Looking for this to retrace to 2100 and then consolidate and move up, or for sellers to take control and move past the support at 2070 and break through to 2050 area close to the 50 moving average. There is some support at this level, around 2070 and we could see a 10 point move up before it reverses and breaks support to return to the 50 moving average.
The consolidation zone from 2050 to 2118 area has been tested on many occasions and the floor has not been determined yet. There has been no real capitulation buying or selling.
We had a higher range for the week with the range moving from last week 35 point range to this past weeks 56 point range. In this type of chop though we must be careful for turn arounds when we get these engulfing patterns because most have only established support and resistance.
Always manage your risk first, and never take a trade you can’t afford.
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The US markets had a partial correction with a few break away gaps which can become longer term targets for the next move down by sellers. The first gap we can see filled today bringing the market down to within a few points of the previous open gap.
The Opening gap on the S&P500 emini futures was 8 points, we opened with buyers in control, and with in the first hours of trading we closed the Gap. The Gap looks like it acted as resistance where the sellers moved in and then moved the market to the previous lows on the open.
There is still another open gap just below at 2001.50 .
This is another daily chart showing open gaps for the previous months trading action.
The open Gaps below the 200 Moving average are a good target for a major sell off. We bounced on the 200MA and retraced to the previous swing highs. The market might need a pullback to break through this resistance as sellers have moved in on many occasions at these price levels.
The 50MA is the next down side target at 2094.75. You can see that volume has picked up a little bit on the sell off and then volume drops as we put in a bit of price failure under 2108 as buyers moved in.
As we are in earnings this next week we could watch for some volatility. The market really moved with exuberance from the supported lows on the 200MA, it looks like we are watching for some other event to sideline this move up. Be careful trading the highs and always manage your risk first.
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This has been a great month of theatre in the markets with S&P500 having the summer pullback, just before earnings. So leaving the nonsense of “Drama Trading” and coming back to the real world technical trading let’s look at some charts.
The weekly chart shows that we had a large volume week, around 3 million higher than previous seeks, with sellers bringing us down to support but buyers moving in to bounce price off of support the 50MA which is the yearly average price. Support came in at 2032 just a few points away from the 50MA but close enough. We could see price test this area again.
Price projection for buyers 2080 to 2100, or extreme move to new highs.
Price projection for Sellers 2025 to 1980 based on high volatility.
The range was below average at 41 points, not very volatile but slightly higher than the previous two weeks.
With the weekly average trading range we can see support and resistance extremes of 2013 on sell side and buyer side control to 2100. The 200 Moving average on the daily chart co-incides with the 50 Moving average on the weekly chart.
The market is still held within the “Drama Pattern” of a consolidated range within a short period looking for direction but chopping back in forth in an above average daily range. Joel Wissing
The range from 2036 to 2075 is this “Drama Pattern” where no direction is taken. In the short term beginning part of the week we could see a gap down from the relief run up we saw on Friday. The close Friday was 2069.50 Watching for a gap down. If there is selling pressure on no decision with Greece Crisis, I would watch for a close of Thursday’s open gap at 2043.25
If buyers do step in off of this first support, then I would watch for a move higher to 2090.25 where the 50 Moving Average on the continuous 24 hour trading chart. Resistance on the move up at. 2082.25 to 2090.
We might need some type of capitulation price action so there could be a head fake into sellers price failure under the 2032 range. Next support is 2000 for psychological support, 1980, 1950 from previous swing lows.
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Canadian Dollar Oil and Dollar Index Trading plan July 2015
China has fallen off a cliff, Greece’s referendum could change the face of Europe and commodities are crashing. Taking a look at where the dollar index versus the Canadian Dollar and Light sweet crude are trading and price differences now that price is on the brink of price extremes.
Oil prices have fallen drastically over the last year with a high of $115 and a low of $45. Oil rebounded to over $60 but in the face of an international soon to be recession, demand has fallen off, Supply has increased and the price of oil is controlled by sellers.
