Market Ends Week With Mixed Trade

Good day! The market lacked a strong trend bias on Friday. After several days of strong upside, the indices had hit decent resistance at afternoon highs on Thursday, particularly in the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI). As I stated over past several days, the Nasdaq Composite ($COMPX) has had more room to push higher and we saw that occur from the start of trading on Friday. It was the only one of the four major indices to break Thursday's highs. The Russell 2000 had a very gradual upside intraday on Friday, but it had fallen further on Thursday afternoon and was not able to push through those highs.

As I mentioned in Friday's column, I was looking for a larger correction off Thursday's highs heading into the weekend. Initially I was expecting this to come more in the form of price correction, but instead the indices fell into a congestive type of correction. Both the S&P 500 and Dow merely chopped sideways throughout the entire day. Meanwhile, the Nasdaq crept higher along the 15 minute 20 period simple moving average.

The indices turned over a final time into the last hour of the day, moving off the upper end of the day's channel and back into the lower end of it. The flush was the steepest action of the day, particularly the final move of the last 5 minutes into the close. This was perhaps a bit of a response created by profit-taking following the week's gains and concern from the mediocre performance throughout Friday's session which would have created some hesitation from bulls into the weekend.

Dow Jones Industrial Average ($DJI)


A number of individual stocks stood out on Friday, making the day easier for equity traders than those looking for anything more than a scalp in the indices. The energy sector led gainers, up 1.5% on average on the day. Information technology rose an average of 1%. Petrohawk Energy Corp. was up 13.22% on Friday, leading gainers on the NYSE. Patriot Coal Corp. (PCX) rose 8.85%. Arch Coal Inc. (ACI) was another that trended higher throughout the day, gaining 5.34%. Forest Oil Corp. (FST) had a strong intraday trend and rose 4.56%. Other top gainers were PVA (+18.91%), GSP (+15.48%), HXL (+12.26%), and CRK (+11.06%).

On the Nasdaq the major gainers for the day were Marvell Technology Group (MRVL) (+29.3%), Wind River Systems (WIND), Energy Conversion Devices (ENER), and Infosys Technologies (INFY) (+8.27%). MRVL's 6-month highs were thanks to a better-than-expected earnings report late Thursday brought about in large part by sales of Wi-Fi and 3G chips. WIND's upside was also due to strong earnings. ENER's upside was fueled by strength among solar companies, particularly those with exposure to the German market, which is the larger market for this type of power. INFY rose on heavy volume after it raised its price target by 27%.

S&P 500 ($SPX)


As is obvious by the overall market performance, however, not as many stocks were as lucky as those listed above. J Crew Group (JCG) was a notable loser, falling 20.55% on Friday after it cut its outlook for the remainder of the year. It gapped sharply lower, but then ended up stuck in a range for the rest of the day due to that extreme open. Those that established strong losses with the advantage to traders of also having strong intraday trends included Ashland Inc. (ASH) (-7.91%), Weyerhaeuser Co. (WY) (-7.58%), and New Oriental Ed & Tech Group (EDU) (-5.48%) on the NYSE. Medical Action Inds. Inc. (MDCI) led the losers on the Nasdaq after they announced Q4 and fiscal year-end earnings that were 12.5% lower than a year earlier. It fell 21.65% by the close. Sigma Designs (SIGM) was another huge loser, falling 15.56% after its fiscal first quarter profit fell 13% and failed to meet estimates. Both of these traded in a range throughout most of the session after the opening gaps.

Nasdaq Composite ($COMPX)


Volume was light on Friday amid the congestion. The Dow Jones Industrial Average fell 7.9 points on Friday to close at 12,638.32. This amounted to a gain of 1.2% on the week, but it was still a 1.4% loss on the month. The S&P 500 rose 2.12 points and closed at 1,400.38 for a weekly loss of 1.8%, but a monthly gain of 1.1%. The Nasdaq Composite gained 14.34 points and closed at 2,522.66 on Friday. This gave it a 3.2% increase on the week and 4.6% on the month.

The month was saved after falling off highs two weeks earlier due in part to the upside exhaustion of oil prices when crude hit the $135 a barrel zone. Over the past week it has been pulling back while the market rallied. Oil futures ended the session on Friday at $127.35 a barrel. This was 3.7% lower on the week, but still a 12% gain for the month.


On the data front on Friday, the Commerce Department announced personal incomes and consumer spending and consumer prices for April. All of these rose 0.2%. This suggests that the economy weakened further during the quarter despite the much-hyped tax rebates since real disposable income and consumer spending came in flat after inflation was factored in.

At 10:00 ET the University of Michigan/Reuters consumer sentiment index reading came out showing a drop to 28-year lows. The index fell from 62.6 in April to 59.8 in May, which is the lowest level since June 1980. The consumer expectation index dropped from 53.3 in April to 51.1 in May. This is the lowest it has been since October 1990.

The indices are continuing to favor greater corrective action off highs on the 60-minute time frame into early next week. The Russell 200 is attempting to form an Avalanche on that time frame with the 740 zone as support in the EMini futures. I do expect that on a daily time frame, however, that we can still see the market fall into a longer upside or range-bound correction off the support from last week. This can mean slower upside overall which still allows sharp downside into a lower channel support. If this plays out for a few more weeks then the daily and weekly charts will have strong continuation short patterns in play that can lead to another very steep decline into the end of June.

If the indices try to break lower right away early this next week with a lower low on the S&Ps or Dow then we will be dealing with higher chance the market to bounce again on a larger time frame with more of a 2B type of action (a form of double bottom with a slightly lower second low that creates a trap for the bears). This would be particularly true if it is a slower decline than the ones two weeks ago. Or it could kick off a smaller downtrend, such as the one from 10:30 am to 11:10 am Friday morning on a 5 minute time frame in the ES and YM where the market would be heading into the second wave down.

Toni's Daily Market Action Letter is brough to you by her complete guide to market analysis at Swingtrader.net (No, it's not just for swingtraders!!!)

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, June 2, 2008
10:00a.m. Apr Construction Spending: Previous: -1.1%.
10:00a.m. May ISM Manufacturing Business Index: Previous: 48.6.

Tuesday, June 3, 2008
7:45a.m. ICSC Chain Store Sales Index For May 31:
8:55a.m. Redbook Retail Sales Index For May 31:
10:00a.m. Apr Factory Orders: Previous: +1.4%.
5:00p.m. ABC/Wash Post Consumer Conf For Jun 1:

Wednesday, June 4, 2008
8:30a.m. 1Q Productivity, Revised: Previous: +2.2%.
8:30a.m. 1Q Unit Labor Costs, Revised: Previous: +2.2%.
10:00a.m. May ISM Non-Manufacturing Composite Index: Previous: 52.0.

Thursday, June 5, 2008
8:30a.m. Initial Jobless Claims For May 31 Week:
10:00a.m. DJ-BTMU Business Barometer For May 17:

Friday, June 6, 20088:30a.m. May Nonfarm Payrolls: Previous: -20K.
8:30a.m. May Unemployment Rate: Previous: 5.0%.
10:00a.m. Apr Wholesale Trade: Previous: -0.1%.
3:00p.m. Apr Consumer Credit: Previous: +$15.3B.


Key Earnings Announcements This Week:

Monday, June 2, 2008
Before: AGYS, IPI
After: ABM, CMOST, LULU, MIND, NCS, TMRK

Tuesday, June 3, 2008Before: GMTN (?), HGG (?), LAYN, NOOF (?), SGK (?), TOL
After: BOBE, CPRT (?), DMND, GES (?), HOV, TUTR, SAI

Wednesday, June 4, 2008
Before: AMWD, CONN, BRLC (?), VIP, VOL, WSM
After: ADCT, PSS, CMTL (?), DDMX (?), FCEL, GEF, MATK, QSII (?)

Thursday, June 5, 2008
Before: ALOG, BRLI (?), BTH, BF.B (?), CIEN, CRAI (?), DLM, FRPT (?), JTX, KFY (?), MDZ (?), MESA (?), PDC (?), RSTO (?), SFD, TSL (?), UTIW, MTN
After: CHP (?), CAE (?), COO (?), FMCN, HRLY (?), IUSA (?), NSM, NINE (?), OPTM (?), ZQK (?), SYMM (?), TTWO, TMA (?), PAY (?)

Friday, June 6, 2008
During: PNY

Note: All economic numbers and earnings reports are in line with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column and some companies have not confirmed their time, so always double check when taking positions overnight during earnings season! (?) = Not yet confirmed at the time the list was compiled.

Trade and Commentary Wrapup 20080530

Hi gang, Here is the initial wrapup from Friday. I will clean up the logs a bit this weekend and post some additional charts as well as soon as I get a chance, so please check by and refresh your page later this weekend to view...


09:35 Toni: wicked open in the NQ... was up nice premarket but crashed into the open.... still managed a gap but down a lot from premarket highs
09:35 Toni: has some support in here
09:38 Toni: as i mentioned in the mraket letter, i have a bearish bias into the morning today ... want to see a larger correction off yesterday's highs, even if its a range



09:39 Toni: great daily chart on NVDA for more upside.. will watch for a correction



09:47 Toni: futures are still dealing with that earlier support .. pretty choppy again so far
09:53 Toni: 5 min time frames are holding up well off the support in the indices
09:54 Toni: going to have to get a momentum shift in order to get much downside agan
09:55 Toni: 2 min resistance in here

09:56 snarfieag: TIF more upside today?
09:57 Toni: yes but best if it bases a little here first
09:58 snarfieag: thanks toni

09:58 Toni: YM back at morning lows

10:04 sedona: MRVL not moving up with mkt .... any chance?
10:05 Toni: that is such a huge gap already that i dont know that it has much more in it

10:10 Toni: extremely choppy market on the 400 tick charts among others
10:11 Toni: not pressing it for now
10:12 Toni: nas moving up dow moving down
10:12 Toni: nas upside is weakening a bit but may just base a little here and cont
10:25 Toni: nas base getting decent play on the cont
10:25 Toni: in the nas i've been watching the daily for potential 2T... much easier to accomplish than the dow or sp
10:26 Toni: was hoping for more weakness today but never got a base, just rounded lows
10:28 Toni: futs resistance here ... NQ coming into equal move on the 400 tick all sessions
10:29 sngdncman: so sell it, Toni?
10:29 sngdncman: been ok on my ES stuff
10:30 Toni: yes but keep stop tight
10:30 Toni: fib resistance is 2039.5
10:31 Toni: so if this doesnt hold we may see a little flush into that fib
10:31 Toni: then would try again
10:31 Toni: or can just keep stop over that levels
10:32 Toni: -s
10:34 Toni: NQ back at premarket highs
10:35 Toni: first support
10:54 Toni: song.. 5 min 20 sma 2032 is next NQ support



12:52 Toni-away: NQ is coming into that fib level i posted earlier
12:52 Toni-away: 2039.5



12:54 AoN: Toni, is INFY kinda momo reversal or any other bearish setup u can see?
12:55 Toni-away: yeah it had that on a 1 min and now trying avalanche
12:55 Toni-away: the best thing though would be if it flushes higher once more
12:55 AoN: ty
12:55 Toni-away: like the indices did yesterday
12:55 Toni-away: so it creates a trap
12:56 norancho: yeah, EDU stopped me out for a small profit, and now it goes :(
12:56 Toni-away: because you have this congestion here still along the highs
12:56 Toni-away: without as much pace change
12:56 Toni-away: if it goes and tries highs the odds are higher than just the avalanche
12:56 Toni-away: and then likely it holds those highs the rest of the day
12:57 Toni-away: really the NQ, ES 5 min yesterday are great examples of that
12:57 Toni-away: EDU hit the 100 day sma at lows today so i think that is why its having harder time breaking

12:58 Toni-away: nice find on GDP whoever posted that

12:58 Toni-away: market is really still holding that larger correction bias on the 30 min
12:58 Toni-away: its just doing it with more congestion
12:59 Toni-away: i had expected some more downside in price for correction too
12:59 Toni-away: can still get that this afternoon though

13:00 Toni-away: if you guys pull up a 400 tick chart of the NQ you can see a much slower ascent since 11:15ish than out of the open into 10:30ish
13:01 Toni-away: this can create a 2T on that time frame to help the market turn over
13:01 Toni-away: sinec the choppy creeping higher is trapping action
13:01 Toni-away: 13:01:40 2T: This is the reverse of a 2B and is a form of double top. For more information on this setup, please see http://www.tradingfrommainstreet.com/techanalysis.html#2

400 Tick Charts
13:06 AoN: why do we need the 400 ticks chart T? cant see that on the 5min?
13:06 Toni-away: i use them in the futures because it evens out the action showing premarket etc
13:07 Toni-away: cant make volume readings though
13:07 AoN: i c
13:07 Toni-away: also you can see swings in price better at times
13:07 Toni-away: so for instance
13:07 Toni-away: you can read the momentum in a congestion zone
13:07 Toni-away: that might just look like overlapping chop more on a time frame chart
13:08 Toni-away: so i use them most for timing
13:08 Toni-away: entries and exit
13:08 Toni-away: esp entries
13:08 AoN: on futs or also stocks?
13:08 Toni-away: actually... both
13:08 Toni-away: but i set it up for futures
13:09 Toni-away: i just have one tick chart on my scan page though
13:09 Toni-away: so i see it when scanning through stocks
13:09 Toni-away: it works well for very liquid stocks looking at really early breakouts
13:09 Toni-away: because you can see an "A" pattern on a tick chart that looks like chop on even just a 1 min
13:10 Toni-away: but if you love the daily then its good to take it
13:10 Toni-away: also you will see momo reversals on a tick chart that dont show up on the time frame charts
13:10 Toni-away: because for a momo reversal the ones i like most have equal distance between highs so on a time frame chart they may be spaced out a lot differently but show up very clearly on a tick chart
13:11 Toni-away: NQ coming off that resistance.. held within a tick
13:11 Toni-away: for entries i use a 50 tick
13:11 Toni-away: that is what is on my scan page too
13:11 Toni-away: for ES though i use a 100 tick for entries
13:13 AoN: so you flip between tick and candles or you have different charts set up?
13:13 Toni-away: i have different charts up

13:14 Toni: the NQ 2T is at the lower channel from this move higher since 11:15
13:14 Toni: needs to break this to confirm it so this is first support coming off the resistance
13:14 Toni: 2035.5
13:23 Toni: looking for a cont pattern for the move off the resistance to confirm with greater breakdown... action is going to continue to be choppier for now which means risk remains higher as well
13:24 Toni: lower channel line holding exactly
13:24 charlie: so u see more selling this afternoon?
13:25 Toni: was expecting it but just no confirmation action... hugging the channel would have been the best way to create a breakdown
13:26 Toni: instead its back up in the middle of the channel
13:26 charlie: ok
13:26 Toni: what this does is push the congestion out longer on a 5 min and 15 min
13:26 Toni: so kinda like we looked at this morning
13:26 Toni: where the channel was also creeping up and weakning
13:26 Toni: but i said if it based it would be able to cont more easily
13:27 Toni: that is what we still have the risk of
13:27 Toni: let me see the exact time so you can see
13:27 Toni: just a sec
13:28 Toni: it was 10:12
13:28 Toni: can see on a 1 min
13:28 Toni: so we have same risk on a 5 min now
13:28 Toni: 9:55 was the NQ first high this morning on the 1 min
13:28 Toni: then it tried a 2T at 10:06 coming off that
13:28 Toni: but
13:29 Toni: it also held the lower channel of the move into that second high
13:29 Toni: and then fell choppy sideways
13:29 Toni: which created a cont on the upside instead
13:29 Toni: let me throw up a chart fast
13:29 Toni: again.. this may not form, but its a risk now because of the bounce off the lower channel
13:33 Toni: http://www.tradingfrommainstreet.com/images/trades/comparison.gif



13:33 Toni: this is the comparison from the morning action that can be what plays out now
13:33 Toni: see the action into the first highs was similar
13:34 Toni: then move into second high
13:34 Toni: but in the 1 min it fell sideways
13:34 Toni: bounced up off the lower channel zone
13:34 Toni: this then allowed it to continue up
13:34 Toni: you guys can also see that fib level on the 400 tick
13:35 Toni: that was the resistance for the second high
13:35 Toni: created that scalp into the lower channel but that lower channel was also first support so... will have to see how this now plays out
13:35 Toni: base will more likely lead to upside
13:35 Toni: you guys see the similarity so far?
13:35 charlie: then by all means...let it base
13:36 Toni: it doesnt have to look pretty at all
13:36 Toni: just chop mostly sideways
13:36 charlie: yea im afraid that is what is going to happen
13:36 Toni: a tick chart might have shown the 1 min data better
13:41 Toni: http://www.tradingfrommainstreet.com/images/trades/comparison2.gif
13:41 Toni: that shows it on a 100 tick and 400 tick



15:17 Toni: keep an eye out again for an avalanche in the futures
15:17 Toni: 15:17:55 Avalanche: For more information on this setup, please see http://www.tradingfrommainstreet.com/techanalysis.html#4
15:18 Toni: tis is a strong change of pace here
15:18 Toni: not sure there is enough time in the day though is the conern
15:19 Toni: here is the lower channel support again in the indices
15:19 Toni: on the 15 min time frame

15:25 Toni: GDP another little base



15:29 IceGuest_75_: have NQ rallies the last 4 days seemed lacking conviction/momentum to anyone else?
15:32 Toni: yes Ice
15:33 Toni: we should keep chopping higher ont he daily
15:34 Toni: but can get a flush lower next week early in this 60 min trend

15:38 Toni: uptrend line broke on the NQ
15:39 nicksngdncman_: let it go then?
15:39 Toni: ?
15:39 Toni: what are you in?
15:39 nicksngdncman_: long june future NQ
15:40 nicksngdncman_: only one....learning to do it
15:40 Toni: oh.. well the 1 min has a momo buy so can bounce here but need a stop under the low it just made
15:40 Toni: and would get out on the bounce
15:40 nicksngdncman_: thanks
15:40 Toni: since it should hold the highs
15:40 Toni: the uptrend channel has broken
15:41 Toni: so we should see more corrective action off the highs at the very least with a range
15:41 nicksngdncman_: yes...I see it...decisively
15:41 Toni: if you look at a 1 min you can see three lows
15:41 Toni: each slightly under the last
15:41 Toni: this is a momo buy
15:41 Toni: but
15:41 nicksngdncman_: yes..I have it up
15:41 Toni: it goes against the larger trend now
15:41 Toni: because that trend has broken



15:42 nicksngdncman_: oh...I see...so down next week most likely to test...like...2022?
15:42 nicksngdncman_: or worse of course
15:42 Toni: yeah at least i would think
15:43 nicksngdncman_: really sideways now....
15:43 Toni: if you look at a 30 min chart
15:43 Toni: the rally off the afternoon of the 28th into todays highs
15:43 Toni: is also equal move
15:44 Toni: compared to off the lows ont he 23rd
15:44 nicksngdncman_: which indicates?
15:44 Toni: so also have that price level at these highs
15:44 Toni: its a very strong resistance
15:44 nicksngdncman_: yes...I see
15:44 Toni: its a form of price resistance
15:44 Toni: that is very accurate
15:44 nicksngdncman_: ok...
15:45 Toni: 2045 was the equal move according to the way i measure them
15:45 Toni: and it hit 2043.75
15:45 Toni: so on a 30 min time frame
15:45 Toni: that is very close
15:45 nicksngdncman_: think I will not weekend in it....
15:45 Toni: and right in the zone
15:46 nicksngdncman_: yes
15:48 Toni: for the momo reversal this is typical first target
15:49 nicksngdncman_: I moved out of it...
15:49 charlie: figures...now SPWR goes
15:49 Toni: the pattern is tiny in this case of course
15:54 Toni: here is next NQ resistance
15:55 Toni: on the momo
15:55 Toni: 5 min 20 sma
15:57 nicksngdncman_: thank you sweet Tofu lady....I made back what I lost...lol
15:57 Toni: :)

Market Continues Higher Off Daily Support

Good day! The market experienced a nice upside move on Thursday to continue the correction off the daily support that hit going into the end of last week and beginning of this. On Wednesday afternoon the indices began to move higher following a pullback throughout the morning. This move continued well into Thursday afternoon. The index futures had fallen a bit off premarket highs on the 8:30 ET jobs data. The Labor Department had reported that unemployment claims rose 4,000 to 372,000 last week, which was a bit more than expected. Lows held at 9:00 ET though and the market turned higher into the open.

The morning fell into congestion early on in the day. The most notable action early on was the 10:30 oil inventory data. Crude supplies fell by 8.8 million barrels to 311.6 million last week due to delays in off-loading crude oil tankers on the Gulf. The market flushed lower on the data, but then began a steady recovery while oil prices turned over and began a selloff that would last well into the afternoon and end with oil futures down more than $4/barrel to close at $126.62 a barrel.

Dow Jones Industrial Average ($DJI)


At about 10:45 ET the indices all broke to new intraday highs. From that point onward into the early afternoon the 5 minute 20 period simple moving average served as support and the indices stepped higher with the last strong upside move taking place at 12:30 ET. Most trends such as this will correct into the afternoon. Given the momentum on the upside, however, the odds were higher for a more gradual correction or roll-over at highs.

The 13:30 ET correction period held the 5 minute 20 sma for the last time. The market began to congest along that level throughout the next hour. The indices tried another move higher shortly after 14:00 ET, but due to the intraday extension I stayed on the sidelines. It created a trap and was followed by a choppy yet steady move lower into the closing bell. I had been looking for an Avalanche on the 5 minute time frame to help turn the momentum over by hugging the 5 minute 20 sma in the Nasdaq for instance before breaking, but the market had other plans and stepped lower on a 2 minute chart.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) closed higher by 52.19 points, or 0.4%, on Thursday at 12,646.22. It had been up well over 100 points earlier, but was the weakest of the indices in the afternoon. The S&P 500 ($SPX) rose 7.42 points on Thursday, or 0.5%, and closed at 1,398.26. Financials led on the upside with gains of 1.8%, while energy stocks fell 2.6%. The Nasdaq Composite ($COMPX) held up best with a gain of 21.62 points, or 0.9%. It closed at 2,508.32.

Nasdaq Composite ($COMPX)


My outlook for the week had not changed yet. I continue to expect more correction off the recent daily lows with greater daily overlap. We are likely to see the overlap come into play more on Friday since the 60 minute charts are favoring more of a pullback off Thursday's highs with support in the congestion zone from Wednesday for the Dow and the upper end of that day's range for the S&Ps and Nasdaq.

