Danger still lurks.
Although short-term rally has eased tensions and provided some sweet relief, danger still lurks. It’s so easy to become fixated on the hard right edge of the chart and getting lost in the intra-day gyrations in price. If we take a critical look at an index entire chart, we have several important clues that should have you on the edge of your seat. First and most obvious is that all the major indexes are in a current downtrend. The rally is testing not only the downtrend but also some very significant price resistance levels. Also, we are still below the 50-day average, the T-line, and that the 34 EMA is dangerously close to dropping below the 50.
Trust me I want to market to resume its uptrend as much and anyone else. However, if I allow that bias to cloud my view of the potential dangers displayed in the chart, I’m failing as a technical analyst. Always take the time to look at the big picture and remember Price is King!
On the Calendar
The hump day Economic Calendar has four important reports. Inflation hawks will be keeping a very close eye on the Consumer Price Index which comes out at 8:30 AM Eastern. The consensus is looking for a gain of 0.3% on the month but also expecting the yearly rate to slightly decline. Also at 8:30 is Retail Sales where forecasters see an overall moderate 0.3% gain. Then at 10:00 AM we get the Business Inventories Report which forecasters expect an increase of 0.3%. The EIA Petroleum Status report is at 10:30 AM. They don’t forecast this number, but the last 2-reports have shown a build in supplies, a 3rd would begin a trend hurting oil-related stock prices.
On the Earnings Calendar, I show just about 180 companies will report results. Make sure your check and planning for these events to avoid undue risk to your account.
Action Plan
The market spent another day chopping sideways taking a break from the huge daily price moves. On the positive side, the bulls were able to shrug off the morning gap down and close just slightly higher. On the negative side, the market continues to deliver triple point gaps daily and remains under price resistance and the 50-day average. At the close yesterday, the VIX drifted just below 25 but seems stubbornly resistant to a pullback keeping traders on their toes.
The CPI this morning could be very import today to determining market direction. A print below 2.0 could bring out the bulls while a number over 2.0 could bring out the bearish inflation hawks. Currently, the Dow Futures are pointing to 100 point gap up, but that could quickly change if inflation raises its ugly head. Please keep in mind that all the major indexes are below significant price resistance levels. Which means a failure pattern near resistance is still possible which could once again inspire the bears. Extreme caution is still warranted as we approach resistance with high volatility.
Trade Wisely,
Doug
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Pushed Through Resistance and Tested
EGHT has pushed through resistance and tested the support with the trending 34-EMA following. On the 2 and 3-day charts I can see Bullish Morning Star type formations supported by the T-Line. The bulls could push EGHT to $22.00 plus.
Saturday, February 24th 5 Traders come together to share and teach. We still have seats available for the discounted pricing.
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Remember to check out the Event Calendar located at the top left of any webpage.
►Listen to your Rules
Ok, I see a little price action trying to slip into the SPY chart but let’s not get excited until we have a trend reversal. Price has closed in the T-Line bands but not above the upper green band. The V-Stops are still pushing the price back. Once the there is a breakout of the upper green band and a supporting green V-Stop with a visual low high/low high we can talk bullish.
- Is there a Low High-Low High bottom?
- What is the 34-EMA doing in relationship to itself 20 -30 – days ago?
- What is the T-Line doing in relationship to itself 20 -30 – days ago?
- What is the T-Line doing in relationship to the 34-EMA?
- What is Price doing in relation to the T-Line and the 34-EMA?
►Learn Our Tools and Trading Techniques
On February 8, Rick shared SFLY as a trade for members to consider and how to use the trading tools listed below. Currently, the profits could have been about 24.5% or $375.00 with 100 shares. Using our Simple, Proven Swing Trade Tools and techniques to achieve swing trade profits.
Candlesticks • Price Action • T-Line • T-Line Bands • Support • Resistance • Trend • Trendlines • Chart Patterns • Buy Box • Volatility Stops • Profit Zones • Entry Zones • Protective Stops • RBB Rounded Bottom Breakout Strategy • Pop Out of The Box Strategy • Pinball Strategy • Trade Planning
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►The VXX short-term futures
The VXX is still in bullish territory supported by price action, T-Line Bands and the V-Stop. 200-SMA is also nearby.
►Rick’s Swing Trade ideas
Member Login – Full Trade List
30-Day Trial • Monthly • Quarterly • Semi-Annual • Annual
To learn more about our trading tools join us in the trading room or consider Private Coaching. Rick will help coach you to trading success.
Investing and Trading involve significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.
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QURE Testing Support & Resistance
On a weekly chart, QURE has been testing support and resistance for about 11 bars. Then POW – buyers finally found a way out and finally broke out. The Ascending Triangle breakout could push QURE to it’s 2015 high and produce a few good swings for the swing trader. Remember to check out the Event Calendar located at the top left of any webpage.
►Listen to your Rules
The Market or any chart, do you feel comfortable buying a stock long if the price is not trending in your favor? If you do, you may be a predictor. Some predictors make money; most do not. As yourself a few questions.
- What is the 34-EMA doing in relationship to itself 20 -30 – days ago?
- What is the T-Line doing in relationship to itself 20 -30 – days ago?
- What is the T-Line doing in relationship to the 34-EMA?
- What is Price doing in relation to both the T-Line and the 34-EMA?
