neoTOOLBOX.com

ES - The support and resistance levels yesterday worked out beautifully!  Tomorrow will be another good test.  I added a "strength" indicator to my homework script (see asterisks next to level).  This lets you visually see resistance levels and their relative strength.  I have a feeling I will be tweaking this in the future.

From the output below, you can see there are stronger resistance levels above than there are support levels.  However, always keep in mind, nothing in trading is 100%.  Does this imply more downside?  We didn't see as much downside as we were expecting today, and in fact, saw a rally into the close.  As of this moment, I am keeping the same plan as I had yesterday: look for a rally to 912 or 917.25 for a short to 887.75 or below.

One thing the script doesn't show is if you take the high of 2009.01.06 (942.75) and the low of 2009.01.08 (891.50), the middle point is at ~917.  This happens to be one of the points we are looking to rally to!  Another point of confluence and thus resistance.  

NOTE: Updated homework (12:30 CST) 

Homework

Homework

ES - I am making good progress in automating the grunt work of my homework generation.  (However, the plan is there will always be a human review/override after generation)  I've found that I keep doing the same steps each time when I do my homework, so why not automate it?  Makes things quicker and less chance of human error.

Below is generated by the script (with some seeded values).  The more items listed next to a level makes it more important (more confluence there).  I still need to look for (and indicate) confluence between Daily and Intra-day levels, indicate confluence with rotation levels, as well as work on better formatting of the information.

Homework

ES - Time to start hitting the markets hard again.  If we keep continuing up, 933 may pose some temporary resistance (Gann 360+180+45 and trendline).  This will pose a double top.

Underlined levels have confluence with both intraday levels and daily levels, as well as a pivot point or HLC. 

 DAILY

DN: 917.50 (PP,D360+180), 912.75, 902.50 (S1,90,D360+90+45), 892.75 (U/D)

Summary 12:21 CST - Friday's close seems to be working best as a rotation level, 925.50.  This puts a 100% rotation down at 917.75, which is right inline with the numbers from above and the bounce we have seen so far today.  A 100% upward rotation is all the up at 964!  I couldn't come up with a good choice last night, so I just used Friday's rotation level above.  Updated.

Homework

Homework

ES - I am trying a new format for my homework.  This may not make sense, but it is initially for my own notes.  If this new format/technique seems to work, I will improve on it.  They are generated using a mix of Gann, pivot points, and rotation.

The general idea is a list of levels to look out for, where underlined are more important.  Also, "daily" levels are more important than "intra-day" levels.  Bold levels are updated at EOD to show the ones that actually came into play.

I am hoping to automate the generation of these levels.  If they turn out to be useful, it will be easy to apply the logic to any instrument... if I can automate it.

DAILY

UP: 902.75 (R2), 915.50-917.75 (R3,LR125,360+180), 933

DN: 887.75, 878.25 (LR25), 873 (360+45), 858.25 (360)

ROTATION: 887.75   (better choice 888.25, previous Close)

INTRA-DAY 

UP: 892.75, 906.75 (LR100), 912.75 (180)

DN: 884, 882.75 (90,PP,HR100), 876.75 (45,S1)

To complete the rotation from Tuesday, we hit 892.75 and bounced off as expected.  To help confirm that Wednesday's rotation level is 887.75 we need to fall down to that level and have some kind of bounce, even if small.  (We are currently at 889 and falling) There seems to be a lot of resistance forming at 882.75, which seems like a likely down target.

EOD Summary - 16:00 CST - As expected, we returned to the 887.75 level and bounced.  I was expecting a further move downward, however.  Though, what we did do was also technically perfect from a rotation stantpoint.   Since 887.75 was the rotation "center" and the previous primary pivot was at 868.75, this meant we needed to rise 19 points (887.75 - 868.75 = 19) from the center to complete the rotation.  This puts a top target at 906.75 (887.75 + 19).  Today's high was 908(!), then a hard fall.  After a complete rotation, you'd expect a return to center, which we made a pretty good attempt at, but the market closed before it could complete.  It will be interesting to see if this movement will complete once the market opens again.

