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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 - Market Showing Weakness. Needs Downside Follow-Through.

    Friday  14 May 2010

     The market showed the kind of weakness in Thursday's rally we wanted to
    see, within the down trend, to warrant a short position.  The previous two
    trading days had smaller ranges and rallied on decreasing volume as price
    approached anticipated resistance.  Yesterday, price rallied to a slightly
    higher high, but as the end of the trading day neared, began to fall on
    increasing intra day volume.

     An important point to make is in noting the first sell-off low from contract
    highs, the second bar after the 1216 high.  The low that day, 28 April, was
    1176.75.  The rally high from yesterday was 1174.75.  This leaves a little
    space of 2 points that the rally could not fill.  That is a subtle bearish
    implication, showing the market rally was weak, in that regard.  There was
    more.

     We had 1175 to 1185 identified as a zone of resistance, [see chart with 
    horizontal lines, S & P - Rally Into Resistance,].  The small range rally on
    decreasing volume was unable to reach that area, and that, too, tells us the
    character of the rally is weak, and it should lead to a resumption of the
    down trend.  Next chart.

     

    S&P D 13 May 10

     

     This is a 30 minute chart that shows how narrow the bars are at the high,
    contrasted by the wider range bars when price declines.  The day session
    high was 1173.  Around 9 a.m., CST, price made a low, 1161.75, and then
    rallied to close at the upper end of the range, [the bar is located in the
    middle of the session].  That activity had to be respected  as a show of
    strength.  We waited for a wide range bar with a low end close, underneath
    the trading range ,to confirm a resumption of the down trend was likely
    underway, and that was a place to get short, third bar from the end.

     What we need to see on Friday is continuation of the exhibited weakness. 
    The expectation is for a retest of the lower levels from last week.  The initial
    support target is the 1141 area.  How the market gets there, if there is a
    decline, will tell us the likelihood of where price may eventually go.

    S&P 30m 13 May 10

    Tags: S P, SPY, QQQQ
    May 14 12:33 AM | Link | Comment!
  • S & P - Rally Into Resistance. Trend Is Still Down

    Thursday  13 May 2010

     Dealing first with the trend, the daily remains down, the hourly is also still
    down but in a rally phase.  We are looking for a turnaround to head lower. 
    The initial resistance around the 1169 high did not hold.  In fact, we went
    short on Tuesday, saw good movement down in overnight trade, but got
    stopped out for a small loss after the day session opening as price
    continued to go higher for the balance of Wednesday.

     Looking at the HOW of this rally, it is not overly impressive.  The ranges for
    Tuesday and Wednesday are progressively smaller, showing an inability or
    an unwillingness for buyers to press their cause.  Also, volume was lighter
    on Tuesday, and even lighter on Wednesday.  The strongest volume effort
    shows up on the down days, so the character of price activity remains
    negative.

     On the upside, however anemic the rally may appear, sellers are also not
    responding by coming in and pushing price lower.   What we are looking for
    is a sign that price is about to turn and resume the downside.  Developing
    market activity, while up, is acting in a counter trend vein, but as we remind
    everyone, anything can happen, and trends change.  That is not a backdoor escape for taking a stand, but just an acknowledgement that flexibility is
    always required.

    S&P 120m 13 May 10

    Tags: S P, SPY, QQQQ
    May 13 8:48 AM | Link | Comment!
  • S & P - Lacks Stability. Patience required.

    Tuesday  11 May 2010

     There is no compunction to be involved in the markets everyday, save for
    the non-professionals who "feel" the need to catch every move each day. 
    We have talked about the parameters being established for a developing
    trading range, and it would be a healthy process for the market to undergo
    at this stage.

     You can see why the 1180 area is important as resistance for any rally. 
    That level acted as previous support, back in the old days when the market
    was calmer and ranges were smaller.  1185 is also where supply took over
    in the market, last Thursday, so watch HOW the market responds when/if
    price rallies to this key level.

     Initially, the 1136 area may offer some support on any breaks.  It was the
    Friday high, noted by the horizontal line just below current trading.  Should
    that give way, then we can expect a retest of the Thursday-Friday lows...not
    all at once, but over a period of several trading days.

     There is no edge to be had in trading either side of the market, for now. 
    Up 46 points one day, down 13 points another day leaves a lot of room for
    error.

     Wait for an edge.

    S&P 120m 11 May 10

    Tags: S P, SPY, QQQQ
    May 11 8:44 AM | Link | Comment!
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