Intraday Market Analysis

Charts and commentary geared towards the active trader that are typically based off the intraday charts (e.g.- 1 minute to hourly charts).

Jul 232013

SPY 15 min 10The SPY 15 minute chart printed a close today with only one of the 4 confirmation signals on a sell; prices still trading below the recently broken uptrend line.  Following the last update earlier today, prices moved slightly higher causing the stochastics to immediately move back above 80 following a very brief & shallow dip below.  The MACD pretty much did the same with a very brief and shallow dip on the signal line that it was barely discernible.  Therefore, technically speaking we did have a whipsaw that lasted one or two 15-minute candlestick periods (as it’s the closing values after each 15 minute period that matter), although the most important/accurate indicator for this time frame, the 14-34 ema pair histogram failed to cross below zero today.  Regardless of the brief sell signals on the other indicators, all three on the bottom of the chart (stochastics, 14-34 histogram & MACD), all closed back above their respective “buy” signal levels today and so we’ll just have to continue to monitor these signals tomorrow.

SPY 60 min 5Zooming out to the 60 minute time frame, the recent breakdown below the primary uptrend line preceded by sharp divergences on the MACD & RSI could signal that we are in the early stages of a correction but we’ll need some additional evidence, such as all four sell triggers on the 15 minute chart, to help confirm.

Jul 232013

SPY 15 min 9… 2 to go. Remember, as discussed in Friday’s video overview of this multi-signal system used to help identify early short-term trend changes in the SPY, what makes this (pending) signal different from the last few, which included two whipsaw signals, is that we had intersecting uptrend lines this time around: both a short-term (orange) trendline as well as the intermediate-term (white) uptrend line.  Typically, the longer the duration of a trendline or technical pattern, the larger the expected magnitude of the correction will be.

As of now, we only have two of the four sell signals triggered; the trendline break and the cross below 80 on the stochastics.  We still need to see some additional downside or possibly some sideways consolidation in order to trigger the MACD zero line crossover (second of either the slow or fast line) as well as a bearish cross of the 14 ema below the 34 ema.  My preference is to see at least 3 of the 4 signals triggered in close proximity to confirm the sell signal.

Jul 112013

In the previous post discussing the recently triggered IIAA Sentiment Extreme Sell Signals, I mentioned how those signals can take up to several weeks to manifest in the form of a trend change and that they are not to be used as exact timing indicators.  That indicator can be used by different traders or investors in different ways.  For example, longer-term swing traders, trend traders, or investors might use the buy (sell) signals to start accumulating (booking profits) on long positions following buy (sell) signals.  More active traders, like myself, will use those signals to be on the lookout to prepare for a potential trend reversal, as the most powerful moves often come in the early stages of such trend reversals.  However, it is not uncommon to also see some of the most powerful moves in an uptrend or downtrend come in the final stages (i.e.- a blow-off top or bottom).   Therefore, being too early or jumping the gun without some other types of confirming buy/sell signals can be very costly, assuming that one throws in the towel just before the reversal finally takes place.

There are many ways to utilize this & other buy or sell signals depending on how one is positioned but for the sake of this example, let me share my strategy.  I’m currently & have been running a net short portfolio for weeks.  Net short means that I have more short exposure than long exposure although I do own both longs and shorts.  In fact, although I current hold more short positions than longs, my trading account has a decent gain on the day due to the big gains in such positions as WLT, CLF, HL, AEM & SLV (and some others outside my trading account) while most of my shorts, such as the airline stocks, are up much less than the broad market.

Although many of the charts on these positions are looking very bullish, as of today’s second consecutive 18%+ bull/bear sell signal I will be looking to book partial or full profits on some of these trades sooner than later, quite likely before even the previously posted first targets.  I will try to update as many active trades as possible soon but my thoughts are that the risk/reward to remaining long is rapidly diminishing.  However, as stated recently, I am not adding short exposure here either, as the short-term trend by just about all metrics that I follow is no longer bearish.

Yesterday I posted a 15 minute SPY chart listing 4 criteria that I was waiting for in order to confirm a likely resumption of the downtrend.  At the time of posting, we had just triggered one sell signal via a break below a well defined uptrend line.  However, although we came extremely close, not one of the other sell signals were triggered.  In fact, if you look at this updated 15 minute SPY chart, you will see that we had a nearly identical “close, but no cigar” pending sell signal a few weeks ago back on June 27th.  At that time, we had all three indicators below (144 stochastics, 14-34 ema histogram, and the MACD) all poised to trigger sell signals (as defined in yesterday’s chart/post) at the same time a well-defined uptrend line broke down.  However, like yesterday, none of those confirming sell signals triggered and as such, prices went on to make marginally higher highs following a shallow dip.  Of course, as prices made those higher highs, the 14-34 histogram as well as the MACD continued to diverge (lower lows) and a confirmed sell signal was given on July 2nd with a break below a new uptrend line as well as all 3 indicators triggering sell signals…. something that I will be watching for going forward.SPY 15 min 4The bottom line is that the recent AAII Sentiment Extreme Sell Signals, as effective has they have been historically, are most effective if/when confirmed by multiple sell signals on the shorter-term time frames, such as this 15 minute chart.  Although the sell signals on this chart often trigger in close proximity, ideally you want to see at least 3 of the 4 trigger before aggressively closing longs or adding short exposure.