Even though the Gann level of 887.75 worked very well as a rotation level, a more precise level would've been 888.25, the previous close.

Homework

ES - This is admittedly posted after the fact.  However, I want to add a record of my written notes for me to refer to in the future.  These numbers performed very well!  (Underlined are more important than not and "daily" are more important than "intra-day".)

DAILY

UP: 873, 878.25 (R1), 887.75 (360+90)

DN: 858.25 (360), 844, 839.25

ROTATION: 873 (Daily 360+45)

INTRA-DAY 

UP: 876.75, 882.75 (90), 892.75 (90+30,LR100)

DN: 868, 862, 852.25

To complete the 100% rotation, we needed to get up to 892.75.  After the close at 888.25 we floated up to 892.50!  That's technical analysis, baby! 

The generation of the above numbers for Wednesday states we now need to fall to 887.75.  We are currently at 889 and falling.

Homework

Due to the holiday's, I haven't posted updates as often as I'd like.  However, here is a very interesting chart of the past couple week's activity.

You can see we hit the 540° (360+180) level twice (12/8 and 12/17).  The second time, you can see the divergence in the momentum indicator (green indicator below chart) showing weakness.  From that level, we fell back to the 360° level.  This is a 180° move down from that high.  Today marked a 90° move up, which is a 50% move up from that low.  Again, these levels (red lines) are all calculated from the low we had in mid to late November.  The blue levels are calculated from the most recent high set on 12/17 at 918.25.

After a 180° move (as we saw from 12/17 to 12/22), it is common to see a 45° or 90° retracement before continuing in the direction of the trend.  Yesterday, we showed the importance of the 45° level (360+45).  Today, we have shown the importance of the 90° level (360+90).  Does this mean more downside from here?  If so, it means a return to the 360°, then the march to new lows.

Today's intraday action bounced off the 878.25 level (120° blue level on chart below) in the overnight action a couple times, showing the importance of that level as well.

I updated my script to display levels like "360+90" rather than "450".  Because what is more important than knowing it's the 450° level is the fact we made a 90° move above the 360° level (360+90=450).  Similarly, other levels are broken up in the same fashion.

Homework

ES - Due to this being the holiday season, my homework is getting a little sparse.  December isn't the best time to trade, so I am just keeping tabs on the action in preparation for the start of the new year.

This is a summary of Wednesday's shortened session due to it being Christmas Eve!

After 5 days of declines, we have a very muted rally that stopped at the 34 volume weighted MA (burnt orange MA, one of my favorites). You can also see the 360° is also holding, but I don't feel like for long.   We may get a rally up to the crossing of those navy trendlines (or the 405° line), but I feel that will be about it.

Homework, Lesson

ES - This is a summary of Tuesday from a Gann perspective.  This is today's chart filled in, continued from the chart in yesterday's HW.  I tried to make it as confusing as possible. ;]  If you can follow it, this is really mind-blowing.  The Gann fan lines are still there from the previous pivot high (downward sloping, light gray lines).  With the addition of a measurement taking from yesterday's low (bottom left of the chart).  As mentioned in the chart from yesterday, we were pivoting on the 90° line, moving 30° lower (to 120) and 30° higher (to 60) before yesterday's close.  In the overnight action, we pulled back a little more, to the 45° line (876.75) and then fell back to the "center" at 90° (962) to complete the cycle, as noted in yesterday's HW.  After hitting that 90° line we swung up, then swung down a similar distance, all contained within the gray Gann fan lines.

One interesting thing to note, the distance from yesterday's swing high pivot and the swing low from this chart is 38 bars. 38 bars from that swing low is the exact peak before we began the fall of today's action (the bar that crossed the 45 line a second time).  Another 38 puts us at 3:30 EST tomorrow morning.  We will see if anything significant happens there.

