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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • S & P - The Market Is Showing Its Hand. One Way Or Another, It Always Does. 0 comments
    May 24, 2010 11:02 PM

    Monday  Evening  24 May 2010

     Yesterday, mention was made that the market will show its hand.  Today it
    certainly did that, for clearly the sellers are in total control.  We said if there
    are any surprises, they tend to happen in the direction of the trend,
    [see S & P - Keep A Perspective, 8th paragraph].  The surprise came by
    the end of the day: no follow-through rally, and ease of movement down.

     What many expected today was the beginning of a recovery rally after
    Friday's strong turnaround close off the low.  Initially, price did rally.  We
    even engaged in a day trade from the long side, [the intra day trend began
    turning up, so we knew the time frame for what was solely a day trade, and
    made money].  The market made known its intent in the last two hours of
    the trading session, and it revealed important information about what to

     The first expectation, a continuation rally, was dashed when price could
    not get above the lower end of developing resistance ranges starting at
    1089, up though the 1123 area.  The high was 1088.75.  What confirmed
    that the rally was likely to fail, in addition to it being weak, was the lack of
    volume.  In order to break through a resistance area, there has to be
    volume, proof that buyers are present and behind any rally.  The
    opportunity to capitalize on a move up presented itself, however, buyers
    were totally AWOL.

     For a while, that was also true of sellers.  Light volume said neither side was
    pressing the market, although the down trend gives the sellers a decided
    edge.  What spelled Trouble for the bulls, and that is spelled with a capital
    "T," was the ease of movement down going into the close.  It was deja vu all
    over again!  By the end of the day, the market made it crystal clear, price is
    headed south, almost with impunity.

     There is no need to draw any trend lines or look at artificial indicators, like
    moving averages, over bought, over sold, etc.  The small range, the lack of
    volume, and the close on the low says it all.  [Second to last bar.  The last
    bar is the evening session, as we write].  It tells us how weak the market
    really is.  The close told us to expect lower prices Tuesday.

     The message of the market is very clear.  The demonstrated weakness and
    inability of buyers to take a stand tells us the February lows, 1035.25, are a
    retest, likely at a minimum.  The downside momentum tells us that another
    wash out of longs could be in the cards, and it could get ugly for them.

      Never, ever underestimate the power of a trend, and never get in its way. 
    You are seeing firsthand why.  There is little need to fine tune this decline,
    for it will go where it has to go until most all of the hold-out buyers throw in
    the towel.  We have our rules of engagement, and there will be opportunity
    to benefit.  We are on the sidelines, waiting for one.

    S&P D 24 May 10

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