Teach Talk Trade Day Trading & Technical Analysis

ES (E-Mini): hammer with small wick.

The ES was  down on Tuesday. The NASDAQ was down as was the Dow & S&P. After a strong down day on Monday, the markets posted another lost that wiped out last weeks move up.  We are now back to levels on August 8th. The supply and demand pictures that imply a turn or at least a pause while it ponders the situation.

We had a Long Swing Trade noted at 9AM at 1264 and exited with a 7-12 point gain by 11:30 AM.  So far this morning we have had 4 other calls with 1-3 points per trade, time to be done for the Day!

The StoRSI, our momentum oscillator, momentum oscillator, closed near its lower trigger level last night. This lower reading signals an end to the downside momentum. Price could consolidate from this area, due to the oversold condition of the market (which has caused momentum to indicate the extreme oversold conditions).

The T8 which is trending upwards since July 21 or so and now is stalling to the upside. There is plenty of room between price and the up trending T8 for a retracement backto the T8. The market could easily consolidate back to the T8 exponential moving average before it encounters further resistance. The T8 is our preferred exponential moving average and it dictates our thoughts on the direction of the trend.

The candlestick formation candlestick formation posted on Tuesday was a “hammer”. The body of Monday’s candle covered Thrusday and Friday’s candle bodies. Many times, this formation leads to a reversal in trend and supports futher downside. Confirmation must take place on Tuesday but the extension of the wicks to the upside and downside gives us another hint that the market could begin to move down.

***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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Uncle Mike