Ultimately we closed at the 858.25 line from the daily chart, as mentioned in the previous HW. 

Homework, Lesson

ES - This is a summary of Monday's action from a Gann perspective.  From Friday's low, we bounced 45° to 891 area.  Then, taking a measurement from that retracement, we fell to the 120° (852) area, then ultimately found resistance on a 50% pullback to the 60° (872) area.  Another way to look at that is we went to 90+30 (120°), then rotated on that 90° level to 90-30 (60°).  Now that that rotation is complete, a return to the center 90° is probable (862).

You can also notice that on the way down to that 120° area, we had a small bounce on the 45° on the way down. 

This may be hard to understand, but it is very interesting.  Below is the same chart as above with some additional info on it.  It took 18 bars to go from the high pivot (marked "Pivot H0") to cross the 45° level (where first vertical blue line and horizontal 45° blue bar cross).  From there, it took another 18 bars to go from that point till it crossed the 90° line (second vertical blue line).  From that 90° line, it took 2 bars to go 30° more to 90+30=120°.  Then another 2 bars to go from that 120 to 90-30=60°!  

In other words, the vertical blue lines are 18 bars wide.  We crossed the 45 and the 90 in the same unit of time.  Then, after crossing the 90°, two quick red bars down to 90+30=120, then 2 quick green bars up to 90-30=60.  We are now in overnight data, so price does not move as quickly.  Perhaps we will return to the 90° line by the 4th vertical blue line?  (I've done some more work on the Gann Fan portion of my Gann script, which is much more complete and accurate now.  These are the light gray lines.)

Here is a look from a daily standpoint.  We see that we bounced off the 360° level (a 180° fall from the 540° area high) and returned within the triangle (blue lines). Looks like I was a day early on the 855-858 target (see Friday's homework)

Homework, Lesson

ES - Short entry today.  Below is a 15min chart showing the Thursday down move dead-on the 360° rotation (873.75), measured from day's high (see the small, blue dash on the high bar).  Then a quick return to the 180° level (892), a couple tests, the a slow fall.  There was a nice false bar setup as well, right there on the 180°.  So, I feel the entry was missed.  Those two big bars that happened a couple hours ago was exactly a 30° pullback and would've been an entry spot as well.

If we keep falling, I'm looking for a target of 855-858.

Summary - It looks like we didn't fall as hard as I was expecting today.  However, there was still lessons to be learned by today's action.  The chart below shows the same lines from the chart above with the rest of the day's data filled in. (this is a 30min instead of a 15min to show all the data).  You can see how the levels held very well.  Above each swing shows the distance traveled since the previous swing (rounded to the nearest degree level).  If you don't understand the concept of these degrees, just think of them as a unit of price movement.  

As you can see there was a lot of symmetry in the movements; either "90°" or "180°".  After the move to 360°, there was a "180, 90, 180" pattern.  Then a "180, 90, ?".  Will we fall to 874 (the final 180° move) after this afternoon's open to complete the series?

Homework

ES - I have a couple very interesting charts that I felt deserved it's own entry.

Here is the 15-min ES chart up to mid-day Wednesday.  You can see how the Gann levels contained this movements perfectly (almost to the tick!).  After a return to the 50% line (270°, half of the 540° move up).  After that, I found it interesting that the movements kept halving on the way up... 90 to 45 to 22.5.   The end of that series (912.75) just happens to be yesterday's close!  How can that be a coincidence?  What if we did this math (right after yesterday's close) and saw all this movement prior?  What if we wrote some software to help identify these possible scenarios for us?  Still learning...

Homework

ES - Tuesday was a fed day leaving us with historical low interest rates.  As a result, bonds flew to new highs we've never seen.  The bonds monthly chart just looks rediculous (see very last chart here).  

