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Rank: Advanced Member
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it appears we have another false rally. and ultra shorts stand at solid support lines although ultrashort on financials skf seems to have none. do you predict we cross the bb and continue on up on decreasing volume.
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Rank: Advanced Member
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j0sh1ngU wrote:it appears we have another false rally. and ultra shorts stand at solid support lines although ultrashort on financials skf seems to have none. do you predict we cross the bb and continue on up on decreasing volume. Yesterday's candlestick was a perfect doji at resistance at the middle BBand. A doji can be a reversal signal, or a signal of indecision. The RSI may be rejected at the 50 line, and Full Stochastics may be rejected at the 50 line again.
That's because the Futures are way down this morning because Durable Goods Orders came in twice as bad as expected. Personal Income and Outlays was also weaker than expected, but Jobless Claims dropped by 14,000.
Volume should be very light today as many traders are already on vacation, and even lighter in the shortened session on Friday. So we can expect extreme volatility, and most likely a down day today. But don't be surprised if we close green on the day...
Happy Trading,
zz
 www.stock-market-lessons.com
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ZZ
If you could have only one indicator for trading(not counting price and volume)what would it be?
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Rank: Advanced Member
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duke wrote:ZZ
If you could have only one indicator for trading(not counting price and volume)what would it be? duke,
That would have to be the CCI.
Look at the chart below. The CCI gave a Sell Signal the last time it crossed down through +100 line. It also gave two Buy Signals when it crossed back up through the -100 line, even though the first time it did that it was only for a one day rally. It worked much better the most recent time it did that, and went all the way up to the middle BBand yesterday before forming the doji at the resistance at the middle BBand.
You actually don't have to wait for the CCI to cross back up through the -100 line. As soon as it starts to turn back up is when I usually take my first Buy position, and then I add more when it crosses up through the -100 line.
The other Indicator I feel is just important as the CCI is Bollinger Bands.
You Sell when the price hits the upper BBand, and you Buy when the price is below the lower BBand.
Stochastics is the next most important. The last time the STO fast line crossed down through the slow line when it was above the 80 line was a Sell Signal. And the last time the STO fast line crossed up through the slow line when it was below the 20 line was a Buy Signal.
I hope this answers your question.
Happy Trading,
zz
www.stock-market-lessons.com
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ZZ
Thanks, very helpful as usual.
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Joined: 10/29/2008
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great analysis. just a quick question for you zigzag. sort of pertains to Dow but not necessarily. anyways. when dow reaches its top i plan on going ultra shorts. however there is a few things i do not like about them/have questions. FXP broke through all its supports and it seems to be lagging behind others but its for this reason specifically that I like it. your thoughts. in addition i like skf, but its macd does not look great even when the stock looks poised for a rebound. everything else seems to look great when the stock turns around. looking at price target of 100-110 on it. your thoughts or comments. Vix seems to be getting really close for a sign to sell longs and enter shorts? thanks again.
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ZZ.
I really appreciate your time and efforts on your charts and analysis. You clearly show that the Dow is currently on a run up specifically in regards to the CCI and STO fast line crossing the slow line when it was below 20.
The overall chart pattern seems concerning to me. Since 11/4, we have had essentially a descending triangle pattern as characterized by lower highs and lower lows. This pattern and the fact that there still are a lot of things fundamentally troubling leads me to think that we can expect a 1500 to 2000 break to the down side.
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j0sh1ngU wrote:great analysis. just a quick question for you zigzag. sort of pertains to Dow but not necessarily. anyways. when dow reaches its top i plan on going ultra shorts. however there is a few things i do not like about them/have questions. FXP broke through all its supports and it seems to be lagging behind others but its for this reason specifically that I like it. your thoughts. in addition i like skf, but its macd does not look great even when the stock looks poised for a rebound. everything else seems to look great when the stock turns around. looking at price target of 100-110 on it. your thoughts or comments. Vix seems to be getting really close for a sign to sell longs and enter shorts? thanks again. j0sh,
I'm not familiar at all with FXP. What a strange ETF, shorting the FTSE+Xinhua China 25. Yes, it broke support at $59.75 and the reason it may be lagging is it's already at the resistance level at the lower BBand which is just now starting to turn down a tiny bit. So it will be harder for it to go down quickly now.
SKF is another play I wouldn't touch. Why short the Financials now? They have been rallying hard lately with all the $$$ the Fed has been pumping into them. After this week's and last week's actions by the Fed, they all know they won't be allowed to fail. It would have been better to play a Long Financial ETF earlier this week.
I don't use the $VIX for Buy or Sell Signals anymore. It's not acting like it used to in years past, so I don't find it to be a predictable indicator anymore.
Happy Trading,
zz
www.stock-market-lessons.com
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ZZ,
What do the charts and what's your opinion on whether we will keep rallying next week? Feels like it is time to go long, but the market is so unpredictable now.
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likesmoney wrote:ZZ.
I really appreciate your time and efforts on your charts and analysis. You clearly show that the Dow is currently on a run up specifically in regards to the CCI and STO fast line crossing the slow line when it was below 20.
The overall chart pattern seems concerning to me. Since 11/4, we have had essentially a descending triangle pattern as characterized by lower highs and lower lows. This pattern and the fact that there still are a lot of things fundamentally troubling leads me to think that we can expect a 1500 to 2000 break to the down side. You are Welcome! likesmoney,
I am flabergasted that the Dow rallied so hard on Wednesday and closed at the high of the day! After the Durable Goods and Personal Income and Outlays reports came out worse than expected, I thought the market was going to have a really bad day. Jobless Claims decreased by 14,000 so that might have been part of it.
I had to make two runs to the airport to pick up relatives on Wednesday, so I have no idea why the sentiment changed. I usually watch CNBC all day, and I missed their explanation for the rally. Volume was light due to the Holiday, and it will be really light on Friday because the market closes at 1pm ET.
As far as your descending triangle goes, this is what a descending triangle looks like:
I don't see a descending triangle in the time frame you mentioned. What I do see is a bull flag and the price has broken above the upper trendline, which is bullish. Bull flags are usually found during a pullback in an uptrend, and rarely in downtrends but they still work.
Every one of the Technical Indicators on the Dow's daily chart are Bullish. It has broken up through and closed above the middle BBand, which is also Bullish. If Friday was going to be a normal volume day, it would be a better indication if it's going to stay above the middle BBand. There's only one report on the Economic Calendar Friday-NAPM-Chicago, and it's not that big.
On Monday, if it continues up there's a chance it will move on up to the upper BBand and meet resistance there. But I'm not convinced the resistance at the middle BBand has been conquered yet. Friday we just might see a Bearish shooting star candlestick, or a doji candlestick which means a possible reversal or indecision.
Happy Trading,
zz
 
www.stock-market-lessons.com
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