clear down trend with many days that we closed at the lows this is sign for hope that if Friday's high is be broken we could see a correction. CCI divergence will give us another hope for correction. The setup will be above Friday's high with stop under Friday's low. The first test will be the 10sma as trend test resistance area. The daily charts give us support and to expect a correction. Now let’s see the weekly charts. The DIA reached the channel low and support area. Also CCI divergence supports that idea. The SPY CCI is the same and reached the $65 number support area, while the QQQQ reached previous low which will serve as a support area. Conclusion is the chart support correction scenario. Weekly CCI is under 200 which means that charts are in the oversold area. We know that oversold can become more oversold, but for the same reasons that I explained above it gives us enough reasons to watch for a correction. There are two ways to a catch bounce, we know that bounces in a bear market can be very fast and they start the same way as Friday. First way is to try pick bottom with CCI divergence setup which will always be higher risk. Be prepared to be stopped several times before we catch right bottom. The lower risk way is to leave the initial bounce and wait consolidation (continuation like base, flag or triangle) and then take the trade on a breakup and continuation setup. That way you will decrease risk, but also risk missing the initial move which can be very strong in a bear market. My focus for the next week will be on possible corrections and I will scan for longs. Can be a good weekly CCI setup, but I will look for classic continuations. My focus will be on the long side. If market doesn't go and selling pressure continues I will use short setups only for scalps, nothing longer. I can’t be sure that correction will start next week, but we have fair odds for that and charts support that scenario.
Those of you that used to come into the trading room and stopped, I want to tell you 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!
Another rough week is over. We still don't have a solution for the banks and economy lost another record amount of jobs. The news is all bad. We got a rally Friday afternoon 30 min before close, but can that be enough for hope? On the 60 min charts we can see that indices just reached previous high and that is not enough to say if the trend will change. Before I said the signals for a change we must look at the bigger time frames. Let’s start with daily charts. The DIA and the SPY formed doji bar which means indecision. After a clear down trend with many days that we closed at the lows this is sign for hope that if Friday's high is be broken we could see a correction. CCI divergence will give us another hope for correction. The setup will be above Friday's high with stop under Friday's low. The first test will be the 10sma as trend test resistance area. The daily charts give us support and to expect a correction. Now let’s see the weekly charts. The DIA reached the channel low and support area. Also CCI divergence supports that idea. The SPY CCI is the same and reached the $65 number support area, while the QQQQ reached previous low which will serve as a support area. Conclusion is the chart support correction scenario. Weekly CCI is under 200 which means that charts are in the oversold area. We know that oversold can become more oversold, but for the same reasons that I explained above it gives us enough reasons to watch for a correction. There are two ways to a catch bounce, we know that bounces in a bear market can be very fast and they start the same way as Friday. First way is to try pick bottom with CCI divergence setup which will always be higher risk. Be prepared to be stopped several times before we catch right bottom. The lower risk way is to leave the initial bounce and wait consolidation (continuation like base, flag or triangle) and then take the trade on a breakup and continuation setup. That way you will decrease risk, but also risk missing the initial move which can be very strong in a bear market. My focus for the next week will be on possible corrections and I will scan for longs. Can be a good weekly CCI setup, but I will look for classic continuations. My focus will be on the long side. If market doesn't go and selling pressure continues I will use short setups only for scalps, nothing longer. I can’t be sure that correction will start next week, but we have fair odds for that and charts support that scenario.
Those of you that used to come into the trading room and stopped, I want to tell you 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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