Teach Talk Trade Day Trading & Technical Analysis

05-05-08 Market Directions: A Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

Today’s chart features the DIA, the exchange traded fund (ETF) that mimics the movement of the DJIA.  The chart displayed is a weekly candlestick chart.  This is a great vehicle for trading the direction of the DOW.  The chart shows the T8 (exponential moving average), our moving average that defines trend, turned positive in mid-April.  The subsequent movement, since that time, has come at the expense of exhausting the momentum to the upside.  Above the candlestick chart is our momentum oscillator : the Stochastic RSI. As we can see, the StoRSI made a bottom in late January and with the exception of testing that bottom in March, the market has gained substantial points (DOW appreciation = ~+2300) since bottoming out. Unfortunately, the momentum oscillator has now traversed to its upper levels and the market is now in danger of retracing once again.

The T8 (maroon line), our moving average that defines trend, continues to move in a positive direction. Price has now drifted higher and is substantially above the moving average. As in most cases, “price tends to revert to the mean”. Usually, if price spurts up or down and gains space between itself and the moving average(s), price usually draws back to these averages.

Finally, the basic chart analysis tells us that the market has created a head and shoulders pattern in this weekly configuration.  Head and shoulder patterns stop movement to the upside.  Once the market displayed the head and shoulders pattern (s, h, s), it began coming down and soon broke the neckline support.  As we can see, the rally we have seen since mid-March has been stopped by the neckline (now acting as resistance).

The Stochastic RSI has turned negative above its trigger level; the market has incurred resistance at the neckline of the head and shoulders pattern; and the DIA has drifted a long way away from the T8.  These negative technical signs could spell trouble for the DIA in the coming weeks.

***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 volatility will continue and we 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 (1501)

Market Directions: Technical Analytical Views of Stocks, Futures, Eminis and Forex for Traders and Investors.

04-23-08 Yen Continues Upward March

As we have pointed out in the past, we love to buy issues that have openings below their moving average trend indicators.  As the maroon line, the T8, continued to move up in the Yen, Monday gave us an additional opportunity to purchase below this supporting indicator.  

 The T8 (maroon line), our moving average that defines trend, has been in a postive posture since last summer.  This weekly strategy has prompted us to buy on seven different Monday mornings.  This relaxed approach to the market can be applied to all major futures markets. 

***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.

 

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DOW Directions 03-12-08 (Wednesday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): DOW logs best day in five year!

Tuesday’s market pushed to the fourth all-time highest gain and the highest point gain in five years. The amazing +416.66 gain recovered most of the -500 loss the DOW experienced during the previous three days.   Yesterday, we stated that the DOW deserved a “dead cat bounce”…due to its oversold situation.  The DOW didn’t bounce, it leaped into the sky like Superman.

The daily StoRSI, our momentum oscillator,  powered up from its oversold position on Monday.  After a week of wallowing below its lower trigger level, the StoRSI moved more than halfway up toward the upper trigger level.  Yesterday we blogged: “This market is set up to make a “dead cat bounce”.”   It bounced like a superball!   Any strength on Tuesday will send the indicators and the underlying price to resistance areas.  Three scenarios are possible:  a. the least likely is that Tuesday’s action is the beginning of a new major trend to the upside  b. the market rallies on Wednesday and the StoRSI moves over its trigger level, price moves to the downtrending T8 and we resume the downtrend that we are currently in c.  the market moves to the resistance area on Tuesday and turns down without fullfilling its upside momentum potential (the most logical scenario).

The T8 (maroon line), our moving average that defines trend, continues its downward direction. Even with all the upside movement of Tuesday, this continues to be a negative sign. Yesterday we stated: ”…as price drifts away from the T8 and creates a large distance between the two (price and the T8), the tendency is for price to revert to the mean (T8). We haven’t seen this type of distance between price and the T8 since the low of January 22nd.”  Yesterday, we basically imitated the action we saw during the third week in January.

Tuesday’s candlestick was a big white candle. This is always a good sign, but of no significance in this case. Candles draw patterns of supply and demand. These supply and demand patterns have a high degree of predictability. 

***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 (518)

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.

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 (659)

DOW Directions 02-05-08 (Tuesday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Up trend begins to form as market peels off an easy -100+.

Monday’s market saw the DJIA close down -108.03, continuing its volatile performance. Thursday and Friday’s +300-point advance has turned the trend positive.  As the market retraces its strong gains of Thursday and Friday, we would like to take advantage of any openings below the T8.

The daily StoRSI, our momentum oscillator, was moving in a positive direction again (until Monday), picking up steam from Thursday and Friday’s action. Monday’s action caused the StoRSI to turn down before it reached its trigger level (a sign of weakness).  

The moving averages suggest a new leg to the upside in the stock indices and traders should be monitoring retracements for buying opportunities.  Last week’s turn to the upside in the T8 was a very positive near-term sign for the market.

Monday’s black candle was of little or no significance. 