Trade and Commentary Wrapup 20080529

09:37 Toni: TRMP and DBRN on long watch list
09:42 sedona: DBRN good call ... just took a quick scalp on the pop
09:59 Toni: nice job sedona
10:27 Toni: DBRN on the move again
10:26 Toni: TRMP I think may have gapped too much into that congestion from May ecause its pretty stuck in here
12:10 Toni: TRMP off watch
12:11 Toni: DBRN nice "D" cont setup out of 11:30 under way

09:38 Toni: JAS also on long watch list

09:38 Toni: Breakout Template: For information on A, B, C, D, or Z template patterns, please see http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif
The green circle is the entry with the red bar as the stop.

10:03 Toni: LDG basing at highs with a good daily
10:04 Toni: i am a bit concerned about the extension on the 15 min already
10:04 Toni: since it has an equal move compared to the 27th
12:13 Toni: LDG at high.. also came out of a "D" setup from 11:30

10:11 Toni: NFLX is forming a daily short setup as a swingtrade

10:29 Toni: 10:29:35 Market Alert: NQ hitting the highs from the 21st and gap closure zone here(2016.5 NQ)(short)
10:30 AoN: oil data
10:30 snarfieag: wow oil price amazing pop
10:31 norancho: bad news on oil supplies
10:31 Toni: excellent resistance reaction coming out of the oil data
10:32 Toni: first support
10:47 Toni: first support held very well in the futures coming off that pre-oil data high (2005 NQ)



10:56 Toni: futures resistance (2017.25 NQ) (short)
10:57 Toni: 2T on NQ 50 tick
10:57 Toni: 5 min 20 sma is support
11:06 Toni: first support here on that pivot trade
11:07 Toni: 2012.34 was 5 min 20 sma NQ
11:07 Toni: 20.11.75 lows into it



11:47 Toni: FXI and GS bases at highs (Breakout buy setups)
11:47 Toni: 5 min
11:48 Toni: GS went fast (from 178.5 breakout)
11:48 Toni: at first resistance at 179 already
11:53 Toni: FXi 152 first resitance zone from the 151.65ish breakout
11:57 Toni: FXI and GS can use this push to take gains
11:58 Toni: 152.33 FXI high just made and 149.47 GS... both showring a bitr of extension here on the 5 min
12:00 Toni: FXI last 152.36
12:00 Toni: GS last 179.37
12:39 tanker: thx toni +1.2 on FXI :)



11:37 Toni: nas is a bit stronger with a triangle on the 2 min now with ER basing at highs but 15 min charts are pretty extended so i'm gonna sit this one out
11:50 Toni: the futs triangle breakout is pretty steady so far
11:50 Toni: initial resistance
11:51 Toni: ER same
11:51 Toni: made wrong choice to sit this set up out lol

12:13 AoN: Toni do u have an opinion on MAR?
12:14 Toni: i like it aon... i would like to see it flush upwards once more to help change the pace int he range
12:14 Toni: maybe into the 15 min 20 sma
12:14 Toni: that would be the best to avoid a false trigger

12:40 Toni: futs resistance zone... use caution on reversal plays at this time because of the moentum
12:42 Toni: 13:00 is major correction period
12:48 Toni: getting the corrective action off the resistance

12:43 snarfieag: toni, do you think this will be a trend-up day?
12:44 Toni: i think the trend is going to dimish a great deal with the afternoon
12:44 Toni: might be able to still hold up but nothing like this morning's move
12:44 snarfieag: ok thanks
12:44 Toni: will have to see how pace changes on the 5 min time frame to see if we get any larger pullbacks
12:44 snarfieag: is this end-of-month positive bias at work?
12:45 Toni: well i dont know that it has to
12:45 Toni: its a reaction to the daily support that hit going into the week
12:45 Toni: just the follow through on the correction off that support level
12:46 snarfieag: thanks toni

12:48 Toni: getting the corrective action off the resistance13:22 Toni: nice change of momentum off the highs
13:22 Toni> notice how at the intial resistance it couldnt get going.. had to retest highs
13:25 Toni: futs at 5 min 20 sma support

13:26 Toni: those in EQIX swing from yesterday can have partials in
13:27 Toni: highs of 97.47 today

13:52 Toni: FLS 15 min avalanche forming
13:52 Toni: 13:52:28 Avalanche: For more information on this setup, please see http://www.tradingfrommainstreet.com/techanalysis.html#4
13:52 Toni: the con is the daily highs since its against larger trend although that is temp. exhausted
14:56 Toni: FLS trying again
14:59 Toni: i am looking for 135 on FLS
15:20 AoN: out FLS +.70 ty T
15:26 Toni: am pushing for a little more on FLS then i'm caling it a day
15:30 Toni: got FLS push (135.26)

14:39 Toni: futures upside is starting to roll over so should continue to correct this afternoon but can just hold the range
14:41 Toni: this drop is the sharpest downside of the day other than the oil data in the indices

14:47 Toni 14:47:58 Market Alert: avalanche potential in the indices
14:48 Toni 14:48:00 Avalanche: For more information on this setup, please see http://www.tradingfrommainstreet.com/techanalysis.html#4
14:48 Toni 5 minute time frame
14:48 jonathanpoon: Toni, another reversal possible?
14:48 Toni: yes but i am focusing on scalp only for now
14:50 Toni: this is 1 min 200 sma in the indices
14:50 Toni: so for the avalanche we want to see it hug this level
14:50 Toni: as i said earlier.. there is higher risk today that we just chop back and forth this afternoon

14:54 Toni: SPWR i missed the best trigger, but breakdown ont he 15 min (76.91 current)
15:00 sngdncman: and on SPWR? what would you expect toni?
15:01 Toni: about 75.65
15:01 Toni: some initial 5 min support here (76.50)
15:01 sngdncman: thank you very much
15:05 Toni: SPWR if you took the cont i'd protect some.. 76.05/ 75.95
15:06 sngdncman: that was nice..thank you...took 76.00
15:25 Toni: SPWR hit target

15:03 sngdncman: Toni...whre is next support on ES?
15:03 sngdncman: 1398.75?
15:04 Toni: 1395ish
15:04 Toni: this is support here first though
15:04 Toni: so will see how it holds
15:11 sngdncman: thinking I might short another ES at 1401.50ish?
15:12 Toni: i think that may be a little too early on the ES.... the 5 min is support so decent chance of more reation off this zone
15:13 sngdncman: ok...thanks...waiting
15:13 Sam_: could this be Z pattern on ES?
15:13 Toni: my concern is the two wave pullback into the 15 in 20 sma zone
15:13 Toni: not sure what "z pattern" means
15:14 Toni: but if its 2-wave drop offo highs into support then yes
15:14 sngdncman: ok..yes...I see the idea now
15:14 sngdncman: basically can go either way?
15:15 Toni: well typically this will correct off the low more
15:15 Toni: if the correction is gradual then you get the cont selloff
15:15 sngdncman: also..thanks for FLS...it is working now
15:15 Toni: off the low - off the support
15:15 sngdncman: ok...there is goes
15:16 sngdncman: quick little something
15:16 Toni: yeah... was too early for normal cont. so trap risk is higher
15:16 sngdncman: 10/4
15:16 Toni: i hope the last 45 min isnt just that type of trend action we've seen a lot this week
15:16 Toni: where it just chops lower
15:17 Toni: on 1 min flag
15:17 Toni: like this
15:17 sngdncman: possible?
15:17 Toni: yeah

Indices Consolidate Off Daily Support

Good day! After hitting the daily support on Friday and into Tuesday on this shortened trading week the indices have been trying to find a decent directional bias. Yesterday I showed you a pattern which developed early on in the morning on the 27th (http://www.tradingfrommainstreet.com/Newsletters/focusletter/archives/20080528.html). The indices had experienced a similar pullback off highs on a 5 minute time frame as compared to the current daily time frame. The reaction off the support was a slower upside move with a lot of overlap from one day to the next. The action was comparable enough for me to surmise that we would see a similar reaction develop off the daily support. The wild card is the Nasdaq, which was somewhat stronger in recent trade and hence has a better chance to break the prior highs on the daily time frame to trap traders than the rest of the market.

So far the follow through has been exactly what was expected. Although the market did move higher on Wednesday, trade was choppy and the market overlapped the prices from Tuesday by quite a lot intraday. The session had begun with a slight upside gap into the open. I was expecting highs to hold within 15-30 minutes of the opening bell, but the market was not really able to get going at all out of the open. It did chop around for 15 minutes though before turning over to quickly close the minor price gap.

Dow Jones Industrial Average ($DJI)


The upside into the open began at 4:00 am ET, which is a typical premarket correction period. This is when the Tokyo exchange closes. At 8:30 am ET durable goods data spiked the index futures once again. The Commerce Department reported that orders for durable goods fell 0.5% last month. A larger factor behind the decline was a cut back in aircraft orders. Excluding transportation, however, orders climbed 2.5%. Overall the data was not as bad as had been anticipated in April since speculation regarding the impact of soaring oil prices on transportation was quite strong.

After such a large move on Tuesday afternoon without so much as a 5 minute bull flag, however, the indices were not able to easily hold onto the early morning gains. Resistance from last Wednesday and Thursday lows in the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) had also hit going into the opening bell. At the same time, last Thursday's opening prices in the Nasdaq Composite ($COMPX) were being tested. After the initial 15 minutes of the day yesterday the pressure gave way to selling.

S&P 500 ($SPX)


The market trended lower throughout the morning on Wednesday. The 5 minute 20 period simple moving average was only strong enough to stall the pullback by a couple of minutes before the indices pressed lower into the 15 minute 20 sma. This created a nice scalp setup coming off the support, but this was still not a very significant correction on a 15 minute time frame. To compare, the pullback on Tuesday morning lasted half the day. Since the continuation on the upside Tuesday afternoon was similar to the move off lows from Friday into Tuesday morning it made it probable that the correction off Wednesday's highs would last for at least the same amount of time.

The morning downside resumed out of the 11:00 ET correction period yesterday. This was almost identical to the action the day before. On Tuesday that continuation took the market into lows at noon. This meant that 12:00 ET would once again be the larger correction period to watch out for. The momentum action on the downside, as well as the bounce, was a bit different yesterday than the day before. This created a smaller bounce at 11:30 ET off the prior lows zone on the 5 minute time frame which created a triangle continuation short into noon. Although not exact, the zone of 12:00 ET again held very well and the market was able to once again turn around into the afternoon.

Nasdaq Composite ($COMPX)


The afternoon action on Wednesday did not have as much in common with the prior day other than that the bias was once again bullish and the action was again very choppy. I was not even convinced that we would see a strong move. After the market had bounced at noon it had based along the 5 minute 20 sma to create a nice Phoenix buy setup into 13:00 ET. The follow through on this move was slower than the initial bounce, so the result was a two-wave correction off lows from 12:10-13:30 ET. This meant a bearish bias into 13:30 ET.

The Dow and S&Ps fell sharply at 13:30 ET. They continued lower into 14:20 ET. By forming only a short base into 14:00 ET and a lesser continuation on the downside into 14:20 ET, however, this meant that another two-wave formation had taken place that reversed the prior one. The market popped sharply out of 14:30 ET, but still took a bit of time to gain strength. Finally they broke higher at 15:30 ET into the close.

Thanks to the late day enthusiasm the indices managed to post gains on the day. The Dow closed higher by 45.68 points, or 0.4%, at 12,594.03. Only 17 of its 30 components came out ahead though. AIG led the decliners with a 4.7% loss after announcing that they may need to raise even more capital to help bail it out of trouble. The S&P 500 rose 5.49 points, or 0.4% as well, to close at 1,390.84. It was led by materials and energy. Financials suffered the most. The Nasdaq Comp. climbed 5.46 points, or 0.2%, and closed at 2,486.7.

As the week progresses I am still looking back to Tuesday's morning action as guidance. This points to continued upside this week, but with greater overlap from day to day in price action. The opening price level from the 20th is going to be strong resistance in the S&Ps and Dow, but that is if they even manage to gain enough strength to get there. I am looking at more of the 12,850 zone for Dow resistance, while those 20th highs would place it in the 13,000 level. 2540-2560 will be Nasdaq Composite resistance on the daily time frame. The momentum over the next couple of days on the upside will help provide us with a better estimate of the highs. Stronger momentum will make it easier to push the upper envelope of resistance, whereas greater overlap and lighter volume and chop will make it more difficult.

Trade Wrapup and Commentary 20080528

09:39 Toni: i just missed that index support....
09:40 Toni: was premarket lows in the YM
09:40 Toni: ES and NQ were closed also but ES was slightly lower than last premarket low and NQ was slightly higher
09:40 Toni: I am expecting the morning upside to lead to a correction mid-day
09:42 Toni: on a 60 minute time frame i am looking for more correction off the lows but with overlap from that is day to day much greater than it was on the way down in the ES and YM at least
09:42 Toni: NQ can be a bit stronger

09:46 Toni: DAKT on my long watch list today
09:47 Mykonos: Boy DAKT was huge gapper, news?
09:47 Toni: earnings
09:47 tanker: beat by 8 cents
09:48 Mykonos: ty
09:52 Toni: DAKT also struggling
09:52 Toni: gonna take tha off watch for now also since the pace changed too much
09:52 Toni: larger market is just too weak

09:48 Toni: looks like that was it for the futures

09:55 Toni: LVS daily has lots of room for downside... would monitor it for cont short setups
09:56 Toni: it has swing potntieal because of the weekly as well
10:08 Toni: LVS doing the same choppy deop action as the rest of the market
10:08 Toni: does have some intraday spupport here also

09:56 Mykonos: RL nearly @ HOD
09:58 Toni: yeah its having a hard time.. it did give a tick charte "A" trigger over 68.77 but it was not much of a base at all on the 1 min
09:58 Toni: RL that is
09:58 Toni: index gaps filled in ES and NQ
10:03 Toni: RL scratching off this level
10:04 Toni: this morning downside is similiar to yesterday
10:04 Toni: on the upside
10:04 Toni: just choppy
10:04 Toni: its a steady trend
10:04 Toni: but tiny corrections on like a 50 tick chart only
10:04 Toni: and chopping lower
10:05 Toni: RL heres the bounce to scrach
10:06 Toni: well.. can get small gains
10:06 Toni: but just not likeing the sloweing roundedness of it
10:12 Toni: well shoot... out of RL a little too early



10:06 Toni: the futures have next support at 15 min 20 sma
10:06 Toni: also premrkat lows from around mid-night
10:07 Toni: can do a sharp pop but then cont easily
10:07 Toni: so not feeling to great on the long side other than scalp
10:14 Toni: getting that sharp pop in the NQ
10:19 Toni: heres the cont
10:20 Toni: the 15 min 20 sma is hitting on the ES
10:20 Toni: little more room into it on the NQ
10:21 Toni: also coming into that midnight lows zone
10:21 Toni: can really see that pop then cont i talked about on the 400 tick of the NQ
10:26 Mykonos: choppy out there fer me
10:26 Toni: yep
10:26 norancho: seems like most days are choppy
10:26 Toni: kind of market where you can be right and still get flushed out easy
10:30 norancho: some market support here
10:30 Toni: yes... this is the 15 min 20 sma and premarket lows
10:30 Toni: that we are seeing
10:35 Toni: i am expecting choppy upside overall off this support and for upside to take longer than the morning downside
10:35 hermosaj: this is such a drag
10:35 Toni: going to continue to be a more difficult market
10:36 Toni: i decided t just scalp this bounce
10:36 Toni: gonna take a break for a bit



13:51 Toni: 13:51:50 STOCK SWING TRADE: BUY SETUP EQIX watching for another entry op as a swingtrade buy setup

13:52 Toni: DLTR 5 min bull flag beginning to form
14:19 Toni: DLTR reistance
14:19 Toni: taking it off as just scalp into this 36 zone



13:52 Toni: futures are holding with the slower upside cont we were expecting on the daily by creating this range within fridays prices today

13:52 Toni: NQ come support in here (1988.5-.75)
13:57 Toni: first nq resistance (1992 - high 1992.5)
13:58 Toni: 1992 from 1988.75
14:00 Toni: nq was 50 tick momo reversal with the support.. can see the 1992-1992.5 was also the first traget from 13:38ish high
14:01 Toni: rest has to hold here or will scratch
14:04 Toni: come on nq..... i know you want to....
14:14 Toni: taking off rest ne on this move (1993.5)
14:23 Toni: nice timing lol
14:23 Toni: NQ turned pretty fast



14:39 Toni: market looks like it may just stay stuck in a range the rest of the day...
14:39 Toni: cont to be scalps only

14:40 Toni: geting out of stocks a little early today... RL and DLTR

Market Rallies to Kick Off Shortened Week of Trade

Good day! As I mentioned this weekend, coming into the new and shortened trading week I had been looking for the market to correct off support from Friday's lows or lows in the first half of yesterday. I am expecting that these lows will lead into a continuation pattern on the downside on a daily time frame over the next couple of weeks. So far the action this week is holding this bias.

The Nasdaq Composite ($COMPX) has continued to outperform the rest of the market, but this will not yet be enough to keep it from also turning lower relatively easily. While the Dow Jones Industrial Average ($DJI) will have resistance at the 20 day simple moving average and have a more difficult time breaking the prior daily highs, the Nasdaq still has enough added strength that we may still see another slightly higher high. As long as it does not break by more than a day, however, this would simply create a trap pattern I call a 2T (think: 2 tops). It's a form of double top where the second high is just slightly above the first.

Dow Jones Industrial Average ($DJI)


The difference in terms of relative strength between the indices was very pronounced on Tuesday. Although all the indices found support mid-day on Friday and began to turn higher, the Nasdaq had managed to close near the highs of the day. The S&P 500 ($SPX) and Dow Jones Ind. Ave. on the other hand closed near the day's lows. The Nasdaq futures then crept slightly higher on Monday and took off sharply to the upside out of Tuesday's opening bell. The index quickly overtook Friday's highs, but the S&Ps and Dow struggled with congestion in the middle of Friday's range and failed to break through highs.

The morning received a boost from data into the open and at 10:00 am ET. Ahead of the open the Case-Shiller home price index came out, showing a 14.4% drop over the past 12 months. This was the steepest drop in the 20-year history of the index, but the market rallied despite the news. Then, at 10:00 ET, the Commerce Department released more home sales data. New home sales rose for the first time in six months in April. Granted, this can easily be a bit of a "dead cat bounce". I must extend an apology to my kitties, but alas I did not give it that name! Further downside in housing is still to be expected, but after last week's downside exhaustion the market was looking for anything to grasp onto for its own bounce. Consumer confidence was not pleasant either, but apparently overlooked in the short run. The Conference Board announced that U.S. consumer confidence fell in May to a 16-year lows, while expectations of inflation grew. Yes, I said 16-year low. Yikes!

S&P 500 ($SPX)


Just prior to the 10:15 ET correction period the indices began to stall and show resistance. The mini-Dow futures were testing their 5 minute 200 period simple moving average and the Nasdaq created a trap over Thursday's highs. The momentum was so steep on the upside, however, that the indices did not turn over quickly and instead they crept lower into the 5 minute 20 period simple moving average. This action in the indices on the 5 minute is very similar to what has taken place coming off this last daily high in the indices, so we have a decent chance of seeing similar pattern development on the daily time frame as seen in the morning trade in the indices on Tuesday.

After hitting the 5 minute 20 sma support, the indices hugged that support to create 5 minute Avalanche patterns. Volume dropped somewhat to indicate that further downside was warranted. This took place out of the 11:00 ET correction period and the follow through was very strong. The Nasdaq fell into support at Friday's highs, while the S&Ps found support at Friday's lows. These support levels hit at the same time as the 12:00 ET correction period and this led to a strong reversal once again into the afternoon.

Nasdaq Composite ($COMPX)


The 5 minute 20 sma served as resistance initially at 12:30 ET. Congestion began along that resistance level, eventually breaking higher out of a Phoenix buy setup. The afternoon trade was significantly more choppy and erratic than the morning trade. This made timing continuation entries much more difficult since the indices made continuously slightly higher highs to creep to the upside until about 14:30 ET. At that point they rallied sharply before they continued to creep higher into the close.

The Dow Jones Industrial Average closed higher by 68.72 points, or 0.6%, on Tuesday at 12,548.35. Citigroup (C) climbed higher by 2.56%, while IBM (IBM) rose 2.51%. Du Pont (DD) was the top decliner by 1.3%, while Chevron (CVX) fell 1.14% along with the rest of the oil and oil services and related sectors. The S&P 500 rose 9.42 points, or 0.7%, and closed at 1,385.35. The Nasdaq Composite added 36.57 points, or 1.5%, to close at 2,481.24.

Trade and Commentary Wrapup - 20080527

09:33 Toni- NGAS and CEDC are on my upside watch list
09:38 Toni- NGAS nice breakout (from 9.21 break)
09:47 Toni- nice break on CEDC (from 71-71.15 zone)
09:56 Toni- CEDC at some initial resistance here at 72
10:00 Toni- CEDC next resistance zone here into 73
10:11 Toni- 73 hit CEDC



09:34 Toni- market doesnt feel that strong yet

09:35 Toni- futures 2 min support (2 wave pullback buy 1966.25 NQ)
09:38 Toni- futures good reaction off support
09:39 Toni- futures resistance
09:39 Toni- first level (1975 NQ)
09:46 Toni- second resistance zone hitting (1979 NQ)

10:07 Toni- futures resistance (1984 trading NQ coming off 1985.75 high)
10:22 Toni- futs coming into first little support on the reversal (1979.5 NQ)
10:40 Toni- second support level hitting coming off the reversal (1977)

Market Extends Losses on Third Wave of Selling into the Weekend

Good day! The market ended in the red once again on Friday after a very strong week of selling. I was not quite sure what we would see when I wrote yesterday's column. We had seen two waves of downside on the 60-minute time frame which left the market correcting off lows on Thursday. How Friday would play out depended a great deal upon how the session began. Had the open been even or higher than Thursday's close, then we could have seen more rounded lows or a longer correction off the support in terms of time and price before more selling emerged. Instead, however, the bearish bias resumed around 3:00 am ET in premarket trading and accelerated into the opening bell.

Early in the day the National Association of Realtors reported that the inventory of unsold single-family homes and condos rose sharply by 10.5% to 4.55 million in April. This is the largest inventory since tracking combining single-family homes and condos began in 1999 and would take over 11 months to cover at the current sales pace. For single-family homes the data goes back further, but we are still seeing the largest inventory to sales ratio since 1985. As a result, the concern that we have not yet seen the lows of this housing market correction is now being fully appreciated by even some of the most optimistic observers and market participants. Weekly bear flags triggered this last week in both Lowes (LOW) (-0.68%) and Home Depot (HD) (-0.52%), both of which have been heavily impacted over the past 15 months by the declining turn-over in housing which inevitably fuels home improvement projects.

