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Posts from the ‘Day Trading’ Category

30
Jan

Bar-by-bar Analysis – Week 4

Week 4: January 23-27, 2012

For our fourth weekly analysis of 2012, we examine bar-by-bar for the following index:

  • S&P 500 Daily chart - Last week was a choppy week, but the end of the week activity is showing signs of bullishness for the upcoming week.

Prices advance to new highs last week, but came right back down to test support levels. During this test, volume is noticeable lower, which is bullish for this situation. Full details on the bar-by-bar analysis below.

Note: When we say “Demand”, we refer to active buying, and when we say “Supply”, we refer to active selling. During an up-trend market, a lack of supply alone would allow the prices to trade higher without the need of Demand present. During a down-trending market, a lack of demand alone would allow the prices to trade lower without the need of Supply. Read more »

22
Jan

Bar-by-bar Analysis – Week 3

Week 3: January 17-20, 2012

For our third weekly analysis of 2012, we examine bar-by-bar for the following index:

  • S&P 500 Daily chart - A bullish weak ends with clues that sellers are not letting the bulls push the markets higher. Stay cautious.

After a see-saw week of bullish and bearish days, the week concluded with warning signs of sellers preventing the market from going higher. This hidden selling gives us the hints that it’s likely a good time to begin selling some longs. However, it’s not bearish enough to start a short, but definitely a good area to sell longs at attractive, high prices. Full details on the bar-by-bar analysis below. Read more »

16
Jan

Bar-by-Bar Analysis – Week 2

Week 1: January 9-13, 2012

For our second weekly analysis of 2012, we examine bar-by-bar for the following indices:

  • S&P 500 Daily chart - Due to the lack of buying demand, it’s best to sell some of the long positions that were bought from the lower prices a few weeks ago. There is no short-entry neither. Stay cautious.
  • Dow Jones Industrials Daily chart -  The DJIA showed more weakness than the S&P 500 index. However, we remain focused on the 12,250 key support area that we mentioned last week. Buying at this level is recommended if there is no sell-off with high volume (high supply).
  • 30-year Treasury Bonds (TLT) Daily chart – Recent bond selling pressure is a positive sign for a bullish S&P 500.

We conclude that there is a slow down in the market’s rally. Based on a variety of clues, we expect some kind of retrace lower before continuation of the rally. Watch for the Dow Jones Index 12,250 level as a support level for a potential long entry into the broad equity markets. If this support area fails, we will have a trend change. Otherwise, we can expect a continuation of the rally, which is our expectation. Detailed bar-by-bar analysis can be found below in the chart annotations and notes.

Note: When we say “Demand”, we refer to active buying, and when we say “Supply”, we refer to active selling. During an up-trend market, a lack of supply alone would allow the prices to trade higher without the need of Demand present. During a down-trending market, a lack of demand alone would allow the prices to trade lower without the need of Supply.

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8
Jan

Bar-by-bar Analysis – Week 1


Week 1: January 3-6, 2012

For our first weekly analysis of 2012, we examine bar-by-bar for the following indices:

  • S&P 500 Daily chart – While off to a strong bullish start, the buying quickly faded and now is struggling to make gains.
  • S&P 500 Weekly chart – The weekly chart broke out of resistance during the new year, and any signs of lack of sellers will automatically allow prices to trend higher.
  • Nasdaq Composite Daily chart - Nasdaq is stronger than S&P 500 so far, but is in a critical resistance level that it has not cleared. Expect a test here to identify the true balance of supply and demand before it goes higher. 2,615 is a key support that needs to get tested.
  • Dow Jones Industrials Index Daily chart 12,250 is a key support that needs to get tested.

We conclude that the stock market is ready to test key areas, most evidently in the Dow Jones chart, before moving higher. The overall trend is bullish, but the lack of buying demand during the first week of the year sets up the stage for testing support areas. If this support area fails, we will have a trend change. Otherwise, we can expect a continuation of the rally. Detailed bar-by-bar analysis can be found below in the chart annotations and notes.

Note: When we say “Demand”, we refer to active buying, and when we say “Supply”, we refer to active selling. During an up-trend market, a lack of supply alone would allow the prices to trade higher without the need of Demand present. During a down-trending market, a lack of demand alone would allow the prices to trade lower without the need of Supply. Read more »

2
Jan

Bar-by-bar Analysis – Week 52 (2011)

Summary

The markets rallied on low volume during the last week of trading. Without the increase of demand, it would be difficult to break resistance. So far, only failed attempts at the resistance of the high of bar 6. It was a good opportunity to take some longs off the table. However, it is not recommended to take a short position based on this action since the price fall is due to lack of demand rather than supply coming in. The first day of trading in 2012 will be a key day. Either demand comes back and we break resistance or we will go down due to the lack of demand and sellers will emerge. For now, there is no short term trade. Read more »

18
Dec
weekly-calendar

Weekly Analysis – Week 50

Summary
There was selling pressure last week. By the end of last week, there was an attempt to reverse that, but failed midday. The daily trend is still bearish, and breaching recent lows means a new leg down will get created. However, the analysis from the weekly chart shows that we’re still trending up, while weakness also shows. Stay cautious for now since there are mixed signals. Until next week, we have a mixed market and no long entry areas so far. Additional analysis will continue next weekend. Thanks for checking out the bar-by-bar analysis for this week.

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11
Dec
weekly-calendar

Weekly Analysis – Week 49

Week 49: December 5-9, 2011

Bar-by-bar Analysis Summary
With the large range of Friday, it attempts to explain that Thursday’s action was a shakeout or a test, The lack of selling pressure caused the market to move back up. We are looking bullish and any aggressive trader can take a long here with a stop below Thursday’s low.

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4
Dec
weekly-calendar

Weekly Analysis – Week 48

Week 47: November 28 – December 2, 2011

Bar-by-bar Analysis Summary
Following the huge bullish run during the week, the end of the week action sets up a trap to trap the breakout buyers while professionals sell into the good news. The increased volume is showing supply (selling) coming into the market. Look for a test of the highs this coming week for a potential short as the breakout buyers get stopped out. Stay cautious and focus on shorting weakness, not buying strength.

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27
Nov
weekly-calendar

Weekly Analysis – Week 47

Week 47: November 21-25, 2011

Bar-by-bar analysis Summary
Trading ahead of the Thanksgiving break is quickly showing a reversal signal, pointing to a bullish run next week. Professionals used the opportunity to sell their Treasury bond position on Friday to turn bullish in Equities. Because of the low liquidity conditions in the equity markets, they began dumping 30 year Treasuries first. This should follow through next week with strong buying in Equities.

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20
Nov
weekly-calendar

Weekly Analysis – Week 46

Week 46: 11/14/11 to 11/18/11

Bar-by-bar Analysis Summary
This week’s action marks price weakness. If the next bar closes lower, we would have a failed test. It would mean a major sign of weakness. Focus on shorting on any pull back next week if this happens. However, a higher close would confirm a successful test and it would be a reversal. Read more »