Weekend wrap up, May 31st

On Friday, as we approached US close, the FTSE gained over 50 points as the US markets rallied to finish the week and the month of May on a upbeat.

We had reached as low as 4400 on the bid before that happened, which also coincided with the lower boundary of the ascending channel that we have been respecting since March. We also broke above the triangle formation that was in the works, in a fashion similar to the break above the 4100 line in mid-April. Now, we have to see how the FTSE reacts during market hours on Monday, but momentum on intraday charts is strongly positive as of Friday's last numbers.


Looking at the daily chart, note that:

• After almost 20 days pointing south, momentum seems on track to go back to positive: this depends on the next few days obviously. Momentum on other indices, like the NASDAQ, the Euro Stoxx 50, the Hang Seng and, less evidently, the S&P 500, DJIA and DAX, is already looking north.
• Last week, the 30 day weighted moving average (in purple) acted as support.
• The 4670s acted as resistance back in November of last year (there is a typo in the chart mentioning October), and in January.
• Please also note that we closed 2008 just above the 4400 line (4405), so we are currently positive YTD.

When compared to the past 9 months, volatility over the past 20 days has been subdued as we have ranged in a 200 point zone between 4300 and 4500. Look at the Alligator indicator on a daily chart: it's closed shut, signaling that the next move (up or down) is going to be quite powerful.


Lastly, look at the action on the weekly charts and notice how the candles react when close to the Bollinger bands:

• Bollinger bands often act as resistance or support.
• See how in trending markets, regardless of direction, the weekly action often stays close to the upper (in an uptrend) or lower (in a downtrend) Bollinger band.
• Also compare the current width of the band to the past.
  

I'll be watching momentum closely these coming days: if we turn back to positive we might have a considerable northbound move coming. That said, let's not get ahead of ourselves because we rallied for 45 minutes into the US close on Friday.

Play for Friday, May 29th

We had a hectic afternoon yesterday, very choppy and volatile at the same time.

At pre-open, we are quoted in the 4420s to 4430s on the bid, and we are standing on the borderline with the descending triangle mentioned yesterday. However, momentum is still positive on intraday charts. Please see below the updated charts.

I will not be looking for a short entry and try to guess a top on this move unless momentum switches. Most likely, I'll either stay flat or look for a long entry or a scalp.

Closed long at 4414

From 4398. I am now flat.

Flipped side!

I have closed my short at 4398 (from 4485) and flipped to long, 10% fill, stop at 4385.

Update: moved stop to 4390.

Covered some shorts at 4371

I covered two thirds of my shorts at 4371 from 4402 and 4416. I still have a contract from 4485 and my stop is still at 4445.

I don't like the momentum that's building up.

Added short at 4402

For a further 10% fill. Stop still at 4445.

Triangle watch

Please see this updated trendline chart. Check how in early April we defined a downward sloping triangle we then broke above of: that break coincided with daily momentum turning positive again.

Compare that action to what we are seeing now and look out for any significant switch of momentum to the upside as already noted.

Sideways action

Since the open we have found support and moved sideways between the 4350s an 4360s, which are an ambush long area from Tuesday's lows to yesterday's highs.

Be on the lookout for any significant switch of momentum on intraday charts.

Play for Thursday, May 28th

I had spotted a potential double top formation a week ago, and began warning that a test of the middle of the top was likely.

Indeed, as I have said since Friday, the FTSE went up and weakened below the 4440s (yesterday's high was 4440).

Now, in order for this double top formation to be complete we need to break below its neckline: the 4300 line. We are currently quoted in the 4350s-4360s on the bid which is a potential ambush long area from the lows on Tuesday: if we rally on these levels at open and break above yesterday's high I will re-assess the bearish bias.

I'll be looking to add anywhere below yesterday's highs (a potential ambush short being in the 4390s to 4410s) but will also want to see us break below the 4300 line to be comfortable on these shorts.


We are currently just outside of the ascending channel, but, as mentioned, we need to close below the 4300 line. Momentum is negative on intraday time frames and daily charts. I would however like to highlight some arguments to support a continuation of a bear market rally:

• We have been ranging for over 20 days now and finding strong support on the 4300 line.
• The daily charts denote negative momentum and indicators have been moving downwards while the market has moved sideways: without a significant downside break we might be "recharging" the indicators for another move up.