Building the bearish argument for the ES:   

• Typically, as bonds rise, the S&P falls.  With the rise we saw yesterday in bonds, this should cause the ES some pressure.
• On the daily chart below, there is divergence in the momentum indicator (green line) as we reach a double top of 12/8.  This shows weakness.  
• We are over bought on the stochastic
• We still have the 921 level (see chart below) holding and failed to get as high as the 12/8 high.  Again, this is a 180° retracement from the 720° bottom (720-180=540).
  
• Putting in a reversal pattern (as described here) and illustrated here:  

1. Made an initial move in a multiple 90°.  In this case a 180° move up from 720°.
2. Bounced down a multiple of 45°.  In this case a 90° move down on 12/12.
3. Returned to the original level of part 2 above by making a 90° up move.
4. Reverse direction.  In this case, down to eventual new lows.

Homework

ES - After a textbook Gann day yesterday, we are snug between two major Gann lines.  Since we are moving downward, I took the Gann measurements from the recent swing high on the daily chart.  The center line is 90°+45°=135° (874.25).  December seems to be an odd month for trading, so I have prepared multiple scenarios, just in case! 

• Sell 874 (135° line), if prior to getting to 865.
  • Initial target 865
  • Summary: This played out right after the close.  We fell 45° (869) instead of a full 90° (865).  I should not have added this scenario to HW.
• If we just go down from here, Buy 865, the intraday 90° level
  • Target 874 area
    
  • Next Target 889-893
  • Summary: Never got there before the "Bull Scenario" below.  So, off the table.  However, as mentioned above, we got a 45° break instead of a 90° break, then a rally.  The idea worked, but didn't get triggered.
• Bear scenario: If we fail to rally off 865, and instead fall through it, look for support at:
  • Target 855-860, 180° area and yesterday's lows
  • Next Target 830-835, 270° line and the light gray line from our pitchfork
  • Summary: We rallied instead of breaking.  Levels may still prove important.
• Bull scenario: If we rally early in the day (prior to the above failures), look to sell 889-893 area (90° line and yesterday's highs).
  • If we rally late in the day (especially, if off the 855 area), look for a target up to this same 889-893 area.

Homework

ES - I am turning in my homework late and this is a summary of Monday instead of actual homework.  As mentioned in this Gann Lesson, we reached the 180° level soon after trading resumed Sunday afternoon and retraced to the 90° level (see first chart below).  This high also came right at a daily resistance line (see second chart).

Important Gann lesson:

• Multiples of 45° are considered "hard", "corrective" moves.
  
• Multiples of 30° are considered "soft", "continuation" moves. 

When there is a movement to the 180° level, there is typically a retracement of 45° and/or 90°.  This played out perfectly in today's action.  When we hit the 180° level, we retraced to 45°, then took a "soft" 30° pullback before continuing down to the 90° area.  To illustrate this, if you look closely at the chart, you see we bounced off the 135° level.  This is 180°-45° = 135°.  Thus, a 45° pullback from the 180°.  Then a small bounce (30°, not shown on chart), then a 90° retracement (180°-90°=90°).  What next?  Well, typically, we return to 180° then on to 360°.  However, we are in a bear market, so I will wait to see what the market tells us.

Today's bar is indicated by the large blue arrow.  Notice the day's high stopped cold at the blue resistance line (this is the same area discussed above).  Also, notice today's low stopped at the 360° rotation measured from the low we saw on 11/20.  Then, we closed on the 405° level (360°+45°).  Amazing!

You will also notice other levels lining up perfectly with past data.  For example,  270° (180°+90°) and 240° (180°+60°) levels. 

Homework, Lesson

ES - Last night's homework listed a few reasons why the pull back was hitting a ceiling and there were multiple formations and measurements indicated the rally was over.  Since Thursday's open, we are now down 75 points (Thursday's action and current overnight action).  This intraday downward move was so great, I had to adjust my factoring on my Gann measurements to include it all!  The rising wedge is playing out perfectly, as the pitcher is pouring out red bars.  As Oscar like's to say, "The fundamentals always come out in the charts first."  Today, the fundamentals were the automotive bailout talks failed.

