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
Friday We Posted SKX
Friday we posted SKX in our blog (trade alert). SKX closed with a Doji Friday with the 4-day chart presenting up with a Pullback Opportunity Bullish Engulf find support on the Lower T-Line and the V-Stops. Hit and Run Candlesticks bought long SKX Friday. SKX looks as if it may challenge the $51-$52 area after a successful breakout of the current resistance.
►Listen to your Rules
Be wise, don’t rush in and listen to your trading rules. This what I will tell myself today over and over. In the SPY price is still trending down below the T-Line and the T-Line Bands (both upper and lower). On the daily chart, Lower highs and lower lows are present when this chart pattern reverses then and only then will the market be in a good position to attack. Just my plan, what’s yours?
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►Learn the Power Of Simple Trading Techniques
On January 8, Rick shared VSTO as a trade for members to consider and how to use the trading tools listed below. Currently, the profits could have been about 16% or $250.00 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 had a big week last week, and many dollars have been made on it bullish move. Now that the VXX is trading over the 200-SMA and has smacked resistance a good little rest is needed.
►Rick’s Swing Trade ideas
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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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Trade Alert
SKX has broken out today, if it holds and tests support with a pullback we might consider a trade.
COUP is an another we are considering for a long trade when the time is right
KORS we are waiting for a short set up when the time is right
Tune in thru-out the day we might post on the HRC blog, HRC Smart Phone APP, Twitter, Facebook, StockTwits as trade ideas present themselves.
Recently closed VXX 375% • TWTR 180%
Remember all trade ideas are for your evaluation and consideration
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Hard Week For The Market
It’s been a hard week for the market (SPY) eight days below the T-Line and in the middle of a Blue Ice Failure Pattern. Yesterday low closed below the previous low and our Dotted Deuce, I can almost hear the 200-SMA calling. Over my past 30-years of trading, I have found it much easier to trade in the direction of the market and ass of the close yesterday our trading trend is still down.
The VIX (CBOE Market Volatility Index) has been on fire and is currently in a bullish stage. A wise trader once told me not to fight the trend.
We feel trading right now will be more risk then the typical trader wants to experience, I am personally in all cash after recently closing my VXX trade for 375% and the TWTR trade for 180%
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The VXX short-term futures have broken out of the 200-SMA, the VXX needs to pull back a little before they become a long trade. Holding above the 200-SMA in the future should keep the volatility high and the market on its toes.
Rick’s Swing Trade ideas
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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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Blue Ice Failure
Yesterday I wrote that the market was walking a tightrope and a misstep could bring on Blue Ice Failure pattern. Unfortunately, that misstep occurred bringing down the Dow 1032 points at the close. The VIX rallied back above 33 as fear and panic gripped the market. Many are pointing to the fear of rising interest rates as the catalyst for the selling, but I think the real culprit is the leveraged VIX products. They seem to be blowing up in the face of the institutions that created them and costing them 100’s of millions. In the weeks and months ahead I suspect we will hear a lot more about what really happened.
Once again Futures in the pre-market are all over the place with very fast price action and quick reversals. On the positive side, company earnings continue to come in very strong for the most part. Today I am once again suggesting extreme caution. The indexes are currently testing important price support levels. If they hold the worst of this selloff could be over, however, should they fail today day could be a very dismal day as we seek the next level of support? Falling to the 200-day morning average is not out of the question.
On the Calendar
The market could use some good news this morning, but there is no major report on the Economic Calendar today. In the National News, the government finally passed a budget in the wee hours of the morning avoiding a shutdown.
On the Earnings Calendar, we also get a break today with just under 50 companies expected to report.
Action Plan
The DIA, SPY and QQQ’s finally came to rest at or near a key level of price support. The major question for today is will it hold? With the SPY only 4 points away from the 200-day moving average I fear the selling could easily continue to test this important level. The QQQ’s would need to fall over 5 points to test the 200 while the DIA would need to decline a whopping 11 points to visit this important average. That would mean the Dow falls another 1100 points! So cross your fingers and hope the current price support holds.
With volatility so high anything is possible. This is a market for the very fast day traders and big institutions. As swing traders, we have no edge amidst the fast reversals and whipsaw price action. As a result, I continue to remind everyone that cash is a position and in the current market condition it’s a darn good one.
Trade wisely,
Doug
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Good morning team.
As you know I am in no rush to enter trades but flipping through charts this morning I see a potential opportunity in CSCO. I’m looking at and Iron Condor position but I’m going to be very picky about the entry. If you don’t understand Iron Condors try putting it on in a paper trade account.
Consider:
Selling the MAR 43 Calls & Buying the MAR 44 Calls – Selling MAR the 38 Puts & Buying the MAR 37 Puts. I have placed the order trying to get a $0.40 Credit. The minimum I would accept is $0.35 as a credit.
If we do get a $0.40 credit the Maximum Risk in a single spread is $60.00. The probability of success currently is better than 70% assuming we get filled. Don’t rush the trade. Let the order sit there and bake. If we don’t get filled don’t worry about. There will always be another trade.
Remember all trade ideas are for your evaluation and consideration.
Pesky 50-SMA
The market (SPY) ran into the pesky 50-SMA and was pushed away ending the day with a long wick at the top and a very small body. The candle formation “Inverted Hammer” is a sign the sellers outnumber the buyers unless something changes overnight there is a high probability the next day’s open is lower. The failure at the 50-SMA is a Blue Ice Failure pattern and requires a qualified bullish reversal pattern to challenge and overcome the 50-SMA.
The downtrend is still in play with $259.00 acting as support for now. Price has now drawn a low to a high and today will draw a lower low. Watch the chart for the next clue to a bullish bottom construction or soggy bottom fall out. Looking at the 4-hour chart, we might be drawing a higher low, with follow-through over and a test of the $271.60 area might encourage the buyers to take another run at the pesky 50-Sma
►Featured Trade Ideas
LULU printed a Bullish engulf two days ago and posted follow-through yesterday testing a multi-year high. LULU has the potential of reaching $100.00 or more. LULU has been trending and recently started to consolidate and has met a high number of our conditions for a possible trade. Learn more about how to trade this trade and others with Hit and Run Candlesticks starting at 9:10 ET in the live Trading Room #1
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►Learn the Power Of Simple Trading Techniques
On December 26, Rick shared WTW as a trade for members to consider and how to use the trading tools listed below. Currently, the profits could have been about 46% or $2345.00 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 all over the place, the 200-SMA with a doji yesterday well above the downtrend line. While the VXX chart is in a bullish status, I do not believe it is not a buyable chart right now based on our terms.
►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.
*************************************************************************************
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.
