5:14pm
The Pennant is now confirmed and broken, the bulls pushed the market to prior support/now resistance, but failed to break above. While a small bounce could be in the works due to a double bottom, this market is probably going to crash.
This is a 60 minute of the SPY, the red line represents bottom support of pennant.
3:19pm
New Low for the ES means pennant as been broken, and we’re heading towards 2002 lows, and towards a possible 650-675 target of the pennant. Expect some possible buyers at 768 (or under it).
1:57pm
Possible head and shoulders formation, as move higher is on light volume, if bears take this one, we’re in for a confirmed break of pennant formation. What are you guys thinking?
1:40pm
Volume is a little strong on the downside, but the 2 PM reversal time should pretty much decide this market’s fate for the next 2 weeks.
1:25pm
Some more consolidation.. could bring more buyers, but the 830-840 level is still far away.
12:37pm
I’m liking this rally as a bull, some resistance as prior support, maybe we can consolidate for another move higher.
11:30am
Very clear bull flag forming on the ES, could help us move higher.
11:16am
Market still getting that rally it needed to have yesterday. If the bulls fail today, then we will consider this market broken, however this is the fakeout rally that was missing in yesterday’s trading. If we can rally above 830, I can see more upside.
10:48am
First hit of 20 SMA 10 minute candle, serving as resistance.
10:43am
The market has finally found some buyers, the volume was strong on the first buy candle, but whenever the market needs to consolidate downwards to extend the move higher, it does so on strong volume, and that makes it really hard to read the charts. Keep in mind that the bulls have to do whatever they can to bring us back above 830 so that the pennant is not broken.
10:12am
Todays’ volume is incredibly light, but price-action trumps volume, and you have to respect the bears’ capability to push this market down. The absence of the bulls keeps me very nervous on this market. I am not playing this market either way, until we get some form of consolidation or pattern. We are also way too far away from the 20 SMA to be shorting.
12:00 am
Hey guys, today like yesterday is a crucial day for the markets, as the markets will decide if yesterday was a fakeout or a breakdown? We will have to track the price action and the volume today, but you have to give the bears the benefit of the doubt as they managed to push down on strong volume yesterday.
Megaphone:
:
Broken Down Pennant:
Good Job to those who were on the right side of the trade yesterday, I certainly wasn’t, but we do have some signs of a possible bounce (MACD bullish divergence), and of course support, if you believe in the megaphone formation. In any case, trade the market very cautiously on any rally. What are your thoughts?
Tony C claims that the S&P could rally to 920 by 3:00 pm Thursday, the time of Options expiration. According to Tony C, this rally would relieve the Options sellers from having to pay out hundreds of billions of dollars in Puts claims. Are we going to have a 114 point S&P rally tomorrow? (I don’t “think” so) I suppose the megaphone theory is still on the table. The S&P’s 806 close is still within the megaphone formation. One thing for sure. Tony C’s idea of a nice rally starting on Wednesday did not materialize. The megaphone theory must step up to the plate with a rally by 4:00 PM tomorrow. S&P losses tomorrow will put the megaphone theory in the “VOID” category, and put Tony C’s reputation on the line.
sad that i traded the downside so cautiously today waiting for this amazing rally to begin. at least i still made some $$… tight stops on each trade to the upside and a quick reversal to the short side kept those losses low. the trend is your friend and since we have now broke 800 overnight …. a rally tomorrow? a global depression is almost a certainty at this point… a huge break lower through Monday is what im expecting… and Monday… yuck.. i dont want to watch.
Idan,
Good post.
There sure were signs (and videos) suggesting a rally would/should start on Wednesday. There are also signs of that for today as well. One lesson we traders need to learn is to not enter a trade until the move in the direction of our bias/judgement has actually begun, and better yet, confirmed. I still find myself wanting to catch the ideal entry point for the maximum possible return, such as the top of the developing right shoulder before the full shoulder is built and the neckline broken on a H&S pattern.