The big picture: From the chart below, you see the latest overnight action has stopped cold on the .618 level of our pitchfork (light grey line).  This is also in the area of a 90° rotation down from the top (825), which is also an old favorite level that has come up multiple times in the past.  Coincidently, the 180° rotation lines up with our lows from a couple weeks ago.  This puts a full 360° rotation all the way down at 575!  However, before we get there, we have the MOB (big green block) to get through at around 712.

From just looking at the current bar, it feels like today's action has already played out and it's very early in the overnight action!  Where do we go from here? 

• As mentioned above, 825 is the main support in this area.  If we manage to break it, look for a rally back up to it to short further.  
  • Initial targets of 816 (90°), then 807 (180°), and the extreme 789 (360°).
    
• If we don't break 825 and instead rally from here, look to sell 864-866 (360°, see chart below).  Coincidently (maybe not a coincidence?), this is also an important area that we have seen many times before.  
  

Summary 11:25 CST -  While watching the overnight action, we hit an important support level at 829.  With that large of a downward move, it makes sense that we were out of sellers at that point and rallied back up to the 865 area (as mentioned in the above HW).  After a 10 point fall from there we rallied up to 872.  This is an area that has come up multiple times in the past and was mentioned in Thursday's Homework.  From there, we got another 10 point fall.  Currently, floating somewhere between those levels.

Homework

ES - Wednesday had a very tight trading range, sandwiched between the swing-high close of 11/13 (907.75) and the diagonal trendline (see two green lines).  It appears this level is holding very well, as this swing-high has prevented the last few days from closing any higher.  As menitioned in Tuesday's Homework this area is also the 61.8% retracement level (906) from the previous move down.  Once again 897 was an important level for Wednesday.

From the bear's perspective, we made a 180 degree move from the 11/21 low as mentioned in this post on Gann. 12/8 came within a couple points of this 921 level and fell back.  A movement to the 180 degree level is an important one and a 45 degree (872) or a 90 degree (825.75) retracement should be expected (see chart).  These two levels are, coincidently, levels that have held high importance in the past.  Amazing how they are back!  This 180 degree level is an important one, since it is the midway point of a full 360 degree rotation.  (FYI, the 360 mark is at 1122, which just happens to be at the area we broke back at the beginning of October to fall to this whole new trading range we've seen for the past couple months.)

It also seems we are in a rising wedge, which is a reversal formation. These are the blue lines on the chart.  A reversal pattern right at a reveral area.  Hmm...

From an intra-day perspective, we are currently at an interesting support area (889 area).  If we are going up, this seems like the place to buy.  You can see in the chart the two support lines coming together, right where we are at.  If this proves to be a bullish spot, a conservative target is 893.75, then 897.  (If we fall straight from here, look for 887 and 872 target areas.)

However, the patterns don't suggest a move up.  The maximum move up the patterns would allow is a retest of 919, then a failure.  This 919 level lines right up with the red resistance line, the high of 12/8, and the high of 11/14.  In other words, look to short 919 area (if we get there).  (Be careful of that important 897 level on the way up, that could stop us cold)

The last few days have essentually moved sideways and we don't have clear direction, so we will let the market tell us where it wants to go and we'll act.  We just need to be prepared with different scenarios. 

Homework

Homework

ESZ8 - Friday left us at a pivotal point.  I was expecting a fall on Friday and on Monday, but instead this action is making me take a stance I've been fighting for a couple weeks: being short-term bullish.  I mentioned this scenario in last Thursday's HW.  However, now that I'm giving in, it may be a bit late.  Ever since 11/21, we had an Advanced GET, Type 2 bulllish setup.  We bounced off the MOB (first, big green bar), the Oscillator showed divergence compared to price.  The Type 2 seems to have worked as expected. See chart below.  I saw it back then, but I didn't want to buy into it, since all we get is negative reports and "the sky is falling" situations all over Wall street.