Added short again at 4416

10% fill, I have also moved my stop to 4445

I have covered part of my short

I have covered my short entry from this morning at 4403 from 4432.

Still short at 4485 for a 10% fill but I am seeing momentum rising again.

Added short at 4432

For a further 20% fill.

Update: I will let my current positions hit my stop before reconsidering my short bias, however I will NOT be adding if we move up towards the 4500 line.

Play for Wednesday, May 27th

As predicted since last week, and repeated this weekend, we are now testing the middle of the head on the double top.

Be mindful that on longer intraday charts momentum is still bullish for now, but also that we rallied yesterday after a three day weekend. I am still short, with a very small position at 4485, and would not mind getting stopped out on such a small position. These are my considerations for today:

• If intraday momentum fails below the 4440s or so, I will be looking to add.
• Alternatively, any intraday buy signal will have me close my short (if I can) and flip side.
  
• First significant support would be around the 4370s-4380s and resistance in the 4510s.
  

Play for Tuesday, May 26th

Please refer to the weekend wrap for considerations regarding today.

As mentioned, I'll be looking for weakness anywhere below the 4440s. Beware however of rising momentum on some intraday charts.

(Long) Weekend wrap up, May 25th

This is going to be a rather quick update. While the LSE was closed, some CFD still provided FTSE quotes that moved concurrently with the movements of the mainland European indices.

We have to give a substantial discount to today's movements across the European markets, given the UK and US holiday.


We have seemingly broken below the ascending channel we have been in since March, but this break out has occured during a Bank Holiday: we have to open and stay above the 4350s tomorrow to stay within the channel.

Short term momentum, has momentarily shifted to the upside: however, as I said on Friday, a possible test of the middle of the double top is still possible and would maintain the validity of such formation: I would look for weakness below the 4440s and beware of any remaining strong upside momentum if we broke above this level.


Momentum on longer intraday charts, such as 4 and 8 hours is still negative for now.

I am currently holding my bearish bias:

• Negative momentum on daily charts and long term intraday charts.
• Bearish formation developing: a double top in the 4510s.
• Oversold conditions on weekly and daily charts had been reached.

We need to take out the 4510s double top to re-assess the situation. With regards to downside targets, in early April the 4100s had provided major resistance: this could now turn to support on the way down and could be a first downside target.

Play for Friday, May 22nd

Yesterday afterhours the FTSE reached as low as the 4310s, and it's now quoted in the 4340s.

Today, and also once we open again on Tuesday, I'll be looking to add to short positions if long term momentum is maintained.

I updated the trendline chart just below, and as you can see we have respected the neckline of the double top and we are still within the ascending channel.


We could find some strength at the levels we are at, and possibly retest the middle of the double top between today and when we come back on Tuesday. Ideally, I'd be looking to add below or at the 4440s: another touch of the 4500 level would be quite bullish.


We have the following bearish arguments on the table:

• Double top formation which requires a confirmation.
• Negative momentum on all long term time frames, intraday and daily.
• Daily and weekly RSI had both reached overbought conditions.
• Negative divergence on both daily and many longer term intraday time frames: see the 8 hour chart below.

Still, we need to penetrate the neckline of this double to complete the bearish picture.

Has the downtrend resumed?

Have we reversed trend? Just looking at the tape today, and the momentum we found on the downside, it seems probable.

We had some divergence play out on both the daily and 8 hour charts as we created this double top in the 4510s, of which I warned yesterday.

Back in February, we had also detailed a double top in the 4300s: before we headed well below though the double top was tested again about halfway. See the chart below for details of where we stand.

It will be interesting to see where we find support, and whether we do retest the middle of this double top formation.

Play for Thursday, May 21st

Since Tuesday, an until last night, we had defined a very tight range, with a support of 4450s and a resistance in the 4510s.

Last week, 4450s had worked as resistance at the beginning of the week. Yesterday, after hours, we broke below the 4450s support, and found buyers in the 4400 area.

Now, momentum is negative on all longer term intraday charts, and back to negative on the daily chart: however, this was the situation we had on Monday before open, and we know what happened then.