In the the daily chart comparing the oil price extreme lows with dollar index and the Canadian Dollar, The dollar index is not close to it’s previous highs but the Canadian dollar is approaching it’s lows. If the Euro and Chinese markets have further volatility and demand for the dollar surges, we could see the dollar index push through the bearish channels resistant trend line and head to previous swing highs at 1.01 .
Canadian Dollar major support is .77
This could push oil prices down to the $45 dollar range and possibly further if there is more volatility in China. This disruption could then push the Canadian Dollar to new lows as it breaks the Major Support at .77 cents US to the Canadian dollar.
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Gold prices are not headed up. There is no bid catching and sellers are in control. The critical price support is coming up at 1132 to 1143. If sellers push below here we could crack the $1100 psychological support.
All the gold bugs are scratching there head saying the roof is falling, the roof is falling, but the truth is the naked shorts in futures and the margin calls that will be hitting the market and paid in gold will be huge.
The extension of the Head and shoulders which I have posted many times before is to 1050. If the margin calls are enforced in China, we could see large amounts of gold entering the market.
Chinese Stocks are cliff diving. China, as mentioned yesterday is the one on the side of the cliff. The Shanghai has stopped trading on $2.6 TRILLION of Stock. They aren’t trading on the market place and the rest have brought the market down about 9%.
Chinese stock market in Shanghai has moved in to Bear market territory with a break of the 200 moving average. Today the market is off almost 9%.
The next chart is a 1 minute chart and you can see that it has fallen 10% in the last few hours. Remember the market is still up for the year. The biggest consideration is if the government will let it slide, or step in and letting this roll over to margin call against property values. The Chinese market foreshadowed the 2008 US Market crash also. Trading Plan is no overnight holding and careful with your shorting. Chinese government can halt trading, put in their own plunge team, or just declare a price. Very Volatile, very risky. This will effect $25 billion in US purchases by China.
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Presently, the US news has pushed the trader investor into missing the biggest news item that will have a large effect than the referendum this past weekend in Greece. The news has cycled over and over on how Greece is voting on accepting austerity proposals from basically Germany and France. Greece owes them a total of around 170 billion dollars. Other countries since 2010 have contributed billions too, but as they are also in default and collateralize d their debt with junk bonds pushed into the European Community, in the short term they can wait to see how to follow if Greece takes on this arduous trek to a new economy. It is not like the news pictures it as a jump, a fall from Europe, but more of a political 1 foot forward two steps back until Greece commits to their future through their own currency. They are climbing Mount Olympus not jumping from a cliff.
Looking at the pullback in the US markets, I would attribute the long term direction more to what is happening in China. China is the 800 lb Gorilla sitting on the financial markets. The Bank of China has just dumped 20 billion dollars into the market today, and the total loss to the Chinese markets this past month is in the Trillions of Dollars. Much more than the combined values of all the PIGS debt. This 25% correction in the market has not exhausted. If there is any indication in past major corrections their could be a 50% correction. I think the BOC will definitely step in with more support and extend leverage to stock holders but this is setting a very bad precedent in the market. The market clearing process of selling too much, moving to an oversold condition opens up the opportunity for new money in and inefficient, non employee-centric businesses to be cleaned out.
S&P500 emini futures showing support on the 200MA moving average. Buyers and sellers had a capitulation before the move down showing seller exhaustion. Strong buy on today’s market with next major support at 2032, 1009 then 1957.50 News out of China could be big and set off a few international market makers that might be shorting. Watch for a break above 2100 and then some consolidation. If Greece folds and the BOC covers the market, then we could rally through to August.
There is a shift coming in the markets, and the risk off trade is slow, the catastrophe hedge GOLD is weak, Silver even weaker. Copper had an almost 4% change in price today to the sell side. Mortgage rates could be going up in the US in September, probably to be delayed to November or a slow sales moving month. For each half percent, an estimated 200,000 home buyers will be knocked out of the market. Home prices also correct when interest rates go up, so all these new buyers afraid of getting a higher rate are buying at the top of the market…..
