Chicagostock Trading

Chicagostock Trading

How Does the Ali Baba Top Differ from 2011's Bin Laden Top?

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The recent reversal in the SP500 has reminded us of a similar time the charts and reversal felt and looked the same.  The above chart is from 2011.  As seen the market made an early high of 1335 in February, correcting down to 1241 before rallying back to new highs.  New highs were made on what was called the "Bin Laden" high. On the news of his capture, the SP printed the highs for the year at 1373.50 and turned lower to retest the previous 1335 lows made in February.  This retest was followed by a "U" shaped reversal that recovered back to where the market failed at 1348 on the 1st of June.  This reversal failed to stabilize and push through the highs, leading into what developed the right shoulder for the 2011 head/shoulder top and crash down to 1080 that was fueled by the debt downgrade.  QE 2 ended in July 2011, just as QE 3 is expected to end 10/29/14. 

 

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The Crawl Back to 1915

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After attempting to hold last Tuesday, the market rallied to 189275, only to meet major resistance against the broken August lows of 1890. This led to a narrow range last Tuesday, barely holding Monday's 186375 low.  Globex saw the market break this triple bottom against 186375, giving way for the 189275-186375 range to be expanded down to 183475 (189275-186375=29, 186375-29=183475). The market fell on Wednesday to complete this target, however continued another 20 handles lower into 1813 to test major support from the April lows, before seeing a squeeze back to the 1863 level.  The following day saw a retest of the lows which held, creating another range, 1863-1813. The range gave room for the market to expand up to 1913 (1863-1813=50, 1863+50=1913), or down to 1763, depending if the ES was able to breach the top range at 1863, or bottom range at 1813.

 

 

On Friday the SP500 recovered above 1863 and attempted to target Tuesday's 189275 highs, running into 189175.  The break above 1863, gave the market room to expand up to 1913.

 

On Monday the SP took out last Tuesday's 189275 high and found support down to 1870 before rallying into close at 1900.  Today, 1 week after the failed 189275 high made last Tuesday which was followed down to 181300, we have recovered back above those 189275 highs and completed the short term range expansion target of 1913.  The move now retests major resistance based on the double top made at 1930, along with revisiting the scene of the crime, being the 1920 major support level that was tested early October before finally giving out and falling 100+ handles.  Old support becomes new resistance.  A move through 1980 is needed to reverse momentum and create a V bottom on daily charts as rallies into 1920-1958 offer sellers an area to defend.  

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The Ebola Swan- SP500/Yen Market Review

 

 

Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.

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Oil's Target via T/A

 

A few weeks ago, before starting October, crude oil was sitting back at its 2014 lows of 9124, after rallying up to 10768, only to fail the retest of the 2013 summer highs.  This failure, and upside down U turn, led to a small consolidation period as short covering and new buyers materialized to put in a tug of war.  The 2014 reversal of 9124-10768 has a 1644 range.  Taking this range and subtracting it from 9124, this gives downside objective of 7480 to complete the expansion.  This takes place as the market made a technical reversal for the year of 2014 and failed to hold 91, seeing a flush, and expansion of the 2014 range, in the opposite direction. First level of major support is seen at 8090 with sell stops under 7728 to complete 7480 objective. Short term this support level offers an area for shorts to cover and buyers to look to defend, for a move back to retest 84-88 resistance, up to 91.  Failure to hold 7728 gives way to complete 7480 expansion target, which takes out the 2011 7495 low. 

 

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Pre NFP Market Update, SP500, Bonds, Midcaps, Yen

Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Video content hosted by third party.

 

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