I am going to keep my current small short position, and look for weakness in the 4450s to add. Otherwise, I'll adapt and flip side or see what the market throws at us.

Sweet

Covered half of my short at 4480, 5 points....phat profits...

Short again

At 4485, 20% fill, stop at 4500 (yet again).

Closed long at 4506

From 4481.

Flipped position

Closed my short at 4481 (8 points loss) and flipped, still 10% only fill, 10 point stop.

This market is really hard to trade, dips are disappearing even on smaller time frames, and on low volumes.

Play for Wednesday, May 20th

The market mostly offered scalp opportunities yesterday, although there was a good shorting chance at midday as we travelled from the 4510 to the 4440s.

On Monday, the rally began in the 4300s and as noted reached above 4500 yesterday. There are both bullish and bearish arguments on the table.

Bullish arguments:

• Momentum is quite mixed, but still positive on 4 and 8 hour intraday charts.
• The 50% to 61.8% retrace of the recent rally is between the 4380s and the 4410s.
• 4400 could turn into support.

Bearish arguments:

• Momentum on the daily chart is mixed (not a great argument actually).
• We might be detailing a double top, see the chart below. Emphasis is on the word "might".
• Longer term intraday charts (4 hours and 8 hours) as well as the daily chart (below) are beginning to show relevant divergence on this potential double top. This has to be confirmed with a sell signal.
  

So momentum is mixed and we are well within the ascending channel. I have a small short on still on from yesterday: I am going to keep it for now, but will be looking for buy signals within or above the 4380s and 4410s.

We have the minutes of the Bank of England and of the Fed coming out today, which might move the currency markets and consequently the indices.

Short at 4473

I went short at 4473, 10% fill only, stop at 4500.

This morning I was reading 81 on my hourly RSI: I actually had to adjust the scale as I had no more room on the upside.

Closed long at 4484

From 4469.

Long at 4469

15 point stop, 10% fill, for a scalp.

Covered short scalp

At 4456 from 4477.

Short at 4477 for a scalp

10 point stop, 10% fill, scalp trade

Play for Tuesday, May 19th

Yesterday's action was incredible. Not only did we break above the tight descending channel we were in, but the indices, all indices, were simply relentless in their drive upwards: smashing against the upper Bollinger band on most intraday time frames. It was a good idea to take the little profit I had on my shorts and then simply stop: a better idea would have been to flip side but finding a comfortable point of entry was basically impossible.


Momentum is on the rise, and even on the daily charts is about to get back to positive. I am not sure we'll have a good dip into which to buy, so I'll be looking for long scalps or an entry point where I can. That said, given yesterday's surprise anything is possible.

Covered short at 4402

From 4399. I'll let permabears play this one out...I have positive momentum on all intraday charts, including some of the 8 hours charts.

Short at 4399

20% fill, in for a scalp and ready to flip to a long if necessary, stop at 4410.

We reached the upper trendline as the chart below displays.

Covering all shorts

Covered all positions and I am now flat at 4352 from 4398 (20%) and 4345 (10%) and 4342 (10%).

Momentum to the upside is too strong. Will seek another entry.


Update: the divergence I had spotted on the hourly chart this weekend came through...

Added shorts

At 4345 and 4342, for a 20% fill.

Beware of the bulls though...

Update: I have moved my stop down to 4370.

Play for Monday, May 18th

After the Asia session the FTSE is quoted in the 4300s to 4310s, after being bid as low at 4286.

I'll be looking for weakness and a sell signal below the 4370s to add to my short positions, possibly even as low as the 4330s or 4340s. If we move above the 4370s I'll be looking to close my shorts. Please see the weekend wrap up for further insight.

Weekend wrap up, May 17th

At the beginning of this past week the FTSE ranged from the 4380s to the 4460s, finally breaking below the 4400 line and staying below it on Thursday and Friday.

We closed the week finding support between the 4300s and the 4330s, and forming a new descending channel (pink) but still within the original ascending channel (blue). To be noted, is that the double top in February also occured in the 4300s to 4330s.

