Problems in the Euro Zone are keeping a lid on any good news from US Gov released economic reports today….the big primal fear is the Euro Zone debt issue…once started in Greece and then moving over to Ireland could quickly take swing on over to Portugal and then quickly swallow Spain…even today Credit Default Swaps (these are insurance coverage contracts for those holding bonds on either Portugal and Spain) has risen dramatically…and if both of these countries want to borrow money in the open markets they are seeing their cost of interest rising just as quickly as well…all in all, not that good, which is also why the US Dollar Index has risen above 81 and appears to be climbing higher while the Euro continues its downward track…as the Dollar continues upward, it will put more downward pressure on the US Equities as well as many commodities since they are traded in US denominated currencies…
Looking at the S&P 500 E-Mini Daily chart below you can see how current market price action has centered almost at support levels…..these support levels are right at the 25% Fib retracement levels as well as almost resting on the 50 Day EMA (blue line)….as I said in an earlier post, at these levels your best approach is to wait it out and see where price action moves…every time price tried to move below these support levels buyers stepped in and moved prices higher, but only so much….currently, with the S&P is in pullback mode, the best play for day traders is taking short term short positions on intra day rallies…
Looking at the same S&P 500 E-Mini Chart below but using 60 minute timeframes you can see where nice trade positions present themselves more clearly….here you can see I plotted a regression trend line from Elliot Wave 3 to Wave 4…a break to the down side required patience waiting for the setup but as you can see, the break occurred close to the EMA break as well…this was a good area to enter a short position…and early warning of this break was the extreme bearish divergence in the MACD below as shown….
Trade Smart – Not Often
Hello everyone, I hope you each had a great start to our year end Holiday season….below is a quick weekly recap of the previous trading week’s activity. One of the items I paid some attention to is how to discern a pullback/consolidation area vs. a trend change…both of them can be an opportunity to profit if you know what to look for….enjoy!!
Trade Smart — Not Often
Stocks staged an impressive rebound yesterday, bouncing back from Tuesday’s drubbing due primarily to a dose of encouraging economic data. First up was the steeper-than-projected drop in first-time unemployment filings, which now stand at 407,000; -which by the way is the lowest level in more than two years. Also coming in the Gov reports was that US personal incomes jumped 0.5% in October, exceeding economists’ expectations, while personal spending spiked 0.4% month-over-month. And, as I indicated in my last week’s video update I felt the Reuters/University of Michigan consumer sentiment index’s final reading would rise for the month….and it did, up to 71.6, much better than the 69.8 reading expected from analysts.
All of these numbers happened to be well timed with the shortened Holiday week sparking optimism ahead of the anticipated holiday shopping season….keep in mind however we did have very lackluster housing and manufacturing data which can put a cog in all of this Bullish activity…without the housing markets supporting bullish activity the upside still remains at our resistance levels of 1220-1236 in the S&P 500…..
Our unemployment situation is still very dire without any since of improvement through 2011…all of this Quantitative Easing is not working as the Feds had hoped….In my opinion, businesses still have plenty of excess capacity so the only reason to invest is in areas that cut costs, not in areas that expand capacity. Cutting costs usually means substituting capital for labor. That helps raise productivity, but is not particularly helpful in reducing unemployment. Very low interest rates do help spur investment, but regardless of how little it costs to borrow, no business is going to want to invest in capacity that is just going to sit idle from lack of demand. This is why, in my humble opinion we’ll continue to see very high unemployment and limited upside movement in the markets until the housing markets turn……
Happy Thanksgiving Everyone!!
Trade Smart — Not Often
Hello folks, here is the Trader User Group weekly market action recap for this past week….by the way, we had a great Saturday session this weekend and am glad we had a full house. Shortly we will be recording all of these Saturday sessions for viewing within our Learning Center on our web site….of course this will be for all our Members so come on in and join us….
And now, please enjoy our Trader User Group Market recap for this prior week….enjoy
Have a Great Happy Thanksgiving!!!!
Trade Smart — Not Often
After a few quite days of price action today saw the markets take off at the beginning bell and didn’t slow down all day…after a few days of falling prices the S&P 500 reversed itself last evening and continued strong bullish well into the day today…looking at the Daily S&P 500 E-Mini chart below I’ve noted a couple of key items that told me a possible bullish reversal could play itself out…
First, we were sitting right at a key Fib pullback level of 25% as shown…in addition, my system calculated, using the minor Elliot Wave 4 and major EW 3, a potential pullback area as indicated in the chart with the yellow and teal ellipses…and finally, the price action of Nov 17th finished the day with a Candlestick pattern similar to a Doji which indicates a possible trend reversal…based upon these actions in this chart I took a long trade last evening in ES (E-Mini’s) and am still holding the long position today with over 20 points per contract in profits….
Folks, please keep in mind that this was a short term trade only…we still face very strong resistance as indicated in the chart with the R1 positioned at 1216.75 and R2 positioned at 1236…my system also calculated an upside resistance zone based upon Elliot Wave counts and put the colored bar right on R2 which further strengthens that resistance zone as well….I am not into guessing where the market will go from here, but I will tighten my stops if the markets move higher…don’t jump into the markets with the belief the bull run will now go to the moon….watch these resistance zones and play accordingly.
For our Trader User Group Members I have some great news….first, on the Members Home Page I have posted the Loss of Risk Graph many of you have asked for.. I also have posted a Market Calendar that covers the current week’s economic reports. I really like this Economic Calendar since it not only shows you what’s coming up, but it also defines that it should mean to you. And finally, starting next week we will be adding a Member’s Forum to our Member’s area….this will allow us to converse and reply to comments, discuss educational topics and most important, very shortly I will be releasing trading positions I am taking for your review and follow along. All in all, a lot of good stuff happening.
For those of you not yet Members I would invite you to join us…you’ll quickly find your annual membership fee quickly covers thousand’s of dollars worth of material, trading action and education…enjoy!!
Trade Smart — Not Often