Markets appear to be trading very technical these days. Sometimes the charts can seem out of whack; however, there are some beautiful patterns (pictures) in the financial markets as of late.
On Thursday, October 03, 2013 price on the S&P500 (SPX) retraced from the September 19, 2013 high to probe lower at 1670, which is just shy of the 61.8% Fib retracement line. Price bounced later in the day and managed to close at the 50% Fibonacci level. The E-Mini S&P ($ES_F) shows a similar pattern. Both closed above their respective 50% line on Friday (October 04) as markets found support and moved higher. Price, once again, used the 50-Day Moving Average as support, although price probed below. Eventually these won't be probes or price rejection bars, but for now we'll use the technical levels put in place by the SPX at 1670 as a point of interest. Additional comfort (support) is found at the 1666.25 level where the 61.8% Fib level sits and the 100-Day Moving Average sits at 1661/1662.
The picture here is quite clear: the Bulls are trying to use this obvious technical support area to accumulate and continue this market higher. Any failure to hold the line here by the Bulls will bring out the Bears as they look to exploit the disappointment at the failed accumulation in this area. Bears will enter the market when they see the commitment level of bulls waning. This market can only go lower if the Bulls fail at confirming accumulation.
Names to Trade (THESE ARE SHORT TERM TRADES, typically 1-day to 1-week):
Boeing (BA) seems unfazed by the government shutdown. Price used the 21-Day Moving Average to find support at $114.73 and has traded higher since. Upside resistance is seen at $117.77 and the September high of $120.38. A break below the previous pivot low ($114.73) should send price lower to close the gap area at $111-113. Bias: LONG
Commercial Metals Corp (CMC) appears to want to use the previous resistance high of $16.25 (August 13th) for support. This area is also the 38.2% retracement level, which, ironically (sarcasm), is sitting at $16.23. Good risk - reward here. Interesting one to watch, as this one makes up 3.21% of the SPDR Metals and Mining ETF (XME). Bias: LONG
Tesla (TSLA) has been on fire lately. The stock suffered a minor sell off, but managed to find support at the 21-Day MA, and on the weekly chart price found support at the 8-Weekly MA. Most analyst are looking at the fundamentals and claiming the company cannot make any mistakes because the price valuation has gotten distorted. I'll leave the fundamentals to the professionals. Price seems to have managed to shake off the negative news and moved to reclaim the $175 level. The trade could be extremely vulnerable to a shift in sentiment.
Bias: LONG
Value Click (VCLK) has traded in the opposite direction of the broad market since May2013. After the gap down, there have been a few attempts to trade back above the 50-Day MA, but to no avail. This one looks a bit dire. This could be a text book example of what happens when Bulls attempt to try and build a base (which it appears is happening), but end up failing. If price is not able to hold the $20.20 - $20.50 level, buyers will liquidate and look for another area to try again. Bias: SHORT
Other LONG set ups of interest: DANA, IPG, KLAC, MMM, NUE, SU, TRV.
***Disclosure***:
All equity positions disclosed are traded via Call or Put options. Strike entry is determined based on Delta reading of >.70. SPX is traded via the E-Mini S&P.
On Thursday, October 03, 2013 price on the S&P500 (SPX) retraced from the September 19, 2013 high to probe lower at 1670, which is just shy of the 61.8% Fib retracement line. Price bounced later in the day and managed to close at the 50% Fibonacci level. The E-Mini S&P ($ES_F) shows a similar pattern. Both closed above their respective 50% line on Friday (October 04) as markets found support and moved higher. Price, once again, used the 50-Day Moving Average as support, although price probed below. Eventually these won't be probes or price rejection bars, but for now we'll use the technical levels put in place by the SPX at 1670 as a point of interest. Additional comfort (support) is found at the 1666.25 level where the 61.8% Fib level sits and the 100-Day Moving Average sits at 1661/1662.
The picture here is quite clear: the Bulls are trying to use this obvious technical support area to accumulate and continue this market higher. Any failure to hold the line here by the Bulls will bring out the Bears as they look to exploit the disappointment at the failed accumulation in this area. Bears will enter the market when they see the commitment level of bulls waning. This market can only go lower if the Bulls fail at confirming accumulation.
Names to Trade (THESE ARE SHORT TERM TRADES, typically 1-day to 1-week):
Boeing (BA) seems unfazed by the government shutdown. Price used the 21-Day Moving Average to find support at $114.73 and has traded higher since. Upside resistance is seen at $117.77 and the September high of $120.38. A break below the previous pivot low ($114.73) should send price lower to close the gap area at $111-113. Bias: LONG
Commercial Metals Corp (CMC) appears to want to use the previous resistance high of $16.25 (August 13th) for support. This area is also the 38.2% retracement level, which, ironically (sarcasm), is sitting at $16.23. Good risk - reward here. Interesting one to watch, as this one makes up 3.21% of the SPDR Metals and Mining ETF (XME). Bias: LONG
Tesla (TSLA) has been on fire lately. The stock suffered a minor sell off, but managed to find support at the 21-Day MA, and on the weekly chart price found support at the 8-Weekly MA. Most analyst are looking at the fundamentals and claiming the company cannot make any mistakes because the price valuation has gotten distorted. I'll leave the fundamentals to the professionals. Price seems to have managed to shake off the negative news and moved to reclaim the $175 level. The trade could be extremely vulnerable to a shift in sentiment.
Bias: LONG
Value Click (VCLK) has traded in the opposite direction of the broad market since May2013. After the gap down, there have been a few attempts to trade back above the 50-Day MA, but to no avail. This one looks a bit dire. This could be a text book example of what happens when Bulls attempt to try and build a base (which it appears is happening), but end up failing. If price is not able to hold the $20.20 - $20.50 level, buyers will liquidate and look for another area to try again. Bias: SHORT
Other LONG set ups of interest: DANA, IPG, KLAC, MMM, NUE, SU, TRV.
***Disclosure***:
All equity positions disclosed are traded via Call or Put options. Strike entry is determined based on Delta reading of >.70. SPX is traded via the E-Mini S&P.