Red Dragon Leo

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Red Dragon Leo

Link to Red Dragon Leo - Stock Market Trading on the Darkside

ES Morning Update January 21st, 2016

Posted: 21 Jan 2016 06:24 AM PST

38d06f61-2ccf-44e2-8bff-0f10dab15c49This 2 hour dipped afterhours when the 60 minute rolled over and took the futures down to 1840 area.  But it turned back up suggesting it wants to rally some.

My thoughts… we have positive divergence on many charts and time frames.  This does suggest the market is about ready to go up.  But it’s still go a lot of downward pressure on it from the weekly and monthly charts.  The daily is still point down, and while it’s oversold, it’s not showing signs of turning back up yet.  So while I think we’ll still see some kind of rally I don’t feel it’s going to be strong like the one yesterday.

The move up yesterday was off a double bottom area (with a pierce of it) from October 2014, and it was from an important “even number” of support… the 1800 level.  Today we are in “no man’s land” as the bulls haven’t cleared the falling trendline of resistance and they got themselves overbought on the 60 minute chart, tired on the 2 hour chart (shown here), and mixed support on the 4 hour and 6 hour charts.

So, I think we’ll drift back down today.  In fact I wouldn’t be surprised if we closed in the red some today.  The key for the bulls here is to stay above yesterday’s low and make a higher low today.  Then they might have a good shot of starting a rally Friday that will last more then one day.  Right now though… I just don’t see it.  I see a short at the falling trendline but not a powerful short like all the others.  Probably just a day trade only.  The market wants to go up but it’s tired.  And the bears are overload right now making it hard for it to go down huge again like the past few days.  I think we’ll be rangebound today between yesterday’s low and the falling trendline around the 1875 area currently.  A move down to 1820-1830 (that holds) could setup a nice move up into Friday.  But right now I don’t see any high odds swing trade for more then one day.  Day traders, your range is that falling trendline around 1875 to the 1830-1840 area from prior bottoms.

ES Morning Update January 20th, 2016

Posted: 20 Jan 2016 06:49 AM PST

e89afde9-bf98-4414-beb2-0143dbf7408fThe Futures did a flip this time around and sold off afterhours instead of rallying up and becoming overbought like they have done the past several trading days.  This suggests the market will flip during regular hours as well and go up instead of down.

This 60 minute chart supports a rally today and the 2 hour is hooking up as well.  The 4 hour and 6 hour are lagging behind.

Trying to pick a spot to take a trade overnight has been tough lately as there just haven’t been any clear trades.  Everytime it looks like the market might go up the next day it does the whole move overnight/premarket and then goes down at the open.  It’s been a steady series of steps walking the market down.

The moves down are so controlled right now that it seems hard to find a bottom.  We’ve yet to see a “capitulation” day where every bull gives up and sells everything.  Then the market reverses and puts in a long bottoming tail candle on the daily chart.  So for now it’s just a day traders market.

My thought are that we’ll go up some today as the 60 minute and 2 hour charts push up on the futures.  But I wouldn’t be a player of it as it can rollover again at anytime.  After the 60 and 2hr MACD’s get up even close to the zero level (which could be midday or the close?) we could see them roll back over again and drop again.

ES Morning Update January 19th, 2016

Posted: 19 Jan 2016 02:40 PM PST

d426dbcb-eeec-43d9-a4aa-c9018fad2c1fFutures are hitting the falling trendline of resistance again this morning.  Next resistance is the other falling trendline.

Futures are hitting the falling trendline of resistance again this morning.  Next resistance is the other falling trendline.

The 4 hour and 6 hour are still in negative territory with more room to go up.

Last week we rallied up on the 13th strongly to hit the falling trendline and then rolled back over and erased it all the next day (and more).  Will this time be the same?  Tough question of course as we know how SkyNet mixes it up a little from time to time.  Once us sheep finally see a pattern it is quickly changed and doesn’t work the next time around.  This leads me to believe that we won’t drop to a new low today like we did the last time.  Possibly we make an “inverted head and shoulders” pattern today by pulling back to make the right shoulder?

My thoughts are that while I don’t think the low is in yet for this move down we could have a small rally early this week.  Traders are just coming back from the MLK holiday, which should lead to light volume today.  I don’t see any clear edge for taking a long or a short today.  Right now the charts are mixed.

The SPX Cash is still buried in the dirt and really should come up for air some today, which leads to the theory that the futures won’t drop to another lower low today as well.  The SPX wants to come up while this 60 minute ES Futures chart wants to go down.  Hence the word “mixed” charts today.  Since we have been going down for several weeks now it suggests the bears will again pounce at the open.  For me though, I’d be more excited to short from that 2nd falling trendline… maybe tomorrow or Thursday?  But without a clear edge one way or the other today it’s just a gamble to trade… which I’ll leave to the day traders.

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