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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 Message Of The Market Is Clear. Do Not Lose Sight Of It.

    Thursday Evening  10 June 2010

     Our read on this developing market gyration has been on target,
    starting with identification of demand buying back on 25 May, and
    expectations of a trading range.  [See   S & P - A Set-Up In The
    Making
    , click on http://bit.ly/aLZKzQ].  Thursday's turnaround rally,
    when the market appeared to be on its back for a nine count, was
    no accident when put into the context of HOW price had been
    developing.

     If there is one word to describe this market since the huge fall on
    6 May, it would be volatility.  It was not uncommon to see the Dow
    having 100 - 200 day fluctuations, alternating up and down.  This
    kind of volatility is not easy in which to participate, for the risks of
    taking a position on either side of the market was large...just like
    the rally in the S&P Wednesday, only to see it give back 26 points
    by the end of the day.  It is for this reason that we remained on the
    sidelines as this unpredictable trading range was being dissected,
    almost day by day.

     What can be said of the market now is that the likelihood of a rally
    to, and maybe above 1106 is a distinct possibility.  The ease of
    movement up on one of the strongest volume rally days, recently,
    tells us that the daily trend may turn up, at least for a while.  What
    we need to see now is a weak reaction as a set-up to go long.

     You can see on the daily chart that the low of 25 May has now
    been retested on Tuesday's higher swing low, confirmed by today's
    strong rally.  This is an example of why we often say to wait for
    confirmation of market activity to trade more confidently. We said
    we needed to see a rally that held, and it finally happened.

     This would be a good time to put what has been developing as a
    trading range into the next context for expectations of future 
    developing market activity.  While there may be an opportunity to
    establish a long position as this up swing develops, any rally is
    likely to be short lived.  When you see the kind of volatility of this
    caliber in a developing trading range, it most often leads to
    distribution.  Smart money is setting up to get short on rallies in
    anticipation of much lower prices in the future.  All of this volatile
    buying and selling is a smoke screen designed to hide the deft
    hand of market movers.  We mention this now because of the
    belief that the bigger moves to come will be to the downside in 
    the continuation of a bear market.

     The reason for making this point is to demonstrate how patterns
    of market activity repeat themselves over and over, and what we 
    see as developing  trading range is another phase that is used to
    continue the shorting of the market that began back in April.  All
    you have to do is compare the size of the bars prior to April, as
    price rallied, to the bars after April, as price declined.  The
    message is important and one not to be forgotten.

     For now, we get to deal with what is, and that is looking for a weak
    downside reaction to get long.  This is also why it is so important to
    know the time frame(s) in which to trade in order to go with the
    developing momentum.

    S&P D 10 Jun 10

    Tags: SnP, SPY, QQQQ, Dow
    Jun 11 12:15 AM | Link | Comment!
  • S & P - The Low End Of The Trading Range. Will It Hold Or Give Way?

    Wednesday  9 June 2010

     This is what can happen in a trading range: a promising rally, followed
    by a promising decline, neither able to deliver.  Ostensibly, today's
    failure to hold gains that turned into losses would be the prelude to
    the breaking of support...but hold on.

     Wednesday's decline was a wider range bar than was Monday's decline, and volume was greater on this last drop, but...and this has typified this trading range...just when it looks like the direction is clear, price
    reverses.  Look at the activity bar from Wednesday.  The saving grace
    for the bulls is that the drive down, while closing negatively on the low,
    did not make a new low close, nor did price exceed Tuesday's low.  Why not?!  This was the seller's chance to once again rout the buyers but
    did not.  Of course, there could be more downside on Thursday, making
    these observations moot.

     From a factual perspective, what rallies that occurred have been weak, and Wednesday was no exception.  However, support has not been
    violated.  Looking at Monday's lowest close since February, it was the
    smallest volume of the past four days, and that suggests the selling
    pressure was not there when it was opportune.  The facts say support
    should be broken.  The character of the price volume make-up leaves
    room for doubt, but with time running out.

