Sunday, April 18, 2010

Guest post by mmTesla

Friday was an excellent day for Bears. I was going to do a post about Thursday intraday trading, however today was absolutely spectacular and important for you swing traders. Therefore this post will be devoted to a bullish perspective, however any clever bear will also know the oh shit points for dem' bulls.

Alright, well the GS scandal was no doubt the catalyst today, however look at where we turned today:


This is an untested volume point of control from before we broke out of the 1185 range. Basically it was the most accepted price for buyers and sellers. Everyone was content and in this case we moved upward. The scary part is that down to the very tick 1182.75 the ES turned around. What this means is that we tested this area and it was once again was accepted by the market. Strong buy signal.

Now for the first day since we crossed the 8ema off of the 1040 low, we have finally closed below the 8ema. This is VERY alluring to me. Now at the bottom of this chart, notice the volume for today. Biggest volume we have seen in a very long time, this also happens to be on the confirming candle off of the doji we made yesterday. Red line is from naked VPOC that we tested today, also notice the trendline we broke today.

Change in the winds?

At about 1165-1170 we have support from the fib fan that starts at the 1987 black swan low to all time highs. After that the next real support is at 1145-1150, we have the trendline from the 2002 low and 2003 re-test. That level is also the previous swing highs, so a close below that makes this rally a false breakout of the double top. I would also assume that around these levels big time frame players will be rotating their portfolios to being more bearish.

A few levels to watch.

So on the short term, we received a buy signal intraday (big surprise) so we may see a bounce Monday, possibly through Tuesday. Slightly longer shorter term, we have volume confirming down candle on the daily, what is important is a close past the midpoint of the body of the candle. While today was an excellent day, we have some very tough places to overcome and "buy the dip" is still very valid at this point, until we capture those levels.

This is how I think the transition into the intermediate term will play out. We will have a correction of about 5-8%, which we may have seen the top of yesterday. I don't think we will see 1225 before we correct. Anyways after this correction I picture us moving up and past 1225 and into the very high volume area above. This is where I think our topping pattern will occur. Politically by the time this folds out, we may actually see some improvement in the economy so the politicians will focus on that rather than the market. At that point they can relax and let the market correct, I do not see a crash like before because that would cause panic, however a steady grind down is more likely in my opinion.

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