So watching the market today, it struggled with resistance at 1040 and then seemed to get past there and then bounced off of it as support a couple of times. Obviously, this was very short term intraday stuff. Does the break last week make 1040 a sort of irrelevant level? Or is it still a source of resistance/support? (this is more of a general technical question - do technicals become less relevant after they have been broken) Also, Does the strength these first two days this week change anything in regards to your targets? Or do you see this as just a mini-bounce for a few days?
Ya I wonder whether TA allows for patterns within a pattern. Currently from TA, the market should get to 950s or so but can you still make plays in between then?
It depends on the timeframe that you are thinking - operating in. Five minute charts have minimal meaning - value to someone who looks to do a position trade that will last a few months. A weekly chart has minimal meaning - value to someone who switches several times between being Long and Short on an intraday basis. Perhaps they determine Pivot Points, key longterm support & resistance areas and then they are done with a weekly chart.
oh and it's really hard not to start shorting bp here. hot aussie cnbc anchorwoman is asking...."is it time to buy bp now?" sure let's start buying when it's like 40% off lows and the relief well isn't even close to a certainty.
Sorry, didn't see this when it was posted. The standard interpretation is that once a technical level has been violated one way, it should act as resistance the other way. Changing from support to resistance, or vice versa from resistance to support. It should not be violated consecutively or time and again. If it does, then yes it loses its relevance. According to this standard interpretation, 7/7/10 was a "bullish crossover". Meaning after we broke significant support(1040), which is bearish in itself, we immediately broke back above it, or "crossed over". This is bullish because all those who shorted/sold on the Head and Shoulder pattern(1040) are now all of a sudden caught off guard, and the shorts may be forced scramble. This is the "standard" technical interpretation of last week's action. Which may very play out- we keep going higher from here propelled by a short covering rally. My own interpretation is a little different. I view it simply as noise after breaking a significant level. The bullish crossover is certainly in play, as plenty of people who shorted 1040 are now caught. But I am looking for the short covering to work itself out, and for the longer term technicals to still prevail. 1085 and 1100 if we get there on the SPX cash are potential spots to add. This is why I stress the Technique of trading so much, even more so than the Technicals: The Technicals we are looking at now are the Head and Shoulder pattern and resulting 1040 neckline. The Technique was to identify the 1120-30 short, as opposed to 1040. With the functional 1150 stop loss. With a 940 profit target. (which was explained in previous posts) There by yielding a potential 190 point profit, with a 20-30 point loss if wrong. Further more, once we hit 1050-70ish, we could have taken some profits on a portion, or moved our stop loss to breakeven, yielding still a potential 190 profit, with a $0 loss if wrong. No one can predict how the market will exactly play out, but we can maximize our risk/reward with proper technique. Plenty of people know what technicals are, but fail to successfully use them. This is why. Most who look at technicals shorted a break through 1040. That could have worked great, if we broke straight to 940. Or it could work like how it did, with all those guys ****ing their pants now. If we eventually go down, great, we all make money. But if it doesn't and we go up from here, they get blown out of the water. Thats why being right or wrong isn't the most important, but rather the proper technique in trading.
Yes there are absolutely patterns within patterns. Like Mango said, it is all relevant to what time frame you are looking at. There are plenty of rallies to catch even in the most vicious of bear markets. And there are plenty of corrections in the bubbliest of bulls.
[Cleverly disguised I've lost way too much money in the stock market post] "I've worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate's distribution of long straws is wildly capricious." - Warren Buffet [/Cleverly disguised I've lost way too much money in the stock market post]
AAPL, and in turn NQ, showing some real relative weakness as market leaders. This should be bearish for the overall market, we'll see how it plays out. After hitting 1085 on ES this morning I put on an initial add to the short. Actually didn't add to ES, but rather NQ, for the aforementioned reason. Next add is around 1110 on SPX cash, the 200SMA.
Well yeah becuase the Iphone 4 has a serious design flaw and has accordingly been a bit of a flop- I don't think you need TA to tell you that. Mind you I'm not coming at this as a total skeptic or a TA scoff- I don't relly have an opinion on it 1 way or the other.
This was apparent on 6/22/10, the day after it hit an all time high, when it was trading at 275(the entry with technicals that Qazi is refering to)? All I saw were $300+ analyst targets. Now it is much simpler after the fact, but a $250 entry after the fact is also a much worse risk/reward trade.
i realize you said you're adding at the 200 DMA, but after the death cross, are you giving any added importance to the 50 DMA (where we're at right now) or would you not particularly care if it breaks through and the 200 (another 15 points away) is going to pretty much determine you're longer term stance?
I do put some importance on the 50SMA, which was one of the factors why I added a little today. We are going straight through that level right now btw. I am much more willing to be patient now since this is an "add" as opposed to an initial entry, hence waiting for the 200SMA. The 200SMA is btw not my line in the sand for longer term, just a potential spot to add. I have my stop at the last pivot high of 1130. Which would basically be a breakeven stop for my core position(slight loss). In addition to whatever I lose on the small add today and at the 200SMA. Will also be paying attention to how we react to 1150 if we get there. Anything higher then I will have to reevaluate my longer term stance.
The patience I am referring to applies to the Longer term trade. HOWEVER, in lieu of the over night action, I am looking to load up for a shorter term trade: INTC came out with blowout earnings last night, trading as high as 8% up after hours. NQ up 1.5% overnight at one point. Now we are opening FLAT to DOWN?! I am shorting here with a tight stop for a short term trade(2days-1week). For the long term trade nothing has changed, still waiting for 200SMA. EDIT: PS, COMPX DEATH CROSS, DEATH CROSS, DEATH CROSS today!
50SMA crossing 200SMA to the downside. They even talk about it on CNBC nowadays, meaning it is probably more or less meaningless now. Still, it is considered a significant event to the TA guys.
