S & P - Not An Easy Technical Read. At Least Not For Us.

May 01, 2011 11:46 PM ET
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Contributor Since 2009

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 managed money in the cash bond market for a $5 billion pension fund using Peter Steidlmeyer’s Market Profile. Proficient in Gann, Elliott Wave, Market Profile, etc, Mr Noonan no longer uses any of those technical procedures. Instead, his primary focus is on developing market activity, relying solely on the information generated by the market itself, such as the interaction between price and volume, and how they relate to important price levels in the market structure. He incorporates proven market principles, such as knowledge of the trend, supply and demand, along with disciplined rules for to find developing high probability trade opportunities. He can be reached by e-mail at his website: mn@edgetraderplus.com

Sunday Evening  1 May 2011

  Live by the charts, die by the charts...our motto.  We had a long
position from 1345.5, last Wednesday,  [See Silver And The S & P
- A Tale Of Two Markets
, click on http://bit.ly/lEsnLH, first chart], but
exited in two stages, using a trailing stop on the second half from
Friday at 1355.5, which turned out to be the low of the day session. 
What bothers us about this market is how it ignores basic technical
principles, and for that we always pay tribute to the Federal Reserve
interference via POMO, covered so many times here, previously.

 Whenever a market rallies in decreasing volume, it is a lack of
demand, and that often leads to selling entering the market for a
correction.  An ensuing correction takes price lower to find more
demand, a basic market cycle.  Such as not been true of the S&P,
and we have missed participating from the long side, for the most
part, as a consequence.

 One of the aspects of a smaller range and lower volume rally harks
back to February, noted on the chart.  Next day, seemingly out of
nowhere, price reverses sharply for a healthy correction.  In the
same article, we also went long silver and exited for a healthy gain
in just one day.  Price did go higher for the next  few days , but we
had no regret getting out too soon.  For a clear illustration why, if
you have not read our article on silver today, take a look at the
follow-up.  [click on http://bit.ly/jJ5rgg].

 Sometimes, it is better to be a few days too early than a minute too late.

 We have not forgotten how the S&P has rallied for at least two weeks
following an OKR, [See S & P - What Is In A Name? , click on
http://bit.ly/hoQkq0, third paragraph after first chart.]  However, that
is potential, and it may or may not repeat.  The likelihood is for a
repeat, but one still has to read the present tense developing market
activity, and the lack of volume on a rally in any other market will most
often lead to a correction.  We cannot ignore basic market principles
for a single market, making an exception.  Discipline does not allow
for it, for it leads to relaxation of rules at other times.

 There will be more buying opportunities, just as there was last Wednesday.


S&P D 1 May 11

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