►Learn the Power Of Simple Trading Techniques
On January 31, Rick shared SFLY as a trade for members to consider and how to use the trading tools listed below. Currently, the profits could have been about 33% or $1770.00 with 100 shares. Using our Simple, Proven Swing Trade Tools and techniques to achieve swing trade profits.
Candlesticks • Price Action • T-Line • T-Line Bands • Support • Resistance • Trend • Trendlines • Chart Patterns • Buy Box • Volatility Stops • Profit Zones • Entry Zones • Protective Stops • RBB Rounded Bottom Breakout Strategy • Pop Out of The Box Strategy • Pinball Strategy • Trade Planning… Learn More
►The VXX short-term futures
The VXX is built on fear, and it’s carrying a great deal of fear. VXX holding over the 200-SMA on the daily is something to take note.
►Rick’s Swing Trade ideas
Member Login – Full Trade List
30-Day Trial • Monthly • Quarterly • Semi-Annual • Annual
To learn more about our trading tools join us in the trading room or consider Private Coaching. Rick will help coach you to trading success.
Investing and Trading involve significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.
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Protect Your Capital
I often say trading is a business. With the trader as the CEO of the business, it’s our responsibility to make money. As a result, it only natural that we want to trade every day. It’s very easy forget that if we are to make money, then it must be the first order of business to protect your capital. If your anything like me patience is a skill that I have to work on every day of my life. The truth of the matter is that most of us have very little natural patience.
To combat our natural tendencies is why we as traders must have a well thought out trading plan and develop the discipline to follow the rules. With volatility so high my edge is gone, and it’s my discipline to follow the rules of the plan that protects me, from me. I have learned the hard way that if I break my rules, the consequence of that action is often a capital loss. The choice is yours. Will you exercise the discipline necessary to follow the rules that protect your capital or will you allow your impatient nature to rule?
On the Calendar
Another very light day on the Economic Calendar today with no market-moving reports. There is a Fed Speaker at 8:00 AM Eastern which happens to be the biggest event listed today.
On the Earnings Calendar, we have about 150 companies reporting today. Make sure your checking and have a plan for companies you hold or thinking of buying.
Action Plan
The big gap up yesterday seemed to run directly into a stone wall as there were no follow-through buyers. The VIX pulled back ever so slightly but remained very high by the end of the trading. The decision to stand aside is a difficult one for most traders, but it seems to have been a good call considering the morning futures. As I write this, the Dow Futures are pointing to gap down in the Dow of more than 150 points. That could potentially create a failure pattern on the index ETFs.
Now the question is can the market hold creating a higher low we can work with, fall to lows to find support or will it drop right on through creating a new low. Continue to expect very past price action with the VIX likely rising at the open today. Remember that sitting in cash is a position and one that protects your capital in times of such volatility. Try to be patient; good things come to those who wait.
Trade Wisely,
Doug
[button_2 color=”green” align=”center” href=”https://youtu.be/SQsmmYlljEQ”]Morning Market Prep Video[/button_2]
Support?
Friday certainly was a rough day for the market capping off one of the worst weeks in several years. As nasty as was the market received answers to two very important questions. Will the SPY 200-day average provide some support? Will bulls be willing to take the risk even though the DIA and QQQ’s didn’t reach that deep.? Both answers come back affirmative, and the Dow Futures indicate more are willing to dive in this morning.
Volatility is still extremely high making it very dangerous as huge reversals can still happen at any time. With this morning’s huge gap up it puts the Dow’s price support about 600 points down. With the volatility still so high that is way beyond my tolerance for risk. Consequently, I will maintain my discipline and not get caught up in the morning hype. I will not chase!
On the Calendar
We begin this week with another light day on the Economic Calendar. Amid several bonds events, the only potentially market-moving report comes at 2:00 PM Eastern with the Treasury Budget. The consensus is calling for a sizeable deficit of 51.0 billion and is the first post-tax reform report.
To keep us on-our-toes we have just under 80 companies reporting today. Make sure to have a plan if you are holding or intending purchase a company at or near it reporting date.
Action Plan
Friday was a pretty gruesome day until the bulls staged an impressive rally in the last hour of trading before the weekend. The rally began after the SPY broke below the 200-day simple average. The DIA didn’t make to the 200 nor did the QQQ, but they both seem to have reacted to a price support level. The IWM had fully given up the 200-day average but managed to recover back above with the end of day bullishness.
Dow Futures this morning are signaling a huge gap up of more than 300 points. Personally, I refuse to chase a big gap, and I instead will stick to my discipline an wait for low-risk entries. It’s great to see the bulls stepping back in, but that in no way shape or form means that its safe to get back into the water just yet. Keep in mind the VIX closed on Friday above 29 which means very fast price action and reversals are still likely. If you’re a very experienced and very fast day-trader, then this price action is just what the doctor ordered. However, if you’re a swing trader, the huge intra-day whipsaws create a risk that is well beyond the risk-tolerance of most traders.
Trade Wisely,
Doug
Although short-term rally has eased tensions and provided some sweet relief, danger still lurks. It’s so easy to become fixated on the hard right edge of the chart and getting lost in the intra-day gyrations in price. If we take a critical look at an index entire chart, we have several important clues that should have you on the edge of your seat. First and most obvious is that all the major indexes are in a current downtrend. The rally is testing not only the downtrend but also some very significant price resistance levels. Also, we are still below the 50-day average, the T-line, and that the 34 EMA is dangerously close to dropping below the 50.