Support was quite strong on both Thursday and Friday, and in the first half of this coming week it will be interesting to see which channel is confirmed: whether the ascending or descending one. A 50% to 61.8% retrace from Friday's high would occur in the 4370s and could still respect the descending trendline. However, in order to break the ascending channel, we need to close below the 4300 line by the middle of this week or so.



On Friday, we had some divergence forming on the hourly RSI: momentum however is still negative on all intraday charts from 1 hour to the 8 hour and also on daily charts (see below). If we get a buy signal on the hourly on Monday and we go above the 4370s it is something to pay attention to: the bulls are still buying the supports, while the bears still seem hurt from the recent rally.

Below the current levels we could find support in the 4270s (please also see the charts above, as this area seems to rest on the bottom trendline of the ascending channel), and below in the 4170s and around the 4100 mark. There are also a few minor support lines in between that could form, such as in the 4230s.

Momentum on the daily charts is still negative of course, and we seem to be respecting the 7 day weighted moving average, which has acted has resistance since Thursday morning: a significant close above it would put a dent in the bearish argument again. For now, this market seems set on a slow crawl down, and we need to penetrate supports faster in order to gain some downward momentum and for bears to enter the game with confidence.

Last week, I noted that the top of this move could come anywhere from Friday's closing levels to the 4600, but also warned of any further upside and a last area of resistance. We did not touch the upper Bollinger on the weekly nor got above the 4500 line this past week. I am maintaining my bearish bias in light of what the charts tell me, but we need to get some confirmations this week: as of Friday the bulls were still fighting to keep the ascending channel alive.

Covered, moved stop and added limit sell

Just covered half my short at 4337 from 4398. I am still short for a 20% fill.

I also moved my stop down to 4390 and added a limit sell for a 10% fill at 4372.

Update: my limit sell didn't get hit by 2 points, and I wasn't at the desk when we got there to execute manually, so I am cancelling my limit order. Still short as per my position sheet on the left.

Short again at 4398

Let see if resistance is confirmed.

40% filled, tight stop at 4410.

Update: I admit that I was spooked out by this morning's strength. My entry at 4398 was essentially at the same average level I had on before but I doubled the position in size.

I am playing cautiously, until I see momentum on 4 hour charts back to negative I am ready to take this short off anytime. The bears have not shown themselves in hordes, and the bulls are still buying the dips.

Covered all shorts at 4386

From 4423 and 4375. I am now flat.

I don't like the fact that we are hanging above the 4380s, which is where I have my 7 day weighted moving average.

Will seek another entry.

I am moving my stop

I am watching the momentum closely as mentioned in the daily play, and I am not liking what I see.

Back to positive on most of my MACD setups on the 4 hour charts, and relentless to the upside on shorter time frames.

If we go above the 4380s and stay above them it's already a bad sign. I am moving my stop to breakeven with my first entry at 4423, and will be adding only if a clean sell signal develops.

We have Euro CPI this morning, which might provide some volatility. In any case, be cautious.

Play for Friday, May 15th

The FTSE is quoted at 4367 on the bid right now.

Yesterday's idea is still in play, however if we don't sell off as expected today between the 4370s and 4390s, there is still the possibility that we might get a higher ambush short opportunity. Below is an intraday charts: please see the the 50% to 61.8% retrace from the highs in the 4520s to the lows in the 4290s: this ambush short is between 4410s and 4430s.


That said, I'll be watching the 4 hour intraday charts to see if momentum shifts completely to the upside: as I said in this past weekend's wrap up I was expecting the FTSE to top between 4500 and 4600, and the event of a run higher would not take us above the 4800-5000 area. The market does what it wants: if long term momentum shifts back to positive I'll be following along.

Added short at 4375

For a further 10% fill.

By the way, I just noticed I made a huge error in saying where I would be looking to sell in the daily play. I have amended this now: I rushed it through and typed 3970s to 3990s as opposed to the current 4370s to 4390s. I was probably hoping for this thing to slide down...apologies for that.

Play for Thursday, May 14th

Yesterday we had the first truly significant down day:

• Momentum on daily charts is now negative.
• Intraday charts for the longer time frames are also negative.

Unless momentum turns around rapidly, my bias is to short only and to build a longer term trade.

