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.

 

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04-29-08 Market Directions: A Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

Last November, the T8, our moving average that defines trend, turned negative.  The market began to slide and continued down until mid-April (when the T8 turned positive).  After the market turned down, it gave traders three opportunities to sell weekly openings, above the down-sloping T8 on three Monday’s in December (13,649; 13,540; & 13,423).  The market continued to slide and punched down to under 11,500.

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 (and creating a positive “double bottom”), the market has gained substantial points (+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, is gaining positive inclination.  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.  

 Altough the “double-bottom” bodes well for creating a floor in the market, don’t be surprises if the market pulls back over the next month.  A retracement to the T8 would set up a buying opportunity in the future.  In the meantime, “keep your powder dry”.

***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.

 

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04-20-08  DOW Directions:  A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

Weekly candlesticks and trend point to a rally in the SPY stock index.

As the trend changed to positive, the weekly candlestick pattern posted a bullish engulfing pattern.  This is always seen as a positive sign. Equally as postive is the trend turning up.  This positive turn in direction is hint of upside since last November.

The daily CMO, our momentum oscillator, turned up and could assault its upper boundaries over the next few weeks. once again. The important fact is that the CMO moving in a positive direction once again. This could result in another couple of weeks of rally.

The T8 (maroon line), our moving average that defines trend, changed direction last week. This new leg to the upside is significant.  We haven’t had a hint of upside trending since last November.  different story.  We expect price to retrace to the uptrending T8 and at that point we would love to buy this market.

Last week’s candlestick formation was a “bullish engulfing” pattern. The can be a very significant candlestick pattern. Bullish engulfing patterns are usually followed by strong market movement to the upside. 

***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 03-27-08 (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 (936)

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 (442)

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 (400)

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 (418)

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 (444)

DOW Directions 03-17-08 (Monday): A Daily Technical Analytical View of Stocks, Futures, Eminis and Forex for online and day traders.

DIA (Dow ETF): DOW takes additional lumps…more on the way?

Friday’s market gapped up, to start the session, and then dropped an additional -194.65 points to end the session.  The market was resisted at the downtrending moving average and we took advantage of the opening above the T8 to short the DOW and to take advantage of the “dead cat bounce”.

The daily StoRSI, our momentum oscillator, has turned down before it has penetrated the upper trigger level.  This is a negative sign.  We now have to look at the downside potential.  As we look back to January, on the chart, we see a similar failure for the StoRSI to complete its journey to the upper trigger level.  If history repeats itself, we have a long difficult slide coming in the near future (starting immediately and continuing for a week or longer).

 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 the blog last week: “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 then agin on Thursday and Friday). 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.” There are times when it is easy to call the direction of the market, providing you allow the T8 to dictate the direction of the market. 

Friday’s candlestick was a “dark cloud”.  Dark clouds are directional stoppers.  When the market is rallying and a dark cloud appears, a storm soon follows.  The market gapped up on Friday and then closed significantly lower.  The body of Friday’s candle closed into the body of Thursday’s candle.   Usually, it is extremely hard for the market to rally after a dark cloud has appeared.  Look for lower prices to start the week.

***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 (440)

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 (534)