The Rogue Investor » price

Correction on, but this is not a top

Alex — Mon, 10 May 2010 05:20:31 +0000

This last week was quite a shock. 990 points.

Surprisingly, the S&P 500 is only down 8.74% from the top. While that is a big chunk, it less than 1% more than the last pullback. Chart:

We've tumbled 8.74% so far. The question is how much further will we go?

I’ve got a blue support line on the chart above. Based on it, we still have a little more to fall. Before that line we have the 200MA which could also be a point of support.

As far as analyzing the price movement, we have both bearish and bullish points here. The exchanges have closed in the middle of the range the last two sessions on ultra-high volume which shows both buying and selling.

The bottom line is the hedge funds are shaking out the amateurs as they buy on the way down. I expect to see a session where stocks close on/near the highs for the day after being down. This will be the turning point into a new leg of the rally.

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Smart Money Active on Friday Before Holidays

Alex — Fri, 18 Dec 2009 22:40:21 +0000

Just as it looked as though the Smart Money wouldn’t show their faces before the holidays, Friday’s volume soared signaling a large batch of orders taking place.

From the initial analysis, the S&P 500, Nasdaq, and Russell 2000 all had bullish price action, closing near or at the highs for the day, and the Dow 30 and NYSE showed signs of supply, closing off highs, which could ultimately be bearish.

Squeezing this for even more analysis, we can see that the broader indexes showed bullish action. To me, this would suggest that overall,Friday was a bullish session because more total stocks were sampled to have better return on the elevated volume.

For a much more complete view of how this day will affect future market movement, we will have to wait until Monday’s session. If the indexes move higher with strength, we will know that today had to be buying and can expect higher prices until further Smart Money orders take place. If prices are unable to close on highs and show weakness, we can conclude that there was selling amongst Friday’s trades and can anticipate lower prices to come.

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Flat Week Provides Little Direction for S&P 500

Alex — Mon, 14 Dec 2009 05:47:33 +0000

As time continues to fly by, now almost halfway through December, the markets have shown us little as to where they want to go.

One thing that sticks out to me is that in the last 24 days, we’ve only seen the market close on/near the high for 7 days. With a stat like that, it is easy to understand why the markets haven’t pushed higher into fresh, new ground.

The bulls gets some kudos here also. Of those same 24 days, only 1 has closed on/near the low.

Either way you look at it, we still end up in the same situation: narrow trading channel and very little direction in the markets.

If the market continues to rally and approaches the top of the trend channel, keep an eye on volume. If volume picks up and prices are unable to close on/near the high for the day, it is a good bet that our sideways trend will continue.

This would show that there is still supply in the market and that until the supply is removed, the market cannot rally higher.

Here is a look at the 2 recent days where the Smart Money was most active:

While both of these major days of activity both closed up, only one of them was a sign of strength. As you can see, I have marked them appropriately.

The first marked day is strength because of the close. The market finished on the high of the day and is right at the bottom of the trend channel. On the other hand, the weakness is seen on the second day because the market closed in the middle of a rather wide range at the top of the channel.

Overall, all we have at the end of the day is a flat market. All we can do is wait and watch for a new direction.

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Markets Gap Higher but Close Off Highs

Alex — Tue, 24 Nov 2009 03:18:53 +0000

After a lackluster end to last week, the markets jumped right back with the S&P 500 closing up 1.36%.

The number by itself is pretty impressive but the price action says different. All the major indexes closed pretty well off highs signifying supply in the market.

When we add volume to the mix, the day’s significance drops. Volume was close to the low for the last two months.

If things stay consistent, it wouldn’t surprise me to see the markets drift back to the previous highs and then fall off on increased volume.

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ETF Pick: DBA – Agriculture Long

Alex — Wed, 14 Oct 2009 05:18:25 +0000

Here is a great looking breakout on the ETF DBA. Often, the 50MA and 200MA are sources for serious support and resistance. Here, DBA has blown through a significant trend line as well as the 200MA.

In addition to very bullish price movement, the volume on the last two days has been through the roof. The volume does seem a little excessive compared to the typical range but I don’t think it’s much to worry about.

Personally, I would wait to see another follow-through day on solid volume to know if this isn’t just volatility.