Trade Guideline For Friday

On Thursday, Nasdaq opened near prior day close, but quickly rallied above 3000 support/resistance level, triggering short-covering rally that lasted all day except for the end of day profit-taking decline into the close.

For Friday, the key Level for NQ will be 3020.

-- As long as price stays below 3020, the bias is down, with support at 3007, 2995 and 2980. Friday tends to be choppy and trade sideways inside a trading range as options traders square their books. But as always, be on the lookout for extreme market internals for signs of a strong trending move, up or down.

-- With price trading and pushing above 3020, stops may starts to get hit, triggering short-covering rally, with resistance at 3037. 

Trade Guideline For Thursday

NQ mostly stayed below 3000 resistance level on Wednesday, although it eventually broke above 3000 in late afternoon, rallying just enough to close the gap, but dropped back down below 3000 at the close.

-- The rally from day low looks like a large bear flag (bearish). If so, it should go start to trend down soon, target down is a retest of last week Friday swing low, but standing on its way down is support at 2980. 

-- A rally back above 3000 has the potential to trigger short-covering rally, potential target is Tuesday swing high, but first resistance is at 3017, and has the potential to stop and reverse the rally.

ES has a similar pattern with key resistance at 1662, bulliih above and bearish below it..

Trade Guideline For Wednesday

NQ opened with a large gap-up, and then quickly reversed back down, triggering long-covering decline, as trailing stops were hit, taking price down to 3000 support zone before rallying for the end of day profit-taking. 

A decline into the close down to support, 3000, is either re-test of Tuesday's low, support, or a decline to break support, on its way down to last week Friday low. 

-- As long as 3000 is not clearly violated on Wednesday, I will be looking for the market to rally back up to re-test the high.

-- A clear and sustained break below 3000 support is an indication that it is trying to re-test last week Friday low, but there are supports coming in at 2980 - 2985 that can stall the decline.

Trade Guideline For Tuesday

At the end of the day last week Friday NQ was rallying towards previous support now-resistance 3010. Whether or not it will continue rallying towards 3010 resistance depends on where it trades in the morning on Tuesday in relation to its equilibrium price level, which is 2985 for Tuesday.

Trading above 2985 implies NQ is still going up towards resistance 3010, which will serve as a very strong resistance level. A clear and sustained break above 3010 may trigger a short-covering rally, next resistance is 3020 and 3030.

It NQ trades below 2985 in the morning on Tuesday then I will be looking for price to decline down to re-test last week swing low 2965 area. A clear break below support could trigger a fast liquidation decline.

Trading range = 2965 - 3010

Friday Trading Guideline

A gap-down opening on Thursday below Wednesday's swing low implies wave 5-down was in progress. Then upon completion of  wave 5 decline, I was looking for a large ABC wave rally that closed the opening gap late in the trading day.

On Friday morning I am looking for a completion of a larger wave C of ABC rally that started from Thursday low with upside target between 3010 - 3022.50. Resistance are 3010 and 3022.50.

As long as it does not clearly violates 3022.50 resistance level, the next leg down should resume, whether or not it will resume its downtrend on Friday, only time will tell, but upon completion of a large ABC wave rally, as long as it does not clearly violate 3020 resistance, the next down-leg should resume, with the next downside target at 2900.

However, a clear and sustained break above 3022.50 implies the daily uptrend has resumed, targeting another higher high above Wednesday's high, negating Wednesday's reversal down day.

Thursday Trade Guideline

Mixed messages from Ben Bernanke and the Fed was enough excuse for some algo traders to trigger their sell buttons, designed to run-over trailing stop-losses of those holding long positions, and it did, causing fast liquidation decline, erasing the previous five days of rally in just a few hours, resulting in a large bearish reversal day.

From a wave structure perspective, the decline looks like wave 1-2-3 down, with the end of day profit-taking rally as wave 4. If so, the pullback wave 4 up should not clearly violates 3010 resistance zone, and then move back down to below Wednesday low. A decline below Wednesday low implies wave 5 down is in progress, and once completed, a large ABC rally back up is to expected.

As long as Wednesday high is not violated, Wednesday bearish reversal day should continue, going forward, the trade will be Sell Rallies as long as resistance levels, 3010, 3020 and 3032 are not violated. 

Pullback rally resistance for ES are 1660, 1666 and 1670-1672.

Only a clear and sustained break above 3032 for NQ and 1672 for ES would change the trade direction back to Buy the Decline mode

Trade Guideline For Wednesday

On Tuesday, Nasdaq continued to make another higher-high, and as usual, pulling back down after making a higher-high. 

As long as NQ continued to make higher-high and higher-low on a daily chart, the uptrend is still in progress without any pullback. Breaking below prior day low may trigger a larger pullback that could last several days.

Key level for NW on Wednesday is 3017.

-- Above 3017 implies another higher high is a high probability.

-- A clear and sustained break below 3017 is an indication that larger pullback is likely.

FOMC decision will be on Wednesday.

