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 (361)

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 (923)

DOW Directions 03-25-08 (Tuesday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Daily trends turning up, weekly trends continue “weakly”.

Monday’s market continued its positive push and ended up +187.32.  Usually, a turn in the daily trend is sign of positive prices in the near future.  We need to excercize caution as the daily trend turns.  The weekly trends are still very negative.  If the daily prices continue to push higher, eventually the weekly trend will change to positive.  The market needs a very positive week to accomplish this task.

The daily StoRSI, our momentum oscillator, turned up once again.  This is the fifth directional change in the StoRSI in the past two weeks.   The current level puts momentum near its upper trigger level and we should expect it to traverse above the red line, upper trigger level, as it starts to encounter resistance.   

The T8 (maroon line), our moving average that defines trend, has changed direction and is now pointing up. This could be the beginning of a new leg to the upside.  The only negative technical news is that the weekly T8 is still in a horrid tailspin.  The weekly chart still is very very negative and could choke back any real potential on the upside.

Mondday’s candlestick was not a significant candle.

***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 (430)

DOW Directions 03-24-08 (Monday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Market pushes up at end of short week

Thursday’s market pushed up +261.66…almost matching the negative action of Wednesday.  The seesawing of price and volatility continues to be the main feature of the market.  Without any defining direction, the market continues to be as volatile as we have seen in many years.

The daily StoRSI, our momentum oscillator, has turned “flat”.  In the past week and a half, we have seen the StoRSI push to the area near the upper trigger level.  This was followed by the indicator turning down, then back up, then down and finally, the indicator has gone flat.   If we examine the last six days of trading, we see a microcosm of the market: wild volatility with little or no directional movement. We are experiencing record setting type days (intraday movement), yet we are going nowhere in price.  The waffling in the indicator is reflected in the market movement and makes discerning direction a difficult task.

The T8 (maroon line), our moving average that defines trend, has changed direction and is now pointing up.  This could be the beginning of a new leg to the upside.  Early this week, we should be able to discern if the market is going to break out of this trading range.  If the market continues to chop back and forth, we could see a number of directional changes in the T8.

 Thursday’s candlestick was not a significant candle posting. 

***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 (387)

DOW Directions 03-19-08 (Wednesday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Market zooms with help from the Fed and technical double-bottom

Tuesday’s market rocketed up in anticipation of a Fed interest rate cut.  The market was not disappointed when the Fed cut rates by 3/4 of a percent.  Fed announcement days are always volatile and can trade in a wide range of prices.  Tuesday’s range was all upside after most indices posted double bottoms on Monday.

The daily StoRSI, our momentum oscillator, has hooked back up and the chart is now demonstrating the wild volatility that we have witnessed during much of the last few quarters.  Just in the last two weeks, we have seen the market crater, rally, decline with gusto and then rally again (last two days).  We are experiencing record setting type days (intraday movement), yet we are going nowhere in price.   We see that movement occuring in the StoRSI (up, down, up).  The waffling in the indicator is reflected in the market movement and makes discerning direction a difficult task.

The T8 (maroon line), our moving average that defines trend, continues its downward direction. We believe that when price retraces to the T8 (our trend) that there is a high probability that if the trend is down, price will be resisted.  Of course, this strategy was not successful on Tuesday.  Occasionally, price will open above a down-sloping T8 and not go immediately down.  It is important to note:  when the three moving averages, represented on the chart, superimpose on one another, usually there is a rapid directional move in the near future.

Tuesday’s candlestick was another large white candle.  This white candle has little significance…although, white candles are always welcome if a trader is looking for upside potential.

***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 (406)

DOW Directions 03-18-08 (Tuesday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Wild session turns into positive day

Monday’s market gapped down, to start the session, and then rallied throughout the day to close slightly higher. The “dead cat bounce” that we have suggested in previous blogs has now been satisfied.  Keep in mind:  Tuesday is a Fed day and we always suggest moving to the sidelines during these volatile sessions.  Fed “daze” are often the most volatile sessions in what is a very volatile market.

The daily StoRSI, our momentum oscillator, has  flattened and is now “waffling” near its upper range.   Another strong day will drive momentum to its overbought range.  A day of unchanged activity or a down day will force StoRSI to continue its journey toward the lower trigger level.  Today’s session could set the tone for the next week of action.

The T8 (maroon line), our moving average that defines trend, continues its downward direction.  We believe that when price retraces to the T8 (our trend) that there is a high probability that if the trend is down, price will be resisted.   The T8 continues to tell us we are in a steep downtrend.  It will be extremely interesting to see if a short, triggered by and opening  above the T8, can be executed successfully on Tuesday.  Usually, this simple approach can be quite rewarding.

Monday’s candlestick was a large white candle.  If the market would have closed at its highs on Monday, we would have a piercing line formation.  Since it did not, the white candle has little significance…although, white candles are always welcome if a trader is looking for upside potential. 