Greece is going to have to climb mount Olympus to get their new economic fire and it is going to be a long hike.
The Sky could be falling, the referendum on July 5th is adding some volatility to the US and international markets.
We are sitting on the brink of some amazing changes that could be brought about by the Exit of Greece, from the Euro. Iceland previously held a referendum(in 2011) asking the people if they wanted to guarantee 2 Icelandic banks . European governments put pressure and all types of doomsday propaganda about how Iceland will loose its standing in the world. The vote was close to 60% against the guarantee. Iceland moved out from the pressure of the banks and let the business fail but kept their integrity and Iceland has been doing well since then.
It is a courageous step in the climb, and the pressure the Greeks are under both physically and psychologically must be huge and the hangover for the party in the streets just as big. In this, we might see some of the abhorrent corruption of our banking systems corrected. In the US, it seems we have not learned from our mistakes and have let the banks become our political masters, controlling our commerce, our industry and future taxes.
I remember in the 70’s when we had anti monopoly laws and policies, we broke up the “Bells”, we monitored the banks, we had mistakes but we had a sense of business that was to serve people, not as a business entity treated like a person that can not be held accountable. No banks or bankers have been charged and held responsible for the instruments they sold back and forth that created the largest transfer of wealth from middle class to the wealthy. The 2008 Financial Crisis will be small compared to what is in store for the markets in the futures.
As each of these begin to unwind, the Grexit, the Italian, Portugal, Spain exit that could follow. Eastern European countries unwind and their debt skyrockets, the baby Grexit in the US with Puerto Rico, Cities unable to pay their pensions with out issuing more debt(bonds) and of course the Ponzi of Treasuries and Bonds as the world looks for a source of safety and to take risk out of the markets.
The changes could be fast, the market could clear these fraudsters out, there could be a new start for many countries and cities. The fear of such a choice is often larger that the actual consequences.
We shall see…..
So What is your PlanB?
Remember to always manage your risk first. If you don’t have money to burn, stay out of these markets.
Money Maker Edge™
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As mentioned in last weeks article, the S&P500 emini futures have previously pulled back to find support in the last week of may and the first weeks of June. Today, we hit the support of 2068.75 in the overnight session and have bounced past the Point of Control at 2081 where the buyers are moved back in to control.
In a recent talk with day traders in Newport Beach. “Trade what you see, remember this is a widely held market and every time there has been a pullback or minor correction, the crazies will come out saying the sky is falling. The sky will fall when we have a 10% or more correction. Until then play the direction of the market. Trading is about being nimble.” Joel Wissing
This pattern where we have a double top or head and shoulders pattern gives us a small pullback or minor correction (less than 5%) has proven to be a continuation pattern in this widely held market.
The S&P500 reversal off of support at 2067.25 where sellers capitulated and buyers moved in is a key area of support. If you notice the buyers moved in and brought price above the 50MA at 2097 showing strength in this move up. This means the short term bullish trend is still in tact.
We have entered the next price projection zone (pinkish box) and are looking for it to move up, consolidate, and then break through the top either in the last quarter of the year of before the first week in August when we normally get a minor correction.
Downside projection this week was for the 2067.50 area, and the market is not showing signs of reversing off of today’s bullish move. If there is an outlier (read this from December 2014) that causes sellers to leave their widely held positions the next area to be tested will be 1960 for a full correction where we have an open gap.
Warning: Summer time trading can have very low volume and quick volatile movements. Always manage your risk first and don’t trade unless you know what you are doing. Only you can be responsible for your income, wealth and freedom!
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“Traders use a trading plan to set their trades, risk management and execution with the nimbleness of trading the direction of the market.” Joel Wissing Money Maker Edge™ Trading Course.
