ES Crashes Through Some Support

[brownsfan019 17]

Took a look at the daily after today's strong bearish move and we definitely crashed through some previous support today.

 

Longer view:

 

 

Up close view:

 

 

 

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Is 1200 on the horizon for the ES? I could see it. A little support here @ 1240 to get through, but not much else in the way.

 

Note - I love that sell on the orange arrow in the first chart - great candle pattern right at the 200 SMA on the daily. As you can see, doesn't happen that often but what a nice sell via basic candlestick analysis @ the 200 SMA.

[firewalker 10]

Yeah I remember that SMA(200) touch, it had several confluences together. There's a chart posted somewhere in another place (I think it was the YM/ES/DJIA analysis thread).

 

I considered the area surrounding 1262 to be crucial too. I agree there's very little between this and lower now, and there's a good possibility we can fall lower fast and hard.

 

Took a look at the daily after today's strong bearish move and we definitely crashed through some previous support today.

 

Longer view:

 

 

Up close view:

 

 

 

==========

 

Is 1200 on the horizon for the ES? I could see it. A little support here @ 1240 to get through, but not much else in the way.

 

Note - I love that sell on the orange arrow in the first chart - great candle pattern right at the 200 SMA on the daily. As you can see, doesn't happen that often but what a nice sell via basic candlestick analysis @ the 200 SMA.

[brownsfan019 17]

Do we see 1200 today?

 

just kiddin.

 

[brownsfan019 17]

Today was an interesting day:

 

 

 

We have a hammer, which is a bullish individual candlestick but more important we saw an attempt to go lower that was rejected rather easily today.

 

 

The intraday chart (15 min) looked like:

 

 

 

What we saw were TWO attempts by the bears to penetrate even further and both attempts were unsuccessful.

 

And if we add the 1233 area on the intraday 15 min chart (nearest s/r on my dailies) we see:

 

 

The two attempts to bring the market down both occurred at a previous level. This resistance then turned into intraday support as evidenced by the up arrow to possibly get long. So just doing a quick look at the 15 min chart and using a previous support area, we can see 3 possible shorts and 1 possible long.

 

 

And a 5 min chart:

 

 

 

As we can see above, the first two possible areas to short were pretty clear and fairly easy. Note that both of these occurred in pre-market hours. Today was a non-farm payroll day, so pre-market gyrations were expected. And then right into lunch we get the lunchtime congestion, which also coincidentally was at the previous support area. Price hung around there for close to 2 hours before the bears gave up and the bulls took control; therefore giving us that daily hammer.

 

IMO we have a pretty defined trading range, box or area (whatever you want to call it).

[MC 10]

Great post as always BF. What do you make of the volume on the bounce though...it was fairly paltry. This is one area I struggle with, balancing what weight to place in price action and what weight the volume should get. :crap:

[firewalker 10]

Good illustration brownsfan... that's actually very similar to my approach.

 

Today was an interesting day:

 

As we can see above, the first two possible areas to short were pretty clear and fairly easy. Note that both of these occurred in pre-market hours. .

 

Just one comment: on my chart the second short occurred 15min after the open...?

[brownsfan019 17]

Great post as always BF. What do you make of the volume on the bounce though...it was fairly paltry. This is one area I struggle with, balancing what weight to place in price action and what weight the volume should get. :crap:

 

Good question MC. I didn't even look at volume to be honest in my analysis there. Through quote.com it appears the volume on Fri was pretty substantial, so not sure if we are on the same page here:

 

 

Quote.com has been known to be wrong before as well.

 

==========

 

Now if you are referring to the previous area that was used as a S/R level, I pay no attention to volume when finding S/R. Why? I'm looking for areas where price was QUICKLY rejected, which means more often than not, the volume will be lower at this level. In other words, while the entire daily candle might show good/decent volume, the area that I am really interested in more often than not has lower volume. And that makes sense - I want to see where buyers/sellers stepped in to stop price in it's tracks and that's usually a volume burst but not necessarily a substantial volume push.

 

Volume on the daily is a good guide, but it can be misleading in terms of how much volume traded at what level.

[brownsfan019 17]

Good illustration brownsfan... that's actually very similar to my approach.

 

 

 

Just one comment: on my chart the second short occurred 15min after the open...?

 

On quote.com it looks like it was around 845am EST, but that could be off. I don't have my OEC trader up right now to see exactly.

[MC 10]

Good question MC. I didn't even look at volume to be honest in my analysis there. Through quote.com it appears the volume on Fri was pretty substantial, so not sure if we are on the same page here:

 

 

Quote.com has been known to be wrong before as well.

 

==========

 

Now if you are referring to the previous area that was used as a S/R level, I pay no attention to volume when finding S/R. Why? I'm looking for areas where price was QUICKLY rejected, which means more often than not, the volume will be lower at this level. In other words, while the entire daily candle might show good/decent volume, the area that I am really interested in more often than not has lower volume. And that makes sense - I want to see where buyers/sellers stepped in to stop price in it's tracks and that's usually a volume burst but not necessarily a substantial volume push.

 

Volume on the daily is a good guide, but it can be misleading in terms of how much volume traded at what level.

 

I did note the daily candles and volume look very bullish for sure. And I have to carry a bullish bias since the freefall should be testing prior support to be legit in my eyes. But intraday the whole lift was on moderate volume on my charts. So I guess I'm questioning the buying pressure, but I have been known to look too far into volume instead of price action and vice versa. Volume and MP are helping me to balance what I see but I'm still working on myself.

 

Part of me wants to abandon volume for a bit and just read candles/structure RT.

Any thoughts on something like that?

[brownsfan019 17]

Part of me wants to abandon volume for a bit and just read candles/structure RT.

