Market Recap 09-03-10 Friday chart 1 Reasons for entry:This morning the market was pushing up strongly, then gave sideways action for a while. Sideways action at open usually creates a shoulder, that pops a head at the first opening minutes. When the market has pushed strongly up premarket, and holding there, in order find short entry, we need to see Macds rolling with weakness and grabbing to the bottom Bol. band on the smaller time frames like today on 144, 233 . S1 is a great short entry with perfect Head & Shoulder bar setup. We also have Big 61% retrace on LT frames and 100ext. area. 610 RSI is overbought. The sideways action formed a cone, which height is also matching the target area. 377 and 610 had strong bearish divergence, where 610 was hugging the rail nicely(hugging means will continue in the same direction, which here is down), and during the last upmove that formed a head pattern 610 macds didn’t go up with the market (they were tired), and made perfect bear flag for more down. 987 was making perfect upside down foot; 1597 was making a foot, plus with a great bulge on top; 4181 had decent separation on the rail up during premarket, needed to get closer to the rail. Here we expected that 4181 will cut through the Bol.band as the 1597 with bulge and 987 foot, had lots of power for down.

Market Recap 09-03-10 Friday chart 2 Reasons for entry:

This is another chart of the premarket showing the Head and Shoulder ( H&S) pattern taking place.

Market Recap 09-03-10 Friday chart 3 Reasons for exit:

After the drop, first bounce started to occur at the small 61% retracement, where some separation was announcing the bounce like 144, 233, 610, while 377 bands were trailing, 1597 macd was touching lower Bol.band, but with the that kind of bulge, usually breaks through the Bol.band. We cover some of the position at C1, even though we expect more down, as the deep pullback around news time might retest the highs. With our boundary in place, our previous short entry is still working great. After the news and the deep pullback, 987, 1597 grab on the rail down with power as macds are stretched. Next area to cover is around 50% retrac. where 144 starts to build some bullish divergence; 233 and 377 are making multiple separations; 610 was separated for a while (which can last longer, when larger timeframes are strong down), but there was no reason to cover, as Larger timeframes 987 and 1597 were strong on rail down; 987 starts to separate more at the Midpoint, and considering we are at the 50% retrac. area, it is time to cover C2 more or All of the position.

Market Recap 09-03-10 Friday chart 4 Reasons for exit:

Another option is to let the last position ride, with boundary at place above the deep retrac. area, until 987 and 1597 slowdown more and get underneath the Bol.bands. Note that 610 RSI is oversold at the last covering.

Market Recap 09-01-10 Wednesday chart 1 Reasons for entry:

This premarket action showed us that the market was pushing higher, but coming to deep retracement areas from the highs of Monday, also 610 was overbought. It was due for a retrace. Before the open the market went sideways, anticipating a head to pop higher at the small 100 ext. we get from the last pivot. There was lots of bearish divergence on 144, where S1( Head & Shoulder bar setup) and the pullback S2 ( slide bar setup) are valid shorts. 610 Macds (our main chart for finding a good entry), were on top of Bol.band and nicely separated, creating a bulge; 233 was the only one trying to make a foot after the bulge, but rest of the charts pushed it lower and once the foot gets prolonged, will not work as a foot anymore; 987 had a bulge on the top; 1597 Macds separated on the rail, need a flag; 4181 Macds nicely separated on the side, need to come back to Bol. band.

Market Recap 09-01-10 Wednesday chart 2 Reasons for exit:There was no reason to exit the trade (as 610 was hugging the rail down) until the 50% area of retracement. To find the valid 50% retrac. area, we find that retracement should be plotted from the pullback bar from this morning. We adjust the retracements according to the bar action showing slowdown at the 23%, 38% , 50%, also we always try to find if the target will match a 100ext. The bars slowed down at the 50% that we marked and we find a 100 ext is matching. 144 had nice bullish divergence for a while, then gave us nice bull flag at our target area; 233, 377 lots of separation and zigzagging, where 377 makes pretty bulge underneath; 610 in the same time is very separated and coming underneath, anticipating a foot; 987 pole on the rail needs a flag; 1597 has just finished the bull flag and is ready for another push up; 4181 Macds after separation, came back to Bol.band for more up. We cover the position at our Target area as the direction is changing.

Market Recap Tuesday 08-31-10 chart 1 Reasons for entry:This early morning the market dropped lower from yesterday’s close and tested the lows (bottom) of yesterday. Considering that the market had continuous down move since yesterday open, without any significant retracement, we are due for a good bounce. The best area for a Long is the retesting of the morning lows, the very deep retracement that occurred at 9:44AM. Notice that at 9:41AM there was a dual bar bounce, but no bullish divergence yet. The next pullbacks at L1 and L2 areas are great entry supported by a strong bull flags on 144, nice foot on 233, 377 and 610 making nice bull flags during the testing of the morning bottom. 987 also had bullish pattern and bouncing from the bottom Bol. band. 1597 made such a pretty foot, even had a heels on it. Those heels are great bulges on the side and underneath, it holds lots of power for up; 4181 was on rail down, but with huge separation that lasted too long created a pole that needs a flag, which announces that Macds will cut across inside the Bol.band with strong power.

Market Recap Tuesday 08-31-10 chart 2 Reasons for exit:

After the long entry, we had a nice strong up move for 7 points, where 144 started to bulge on top and roll, 233 also had bulge on top; 377 after side separation was ready to cut across the Bol.band in need of a flag; 610 after being strong on rail, with small separation finished a pole that needs a flag. 610 Macds here were cutting from the side, meaning after this, we expect at least one more push up. Another possibility is that 610 as being strong on rail, after the flag will continue more up (as the side separation was not strong, but more like hugging the rail for another 100% extention. 987, 1597 and 4181 all had very strong and stretched Macds that during the strong push separated and needed retrace to come back to the rail.

