April, 2009

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26
Apr 09

Market Log for April 27th, 2009

indu daily chart

indu daily chart

We are range bound. Dow Jones Industrial Index is presently stuck between a 7800 area support and 8200 area resistance. Momentum is still pointing to the upside and we may get a push through the 8200 resistance. This is an area where I would be open to establish new long positions, but not too agressively. That means trade small so that you can use wider stops. This type of position would be good to hold for 2-5 days.

Most people always want to know “Why” the market will go up. Well this week we have many possible catalysts that the media propaganda machine can sink its teeth into. On Tuesday we have the S&P/CaseSchiller home price index and consumer confidence. Wednesday is first quarter GDP and Fed rate decision and crude inventory. Thursday is initial jobless claims and PMI. There are other reports coming out of the Eurozone but not worth mentioning. It is good to be aware of the upcoming news reports, but that is about it. We usually stay out of the market during these reports, and let everyone else figure out what to do. Once the market chooses a direction, we are then ready to participate.

At Cashmechanics.com we are trend followers and apply this approach to a variety of trading strategies. Trends can occur on 1 minute charts all the way up to yearly charts. If you are a daytrader, you want to know how to relate the price action on different time frames in order to position yourself properly. Before you can take any trades though, you have to have other variables defined as well. We use this philiosophy in our trading and you can see it in action on a daily basis in our chat room. Join us and learn how, especially because it’s free.   Talk to you in the chat room.

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19
Apr 09

Market Log April 20th, 2009

indu daily chart

indu daily chart

The Dow Jones Industrials index has been pushing highs since the bottom in March. So far I have been waiting for some kind of evidence before taking a position on the short side.  Remember, you’re not going to short tops or buy bottoms.  You should be happy with a little out of the middle. What I am doing in this environment is scalping longs and shorts, whatever I can get on small time frames like 5 minute and 1 minute charts.

As far as the market is concerned, pay attention to the earnings in the financial sector this week, and some US Treasury announcements on Friday.  We are not news traders here, but it is important to be aware.  News moves markets, especially when the media overdramatizes it.  As a technical trader you just need to know WHEN it is coming out and then you want to see how the market interprets it.  Let everyone else figure out what is going on, and then you can take the side that the majority chooses.

Also, just be aware of the daily candlesticks.  It looks like the market is getting a little tired here, so even though there is no reason to short yet, I am certainly not taking any new longs to hold on to.  Only scalps. Technically, the market wants to go higher, but I think the risk is higher up here for new longs.  Be patient.

Soon we are going to be publishing a newsletter that will have some option and forex trades that you can take and not have to babysit.  Sign up here.

Other than that, join us in the chatroom each day for our intraday trades and observations.  That is our core strategy. See you in the room!

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12
Apr 09

Market Log April 13th, 2009

indu daily chart

indu daily chart

Market Log for Week of April 13th, 2009

If you look at my post for the previous week, I stated that the Dow Jones Industrial Index had clear positve momentum. It was a good place to take some money off the table because of the resistance zone that we were in.  It was not a good place to get short. So here we are, positive momentum is still in effect.  That means price is saying it wants to continue to go up.

Price action, no matter what time frame is key.  Don’t let anyone tell you otherwise. Current price is above the 8 ema (green line) and 50 ema (cyan line).  Also it has pushed right back up to the previous resistance area of 8000 without much of a problem.  This is bullish on the short term.  What does that mean to people itching to short? Well I can say that none of us are getting short right now. We are staying flat.  For those with long positions, thats great, just don’t be too greedy and don’t be afraid to take profits.  From a swing trading perspective (trades from 2 days to 2 weeks) I am not planning to take any new longs, unless we get a tradable dip in the market.  Sign up for the news letter to get updates on this.

It is important to also remember no matter what the fundamentals are, when trading short term price movement, price can be irrational. With that said, price is still below the 200 ema and approaching 8400 which is a significant resistance level.  From this perspective, we are in the middle of a bear market rally.

I am not going to mention all the news, fundamentals and media hype as to why the market is going up. If you want to get all caught up in that, watch CNBC.  At Cashmechanics, we are technical traders.  That means we focus on price. By doing this type of analysis, we have no bias and can effectively position ourselves in the market. If you want to learn how you can do this too, become a member because right now its free.  See you in the chat room!

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5
Apr 09

Market Log for Week April 6th, 2009

indu daily chart

indu daily chart

For our short term traders, the week looks quiet for the most part in terms of major economic reports.  For our purposes, I am examining the Dow Jones Industrials Index.  Right now there are signs of positive momentum.  This means prices want to head higher in the short term.  Keep in mind, prices fluctuate and can easily reverse from this level.  We are at a major resistance at the 8000 area and so far its holding.  If you bought into the recent bottom, and you have profit, thats great.  Trail your stops, take some money off the table and be happy. This is not the time to be greedy. For those of you thinking about shorting, there are no significant signs of weakness yet.  Be patient. Keep in mind the index is still below its 200 day moving average so this market still has a bearish bias.

Always beware of the media. Their sole purpose is to sell advertising.  They will report whatever sounds like it will get people’s attention.  Never trade on that kind of information.  If you want to know where prices are headed, learn how to interpret price action.

Each week on this blog, I will look at price action and examine short term market direction. I am also going to share some ideas on how traders can capitalize on these observations.

For those of you who don’t have the time to follow the market during regular hours, sign up for our free newsletter.  In it, you will receive information that you can trade on as well.