Dow Jones Industrial Average ($DJI)


The Nasdaq Composite ($COMPX), led by technology, has been displaying the greatest relative strength when compared to the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) over the last several months since the market turned higher in March. It was able to recover the largest percentage of the losses that had accumulated since the market reversed off highs last year. This relative strength continued this past week as well. While the S&Ps and Dow gapped lower to immediately trigger a 60 minute bear flag, the Nasdaq held the trading range that had been forming into the close on Thursday when it opened the next day. It then held the lows of that range for the first hour of trade, whereas the S&Ps and Dow fell sharply lower only minutes out of the open.

The market found support at 10:00 ET when the Nasdaq hit the lower end of its 15 minute range. A bear flag formed at that point in the S&Ps and Dow on the 5 minute time frame while the Nasdaq also pulled higher at a more modest pace. When the Nasdaq closed its morning gap at the same time as it hit the 15 minute 20 sma, the indices gave way to another sharp move lower. This led to a breakdown trigger in the Nasdaq and continued the larger 60 minute bear flag in the other indices. When this took place I began to watch the move in comparison to the breakdown on Wednesday. Since the pace of the selling Friday morning was nearly as strong as the momentum seen in the selloff on the 21st it opened the door for the S&Ps to establish a move that was comparable in terms of price as well.

S&P 500 ($SPX)


The breakdowns in the Dow and Nasdaq were not quite as strong as the moves seen on Wednesday, so this made it a bit more difficult for them to create such a move. The Nasdaq, in fact, would first have to deal with equal move support as compared to the afternoon breakdown on Thursday. This support level hit at 11:30 ET when the S&Ps closed in on the zone of its 60 minute equal move. The S&Ps did fall a tiny bit short of an exact equal move, but the overall pace of the breakdown was slightly more gradual as well. The result was that it also held support when the other two indices began to bounce into noon.

A little two-wave move higher on the 5 minute time frame took the Nasdaq once again into its 15 minute 20 sma resistance. This triggered a scalp short in the indices due to the lighter volume on the upside and the slower overall momentum of that upside. I was not looking for much on this move, however, due to the larger time frames. Nevertheless, the indices still managed to retest the lows and even pushed the S&Ps closer into an exact equal move into 13:00 ET.

13:00 ET is a strong correction period intraday. Reversals from a morning trend often confirm at this time. The slightly lower low in the S&Ps, as well as the Dow, created a reversal pattern known as a 2B. It is a type of double bottom which involves a trap by breaking the prior lows by just enough to trigger many stop orders for those that bought the earlier lows. At the same time, it also traps those which take the break of the prior low as a new trigger to short.

Nasdaq Composite ($COMPX)


The momentum into the 13:00 ET correction period was rather strong. This made it difficult for the market to bounce quickly off the support. It took another flush lower into the 14:00 ET correction period to help the correction coming off lows. Since a three-day weekend was on the horizon I actually called it a day a few hours early in anticipation of a light and choppy afternoon. Due to the three wave downtrend on the 60 minute time frame and the support from that move hitting over noon, the holiday meant that the afternoon would most likely take the form of a range as well. The Nasdaq did have a bit of an uptrend, but it was still a very choppy and light one.


The Dow Jones Industrial Average closed lower by another 145.99 points, or 1.2% on Friday at 12,479. The loss for the week as a whole amounted to 3.9%. General Motors (GM) was the biggest loser on Friday. It fell 4.5% after announcing expectations of a $1.8 billion loss and cutbacks in production for the second quarter. Financials were also hit hard. Citibank (C) lost 2.76% and Bank of America (BAC) fell 2.3%. AIG lost 2.27%.

The S&P 500 fell 18.42 points on Friday, or 1.3%. It closed at 1,375 for a 3.5% loss on the week. Home builders were among its largest declining issues. KB Home (KBH) fell 4.6%, while D.R. Horton (DHI) shed 2.7%, and Pulte Homes (PHM) lost 2.2% on Friday. The airlines also faired quite poorly. The AMEX Airlines Index lost 4.25% on Friday.

The Nasdaq Composite took the lightest hit, losing 19.91 points, or 0.8%, on Friday and 3.3% on the week. It closed at 2,444. The Russell 2000 lost 1.22% on Friday.

The market will be due for a correction off daily and 60 minute support levels into early next week. The larger momentum shift on these time frames, however, leaves the larger bias on the bearish side. This means that corrections off support are going to have a slower overall pace on the upside. We can still see brief, yet rapid, upside moves on smaller time frames, but not on a 30-120 minute scale. I did a great deal of scanning this evening for larger time frame setups and there is a very strong bias in most of the stocks I flipped through for more downside on a weekly time frame.

A significant percentage of stocks have had two waves of upside off the support from several months ago and now have bear flags which have begun to trigger on the weekly charts. These two-wave breakdown setups can lead to longer ranges with the lower end of the channel serving as support and leading to a longer channel since corrective moves can often take one and a half to two times as long to form as the trend move going into those correction, but odds are high that they will at least test those channel lows and potential is strong to break them. There are also many that have had three waves within a longer congestion zone that also indicate a bear flag developing. Some stocks that fall into these patterns in recent weeks are M, XRX, BC, ATI, GNW, JCI, BAC, BBT, CTSH, VIA.B, TGT, BMS, AMP, KMB, SWK, BDK, DDR, MMM, FDO, CTSH, LINTA, and the list goes on...

This type of action that I am seeing over and over again leaves me looking for continuation patterns on the downside on a daily time frame over the next couple of weeks. Two weeks of choppy trade holding lows from Friday or early Monday with declining volume would be the best setup to see form on a daily time frame for that continuation breakdown.

Economic Reports and Earnings Events Next Week

Economic Reports and Events This Week

Monday, May 26, 2008
There are no economic indicators scheduled for today.

Tuesday, May 27, 2008
9:00a.m. 1Q Case-Shiller Home Price Index. Previous: -8.9%.
10:00a.m. Apr New Home Sales. Previous: -8.5%.
10:00a.m. May Conference Board Consumer Confidence. Previous: 62.3.
10:00a.m. May Richmond Fed Manufacturing Index. Previous: 0.
10:30a.m. May Dallas Fed Mfg Production Index. Previous: 12.5.
5:00p.m. ABC/Wash Post Consumer Conf For May 25.

Wednesday, May 28, 2008
7:45a.m. ICSC Chain Store Sales Index For May 24.
8:30a.m.Apr Durable Goods Orders. Previous: -0.3%.
8:55a.m. Redbook Retail Sales Index For May 24.

Thursday, May 29, 2008
8:30a.m. Initial Jobless Claims.
8:30a.m. 1Q Prelim GDP. Previous: +0.6%.
8:30a.m. 1Q Prelim Corporate Profits. Previous: +1.1%.
10:00a.m. Apr Help-Wanted Index. Previous: 19.
10:00a.m. DJ-BTMU Business Barometer For May 10.

Friday, May 30, 2008
8:30a.m. Apr Personal Income. Previous: +0.3%.
8:30a.m. Apr Personal Spending. Previous: +0.4%.
9:45a.m. May Chicago PMI. Previous: 48.3.
10:00a.m. End-May Reuters/U Mich Sentiment Index.


Key Earnings Announcements This Week:
Monday, May 26, 2008
NONE

Tuesday, May 27, 2008
Before: GMTN (?), GASS, VOD
After: BGP, DCI, JMBA, SNDA, SHRP (?), LNUX

Wednesday, May 28, 2008
Before: AEO, CBRL, CHS, DAKT, RL, ROLL, SHMR, BRLC (?)
After: AFCE, APSG, CWTR, DBRN, DCP, JAS, MW, TIVO

Thursday, May 29, 2008
Before: AGYS, ANST, BIG, COST, FRPT (?), FRED, GCO, HNZ, JOYG, MESA (?), MNRO, MOV, NM, NZ, PDC (?), RSTO (?), SGK (?), SHLD, SCVL, SCMR, TSL (?), WSM
After: JRJC, DLIA, DELL, ESL, HEI, IUSA (?), JCG, MRVL, NINE (?), NOVL, OVTI, NX (?), SEAC, PAY (?), WTSLA, WIND

Friday, May 30, 2008
Before: KIRK, SIFY, TIF
After: CAO, LGF

Note: All economic numbers and earnings reports are in line with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column and some companies have not confirmed their time, so always double check when taking positions overnight during earnings season! (?) = Not yet confirmed at the time the list was compiled.

Trade and Commentary Wrapup 20080523

09:32 Toni: expect a slower day today... most of the action will be in the morning. We are heading into a three-day weekend so volume will drop off sharply into the afternoon

09:35 Toni: hmm.. my scans arent working
09:36 tanker: gainers: AAPL ISRG VRGY HIBB SINO CA NDAQ BABY MT BUD
09:36 Toni: my gainer scans are showing yesterday's gainers lol
09:37 Toni: true but not so pretty today :)
09:37 tanker: losers:CHL DSX POT NUE FRO PPO MTL DRYS FSLR HURC TBSI CAKE EGLE AMLN ALKS
09:38 Toni: ty tanker

09:40 Toni: CAKE is a rather significant daily channel break

09:44 Toni: yeah just looking at that (CA)
09:45 Toni: i also like the daily on BUD a lot
09:45 Toni: problem with CA and BUD is they need corrections to get into easily
09:45 Toni: since already in a fast trend up intraday

09:49 Toni: futures weak again today
09:49 Toni: nasdaq again is holding up the best
09:51 Toni: volume not too bad yet
09:52 Toni: this has kicked off a third wave of downside in the ES this morning
09:52 Toni: on a 30 min time fram
09:53 Toni: 1378 is next ES support after this one currently hitting
09:54 Toni: well i was not initially (expecting an equal move on the breakdown) because most corrective moves are two waves so i was thinking we could more easily fall into a corrective base or congestion but given the momentum on the break it is more possible now

10:02 Toni: futs support holding on the 5 min... falling into congestion

10:08 Toni: futures are holding up pretty well
10:08 Toni: some 2 min resistance here
10:13 Toni: nice little reaction on the 2 min resistance but i am worried that the market is going to be choppy all day

10:15 Toni: AAPL is basing at highs
10:24 Toni: AAPL coming into first little bit of resistance with the 182 whole number

10:19 Toni: GOOG is forming 5 min avalanche
10:20 Toni: little concerned on GOOG eacuse the larger market looks bullish
10:20 Toni: intraday
10:20 Toni: at least the nasdaq
10:21 Toni: GOOG trying
10:23 Toni: although the nasdaq is holding up the S&Ps and Dow are forming 5 min bear flags so this is a bit tricky
10:37 Toni: GOOG coming into first support zone
10:38 Toni: goog 548.5
10:47 Toni: GOOG good place for gains
10:47 Toni: lows in the 547 level

10:25 Toni: NQ gap filled
10:29 Toni: NQ gap resistance holding and flags under way
10:33 Toni: futs first support on the flag

10:35 Toni: BBOX base at lows

10:35 Toni: futs still weak
10:36 Toni: the ES will have support 1378
10:36 Toni: after that 1372 is the equal move zone

10:37 Toni: NQ at premarket lows zone
10:37 Toni: 1378 hitting ES
10:38 Toni: ES support holding on the 2min
10:39 Toni: this support doesnt come with a correction period ... 10:45 is next correction period
10:39 Toni: so might get some rounding off

10:41 Toni: no idea (regarding question on sell programs)... was a technical setup for it so doesnt need to have been anything else
10:42 Toni: if you look at a 1 min YM you can see the "D" pattern .. was "A" pattern on the 100 tick ES...both were the flags i mentioned earlier
10:42 Toni: 10:42:07 Breakout Template: For information on A, B, C, D, or Z template patterns, please see http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif The green circle is the entry with the red bar as the stop.
10:44 Toni: nice hold so far on this initial support
10:46 Toni: after 11:15 i think we are going to see the market become pretty dull
11:12 Toni: 1372ish is the ES equal move as i mentioned earlier
11:12 Toni: on the 30 min
11:14 Toni: showing a little support a bit early
11:32 Toni: ES heading into that larger support

12:04 Toni: futs 2 min resistance
12:17 Toni: i am about to take off for the day... this futs off the resistance is scalp only because as i said earlier the afternoon is going to be lighter... more likely for range and chop so want to be careful
12:28 Toni: for scalpers in the indices... would use this drop on the 50 tick to take gains
12:28 Toni: and thats it for me today

12:18 Toni: i'll be around all next week except tuesday afternoon

12:28 Toni: will see u guys on tuesday!
12:29 norancho: have a good weekend

Stocks Pause Heading into Holiday Trading

Good day! After another strong day of selling on Wednesday, the market paused to catch its breath. The indices were left extended on the downside into Thursday morning after hitting the equal move support zone with Wednesday's descent as compared to that which took place earlier in the week on the 30 minute time frame. Since the market had begun to round off at lows into the close it left open the possibility that the indices may try one more push to lows before correcting longer off support. Some early morning jobs data, however, helped hold up the market early on.

Ahead of the open on Thursday the Labor Department released its latest data on first-time claims for state unemployment benefits. These had fallen last week by 9,000 to 365,000 on a seasonally adjusted basis. This was the lowest they had been since the first week of April. The dollar moved higher following the news, while oil backed off its record highs in the $135/barrel zone.

Dow Jones Industrial Average ($DJI)


After opening slightly higher, the market began to pull back and closed the gap within the first 15-20 minutes of the day. This took the indices into the first correction period of the day and the gap zone held as support. The market was able to pull higher in short bursts over the next 45 minutes before hitting larger time frame resistance at the 15 minute 20 period simple moving average. This resistance had me again favoring another reversal into noon, but the move had a difficult time with follow through. This was most likely due to that larger 30 minute equal move that had already hit and was serving as support.

The market hit initial support on the pull lower at the 5 minute 20 sma. At this point the indices began to hug that support level while volume dropped off. The formation was a 5 minute Avalanche pattern which triggered coming out of the 11:15 ET correction period. This followed through nicely into 11:45 ET. Equal move support on a 5 minute time frame hit in the Nasdaq Composite at that time. The S&Ps 500 ($SPX) and Dow Jones Industrial Average ($DJI) fell a bit further than an equal move with both hitting morning lows before they stalled.

S&P 500 ($SPX)


Over noon the market again turned higher. The overall momentum was slightly less than the downside, but it was still strong. The indices made their way higher into mid-afternoon. The congestion from the previous Avalanche served as initial resistance, but a pullback into the 5 minute 20 sma on light volume was able to take the indices back into the zone of the morning highs. This was a slightly higher high on the 5 minute Nasdaq, creating a 2T reversal pattern by causing a trap just over the previous high.

The market turned sharply lower into the 14:00 ET correction period. Compared to the congestion Tuesday afternoon and into Wednesday, however, the congestion throughout Thursday's trade was not quite long enough to allow the market to trigger a third wave of selling. The market bounced back off the lower end of the day's trading channel and continued to bounced around into the close.

Nasdaq Composite ($COMPX)


The Dow closed higher by 24.43 points, or 0.2%, at 12,625. 19 of its 30 components posted gains. The S&P 500 rose 3.64 points, or 0.3%, and closed at 1,394. The Nasdaq Composite gained 16.31 points, or 0.7%, and closed at 2,464. Consumer staples, health care, technology and health care led the gainers, while energy, materials and industrials were largely negative.

Trend moves are notorious for forming in waves of two or three. We already have two strong downside moves on a 30 minute time frame. Corrective moves are more often two waves, while primary trend moves tend to come in threes. Since the trend up until now has been on the upside, we may not see a substantial third wave until after the market corrects off support and rolls over. This can happen with an Avalanche pattern on the daily time frame, a 2T on the daily or even a descending triangle.

Which setup will be favored will depend upon how the market reacts to the daily support. If the indices round off at lows with a lower low then a 2T or triangle is more likely, where if the lows on Thursday hold we can more easily see an Avalanche form. Should the trend continued with a strong third wave of selling then the 20 day sma is going to be a major resistance level. In any case, I am again favoring a larger weekly pullback off the recent highs over the next several weeks.

Trades and Commentary Wrapup 20080522

Hey gang... I was out of the office Tuesday-Wednesday and not going to be trading a ton the rest of this week due to taking care of a sick little boy and taking care of some other things ahead of this upcoming extended weekend, but the room is still quite active for those of you wishing to drop by. You can find a login link at http://www.tradingfrommainstreet.com

All my best,
Toni

09:37 Toni - 09:37:15 STOCK SWING TRADE: SHORT SETUP ISRG daily Avalanche short setup
09:37 Toni - 09:37:21 Avalanche: For more information on this setup, please see http://www.tradingfrommainstreet.com/techanalysis.html#4
09:38 Toni - index futures hit equal move support yesterday afternoon compared to the drop monday into tuesday so we are seeing the reaction to that support level

09:45 Toni - futures still weak... looking like we may get some lower lows in the indices at this rate... would lead to rounded lows on the


10:05 Toni - futures here hitting premarket highs
10:06 Toni - good price resistance
10:15 Toni - futs losing upside momentum

10:16 Toni - MEOH that weekly looks interesting as potential for a position trade buy

10:38 Toni - FSLR is basing at lows... a con is the 50 day sma and the larger extension on the downside ont he 30 min
10:38 Toni - not really finding a whole lot today so far :/
10:59 Toni - FSLR giving into the cons on that base formation so taking it off my watch list

10:42 norancho - may see some market p/b here
10:43 Toni - yeah indices hitting 15 min 20 sma levels

11:18 Toni - DRYS base at lows (trading 96.20)
11:19 Toni - this also has similar cons as FSLr did so would look at it in scalp perspective
11:30 Toni - DRYS showing support... this is the 20 day sma (94.50)
11:30 Toni - nice little scalp

11:23 Toni - futures are really sloppy today
11:23 Toni - thought we would get more reaction off that 15 min 20 sma
11:23 Toni - bias on the 100 tick is still more bearish for momentum but its really playing out rather long
11:33 Toni - futs still trying to pull off that 15 min 20 sma
11:45 Toni - futs FINALLY living up to the bearish bias

11:28 Toni - expect trade tomorrow to be pretty light
11:29 hermosaj - i won't be trading tomorrow already feels light
11:29 snarfieag - is monday holiday?
11:30 Toni - yeah i will not be either ... got a lot of things i need to work on and tomorrow will probably be a good day to do so
11:30 Toni - yes re monday

13:54 Toni - keep things scalpish today gang...
13:55 Toni - the 30 min charts are actually still bearish
13:55 Toni - we have two waves up on it now
13:55 Toni - so this does have the potential for breaking lower again into the close

Oil Soars While Market Correction Continues

Good day! The market continued to face pressure on Wednesday after reversing sharply off Monday's highs. In Tuesday's session the indices had retraced into some larger 60 minute support levels which held prices up somewhat into the close and left a mildly bullish sentiment into Wednesday morning. This sentiment played out very quickly within the first 15 minutes of the session. The Nasdaq Composite ($COMPX) led the opening rally, boosted by news from Intuit (INTU) which beat fiscal third-quarter earnings forecasts. The Nasdaq came close to reclaiming 50% of the losses from the descent on the 15 minute time frame off Monday's highs and into Tuesday's lows.

The Dow Jones Industrial Average ($DJI) did not experience the same level of excitement out of the open and the S&P 500 ($SPX) was also quite sedate. When the 9:45 ET correction period hit all three of the indices turned once again. The 5 minute 20 period simple moving average served as initial support for the S&Ps and Nasdaq, while the Dow found initial support at prior 5 minute lows from Tuesday afternoon. These levels hit shortly after 10:00 ET. A level of congestion along the support zone followed with declining volume. This created a continuation pattern in the form of an Avalanche which triggered early at 10:30 ET.

10:30 ET data regarding crude oil inventories were the primary instigator of the early continuation trigger for the indices on the downside. Crude supplies fell by 5.4 million barrels to 320.4 million last week. Supplies had been climbing for four consecutive weeks and had been expected to continue to do so this past week as well, but suffered due to a substantial decline in imports. Early in the session crude surged to a record high of $132.08 a barrel, eventually breaking though $133/barrel. They had closed on Tuesday at $129.07 a barrel for the June contract. Texas oil and gas executive T. Boone Pickens made headlines predicting that crude oil will hit $150 a barrel.

Dow Jones Industrial Average ($DJI)


After breaking lower with the data, the indices stalled for nearly 15 minutes before continuing lower out of the 10:45 ET correction period to complete the Avalanche breakdown. The second wave of selling took the indices into the 11:00 ET correction period. At that point they had established a little over an equal move as compared to the initial drop and were once again at support levels on a 60 minute time frame. The S&P futures were in the lows zone from the 15th and the Dow futures were coming into support from the lows of the 9th of May. These corresponded to the 5 minute equal move support and 11:00 ET correction period and allowed the market to begin to correct once again off the lows going into noon.

As in Tuesday's trade, momentum shifted on the 5 minute time frames when the indices came into resistance at the 5 minute 20 period simple moving average. The resistance stalled the upside move, but the reaction off the resistance was very mild. Instead the indices slid lower and hugged the 5 minute 20 sma as volume again declined to create another continuation pattern. This time is was a pattern opposite of the Avalanche which I call a Phoenix. Another false start took place around 11:45 ET, but the indices were able to still hold on and broke higher once again between 12:15 and 12:40 ET. The Nasdaq continued to hold onto its lead with strong upside follow through, but the Dow remained trapped under the 15 minute 20 sma and was unable to offer as strong of a move.

S&P 500 ($SPX)


From a daily standpoint, as I mentioned yesterday, the larger bias in the market was in favor of more downside this week. The inability of the Dow to push through resistance easily and the larger downside bias made it very easy for the bears to regain control in the afternoon. This began with the 13:00 ET correction period. The market quickly broke through support from the smaller uptrend channel mid-day. This initial move was modest, but a small Avalanche formation into the 5 minute 20 sma resistance led to a much stronger breakdown.

Nasdaq Composite ($COMPX)


The indices fell sharply into 14:00 ET. They hit support initially around 14:15 ET at some fibonacci support from an extension off the last 15 minute downtrend earlier this week, but the pace was so strong into those levels that the market continued to push lower, albeit at a slower pace. Some rounding off at lows took place into 15:00 ET, taking the market back into the 5 minute 20 sma resistance, but it once again held very well and the market sold off into the final 30 minutes of trade. This late day action left the market at equal move support as compared to the breakdown on Monday and into Tuesday. I think we may see a bit more (downside) into the morning, but the market is due for another correction up off lows on a 30 minute time frame. So, I will be watching out for that correction up off lows at least going into the second half of trade on Thursday.

Wednesday's trade ended with a loss of 227.49 points, or 1.8%, for a close at 12,743 in the Dow Jones Industrial Average. The S&P 500 lost 22.69 points, or 1.6%, and closed at 1,410. The Nasdaq Composite closed at 2,487, down 43.99 points, or 1.8%.