I do watch a lot of YouTube videos and each one provides a unique view of the TA of the day. I also study all the EWT charts people post. I then review the monthly, weekly, daily, hourly, 30m, 15m, and 10m charts to get a bias for the day and I update any trendlines on my charts. I generally use the $SPX and XLF as my proxies, as well as the $VIX..
Today could go either way due to the breakdown of short term trendlines, but the 10m charts are oversold and outside the BB so a push at least up to the old trendline (~812) is likely, though the divergences are minor at best. I’m mainy going to see where it goes before I act.
Here’s a daily view for the SPX:
http://social.stocktock.com/profiles/blogs/ta-signs-on-the-spx
Thanks again for the post Idan. The most frustrating part of being a trader is that the market at times will disagree with the genius underlying our well thought out plans, and price will move against us. It happens. I am glad to see you remain equanimous and congratulated those on the other side of the trade. With good risk management we all live to trade another day, and hopefully more adeptly as we learn the market’s lessons.
A quick thought on options expiration and max pain. Every month around options expiration week I hear about “max pain” and how the market makers will pin stocks, the indexes and other underlying securities at price points where they have minimized the extent of any payouts they will have to make. Is there substance to this theory? Of course. The professionals on the street are motivated like the rest of us to do what they can to maximize their profits. But the ability of this theory to therefor be extrapolated into a no lose trading formula upon which I am willing to commit capital is thin. The theory works best in markets that are not volatile, where a large player or groups of players can manipulate or move prices favorable to their position for a day or two. But in volatile markets like this, attempts of manipulation do little to move prices in the face of motivated buyers or motivated sellers. The theory didn’t work last op ex, and does not appear to be working this op ex. I don’t remember the last time this year that the theory has worked. What is its value then? It makes us aware that players with much more at stake than us, once a month may have a certain bias in the movement of an underlying security due to outstanding option contracts. If they can’t move the price to the max pain strike price, and if they haven’t hedged the position, then price moves can be amplified artificially. The theory has value for me on par with other trading aphorisms like “seasonality”, or “bottoms are formed in October”. They run amok around my mind with other thoughts, but they are never the proximate reason for me to put my capital at risk.
Thanks again for the post Idan!
excellent take on it. Failed last month…should be less affective this month.
Gannfann’s numbers and comments for 11/20:
838-840 2nd resistance
825-827 1st resistance
784-785 1st support
775-777 2nd support
Prices should continue its decline but traders need to watch here for the potential turnaround day. It is my feeling that this down move has almost exhausted itself or ran its course on the short term. Prices are getting very close to my 770 range which should be major support and is an important price range to hold. It makes sense that we are only 30 points away from that forecast and we are moving into support. It is my feeling that we will break that range eventually but it should hold that level when prices go there for its first time. It is important to understand that prices must hold the high 770 range if we are to see any chance for a recovery.
Keep in mind that we have a high probability of a turnaround day here. I do not see any rally lasting very long but prices due seem to be oversold on the short term. Traders should also watch the 806 range…..
Gannfann’s site:
http://blog.stockmarketharmony.com/
gr. The 775-777 Support level on the SPY is what I used to push in a long trade. We will see how well it holds. I hope GannFann is reliable with his daily Resistance & Support calls. T.A. is not my specialty. Assistance like this is very helpful, especially if it is accurate. Thanks for the Web-site.
Nobody gets it right every time. Not even Tony C. I very much appreciate Tony’s commentary because it often opens up possibilities I had not seen but that does not mean I consider his word the gospel. Thank you also to Brian for his risk management reminder. Wise counsel during the greatest deleveraging in the history of man. I would also point out that the market is going down more days than it is going up so the percentages say those that say the market is going down today will be right more often than not….until it doesn’t
Good luck to all and thanks to those who are wiser than I.
Good mornin!
Good posts above. I agree with most. I have noted my displeasure with the failure of the perceived rally and my disdain for not haing been short over the past three days. It was nobody’s fault but mine. Make your own decisions period. Herd mentality, optimism and the pure belief that the market HAD to turn got me. I am a little like Idian. If I don’t make a perfect entry I am extremely hesitant to play the game. While we do miss Craig terribly the board has a wad of remaining talent. We each have our own strengths. I believe we all work well together. We form a exceptional discusstion group and I would say a high majority of the time we make the correct decisions. In this market that is saying something.