However, that bullish sign may be done playing out, right here.  I say that because we retraced to the 61.8% level (906), we have the AGET stochastic setup (Oscillator returning to zero, "false bar" showing down trend, and stochastic overbought).  If we start falling, a preliminary target for the next leg down is about 703 (second MOB).  However, overnight data should give us some indication where we may go tomorrow.  We are currently resting on a crutial 897 area.  Does the Type 2 setup have some more juice?  Or, is it time for the bears to re-gain control?

Tuesday will be a tricky day.

• If we bounce up from here, look to sell 921 area again tomorrow (yesterday's high and very important 180 degree Gann level (see Gann lesson, Part II). Look for resistance at this 897 level again on the way down.  
  
• Look to buy 874.25 to 880 (50% line to maroon MA).  Also, an intra-day gann calculation on Monday's high, puts a 360 degree rotation at 881.
• If we continue down in the overnight action, look to sell a rally back up to 897, down to that 874-880 area.
  

 Good hunting! 

Homework

ESZ8 - After Friday's wide trading day and surprising bullish close, we are left to wonder what is next.  From the teaching of Oscar (http://www.livewithoscar.com) a formation was brought to my attention: the Bearish Diamond Formation (more info).  Typically these occur at market tops (which we are obviously not at), but it is still bearish none the less.  The chart below helps show what next week may have in store.   You can also see that 34 volume weighted MA (maroon line) coming in as well.  If this market was going to rally any further, it has to break up hard on Monday (above 900, which is above Friday's high, above the 34 MA, and above the previous swing high).  I don't the market has it.

The CCI has also returned to the zero line, thus a zero line break wouldn't be surprising.  The stochastic is just about over-bought.  Both bearish signs.

I am going to cautiously look to sell Friday's highs and the 34vw MA (879-883) on Sunday afternoon.  On top of that, I have a gann line at 882.50.  Good hunting! 

Homework

ESZ8 - Tomorrow we will have employment numbers that have no chance of being good.  We were already expecting tomorrow to be a down day and those employment numbers are surely going to help the case.  Hopefully, the overnight action will float up and give us a chance to short it down.

I've been working a lot with the idea of rotation and putting it into an EFS script.  I have a beta of something that looks extremely promising.  This is something that I will have up on the main homepage when it is ready (http://neotoolbox.com).  Thursday's primary pivot level was 865 that rotated beautifully around.  This also reiterates the importance of this 865 level we have seen for weeks.  Based on the squeezing of a trendline, this puts our primary sell level for Friday square on 865.  I imagine tomorrow to be a big down day to finish off the week.  I think a reasonable target is our most recent swing low's close at 815.75.  However, we may easily get lower than that, so the next targets are 795 and 770. 

• Sell 865 (resistance level we have seen multiple times before (big red line)).  We also see the purple trendline and 34 (weighted) MA (dark blue MA) all coming together right there.  The purple trendline may put our entry level more toward the lower 860's.
  • Target 815.75 (most recent swing-low close on 12/1)
  • Next target levels are 795 (green trendline) and ~770 (bottom of pitchfork)
• Secondary scenario... Look for opportunities to sell at 856-858 if we can't get up to 865 and all indicators are looking good.

Homework

ESZ8 - Wednesday's close was a bit surprising, as I was expecting a fall.  So, I did some more research as to what would've foretold this move and why I missed it. My initial research turned up the 34ema (weighted).  This is the dark blue MA on the chart.  As you can see, we went right to it.  In the past, everytime we hit this line, we either bounced off immediately or crossed it and returned below it the very next day.  I recommend taking a look at the 34ema weighted (blue MA) and the 34ema volume weighted (maroon MA).  When price is between those two eMAs, it's decision time...  Either we will reverse back into original trend, or break out into a new trend.  I also recommend NOT trading if the 34 ema is flat (<30 angle).  This is merely "chop", without direction.  Based purely on the dark blue line (34 ema), you can see we are obviously trending down.

