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Monday, November 19, 2012

Daily update 11/19

From Friday night's daily update: "Most of the time after this buy signal there is a rip the face off the shorts rally day.  If we get above today's high on Monday morning do not fade the rally.  Look to be a buyer.  Most of the time the market will keep creeping up all day.  If there is a dip in the afternoon it should be a buying op."

I believe this qualifies as a rip the face off of shorts rally.  If you look at the intraday price you will see it did include an afternoon dip that was a buying op.  The market rallied into the close.  After the rip roaring up day from this buy signal I have never figured out a clear edge on whether to hold overnight.  It is pretty much 50/50 whether it gaps up or down the next day.  Here is the daily SPX chart.

SPX closed slightly above its 200 SMA with a green price bar.  The market worked off the extreme oversold condition in two days.  Notice the big drop in volume today.  Lets zoom in to the 130 minute SPY chart.

About 10 minutes until the close I was trying to figure out whether to exit or hold the swing long positions.  I was looking at those big red volume bars, and the not so big green bars today and decided to close out completely.  I wrote this Friday night also "A rally here is counter trend to me.  I tend to be much quicker to take swing profits and look to enter again on pullbacks."  I believe the bigger move will be down.  I don't want to be nursing long positions trying to find reasons in the charts why the market might continue up and miss the short entry.  I don't know if my next swing trade will be long or short at this point.  I know I don't want to miss a short if I see a setup.  I am not worried about missing a long here.  I just don't see anything that indicates Friday's low is particularly important.  We did not get a VIX spike, a volume climax, or any other sentiment indication of an important low.  I do have a breadth chart that indicates the odds are high price will retest that low and possibly exceed it.  I want the cake.  I will let others fight over the crumbs here.

Lets take a peek at the 60 minute SPY chart.

That lack of volume into the close is pretty clear on this chart.  We also ended up right near a resistance line.
Today just does not look like the start of any big move to me.  SPX might creep up to the 1395-1400 resistance area.

For tomorrow, I think I might be looking to buy a gap down or sell a gap up if either gap is sizable.  If we open fairly flat I will probably sit on my hands.  This being a holiday week and a big up day today it could be choppy tomorrow.

No charts for the chart practice site this week.  I am taking a vacation from that for the holiday week.  Daily updates will continue.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.