Comments from GS.
FX Movers and Shakers – Thursday, November 20, 2008
Trading Strategy – New Capital. Surprise rate cut from the SNB 100 bps when 50 bps were priced to year end. Surprise investments in financials greet investors – as Alwaleed increases his stake in Citi bank back to 5%.GE in talks with Asian funds. GMAC files to become a bank holding company. The push to add to capital in a world thirsty for liquidity shows some hope even as equity markets flounder to new lows. The risk return of equities vs. bonds flipped yesterday when the dividend yield of the SPX surpassed the 10Y US bond by over 25 bps – the DJIA has the same story – and many are pointing to corporate yields that suggest a world pricing in a depression rather than a recession. The subtle difference matters – so the focus on the day in the US will be about how bad is the real economy leaving jobless claims and leading indicators and the Philadelphia FED survey to do a significant amount of work on the psychology of this bear market. The driving force for the bearish turn over the last week for all markets has been the view that the FED isn’t ready to do more than wait now and that the US Treasury is on hold until the new Administration. A two month vacation from new facilities, actions and support in the midst of a giant crisis begs the point about new capital. Three interesting points about FX in this mess: 1) Ranges overnight were modest. The EUR is above 1.25 and the ability for the USD to gain even as the moves lower in equities suggests this deleveraging of risk isn’t European anymore. 2) The rate cut in Turkey yesterday and the weakness in TRY suggests the devil’s choice of capital needs in EM – as those that still believe in free capital going to the best rate have to compete in a madness of other sovereigns, international corporates. Lower demand from too high a rate has swayed the central bank of Turkey and opens up for more TRY pain – suggesting that other EM bankers may be on the same path. Unlikely that the IMF money requests rumored for Turkey will be forthcoming if this game continues. 3) AUD, CAD, NOK – not all commodity currencies are equal? AUD back to the RBA intervention levels previously traded – suggests the world is more concerned about China than US even as the US shares perform significantly worse. CAD may be the one to worry about in the short term as its set for a 1.30 retest. NOK is stronger again – even as SEK tests 10.30 against the EUR and the Baltic concerns grow. NOK up with oil down may be the unsustainable surprise.
Main Movers – AUD off 1.1% to .6290; CHF off 0.3% to 1.2175; CAD off 0.3% to 1.2580; NOK up 0.15% to 7.07; SEK up 0.7% to 8.15.
The almighty blue channel at the close today is at ES 756.
Premarket getting weaker. A shake?
I believe so.
long bond price jumped another 2.2%
TLT?
yes. almost close to historical high.
actually made a new high today.
the historical high was in 1998
Tony C’s and Craig’s chart, could be in violation here on the downside. If that breaks i’ll be selling my longs.
We could get a quick gunning down to 770 on the SPX (2002 lows) as the first test. This “will/might/could/should/better” spark a massive rally. Get your powder ready. Don’t cash out too quickly on this drop if it happens, as 770 is not that far away and it WILL bounce.
Beware, 770 is not gospel. It could be +/- a few points.
Second day I have life stuff that needs done and won’t be near the market. I caight up last night on yesterday’s market by reading thru your day’s posts. Give ‘em hell today and keep a running post thread so I can catch up this eve. I’m out of EEV. It was good to me but time to split up. Was a prosperous settlement.
nice trade Val
wow!
$FVX 19.31 down 7.4%
$TNX 31.62 down 6.7%
$TYX 37.52 down 5.5%
people are officially scared!
“Buy from the scared and sell to the greedy.”
Tom Veale (not me)
have been waiting for the moment.
But what if you’re scared AND greedy?
interesting shake before open…I’m cash, confused.
Nice moring news!
“The number of U.S. workers filing new claims for jobless benefits surged last week to their highest level in 16 years”
Todays $VIX
http://social.stocktock.com/profiles/blogs/thursday-vix
Daily VWAP is at 799. Looks like we may test it and push through it to bring in more buyers. Will it last?
