Things change

I'll admit the market was looking bullish since the past week every intraday decline was met with demand to close the day near the highs.  That came to an abrupt end today when the market crashed through the trading range.  These is decisively bearish in the short term.  I would like to see a rally to test the broken resistance around 1825-29 before initiating a short position.  So lets watch and see what happens.  

Thanks for reading. 

Stuck

Last time we highlighted the trading range between 1836.8-1829.2 which saw a short lived break to support before priced traded back in the range.  This signaled to me the strength (not the weakness I was anticipating) of the market since the bears failed to take advantage of the break of support.  Instead the market is looking more bullish as we are now making higher highs and higher lows in this now expanded trading range.  A break of the 1838.6 would lead me to believe that price will look to challenge the all time highs.

The SPX 15 min candlestick chart below highlights the trading activity over the past two trading sessions.  Prices have been trading in the upper end of the trading range and the declines have been short lived.  There appears to be absorption of the supply coming in at the top of the trading range which looks bullish.  The important part is we can see clearly from the PnF chart above the trading range boundaries which appear to be expanding upward.  So we wait for a breakout and jump on for the ride.

Thanks for reading.

Follow up

Ever look at a chart and say to yourself 'What a great setup!' and wait impatiently for the markets to open so you can start on your journey to making that first million?  Then when the moment comes you freeze like a deer in headlights.  I felt that today when I was looking at the opening bell and it took all my might to fight that feeling and just do it! In our last post we saw a clear trading range which on a break would have giving us the clue to the path of least resistance. I'll admit I did have a bias to the downside and was looking to play that.  Below is the SPX 15min PnF including today's trading action and you can see the trading range even more clearly between 1836.8-1829.2.

The SPX 5 min chart below highlights the quick move this morning to the top of the trading range only to fail and break support (bottom trading range). Interesting enough we had a test of broken support which was a good opportunity to go short.  Also notice the speed of the drop once support is broken.  If you are short then you know you first target is 1810 and you stop should be the top of the trading range risking about 7-8 points with a potential gain of 18-19 points.  Not a bad risk reward. 

Thanks for reading. 

2014 and beyond

“Cheers to a new year and another chance for us to get it right.”
― Oprah Winfrey

Happy New Year all.  It was a great holiday and always seemed too short.  However, like a good blacksmith and continued to sharpen my blade of knowledge reading and understanding the workings of the market.  Okay so I read a couple of days when the weather was bad outside in-between drinks. This year I'll will be posting only when i see potential set ups that I would like to execute on.  The posts will be shorter (thank goodness) but still helpful I believe.

Without further delay below is the SPX 15min PnF chart highlighting in green the current trading range.  We simply wait to see which way it breaks and jump on board.  The red area highlights the potential first target (support and resistance) on a break of the trading range.   Simple right?  Just try trading in real time. Not so simple.  I would like to see a break (either way) and subsequent test of the broken support/resistance area before having the confidence to enter a position but sometime the market is not that kind.

Lets watch and see.

Thanks for reading.