Market Continues to Bleed into Tuesday

Good day! After falling apart on Monday afternoon in that strong reversal we had stalked, the indices were left dazed into Tuesday morning. As I mentioned yesterday, the odds were much higher for a more sustained follow through on the downside this time around in the indices due to the larger time frame resistance which hit mid-day on Tuesday. This included the upper daily channel resistance in the S&P 500 ($SPX) and prior daily highs on the Dow Jones Industrial Average ($DJI), as well as the weekly resistance we have been stalking.

On Monday the market had broken lower into the afternoon and then formed a continuation pattern on the 5 and 15 minute time frames into the final 30 minutes of trade. Tuesday's session began with the advanced follow through of this late day breakdown. A pop into the close on Monday helped shift the momentum somewhat heading into Tuesday, so even though the price bias remained focused on the downside, the momentum or pace bias was no longer as strong as in the prior afternoon. The market slid lower throughout the first half of the day, but each low barely broke the prior one before pulling back up to create a very gradual downtrend into noon.

Dow Jones Industrial Average ($DJI)


The market placement on the daily time frame and the upside exhaustion on that level kept the bulls from being able to gain any type of foothold over noon despite the slowing pace of the selling and the larger 15 minute time frame support levels which began to hit. The zone from Thursday's lows in the Nasdaq and the closure of the gap from the 14th in the Dow were primary support levels on intraday time frames. They corresponded to the 12:00 ET correction period.

By the time the 12:00 ET correction period hit, momentum had shifted on a 1 minute time frame to favor a longer correction off lows into the early afternoon. At this time the Nasdaq was forming a 5 minute Phoenix pattern under the 5 minute 20 period simple moving average on light volume. It triggered with the 12:00 ET correction period, but the larger time frames continued to apply pressure and the Nasdaq hit and held resistance from Monday's afternoon lows around 12:30 ET, while the S&Ps and Dow held resistance from earlier congestion intraday that had formed into 11:30 ET.

S&P 500 ($SPX)


A two-wave continuation short pattern developed in the early afternoon in the market on a 5 and 15 minute time frame. The bounce off 12:00 ET lows was the first wave. A second came at 13:00 ET. It had similar momentum as the first, but was more stunted and held the highs of the first wave. A break in the lower channel came between 13:15 and 13:45 ET. Once again the pace was nothing compared to the prior session's decline, but it was quite decent compared to normal market moves intraday. It took the Dow futures lower into the support from the lows of the 13th, which hit at about 14:14 ET, while the S&Ps and Nasdaq used support in the zone of Thursday's lows.

With just over an hour and a half of trade remaining in the day, the market was continuing to show a more difficult time making new lows on a 15 minute time frame and the action on those charts became rounded in appearance, suggesting that the remainder of the day would see a similar rollover off the larger support, while still holding back from any full throttle rally.

Nasdaq Composite ($COMPX)


At 15:00 ET the indices formed a nice little scalp pattern as a buy when the indices hugged the 5 minute 20 sma perfectly with slightly declining volume. This create a nearly textbook example of a Phoenix buy pattern on that time frame and easily brought the indices back into the range from the previous two-wave breakdown setup. Many corrections in a larger trend, even a gradual one like Tuesday's, come in two waves, so the bounce at 14:15 ET and Phoenix created another form of two-wave correction that favored a final turn lower. The 15:30 ET correction period helped accelerate this downside, but prior lows on the 5 minute time frame held and the market bounced back a little into the bell.



The Dow Jones Industrial Average ($DJI) lost 199.48 points on Tuesday, or 1.6%, to close at 12,819. The selloff was led by Home Depot (HD) (-5.2%), JP Morgan (JPM) (-5%), General Motors (GM) (-4.8%), and Citigroup (C) (-3.8%). Crude oil crept up to just under $130/barrel on Tuesday and the only oil and energy stocks benefited from this continued rally. The Nasdaq Composite ($COMPX) fell 23.83 points, or 0.9%, and closed at 2,492. The S&P 500 dropped 12.23 points, or 0.9%, and closed at 1,413. As the week progresses I am expecting the market to continue to correct off this week's highs. There is room for upside into the morning due to the support which hit at Tuesday's lows, but my upside focus will be short term intraday.

Early Gains Quickly Erased

Good day! The market has been experiencing a series of steady uptrend moves on a 15 minute time frame followed by substantial pullbacks which erode a large portion of those gains more rapidly than they were obtained. After Friday closed with a bias for another wave of upside on the 15 minute time frame into Monday, I was convinced we would see yet another example of such action to begin the new week as well. This time around, however, the indices were becoming a great deal more extended due to a 60 minute trend which had been in play since the 9th. This had me watching for an even larger pullback off highs than those of recent days.

Dow Jones Industrial Average ($DJI)


The morning began on Monday with a relatively even open after an inactive shortened session Sunday in the futures and slow premarket activity. This left them at the price resistance from the equal move on the 15 minute time frame that hit in the final hour of trade on Friday. The indices were able to continue this correction into the first reversal period at 9:45 ET, allowing them to form a decent bull flag that followed through quite well. The Nasdaq Composite ($COMPX) had been leading the upside over the last couple of weeks, but while it also experienced the sharpest pop out of the flag on Monday morning, the rally in that index lasted only 30 minutes and faltered from that point onward throughout the session.

Yahoo (YHOO) had received a little bit of a boost into the open that gave tech shares a bit of a push to begin the day. Microsoft (MSFT) had announced that it was again in talks with the company for a deal that would not involve an acquisition as previously designed. This could be particularly accountable for the early morning strength in the Nasdaq, but Amazon (AMZN) was a more significant player, rallying 7.6% on Monday following an upgrade by Goldman Sachs. Unlike many of the top names in recent weeks, AMZN was able to withstand the late day selloff pressure that tormented the broader market.

S&P 500 ($SPX)


The Nasdaq stalled its break to new highs on the month with the onset of the 10:15 ET correction period. The S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) kept crawling higher. While they made new intraday highs, the Nasdaq had begun to form a bull flag on the 5 minute time frame with the 5 minute 20 sma serving as support. The S&Ps and Dow stalled fell into ranges along highs at approximately 10:35 ET. All three of the indices broke higher coming out of the 11:15 ET correction period, but the Nasdaq had experienced a greater price correction and ran into some trouble at the morning highs.

The Dow took the lead throughout the remainder of the morning and into the early afternoon. Among the Dow's leaders on Monday were Alcoa (AA) (+3.3%), Boeing Co. (BA) (+2.2%), and Chevron Corp. (CVX) (+1.8%). Lowe's (LOW) (-2.6%) and Microsoft (MSFT) (-1.8%) were two of the weakest components. Overall market strength was found in utilities, telecoms, energy, and industrials. Crude-oil prices hit highs of $127.77 a barrel and were followed by a record close of $127.31 a barrel.

Nasdaq Composite ($COMPX)


Meanwhile, as the Dow and S&Ps advanced, the Nasdaq barely managed a slightly higher high. This exhibition of upside pressure would eventually help signal an imminent reversal. Over noon the indices again experienced a price and time correction. The Dow broke with a small bull flag/base at highs coming out of noon, but while the S&Ps had formed only a slightly weaker bull flag, the S&Ps merely crept higher into 12:30 ET, remaining equidistance from the 5 minute 20 period simple moving average as it ascended. This accentuated the Nasdaq's weakened status and began to create favorable conditions for an S&P reversal as well. All that was left was for the Dow to decide to play along.

A final pullback into 13:00 left all three indices hugging the 5 minute 20 sma support fairly well. The Dow by this time was hitting prior daily highs for strong price resistance and the S&Ps were testing the upper trend channel line from the channel which has been in place for the past several months. Both of these larger time frame resistance levels, combined with the weakened momentum and larger trend exhaustion formed the perfect habitat for a strong afternoon reversal to emerge. This breakdown began coming off highs at 13:30 ET and accelerated past the 14:00 ET correction period, stalling for only a minute or so at each of the nearby support levels before finding initial support on a 5 minute and 15 minute time frame at Friday afternoon lows in the Nasdaq, opening highs in the S&Ps, and 10:35 am ET highs in the Dow.



Although a number of the recent breakdowns such as this have rolled over and back into recovery mode following the initial 15 minute move, two-wave corrections in general are much more common and the larger resistance left me favoring a close at or near the session's lows. A gorgeous base into the 5 minute 20 sma offered the perfect opportunity to jump on board for those that missed the initial turn of the tide off the day's highs or merely another opportunity for those that had been tracking the move throughout.

The Dow fell into the 13,000 level in a matter of minutes, taking it back into Friday's afternoon highs and 5 minute 200 sma support intraday. Meanwhile the S&Ps hit support at morning lows and mid-day highs from Friday, and the Nasdaq futures broke Friday's lows to return to late afternoon congestion from Thursday. All of these support zones hit on strong exhaustion volume with 20 minutes to spare before the closing bell. The result was that I did not exactly get my close at the day's lows, but it was still still a quite a punch for the market that left it reeling into the early morning hours on Tuesday.

The Dow on Monday gained 41.36 points, or 0.3%, despite the collapse, and closed at 13,028. The S&P 500 also posted a gain, albeit slight, of 1.28 points, or 0.1%. It closed at 1,426. The Nasdaq had felt the full force of the blow and landed lower by 12.76 points, or 0.5%, to close at 2,516.

The indices do have support once again heading into Tuesday morning. Both the S&P 500 and Dow Jones Ind. Ave. are hitting the lower trend channel support from the channel in play since the 9th. I am expecting the market to pull back and correct longer on the daily time frame now at this time, however, with Nasdaq support levels at 2493, 2480, and 2440. The odds of testing 2493 on Tuesday are quite high, but I will be watching for an Avalanche pattern on the 60 minute time frame to take it into the second support level. The Dow may form more of a descending triangle before it can give way, although the S&Ps can also create an Avalanche fairly easily on that time frame. Upside will be choppy and higher risk, limited primarily to scalps or news driven securities.

Trade and Commentary Wrapup and Random Ramblings - 20080519

Hey gang,

There are tons of other posts and trades from the folks in the chat, but I have pulled out my market and stock commentary and post it each day here. The following is from today. I was in and out a great with a sick little boy and upgrading my services, so not an active day for me even though others in the room were right on top of many of the major gainers and losers on the day. I'll try to post some more of the other chat on days when I have time to post more charts to show what folks are looking for, but I will probably be taking tomorrow off to catch up on sleep since my little guy has been up most of the night again tonight and I am beat!!! I hope you guys had a wonderful Monday. That late day reversal was awesome! (ok, maybe if not still long hehe)

There is a bit of a discussion in here today on Verizon Fios. I switched over this week and am loving it so far. Peeps are always asking me about that kind of thing so I included that discussion. For charts dealing with the market commentary part, check back shortly for my daily market wrapup, which will include charts that show the intraday action I was posting in the room.

Have a wonderful Tuesday!

All my best,
Toni
http://www.tradingfrommainstreet.com (room link is located there)

09:40 Toni: my poor little b has whatever i had a week ago so i am going to be in and out a ton today since he is home sick

09:42 Toni: gainers:
09:42 Toni: VLO
09:42 Toni: VIP
09:42 Toni: EXM
09:42 Toni: LDK
09:42 Toni: MTZ
09:42 Toni: ACI
09:42 Toni: NVS
09:42 Toni: PDE
09:42 Toni: APA
09:42 Toni: X
09:42 Toni: MBT
09:42 Toni: RDS.A
09:42 Toni: TSL
09:42 Toni: MEE
09:42 Toni: ANR
09:42 Toni: UNP
09:42 Toni: MTL
09:48 Toni: SOLF
09:48 Toni: CPSL
09:48 Toni: AMZN
09:48 Toni: PEIX
09:48 Toni: JASO
09:48 Toni: RIMM
09:48 Toni: DRYS
09:48 Toni: CSIQ
09:48 Toni: BIDU
09:48 Toni: TRMA
09:48 Toni: ARBA
09:48 Toni: STLD
09:48 Toni: SPWR
09:48 Toni: CYBS
09:48 Toni: SIGM
09:48 Toni: ZOLT
09:48 Toni: OPTT
10:09 Toni: NQ coming into resistance here
10:09 Toni: 10:15 next correction period
10:19 Toni: nq nice off the resistance so far
10:19 Toni: good pullback... coming into first bit of support
10:19 Toni: looking at 2040ish on the rest
10:19 Toni: 2040-2041
10:47 Toni: NQ hit target 2041
10:55 Toni: NQ holding support
11:23 Toni: here is first resistance coming off that support from the 2040-2041 level
11:24 Toni: 2048.75 last

10:10 Toni: gee.. i have been deprived not having to watch kid shows in the morning ... dancing and singing puppets ... forgot what i was missing out on with kids in school
10:11 Toni: drrrr
10:11 crack: deprived?
10:11 Toni: --- often sarcastic
10:12 Toni: :)
10:14 crack: you dont lock ur kids in the basement?
10:14 Toni: no basements here in florida

10:17 Toni: SOL holding up (basing at highs for upside breakout)
10:29 Toni: sol first resistance btw for those that caught it
10:48 Toni: SOF base at highs but that 60 min is quite extended
11:05 Toni: SOL new highs

11:00 Toni: i got verizon fios this weekend... any of you use that?
11:01 charlie: what is that?
11:01 Toni: fiber optic
11:01 charlie: im still on the old slow DSL
11:02 Toni: its not as fast as my cable gets at peak time but its consistent so is really about twice as fast as the cable
11:02 Toni: i get 20-21 dl vs 8-26 on cable
11:02 charlie: HES acting nice
11:03 Toni: the programs they put on the puter though make it slower opening programs although the inet is super fast
11:03 Toni: it has a 3 day battery backup
11:03 Toni: and the digital tv and phone all in one
11:03 Toni: so if power goes out i can use any of those still
11:04 Toni: am liking it so far
11:04 Toni: customer service is not great though
11:04 Toni: forgot to have them help me with getting the laptop working with the wireless
11:04 Toni: having trouble with that
11:05 LP: so you like Fios a lot more than Comcrap?
11:05 Toni: yeah i do
11:05 Toni: so far... day 3 :)
11:05 Toni: the inet box has 4 plugs for direct connection and is wireless
11:06 LP: nice...they laid the fibre down here but won't light it up for another 6 months
11:06 LP: I'll be gone by then... :(
11:06 Toni: none of the other issues i've had before with wireless boxes
11:06 LP: however...they've promised a 64 mb connection in Dubai
11:06 Toni: they just laid it here a few months ago but just activating them now
11:07 Toni: i was pleasantly surprised
11:07 LP: can't wait to see what 64 mb of extremely sensored internet is going to be like..
11:07 Toni: get more services for less than my comcast and phone was costing me... not sure what i will do with 200 tv channels when i barely watched 20 but hey
11:07 Toni: lol
11:07 LP: however...the one page they will allow should be fast
11:09 LP: so...those compcrap commercials are full of lies...they say it's much faster than Fios...
11:10 Toni: well the fios is a direct line.. you dont share it at all
11:10 Toni: so even though cable is faster if you are the only one on
11:10 Toni: what are the odds of that ?
11:10 Toni: :)
11:11 Toni: my cable at the fastest was 26 and that was only once
11:12 Toni: http://www.speedtest.net/
11:13 Toni: i have 20415kbls dl and 4358 upload

12:18 Toni: Dow is approaching prior daily high
12:19 Toni: the dow and s&ps have totally taken over the lead today
12:19 Toni: should see some correction this afternoon
12:39 Toni: futures all showing exhaustion

12:52 Toni: NQ forming 5 min sloppy avalanche

13:40 Toni: HES basing at highs again here... forming 15 min bull flag

14:21 tanker: hes strong pop up off the 200
14:24 frank: toni you in hes?
14:25 Toni: nope... took eye off it
14:25 frank: moving up
14:25 Toni: yeah popped fast whenthe market hit that support

13:56 Toni: keep an eye for cont patterns on the short side in the indices gang
13:56 Toni: like i said earlier... good resistance and upside was very exhausted
13:57 Toni: have some peeps here with techie stuff so i may be a little bit before i really have a chance to get back to scan..
13:59 Toni: grmn should be good on a cont. pattern as well
13:59 Toni: if is pulls up to the 10 or 20 sma ont he 5 min
14:05 Toni: NQ hitting 30 min 20 sma
14:05 Toni: market bias still bearish
14:06 Toni: support likely temporary
14:15 Toni: nasdaq already under morning lows
14:15 LP: nice heads up on the indices T...
14:16 Toni: :)
14:16 Toni: from watch letter also :)
14:16 Toni: " This means that the market will have an easier time with corrections or pullbacks off the highs. So, upside in the morning will once again have a substantially higher risk of a strong reversal. "
14:16 LP: shorted the YM at 13125
14:16 Toni: very nice
14:17 Toni: ES 20 sma 30 min hitting
14:18 billgi: very accurate letter toni..nice job
14:19 charlie: i dont know what i would do fro mkt direction without here and her magic 8 ball
14:19 Toni: lol
14:19 sedona: Floor Talk: Haven't heard any specific reason for the sudden sell-off in the market, beyond what looks like an aggressive bout of profit-taking
14:19 sedona: It thus makes sense that the hardest-hit groups this afternoon are the momentum favorites such as Commodities (POT, MON, MOS, NUE, PCX, ACI, etc), Drybulk (DRYS, EXM, DSX), and Technology (RIMM, AAPL, SNDK, NTAP, FFIV, ONNN, etc).
14:19 Toni: magic 8 ball works faster now eith new inet!
14:19 billgi: she's pretty good on other stuff too..lol
14:19 sedona: even briefing.com doesn't know what to day about this drop ... for 10mins.
14:19 charlie: oh yea
14:20 sedona: say
14:20 Toni: 2023 is a fib level on the nq
14:20 Toni: ES at friday highs
14:21 Toni: so have some exhaustion here on this selloff
14:21 Toni: rest of the day can chop

14:21 Toni: expecting to keep trending lower this time but choppier
14:22 crack: i concur- im waiton on bounce to ssh into
14:22 crack: meant to say i concur senator
14:22 aOn: this is similar to the Thurs aftanoon selloff
14:23 crack: resshed drys at 108.2 and just coverd at 108.10 sweet
14:23 Toni: u mean wed?
14:24 Toni: 10 cents?
14:24 crack: i know i got scared and ran to mommy
14:24 crack: 2 secs later it cracked
14:24 jonathanpoon: Toni, this reversal to scare away longs?
14:24 Toni: i'd be scared lol
14:26 crack: ssh some spys
14:29 Toni: 2017.75 is next fib nq so in that zone at this low now
15:09 Toni: ES base here along support ... bearish
15:16 Toni: come on market... break already
15:16 Toni: i want another wave of selling!
15:17 charlie: and i would like to see a rally into the close....lol
15:20 Toni: ES and YM have nice low level bases but need a slower upside ont he 1 min
15:20 Toni: 5 min 20 sma is resistance
15:21 Toni: i was not thinking wed get a bounce like last several flushes but we'll see
15:21 Toni: not much time left on the day
15:22 Toni: was thinking we'd close at lows or near them
15:33 Toni: yippeee
15:42 Toni: gorgeous breakdown :)

Market Recovers After Sharp Morning Decline

Good day! Despite options expiration, Friday was a rather tame day in the market. True, moves on 5 minute time frames and smaller were extremely choppy, but the indices did a superb job of holding 15 minute and larger time frame support and resistance levels. Just as importantly, they experiences a number of exceptionally smooth movements on a 15 and 30 minute time frame intraday.

Going into the morning on Friday I was looking for some additional follow through on Thursday's rally. This came in the form of an upside gap which extended the rally and created exhaustion into the opening bell. The result was a correction off highs that was a bit sooner than I had been expected. Nevertheless, the price action coming out of the gap was favorable for continued downside since the rally itself, while strong, was much weaker overall than Wednesday's selloff.

Within only 15 minutes or less the indices had all closed their morning gaps. 9:45 ET is the first correction period of the day and the market attempted to correct somewhat at that time. The 10:00 Michigan Sentiment data loomed. As soon as it hit, indicating the weakest sentiment since June 1980, the sellers returned. The University of Michigan/Reuters preliminary U.S. consumer sentiment had dropped to 59.5 in May.

Dow Jones Industrial Average ($DJI)


The morning descent found support once again into 10:15 ET. A level of congestion followed before the market broke down a final time on Friday morning. The 11:00 ET zone was the next correction period following the market breakdown, but the momentum of the selloff into that time period was still stronger than average. The indices compensated by heading slightly lower into 11:15 ET, which is another very common time for morning reversals to take place going into the afternoon. The Nasdaq held this low perfectly and the other indices came quite close.

The Nasdaq Composite led the bulls into the afternoon. An initial stall in the upside took place into noon, but after only about 15 minute the bulls returned and took the indices to the next intraday resistance levels from early price congestion and highs on 5 and 15 minute time frames. Shortly after 13:00 ET these levels came together. The 15 minute 20 sma in some of the indices combined with prior 15 minute pivot highs over the last several trading days to push the indices into a larger correction on a 15 minute time frame that lasted until 13:45 ET.

RUSSELL 2000 ($RUT)


The most clean-cut pattern in the market in mid-afternoon on Friday took place in the Russell 2000. It had been the weakest of the indices and rally to its 15 minute 20 sma in the early afternoon while the other indices were pushing though it. It then hugged that move average perfectly on declining volume. The pattern which formed is one that I call a Phoenix since its a buy setup coming off lows when the market breaks free. A steeper version took place in the Nasdaq coming out of the 14:00 ET correction period. The Dow, Russell, S&P, and Nasdaq all experienced continuation patterns that were very consistent with the early afternoon moves. The similar pace made it very simple to locate the upside resistance. By simply measuring the first move off lows and applying it to the continuation move it created a price resistance level that all four indices hit just before 15:30 ET, leading to another correction into the closing bell.

S&P 500 ($SPX)


The Dow Jones Industrial Average ($DJI) dropped 5.86 points (-0.05%) on Friday, ending the week at 12,986.80 with a weekly gain of 1.9%. The top losers were General Motors (GM), which lost 2.59% on Friday, Citigroup (C), which fell 2.57%, and American Express (AXP), down 2.37%. Chevron (CVX) gained 1.92%, while Exxon Mobil (XOM) rose 1.5% to accompany the rally in crude futures to highs of $127.82 a barrel. Fuel prices have hit a record average of $3.79/gallon for regular unleaded.

The S&P 500 ($SPX) closed only slightly higher on Friday by 1.78 points to close at 1,425.35. The gain on the week was 2.7%. The Nasdaq Composite ($COMPX) produced the strongest gain on the week as a whole, up 3.4%, although it fell 4.88 points on Friday to close at 2,528.85. Among other top gainers on Friday were Level 3 Communications (LVLT) (+8.23%), Starbucks (SBUX) (+6.10%), Garmin Ltd. (GRMN) (+5.97%), Rowan Cos (RDC) (+6.52%), XTO Energy (XTO) (+6.34%), and BMC Software (BMC) (+6.09%). Among the top losers on Friday were Apollo Group (APOL (-4.15%), UAL Corp (UAUA) (-3.96%), Keycorp (KEY) (-5.46%), and Regions Financial (RF) (-5.39%).