Market Recap Tuesday 08-31-10 chart 3 Reasons for exit:Another option was to let the rest of the position run after the usual news time, 10:00am, for another 100 extention up, with boundary in place near the deep retracement area, above our entry. After the news market bounced at 50% retrac. from the bottom, where the 987, 1597 got back on rail to continue higher. 610 made a strong bull flag for more up. The bigger timeframes, 987, 1597 and 4181 kept the power up, even though the smaller timeframes showed exhaustion with bulging on top. The covering takes place at the 50% area from the 617.50 high from Friday close (avoiding the lonely bar). The market was riding the up trendline, then breaking below it, tested it underneath as resistance. 610 after strong separation and zigzagging got on top of Bol.band, where 233 and 377 Macds were already grabbing on rail down. 987 separated from a side, cutting across needing a flag, also 1597 separated from side, cutting across with Bol.bands wide apart, announcing sideways action coming. 4181 finished the bear flag, hitting resistance at upper Bol.band.

Market recap Monday 08-30-10 chart 1 Reasons for entry:After last Friday’s close, there was a big push up, that created a high peak (on Large timeframe, the peak reached 76% retracement from last week’s high 633 area). However, the premarket action was strong down, that erased the whole upmove and some more. We have seen this picture before. This means they don’t want it anymore, the buyers are not there to support the morning peak. This picture shows us that the best trade to look for is to short at a valid retracement measured from the high of the morning(624.50). We can wait for the short to occur, or we can look for a long from the morning bottom as a bounce is needed and will give us minimum of 3+ points, (supported by the Macds). First long occurs at 9.33am when Russell did very deep retracement testing the lows of the morning. 144 gave us a beautiful bull flag, that is a million dollar bull flag to look for at the early opening minutes, that occurs very often. This Long entry is also supported by the foot on 233 and 377 , with lost of side separation and bulge on 377, that will create a snap up. 610 didn’t have a great separation, rather hugging the rail down, but the pole needed a flag and macds squeezed to cut across inside the Bol. band starting the flag.; 987 also slowed down after being on rail down and separated, in need of a flag; 1597 Macds slowdown after separation, in need of a flag; 4181 had a great separation from the side, is on the way to the bottom Bol.band, but during that time( considering it is a Large timeframe) market can move significant number of points, when other timeframes are ready. Note that 610, 987 and 1597 Bol.bands are separated, showing sideways action.

Market recap Monday 08-30-10 chart 2 Reasons for exit:We close 2/3 position at the retesting of the 23% retracement area, holding the rest for the next higher deeper retracement. We notice that the market was just doing sideways, almost tired to move up, kept hitting the 23% multiple times, and bouncing within the cone pattern. After it broke below the up trendline, the bars will usually test the trendline from underneath (which trendline acts as resistance now). 144 Bol bands were moving sideways, not being able to ride the upper rail during the sideways action; 233 had great bulge and also hitting the upper Bol. band as resistance; 377 made great bulge on top of the upside down foot pattern; These timeframes finished their job, pushing the market up about 3 points, where larger timeframes started to bearflag; 610 finally finished the bear flag, after hugging the rail down earlier. Even though tried to create a foot, it never made it on the rail up; We close the rest of position as all the above described charts started to show Macds rolling down. 987 trying to bulge underneath, but the Bol. bands came very close together and became prolonged. The prolonged bands that look like a tight tube can continue for a while and continue the bear flag;

Market Recap Monday 08-30-10 chart 3 Reasons for different entry setup:Here is another option for a great trade today. As we said above, the early morning picture is telling us more down, therefore finding the best place to short will reward us with many points. Market was not able to retrace more than 23% Up in the first 30min after open, telling as again that there are no buyers. After the news the 23% retrac. area was hit multiple times(in this case 5 times) and the power of the Macds in all timeframes was showing down. We find very helpful drawing the up trendline, which got broken below, then retested twice, where was the area for the short. S1 and S2 were two possible shorts where 144 Macds had bearish divergence; 233 and 377, 610 Macds all zigzagging and separating from on the top of Bol.band.; 987 foot became very skinny, where Bol.bands create a tight tube, which continues into a bear flag down; 1597 Bol.bands continued down with Macds getting stretched down. 4181 Macds grabbed the down rail, stretching.

Market Recap Monday 08-30-10 chart 4 Reasons for exit:

Market started to slowdown with 144 building bullish divergence, 233 getting on the rail, 377 having huge bulge underneath; 610 underneath the Bol.band but no separation, still will create a bounce, but not as strong; 987 on rail down slightly separating, 1597 very separated on rail down, ready to snap and cut across the Bol.band; 4181 hugging the rail and slowdown. We leave the rest of position ride with tight boundary below our short entry, as our 100% ext. big target from the high of the day (pullback bar) is lower at 608.5, which is matching the 38% big retracement area on Large timeframe.

Market Recap Monday 08-30-10 chart 5 Reasons for exit:

The rest of position is covered later at our target area, where we can have our limit order ready, and come back from time to time to observe the trade. We covered where 144 had bullish divergence, 233, 377 and 610 were making a foot; 987 and 1597 separated, cutting across inside Bol.band; 4181 Macds separated need to come close to Bol.band, even though they are still on rail down, but close to Midpoint area of support.