Jul 102013

This is an updated static version of the 15 minute SPY chart that was covered in the video posted on the site yesterday.  As discussed in the video, it is typical to see various buy or sell signals all trigger in close proximity once a valid trend change (non-whipsaw) has taken place.SPY 15 min 3As this updated chart shows, we’ve now had the first of 4 possible sell signals take place; prices breaking down (and slightly backtesting) the uptrend line shown yesterday.  As always, the more buy or sell signals received in close proximity, the lower the chances are of a false signal or “fake-out”.  Eyeballing the distance to each of their respective sell signal levels (cross below 80 on the Stochs, cross below zero on the 14-34 ema histogram, and a cross below zero on the MACD), we still have quite a bit of work to do before those other three triggers confirm this first sell signal (trendline break).  Keep in mind though, that this is a 15 minute chart and therefore, an impulsive move lower could trigger those additional signals as early as today.  At the very least, the trendline break, although yet to be confirmed via the additional signals, should be an early warning sign for those positioned aggressively long.

Jul 092013

In response to a question from yesterday’s video on using moving average pairs to help identify trends and trend changes, I made this video to show how to configure and optimize moving averages on any specific time frame.  Also discussed is the use of other indicators or signals in order to help confirm a moving average cross-over buy/sell signal.  A 15 minute period intraday chart is used in this example although the same technique applies to all time frames.

Jun 112013

SPY daily 2My intraday market analysis has been more frequent than usually lately as I believe that we are at a potentially important battleground between the bulls and the bears.  As the intermediate and long-term bullish trends remain solidly intact at this point, the short-term trend is bearish.  However, the S&P 500 is currently trading only 2% above the bottom of that extended rising channel and so a solid break below that channel would be a well-watched technical breakdown that would likely usher in additional selling and potentially trigger an intermediate (more lasting) sell signal.

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SPY 10 minuteWith that being said, here’s a 10 minute chart of the SPY showing that prices have now backfilled today’s gap, so far stopping cold right at the reaction low put in on the last 10 minute candlestick from yesterday.  If the market does make another move up, it has a short-term downtrend line that runs parallel the primary downtrend to contend with, levels & likely bounce targets that should have been added to the previous SPY chart.

Jun 112013

head fakeHead fake:  A Head fake occurs when a player moves the head to fake a change in direction. 

In financial markets, a head fake is where the market appears to be moving in one direction but ends up moving in the opposite direction. For example, the price of a stock may appear to move up, and all indications prior to that are that it will move up, but shortly after reverses direction and starts moving down.

Head fakes are often caused by market makers who place bids and asks in such a way that they cause the apparent (fake) trend in order to later profit from it.   source: Wikipedia.orgSPY 30 minute

Jun 112013

SPY 15 minHere’s an updated 15 minute chart of the SPY which gapped below the downtrend line today, undoubtedly trapping many longs.  Prices are now just above support so a reaction here is likely although also likely to be fleeting.  Once this support level breaks, which I continue to favor, the next important support/target is the 159.70-80ish level.

Just any fyi: The last few SPY charts labeled as 5 minute charts were actually 15 minute charts like the one below.  I had changed the time frame on my 5 minute template to a 15 minute period and had mistakenly referred to them as 5 minute charts.

Jun 102013

SPY 5 minute 5Although I have not added the SPY or any broad market tracking etf’s as active trade ideas, I have been focusing my market analysis on the S&P 500 lately.  As such, I recently received a request for a suggested stop level on the SPY from someone short and would image that there are others out there currently short or looking to position short on this bounce.  Of course, there is no “one-size-fits-all” stop level for any trade as stops levels for each trader are dependent on several factors, including their own entry price or average entry price (if scaling in) as well as their unique risk tolerance & trading style.

With that being said, my thoughts are this:  Any move over 166 would be the first objective stop level for those already currently short, as that level is horizontal resistance as well as just above the 61.8% fib retracement level of the drop off the May 22nd peak.  Depending on one’s average entry price, including those interested in shorting between here and that 166 level, a stop not too far above the May 22nd high would be an objective stop area.

As far as new short entries or add-ons, one could certainly short here and use a tight-stop just over that 166 level.  I’m currently watching for, and expecting, prices to fall back to make a backtest of that yellow downtrend line where bullish traders will be looking to position long. However, I think that prices will continue to move lower from there if we do revisit that level.  If so, a break back below that downtrend line, especially once/if prices drop below the 162.50 & then, more importantly, the 159.70-80ish level, should open the door to the next wave of selling.

As far as the updated trade ideas that I planned to get out over the weekend, I got off to a late start with the market update posted last night and to make matters worse, my site went down last night due to a server issue at the web hosting company (hence, the reason I was not able to get that post out until 2am my time).  As I’m just now mentally coming back online myself, I’ll comb thru my watchlists and the existing trade ideas to share any trade ideas that might stand out.