Friday, May 27, 2011

Equities weekly wrap-up 5/27

I think since we've started this blog we have been advocating a short position in equities markets. While the last few days have not been kind after a good start to the week, I think there is strong evidence that there is nothing to panic about in all 4 markets. The retracements in yellow are the retracements of the last up move before the downtrend began, and all 4 markets broke below the lowest retracement level of these on Tuesday or Wednesday, indicating an end to the uptrend. We've also held the retracement for the most recent down move (in purple) in all 4 markets. As is the case most of the time, we leave into a long weekend with a lot of uncertainty sitting on important levels. All four markets sit at a confluence of retracements except the S&P. The Russell is the only one to break past the 38% retracement of the most recent downmove, but now sits at the 50% and also the most recent peak from last week. I think we look to continue the down swing on Tuesday, but any higher than we finished today and we might end up in a no trend area, which is always danger for swing traders.

USDCHF Update 5/27

I discussed 4 days ago about the usd/chf downtrend looking to continue, and it doesn't look like I could have been much more right (not very common, so I must pat myself on the back a little). Its broken new yearly lows now and I would be pulling some of the trade off here and then looking to ultimately target the 100% level of the extension shown in yellow (@.8146).

Equities volume analysis 5/27

Here it is, my first ever blog posting as requested! :) Again the Delta Vol shows continue selling on both index. This is why I am still bearish from my inital positon on the russell at 838.40. Of course as everyone know, using vol analysis for your trading can change at anytime when supply and demand comes in. You do not know when but you need to be able to react to it quickly. As of right now, I am still bearish and think this morning was a mark up. Of course this can change if Vol picks up or the bears give up near end of day, but hints of it will show up in the chart. I hope this help. I'm just playing the odds and managing my risk with a trailing stops. FYI... i hate this market btw with the FED being involved. Its not the same anymore these day...... good luck!

PS: Since this is my first ever post, I had to remove some charting items for legal purpose. Just being truthful just in case one of you ask. :)

Nasdaq (NQ) Intra-day report 5/27

It looks like today will be the make or break for being short equities. As we watch the nasdaq break out of its downward trend, crack its first retracement and look to head north into a long weekend, there doesn't seem to be much hope. I think the only thing that would make me feel comfortable going into the weekend short would be an afternoon sell off that sees us below the purple trend line and the 38% retracement. There is a little hope of this as we can see some divergence with the MACD forming (highlighted by the yellow trendlines), which at this point if it did sell off would be triple divergence. Most likely I will be out of this trade by the end of the day for a small loss but will update at the end of the day.

WLT Walter Energy update 5/27

On 5/24 I offered Walter Energy (WLT) as a great trade opportunity as it formed a hammer on good volume off great support. So far if you got in this trade in the 115-120 level you have been rewarded the last three days as we push into the 125 level and its first real test to the upside. If you happen to load up then this is a good opportunity to maybe consider taking a small quantity off. Still feeling this ends up back in the 135-140 range, and have targeted my position as such.

Euro bumping on trendline 5/27

The dollar has been getting absolutely rocked, with only a small dead cat bounce yesterday off some support. With that comes the euro gaining quite a bit, and heading towards a forming trendline. I think at this point it might be ill advised to enter a short here unless you get some sort of candlestick formation or other signal that this trendline might hold. I think though you might be able to make a good play back to the trendline in yellow if you're scalping intra-day. Otherwise on a daily type position I think it would be wise to stand clear until this picks a direction and not enter anything heading into the long weekend ahead.

Edit: The awful housing number that just came out seems to have maybe given us an engulfing pattern to look into selling the euro here for at least a small gain.

Corn (ZC) Second opportunity? 5/27

After talking about corn earlier this week as a potential buy if we could see it pull back to the 717-715 level, it seems it decided to atleast for the moment bounce off the first retracement (@731). But with the shooting start formed yesterday, if we see a break of yesterdays lows I could see it heading right back towards my targeted entry aread over the next couple days. Otherwise if it doesn't, Tuesday might have been your best opportunity to get into this trade.