Weekly to Daily to shape your perspective of the market. Sequencing is one of the most important steps for a trader to learn. How one sets up their trade plan is how you create your opportunities in the market.
The weekly chart is very consolidated at the top of the market where it has been hovering trying to make it’s way to new highs. 2074 the previous swing high on a move up is the new support on this move, as noted by the red line.
The sellers had a slight uptick in volume coming close to the average monthly volume of 5259k. An increase over the previous month. Still watching as the volume spikes are decreasing.
The Range is very small at 29.75 points for May. This type of small range occurs normally before we have some volatility and a break out in a market. Last years summer also started with this type of small range and then broke out in August. We might see the same unless an outlier pops on to the scene. Greece exit, could be a big mover of the markets, or a second tier bank failure for non payments of debt. Remember in a widely held market supported by quantitative easing we will see these periods of consolidation, low range days, weeks and months and then a small correction which acts like a spring to bring in the volatility to break through new highs. Here is the article about some of the pressure on the 2015 markets.
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Trading plan for the S&P500 emini futures. Price has moved into the next Price projection block from 2090 to 2203. The sellers moved in on Tuesday testing the support and almost closing the gap which is laying at 2091, very close to the 50MA, which could be added support.
The seller volume spiked and moved up to 1.54 million contracts traded showing some volatility with the buyers coming back in at support keeping the market above 2100. The market was closed in the US on Monday and Tuesday when the market opened we had sellers committing to this small move down. Wednesday price action on the open had a small test down and then the buyers moved in to bring the market up 17 points. If the market closes above 2123 today we could have a powerful buy pattern as the buyers would have engulfed yesterdays price action.
The price projection to 2140, then to 2165 is still open. We will see where buyers stand going into Friday’s session to see if there is room for new highs.
Remember this is a widely held supported market. The US is not in quantitative easing but other countries are and with institutional buy backs at an all time high it seems this bull market still has direction. A 20 to 40 point pull back is not the signal to the end. A correction, which is normally assumed to be 10% correction in price would put us at support above 1800 which looks like the line in the sand for control in this market. This market is very risky and only use risk capital to trade it. Do not trade unless you know what you are doing. When corrections in the market occur, they occur quickly and Market Makers, take the profit out of the market, and normally that means any retail traders.
Having a written trading plan is helpful to be able to analyze your work. If you don’t understand how you analyze and look at the market, you will not experience improvements in your risk management and your ability capitalize on market price action. You don’t have to take every trade, there will always be another trade.
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The S&P500 emini futures weekly trading chart is showing a very congested trading zone at the top of the market. The 5.4 million contracts traded is slightly above the weekly average but can be considered low volume. The previous weeks trading range is 54.3 points which is slightly above the average for the past 5 weeks. Last week the market ended in a Doji where sellers could not change the direction of the market and buyers did not make any real gains until Friday’s close.
Seems that traders are waiting for some decision around the Grexit or some other outlier to come to fruition.
The Daily Chart on the other hand is spotted with open gaps, low volume moves and signs of continuation to the next consolidation zone.
The daily volume on the S&P500 emini futures contract is under the moving average. The moving average on volume is also headed lower and lower. A rising market on low buyer volume is showing weakness. Although the official US Quantitative easing program ended last October, we can expect corporate buy backs and foreign banks to be buying in until the top comes in and there will be another correction.
There are 5 open gaps since the last correction. We look for 5-7 open gaps for each correction. Remember this is just a tendency. Don’t gamble on it. The next resistance at 2136-40 is our next target on the week and then moving into the next consolidation period if there is no correction.
This week could be a slow grind up if the news doesn’t send us rallying. Any news has been good news as observed last Friday, watch for Oil to consolidate too and for some weakness in Oil, Gold and Silver as the dollar reacts to the conditions in Europe.
Pressure is mounting on the Euro and we are seeing some hair trigger moves in trading, so watch your self. This next break out could take a lot of money out of the markets.
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