Month: July 2004

Reversal Day / Hammer Candle

qqq-7-28-04
Today was a classic reversal day, with the market opening down, then selling off and undercutting prior lows, then stabilizing for a couple of hours in the middle of the day on quiet volume, then staging a powerful rally into the close. The result of the morning selling and the afternoon buying was the highest volume day since the May lows, which were put with a couple of doji candles and a powerful hammer candle (see circled areas on the chart). The Dow and S&P closed higher, but volume was suspect…

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From Today’s IBD: Follow-Through Days

IBD_7-28-04
This is basically what I mean when I talk about a “follow-through day.” Sometimes you might get a variation on day 1, for example a powerful reversal from a morning selloff, but the rally just falls short of pushing the indexes into the green for the day. I would consider that the first day of a rally even though the indexes may have closed with a small loss. You can also get variations on the follow-through days themselves. The market is art, not science, and if you are too caught up in exact definitions of what this or that is then you are not using your brain to make judgments. Sooner or later you’ll get your ass handed to you if you do that! Here is the article:

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Another Crack at It

spy_7-27-04
Here we go for another rally attempt. This time after a test of the May lows and the 200-day moving average. It should also be noted that the contrary indicator of public/NYSE member short sales hit a 17-year high last week, suggesting that the “public” is doing an awful lot of shorting, a situation that sometimes foreshadows a rally. Other technical indicators recently reached oversold levels, but not extreme oversold levels, so we will see. The volume pickup as today’s rally progressed showed traders getting on board, but if the rally aborts those same traders will make a mad dash for the exits.

Rally Attempt Take 2

oneq_7-22-04
Today was almost a textbook upside reversal, including the undercutting our recent lows and the May lows. Problem is we didn’t get clear capitulation in the morning and the volume was suspect. That makes this rally attempt look questionable. We’ll have our answer by Monday… either the rally follows through or it fails. Note: I would have posted the QQQ or Nasdaq chart, but bigcharts.com was having technical difficulties, hence we use the lightly traded ONEQ.

Classic Engulfing Candle

qqq-7-21-04
This could get interesting… It took all of 2 minutes after the open for sellers to overwhelm the gleeful buyers of the $75 billion MSFT dividend/share repurchase news and the MOT upside revenue and earnings news. Painted a large red engulfing candle that took out the bottom of the recent range and the May closing low. Highest volume of the recent down leg and the largest point and percentage decline of the year. The OBV indicator — indeed even just a simple look at the volume bars on the chart — shows that selling on this most recent leg down was/is more powerful than the buying on the way up. Buyers of the rally attempt are now underwater…

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Reversal Bar / Rally Attempt

qqq-7-19-04
Writing this at 7:30 AM on 7/20/04 and only have a minute. The chart shows an upside reversal candle on pretty good volume. Closed up a fraction. This marks the first day of a rally attempt (off of some fairly oversold conditions). Also, to follow up on the previous post: The test of the 200-day moving average failed. At some point it will get tested from below and will likely serve as resistance, making it a good trading target (when the time comes).

Testing, 1, 2, 3

qqq-7-7-04
We are having our third test of the 50-day simple moving average in the past month (see circled areas on chart). The previous visits produced pretty quick rallies. Still too early to tell how the current test is going to go, but there are some red flags. First…

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