What is the 2 day?
839
Next key level after VWAP, I’d be looking at is the 807 level i.e 23.6 Fib retrace from yesterday’s high to morning lows
Let’s get that 770 test out the way.
got that right. I’m dumping my shorts at 770. If we break through that, life is over anyway.
rofl.
Seems to be holding. Fast money to come in at 10 EST. We’ll see what they want then.
im long and I agree
the big question of course is do we get the bear rally of epic proportions I keep hearing about or just a small bounce before going back down further…
SPY failed at S1. XLF now at single digits. Lordie Lordie.
reaching 1st support level.
Nice capiltulation level of volume. Hope it keeps flowing so we don’t have to come back for a revisit anytime soon.
Here are the numbers to watch:
7400 DOW
770 SP500
1070 COMP
Volume is not indicative of capitulation yet. In just the past 5 days, we have had higher volume bars.
TLT is at resistance. I’ll be watching it closely. Deflation will continue to drive the price up. GLD is in a formation that is favorable. I believe you can enter the market short anytime you want and will be able to hold it thru mid December when the tbills purchased in Oct come out. Those will flow into the market and will provide much needed capital for the run into the innauguration. Hope is coming. But hope will fade quickly after that, probably the day after just like the election. The only longs will be GLD and TLT or other pure deflationary plays.
I think these videos are the best TA assessments I have heard in twenty years. Very nice job. (I used to work for THE TA guru in LA long time ago.)
I also think this is THE bear market – and that means it should drive even the most optimistic investor to distraction.
Buffet should be discouraged, Cramer suicidal, all the pundits on the financial shows should be sending out resumes for work in the teaching field. EVERYONE who can be discouraged should be discouraged.
Then, Maybe< we have a bottom
My grandfather went through the crash of 29, and would no more buy stock than leap off a bridge. This bias persisted through my father’s generation. THAT is the outcome of a real bear market, and that may well be where we are headed.
Daily VWAP: 795
consolidation for the final thrust??
OK – everyone calm down. I herd a new term this AM – Hyper Bear – I am one. We are gonna suck till the pre-inauguration rally. Get used to it. Trend will remain down. TARP is done till the O takes office. I really can’t find anything good till then and that is the only good news. If Craig’s pennant is breaking down just accept it.
Get your powder ready. Today is the test.
785…third time charm?
anyone know the 3x EFT short symbols?
BGZ, TZA, ERY, FAZ
BGZ, BGU are a couple
Thanks. Just dumped all my shorts and will wait for the bounce to short again. I can’t believe I am finally in cash.
It is a good feeling. Congrats.
Congratulations, I’m playing for 768.
All –
Any one who plans to buy LONG may want to enter before 770 as the volume will ramp and market orders sometime take a long time to fill and likely will fill at a price higher than they are right now.
closing on 2nd support
Dialy VWAP: 790
I’m digesting things. VIX should hit some strong resistance at 80 to 81 range. Above that you got 96.4 which is the highest ever. ES 1m channeling down. hopefully it stops at 775 and kicks out the channel (which will most likely be a bear flag leading to further downside).
Big volume spike. This may be “enough” of a test.
The sentiment indicators I am watching to close my short positions.
1. Vix 95+ today
2. Reversal in $TNX from -7% to -2%, today!
Whichever comes first.
I don’t want to let the charts cloud my judgment.
That may not happen. Looking to me right now that we have seen the test.
What a superb ride. I’ve closed all 100 contracts. Phew…I can breathe a sigh of relief. It was a long time coming and granted we haven’t tested the VWAP yet, with the Nov puts, I ain’t screwing around.
Congrats. Well played.
FWIW, from Rick Ackerman:
For Edition of November 20th, 2008
“Phenomenally accurate forecasts”
1800-Point Plunge
Coming for Dow?