Nasdaq Composite ($COMPX)


After creeping higher throughout Friday afternoon, despite the equal move resistance, there is still the potential that the indices will experience a third wave of buying on the 15 minute time frame that would lead to the creation of an equal move as compared to the rally on Thursday. This would need to take place relatively early on in the day on Monday and would lead to a third high on the Nasdaq 60 minute charts and a potential retest of highs on the Dow. The pace is still slower than the descent and this has been the case for well over a week. This means that the market will have an easier time with corrections or pullbacks off the highs. So, upside in the morning will once again have a substantially higher risk of a strong reversal.

As the indices continue to defy larger resistance levels, odds increase that the market will push into the price congestion from last November and December before correcting on those time frames, so for the time being I'm still mainly playing the selloffs as daytrades with the occasional overnight hold as opposed to longer swing or position trades.

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, May 19, 2008
10:00a.m. Apr Conference Board Leading Indicators. Previous: +0.1%.

Tuesday, May 20, 2008
7:45a.m. ICSC Chain Store Sales Index. Previous: -1.0%.
8:30a.m. Apr Producer Price Index. Previous: +1.1%.
8:30a.m. Apr PPI, Ex-Food & Energy. Previous: +0.2%.
8:30a.m. Apr Chicago Fed Natl Activity Indexy. Previous: -0.78%.
8:55a.m. Redbook Retail Sales Index For May 17. Previous: +2.1%.
5:00p.m. ABC/Wash Post Consumer Conf. Previous: -47.

Wednesday, May 21, 2008
7:00a.m. MBA Mortgage Refinancing Index. Previous: +6.5%.
2:00p.m. Apr FOMC minutes.

Thursday, May 22, 2008
8:30a.m. Initial Jobless Claims. Previous: +6K.
10:00a.m. DJ-BTMU Business Barometer. Previous: Unch.

Friday, May 23, 2008
10:00a.m. Apr Existing Home Sales. Previous: -2.0%.


Key Earnings Announcements This Week:

Monday, May 19, 2008
Before: CPB, ELON, EXM, LOW, PWRD
After: GRRF, CNTF, DRYS, NCTY

Tuesday, May 20, 2008
Before: AZO, CSUN, DRS (?), ESLT, HD, MDT, MF, SKS, SGK (?), SPLS, TGT, UNFI
After: ADI, DY (?), HPQ, INTU, LTXX, PHHM, PVH, RRGB

Wednesday, May 21, 2008
Before: BJ, BRC, BWS, EV (?), QXM, REDF (?), RTLX, ROST, SOLF, GASS (?), BRLC (?), TLB, TNP, TWB
After: ANST (?), BRS, CHINA, CTRN, CSC, CPWM, PROJ (?), DDS (?), GYMB, HOTT, LTD (?), LDG (?), NAPS, NTES, NTAP, PERY, PETM, CRM, SMTC, SNPS, WSTL, ZL

Thursday, May 22, 2008
Before: ANN, ASFI (?), BKS, BCSI (?), BONT, CMRG (?), CTR (?), PLCE, CMCO, DKS, FRPT (?), FLO, GME, GMTN (?), GSOL, HRL, MPR, NM (?), NZ (?), NWY, OPXT, PDCO, PDC (?), RSTO (?), SAFM, SFL, SSI, SMRT, STP, TECD, BKE, TTC, TSL (?), WPL (?), ZLC
After: ARO, ARUN, BBOX, CA, DITC, FL (?), GPA, HIBB, HRAY, LTON, MENT (?), NINE (?), NDSN, PSUN, TMA (?), CHIP (?), VRGY, ZUMZ

Friday, May 23, 2008
Before: SKIL (?)

Note: All economic numbers and earnings reports are in line with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column and some companies have not confirmed their time, so always double check when taking positions overnight during earnings season! (?) = Not yet confirmed at the time the list was compiled.

Trade and Market Commentary Wrapup - 20080516

09:28 LP : Housing starts surge 8.2%
09:28 LP : but last week foreclosures were up 66%



09:33 Toni : this is third wave on the 30 min charts remember.... third wave up
09:34 Toni : so immediate hmm... i dont trend getting extended
09:34 Toni : The ES gapped right into fib resistance again today
09:35 Toni : retraced 132% back off yesterday lows past wed. highs
09:46 Toni : futs are reacting very strongly off the resistance

09:51 Toni : SRCL great daily for more upside... missed the initial trigger around 56.28 so will keep an eye on it for later
10:46 Toni : srcl fell apart (no setup until around 14:30 ET on 15 min "D" buy)

09:52 Toni : JRJC on long watch list today also



09:57 Toni : Futs initial support

09:58 Toni : oil stocks extended intraday
09:58 Toni : OIH trying to form an avalanche on the 5 min
10:11 Toni : OIH is trying but slow
10:49 Toni : OIH just creeping lower but following through finally
10:50 Toni : this is 5 min 20 sma support on OIH
10:51 Toni : good place for partials in OIH all for shorter term daytraders... forming 1 min momo at support
10:52 Toni : 212.56last
10:58 Toni : 213.73-214.43 were prices that could have been used on entry, depeding on if you shorted the break or the pullback int he avalanche...213.97 for me and covered when that momo triggered 212.56.. stop was 214.63 zone
10:58 Toni : OIH
10:59 Toni : could have reversed that trade ont he momo buy haha
10:59 Toni : 1 min
11:00 Toni : just hit first target per that setup in the 213.60 zone



10:11 Toni : 10:15 ET is next correction period

10:12 Toni : futs support from congestion yesterday
10:13 Toni : remember.. since there were three moves up on the 30-60 min... the correction this time around will more likely take longer than the prior two

10:59 Toni : futs coming into next support
10:59 Toni : also 11 ET correction period
11:03 Toni : strong momentum drop into this support
11:04 Toni : support zone holding with correction period

11:04 Toni : AAP base at highs
11:05 Toni : coming into 5 min 20 sma



11:16 Toni : 11:15 ET correction period
11:16 Toni : next one is noon
11:16 Toni : ES and NQ both down to 50% level of wed's drop

11:32 Toni : hmm... am having trouble with orders on IB... when i change a price on my bracket orders its canceling it when i hit the T for transmit instead of transmittig the new price
11:33 Toni : late post but covered AAP into 38.80
11:34 Toni : this NQ coming into first target
11:34 Toni : just took part on it also
11:34 Toni : a bit frustrated with order issues
11:36 billgi : lol..aap ..79 for me...great minds think alike...ha ha
11:36 Toni : this is 5 min 20 sma NQ
11:37 Toni : 2021
11:37 Toni : covering and gonna reboot
11:37 Toni : brb gang
11:37 Toni : this is second NQ resistance



12:43 Kaizen: es 5m phoenix possible?
12:44 Toni: if it had hugged the 5 min 20 sma then i'd had said yes
12:44 Toni: but broke too early
12:45 Toni: still has upside room but its just choppy creeping again

12:50 Toni: futs here are at ES wed. highs and mid-day highs yesterday from the NQ so this is a resistance zone



13:38 aOn: Toni - about SINA, was this green candle at 12:45 a must for the pattern to work?
13:38 aOn: 15'
13:39 Toni: not sure what you mean
13:39 aOn: nm
13:39 Toni: oh on the 15 min
13:40 Toni: yes, because it gave that last pivot high
13:40 Toni: but the bar before
13:40 Toni: had been slightly lower lows than last one
13:40 Toni: so it was sorta creeping down
13:40 aOn: ok, thx
13:40 Toni: so that green bar basically flushed it out
13:40 Toni: got the creeping out of its system
13:41 Toni: so that was good yes
13:41 Toni: BYI 13:00 bar yesterday was the same idea
13:41 Toni: it was a doji though
13:41 aOn: i ask, because i took it when it broke down just b4 it
13:41 aOn: then had to stand the heat of this bar
13:41 charlie: SPWR testing lod
13:41 Toni: but also helped it by doing that last little pop
13:42 Toni: yeah i will get in early too but will know that if it creeps its probably gonna flush
13:42 aOn: nice on SINA taking 2/3 off + .45
13:42 Toni: if you get it close to the 20 sma on the 15 min though you are safer than if it still had awhile before that would hit
13:42 aOn: but the stop was a problem in this case
13:43 Toni: yes because the flush will often take it over last 5 min high
13:43 Toni: 55.14 was noonish high on SINA
13:43 aOn: that's exactly what I talk about T
13:43 Toni: that flush higher into 13:00 could have popped it over that a little to pstop people out using that price
13:44 aOn: and it went right there to visit it
13:44 aOn: so u would go with a 55.25 stop just to be safe?
13:44 aOn: or even .50?
13:44 Toni: when wrong there is usually still a bit of a pullback after it pops so you can get out without much additional damage, but best to just get as close to that sma as possible on an entry
13:45 aOn: gotcha
13:45 Toni: within 1-2 15 min bars before it hits
13:45 Toni: go earlier than that and its when you get this risk more
13:45 aOn: thx



13:48 Toni: MICC i have been watching the daily momo reversal off highs forming

Market Fights to Recover Wednesday Afternoon's Losses

Good day! After giving up nearly all of its gain in the final two hours of trade yesterday, the indices were left quite extended on the downside on the 15 minute time frame heading into Thursday morning. We have experienced a number of these sharp selloffs recently with some more substantial than others. The sharp downside of of April 28th into the 29th and a variation of the same type of pattern earlier this week from Monday afternoon into Tuesday morning bear the greatest resemblance to the turnaround off Wednesday's highs and the bias it created into Thursday.

In both cases a sharp downside move after the market rounded off at highs was followed by a very gradual correction off lows into the next morning. The move begins very choppy and with a great deal of hesitation, but manages to recover strongly after a bit of congestion along the 15 minute 20 period simple moving average. The overall momentum on that recovery, however, is a great deal weaker than the initial selloff itself.

Dow Jones Industrial Average ($DJI)


The entire rally on Thursday was quite choppy. The market crept higher into the 5 minute 20 period simple moving average where it stalled before continuing into 11:00 ET. At this point the indices were testing their 15 minute 20 period simple moving average resistance levels. The reaction off this resistance was modest. If the market was going to take a stab at holding highs, this was the time to do so. The indices began to form a 5 minute Avalanche by hugging the 5 minute 20 sma support around 11:15 ET. It did not do so long enough, however, to allow for the market to pick up on the downside. It broke after only 20 minutes, which simply dropped the S&P 500 ($SPX) and Dow Jones Ind. Average ($DJI) into 5 minute 200 sma support. This support held perfectly into 12:00 ET.

Out of all the indices on Thursday, the Russell 2000 was the most steady in its performance, experiencing the least amount of overall chop and the cleanest setups. Although I don't follow it a great deal myself on most days, it really stood out this time around. For that reason I've included it in today's column.

Russell 2000 ($RUT)


Following the late morning break to highs, the market's momentum began to round off into 12:30-13:00 ET after the market began to test Wednesday's late morning congestion zones. By this point, however, the market had also confirmed the larger market pattern I mentioned at the beginning of this column and that created very high odds for a trend higher and at least back to Wednesday's highs into the close. Typically when I see momentum slowing on the upside I will begin to watch for reversal patterns. While I had one short setup in stocks into the afternoon, I stayed away from trying to short overall, particularly in the indices.

S&P 500 ($SPX)


Even with a bullish bias for the remainder of the day, the trick was finding decent triggers, or else just having the guts to buy and hold and trust the larger time frame pattern. The Russell 2K again offered the most solid late day opportunity, although the other indices did show triggers if you dropped down to the smaller tick charts. In the Russell 2K, however, a nearly textbook bull flag formed along highs from just after 12:30 ET into 14:00 ET. The 5 minute 20 sma held as support and the index broke well to new highs. It did hold first resistance strongly though and had to use the 5 minute 20 sma for support as the move continued. Nevertheless, the pullbacks were steady and the support held perfectly with one final push to highs in the last 30 minutes of the day. The other indices also continued to move higher after 14:00 ET, but they held the early afternoon highs rather well and only broke higher with 15:30 ET.

Nasdaq Composite ($COMPX)


Despite its cleaner trend action, the Russell 2K was the weakest of the four indices. It did not manage to break Wednesday's highs like the three others did, but it still reclaimed nearly all of the losses from those previous highs. It ended the session higher by 7.31 points, or 0.99%, and closed at 743.38. The S&P 500 broke the prior highs by the largest percentage and closed higher by 14.91 points, or 1.06% on Thursday and closed at 1,423.57. The Nasdaq Composite gained 37.03 points, or 1.48%, and closed at 2,533.73. The Dow Jones Ind. Average rallied 94.38 points, or 0.73%. It closed at 12,993.66, right into the zone of 13,000 price resistance once again.

This type of action on the 15 minute time frames will often follow through into the next morning, but then has high odds once again for another correction into the afternoon. This is also the third wave of buying on the 15-60 minute time frames, so the trend in play since the lows of the 9th is also now extended. It had two comparable time corrections - one on Tuesday and the second of Wednesday's highs - so a third correction should be longer at least in terms of how long it takes to correct compared to the prior two pullbacks once it gets going.

Chat Posts Wrapup - 20080515

Hey gang, don't have a lot of time today, so just pulled out the market stuff and trade posts today and cut out the chatter....


09:40 deandlc1: Toni, You guys see a setup on CAT above 84.50
09:42 chastain: ENER
09:43 snarfieag: thanks for POT yesterday am, crack...out +4
09:44 Toni: think it can as long as the intraday momentum shifts more.. the daily is still good

09:45 snarfieag: toni, POT?
09:47 Toni: POT has resistance here intraday
09:47 Toni: good daily for upside though
09:49 Toni: NQ moving well from support
09:50 sedona: long A
09:51 Toni: initial NQ resistance
10:03 uhart: RIG
10:09 aOn: FCX
10:09 snarfieag: fwlt
10:11 Toni: market still pretty weak so far
10:11 Toni: holding premarket highs
10:12 Toni: am expecting slower corrective action from yesterdays descent
10:12 Toni: so can easily see a lot more back and forth action today
10:14 xr3: GS weak
10:15 xr3: but MER pretty strong
10:20 norancho: BARE breakdown
10:32 hermosaj: PRCP
10:38 hermosaj: WGOV
10:45 tanker: lg HES
10:48 LP: T...what do you think of the major indicies on a swing basis...does it look like it's due for a pullback?
10:48 sedona: FWLT 5mins flagging ...
10:54 Toni: what a slow morning
10:54 Toni: market is trying to correct from that drop yesterday
10:54 Toni: mostly choppy as expected
10:54 norancho: BARE scalp worked but miserable getting there
10:58 tanker: out HES +.71
10:58 norancho: little flag on SGR
11:04 aOn: nice job tanker!
11:05 Electron: nice T!
11:06 Electron: summer doldrums starting early this year?
11:06 xr3: POT testing high
11:08 tanker: thx guys
11:08 Toni: 15 min charts hitting 20 sma intraday resistance levels
11:10 MkTimer: Thanks Toni, shorted IWM
11:14 Wpg: BHI
11:14 chastain: I think all this juggling is pinning to options
11:17 Toni: nice mktimer
11:18 tanker: relong HES
11:18 MkTimer: took part off and rest b/e , thx for trade
11:20 Toni: min bear flag forming in BYI

11:20 Toni: opps
11:20 Toni: 5 min that is
11:26 Toni: main leader today is oil/enery related stocks
11:26 Toni: gold very strong also
11:28 tanker: RIG good--upgrade
11:31 charlie: HES basing
11:31 charlie: VMW testing hod
11:31 opw3: VMW, just paased on it at 69
11:32 opw3: paased=passed
11:32 tanker: FWLT
11:32 sedona: FWLT
11:32 opw3: good decision in hindsight
11:32 charlie: i was in at 69.18 and sold before 70
11:32 opw3: cool
11:33 charlie: keep watching SPWR for bottom
11:36 Toni: indices have avalanche potential
11:36 Toni: 2-5 min
11:36 Toni: 11:36:37 Avalanche: For more information on this setup, please see http://www.tradingfrommainstreet.com/techanalysis.html#4

11:38 charlie: in SPWR tight stop
11:40 charlie: stop SPWR -.11
11:43 Toni: that IWM still going nice of the futs resistance earlier
11:44 Toni: n1 mktimer
11:44 Toni: russell also leading on the avalanche
11:45 Toni: was a bit earlier than ideal for the avalanche trigger so can be tougher to get an equal move
11:45 Toni: fitst bit of support here
11:46 Toni: NQ can form an "A" pattern ont he 1 min for a cont
11:46 MkTimer: out rest IWM, thx for trade
11:46 Eternum: Toni, you mean upside move is not long enough in this avalanche?
11:46 Toni: that the base was not as long as ideal along the 5 min 20 sma
11:47 Toni: NQ triggered on a "D" setup after only basing for same amount of time as the drop
11:47 Toni: ideally it will be about twice as long
11:47 Eternum: Yeah, that's what my question was, ty Toni
11:47 Toni: other wise even on a cont it can just slide lower and then end up forming a longer setup like a larger time frame bull flag
11:48 Eternum: got it ty
11:48 Toni: or it can pull back up slowly into the base and then go
11:48 Toni: so you'll get a slightly lower low within that would be considered that base of two times the drop time
11:49 charlie: 121 holding on HES
11:53 norancho: did I mention that I hate SPWR
11:53 Toni: BYI I dont like the pace change ont he 1 min but will watch it again for later this afternoon for larger 15 min avalanche
11:55 norancho: like look of ETR for more, but may take a day or two
11:56 norancho: LDK forming a bottom, maybe
11:56 Toni: i'm gonna back off a bit and just let this chop play out here a bit in the indices
11:56 Toni: the futs are holding that first support
11:57 Toni: russell has the best relative weakness today
11:57 Toni: nasdaq again with the most relative strength
11:58 Toni: 2 min resistance btw here
11:58 Toni: bbs!
11:58 tradervanya: yea, but you going to have to be really patient to short today.
11:58 Toni: yeah everything pretty scalpish so far and with that move yesterday its likely to remain such
11:58 charlie: VMW
12:00 sedona-away: http://www.tharptradertest.com/default.aspx?question=1
12:00 sedona-away: quiz for what kind of trader are u
12:01 charlie: SPWR small bounce off bottom so far
12:02 charlie: VMW took off
12:04 snarfieag: any opinion on DE intra day?
12:04 chastain: look at DE put options
12:24 Toni: futs at resistance from mid-day prices yesterday
12:25 Toni: gotta step out for about 30-45 min
12:32 norancho: LVS interesting
12:47 mtl: BHI OIH in freefall
12:52 aOn: STV yummy
12:53 aOn: hmmmm, junxed
12:54 aOn: jinxed
13:06 norancho: would like to see LVS break 75
13:10 aOn: GU coil
13:26 Toni: 28th-29th drop and rally and 12-13 drop and rally both very similar to action from yesterday to today as guides
13:27 Toni: in the indices
13:27 Toni: FWLT base at highs

13:33 charlie: FCX...watching it for scalp
13:40 Toni: BYI coming into first support from morning lows
13:46 aOn: Toni - MYGN some kind of a momo rev?
13:47 Toni: yeah
13:47 aOn: thx
13:48 aOn: thxbid base hi
13:48 aOn: BID base hi
13:51 aOn: Toni - do you think WGOV can still get some back wind or basically done for the day?
13:52 xr3: GOOG looking a little bear flaggy
13:52 charlie: HES :120 a maybe scalp
13:58 Toni: 5 min futs bull flag

14:00 charlie: HES not going to go
14:04 charlie: watching CF :137.75 for a scalp
14:06 Toni: BYI support 5 min
14:06 opw3: Toni, what was your trigger on BYI?
14:07 snarfieag: rimm jeez
14:07 MkTimer: Long IWM
14:08 MkTimer: thx toni confirmed my buy b4
14:09 lebarg: big buyer in RIMM
14:11 Toni: 41.70 on BYI short
14:12 xr3: GOOG not following mkt higher
14:12 Toni: looks good mk
14:13 MkTimer: IWM taking parts here, rest have b/e stp
14:13 MkTimer: thx for confirm to buy
14:14 Toni: yw
14:15 xr3: GOOG sellage
14:18 Toni: ER trading a lot more smoothly than the other indices today
14:18 Toni: ER= russell 2k emini
14:18 Toni: IWM is the also russell btw
14:19 Toni: for those that dont trade indices
14:19 Toni: can see the flag best on it
14:20 tradervanya: there was a small bull flag in er2 but this is still bascally a scalping day.
14:21 Toni: am still thinking we can get re test of yesterday highs zone in the nq/es/ym just based upon the trend play
14:21 frank: toni fwlt still looks good to you?
14:21 frank: and do you have a target on it?
14:22 Toni: yes... momentum is trying to shift but this type of 15 min pattern usually retakes prior highs (market reference here)
14:22 Toni: so odds are most likely for it
14:22 frank: you mean 78.04
14:23 Toni: from feb (re: fwlt)
14:23 Toni: my pointer thingy seems lost
14:23 Toni: so not sure that exact price
14:23 Toni: but there about yeah
14:23 frank: 79.65
14:23 frank: 2/25
14:24 Toni: yes
14:24 frank: k from your mouth to gods ears
14:24 Toni: aha! price tool stuck behind mirc
14:24 charlie: norancho...see pm
14:25 Toni: hate when my puter decides to play hide and seek with things
14:25 charlie: the cat did it
14:25 Toni: been watching cetv
14:25 Toni: potential short
14:25 Toni: but man...
14:25 Toni: i really dont like how thin that thing is
14:26 Toni: not as pretty as BYI was
14:26 charlie: what do u think of ICE here as a short
14:26 * Toni slaps charlie around a bit with a large trout
14:26 Toni: sry that is preprogrammed response for ICE questions
14:26 charlie: lol
14:27 tradervanya: oild mounted an impressive retrace to the close so I don't know about the indicies testing the highs today.
14:27 Toni: market has been taking drugs and is in denial refusing treatment
14:29 Toni: even a flush with this type of 15 min action can recover given the larger market pattern
14:29 Toni: nasdaq really formed the best for a reversal type patterns
14:29 Toni: was the momo reversal and flush for 4th high
14:30 Toni: which is a good variation on that pattern
14:30 Toni: on 400 tick
14:30 Toni: sry
14:30 tradervanya: oil is never going down in our lifetime! LOL
14:30 Toni: 12:30ish first high
14:30 Toni: 12:41ish 2nd
14:30 Toni: 13:05 third
14:30 Toni: thent he flag
14:31 Toni: then 14:09ish 4th
14:31 Toni: that is 400 tick NQ
14:39 Toni: FWLT hitting 15 in 20 sma
14:39 Toni: want to see a reaction here
about flushes holding better... market bouncing back with more decent pace than typical rounded highs would lead to
14:47 Toni: want to really be careful this last hour... this has been a very choppy day even though its been a trend day
14:48 LP: Toni...what's you outlook on the indicies for the next few months...or during the summer doldrums
14:48 Eternum: Toni, this rally goes on really light volume in futs
14:48 Toni: have been expecting a correction over the summer
14:48 Toni: yeah.... most volume in the last few weeks has been with downside moves
14:49 LP: do you have any targets in mind for the S&P? also where would you place a stop if you shorted here
14:49 Toni: i think it can turn really any time
14:49 Toni: i mean we are int he zone of resistance ont he weekly time frames
14:49 Toni: so its just getting that shift on the daily now i think
14:49 Toni: earnings season is practically over
14:49 LP: where would your stop be...if you were short
14:49 Toni: so that might be all thats needed
14:50 tanker: bbl
14:50 Toni: on SPY?
14:50 LP: yeah
14:50 Toni: just sec
14:50 Toni: will take a look
14:50 snarfieag: RIG nice today
14:51 tradervanya: it is no coincidence that the mkt has been doing well when hillary wins.
14:51 Toni: 142.65 is the 62% fib level for that drop from dec to lows
14:52 tradervanya: I think that will all change soon after she is oficially out of the race.
14:52 LP: girl power?
14:52 Toni: if that breaks then next resistance isnt until 145.46
14:52 LP: I was think of selling a Jun 143 vertical call spread...
14:52 Toni: i think it might still try a slightly higher high for a flush ont he daily so would be willing to give it just a little room
14:52 LP: Sell the 143 and Buy a 147...
14:52 Toni: over the 142.65 even using that tighter level
15:00 norancho: VMW on fire, but man, is it ever hard to buy here
15:00 charlie: STP testing 47 for the 3rd time
15:12 Toni: FWLT going nicely right off that 15 min 20 sma
15:12 Toni: has a little resistance in here
15:17 Toni: FWLT not sure there is enough time for it to flag
15:17 Toni: but typoically would get a bit of a pullback here
15:17 Toni: with 5 min 20 sma support for a flag
15:17 norancho: LVS broke 75, and of course I got out too soon
15:18 hermosaj: any chance of this WGOV going any further?
15:19 Toni: looks like it
15:19 Toni: has a great 15 min
15:19 charlie: ICE
15:19 Toni: can easily trend higher into 15:30

