market-panic-02

Technical Outlook:

  • Overnight futures are failing hard and fast. There is some pumping of USD/JPY currency pair that has lifted futures off the lows this morning, but still looking at a heavy downward move at the open.
  • Oil sinking again, hard and fast, below $27, and could even see the $25's at some point today.
  • Yesterday's price action saw heavy gains evaporate into the close, as Yellen's speech soured Wall Street.
  • 1812 is a critical level to watch today on SPX. It marks the January lows, and if broken could result in a much bigger move lower for the market.
  • That massive head and shoulders pattern on the weekly SPY/SPX (formed over the last two years) that I have been harping on, looks to confirm today, which is a major problem for the bulls going forward, as it would likely signal further downside for the market going forward. If this confirms, the target on the pattern suggests an eventual 200-300 point move to the downside.
  • If the selling persists throughout the day, there is a strong possibility that SPX sees a move below 1800.
  • Keep in mind though, on these extremely bearish days, they also tend to be the ones that sees massive short covering as well and as a result, some huge intraday reversals.
  • VIX fell 1% yesterday to close at 26.29. Still highly elevated.
  • T2108 (% of stocks trading above their 40-day moving average) fell 2.3% down to 20.31. Still no where near the levels reached back in January, and could create a bullish divergence (but don't get too excited just yet).
  • Strong downward trend-line off of the 12/30 highs. Current resistance sits at 1898.
  • Yellen will be speaking again in front of Congress. This time the Senate Banking Committee. I don't expect her to change her tune from yesterday. But don't rule it completely out.
  • Volume was extremely light yesterday and below average. I don't expect that to be the case today.
  • Insane price movements every day being created by computer generated trading (HFT's) in a highly volatile market marked with enormous headline risk. 
  • There is a lot of stop-loss hunting out there in the market, and being agile with getting in and out of positions quickly has been extremely important. 

My Trades:

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small federal-reserve-01

Technical Outlook:

  • Choppy trading session yesterday that saw the market gap lower but spend the rest of the day chopping around and ultimately recovering the day's losses. 
  • Futures have rallied strong overnight as European markets stage a strong rally.  
  • Yellen's testimony before congress is expected to weigh large on the markets prior to equities opening and dictating the market's direction throughout.
  • Once again, the massive head and shoulders on the weekly chart of SPX/SPY provided support for the market yesterday and the price point that it rallied from. This will be in play yet again today. If this confirms, the target on the pattern suggests an eventual 200-300 point move to the downside. 
  • Volume was slightly less than the day prior on SPY, but still above average. 
  • While we may be seeing a short-term reprieve from the market, overall, the it remains very bearish, and bounces should be treated as a 'dead cat' unless proven otherwise. 
  • VIX still managed to rise 2% yesterday to finish the day at 26.54. Declining resistance is there off of the August highs, and could see provide resistance in the short-term. 
  • T2108 (% of stocks trading above the 40-day moving average) dropped 6.4% down to 20.79. Despite SPX right near recent lows, T2108 is significantly off of its lows and may be signaling a bullish divergence. 
  • Potential double bottom play on the 30 minute chart of SPX. Bears will need to push this through the 1812 level quickly or risk the bulls rallying the market in the short-term. 
  • Insane price movements every day being created by computer generated trading (HFT's) in a highly volatile market marked with enormous headline risk. 
  • There is a lot of stop-loss hunting out there in the market, and being agile with getting in and out of positions quickly has been extremely important. 

My Trades:

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Technical Outlook:

  • Wild trading session that saw price drop over 50 points on SPX followed by a 30 point rally into the close that wiped out 60% of the day's losses. 
  • Despite propping up the market at day's end, the market still is trending lower based on what the charts are showing. A test of 1812 on SPX is very probable at this point. 
  • Volume was slightly higher than the previous trading session and above recent averages. 
  • The massive head and shoulders pattern and its neckline on the SPX/SPY weekly chart was tested yesterday and where the hard bounce took place at. This will be in play yet again today. If this confirms, the target on the pattern suggests an eventual 200-300 point move to the downside. 
  • VIX elevated itself yesterday rising 11% to 26. Panic should ensue on a sustained move over 30. 
  • Surprisingly, T2108 (% of stocks trading above their 40-day moving average) did not drop as much as I would have thought yesterday, only shedding 17%. 
  • Solid follow through yesterday on the bear flag confirmation. 
  • Potential double bottom play on the 30 minute chart of SPX. Bears will need to push this through the 1812 level quickly or risk the bulls rallying the market in the short-term. 
  • Oil is back to trading below $30/barrel this morning. 
  • Three separate but significant time frames have three major bearish trading patterns: Intraday (H&S), Daily (Bear Flag), Weekly (H&S). 
  • No real panic unfolding yet on the indices. 
  • Insane price movements every day being created by computer generated trading (HFT's) in a highly volatile market marked with enormous headline risk. 
  • There is a lot of stop-loss hunting out there in the market, and being agile with getting in and out of positions quickly has been extremely important. war of 1812

My Trades:

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small-ryan-malloryRyan (@shareplanner) specializes in swing trading strategies and is the founder of SharePlanner which he created to help and teach others on how to trade stocks better using multiple approaches and time frames. Each day you can count on Ryan to provide his trading advice as well as transparency in every trade that he makes. Ryan Mallory resides in Central Florida. More >>

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