Monday the Dow closed down more than 600 points Yesterday the Dow closed up 400 points and today the Dow closed down more than 500 points. Needless to say, this is a see-saw market right now. Up to this point, moves have been more random than based on technical patterns, so less is more. Cash is a position, and it is a good position at this stage. If anything, you can play the extremes of the ranges as charts are broken and will take time to repair and give you calculated moves. Fears of the French banking sector's exposure to shaky European debt and the possibility for it to spillover into U.S. banks continue to weigh heavily on the Markets. Worries about the U.S. economy and high levels of public debt in Europe have sent stocks cascading lower over the last 2 weeks.
SPY obviously retraced more than traders would have liked to of seen today, however we did not break yesterday's lows. Use $110.20 as the new reference point.
SPY obviously retraced more than traders would have liked to of seen today, however we did not break yesterday's lows. Use $110.20 as the new reference point.
Below is a 3 minute chart of SPY from the close of Tuesday into today. It is important to know retracement levels to test the validity of moves. The "line in the sand" was the 61.8% retracement level of $113, in order to keep the bullish momentum from Tuesday's move. SPY did hold above yesterday's high, so with this extreme volitilty in the markets, sometimes you have to widen your ranges, like using yesterday's low, or just wait on the sidelines. There is no need to "swing trade" for now, as there is enough action intra-day to take advantage of.
Below is a weekly SPY chart. There is a lot of technical damage in the market and stocks, which will take time to repair. Continue to take trades in both directions, this is a conducive environment for day trading.
It is good to note what stocks broke below the previous days lows and which stocks were able to rally positive at some point in the day to judge the strength versus the market. Remember less is more in volatile times and sometimes it is best to just trade the indicies and inverse ETF's, which are providing enough intra-day action to take of.
I am not including any specific stock charts set-ups today because, frankly, the action does not warrant it. Most traders flattened out positions into today's close as the action has yet to make much sense. Once we do get some consolidation and ranges, I will be posting charts of stocks that held up the best that could bounce strongly.
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