Teach Talk Trade Day Trading & Technical Analysis

DOW Directions 03-27-08 (Thurday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Weekly trend caps upside market movement.

Wednesday’s market continued its choppiness and closed down -109.74.  Volatility still is the name of the game.  Whether we move up or down on a daily basis, we continue to chop in a volatile manner. 

The daily StoRSI, our momentum oscillator, turned down once again. This is the fifth or sixth directional change in the StoRSI in the past two weeks. The important fact is that the StoRSI penetrated the upper trigger level on Tuesday and is now moving down from that lofty area.  It is quite clear, on the chart, that the market reacted to the downside during previous penetrations of the upper trigger level.

The T8 (maroon line), our moving average that defines trend, changed directions last week and the market has responded with mostly upside action.   This new leg to the upside could be short-lived when we consider the negative technical aspects of the weekly chart.  The daily charts tell one story, the weekly charts can at times, tell a very different story.    We expect price to retrace to the uptrending T8.

Wednesday’s candlestick formation is a “evening star” pattern.  The can be a very significant candlestick pattern.  Monday’s action was a strong white candle.  On Tuesday we saw a spinning top and then on Wednesday a weak black candle.  This formation tends to stop price direction to the upside.  Look for lower prices from this formation.

***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 (934)