Market commentary for 04/22/2009
Good day,
They tried to sell off the markets after USB, BK and NTRS all missed. Geitner said the banks were doing alright so they rallied the financials after 11am. I explained in yesterday's market commentary that after a move we need to see rest. Rest can be a base, can be a bounce or it can be any correction. For us, after the move (Monday's action) it will be best to see a base, flag or triangle, because those are continuation patterns and they will give us low risk setups. Unfortunately Tuesday's action didn’t give us anything like that. We can see that on the 60 min charts. For a continuation the bounce is to strong and it is almost the same as Monday's move down which will increase odds for a range action day. If Friday close/Monday open gap do not hold then yesterday's bounce we can expect it back to the daily highs which will form double top pattern. In my mentoring program I always try to keep all things as easy as possible. I believe many know my move-rest-move thinking. If we look from that point it is quite clear. We had a large move on Monday and unfortunately we didn't get a rest period which did not give us good odds for continuation, so we can now wait for another pattern. In the mean time trading risk will remain high and safest place for trading tomorrow will be the smaller time frames, or own way charts. I still expect more weakness in the future, because of weekly resistance area, but we don’t know what kind of correction we will see on the weekly chart. Maybe that will be a base, or rounding top or something else. We can just guess what it will be. Also, we still don’t have a pattern on the daily chart for a clear direction. Those are all reasons why trading risk will be high. In the morning I will like first to see open, because any new gap can bring a different situation. I will be in the live trading room 30 min before the open.
Good day,
They tried to sell off the markets after USB, BK and NTRS all missed. Geitner said the banks were doing alright so they rallied the financials after 11am. I explained in yesterday's market commentary that after a move we need to see rest. Rest can be a base, can be a bounce or it can be any correction. For us, after the move (Monday's action) it will be best to see a base, flag or triangle, because those are continuation patterns and they will give us low risk setups. Unfortunately Tuesday's action didn’t give us anything like that. We can see that on the 60 min charts. For a continuation the bounce is to strong and it is almost the same as Monday's move down which will increase odds for a range action day. If Friday close/Monday open gap do not hold then yesterday's bounce we can expect it back to the daily highs which will form double top pattern. In my mentoring program I always try to keep all things as easy as possible. I believe many know my move-rest-move thinking. If we look from that point it is quite clear. We had a large move on Monday and unfortunately we didn't get a rest period which did not give us good odds for continuation, so we can now wait for another pattern. In the mean time trading risk will remain high and safest place for trading tomorrow will be the smaller time frames, or own way charts. I still expect more weakness in the future, because of weekly resistance area, but we don’t know what kind of correction we will see on the weekly chart. Maybe that will be a base, or rounding top or something else. We can just guess what it will be. Also, we still don’t have a pattern on the daily chart for a clear direction. Those are all reasons why trading risk will be high. In the morning I will like first to see open, because any new gap can bring a different situation. I will be in the live trading room 30 min before the open.
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