Teach Talk Trade Day Trading & Technical Analysis

DOW Directions 02-29-08 (Wednesday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Dow bumps up +114.70 as market becomes technically overbought.

Tuesday’s market climbed steadily during the session, leveling off and closing up over one hundred points.  This push has caused some of the momentum indicators to be overbought.

The daily StoRSI, our momentum oscillator, is now approaching its overbought territory.   The StoRSI is very close to being overbought.  Any turn down in this indicator, before it reaches the upper trigger, would be very negative.  We could see market weakness, any time in the near future, due to this overbought situation in momentum.    

The T8, our moving average that defines trend, has turned flat during the last two weeks.   Yesterday’s action turned the T8 to the positive sign.  I certainly would not “bet the farm” on the upside.  With momentum topping out and the consolidation of the last month continuing….we’d be very cautious at this time.

The white candle, posted on Tuesday, is of no significance.

 ***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 cyclical 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 (689)