Trade Guideline For Tuesday

Uptrend continued on Monday with NQ making its daily higher high in the morning and then sold-off during the lunch hour. Will the same pattern of higher-high in the morning be repeated on Tuesday only time will tell.

Key level to watch on Tuesday is 3020.

-- Trading above 3020 in the morning implies another higher-high is likely.

-- Below 3020 is an indication that it may want to pullback down to lower level, with first support coming in at 3005 area.

Gold bounced off it obvious double-bottom support on Monday as shorts took profit and reversed long for a quick snap-back bounce.

How large will the bounce be, only time will tell. But as long as the double-bottom low hold, gold should either rally back up to resistance $1438 on the June Futures Contract, or trade sideways.

However, a re-break back below double-bottom support could trigger another round of liquidation decline.

Trade Guideline For Monday

One common trait of hyperinflationary collapse is a parabolic rise in the stock market as people rush in to buy stocks in order to protect their wealth from collapsing fiat currency. Here below is a chart of Zimbabwe Industrial Index during their recent hyperinflationary episode 2005 - 2007.

Whether or not the US stock market is telegraphing a hyperinflationary collapse only time will tell, but it is starting to go into a parabolic move up.

Zimbabwe

Current trade theme is Long Equities - Short Gold, Silver and Commodities. Gold and Silver charts are really bearish, telegraphing potential large down days coming. 

Currencies of commodities producing countries, Australia & Canada are also very bearish.

It looks like gold and Silver may open with a gap-down on Monday below prior liquidation low. If so, look for selling algorithm to kick-in with maximum intensity,  The trend should continue until it ends, up equities, down metals and commodities. A reversal in trend will be fast and furious.

For Monday, Supports in NQ are 3015 and 3005 (1658 and 1652 in S&P).

-- Pullback that can stay above these 2 support zones implies the uptrend is still intact, llok for rallies to continue.

-- A clear and sustained break below supports implies it is going into consolidation.

Trading Guideline For NQ on Friday

Nasdaq made another higher high on Thursday, closing right at support-resistance level (3000) for Friday.

As long as it does not clearly violate 3000 support level on Friday, the uptrend should continue. A clear break below 3000 however, implies NQ is going lower to supports 2982.50 and then 2975.

Trade Guideline For Thursday

As short-covering rally continued on Wednesday both the S&P 500 and the Dow made another higher high on Wednesday, with Nasdaq NQ, being dragged down by Apple, just short of making a new higher high. NQ traded between R1 resistance and S1 support on Wednesday

For Thursday, with the market in extreme bullish condition, as long as pullback down does not violates important support level, the uptrend should continue. Key support for NQ is 2982.50.

Equilibrium Level / FT Pivot for Thursday is 2996, bullish bias above, bearish bias below.

Trade Guideline For Wednesday

The outflow of funds from Europe, Japan, commodities, metals, and from the bond market continued to power the equity market into another higher high on Tuesday.

As long as pullback does not violated key support level, which is at about 2987 for Wednesday, NQ should continue to power higher.

Guideline For Tuesday

Slow short-covering rally continued on Monday, but the uptrend is starting to look really tired and could go into a 2 to 3 days pullback decline.

Key Support Level For Tuesday is 2970 area.

-- As long as pullback down does not clearly violates key support level, short-covering rally should continue, next resistance is 2995-3000.

-- However, a clear and sustained break below 2970 could trigger algo selling, with first support at 2952.

Trade Guidelien For monday (NQ)

Uptrend continued on Friday. For NQ as long as pullback down does not clearly violates 2965 key support, the uptrend should continue.

Trade Guideline For Friday in NQ

On Thursday, the uptrend continued, again making higher high and then pulling back down right to support, 2955.25 before bouncing up on end of day profit-taking.

For Friday, support is 2952.50, resistance is 2965.

-- A break below 2952.50 could trigger selling, tanking it down to next support 2935.

-- Above 2952.50 could trigger buy program, pushing it up to Thursday high.

Trade Guideline For Thursday (NQ)

Another narrow-range up-day for NQ on Wednesday, closing neat the high of the day. NQ is in an uptrend on all time frame. Although it is currently clearly in an overbought conditionl, a continual push higher is going to cause more short-covering.

First Support on Thursday is 2952.

-- Above 2952 on Thursday is bullish, short-covering up trending market should continue.

-- A clear break below 2952 could trigger algo selling programs that can tank it quickly down to the next support 2942. Strong support lies at around 2937. 

Trade Guideline For Wednesday

Another sideways consolidation day for NQ on Tuesday, trading above key support 2936. 

For Wednesday, 2936 is still key support level.

-- Trading above 2936 is bullish, implies more consolidation or a trend up day.

-- A clear and sustained break below 2936 could trigger selling algorithm, potentially crushing NQ down to the next support level at 2910, a strong support zone. It would need a very strong momentum move down to break below 2910 area. 

