SP500 1,074.03 +0.38 +0.04%
COMPQ 2,213.55 -2.60 -0.12%
Russell 2000 640.02 -1.19 -1.24%
Exchange NYSE NASD
Advancing 1,133 902
Declining 1,973 1,820
Oil $68.75 -1.46
Gold $1,196.70 +2.70
SOX 353.86 +1.97
VIX 34.61 -3.71
Index Direction Confirmation
VIX Down Yes – SPX
SOX Up No – COMPQ
Strongest Sectors: XLB +1.68%…XLY +1.02%...XLF +0.91%
Weakest Sectors: XLP -1.17%...XLU -0.53%...XLV -0.42%
Four of nine sectors moved higher on Tuesday. Materials, Consumer Discretionary, Financials and Energy were stronger than the SPX +0.04%.
I pointed out the MACD divergence last Wednesday in the AT Workshop in Long Beach, Thursday in the AI Talk, Friday in the Weekly Wrap, Monday in the AT webcast and Tuesday in virtual coaching. In those five events approximately 3,200 people collectively heard me share the technical evidence. I think a few people actually believed me.
Monday evening, to over 600 traders, I explained how the the July and February divergences took three to five days to gain upward momentum and that yesterday was only day one. I also explained that overnight futures don't predict beyond a coin toss how the US markets will close. I'm not sure if anyone actually believed what I was saying on the futures.
Well I was put to the test today when the SP futures opened 24.50 points lower. I suspect more than one of the 600 plus traders where thinking, “I knew Dave didn't know what he was talking about.” Well by the end of the day those same SP futures closed two points higher than Monday's close.
When it comes to trading I teach what I know is real based on experience. I don't teach what someone else said or what I read in a book. So I suspect at the end of the day there were probably two more believers in what I taught last night than there was at the beginning of the day.
OMG, did you see the hammers on the SPX, INDU and RUT today. Does this look like what I have been teaching for years? Some of you will remember the long tailed hammer I pointed out live on Thursday June 8, 2006 as the support area low at that time.
Look at these Charts
(click image to enlarge)
In addition to the long tailed hammer did you see the bullish engulfing patterns and piercing line patterns in large numbers today? Many of these individual charts are also showing MACD bullish divergences. And yes there are a few bull flags out there too.
Look at these Charts
(click image to enlarge)
Guidance:
The SPX formed a long tailed hammer candle very similar to the one on February 8 and last July 8 at the bottom of the two prior bullish MACD divergence. The SPX hit 1,040.78 before rising almost 34 points closing at 1,074.
Yellow Alert on the buy side and potential exit for short term bearish trades. Tuesday was the low day on many charts and continued upward momentum on Wednesday could break the high of the low day and be a new entry for bullish trades and exit for bearish trades. Adjust your stops according to your rules for down trending trades.
Trade strong stocks up.
Trade weak stocks down.
The VIX fell -3.71 and closed at 34.61.
The short term trend is down.
The six-month trend is neutral.
The twelve-month trend is up.
Continue to focus on and trade setups on the charts of the stocks you watch, trade with the trend of the chart and follow your rules.
AAPL -1.54
QCOM -0.06
GOOG -0.09
BIDU -1.92
NDX 100 stocks stronger than the NDX include: GENZ, CMCSA, ORLY, WYNN, FSLR, NVDA, JOYG, AMZN, LBTYA, NTAP, URBN, IACI, STLD, ILMN, MICC, AMAT, DTV, TEVA, EBAY, SHLD, BBBY, ROST, ISRG, CTSH, INTC, INTU, KLAC, SPLS, EXPE, FLIR, BRCM, CA, DISH, MRVL and LRCX.
Stocks weaker than the NDX: STX, CELG, VRSN, BIDU, FWLT, CTXS, HANS, NIHD, ADSK, YHOO, CEPH, ESRX, PPDI, VRTX, WCRX, DELL, HSIC, MSFT, RIMM, RYAAY and NWSA.
Stocks to Watch on Wednesday
Holding Above 30 DMA
EXBD, NTRI, FAZ, NFLX, SNDK, OSTK, AZO
Moving Above 30 DMA = 0
Moving Below 30 DMA = 1
WFMI
Staying Below 30 DMA
ESI, HAS, BYI, DHR, GR, MCD, UNG, WHR, WMT, ICE, ZION, CRM, STI, PNC, AIV, HLF, AMD, ATI, CAT, CREE, DECK, LVS, SPG, SWK, UNP, URE, WFC, BA, DE, JEC, LXK, CHL, GME, SYNA, HANS, ACN, MYGN, AMX, DOW, FAS, FLS, PCLN, PCP, TSL, UAUA, USD, USO, UYG, ATW, BAC, GES, MA, V, CAM, SWN, BUCY, WLT, CLF, MHS, WCG, GMCR, GS, FCX, X, PWRD, AGU, IPI, POT, MOS
Intermediate Term Market Trend: Neutral
Short Term Market Trend: Down
6 comments:
Dave- is the long tail more significant because many buyers had to step in to push it up?
Jeska,
If you mean more significant than a hammer with a smaller tail, YES...a 33 point hammer is more significant that a 10 point hammer...think of it this way if you owned a stock and it went up $10 one day and on another day that same stock went up $33, which day would be more significant to you personally?
DJ
Amazed at the evidence that supported the teaching! What a lesson! Thanks, Dave!
PS...I cracked up reading "OMG". LOL
Christy Gibas
Thanks Dave, again you demonstrated your chart reading expertise. There's no better teacher than experience - thanks for sharing with us!!
Excellent DAVE,
I agree with everything on your blog except the part about maybe "some people may not be sure if what Dave said about the futures is believable". I think by now such a big percentage of us know that Dave's viewpoint on those kinds of things is literally the "high probability viewpoint..." In fact when the futures were down so much, all I could think of was to prepare my trades for both directions, but was on the lookout for the sneak rally that day. It happened and I pulled the trigger. Your blog is such a breath of fresh air. I just wish there were a few more comments from the flock every day as it's nice to see how others are doing with it. Thanks. So very exciting to see this blog every day and follow the markets accordingly.
Christy, Trend and Scott,
Thanks for reading and I'll just keep objectively viewing the charts up, down or indifferent...
Readers Scott's comment about posting more comments would allow you to share like minded objective reads of the chart during chertain hours when I am unable to post comments myself...
DJ
Post a Comment