Wednesday, February 11, 2009

Free Newsletter

Our newsletter for tomorrow discusses some of our core concepts and has a more educational bent to it than usual.

If you're interested in receiving it just e-mail us at info @ highchartpatterns. com and we'll be happy to send it to you.

Tuesday, February 10, 2009

Game Over?

Brutal sell-off today as the market didn't like what Geithner had to say. We'll be watching our favorite short vehicles FAZ SRS SMN DUG EEV tomorrow to see if they can break their respective short-term down-trend lines.

Excerpt from today's newsletter:

SPY reversed in front of 88 (and 50dma) and now is very close to breaking down through the up-trend line (around 82) with further support at 80. Note volume on today's reversal. Tomorrow is very important; if the bears gain momentum here (likely scenario) we could cascade down easily for another 10-15%. If the bulls want to stay in the game then they have to make a Herculean effort to keep the support lines intact and undo some of today's damage (unlikely scenario).

Sunday, February 08, 2009

Mixed Signals

This should be an interesting week with three very important points to remember:

a) we have stimulus/bank news pending early this week
b) support on financials, real estate, and oil thus far have held
c) market heading straight into resistance

Bullish argument:

Take a look at the following charts: USO/URE/XLF (representing crude, real estate, and financials).

All three went through support, but instead of cratering, reversed back up on very good volume. So far, so good.

Huge move through 28 support on USO on Friday.

IYR is a better representative than the leveraged URE but this chart shows the reversal through the lows in a more clear fashion.

As we wrote last week in the blog; that XLF would break that recent support was a given. What was up for grabs is whether it reversed back up or cratered to the next support level. Thus far, it's the former.

Bearish Argument:

We're heading right into SPY 88 resistance in the market. We've had one failed break-out after another in this bear market and there is no reason to think that this one will be any different. A break-out/hard failure of 88 most likely will result in a reversal back through the trend-line. However, the bullish reversals of the three key sectors of financials, oil, and real-estate indicate that indeed, this time it might be different.

As you can see, there are bullish and bearish arguments to be made. We're just happy we are day-traders and don't have to pick a direction for more than a day.