***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 (430)

DOW Directions 03-14-08 (Friday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): DOW resisted by downtrending T8

Thursday’s market gapped down on the opening and peeled off -230 points to start the session.  It didn’t take long for the market to come charging back and close up slightly (+35.50).  Unfortunately, the market was resisted at the downtrending moving average and we are looking for opportunities to short this “dead cat bounce”. 

The daily StoRSI, our momentum oscillator, continued up on Thursday, but the angle of ascension continues to be compromised.  As we stated on Thursday: ”It is important to compare the current pattern of the StoRSI to a similar formation that occured at the beginning of the year. As we can see on the chart, the StoRSI hit the upper trigger level right after Christmas and then bottomed on or about January 8th. The next attempt to rally the StoRSI fell short and turned down after 1/14/08. The failure of the StoRSI to complete its journey to the upper limits of the StoRSI range was a disaster. From the 14th to the 22nd of January, the market “tanked”. Now, fast-forward to the action of the last couple weeks and we can see almost an identical pattern.”  This statement bears repeating.

The T8 (maroon line), our moving average that defines trend, continues its downward direction. Again, it’s hard to improve on what we stated in Thursday’s blog: “We believe that when price retraces to the T8 (our trend) that there is a high probability that if the trend is down, price will be resisted. That’s exactly what happened on Wednesday {and Thursday}. Of course, meeting resistance and falling away is never a positive sign. Be careful, downside action could follow. The T8 continues to tell us we are in a steep downtrend.”  Again, the above statements bear repeating.

Thursday’s candlestick was a strong white candle.  Unfortunately, the candle and its position on the chart don’t elude to any specific direction or action.  The real tell-tale signs are currently being received from momentum (overbought) and the trending T8 (against resistance).  Be careful:  the market is still in a downtrend and has rallied back to resistance.

***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 (526)

DOW Directions 03-13-08 (Thursday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): DOW smacks up against T8 and falls away.

Wednesday’s market opened unchanged, pushed to much higher levels and then peeled off points to close lower on the day.  After posting the fourth all-time highest gain and the highest point gain in five years on Tuesday, reality set in and the market couldn’t muster any follow through.   

The daily StoRSI, our momentum oscillator, continued up on Wednesday, but it has started to compromise the angle of ascension.  It is important to compare the current pattern of the StoRSI to a similar formation that occured at the beginning of the year.  As we can see on the chart, the StoRSI hit the upper trigger level right after Christmas and then bottomed on or about January 8th.  The next attempt to rally the StoRSI fell short and turned down after 1/14/08.  The failure of the StoRSI to complete its journey to the upper limits of the StoRSI range was a disaster.  From the 14th to the 22nd of January, the market “tanked”.  Now, fast-forward to the action of the last couple weeks and we can see almost an identical pattern.  If the market causes the StoRSI to turn down on Thursday, we could be in much lower prices over the next few weeks.

 The T8 (maroon line), our moving average that defines trend, continues its downward direction.  We believe that when price retraces to the T8 (our trend) that there is a high probability that if the trend is down, price will be resisted.  That’s exactly what happened on Wednesday.  Of course, meeting resistance and falling away is never a positive sign.  Be careful, downside action could follow.  The T8 continues to tell us we are in a steep downtrend.

Wednesday’s candlestick was a “shooting star”. This is never agood sign.  Shooting stars stop upward direction.  Hammers tend to stop downward movement and a shooting star is the complete mirrored opposite of the hammer.  Be careful, the candles are telling us that the market did not like yesterday’s action.

***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 (426)

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 (413)

DOW Directions 03-11-08 (Tuesday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): Retracement double bottom could spark rally.

Monday’s market extended its push to the downside.  The DOW has skidded over 500 points in the last three trading sessions and was off -153.54 on Monday.   The market has continued to slide and is testing the lows of the year (which occured on January 22nd).

The daily StoRSI, our momentum oscillator, penetrated its downside target early last week.   Every day that the StoRSI remains under its lower trigger level is another day closer to a recovery rally.  This market is set up to make a “dead cat bounce”.   Typically, the momentum oscillator moves quickly form top to bottom and then back to the top again.  Extended periods of time above or below the triggers signal periods of rally or decline.   The StoRSI has continued to skid along its lowest level  for the last week and we’ve seen an a week of extended downside activity.  Some type of rebound is now overdue.  Nothing goes straight up or down forever.

The T8 (maroon line), our moving average that defines trend, continues to gain a steeper angle to the downside.  This is a negative sign.  With that said, 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.

Monday’s candlestick was another black candle that holds no significance.  Candles draw patterns of supply and demand.  These supply and demand patterns have a high degree of predictability.  Unfortunately, they do not draw patterns everyday and such was the case on Monday. 

***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 (348)