Trade Guideline For Tuesday

Nasdaq traded sideways in a very narrow trading range on Monday. At the end of the day it looks ready for a pullback down to supports on Tuesday.

Key Support/Resistance Level For Tuesday is 2950.

-- Below 2950 is an indication that NQ is in a pullback down mode with first support at 2935. A clear and sustained break below 2936 implies it is going down to the next support at 2910.

-- Above 2950 implies the sideways consolidation is a setup for the next upleg.

Sell In May And Go Away

Nice post from the Gold and Silver Guy, reposting it here.

Stock Preparing for Pullback, Buy Bad News, Sell the Good
May 3rd, 2013 at 10:43 am

The SP500 remains in a strong uptrend, but the index has posted a sizable gains for 2013 thus far so it’s only logical that a pullback within this bull market takes place sooner than later.

With May now upon us and historically prices fall more times than not I feel a 3-4 weeks correction is on the verge of starting. This Friday we just had very strong economic numbers confirming the economy is recovering. This news has sent stocks sharply higher as shorts cover their positions and investors who are not yet long get into position to profit from higher prices. But the herd psychology and their trades are typically incorrect as they invest based on fear and greed. The old saying is buy on negative news and sell on positive news will typically get you on the correct side of the market more times than not if used with price, volume and cycles.

The Technical Traders – SP500 Index Weekly Chart

If we look at the price of the SP500 we need it to breakdown below the recent pivot low before I become bearish.

Volume which is not shown on this chart is below average as price moves higher and this is a bearish sign also.

Looking at a basic cycle using the stochastics indicator we can see that the current cycle is starting to turn down. Cycles tend to lead price during an uptrend so we could still have stocks move higher for another week or so but be aware that when price starts to drop its likely a market top. But until then you must respect the uptrend. Stocks can remain overbought and toppy looking for months… so done be gambling and trying to pick a top until we see breakdown start.

SP500 Stocks Trading Above 200 Moving Average – The Technical Traders View

Stocks trading above the 200 day moving average is a great indicator for helping spot broad market underlying strength/weakness. It does lag the market but is still very powerful. The chart below shows this info and my thinking of what is likely to unfold sooner than later though price may still rise for several days yet.

I also use a similar chart for timing swing trades and market tops which are based on stocks trading above the 20 day moving average. This chart is not shown here but is now trading at a level which generally triggers selling/market top.

Stock Market and SP500 Trading and Investing Conclusion:

In short, I am still bullish on the market as I focus on trading with the trend. I do not pick market tops and I do not pick market bottoms. Knowing that stocks make their biggest moves at the end of their uptrend and at the end of a down trend it’s only common sense that risk is extremely high if you are betting against the current trend.

The best thing to do is wait for a technical breakdown and reversal which puts the odds more in your favor with much less risk and typically a clear line in the sand to exit the position if you are incorrect.

The last major stock market top which formed in September of last year had a series of strong news and strong price action persuading the herd to buy stocks.  Instead it was the last impulse wave up just before a strong correction took place. That is much like what we see now with the economic news.

Trade Guideline For NQ on Monday

Pension Funds looking for both Yield and Safety continues to stampede into high-dividend paying blue chip stocks (especially the component companies of the DJIA), pushing Dow into record territory on Friday. 

With the bond market showing some sign of weakening, the flow of funds into blue chip stocks may continue to accelerate, keeping the market on the bullish side. 

But the party must end one day in the not too distance future, as it is just a matter of time. The key trigger will be an uncontrollable rise in interest rate, which will also come soon.

As a trader I will continue to watch the technicals, and for now the technicals are still in the ullish camp on the Daily, Weekly and Monthly time-frame, pointing to a blow-off top. 

However, on the short-term 5-minute time-frame the Key Level for Nasdaq on Monday is Friday's swing high 2947.50 area.

-- NQ closed down below the high on Friday on end of day profit-taking activities. A break above Friday swing high is likely to trigger another round of short-covering rally, with the next upside target at 2980 area. If market internals can get really bullish it may blow through all the way to 3000.

-- Failure to break and stay above Friday's swing high will cause the market to consolidate and pullback down to supports.

Trade Guideline For Friday

On Thursday, as expected, with the opening price action above 2870 key equilibrium level, NQ rallied immediately, fueled by short-covering, and it trend up all day on Thursday, with the usual end of day profit-taking decline. Whether or not the end of day decline will continue on Friday will depends on where it trades in relation to its equilibrium level.

For Friday key level to watch is 2905.

-- More bullishness above with more short-covering rally above 2905.

-- Below 2905 implies pullback decline is going to continue, with first support at 2894.50 area (FT Pivot). Below that the next support level is 2883 area.

Trade Guideline For NQ on Thursday

On Wednesday, after making a higher high above Tuesday swing high near the open, NQ reversed and slowly trend down in a choppy way all day.

For Thursday morning  as long as NQ is below its previous support now resistance 2870 area, the morning trend should be down.

Above 2870 is an indication that Wednesday's pullback has ended rally continues.