15:19 Toni: WGOV
15:20 Toni: was a great "d" on the 15 min
15:20 Toni: now why didnt my scans pick it up :(
15:20 opw3: yea, head it marked, forgot to set the alert
15:20 Toni: didnt even come up here
15:21 opw3: its not high volume usually
15:21 Toni: my scans today actually havent been very good
15:21 hermosaj: think i mentioned it this morning too
15:21 Toni: mostly just giving me slop
15:35 Toni: can see this correction trying on FWLT at that resistance
15:35 Toni: but not time for a 5 min flag like i said
15:35 Toni: so might just hold here
15:36 Toni: futs did good job moving higher but were more choppy as expected
15:36 Toni: ER even joined in the slop
15:41 Toni: market made it back to those highs :)
15:51 norancho: well, scalped a little off WGOV, thanks hermosa
15:51 norancho: and Toni

Market Barely Manages Higher Close Despite a Strong Lead

Good day! The market made quite a swing on Wednesday. I suppose it was "hump" day after all, so the action was really quite fitting if you think of it that way. Although I had said yesterday that I was expecting upside in the morning and then a more rapid decline into the afternoon for Wednesday, the upside was a bit more than I was really looking for the evening before. The indices, however, had received another huge premarket boost with the 8:30 ET consumer price data. As on Tuesday, the premarket economic data led to a strong move higher ahead of the open. The aftermath of the news was more favorable on Wednesday than it had been the day before on the retail and food sales stats.

The Labor Department reported early in the day that the consumer price index rose only slightly in April, up 0.2%, which was significantly lower than expected. Excluding food and energy, the core consumer price index rose 0.1% and inflation was reported weaker than expected as well. Consumer prices are up 3.9% in the past year, with core inflation paced at 2.3%. Although this news was welcome early on, as the day progressed more and more skeptics stepped forward questioning the data and leading to increased speculation that May would see the full blow of it. For the better half of the day, however, the indices did a decent job of holding the bears at bay, although the bulls never fully embraced their upside.

Dow Jones Industrial Average ($DJI)


The market took off strongly higher out of the open following a decent, but not extreme upside gap. When the indices hit resistance though, they did not pull back for another strong bull flag. The extension was already too much and the market tried to correct to that. It did so by rolling over a little bit, but it was able to form a sad bull flag. The S&P 500 then followed with a third bull flag into 11:15 ET off the 5 minute 20 sma. Each move led to a smaller gain than before as the momentum shifted to create a longer corrective move.

The Dow Jones Industrial Average ($DJI) hit an equal move resistance zone early on in the day as compared to the rally into Monday's highs. The S&P 500 ($SPX) and Nasdaq Composite ($COMPX) still had a bit more room to move when the futures contracts were considered. 2033 was the point I was looking at for the Nasdaq to lead to a stronger breakdown. With morning highs of 2030.75, it left the door open for another swing higher into the afternoon.

S&P 500 ($SPX)


The Nasdaq Composite was very sloppy into the afternoon. The momentum had been shifting indices all day as the bulls worked to hold onto the gains, but the Dow created a textbook two-wave continuation pattern on the 5 minute time frame going into the 13:00 ET correction period. At about 13:45 ET the indices had all hit their resistance. The S&Ps at this time were testing prior daily highs, while the Nasdaq EMini hit 2032.75, within a tick of the price I'd been focusing on.

As the market approached those resistance levels, the momentum continued to shift. At 14:30 ET the 5 minute 20 sma support gave way in the Nasdaq. The S&Ps and Dow broke at 15:00 ET with the correction period after hugging the 5 minute 20 sma for nearly an hour to form an Avalanche setup. The name I'd given that particular pattern was apropos. Within very little time the breakdown was building on itself and took on a life of its own. The Nasdaq, which had been the leader in the previous days had the most to give and was back at Tuesday's highs before the Dow and S&Ps even had a chance to really see what was going on. They joined in more diligently from that point onward as all three continued to fall into the close with the Dow taking over.

Nasdaq Composite ($COMPX)


On Wednesday the Dow closed up 66.2 points, or 0.5%, at 12,898.38. Hewlett-Packard (HPQ) (+3.1%) and Verizon Communications (VZ) (+2.2%) were two of the top gainers, while Caterpillar (CAT) (-1.6%) and McDonalds (MCD) (-1.2%) suffered stronger losses. The S&P 500 gained 5.62%, or 0.4%, and closed at 1,408.66. The Nasdaq Composite gained 2.58 points, or 0.1%, and closed at 1,496.7. Freddie Mac (FRE) (+9.2%) and Fannie Mae (FNM) both made headlines after posting smaller than expected first-quarter losses.

Currently prices are holding strong larger intraday time frame resistance on 60 and 120 minute charts. The decline into the close was a substantial correction off those highs, falling 50% back to last week's lows in the Nasdaq. This put it at support into Thursday morning, but given the pace on the selloff, upside corrections are going to be slower overall. Even if there are strong bursts of upside on a 5 minute time frame, the overall pace of any correction off Wednesday's lows or Thursday's morning lows (if they happen to be a bit lower) should be substantially slower.

Trade and Commentary Wrapup - 20080514

Note: Check back throughout the day for updates and most recent activity at this link.

08:56 Toni: http://www.marketwatch.com/news/story/massive-risk-looms-bulls-have/story.aspx?guid=%7B408286F4%2D996E%2D4E12%2DA584%2DAD9C0CB772FD%7D&dist=TNMostRead
08:56 Toni: a little premarket reading

08:58 Toni: Top name stocks with news heading into today namely earnings: BRCD DE ERTS AMAT WFMI
08:58 Toni: AMAT reported a 22 cent/share loss
08:59 Toni: WFMI reported a 29 cent/share loss with increased sales

09:00 Toni: futures took off for a second morning in a row out of 8:30 data
09:01 Toni: CPI

09:02 Toni: in political news Clinton won West Virginia last night

09:09 Toni: futs dealing with another momentum shift at the premarket highs following the data which took it strongly higher

9:58 ES has hit strong fib resistance at highs 1416 zone

10:08 not seeing much for decent cont patterns on the gainers lists

10:16 YM has pretty good relative strength today

10:32 bulls are really holding onto this

10:51 STP is forming 5 min bull flag

12:21 STP really moving off the "D" pattern on that 5 min (not given in the room but was still followed by a few traders so noting so people see the pattern)

10:52 note: ES has had three moves up now
11:23 futs doing a good job of holding that third time

10:52 btw.. i have an article on momo reversals coming out in july issue of one of the active trader mags... will let you know

10:22 2033 is NQ equal move level for the 30 min so can press into that still. i have been concerned that momo keeps trying to shift. i think the nas would lead any upside
LP: you mean shift down
Toni: right slower upside moves those can flush lower easily
Mykonos: STP good swing trade I think
Toni: yeah has to get through 50.. lots of resistance there 100 and 200 day sma, prior highs, whole number .. the intraday trend can push it into that into the morning but then would expect it to correct on a 60 min so would watch that correction until then just daytrade

12:42 AG potential on breakdown... would be break on the daily too
had trigger about 58.35 at 13:21 - can still form 5 min bear flag cont. $58 first support

12:43 ES on the 800 tick you can really see the pace changing... rolling over at the highs... thought the nas was gonna try one more last hurrah but its fizzling

12:53 market not giving up yet YM is actually forming 5 min "D". YM did hit 30 min equal move this am on that rally. momentum was stronger on it than the rally into the 12th highs so has room to try to push a bit more, breakdown in the market really should have started around that 12:30 attempt intead of popping back
13:07 YM "d" ont he move (triggered 12950)
13:16 YM first resistance (12977)
13:46 YM next resistance showing (12990) (out of position)


13:01 POT forming bull flag 5 min a bit higher risk on this one since it went into the base with just one last pop after slowing into 11
13:03 Toni: that is probably not a con most of you have ever considered but now you know :)
13:03 Toni: if you have a rally
13:03 Toni: then it slow.s... starts to round a bit
13:03 Toni: then pops
13:03 Toni: then bases at highs for a flag or such
13:03 Toni: it adds a con on it for a cont. like a flag
13:04 Toni: so will watch to see if it can give a small phoenix or such in the base
13:04 Toni: and only look for equal move based on the pop if it triggers
13:04 Toni: seo the 11:05-11:20 move
13:07 POT going but on tougher setup


13:05 billgi: toni, on stp would you look for target in 49.30 area ?
13:05 Toni: on a flag on stp would be about 49.50

13:14 DISH base at highs... con is extended 30 min

13:44 the NQ is almost at that equal move... its about 2033
15:07 today's NQ high 2032.75 .. i said 2033 hehe... so close! now its back to the open haha

Market Mixed Following Strong Monday Gains

Good day! The market has had an easier time attracting more attention on downside moves than upside move recently where the volume has been on the lighter side, such as on Monday. This continued into Tuesday's session as well. The Nasdaq Composite ($COMPX), which had led the gainers on Monday, opened relatively unchanged, while both the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) gapped slightly higher thanks to strong premarket data which erased earlier losses.

At 8:30 am ET, the Labor Department reported that import prices rose 1.8% in April, in line with expectations. The primary instigator of the premarket rally, however, was April's retail sales data. Retail sales, excluding motor vehicles, climbed 0.5% for the month, beating expectations for a 0.2% gain. The market popped quickly higher on the news, although the positive reaction lasted for only about 30 minutes before the index futures began to shift and turn over at the highs.

Dow Jones Industrial Average ($DJI)


By the opening bell the market was down from premarket highs, but those highs corresponded to strong resistance levels. The ES (S&P 500 EMini) had retraced to the 62% fibonacci level (based upon the correction off last week's highs) into the opening bell, which held very well. The Nasdaq also opened right into price resistance from the highs of the previous week as well as Monday. The downside was immediate following the opening bell, but it was again led on the Dow. The S&Ps followed closely behind, but the Nasdaq merely crept lower while the other two indices experienced strong downside momentum early in the session.

Support hit initially at the 10:15 ET correction period. This triggered a nice scalp back up into Monday's highs in the Nasdaq, but the Dow held its 5 minute 20 period simple moving average and formed a bear flag out of the 10:45 ET correction period. This time the Nasdaq played along and all three of the major indices fell sharply to new intraday lows into the 11:00 ET correction period.

S&P 500 ($SPX)


11:00-12:00 is a typical time of the day for a morning trend move to begin a larger correction. Given the momentum on the selloff, it would be difficult for the market to recover as quickly as it had fallen. The result was another test lower into about 11:30 ET whereby the Dow hit a slightly lower low into Monday's opening price zone. The S&Ps and Nasdaq held the 11:00 price support, but also pulled back, allowing for a shift in the downside momentum to support a larger correction off lows into the afternoon.

The market crept higher into the early afternoon, breaking the 5 minute 20 sma relatively easily and pushing to highs at 12:30 ET. There was a lot of overlap in price on the move higher and this allowed the indices to fall once again out of the 12:30 correction period, but the momentum shift continued and a second wave of buying on the 5 minute time frame kicked off around 13:15 ET.

The second move higher into the afternoon was very similar to the first. The pace or momentum of the move was comparable and hence the price advance and length of the rally was also similar, exhausting itself into the 14:00 ET correction period. This time the correction off the highs was more sloppy. Instead of a decent price pullback, the indices fell into a range with the 5 minute 20 sma as support. This range broke higher for a third wave of buying into 15:00 ET which took the Nasdaq's EMini contract (the NQ) to new highs on the week and even pushed it slightly through the highs of the month as well.

As I mentioned in yesterday's column, this was not as significant of a feat in the Nasdaq as it will be in the S&Ps and Dow since the Nasdaq has shown the greatest relative strength in recent months and had less ground to cover to break though highs. The Nasdaq Composite itself (the $COMPX), however, did not quite push through the 2499.14 level from May 2, hitting highs of 2498.07, just shy of the high.

Nasdaq Composite ($COMPX)


The indices pulled back off afternoon highs in the final hour of trading, leaving the Dow in negative territory with a 44.13 point, or 0.3%, loss at 12,832.18. 14 of the Dow's 30 components landed in the red. The most notable of these was Hewlett-Packard (HPQ), down 5.5% after announcing its plans to acquire Electronic Data Sys (EDS). Wal-Mart Stores Inc. (WMT) led the retailers lower with a loss of 2.4% on the day. The final selloff intraday took the S&Ps into negative territory once again by a hair, down 0.54 point to close at 1,403.04. The Nasdaq Composite, on the other hand, still managed to hold onto a gain with a 6.63 point higher close at 2,495.12. Yahoo (YHOO) made headlines intraday after announcing that Icahn purchased a large position in the company, which recently resisted a takeover by Microsoft Corp. (MSFT).

The slower upside on Tuesday afternoon as compared to Monday leaves the market still open for some upside into Wednesday morning, but the rally has been hugging the zone of the 30 minutes 20 sma, especially in the S&Ps. Moves such as this can break lower very easily, particularly given the lighter volume of this upside, so I am more bearish into Wednesday afternoon with room for another attempt to press higher on Thursday.

Trade and Commentary Wrapup - 20080513

9:35 FWLT and ENER good daily charts to watch for cont upside intraday today
9:38 FWLT didnt even bother to pause so far
9:43 FWLT hitting first ressitance
9:47 ENER not bothering to hold up
12:43 fwlt is creeping higher (11:48 - $73.56 setup, 12:21 $73.68 2nd entry trigger)
13:18 fwlt nice :) (from later breakout)
13:18 resistance in here with the 75 zone



9:39 WIRE also good daily for more upside to keep an eye on ... thinner though
9:45 (break 9:43 23.76) wire first resistance into 24
12:38 WIRE again at new highs.. looking really good
13:25 go wire go :) (24.78)
13:26 wire 25 resistance (trading in zone at 24.93)



9:42 the ES opened smack into some fib resistance and held it perfectly... been selling off since

9:43 think someone mentioned FLR, but also good daily for more upside



9:52 most opening gainers not holding up

9:57 NQ coming into 15 min 20 sma support

10:00 biz inventories .1% vs .5% estimate

10:02 YM three waves lower on the 100 tick into support here

10:43 NQ pushing up against yesterday's highs (also reversal period)
10:51 NQ back to intraday lows.. once again seeing higher volume on the selloffs today than the buying

11:02 NQ support 11:00 correction period
11:18 futs moving slowly off the support ES hitting 5 min 20 sma

12:07 futs resistance

12:23 WRNC can easily trend higher throughout the afternoon. watch out though because it can have some nasty flushes
13:22 wrnc hitting some resistance into 51 (from 50.60)



12:30 futs at next resistance (1997 NQ, 1403 ES)

12:56 futs at initial support from the reversal (1993 NQ, 1400.5 ES)

13:49 futs 5 min resistance three wave up on the 100 tick

Market Reacts to Daily Support with Strong Upside

Good day! As earnings season winds down, the market still refuses to give up hope despite strong bearish pressure. Monday's session began with a slight upside gap in the indices. The index futures had all formed three waves of buying on their 400 and 800 tick charts and this left the market with a bearish bias going into that opening bell. It did not take long for the indices to pull back, creating a lower high and breaking the immediate uptrend to favor a longer correction.

Action out of the open was once again very choppy. The trend in recent weeks for significantly more choppy intraday moves followed by sharp trend action with stronger than average trend moves carried through into Monday's session. After pulling back for the first 45 minutes of trade on Monday, during which there was substantial ovelap from bar to bar on the 5 minute charts, the market took off. The indices had found support with the 10:15 ET correction period and a 50% retracement in the Nasdaq back to Friday's afternoon lows and after only a modest change of pace on a 50 tick time frame the indices were back to testing the morning's highs. The Nasdaq, which had the most shallow correction out of the three major indices, led the way.

Dow Jones Industrial Average ($DJI)


When the 10:45 ET correction period hit the market stalled. The momentum was so strong on the upside, however, that it worked against the odds of a decent price correction and instead the market held up at the zone of the day's highs. A second wave of buying triggered at about 11:40 ET. In the time zone between 11:15 ET and 12:00 ET it is difficult to pin down any time at which a new move is most likely to occur, so it was primarily the momentum shift on the smaller time frames that indicated the beginning of this latest breakout.

This second rally closed the S&P 500's gap from Friday morning. That price resistance level hit with the 12:00 ET correction period, although it took a few more minutes for the indices to begin to react to it. The overall momentum of the second rally was less than the first, suggesting that any additional upside in the immediate trend would have to work even harder to press to new highs and that a longer correction would be needed before the trend could resume, similar to the uptrend into the morning which had also had three waves of buying.

The market moved in for a third wave around 12:40 ET, but the move only managed a slightly higher high in the indices before the 13:00 ET correction period hit. This finalized the three wave trend move and the market began to pull back into the afternoon. The momentum on that pullback, however, was not extreme. Two waves on a 5 minute time frame took it into about 13:45 ET. The Nasdaq once again experienced the most shallow pullback, while the S&Ps and Dow found support at the congestion from 11-11:30 ET.

S&P 500 ($SPX)


The buying returned slowly for the second half of the afternoon, but after 14:25 ET the momentum increased dramatically, sending the indices soaring to new intraday highs. Volume had been slowing throughout the morning rally and into the early afternoon, but it picked up strong again with the 14:25 ET momentum increase, confirming the rally. The Nasdaq was able to make it back to the zone of last week's highs, while the S&Ps and Dow found resistance at the 15 minute 200 period simple moving averages. These hit heading into the 15:00 ET correction period and the highs held with a range into the close.

The Dow Jones Industrial Average ($DJI) rose 130.43 points, or 1% on Monday, closing at 12,876 with 27 of its 30 components ending higher on the session. Alcoa (AA) led the move with a 6.58% gain, while McDonalds (MCD) climbed 2.75%, and Caterpillar (CAT) broke out of a nice daily range with a 2.52% gain. American Intl. Group (AIG) (-4.74%), and Hewlett-Packard (-4.68) lost ground with Chevron (CVX) closing only a hair negative (-0.-3%).

Nasdaq Composite ($COMPX)


The S&P 500 ($SPX) rose 15.3 points, or 1.1%, on Monday. It closed at 1,403.5. The Nasdaq Composite ($COMPX) gained 42.97 points, or 1.8%, and closed at 2,488.49. The tech stocks helped propel the Nasdaq higher with Research in Motion (RIMM) gaining 6.9% with the introduction of its new BlackBerry model. In other news, MBIA (MBI), a major bond insurer, rose 4.5% after it restated higher earnings. Also of note was action in crude oil prices, which fell $1.73 to close at $124.23/barrel after hitting record highs once again last week.

I don't have a strong feel for the market on a daily time frame right now. The rally on Monday was stronger than I had expected going into the day and opens the door now for another test to highs before a larger weekly correction occurs. Action was still bullish into Monday's close, so there is room for another move higher early this week. A main concern I have for the bulls is that volume was lighter on Monday than it was during the selloff last week. Although the Nasdaq can easily break last week's highs, the S&Ps and Dow will have more difficulty without the volume to back it up.

Question regarding the text included in my CD course

Question:

Hello,

In your course you say "400 pages of text". Are you including the text of the videos in PDF format along the course?

Regards...

Answer:

Hello,

Included in the course is a book which covers the CD course in text format
and includes worksheets/tests of the material. There is also a pdf of
patterns for "successful market timing" which covers a substantial number of
the core pattern setups that I trade, detailing how to enter, exit, set
targets, and stop on the setups as well as pros and cons to watch for and
examples of each. A second pdf on the No Indicators CD uses the slides in
that 3 hour presentation, but rewords the material in a 100 page pdf.

All my best,
Toni
http://www.swingtrader.net

Trade and Commentary Wrapup - 20080512

Hi gang,

For those that are new, this is a wrapup of my commentary from my trading room. It's a live outlet for folks to share trade ideas and socialize about the market. When I have time I include charts to show the action I am referring to so that you can learn from the posts as well. A link for accessing the room can be found at http://www.tradingfrommainstreet.com. This link is updated throughout the day, so just hit refresh on this page to view the latest, including those stocks and market actions I am watching for.

All my best,
Toni

9:34 the indices already have three waves of buying on the 400 tick charts (this means that the market is likely to correct longer from the uptrend and break that trend)
9:46 indices lower high on the 400 tick
9:52 indices doing a good job of holding that third highs... confirming the trend change

9:44 ANN nice daily for more upside.. will watch for cont patterns
13:39 ANN is basing at highs again

9:58 slow morning....