My plan is to try and add to my current short positions, and do so on a retrace up. I am looking to sell anywhere from the4370s to the 4390s, or even below these leves if a sell signal occurs. If we go above the 4410s, I might wait to get a better price on my shorts: however, I'll probably be moving my stop on the current position and on any add-ons into the 4500s.

The Alligator seldom lies

In this morning's post, I mentioned how the Alligator indicator had had its "mouth" closed shut for way too long and that the coming move, up or down, would be sizeable. As you can tell, the Alligator seldom lies...


Also, as posted this morning, I said I would look for weakness from the 4430s to the 4450s and for strength anywhere from the 4410s upwards. After a few scalps, short and long, we retraced back to the 4430s briefly and I managed to get a late short entry at 4423.

We are currently quoted at 4419 on the bid. At these levels, my daily momentum indicators are back to negative. My short is quite small as you can see: if the downtrend continues I'll be looking for rallies to sell and add to my current short, and will move my stop adequately if this turns out to become a position trade.

Short at 4423

10% fill, stop at 4431.

Blogger was briefly interrupted, sorry for the delay.

Closed long at 4432

From 4419. I am now flat.

Covered and flipped at 4419

I covered my short from 4435 and flipped to a long at 4419: 10%, stop at 4409.

Short at 4435

Hoping that the bears have put an end to their hibernation, I am attempting a short at these levels: my stop has already moved to 4445, and only a 10% fill. I am treating this like a scalp trade for now.

I could be flipping side anytime if I see relevant strength and buy signals forming. We have UK unemployment data out this morning and several US data points at 12:30pm GMT, amongst which is Retail Sales.

Play for Wednesday, May 13th

My analysis for today is simple:

• Sell signals on intraday charts in the 4430s to 4450s will be sold.
• Buy signals anywhere between the 4410 to the 4440s will be bought.
  

See the 15 minute intraday chart below: the 200 period MA is the line in the sand for me, and as of now it stands at 4437.


The chart below is an intraday 1 hour chart, set up with an Alligator indicator. I use this indicator not to enter trades, but to get a feeling of trend vs range, and understand how powerful or tight each one is. As you can notice, the "mouth" of the Alligator has been closed shut for two days: the longer the mouth stays shut, the more powerful is the move that follows (usually).

I also described a potential downward triangle that had formed: it got broken slightly in after-hours trading, and we'll have to watch what happens this morning.


Be mindful that:

• Momentum is mixed on intraday charts.
  
• The 50% to 61.8% retrace from the last highs (4510 reached in the after-hours on Friday) to the recent lows is between the 4050s to 4060s.

Be cautious either way, I will continue to trade so.

Closed long scalp at 4440

I am out for a humble 11 points. I'll be off the desk most of the afternoon...

I have reversed!

I have closed my remaining short and reversed my position at 4429.

I am now long at 4429, 30% fill, stop at 4419 for a scalp.

Covered half of short at 4417

From 4448, I am keeping the remaining 10% and pulled the stop to breakeven.

Choppy markets, anything goes really.

Short at 4448

Managed to looked at the screen for a few minutes. I am taking a short now at 4448, 20% fill, tight stop at 4462. Gotta run...

Out and about

I need to run herrands this morning, so I will not be looking at the markets. I'll try to add some pointers later on and post any trades if they occur.

Covered all shorts at 4439

I hope this post sticks, unlike the previous one.

Closed all my shorts about a hour ago at 4439 from 4484 and 4438, for a net 45 points. I am all flat now.

Added short at 4438

I have added a further 10% fill at 4438. I have also moved my stopped down to 4460 to basically close this trade at breakeven if it goes sour.

Covered half of short at 4421

From 4484 for 63 points.

Moving stop

Stop now at breakeven.

Update: I made a mistake when moving my stop, it is now at 4495, so below original level but still above 4484 (breakeven).

Update 2: I have now moved my stop into a light profit at 4880. I am ready to jump off this ship should I see strength building significantly, but want to hold on this position for now.

Addendum

As just published in the play for today, I was expecting to see whether we got a sell signal this morning: it has now developed.

We were quoted in the 4470s to 4480s in pre-market and have opened in the 4450s and are now quoted in the 4440s.

I was expecting support in the 4440s as quoted below, but let's see what happens. I am still short and will look to add if momentum intraday stays negative, but I have moved my stop at 4510.