Any thoughts on something like that?

 

I personally just observe volume, but it does not impact any of my decision making. Friday's intraday action was bullish not necessarily b/c it finished up (and created the top of our hammer) but b/c the bulls rejected any bearish attempts twice. That's all I need to know.

[brownsfan019 17]

Interesting gap up there we have on the ES currently:

 

 

Granted this was news driven, but the TA on this is there as discussed previously. We got a nice push down and a retest of a level on Fri via the hammer. An aggressive buy would have been to either have a buy stop sitting out there or being ready to go on Sun at the open.

 

You just gotta wonder how many knew what was coming over the weekend and were gobbling up long contracts on Fri...

 

[MC 10]

Agreed...Fridays absorption in the middle of the daily charts range was odd. There was smart money in the know IMO.

 

http://www.traderslaboratory.com/forums/f150/nyse-up-volume-uvol-down-volume-4019.html#post47119

Thursday had a big warning sign of accumulation as well. I posted this Thursday night, dunno if you use internals much but it was WICKED divergence.

[SunTrader 10]

After today's big drop I would expect some kind of retracement. But then continued lower move.

 

I prefer to look at the SPX cash index rather than deal with futures having rollovers or funky back and or percent adjustments or other assorted ways of dealing with different price scalings.

[Soultrader 12]

The Asian markets were weak yesterday but did not expect the ES to collapse like that. SunTrader, good one on the retracement. Today, we got a nice bounce on the Nikkei to finish within the previous days range.

 

My only concern is that from a market profile chart, it looks like a complete short covering. Now I am not sure how this info will be transferred to the US... many may not view it as bullish and will continue the selling pressure... Or many may view it as bullish and express more confidence on the buy side.

 

[Kiwi 16]

The trend is still down. And most indexes around the world are sitting over significant prior lows.

It would seem that a retest of those lows at least was reasonable.

 

The main thing that really seems to support the bottom is that there are not a lot of people calling it a bottom on the bulletin boards. A few more "bottoms in" calls and we could be sure of a collapse.

[firewalker 10]

The Asian markets were weak yesterday but did not expect the ES to collapse like that. SunTrader, good one on the retracement. Today, we got a nice bounce on the Nikkei to finish within the previous days range.

 

My only concern is that from a market profile chart, it looks like a complete short covering. Now I am not sure how this info will be transferred to the US... many may not view it as bullish and will continue the selling pressure... Or many may view it as bullish and express more confidence on the buy side.

 

Thanks for the info about Asia Soultrader. Short covering looks to be the case, with the US markets having moved slowly higher since the close. I don't see anything to be bullish about to be honest.

 

The gap on Monday, caused by the takeover of Freddie & Fannie, was imo a great opportunity to get short again. Despite the markets opening much higher, the speed at which we have fallen back below that level is a better measure. Fade the news and all

 

Also, despite oil still falling towards $100, the markets are not reacting positively.

 

Next to that, if we look at the big picture on the ES the bounce that started in July had much less strength than the one in March. I would interpret that as a lack of fresh money coming into the market and think we are in another selling wave.

[Soultrader 12]

CNN seems to think otherwise: http://money.cnn.com/2008/09/08/markets/thebuzz/index.htm?postversion=2008090811

 

Surge in volume on the Nikkei today as well:

 

 

 

A bit unclear for me today.... though I am anxiously waiting on Lehmans announcement next Wed. Article here: http://money.cnn.com/2008/09/09/news/companies/lehman_release/index.htm?postversion=2008090920

 

Also 10yr US Treasury chart shows extremely bullish sign on the 8th of September on the Fannie Mae/Freddi Mae acquisition by Uncle Sam. First move lower but nothing but accumulation..... a bit worrisome for the stock indexes.

 

[brownsfan019 17]

Is there some new people in the Candlestick Corner today? Wow. And here I thought only a few select people could even see this part of the forum existed.

 

[MC 10]

The trend is still down. And most indexes around the world are sitting over significant prior lows.

It would seem that a retest of those lows at least was reasonable.

 

The main thing that really seems to support the bottom is that there are not a lot of people calling it a bottom on the bulletin boards. A few more "bottoms in" calls and we could be sure of a collapse.

 

I also have a hard time believing this recent rally without a legit test. Just seems like too much momentum to stop on a dime. But I also think those that run the game know how close they are to wiping any small gains left on the buyers of the consolidation after the Y2k bear.

 

My one buddy does that...uses the consensus of boards on the internet to gauge what probably will happen. I've tried it out as well...usually the herd is VERY wrong. It does feel like doom n' gloom in most boards, especially lately so who knows.

[james_gsx 16]

Looks like we will get a nice range setup between 1200-1300. Granted 100pts is pretty big, but not in this market. As you can see, we had a nice gravestone doji that kissed 1300 and was swiftly rejected. After that, everything came crashing down. I've learned price tends to re-test those breakout points, which we got. The issue with the volatility is it can easily wipe out accounts if you're trying to swing trade something like this. So instead, I would recommend some sort of credit spread utilizing options until we get a breakout and another confirmed trend... but that's just me, and just for swing trading.

 

 

 

[SunTrader 10]

Low today for the S&P500 cash missed hitting Gann fan (chart posted the other day) by about 2 points. A little room for it to move up before convergence next week sometime of up/down fan levels.

 

Unless Friday decides to give us another monster big bar.

[brownsfan019 17]

Just a follow up here on the daily. Had a retest of a previous low:

 

[firewalker 10]

Just a follow up here on the daily. Had a retest of a previous low:

 

 

The first test is often a successful one. I'm very curious about what's going to happen next...

[brownsfan019 17]

For sure FW! The old saying is that the more times a S/R area is hit, it becomes weaker and weaker.