     S&P D 9 Jun 10

     The intra day activity provides more detail.  Mention was made about
    the overlapping bars at Tuesday's lows being a battle between buyers
    and sellers when sellers should have been in absolute control, [See
    S & P - Truth Time Is Nearer, click on http://bit.ly/9WWGuQ, first
    paragraph after first chart].  That led to Wednesday's continuation rally that failed at 1077.75 before giving back 26 points to close on the lows.

     Where did the low of that 26 point decline stop?  Right at the upper
    end of the overlapping bar battle, the last vestige of support.  Support
    is still tenuous and may give way in Thursday's trade, so there is
    nothing for certain, although the momentum is with the sellers.

     If downside is limited on Thursday, the grasp on that momentum
    lessens, and the potential for the rally that has not shown up lingers,
    maybe even going above 1078.  If price accelerates down, instead, look for 1020 to 1,000 in short order.

    [Chicago Blackhawks win the Stanley Cup!!]

    S&P 60m 9 Jun 10

    Tags: SnP, SPY, QQQQ, Dow
    Jun 10 12:00 AM | Link | Comment!
  • S & P - Truth Time Is Nearer. Support?

    Tuesday Evening 8 June 2010

     Price is at the lower end of potential support, so it would be tenuous to go short here.  The support is potential and not proven, so it makes no
    sense to go long here.  The solution?  Wait for the market to declare
    itself, and then act with greater knowledge and confidence of being in
    harmony with the trend.

     The 1040 area has been acting as support, and price has been
    retesting it the past few days.  If support is to hold, price should be
    rallying away from it with wide range and increased volume.  The longer
    price remains close to known support, the less likely it will hold.  It all
    goes back to HOW price responds or fails to respond to a known support or resistance area.

     Monday's range down was relatively small, saying sellers were unable
    to extend price lower, through the known support.  At least not then. 
    What we need to see now is if buyers can step up and take advantage
    of this opportunity.  If the response from buyers results in a weak rally,
    the 1040 support area will not hold.

     Tuesday was a brief reprieve for buyers.  By the end of the trading
    day, price managed to rally toward the highs of the day.  HOW strong
    was the rally, and was it enough to carry over to Wednesday and
    beyond?

     S&P D 8 Jun 10

     This is the 60 minute intra day chart.  It shows a qualitative difference
    from the other lows in one aspect.  The bars are relatively wider range,
    and they overlap.  That kind of activity demonstrates a battle between
    buyers and sellers.  That a battle existed does not speak well for the
    sellers who have been dominant and had the buyers at their mercy. 
    Not shown, but on the intra day chart there was support at the 1040
    area from a reverse trend line.

     The two highest volume bars for the 8th represent the second and
    third hours of trade, the red volume bar for the lower close on the
    second hourly period, and the green volume bar for the third hour
    which was an outside key reversal, [OKR], a lower low, a higher high,
    and a higher close.  At resistance, an OKR  is a sign of weakness; at
    support, an OKR is a sign of strength, and this one occurred at a
    support level.
     

     There was a flurry of buying during the last hour, [second to last
    bar...the last bar is the 15 minute activity on the E-Mini from 3:00 to
    3:15 p.m.].  The battle of the day went to the buyers for a higher
    close from  Monday and the close at the upper range of the daily bar. 
    Was it enough to keep the battle going, or will upside follow-through
    be lacking and lead to the breaking of not only support but the entire
    bullish rally from March 2009?

     Price needs to get above 1070, and hold.  Then buyers must show
    an ability to continue the rally and get above 1106.  The overall trend
    is biased to the downside.  If there is no sustained rally, the bias will
    become a confirmed down tend with staying power, 1,000 being the 
    next target.

    S&P 10m 8 Jun 10

    Tags: SnP, SPY, QQQQ, DOW
    Jun 08 9:46 PM | Link | Comment!
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