Play for Monday, May 11th

I have shorted at 4484 earlier this morning for a 20% fill, my stop is at 4525. Please look at the hourly chart below:

• We had some divergence forming in the RSI on the way to 4500 in the after hours on Friday.
• Based on where we open and what we do this morning we might get a sell signal, which combined with the RSI divergence might take us down for a significant retrace.

My position is small, but I thought I'd give a short a go, as we broke out above the main ascending channel as well as noted in the weekend wrap up. I might add if suitable.


The long side alternative is to look for strong support and buy signals between the 4420s and the 4440s.

Weekend wrap up, May 10th

Last week saw relentless rising action. The FTSE broke above the 4400 mark, crashing through the double top set in February in the 4330s without a slowdown.

In fact, for the past two weeks the FTSE has created a channel within the channel, as you can see in the chart below. While we remained within the main ascending channel, the index also found support and resistance inside a steeper and narrower rising channel (in bright purple). The FTSE eventually broke above the main rising channel, and closed the week slightly above it with an after hours price on Friday in the 4490s.


Momentum on both daily and weekly charts is still positive. The RSI reading on the daily is now above 70, and on the weekly it is well into the 50s: the strength of this rally is quite amazing, and last week there was no sight of heavy handed shorts, as the market only made minimal retraces down into which to buy. Whenever the market dipped down, into 50% retraces from the 24 hour lows to the highs, it most often did so outside market hours, in the evening or early morning.


In the above daily chart, note how last week's price action pushed itself again the upper Bollinger band: this highlights the strength of the trend upwards. There is also no sign of divergence on the momentum indicators.

Below is a weekly chart, were you can notice the positive momentum still in place. However, pay attention to three factors:

• Upper Bollinger value is around the 4600 mark: Bollinger bands often act as support and resistance.
• The 50% from the August high in the 5640s to the March lows is around the 4600 level.
  
• In January, our high was in the 4670s; we also hit a high the 4690s in early November, but recalling the volatility of the time I would discount that period and the levels made in those days.

We traded above the 4500 level this past week: if this market needs a high note on which to turn, there is a high probability it will occur anywhere between now and the 4600s given that the 4600s are a frequent occurence as stated above. If we rally past that, I doubt the FTSE could see past the 4800 to 5000 area, which marked support at various stages between July and September of 2008.

Today in brief

I have mostly scalped today, as you can see in the frenzy of posts, some real time some less so. Frankly, I am not a fan of scalping as it's intensive and you run more probabilities of getting a bad trade (and some were close to being so). However, while we went up most of the day, the action was very choppy, and created scalping opportunities.

Tally of points for today was over 130. I am pleased, but would prefer to find a good long term entry: too late in the rally to do so, and maybe too early for a turn in the trend.

I'll add some analysis over the next two days.

Have a nice weekend traders!

Covered remaining long at 4460

For a humble 2 points...

Closed half of long at 4478

From 4458, for 20 points.

Gone granola and gone long...

Long at 4458, stop at 4438, 20% fill...I am granola but cautious.

Covered short at 4442

From 4471 for 29 points

Short at 4471

50% fill, stop at 4495

Closed long @ 4465

From 4453. I am flat out now.

Long at 4453

50% fill, stop at 4440 for a scalp

Covered shorts at 4423

From 4452 for 29 points.

Update: the bulls really defended that 4425 line, a 50% retrace from yesterday's lows to this morning highs.

Re-entered short at 4452

30% fill, stop at 4490.

Covered short scalp at 4437

From 4503 for 66 points.

Play for Friday, May 8th

I have a tiny short on since yesterday, and after-hours we retraced down to the 4370s area I mentioned yesterday morning for a long: given the timing of the action, I did not close my short and reverse.

Momentum is negative on most intraday charts: however, I'll be watching closely and if necessary reverse my position at any moment.

The FTSE is currently quoted in the high 4430s on the bid side: there is an ambush short area in the 4450s to the 4460s. Below these levels we can find support at several areas, such as the 4370s or 4330s.


Be cautious either way, we are still in the ascending channel and briefly broke above it yesterday.