If the Dow Industrials fail to hold above 7995, we’re projecting a whopping 1800 points more downside over the near term, to at least 6195. The target comes from a forecast that went out to subscribers on October 22, when the blue chip average was trading above 8500. At the time, we projected downside to at least 7995, a Hidden Pivot “midpoint” associated with the lower target at 6195. According to the Hidden Pivot Method, a decisive breach of the midpoint implies that the target itself will be reached, as it was yesterday. Moreover, if support comes precisely at the midpoint, its subsequent breach would imply that the lower target is likely to be reached with equal precision.
Under the circumstances, and using a very tight stop-loss, we would be aggressive buyers of shares if the Dow were to fall to 6195. That may seem like a promising opportunity for someone currently holding no position, but it would be scant consolation to those who plan on sticking with their existing portfolios come hell or high water. (Of course, the forecast could go awry, and the Dow could rally strongly without getting anywhere near the target. But even if that were to occur we would not necessarily be caught unawares, since subtle signs of a turn would be evident on the intraday charts before a significant rally could develop.)
789 is the daily VWAP. I’d wait for it to push through 796 to add. I’d add more after the 807 level. Just my way of playing it on the long side.
While vol is decent by no means what I’d expect at a bottom. Maybe everyone is sitting on the sidelines. 807 is my signal to add then.
Congrats Surgage. Being in Cash feels good and I’d rather try to suck a pickle up my nose than go long. I will try that first and if it works, then I will go long. Otherwise, I will short later…maybe tomorrow toward the end of opex.
Good visual there…
And I don’t see the volume I’d expect from a true rally yet.
Agreed..just posted the same before. Maybe its time to test out that 3x ETF! ha ha
TNA owes me some money. I’ve gotten burned my last 2 attempts. LOL
795 resistance on the ES.
Back below the daily VWAP. Time to short again?
There we go ….
Hmm.. Why is UA up?
inverse H+S ride from hell.
Okay we get a bounce off the VWAP, I’m taking a small stab
Surage;
Are you going Long?
SSO?
thanks
Yes SSO. I’d like to try out the 3x ETFs but OI looks lame.
Short?
I’d go long on this bounce, risk the minimal. Add more on 807. Tight stops.
Based on the bounce of the VWAP. A failure to hold and I’d exit. But I expect some consolidation here. It won’t be a sharp V rally just yet. Enough money sitting on the sidelines.
Hmm….QID…looks tasty soon
what’s good entry point on QID tom.
hk…I don’t know a good point…yet…I just know that NASDAQ will lead the way down the whole on the final leg down.
I don’t know if I am just wearing down or not, but I got a bad feeling about this. These usually come a day ahead of the fact as you know and they are fairly accurate. I’ve been harping on the fact that there have been numerous chart formations coming to an end over the past few days. Wedges and triangles mostly that are continuation patterns lower. Some have argued the triangle were reversal patterns – I was content to think they were continuation patterns. The wedges were what they were. These larger patterns were from daily charts that were well established. they have all ended and I am lacking direction till they reform and give me a clue. I am now left with just the SPY, ES and VIX. We may be ignoring the dow which might be a more important factor now than ever. I’m very unsure about the near future. I’ll do my best to help here. Something just does not feel right. Maybe we are going to get the reversal and this was a fakeout but maybe not. Just feel very uneasy.
I agree, I’m watching. I’ve tried twice to time the bottom and go long and gotten burned, I’m tired of it for now. The Dow has held up the best of all the indices during this recent decline. I don’t know what to make of that, but my gut tells me they need to come down to where the others are.
It’s easier for the MMs to hold the DOW up.
I ignore it.
Other countries watch the Dow more that the SP500. Keep that in mind.
Clearly the big shorts want more than 777. If they don’t get it, they will still cover today imo.
Open interest on those 3x ETF seem low. I checked BGU…which leads to lousy spreads between bid/ask. Am I missing something here?
INX it has to get back to channel or 743 is next
that means breaking 804-805
VIX setting up a possible bull flag.
No – it is about to cave! Get with the program !! lol
Inverse H&S forming. Forming rt shoulder. Neckline at 802. Head at 774. Target for the move if it plays out will be 830 or so.
on 5min and 1min es. Looks beautiful!!