9:59 IMCL will keep on short watch list... good daily gap but want a better base at these lows

10:08 volume is a bit light so far today

10:27 NQ hitting zone of morning highs

10:39 HOC is basing at intraday highs
13:09 HOC off watch... scrunch....

10:40 NQ here hitting Fib resstance from that trend higher into the open from Friday

10:46 NQ resistance didnt hold too well.. reversal period now hitting with the ES testing premarket highs

11:56 ES closed fridays gap... price resistance zone hitting

12:45 afternoon trade is going to be more difficult for the bulls... has potential for one more rally, but the momentum is shifting so likely to bea weaker than the last
12:53 this is the third move on the 5 min
13:00 13:00 reversal period
13:08 futs rolling over pretty well off the third high so far
13:09 correction period holding

12:55 jonathanpoon-CAT for a swing?
13:03 Toni - CAT looks good for a swing would have liked a better intraday price than here but nice daily

13:12 EOG forming 5 min avalanche 15 min 20 sma resistance... EOG is a bit whippy... on a break I'll be looking for it to test the mornings lows zone 135-135.40
13:22 norancho - trigger looks like 136 to me
13:23 Toni - can use that or 136.29 break

13:38 PCLN similar to EOG.. also trades choppy

13:39 not a lot i am seeing this afternoon with daily charts that also are favoring the intraday strongly

13:46 futs at a bit of support
14:01 futs first resistance coming off that support
14:12 futs coming into second resistance

14:00 correction period

13:55 POT 5 min bull flag 199.40
14:09 POT new highs showing some resistance in here into 201

14:36 futs resistance... 15:00 is next correction period.... this is thursday highs ES... third wave hugher on the 400 tick NQ today

I'm Back!

Ok, I am FINALLY starting to feel a bit better! There is something very wrong with being sick when it's 85 degrees and sunny out! I'm still a bit worn out so am going to be taking this week a bit slow, but hopefully will be getting my feet wet again in the markets, but likely won't be in full time for a few more days...

Earnings Season Winds Down Following Disappointing Week

Good day! The market has experienced a lot of disappointment this earnings season. Overall market action has been choppy as last quarter's reports wrap up, turning the focus back to larger economic concerns such as rising fuel and food costs.

On Friday the Dow Jones Industrial Average ($DJI) lost another 120.9 points, or 0.9%, to close at 12,745.88. This brought the losses for the week to over 300 points, or -2.4%. The 60-minute Avalanche short pattern I had been looking at earlier in the week had formed Tuesday, triggered on Wednesday and followed through quite well during the remainder of the week.

Leading the downside in the Dow on Friday was American International Group (AIG). It shed 8.8% following a larger-than-expected loss which led to a cut in the the insurance company's credit rating by Standard & Poor's.

Holding up somewhat better was the S&P 500 ($SPX). It still lost 9.4 points, or 0.7%, on Friday to close at 1,388.28 for a weekly loss of 1.8%. The Nasdaq Composite ($COMPX) lost 5.72 points, or 0.2%, and closed at 2,445.52, down 1.3% on the week.

The index futures fell sharply in afterhours trade on Thursday and premarket Friday morning. They hit lows between 5:30 and 6:00 am ET and rounded off into the opening bell. The Commerce Department reported a large drop in exports as well as imports ahead of the bell, bringing the trade deficit down to $58.2 billion. This had relatively little impact on premarket trade, however, since prices were already beginning to round off coming off the lows.

Dow Jones Industrial Average ($DJI)


Although up off lows, the indices all still opened with rather substantial downside gaps. As long as downside gaps of this magnitude head higher within the first 15 minutes of the day, they stand a strong chance of at least one of the three major indices closing that gap in the morning. The Nasdaq, which had the strongest relative performance throughout the week again took the lead on Friday and began to pull higher almost immediately.

The S&Ps and Dow were more reluctant to fill the gap, favoring the larger bearish daily sentiment. Although the Nasdaq broke higher at 10:00 ET into the 5 minute 20 simple moving average, the S&Ps and Dow fell into a longer range at intraday highs shortly after the opening bell. All three of the indices, however, moved to new intraday highs out of 10:30 ET. The Nasdaq had been hugging the 5 minute 20 sma on light volume, so it provided perhaps the clearest setup leading to the mid-morning rally.

S&P 500 ($SPX)


The Nasdaq soared into Thursday's close, completing the gap closure as the 10:45 ET correction period hit. Although the S&Ps and Dow fell quite short of closing their own morning gaps, both hit resistance at the same time as the Nasdaq. The S&P ran into its 15 minute 20 sma, while the weaker Dow bumped up against Thursday's lows, which had now become resistance. All of these lined up and the market reacted quickly, pulling back strongly into 11:00 ET. This change in momentum was enough to turn the market bearish for the remainder of the morning and into the early afternoon.

Nasdaq Composite ($COMPX)


The market slid lower mid-day with a lot of price overlap on both the 5 and 15 minute time frames. This is typically a rather difficult type of market to trade in. Volume had dropped off and while a choppy decline can create a rapid pop higher with little notice, the overall momentum was not slow enough on the downside to easily sustain such an attempt. The result on Friday was that a turn higher into 13:00 ET did not make it past that correction period and the indices fell to one more low intraday into the 13:30 ET reversal period to flush out overly eager buyers.

The remainder of the session was spent in an uptrend, but it also remainded more choppy than average. A move higher into 14:00 ET was followed by an extended congestion zone into 15:15 ET before the market made one last intraday high into 15:30 ET. The indices then pulled back into the final 30 minutes of trade and closed near the middle of the day's range.

I am not very optimistic in the near future for the bulls. Although there are some decent support levels that will hit on the way down, I don't think many of them will hold for more than a few days if we continue to see selling early this week, which is likely. I suspect that we are now going to be looking at another move lower on the weekly time frame into the summer since a lot of resistance had hit on that time frame over the last two weeks. The most notable was the November and December lows. This zone has hit and is also a 50% retracement zone for the indices, which have regained slightly more than 50% of the losses that had occurred on the decent off last year's highs. This was what I originally looked at for resistance almost two weeks ago. Even though it has pushed somewhat higher than exactly 50%, its still within the zone of that resistance level.

Economic Reports and Earnings Events This Week

Economic Reports and Events This Week

Monday, May 12, 2008
2:00p.m. Apr US Budget Balance. Expected: -$160B. Previous: -$48.4B.

Tuesday, May 13, 2008
7:45a.m. CSC Chain Store Sales Index For May 10. Previous: -0.2%.
8:30a.m. Apr Import Prices. Expected: +1.5% Previous: +2.8%.
8:30a.m. Apr Retail & Food Sales. Expected: 0%. Previous: +0.2%.
8:30a.m. Apr Retail & Food Sales, Ex-Autos. Expected: +0.3%. Previous: +0.1%.
8:55a.m. Redbook Retail Sales Index For May 10. Previous: -1.6%.
10:00a.m. Mar Business Inventories. Expected: +0.4%. Previous: +0.6%.
5:00p.m. ABC/Wash Post Consumer Conf For May 11. Previous: -46.

Wednesday, May 14, 2008
7:00a.m. MBA Mortgage Refinancing Index. Previous: +19.3%.
8:30a.m. Apr Consumer Price Index. Expected: +0.3%. Previous: +0.3%.
8:30a.m. Apr CPI, Ex-Food & Energy. Expected: +0.2%. Previous: +0.2%.

Thursday, May 15, 2008
8:30a.m. Initial Jobless Claims For May 10 Week. Expected: +8K. Previous: -18K.
8:30a.m. May NY Fed Manufacturing Index. Expected: 0. Previous: 0.63.
9:00a.m. Mar Treasury International Capital Flows. Previous: $60.1B.
9:15a.m. Apr Industrial Production. Expected: -0.3%. Previous: +0.3%.
9:15a.m. Apr Capacity Utilization. Expected: 80.1%. Previous: 80.5%.
10:00a.m. May Philadelphia Fed Business Index. Expected: -20. Previous: -24.9.
10:00a.m. DJ-BTMU Business Barometer For Apr 26. Previous: -0.1%.
1:00p.m. May NAHB Housing Market Index. Previous: 20.

Friday, May 16, 2008
8:30a.m. Apr Housing Starts. Previous: -11.9%.
10:00a.m. Mid-May Reuters/U Mich Sentiment Index. Previous: 62.6.


Key Earnings Announcements This Week:

Monday, May 12, 2008
Before: KDE, ACMR, ARQL, BKUNA (?), BLG (?), CNTY, CHTR, CDE, CODI, CRYP, DTG, DHT (?), EMAG, EMMS, EVEP, EVR, GNA, GTXI, HL, HOC, HWCC, IMAX, IPSU, IMB, VTIV, ISIS, JASO, JRT, KNOL, MBI, MED, NNI, NUHC, ORBK, OHB, PEIX, PETS, PMI, RDN, RADN, SIRI, S, SPF, TTI, TRGL, VAL (?), WPL (?), XMSR, XOMA
After: ARTE, BYI, DE, BWY, CTLM, CBAK, CLWR, COGT, CUZ, DTSI, DXPE, FLR, KNXA, LDK, MDR, MIVA, NMSS, NUAN, PROS (?), PGIC, TWTC, WRNC, WSPI, WNR, XFML, ZOLT (?)

Tuesday, May 13, 2008
Before: SMLC (?), CCJ, CSIQ, CFSG, COMV, DISH, ESLT (?), FOSL, FNDT, GIGM, GLUU, HELE, HOKU, IAG, IGLD, KEM, LIZ, SGK (?), SENO, TJX, VSE, WMT
After: JOBS, ASEI, AMAT, CALL, CVLT, CHCI, DIET, ERTS, FLML, GXDX (?), GIVN, HI, HRC, HMIN, PODD, LEV, MELI, MRGE (?), OPNT, PAAS, PLAB (?), RUBO, WFMI

Wednesday, May 14, 2008
Before: ALLT, MT (?), ACAT (?), DE, DSX, FTE (?), FRE, FSIN, ITRN, JBX, M, MEMY, NICE, CHUX, REDF (?), RSTO (?), SNE (?), ELOS, BRLC (?), TEF, TTEC, VSAT (?), WATG
After: ACXM, ANW, A, BRCD, STV, IMOS, CTRP, CUB (?), FNET (?), PETM (?), QSII (?), SLRY, SINA, SPTN, SXE, SNS, TK

Thursday, May 15, 2008
Before: AHR (?), ASFI (?), BX, BBI, CHNL (?), CYPB (?), DAI (?), DFT, ELON (?), FRP (?), FSRV, FRPT (?), GILT, IART (?), JCP, MESA (?), MLNM (?), PWRD (?), PDC (?), PBH, QXM (?), URBN, YGE
During: EPEX (?), MNTG (?)
After: AAP, ADSK, BMC, CPWR (?), EXAR, FMCN (?), GA, HPQ, IUSA (?), KSS, KONG, LTXX (?), MEDX (?), MNT, NINE (?), JWN, QTM, CRM (?), TMA (?), CHIP (?)

Friday, May 16, 2008
Before: ANF, LABL

Note: All economic numbers and earnings reports are in line with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column and some companies have not confirmed their time, so always double check when taking positions overnight during earnings season! (?) = Not yet confirmed at the time the list was compiled.

Out Sick =(

Hey gang... Well, I came down sick for the first time in 18 months where it was more than just a little cold... ugh! I will be sending out some patterns classes via email to my mailing list instead of the daily market letter this week, so watch out for them. You can sign up at http://www.tonihansen.com if you are not already on the list. I hope to be back on Monday, but I slept for 19 hours straight yesterday into today and am now going back to bed! Take care everyone!

Chatroom Trade and Commentary Notes - 20080505

8:37 ET yhoo might be good for a bounce (out of the open... was referencing earlier question on how to trade the news) actually given the extent of the gap on that particular stock (opened at $23.05)
10:15 yhoo doing decent job of bouncing has first resistance hitting at the 24 zone

9:35 dow leading market on the downside

9:37 FCX on upside watch list today (10:14 $114.65 "D" trigger, 11:04 $115.05 "A" pattern trigger)
11:33 fcx coming into first restiance ($115.75)

9:53 ANR on upside breakout watch list (10:42 $54.65 "D" style trigger, 11:05 $54.80 "A" style trigger, or 11:20 $55 "C" style trigger)
11:28 just took a bit off ANR... resistance from morning high ($55.50-$55.65 resistance zone)

9:54 yeah (i) like that clr also (for upside breakout)... (10:13 trigger $48.77 or 10:30 over $49.50)
10:38 clr first resistance zone here for those following it ($51.35)

9:56 futs at a bit of resistance here

9:56 HES maybe but momo needs to change intraday... would be upside breakout that is (momo changed and triggered an "A" pattern at 10:10 over $109.15)
10:29 HES back at upper end of the range
10:36 HES "a" pattern from earlier hitting initial resistance ($110.00)

10:03 lot of the things that are in high level bases showing weakness in the bases

10:26 saw tdw too late (educational example) :( was trading 58.90 and didnt want to chase... really nice daily on it
member: you like the tdw daily toni? for trapped longs having to sell?
me: yep ISRG had similar action onthe 18th same concept... that daily pattern usually closes near day's lows but can put in most of th emove in the morning and then just chop in the afternoon... FSLR thursday was also similar daily type of trap

10:35 (discussing MEE in the room) "i had MEE btw as momo short scalp into 10:00 on 50 tick chart for those studying that pattern" (educational example... did not have time to call it due to the time frame... trade was over by 10:15 ET)

10:55 WFR base at lows intraday volume and pace in the range are cons

10:59 NQ at premarket lows

11:04 ES 50% retracement zone back to may 1 lows
11:40 futs coming off first resistance from that 15 min support around 11 we were watching... its the 5 min 20 sma

12:01 i am not sure what to make of the market for this afternoon.... futs are trying a 5 min phoenix but on the risky side

12:02 sedona : indices daily chart is toppy ... maybe not going anywhere today
12:03 Toni : yeah i dont have a lot of confidence in follow through today so far... just not seeing it... things getting stuck at first support and resistance levels only... daily is actually on the weak side in the indices for today

12:04 Kaizen: could 5m ES be forming avalanche pattern to upside?
12:05 Toni: yeah.. that would be a phoenix... risk is higher than averge for that setup right now though because it has a rapidly ascending triangle on the 5 min
12:05 Toni: 12:05:26 Phoenix: For more information on this setup, please see http://www.tradingfrommainstreet.com/techanalysis2.html#17
12:05 Toni: avalanche is the pattern off highs
12:05 Toni: phoenix is the pattern off lows
12:05 Toni: just flipped over
12:05 Kaizen: ok, thx
12:27 Toni: can see on that phoenix that it technically broke the upper channel line but essentially formed a trap
12:27 Toni: any time you have a very tight rising triangle after it comes off lows the odds increase it will trap buyers
12:27 Toni: so i like to see two lows in a phoenix or base
12:28 Toni: reduces that risk substantially
12:38 Toni: the NQ actually has two lows in now on the 2 min along this 5 min 20 sma


Discussion on ANR Buy Setup
13:00 Toni: i am counting on ANR to make my day ... i fed it part of my veggie burger to help keep it happy
13:00 Toni: it seems to like veggie burgers
13:01 crack: where will u puke ur veggie burger?
13:02 Toni: i was late...55.20 then added back at 55 just before the lastpop
13:02 crack: wheres ur stop now?
13:02 Toni: crack stop talking mean to it!
13:02 Toni: under 54.6
13:03 Toni: had order in for 55.86 part but missed by a penny :/
13:05 norancho_: ANR ran out of gas on veggie burger, that doesn't happen with hamburger
13:05 Mykonos: ANR heavy sellers
13:05 Toni: crack induced vomiting in ANR :(
13:06 Toni: yeah...stocks dont usually go anywhere on hamburgers... sit on the couch with their beer waiting for the prices to come to them
13:06 Toni: :)
13:06 norancho_: you say that like it is bad
13:06 Toni: lol
13:06 norancho_: :)
13:08 Toni: i had .35 cent slippage off the high on partials for being 1 cent off drrr
13:09 Rory: what did you like about anr
13:11 Toni: the main thing that first caught my eye was the daily chart
13:11 Toni: if you look you can see it had two waves of correction
13:11 Toni: coming in between the 20 and 50 sma
13:11 Toni: you can probably see that better on a 60 min
13:12 Toni: volume was on the light side on the selling
13:12 Toni: and two wave corrections can easily form continaution patterns
13:12 Toni: it actually triggered as such on friday
13:12 Toni: but congested into the close
13:12 Toni: which was good because had it ran into the close the gap could more easily be an exhaustion gap
13:12 Toni: since this was a base into the close on friday
13:13 Toni: and a daily setup after two waves of correction
13:13 Toni: you are more likely to get a trend day off that type of gap
13:13 Toni: i look at all daily charts that look like this for intraday buying ops
13:13 Toni: and use the template:
13:13 Toni: 13:13:41 Breakout Template: For information on A, B, C, D, or Z template patterns, please see http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif The green circle is the entry with the red bar as the stop.
13:13 Toni: for timing them
13:13 Toni: will look for two wave corrections intraday
13:13 Toni: or other forms of base breakout
13:14 Toni: ANR had a couple potential entry triggers which i posted in the blog
13:14 Toni: i caught the last one
13:14 Toni: then the continuation
13:14 Rory: i see what your talking about on light volume sell off
13:14 Toni: which was actually a two-wave buy on the 15 min
13:14 Toni: the light vlume since 11:30 was the reason to add on in the $55 zone
13:15 Toni: i was looking at 56 as initial target zone but when something starts at a whole number it often will stall at .86-.92
13:15 Toni: so i just used the lower end of that since it has been a bit wider in a spread
13:16 Toni: when it hit .85 and began to turn though i had to change my order fast because i knew it would at least pullback to the 5 min 20 sma and since i'd added to the position i wanted to protect that addition at the first main resistance
13:16 Toni: but was slow
13:16 Toni: well.. it went fast
13:17 Toni: usually wont drop like a rock like it did this time
13:17 Toni: i am actually gonna go ahead ans scratch
13:18 crack: done any stat work on size/% gap leading to trend day on these type of plays?
13:18 Toni: this momo change is not positve and the market is having trouble holding up
13:18 Toni: it has a 15 min 2 wave cont short it is trying
13:19 Toni: the last work i did was last summer.. with the base into the close and that two wave pullback it was about 90% on at least having a trend morning or else closing near day's highs
13:19 Toni: it has a higher failure rate when the overall market is very extended
13:20 Toni: but in an iffy market the odds are still that high
13:20 Toni: so like int he middle of a trend move on a daily int he overall market
13:20 Toni: will still give strong follow through on that type of daily in an individual stock
13:20 Toni: got .92 btw
13:21 crack: will u flip and ssh it under any conditions?
13:21 Toni: this might still try again but my odds dropped a lot
13:21 Toni: the ones i will short are
13:21 Toni: say you have that pullback ont he daily or 60 min
13:21 Toni: then it turns
13:22 Toni: runs off lows
13:22 Toni: then continues the next day
13:22 Toni: thent he third day it gaps up
13:22 crack: pbr clears daily swing hi's
13:22 Toni: will look to play that either as scalp up fast in first 60 min
13:22 Toni: or reverse
13:22 Toni: for short
13:22 Toni: because it tends to not follow through more than 60 min
13:23 Toni: often not more than 15
13:23 Toni: this particular one i wouldnt short because the daily is too strong and doesnt show trend exhaustion yet intraday
13:24 crack: if you only had one pattern to trade which one would it be?
13:24 charlie1: the one that wins
13:24 Toni: momo reversals
13:24 crack: recent example?
13:24 crack: tdw?
13:24 Toni: BIDU just had one into 13:00
13:25 Toni: short
13:25 crack: what is the time frame and trigger?
13:25 Toni: can see it on a 1 min
13:25 Toni: or 50 tick
13:26 crack: u ssh that little 1mn pullback to 377 zone?
13:26 Toni: i draw a channel line under lows into that last high that made a slightly higher high and short the channel break
13:26 Toni: then place stop over the highs
13:26 crack: can u post a pick on ur blog?
13:26 Toni: if it stops out coming off a third time then i take 1.5 risk on it off a fourth high
13:27 Toni: like bidu you might havetaken just before 12:45 off the third high
13:27 Toni: at 377 area
13:27 Toni: and may have gotten flushed out
13:27 Toni: so then i take 1 and a half risk units instead of regular one
13:27 Toni: coming off fourth highs
13:28 Toni: often there is slightly more time difference between third and fourth high
13:28 Toni: than betweent he first and second and second and third
13:28 Toni: which will be more comparable
13:28 Toni: that 15 min 2 wave cont short in the indices is under way btw
13:50 Toni: hope you enjoyed the day... for those with this two wave futs short it has next support at morning lows on es and friday lows on nq

BIDU Momo Reversal Short

Toni's Position Trader Newsletter Pick of the Week

The Goodyear Tire & Rubber Company (GT) engages in the development, manufacture, distribution, and sale of tires and related products and services worldwide.

Sector: Consumer Goods
Industry: Rubber and Plastics

GT was one of the market's darlings in late 2006 and into mid-2007. Since then it has been in a corrective mode. It has formed two waves of selling on a monthly time frame into the 20 month simple moving average and has begun to stabilize at that level. I am expecting the upside momentum in GT to increase at this point and will begin to build a position in it with the 20 months sma as support. Notice that volume has recently increased after a period of diminished volume. It has done so with an upside bias, suggesting that the security will continue in that direction. A setup such as the two-wave correction can often begin gradually like GT has done so far and increase on the upside much like a slope of a mountain, so the fact that it did not rapidly bounce off the monthly support and has rounded off at it instead is not a large concern for me.


Stock to Watch:
Long: AZO - Note that AZO is related to GT in that it is also in automotives, although it is technically in the services sector and auto parts industry.


Goodyear Tire & Rubber Co. (GT)

swingtrade watch list for monday, may 5

I am watching UHAL, KFT and UTHR for buy setups as swingtrades based on daily breakout formations. KFT I would prefer a slight correction on the 60 min. UHAL can go quite easily on Monday. UTHR would need a cont. also since it triggered a bit early on Friday and is now more extended on the 60 min. although it has room into $98-100 as a swing. UHAL target is $68-$70. KFT target is $34.

Daily Channel Breakout Falters

Good day! The index futures surged higher into the open on Friday following better-than-expected jobs data. Nonfarm payrolls in April fell by 20,000, substantially fewer than the average of 80k/month average year to date. Economists had been anticipating a job loss of 78,000. April's jobless rate dropped to 5%, off 5.1% in March, while it had been expected to inch higher to 5.2%. Average hourly earnings increased by 1 cent to a year-over-year gain of 3.4%, while the average workweek fell six minutes to 33.7 hours. The factory workweek fell 18 minutes to 40.9 hours.

