Teach Talk Trade Day Trading & Technical Analysis

DOW Directions 01-24-08 (Thursday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Market tuns up with +300 point day.

Volatility continues to rear its nasty head in the stock indices.  Wednesday’s action saw the DJIA up +298.98…trading in a wildly volatile atomosphere.   The large move to the upside has already used up the momentum to the upside, but don’t count out further action to higher levels.  We are pleased that the market is making a strong comeback and are waiting for an opportunity to short this market once again.

The StoRSI, our momentum oscillator, has  snapped back and has traversed halfway back to its upper trigger level.  It only took one day for the StoRSI to travel more than halfway back to its upper trigger level.  Another strong day could see the StoRSI at overbought level (making all short positions tempting propositions).

The T8, our exponential moving average, should provide terrific opportunities to sell. Although price came up toward the downtrending T8 on Wednesday, we are still only  halfway to T8. What seemed like a tall order for this market (the ability to rally back to the downtrending T8) early this week, is now easily within reach. The T8 indicator dictates our thoughts on the direction of the trend. As the T8 begins to decline at a steeper angle, the T8 is even a more powerful resistance.

Wednesday’s candle was a big white candle, the opposite of last week’s black bodies which dominated last week’s trading. The futures’ market stock indices continued to  post great looking hammers. The hammers are exactly the type of candle you want to see at the bottom of a move. The “dead cat bounce” that we suggested early this week is now a reality.

Please keep and mind and read the following thoughts on volatility. We have been preaching about volatility since August and we don’t believe that things will calm down for many, many months.

***Volatility Alert:

During the third week in July, volatility returned to the major stock indices. For approximately four years, the markets have had low to very low volatility. This significant change has ushered in swings of 100, 200 & 300+ points, sometimes on a day-to-day basis. Stock indices tend to be either volatile, or not, for three to five years at a time. Expect continued volatility. The current volatility cycle has just started its volatile period. We feel this is the early stages of volatility and we continue to believe it is here to stay.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Engergy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

 

 DIA: Play Now | Play in Popup | Download (633)