Things are eerily calm right now after a move higher in the broader market indexes. All eyes are on the Federal Reserve and the FOMC Minutes to be released at 2:15. This will most likely be a big market moving report. Make sure to minimize your risk in either direction by lightening up on positions or hedging your positions (I will also include some basic hedging strategies in the education page of Swing-High.com when it is released).
Trade smart everybody. Always trade with a stop loss and manage your risk appropriately. Thanks for being a part of Swing-High.com!
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Choppy day in the markets today. The S&P (SPY) finished up about 0.25%. The Dow Jones Industrial Average (DIA) finished down by about 0.2%. The Nasdaq (QQQQ) finished up 0.4%. The Russel 2000 (IWM) lead the markets big time, finishing up 1.5%. Finally, the Financials (XLF) closed up 0.25%. Interesting divergence among the broader indexes. The market is apparently indecisive on which direction to go next. Expect the next major areas of support and resistance on SPY to be 102 and 108. I will also be watching to see how SPY reacts to the resistance at the 50 day moving average.
The SPY had an inside trading day today (did not make a higher high or lower low). Everything about the neutral sideways action screams consolidation at this level, which can be expected after the recent moves. Consolidation is not a bad thing. In fact, it is healthy and welcomed by most traders as it provides confirmations of certain moves as well as set ups for other moves. The current consolidation on SPY could be a swing low, or a bearish pennant. Of course we will have to play it as we see it. Do not be early though. It is crucial to wait for confirmation of the formation you are trading. Always trade with a stop loss and manage your risk appropriately.
Thanks for being a part of Swing-High.com!
Talk to you tomorrow,
Jason
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The markets are chopping sideways for the most part today, so far forming an doji on the daily candle. The Financials (XLF), Dow (DIA) and Nasdaq (QQQQ) are showing relative weakness to the S&P 500 index (SPY) today. The VIX is up more than 1% and is above 30. The TICK and TRIN are both neutral. Price action in the broader market indexes seems to be in a consolidation phase today, which is a healthy thing to see after such indecisive and sporadic movements we have seen lately.
A Bearish Pennant patter is forming on the SPY 15 minute chart which could break to the down side. From there, expect to see support at 102. If the SPY puts in a swing low at 102 and re-tests the 108 area, that could be the start of a Head and Shoulders formation, which would be extremely bearish. We will have to trade it as we see it.
Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately.
Happy Trading,
Jason
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The markets showed strength this morning, but pulled back nicely from the early highs of the session. The Russells (IWM) and Nasdaq (QQQQ) showed relative weakness today. The VIX behaved as expected and finished with a slight pull back. The TICK and the TRIN were neutral/mixed today. All things considered, today’s action was unconvincing and supportive of the bear case. It is very tough to gauge where the market wants to go from here. I would like to see a consolidation here or at least a better pattern set up before I take any major positions.
Looks like we will just have to wait and see, but the markets still look like they want to go lower from here. Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately. Capital preservation comes before profits.
Happy Trading,
Jason
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Hello Traders,
The markets are higher today on news reports. CIT Group (CIT) filed for bankruptcy over the weekend, which had the potential to act as a Lehman Brothers type catalyst leading to a “Black Monday”-type drop in the markets. However, Ford (F) beat earnings expectations by posting a $1 billion profit and providing positive guidance. Keep in mind, much of Ford’s earnings can be attributed to Cash for Clunkers, so weigh that with a grain of salt. ISM Manufacturing Index data came out better than expected this morning as well. Pending Home Sales also beat expectations. That makes it three to one for news supporting the bull side today.
The VIX has a healthy pullback in the making today at about -7%. The VIX is finding support at the 50% Fibonacci Retracement Line. The TICK is surprisingly neutral and the TRIN is reading slightly bearish. With the divergent action in the market internals, this pop today looks like a sympathy bounce.
The SPY is finding resistance at the 50% Fib line of a recent sell off which also happens to be the round number of 105 and the bottom of Thursday’s candle. The Russells (IWM) are still in a confirmed double top. The Financials (XLF) are relatively strong today, which might be attributed to CIT Group’s (CIT) bankruptcy. The Nasdaq (QQQQ) and Russells (IWM) are showing relative weakness intraday.
In general, I am picking up short positions and will continue to do so if the markets stay bullish. Today’s action is looking a lot like a sympathy bounce (much like last Thursday). I plan to play the downside with a basket of inverse ETFs (most likely: TZA, SPXU, FAZ, EDZ).
Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately. Check back this evening for your Post Market Analysis.
Happy Trading,
Jason
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