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 (508)

DOW Directions 01-25-08 (Friday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Market adds an additional +108 points on upside follow through.

Thursday’s action saw the DJIA up +108.44…continuing to trade in a wildly volatile atomosphere. The current move to the upside has used up the momentum to the upside and now openings above the T8 should be considered as shorting oppportunities.

The StoRSI, our momentum oscillator, has climbed almost back  to its upper trigger level and momentum is close to being overbought.  Keep in mind, the daily momentum is close to exhausting  itself and another day of trading could force the StoRSI into a very overbought situation.  The weekly momentum is a completely different story.  The weeklies are bottoming and this is a very positive sign for the market.  We always suggest and encourage traders to look at and analyze the weekly charts. 

Openings above the T8, on Friday, should be viewed as selling opportunities.  Again, it is worth mentioning:  the weekly charts are bottoming out.  Please keep that in mind when puttin on short positions.

Thursday’s candle was a white candle and now we have seen three nice white candles posted this week.  Overall, this is a very positive sign.  Remember the hammers from earlier this week and our comments regarding this formation: ”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 (631)

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)

DOW Directions 01-22-08 (Tuesday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): World markets crash as Fed tries to save the day (week, month, year).

Capitulation definition: Webster’s defines capitulation as a giving up after offering resistance. In the markets: capitulation happens after the market has taken a beating and then, finally, there is a breathtaking directional bottom. 

 Certainly, the DJIA was headed to capitulation on Tuesday.  Major markets, from around the world, were down 4 to 8 percent on Monday.  The US markets were on a holiday Monday, but they were trading down over 500 points in the futures contracts before the Fed came in and cut rates by 3/4 of a point Tuesday morning.  This caused the market to rebound 300 points in early futures trading.  Prepare for Tuesday to be a memorable day on Wall Street.

The StoRSI, our momentum oscillator, has continued to come down for the past week.   Yet, the StoRSI still has room to drop. It has not reach its lower trigger level during this current slide to the downside.  Usually, issues traverse from top to bottom and back again….many times  penetrating the upper and lower trigger levels.  In this case, the StoRSI could put additional pressure on prices as the it slides to its lower trigger.

As stated: any rallies to the T8, our preferred exponential moving average, would be terrific opportunities to sell. Unfortunately, we are now a very long way away from the T8.  What seems like a tall order for this market (the ability to rally back to the downtrending T8) might not be out of reach.  Volatility rules and volatility could gyrate prices back to the downtrending T8.  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.

Friday’s candle continued to feature black bodies and we see no particular features in the candles. The only distinguishing feature is that we continue to post negative, black candles…day after day. 

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 (511)

DOW Directions 01-16-08 (Wednesday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Market plunges and hints of further flush.

Up, down and all around … volatility continues to be the main feature of this market. The market sank on Tuesday and closed at new recent lows.  The rally that the market saw on Monday was overshadowed by the negative -277 downdraft on Tuesday.   As we have stated for the last few weeks (and as recently as yesterday): “This market still has a very weak posture. All significant rallies should be met with selling.”

The StoRSI, our momentum oscillator, continued up for the last week until Tuesday’s action caused an abrupt turn to the downside.  This is always a negative sign.  Momentum oscillators tend to go up and down and reach its extremes during most of the wiggles in the market.  When a momentum oscillator changes direction, in the middle of its move, from up to down, it is usually a very weak sign.

Any rallies to the T8, our preferred exponential moving average, would be terrific opportunities to sell.  That seems like a tall order for this market (the ability to rally back to the downtrending T9).  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 area.    

There was no significant candlestick posted on Tuesday, but when viewing the chart, we can see a new low close for the area that we are examining.  The market is reeling and we have no significant candlestick formations to hang our hopes on.  When supply and demand puts together a candle that hints of a bottom, we will examine the circumstances and will notify the readers as soon as it has formed.

***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 (602)

DOW Directions 01-14-08 (Monday): A Daily Technical Analytical View of Stocks, Furtures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Volatility continues as market drops again

The DOW continued its volalite ways and dropped down -246.78 points on Friday. Volatility continues to be the main feature of this market.  The market continues to struggle even when the technical aspects call for recovery.  This market still has a very weak posture.  All significant rallies should be met with selling.

After weeks of pointing down, the StoRSI, our momentum oscillator,has turned up, below its trigger level and now has a positive posture. This is usually a very favorable turn of events for most issues. Unfortunately, both the trend and the candle formations argue the case for downside. This conflict causes further volatility…and in this case: volatility with choppiness.

The market could easily rally back to the T8 now that the StoRSI has turned in a positive direction. The T8 our preferred exponential moving average. This great indicator dictates our thoughts on the direction of the trend. When T8 has is pointed down, the tendency for market is to revert to the mean, giving us the opportunity to short the market.

 There was no significant candlestick posted on Friday.   Again, rallies to the T8 should be considered selling opportunities.

 ***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 (565)