The premarket rally created an opening price level in the indices which broke through the upper channel of the daily trend we have been following over the past two weeks. It is common that an upside gap out of a trend channel will create continuation of that channel break. In individual stocks I actually look for such a move to help me identify stocks that will have a higher probability of a trend day in the direction of the gap. When the overall market experiences a gap of this size, however, especially after a trend day such as the one which took place on Thursday, such a gap has a much more difficult time holding and the bias favors a closure of the gap.

The market opened on Friday at fairly decent price resistance, particularly in the S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI). I often use the index futures to identify support and resistance levels. The EMini futures provide very accurate readings. Last November the June contract for the EMini S&P 500 (ES) hit a low of 1426.25. The premarket high on the ES was 1427, with an opening high of 1424. This landed it squarely in the zone of the support turned resistance from November. The mini-sized Dow (YM) experienced similar resistance from a weekly low made in August of 2007 at 13199. The premarket high on the YM was 13133. While this is not as close as it was on the ES, it was still in the zone of that resistance given the size of the time frame involved, although this also means there is more wiggle room on both sides of that resistance level.

This weekly resistance in the indices, combined with the bearish bias on this type of gap in the indices, helped the market start to sell off even before the opening bell rang. An Avalanche had been forming on the 5 minute charts in the premarket and triggered at the same time as the intraday session began, sending prices plummeting out of the open.

Dow Jones Industrial Average ($DJI)


The market found initial support at the 9:45 ET correction period. At this time the Nasdaq Composite ($COMPX) had also fallen into the support zone from Thursday's highs. The two worked together and the market bounced into 10:00 ET. The momentum of the rally was strong, but not as strong as the descent had been and the congestion from the premarket base into the open served as strong resistance, allowing the market to once again begin to sell off as the morning progressed. The light volume on the bounce helped, since it signified a lack of truly committed bulls. Whenever the market rallies on light volume it is a warning sign and increases the risk that it can quickly reverse.

At 10:00 ET the Commerce Department came out with its most recent statistics on U.S. factory orders. Excluding products related to transportation, orders for U.S. goods rose by 2.2% in March. This is the largest increase in a year. Durable goods orders increased 0.1%, coming in higher than anticipated. This data, combined with the earlier jobs data and recent decisions from the Fed, are fueling speculation that the economy may be beginning to stabilize. It didn't do much to help the market out intraday, however, since prices began to fall once again soon after the 10:00 ET data.

The market stalled briefly at morning lows and the 5 minute 20 period simple moving average, but instead of forming a continuation pattern such as an Avalanche, a three-bar continuation formed on the 5 minute time frame. The move was decent out of this pattern, taking the Nasdaq Composite back to its 15 minute 20 sma, but the overall momentum was not as strong as earlier. This is rather common with this type of continuation pattern and can lead to choppier market action.

S&P 500 ($SPX)


The indices had begun to break lower again quickly, but that momentum lasted for only a couple of minutes out of 10:30 ET and it slowed as the indices made lows into the 11:00 ET correction period. The slower momentum allowed the indices to pop quickly, albeit briefly, out of 11:00 into the 5 minute 20 sma resistance, which hit at the 11:15 ET correction period. This resistance held and a 5 minute 2-wave continuation pattern was created, triggering into the 12:00 ET correction period.

The 15 minute time frame made it difficult for the market to gain momentum on the downside on Friday despite the larger bias in that direction. Overall the upside from Thursday into Friday was simply too strong. Sharp upside moves will most often correct through a more gradual pullback. Downside momentum has a difficult time increasing unless the market forms a more gradual upside following the initial correction off highs. On Friday, however, the midday congestion simply did not form long enough to create a larger short setup. Instead it kept breaking down on the 5 minute time frame, making a series of lower lows on the 5 and 15 minute time frame which was a steady trend, but with a slower trend channel than the prior upside move.

At 13:00 ET the market flushed quickly lower. This took the indices into the middle of the congestion level from Thursday. The middle of a previous congestion zone is very strong support and it held well. The market began to increase in upside momentum, hitting prior 5 minute highs and breaking the 5 minute 20 sma just prior to 14:00 ET. It then flushed lower at 14:00 ET, but this simply created a better test of the support and it fell into congestion along those lows. Since the momentum on the downside was slower than the upside and there were slightly lower lows in the S&Ps and Dow on the 5 minute time frame with strong 15 minute support, it made it more likely that the lows would hold for the remainder of the day.

The pattern along the lows from 13:00 to 15:00 ET is actually one, which, had the momentum lower into 13:00 been more substantial, would typically be a short setup. Given the pace and trend placement, however, the risk was high that a short trigger into 15:00 ET would fail. I had been asked about this very pattern intraday and in fact, the setup did trigger a false short with a slight break of the trend channel from 14:05 into 15:00 ET, but the 5 minute chart shows how the indices failed to follow though and flushed quickly higher instead. The market remained choppy into the close, but the bias had turned and the indices closed at afternoon highs, albeit still far from morning highs.

Nasdaq Composite ($COMPX)


By the closing bell the Dow was up 48.20 points, or 0.4%. It ended the session at 13,058.20, up 1.3% on the week. The S&P 500 gained 4.56 points on Friday, or 0.2%. It closed at 1,413.9, rising 1.1% on the week as a whole. Energy and financials stood out as the top market leaders in the S&P, while healthcare remained negative. The Nasdaq Composite closed lower by 3.72 points on Friday, ending down 0.1% at 2,476.99. On the week, however, it gained 2.2%, topping both the S&Ps and Dow.

The failed breakout from the daily channel is going to help the market continue to try to hold the larger channel as the new week begins. There will be room for the indices to move higher on Monday morning, continuing the reversal off Friday's lows. By afternoon, however, the way will have been paved to allow for another breakdown on the 60 minute charts with the strong potential for an Avalanche on that time frame. The larger bias is more difficult to discern since there will be room following another 60 minute correction for the market to again push higher. A lot will depend upon the momentum moves of the next several swings on that 60 minute time frame, although I do think the market will attempt a stronger test of the year's highs this coming week.

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Economic Reports and Earnings Events This Week:

Economic Reports and Events This Week:

Monday, May 5, 2008
10:00a.m. Apr ISM Non-Manufacturing Composite Index. Previous: 49.6.

Tuesday, May 6, 2008
7:45a.m. ICSC Chain Store Sales Index.
8:55a.m. Redbook Retail Sales Index.
5:00p.m. ABC/Wash Post Consumer Conf.

Wednesday, May 7, 2008
8:30a.m. 1Q Productivity, Prelim. Previous: +1.9%.
8:30a.m. 1Q Unit Labor Costs, Prelim. Previous: +2.6%.
10:00a.m. Mar Pending Home Sales Index. Previous: -1.9%.
3:00p.m. Mar Consumer Credit. Previous: +$5.28B.

Thursday, May 8, 2008
8:30a.m. Initial Jobless Claims.
10:00a.m. Mar Wholesale Trade. Previous: +1.1%.
10:00a.m. DJ-BTMU Business Barometer.

Friday, May 9, 2008
8:30a.m. Mar Trade Balance. Previous: $62.3B.

Key Earnings Announcements This Week:

Monday, May 5, 2008
Before: AMRI, ANR, ALO, ALVR, BKI, CZN, CMS, CORS (?), ENG, GG, GAP (?), HAIN, HEW, INXI, MVL, MCY, NTE, NSTC, NGPC, NAT, NOVN (?), ORBK, PPC, PMI (?), POR, RRST, STEC, TDW, WLL
After: JOBS (?), ARG, ALJ, AIMC, APC, AGII, ALC, BAS, CECO, CLF, CSA, DIVX, DLLR, DSCM, ERES, FST, GERN, HLF, HHGP, IBI, INTX (?), KND, LVS, LF, LOOK, MCK, MERC, NLS, EGOV, OMPI, PKY, POM, FACE, PBI (?), PPS, PWAV, PFG, PSB, RADN (?), RAE, RAS, RTEC, SMG, SPRT, SYKE, SYMM, TS, TX, TNS, UDR, VMC, VYYO (?), WTW

Tuesday, May 6, 2008
Before: ADES, APAC, WTR, ARJ, ATRC, ABX, BBG (?), CSE, CPHL, FUN, LNG (?), CHD (?), XEC, CXW, COV, COWN (?), DK, UFS, RRD, DHI, ECLP, EMS, EMR, EL, FNM, FTE, FTEK, WOLF, HSIC, HDIX, HURN, HYGS, ITWO, IAR, IPGP, LAZ, LMIA, LPX, MMP, MLM, PCS, MGM, MDH, TAP, MYGN, NSSC, NURO, NYX, PTRY, PKE (?), PKD, PEI, PFGC, PRGO, PQ, PCG, PLA, PCP, PEG, Q, SLE, SIRI (?), SKH, SE, SPC, JOE, STXS, TKLC, PHC, TEVA, TWPG, TDG, TWP, UNT, VTAL (?), VNO, WTI, WWE, XRIT (?)
After: ACAS, ACLI, ASYT, ATHN, BIDZ, BIO, NILE, BDE (?), BEXP, CELL, CRL, CHRD, CHDN, CSCO, CNL, CRK (?), CPTS, OFC, CUTR, TRAK, DM, EGLE, EXP, ESE, XCO, EXEL, EXLS, GSX, HCKT, HAR, HLEX, HLS, HLTH, HOKU, SOLD, HYC, IIG, IO, JCOM, JKHY, KCP, MFB, MCHX, ME, MXWL, MFLX, ORCC, OPTV, OPMR, OSUR, ORA, OSIP, PACR, PEC, POL, PRXI, QSII (?), RFMD, RUTH, SLXP, SRX, STAA, STAN, SGY, SNCR, SVR, TTGT, THQI, TLCV, UPL, UAM, UTI, VCLK, VTR, DIS, WRNC (?), WBMD, WFMI, GB, WMS, ZGEN

Wednesday, May 7, 2008
Before: AGN, ALD, AHCI, ALY, AOB, AHII (?), ARD (?), CRZO (?), CKP, CSK, CLHB, CTSH, CTB, CXR, DWSN, DVN, DTV, DTG (?), EMKR (?),, EBS, ENB, XJT (?),, FWLT, FTO, FCN, GTN, HELE, HSP, HWCC (?), NRGY, IDCC, IHR, JRCC (?), KNDL, KBALB, ID, LAMR, LM (?), MKTX, MMC, MMS (?), MDTH, MCCC, MGAM, NCR, NEWS, NTMD, ONNN, OHB (?),, OSCI, OC, PCAP (?), PRFT, PNK, PXD, PLUG (?), QLTY (?), PWR, KWK, SBGI, SKYW, SEP, TRK, STE, BRLC (?), TTES, TOT, RIG, TRS (?), UNCA, VRX, WRES
During: ACMR (?), JRT (?),
After: AMCN, AIRN, AEL, ARII, AHS, ANDE, ARNA, ACLS, BKUNA (?), BLKB, BBBB, CENT, CCRT, COGO, CPII, CROX (?), CCRN, DNB, DRRX, BAGL, EAC, ENCY (?), ENOC, EXPD (?), FRT, FCH, FOE, FNET, GHDX, ROCK (?), GIL, GCOM, GOLF, GXP, HANS, HCN, HIL, IDSY, TEG, IPAR, INAP, KNTA, LTRE (?), MVSN, MNR, MSTR (?), MR, MIVA (?), MSCS, NABI, NFS, NMHC (?), NSR, NWS.A, NHWK, NVEC, ODSY, OEH, PLLL (?), PDLI (?), PVA, PVR, PSPT, PCR, PL, PSSI, RAH (?), RSCR, SAFT (?), SNTS, SVNT, SCI (?), SMSI, BID (?), BEE, TLEO (?), OVEN, UEIC, VRAZ, VOLC, WRI, WEDC (?), ZIPR

Thursday, May 8, 2008Before: SMLC (?), KDE (?), ABH, ACW, ACM, ATK, AMSC, ABV (?), ASCA, AHR (?), ARCC, STST, ARQL (?), ATPG (?), ABTL, BKRS (?), BRL, BNT, BCRX (?), BVF, BORL (?), BRKR (?), CVC, CALP, CAPA (?), CELG, CTIC, CDL, CNSL, CTCT, XTEX, XTXI, CRYP (?), CUB (?), CMLS (?), CYPB (?), DWSN, DPTI, DSCO (?), DRQ (?), DYN, EIX, EP, ENER (?), EPL, FRP (?), FVRL (?), FVE (?), FRPT (?), FIG, IT, GLBC (?), GLBL, GPX (?), HEES, IDA (?), ISPH, IART (?), ISIS (?), JAH, JRC (?), KALU, KG, KOP, LXP, LCUT, TVL, LINC, LINE, LIOX (?), LAC, MIC, MPW, MEMY (?), TMR (?), MESA (?), MGPI, MEND, MLNM (?), MINI, MNTA (?), NDAQ, NGS (?), NRP, NRF, OMG, OCR, ORCH, VITA, PTIE (?), PRX (?), PDX, HK (?), PNCL, PXP, POZN, PGN, RHD, RDN (?), RCNI, RSTO (?), SBH, SGK (?), SIRO, SBSA, SPH, SUP (?), SWSI, SURW, SFY, SXCI (?), TICC (?), TTEC (?), TSO, PNX, TRGL (?), TM (?), THS, TRMP, RMIX, USPH, URBN (?), VICL (?), VG, WMG, WW, WNR (?), WATG (?), WPL (?), XMSR (?)
During: SAM (?), DNDN (?), DIOD, EPEX (?), GCA, QSFT, WCI (?)
After: APKT, ATVI, ADPT, ABCO, AEM, AIRM (?), ARE, ALNY (?), AIG, ARP, ANSV (?), ARTE (?), AGO, ATW, BE, BLTI (?), BRNC (?), BRKS, BUCA (?), BLG (?), CAMP, CPKI, CPE (?), CNQ, CTLM (?), CNTY (?), COSI (?), DAR (?), DWRI, DXCM, DEIX (?), HILL, ESIO, EMAG (?), EXAR (?), FMD, GMST (?), GDP (?), SRVY, GUID, HLYS, ICFI, IFON, INWK, NSIT, IOM (?), IPAS, DMX (?), JMP, JUPM, LEAP, LLNW, LOCM, LMNX, MSSR (?), MCGC (?), MEDX (?), MRX (?), MED (?), MELI (?), MRGE (?), MIDD (?), MOVE, NABI, NHP, UEPS, NLST (?), NGAS (?), NUAN (?), NUCO, NUVO, NVDA, OCNW, PEIX (?), PZZA (?), POM, PMC, PEC, POWR, PCLN, PROS (?), PSA, RNWK, RUBO (?), WINS, SALM, SD, SAPE, SGMS, SGTL (?), SIX, SONS, SRSL, SNS (?), SHO, SUPX (?), TEAM, KNOT, THRM, TMA (?), TIE (?), TRMS (?), TRLG, GROW (?), URS, YSI, VSE (?), CHIP (?), VRSN, VITL, WON (?), INT, WPTE (?), XOMA (?), ZOLT (?)

Friday, May 9, 2008
Before: AER, AYR, BECN, LSE, CCU, CCO, CCOI, GTN, HUN, OMRI, OPTR (?), RTK, SUG, STRL, WCRX, WR, WIN
During: ASYNM (?)
After: CYCC

Note: All economic numbers and earnings reports are in line with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column and some companies have not confirmed their time, so always double check when taking positions overnight during earnings season! (?) = Not yet confirmed at the time the list was compiled.

Tick Charts

segment from an email to me:

I love the patterns you watch in combination with all the additional insight and nuances you suggest as well, but the highly discretionary and dynamic nature of it all makes it easy to be careless or lack discipline in the execution. I've recently started watching the 1-min chart to see if I can take price-pattern entries there in anticipation of a pattern play-out on the 5- or 15-min charts.

segment from my response addressing this issue:

I highly suggest adding tick charts. This will show you those back and forth movements to allow you to better read the pace of a move and help time your entries and exits more precisely. Use the time frame charts like the 5 minute and 15 minute to help with bias and pattern formation, but drop down to a 100 or 50 tick chart to help time the actual trade. Pace in particular can be much more easily discerned within a pattern such as a base or whatnot on a tick chart as opposed to a time frame chart. The only disadvantage of a tick chart is that you can't use volume on it, otherwise it's vastly superior. I often use a 400 tick chart to help locate a setup and then the smaller ones to time entry, checking on volume on a time frame chart.

Trade Wrapup - 20080502

11:39 ITG base at lows intraday with daily channel breakdown
13:05 norancho - as ITG drags this out, does it change your interest in it?
13:07 Toni - it the momentum starts to hug the upper end of the channel,,, want it to hold under the 15 min 20 sma zone also and continue to have weaker upside in the channel than on the downside


13:17 NQ support 15 min
13:30 first resistance here on move off support

14:37 RIMM "D" buy on 5 min http://tradingfrommainstreet.com/images/roomexamples/BREAKOUT_TEMPLATE.gif

14:50 charlie might get his rally if this momo shift holds. need a slower downside move

15:05 Eternum - Toni, does YM on 5 min look like bearish D?
15:07 Toni - yeah but the slightly lower lows in the ES and the hugging at the 5 min 20 sma makes me worry it will be a trap.. had too slow of downside pace before the "D" pattern formed... slowed into that support... so risk is higher for failure or just like a double bottom or 2B at best in most cases, but often can trigger then flip fast when this setups up at this point in such a pattern so that is too much of a risk for me
15:11 Toni - see.. triggered then flipped lol

Dow Closes Above 13,000

Good day! The market took me a bit by surprise on Thursday, I had been anticipating another choppy day, most likely holding the lower end of Wednesday's range. The Nasdaq Composite ($COMPX), led by the tech sector, was the strongest advancer and essentially took the rest of the market along for the ride. The S&P 500 ($SPX) and Dow Jones Industrial Average ($DJI) had held the lower end of Wednesday's range with slower upside throughout the morning, but the Nasdaq buying began quickly almost immediately out of the open.

The indices opened with relatively little change off Wednesday's closing levels. Ahead of the open the Labor Department reported on the weekly jobless claims, which rose 35,000 to 380,000 for last week with continuing claims holding four-year highs. In addition, consumer prices reportedly increased by 0.3% in March, while incomes rose 0.3%. Consumer spending rose 0.4%.

Upside began within 15 minutes of the open and continued into 10:00 ET. At that point the rally in both the S&Ps and Dow stalled. More economic data came out at this time with the Commerce Department reporting a 1.1% decline in construction spending and the Institute for Supply Management index holding at 48.6% in April to indicate contraction in the manufacturing industry. New orders and production are gradually declining, but prices are continuing to rise.

The S&Ps and Dow fell into bases along the morning highs out of this data while the Nasdaq continued to step higher. The base in the S&Ps and Dow created a Phoenix formation on the 5 minute time frame with a buy setup triggering out of the 10:45 ET correction period. The momentum did not increase at all with this breakout, however, and the S&Ps and Dow fell into another range along the highs from 11:00 ET throughout the remainder of the morning. The Nasdaq also finally formed a longer correction.

By noon the Nasdaq was substantially more extended than the rest of the market. When the range along the morning highs gave way the Nasdaq had a much more difficult time gaining a foothold. Although it climbed steadily higher, the S&Ps and Dow took over the lead and surged to new highs on the day.

At 13:00 ET the S&Ps were testing Wednesday's highs and I began to look for the market to fall more into a trading range throughout the afternoon. Although this range did take hold, it took another 15 minutes and one more flush of highs before it got underway. All three of the indices were back to testing the upper channel of the daily trend channel by that time, which has been in place over the past two weeks. I have drawn the channel on each of the daily index charts to show the move from the lows and back to the highs on Thursday.

The market finally had extended itself to the point intraday that it simply had to fall back and catch its breath when that upper resistance hit at 13:15 ET. It did so over the next 45 minutes with the 5 minute 20 sma serving as support in the S&Ps and Dow. They hit at the 14:00 ET correction period and the market bounced back into the zone of the day's highs. This created a double top shorting opportunity for daytraders and continued with a two-wave pullback on the 2-5 minute charts into the 15:30 ET correction period. This completed a two-wave correction on the 15 minute charts and the market was able to rally once again into the closing bell.

Thursday's session ended with a 189.71 point gain in the Dow, or +1.5%, at 13,010.00. This was the first close over 13k since January 3rd. 25 of the Dow's 30 components posted gains. Financials were particularly strong on the day. American Express (AXP) gained 6.9%, while Bank of American (BAC) climbed 4.9%, and Citigroup (C) rose 4.2%. Tech shares also led the morning rally. Intel (INTC) climbed 4.6%, while Microsoft (MSFT) rose 3.1% on Thursday. Oil, energy, and gold turned around in the afternoon, rallying strongly while the rest of the market stalled. The S&P 500 closed higher by 23.75 points, or 1.7%, at 1,409.34. The Nasdaq gained 67.91 points, or 2.8%, and closed at 2,480.71.

Given that the momentum on a 60 minute time frame has shifted once again, The market now has the greater potential to break through the highs of the daily channel. Ideally the market will form a slower correction off one end of this channel or another before it really breaks to show more confirmation of a break to come. That does not always happen unfortunately, but it's what I tend to look for when establishing larger positions. The next daily resistance in the Dow will be at about 13220. 12617 is support. 2509 is the next Nasdaq Composite price resistance zone. 2377 is support.

Dow Jones Industrial Average ($DJI)



S&P 500 ($SPX)



Nasdaq Composite ($COMPX)

Trade Wrapup - 20080501

10:00 Toni futures resistance in here, premarket ES highs
. NQ 15 min 20 sma intraday. also monday highs NQ

10:05 in the ES 1387 is support, while 1938 is NQ support
momentum needs to shift again
the enxt resistance levels are 1393.5 ES and 1950 NQ
11:06 the 1393.5 level on the ES is hitting

10:31 ES has 800 tick 2T trying to form (1391.25)http://www.tradingfrommainstreet.com/techanalysis.html#2
10:42 here is first support level (1389 trading, low 1388.5)

10:55 nasdaq continuing to dominate.. its back to yesterdays highs here

12:25 market coming off some fib resistance here btw

12:49 russell 2k is closing in on the week's highs

12:56 ES hitting yesterday highs
12:40 geez.. this market non-stop

12:58 ok gang... gonna put my neck out here now but we should have seen the end of the strong upside now today... even if it continues it should just cree with chop predominate the rest of the afternoon. 13:00 ET correction period is hitting

14:30 market is doing that correction we were looking for this afternoon... can see on the 15 min how the pace has rolled over... more range.. more difficult for buyers
started 15 min later than expected.. but same idea still in play now
energy and oil and such are now taking over on the gainer side while rest back off

14:54 ES double top action 800 tick
15:37 ES double top moving on cont with avalanche... bit of support in here

15:00 MGM base at lows