Market commentary for 05/13/2009
Good day,
The whippy 60 min action continued, but this time the trades that we took supported our expectation. The only way to trade this action is comparing every scan with the market and try to find an “own way” chart or the weakest for a short and strongest for a long. I want to note again that my main occupation is swing trading and if I will take or give day trade call it will be supported with bigger time frames. Let’s go to the charts. On the SPY/DIA 60 min chart we got scenario that I draw in the previous commentary. The day started with a small gap, small enough to expect it would be filled after the open. When Monday's low was broken, that was signal for more selling pressure and a move to the daily 10sma support area for SPY/DIA and 200/20sma for the QQQQ. On the daily charts we can see the SPY reached the 10sma (brown line) and bounced. Remember the moving averages class, it is exactly what we can expect after a strong daily trend up. Unfortunately that resulted in continuation of the 60 min action. Right now it looks like a huge range. Since the bounce from the low was strong, we can expect a continuation pattern. The SPY/DIA closed in the middle of the range, while the QQQQ is in the whippy channel. What to expect for tomorrow? Right now the situation is not clear. The SPY and DIA have good odds to go back to the daily high which suggests the pace on Tuesday bounce from low. The SPY daily chart there is still room for a move to the 200sma resistance area. That scenario is open. In the mean time the QQQQ can go back to the previous high. On the other side, if the 60 min range won’t hold and if SPY breaks under the daily 10sma, the odds for a selling continuation will increase and very possibly they will reach daily the 20sma support area. What will be broken first? Since the 60 min action is very whippy, risk will remain higher and I will scan for weakest/strongest names in both directions. Overnight trading will remain high risk. On the weekly charts I still think we have more chances for selling than buying in the coming weeks and I’m still more bearish, but on daily chart I see the possibility the last push up to daily double top or 200sma for the SPY.
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