Trading today

I didn't do anything this morning, I was simply thrown off by the upside action and neglibile chances of jumping in.

After the jobs data out of the US, I put on a short scalp (crazy huh), which didn't work right away. I re-entered at 4503 and am short: it's just a 10% fill, so nothing major, but let's see where it takes us. As I mentioned this morning, I kept an open mind in light of data points coming out.

I will not be closing my short (unless I get stopped out) and go long today: we went down quite a bit and quite fast, and we have non-farm payrolls tomorrow.

Morning update, Wednesday, May 7th

Wow wow wow. I am not even going to post a chart. Congratulations to anyone long, or anyone that was quick enough to jump on that 50% retrace about a hour after open: it lasted 4 minutes and would have made a great daytrade.

Let's see if the ECB and BOE can put some weight on this freight train.

Play for Thursday, May 7th

Wow, what a day yesterday. Negative momentum had built. We had gone up over a three day weekend. I, like many, was expecting a retrace down (and to ride it) and to then get into this rally....and got nothing. I got whipped on my shorts yesterday, but made some back on a scalp.

We actually did have a retrace down: as mentioned yesterday, in the pre-open we reached down to the 4300s-4310s, but we never saw those levels again after the open. By the end of the day, we had reached the upper boundary of the ascending channel.


This market has a lot of strength, and the action reminds me of the rally we had in the spring of 2008. We are closing in on the January 6th high, as well as to the upper Bollinger on the weekly chart (4670s and 4590s respectively): the rally in the spring of 2008 failed at the upper Bollinger on the weekly.

For today, I'll be keeping an open mind: a long ambush might occur in the 4360s to 4370s, which was also a previous resistance, but just like yesterday we have to get there. To keep in mind however is the flow of news we have today:

• Bank of England announces rates
• ECB announces rates
• Employment reports out of the US
• Official results of stress tests for US banks released.

Just when we might get a good long opportunity we might also find it's time to get short.

Fully covered short @4362

I am all flat right now, but reduced loss from this morning's trade so at least something was achieved.

The pre-open levels were actually a long ambush zone from the lows that were quoted on Monday (at least on my broker) to yesterday's highs: I failed to see that, completely my fault.

Momentum on the upside is really amazing: not one, single, long lasting, retrace down yet during market hours. Let's see what happens in the afternoon.

Update: here is the ambush long mentioned above, which I missed completely, we hovered in the 4300s-4310 pre-open. Oh well, something learned...

Covered half of short at 4352

Pulled stop down to 4376.

Second helpings

I am short again at 4371 and 4363, basically around the same level I got stopped out earlier. I am going to give this another chance, as I really should have been more aggressive on my previous stop.

Divergence on the hourly is forming, momentum seems to be fading, and while the FTSE made a double top, the ES did not follow and failed an ambush short area.

I am cautious, so I'll play this conservatively, I am not here guessing tops...

Stopped out of short

I got stopped out, and the only good part of this trade was that I was in small and for a daytrade, so the loss was neglibile. I am seeing the hourly intraday on positive momentum once again...

The regret is that perhaps I should have been more aggressive on the stop, given that we had some data out this morning. I might try to reduce my losses with a scalp later on.

Short @ 4337

I am short at 4337, 10% fill, stop at 4365, for a scalp or a day trade, hence the larger stop.

Very cautious for now as you can see, intradays are mixed.

Update: I have moved my stop slightly to 4372, although 4365 has not been touched yet.

Play for Wednesday, May 6th

The FTSE held steady yesterday and touched a few highs: however, after-hours the US markets began to fail in momentum, and Asia has hold held ground.

We are quoted in the 4310s to 4320s currently, 25 minutes from the open, and I am seeing:

• Negative momentum from the 1 hourly to the 4 hourly (where it's in works).
  
• We are still within the main ascending channel.
• Momentum on daily and weekly is still positive.

I would wait for strength on the longer intradays mentioned above for a long trade. As we did reach some key levels in a fast manner (and across a 3-day weekend), a retrace down might frankly be in the works.

As noted yesterday, we have several support/resistance levels on the way down, and also one key area around the 4140 to 4160s which we broke through last week. If I had to look for a level to get short, I'll be watching anywhere between the 4330s to the 4350s for weakness.