Teach Talk Trade Day Trading & Technical Analysis

DOW Directions 02-15-08 (Friday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Bearish engulfing candle puts Dow in a negative light.

 Thursday’s market saw the DJIA close down -175.24 points. The higher opening and sharply lower close painted a negative supply and demand pattern.  

The daily StoRSI, our momentum oscillator,  turned flat on Thursday. This is a negative sign.   When the StoRSI is moving swiftly from bottom to top and suddenly it flattens, it is a negative sign.

The moving averages, T8, suggest just what the market is doing: waffling. During the last week and a half the trend has gone from down to up to down again. This undefined direction has caused the market to flatten (or better yer: the market has caused the trend to flatten).  Make no mistake about it:  even though the market is chopping back and forth, this choppiness is very volatile.

Thursday’s black candle was a distinctive bearish engulfing candle.   Thursday market opened higher than sank for the rest of the session and the Thursday’s action totally engulfed the body of Wednesday’s candle.  This is a very negative development in the DIA.   

***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.

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