Saturday, May 17, 2008

Qs Weekly Update

With oil at $127, gold at $1000 and hookers at $5000 the Qs followed suit, finishing up $1.80 or 3.7% for the week.
Above is the daily and weekly 3 linear regression (30,11,3) study. The interesting chart to me is the weekly, displaying the solid penetration of the LR30 upper band. While the weekly RSI is clearly in overbought territory, the other technicals are showing a distinct bullish bias. Both the LR11 and LR3 shorter term channels continue to show positive breakout patterns. Further supporting the case for the bulls is the cross of the 10 and 20 MAs precisely on the LR30 mean.The daily chart is still showing positive momentum and that long tail hammer on Friday is not a sign of weakness. The technicals are all in overbought territory, but a basic maxim of the markets is that overbought,oversold conditions can prevail well beyond the limits of probability theory before reverting to the mean (looked at the VIX lately?). Both the A50 and A200 got a pop this week and the A200, in particular, is in overbought territory. Hard to understand the new highs in the A50, now at lofty level last seen in Oct 2007 before the big slide. Perhaps the NDX offers safety relative to the other indices which are hampered by housing, retail, banking, consumer discretionary and other worrisome components. We are , of course, for those of you relatively new to trading, entering the traditional summer doldrums of low volume and haphazard technical alignments, as all the big dogs are off in their private jets to the south of France, Corfu, Monaco, the Hamptons and other playgrounds of the guys who really control and move the markets, while us mortals are left to try and figure out if that channel cross is really support or resistance. (sorry for the attitude).
Based on the A50 and the A200 the "look" for the NDX is clearly upbeat, with little indication of impeding weakness (other than the overbought RSI).
HOWEVER, from a seasonal standpoint I do not consider this a good time to get bullishly aggressive, preferring instead to stick to the daytrading setups that have yielded a steady income stream with very little drawdown so far this year.

Within the next few weeks I will be switching over a new blog format which will be focused on algorithmic trading since, as I have argued in previous posts, I believe this to be the future for my trading. My intent to is feature 2 simple scans and daytrading systems with daily updates. For those of you with compatible technology in your platforms, you're welcome to follow along, although I make no warranty for your success based on the interpretation of my signals (see disclaimer on right panel of blog). No. . .this won't be a "chat" room. Trading signals will be dictated strictly by the systems as my eventual goal is to evolve the systems into an auto-trade mode on my favorite computer "Wilson", who is my otherwise constant companion during the day (think Tom Hanks in "Castaway").


Fred said...

You said : "The daily chart is still showing positive momentum and that long tail hammer on Friday is not a sign of weakness."

This is not a hammer. The Hammer and Inverted Hammer form after a DECLINE and are bullish reversal patterns. But in this case, it looks like an hanging man, which is bearish. (Hanging Man forms after an advance and is bearish reversal patterns.)

bzbtrader said...

Thanks for the clarification.
You're alsolutely right. Also see The preceding uptrend is the key.