Stock Market Entering A Trading Range?
On Friday Oct 7th, I released a series of videos that detailed several industry/stocks that I thought were headed for more down side. I also felt like we were likely to see more downside in the market and the probability that a trading range would develop. Right now, that trading range is looking like a fairly good bet, which also means it is a difficult time for longer term traders and investors to make money. We'll take a look at a few charts.
Looking at my X-over system (the rules are the yellow 10 bar must cross above the blue 22 bar and the yellow custom indicator in the middle window must cross above its moving average which is a 30 bar in blue and finally in the bottom window the green RSI-14 must be above at least 50 which is represented here as “0” because of the MACD histogram, but it must be above the middle. All 3 must apply for a long position this helps keep whipsaws and false crossovers to a minimum) you can see there is no long entry signal. The 30 bar VWAP (Volume Weighted Average Price) is near $98 so there are plenty of potential sellers still in this market even though volatility has dropped off.
The false breakout of November 4th did what I thought it would (in the video) and reversed to make a move lower. Ultimately it's a decent bet that we see a retest of the support zone in the trading range in all of the major averages.
The next chart is my Custom Trend Channel and it showed the downtrend being neutralized on Tues. November 4th, but has since penetrated (on an intraday basis) the uptrend stop level. It's possible that we see some support at the lower blue line around $90.45 on the SPY and it's not a bad idea to take a shot at a long position with a stop just below. If the stop gets hit, you can always try another long position at support around $84.25
On a short term trader's timeframe you can see my custom 3C indicator (yellow) called a positive divergence (accumulation) and the probability of a reversal pretty much the entire day, but a strong signal around noon time.
NOC is a chart I mentioned and called out as a short-you can see it's fallen out of the flag. There's still a lot of potential downside here and a short is still a viable position. This could be trading in the mid 20's. If you can short it on a bounce near $44-$45, all the better.
PFE-a sector I think is going to absorb some more punishment, not only broke the flag, but made an attempt to get back up through resistance yesterday above $17.25 or so, what a great opportunity to sell this one short!
XLF is near the bottom of the trading range, watch for a breakdown below support, if this happens, another great short sale oppty.
Take a look at these charts and see what you think. Please remember that I'm an affiliate for Worden's TeleChart and StockFinder (formerly Blocks). If you use the links from my site, they give me credit, it won't cost you a penny more. Or call them and tell them that you heard about them from Trade Guild.net if you sign up by phone. Once you've done that, shoot me an email and I'll set you up with my 3C indicator which works amazingly well for calling reversals, tops and bottoms, my MACD Heat Map which helps identify trends and when it is a good idea to buy, hold, sell, or sell short, also my Trend Channel which will take the emotion out of the exit decision and will help you maximize your winners and cut your losers before they get out of hand. Finally you'll get my blended crossover system that will help eliminate the numerous false signals that occur with any typical moving average system. I am also working hard on a trading system that has returned up to 600+% on an annualized basis, that is on StockFinder.
Also take advantage of the free offer to view some of the world's best traders giving seminars, you can watch 4 of them for free with the link at the top of my page, INO TV. What a fantastic resource. Learn how to use Bollinger Bands from John Bollinger himself! This is an awesome offer and service.
I'll be back with more later.
Looking at my X-over system (the rules are the yellow 10 bar must cross above the blue 22 bar and the yellow custom indicator in the middle window must cross above its moving average which is a 30 bar in blue and finally in the bottom window the green RSI-14 must be above at least 50 which is represented here as “0” because of the MACD histogram, but it must be above the middle. All 3 must apply for a long position this helps keep whipsaws and false crossovers to a minimum) you can see there is no long entry signal. The 30 bar VWAP (Volume Weighted Average Price) is near $98 so there are plenty of potential sellers still in this market even though volatility has dropped off.
The false breakout of November 4th did what I thought it would (in the video) and reversed to make a move lower. Ultimately it's a decent bet that we see a retest of the support zone in the trading range in all of the major averages.
The next chart is my Custom Trend Channel and it showed the downtrend being neutralized on Tues. November 4th, but has since penetrated (on an intraday basis) the uptrend stop level. It's possible that we see some support at the lower blue line around $90.45 on the SPY and it's not a bad idea to take a shot at a long position with a stop just below. If the stop gets hit, you can always try another long position at support around $84.25
On a short term trader's timeframe you can see my custom 3C indicator (yellow) called a positive divergence (accumulation) and the probability of a reversal pretty much the entire day, but a strong signal around noon time.
NOC is a chart I mentioned and called out as a short-you can see it's fallen out of the flag. There's still a lot of potential downside here and a short is still a viable position. This could be trading in the mid 20's. If you can short it on a bounce near $44-$45, all the better.
PFE-a sector I think is going to absorb some more punishment, not only broke the flag, but made an attempt to get back up through resistance yesterday above $17.25 or so, what a great opportunity to sell this one short!
XLF is near the bottom of the trading range, watch for a breakdown below support, if this happens, another great short sale oppty.
Take a look at these charts and see what you think. Please remember that I'm an affiliate for Worden's TeleChart and StockFinder (formerly Blocks). If you use the links from my site, they give me credit, it won't cost you a penny more. Or call them and tell them that you heard about them from Trade Guild.net if you sign up by phone. Once you've done that, shoot me an email and I'll set you up with my 3C indicator which works amazingly well for calling reversals, tops and bottoms, my MACD Heat Map which helps identify trends and when it is a good idea to buy, hold, sell, or sell short, also my Trend Channel which will take the emotion out of the exit decision and will help you maximize your winners and cut your losers before they get out of hand. Finally you'll get my blended crossover system that will help eliminate the numerous false signals that occur with any typical moving average system. I am also working hard on a trading system that has returned up to 600+% on an annualized basis, that is on StockFinder.
Also take advantage of the free offer to view some of the world's best traders giving seminars, you can watch 4 of them for free with the link at the top of my page, INO TV. What a fantastic resource. Learn how to use Bollinger Bands from John Bollinger himself! This is an awesome offer and service.
I'll be back with more later.
Labels: 3C, AZN, break support, cross over, heat map, MACD, moving average, NOC, pfe, Resistance, RSI, spy, technical analysis, trade guild, trading system, trend channel, volume, VWAP
posted by Brandt at 2:13 PM
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