Wednesday, January 6, 2016
The market was already heavy and reports of North Korea testing a hydrogen bomb are adding fuel to the fire this morning.
As we've seen many times during geopolitical events, the market tends to gravitate to and inflect at important technical levels.
One of those important levels is close by this morning...1960. A move to 1960 would also get the RSI level below 30 on the daily chart.
My feeling is that the reality of this North Korea situation will turn out to be less ominous as the information gets clearer.
I would take advantage of the support and the oversold condition and use 1960 - 1964 as a level to load up long for a trade.
Tuesday, December 15, 2015
Futures have bounced 50 handles off yesterday's lows and have rallied into a big level right here...2032.
This is probably a decent place to sell some longs and wait for a little bit of a pullback. You can always reload, however, if we do hold this 2032 level.
I'm waiting for the "January Effect" to start kicking in, so keep an eye out on small caps (IWM) for relative strength.
2012 is still big underneath and would provide a better entry point, but there's no need to get too cute.
If we can hold 2032, then the 9 dma @ 2046.78 and the 150 dma @ 2047.13 come into play quickly as greed will trump fear.
Remember, its year end and bonuses are on the line.
Friday, December 11, 2015
Futures are below most support levels and are currently trading around the 100 dma @ 2023.94.
Below the 100 dma, there is some noise on the charts around 2012.
2 causes for weakness this morning:
1. Crude oil continues to get rocked due to oversupply issues and is hitting a multi year low as we speak.
2. The reality of the Fed meeting next week. Often a leading indicator of equities, the junk bond market (JNK) is hitting multi year lows.
$34.09 is the low from 2010:
Playing for the bounce at support levels after sharp sell off's has been working recently, as we caught a nice trade Wednesday and sold at the top.
I would prefer an entry point of 2012-2014, but JNK and /cl (crude oil) are my tells this morning.
If JNK can hold that $34.09 level and crude stops bleeding, futures could snap back to 2032.
Through 2032 with some confidence and volume gets us to the 150 dma @ 2048.57.
Wednesday, December 9, 2015
Futures retesting support here this morning @ the 50 dma (red line above). The 150 dma (light blue line) sits right below @ 2049.40.
This is the spot to buy them for a trade if you missed yesterday's test.
Again, this is not a marriage...catch and release.
2062 is the pivot and has been a battlefield.
If we break through 2062 with a little confidence and volume, look to make sales @ 2079.
The market has been trading with crude lately and oil is up this morning.
Just to keep everyone honest, crude could rally and test its 9 dma @ $40.01, which should give a bid to the overall market and get some shorts to cover that have overstayed their welcome:
Tuesday, December 8, 2015
200 dma = 2058.17; 150 dma = 2049.74; 50 dma = 2047.55. In other words, lots of support here.
Crude seems to have stabilized and it looks like it wants to go green, now that everyone is convinced it's going to $30. That could really help the market, especially since it's right above all these support levels.
Remember, shorts need to take profits, too.
Among the market ETF's, QQQ still has the relative strength, but IWM has a lot of oil names in it.
If crude does go positive and we stay > /es 2062, IWM (TNA = 3x) could rip higher.
But we have to be nimble...everything is a trade here. I would use /es 2079 as a level to lighten up.
Tuesday, November 24, 2015
S & P 500 Futures are down 14 after reacting to Nato member Turkey shooting down a Russian warplane near the Syrian border.
As we all know, traders hate the unknown. And as we've seen many times before, these geopolitical events cause an increase in market volatility as the story plays out and new information is deciphered and analyzed.
However, the good news is that we've also seen technical levels provide clarity during these times of unknown fundamentals.
Like a pilot uses his instruments to fly through the fog, use the charts this morning to trade these events.
3 important levels are bunched up and sit right below us:
2062 has been a huge level since Spring.
2061.47 (grey line) is the 9 dma.
2059 (yellow line) is the 200 dma.
If the market continues to sell off at the open over geopolitical fears, 2062 is a great place to get long for a trade back to the important 2079 level.
Thursday, November 19, 2015
The Federal Reserve's decision on a December rate hike, corporate earnings, high profile ipo's and geopolitical concerns have been grabbing the headlines and controlling the dialog, yet the market is still bouncing in between well defined support and resistance levels.
For example, even as the terrorists attacks in Paris were causing chaos and fear, the market behaved rationally and bounced right off its 50 day moving average (red line above).
It has since rallied into some resistance at the 2089 level and is currently settling into a battle here at the very important 2079 level.
Of all the factors that may affect the market, I expect year-end performance anxiety from institutional money managers to trump them all.
In other words, buyers are higher and sellers are lower, which should create a great environment for range traders.
Rather than getting overly bullish or bearish, I'm using the levels in the chart above as inflection points to trade against.