The Rogue Investor » Dow

Market pops, volume doesn’t

Alex — Fri, 23 Jul 2010 01:37:55 +0000

The Dow jumped up a strong 2% today on slightly higher volume. Even then, a late session pullback leaves the market under resistance and based on the action, I expect it to bounce lower.

Here’s a chart:

Here is the current trading channel the Dow is moving within.

Regardless of where I think it will go, the market can still move above resistance. If this happens, watch for a a follow through day and for the market to continue higher.

I’ll do a weekly wrap-up tomorrow. Have a great Friday!

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Dow finds slight support, trades in tight range

Alex — Thu, 22 Jul 2010 00:50:26 +0000

The Dow has hit a little bit of support lately after falling largely several sessions ago. I don’t think it’s much to worry about if you are shorting the market, but keep an eye on things in case the market moves higher off this consolidation.

Also, volume was slightly higher today than the previous two sessions. Again, if your are short the market, you want decreasing volume on rising days and increasing volume on falling days.

We're seeing lower highs and lows as we move on in time. Until this changes, the market could continue to fall.

I expect the market to continue to bounce around between 10,050 and the moving averages before finally moving below the support.

The thing I would look for to see if the market could go higher is a high volume day where the market moves down sharply and then finishes near/on the highs for the day. Otherwise, expect it to continue lower.

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Resistance likely to cause decline in markets soon

Alex — Tue, 13 Jul 2010 05:36:34 +0000

After almost a 5.5% bounce higher (that I called), I expect the market to find resistance and begin resume its decline to the 9600 level.

We have seen the volume drastically decline as the market moves higher indicating a lack of buying as prices rise. Also, the major exchanges are coming up on both the 50 and 200 moving averages (which are converging bearishly).

Here’s a chart:

The overall trend is down and signs are pointing to more decline.

When shorting, it is best to wait for a sign of weakness (i.e. when the market moves higher but gives up the gains and closes on/near the lows of the day).

I expect to see an tipping point within the next day or two. The volume will most likely be above average and the day will close largely off the highs. Check out either Facebook or Twitter for an update.

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Volume floods markets, Monday’s session very important

Alex — Mon, 28 Jun 2010 06:41:49 +0000

Friday’s session has set up Monday as a pivot point for the future of the market’s direction. The S&P 500 is near the support line at 1070 and there is narrowing room for advancement before resistance is met.

Above average volume shows an increase in professional trading.

The Dow, NASDAQ, and S&P 500 were all basically flat on above average volume on Friday. Each index finished in the middle of the range which is a bullish sign as they each are near support.

Monday will give us a better idea of where the market is heading. My best guess is that we will get a bounce higher and continue in that direction until we run into resistance around 1080, 1085.

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Dow analysis – head & shoulders or cup & handle

Alex — Thu, 24 Jun 2010 16:35:45 +0000

As we move to the middle of the week, it looks as though there are a couple different patterns that could be forming: a head and shoulders top and cup and handle bottom. The pattern you choose will most likely depend on your outlook on the market.

Let’s start off with the bears:

A possible top to the rally could be forming as we examine the head and shoulders pattern here.

A reason you might side with this pattern is because the right shoulder is forming lower than the left with is a bearish sign. Alternatively, you might not agree with this pattern because it is somewhat loose and the volume doesn’t match up where it should (at the tops).

Moving on to the cup pattern:

The cup and handle pattern is more likely the correct pattern the Dow is forming.

There are a couple things that can happen and will confirm this pattern. First, we could fall a little further on below average volume to continue the shakeout. We would want volume to pick up on any days that close off lows. Second, we want to see the indexes to start moving higher and eventually breaking out on high volume.

The good news is I will update you on whatever happens when we get some significant action happening. As for now, the market remains neutral and the best idea is to just hold long positions unless you are down 5-8% overall.