Also, based on the chart, we have a crisscrossing trendlines (purple line and dark yellow line) at around the 870-875 area.  Thursday's bar will place that purple line at 870, the dark yellow line at 877-880 (and, of course, the less-likely 897 line (big red line). 

• Sell 870 872 (purple trendline and blue MA (you can see the chart labeled 872 on the right)), sell 877-880 (dark yellow trendline) 
  • Target 835 (blue horizontal line and light gray line from pitchfork)
    
• Scroll down for the LONG argument... 

Homework

I have been sick the past couple days and was at an all day seminar yesterday, so I have been away from my analysis.  Therefore, this analysis is admitedly after the fact.

Summary  - 

ESZ8 - As we mentioned in Monday's homework, the move we saw was a compression of the previous down move (11/5 and 11/6 gave two big down moves.  12/1 gave us one very large down move).  Based on 11/7, there was a ~32 point up day. Well, Tuesday 12/2 gave us a ~32 up day.  Amazing!

Based on 11/10, we retraced to somewhere between 50% and 61.8% of the initial fall, then fell once again.  Today 12/3, the 61.8% retracement of Monday puts us right at 865, which is a level that has proved important many times in the past.  The market rallied to 864.75 and fell 30+ points to 833.75! So, the first half of today completed the mirror of 11/10.  (See fib retracements on the two bars)  Then the second half of the day...

I was expecting a small rally, perhaps to 849, then new lows (thus beginning to mirror 11/11).  Instead, we got a rally all the way up to 873.75!  Can't always be right.  However, 870-75 was our decending trend line (green line).  Having guts would make you sell that 870 area and hold it into the overnight trading, as I am expecting this line to hold and mark a location to sell tomorrow (Otherwise, the ascending trendline above at 878-880... or the less likely 897 area (big red line)).

Homework

ESZ8 - The expectation is the big players will return to a normal work week (back from an extended Thanksgiving break) and put the market back on the course it was originally on... down.  The overnight activity is already a sign of this.  All the gains of "Friday" are already gone and we are hovering right around Thursday's close.  If we rally to 897 (Friday's high), 904 (close of 10/15 and 11/06), or 917-920 (50% of previous daily move down) it's time to short. (We may not get that high, however.)

• Sell 904 and 917 areas
  
  • Resistance at 887 (see next bullets), 880 (trendline), 865, and 855
    
  • Be aware of R1 at 906.25 and PP at 867.76 when dealing with targets near them.  In other words, these areas are especially important, since we have overlapping sup/res at those areas.
    
  • Coincidently, the 50% point of R1 and PP is 887, which is ALSO the 50% point of Friday's High (887.75) and Close (886.25).  If that wasn't enough, from today's open (5pm CST) and the past 6 hours of activity, 887 is exactly at the 25% point from the high and low of that activity (half of half). Thus, 887 must be an important point of rotation.
    
  • Observation: the move from 10/28 to 11/4 was approximately 180 points.  From 11/21 we started a rally.  If we move 180 points up from there, that puts us around 920.  This is very close to the 917 area (50% of previous daily move down).  So, I feel this makes the 917-920 area important.
    

Homework

Yeah, the markets are open Friday too, but the volume will be so light, most everyone is on vacation, and it's not a full trading day, so I don't consider it to be a trading day worth worrying too much about.

Homework

ESZ8 - I consider Tuesday to be a "doji" day; a day of indecision, a day where we went way up, went way down, and, in the end, didn't make much progress. We did close slightly up, but the overnight action seems to have unwound that (we are currently trading at Monday's close, see small red bar forming on chart below).  Interestingly, Tuesday's high was 874, low was 833.50... the average of the two?  853.75.  The close?  853.25.  Yeah, doji.

Wednesday is filled with approximately seven reports (financial calendar) that just can't be good in this market.  That, combined with the poor reports from Tuesday and the "short 2 days up in a bear market" rule (visit "Live with Oscar"), should give Wednesday the death punch.  As Tuesday closed, I was thinking to myself, we are probably at Wednesday's highs, right here (852.50).

We are currently right below the pitchfork's 0.618 level (light gray line) and surely to head down tomorrow.   

• Sell 855-856 area - Due to the weak market, we may not get much higher before falling.  If we manage to get higher, 865 and 873 are still valid sell levels. 
  
  • Target 800 (the trendline from the swing lows, dark green line), then 785 (bottom of pitchfork, blue line).  I think we will re-enter the parallel channel and continue our march south (if not tomorrow, then Friday).
  • Resistance at 835 and 825 areas (resistance areas can always been seen as target areas!)

Homework

ESZ8 - Monday we hit the 865 level and bounced off hard.  We are now settled between two major resistance/support levels (865 and 825) and on the otherside of the sloping resistance line (now support).  We are also approaching Thanksgiving, which makes trading behavior much more abnormal (think "chop time" all day).  I personally see this as a slightly bullish indicator.

The buyer's argument is we have the CCI crossing upwards through the lower level (bullish), the stochastic is pointing upwards, and Advanced GET Type 2 setup is shaping up (bullish).

The seller's argument is we have to invoke the "2 days up in a bear market" rule.  Which says that after two significant up days in a bear market, the downward trend will continue. (See video explaining this rule based on 2008.10.15 setup.  While you are at it, join Oscar's chat room and tell them "neoikon" sent ya!).  

However, it doesn't really matter.   

• Sell 865 (be careful of res/sup at 855-857 (0.618 level of the daily fork, light gray line)), target of 825, then 796 (downward slope), then 785 (bottom of fork).  If we break 865, next major level to short is 873 area (50% area of this recent down leg and 10/22's low)
• Buy 825 (only if we get there BEFORE 865), target of 865.  On the crazy chance we get above 865 (after bouncing off 825), look for 908.  If we close above 865 873 tomorrow, look for 908 Wednesday. 

 

Homework

ESZ8 - We are now back into the daily pitchfork (blue lines), so we may see more of a bullish move from here.  Also, we have the existance of our proprietary "False Bar Ultra" arrow showing a counter-trend "buy".  However, we are in a bear market, so we must initially look to short the rallies!  Just in case, we have two scenarios:

• Short 825, target 808 (785 is the bottom of daily fork).
  
• Long scenario - If 825 does not break hard, we could be looking bullish.  If we get to 835+, look for a move to 865 (marked, red line on chart). 
  

15:01 CST Summary - 825 short area initially ignored, went to R2 (841) area and retraced back to 825.  After 3-4 hours of sideways (with an upward bias) movement, we get to 865 and have a hard break down to 840 (then settling at 850 area)! 

Lessons - 

• The day rarely plays out like you think (the time and momentum it takes to get to levels, order of levels, etc), even if you are right about the major levels.
  
• When a sweet spot is a particular resistance level and if that sweet spot is ignored by price action (goes against you significantly), look for a return to that level as SUPPORT (duh) for a move in the opposite direction.

Homework

ESZ8 - Broke the daily pitchfork (blue lines) and blew through the MOB.  This move makes sense, since it is a continuation of the important break of the 825 level.  We are faced with a decision on whether to return back into the pitchfork ("seller's remorse") or keep on fallin'!  We are also at the MOB, oversold, false bar showing down, and the oscillator is showing divergence.  All this equals a possible upwards move.

• Short 773 area with 722 target (773 is a Gann line measured from top or from bottom!).  Watch for support at 745-749.  If we get high enough, short 786 (bottom of daily pitchfork).
• Long scenario, above 792 target 835.  

15:25 CST Summary - Went to 885 and broke.  Later 773 and broke hard.  Later recovered to close back into the daily pitchfork.  Looks like we had the levels, but not in the right order.

Lesson - So we can find the levels, now how do you determine what order they will matter! :]  

Homework