Wednesday, July 11, 2012

I'm starting to lean toward a short term bottom

Late last week from the charts, the idea was that we'd see a short term move (intraday-to a day) up in to the gap area from the SPX's drop from Friday. This move I'm leaning toward would more or less be an extension of that short term move which is a scenario I mentioned yesterday.


The gap was entered yesterday and quickly failed, but I'm leaning toward another expedition in to the gap area. I don't have all the pieces to make a really solid case, I do have the call positions today that were entered for a move along those lines. I'd want to see better confirmation before taking any position larger than the spec. position taken today. When considering market moves and the reasons for them, there's often a set up and that often requires a more extreme move than one would expect. Just filling the gap like we saw 4 months ago has given way to a more aggressive, volatile and choppy market that is knocking traders out of positions left and right so this part is more speculation based on market behavior, but I'd assume we'd see a similar "very volatile move" that does more than just fill a gap, it would need a reason to make a move and that reason generally is to set traps for traders.

I'll use AAPL as an example of what I'm thinking as of now, which isn't too far from original trend expectations.

 I would think AAPL would put in a little more lateral action, but it may not be needed as on many timeframes, the drop today saw some aggressive positive divergences, that means the shares were available to accumulate in some size, therefore the normal process of accumulation could be sped up. We are still talking about short term price movement.


 AAPL's 2 min is leading positive, it seems it wants to move higher, although I'm using AAPL as an example, it's more of a market move I'm trying to express.

 3 min positive and in to the weakness of the minutes today.

 5 min, perhaps a lateral base the size of the former one on the 6th.

 The 15 min chart will be key as to whether this is just a move in to the gap and maybe then some or something more aggressive, as it stands, the strong pullback would still be expected and the 15 min chart here supports that idea, so really the different trend expectations from last week wouldn't change much, except the short term trend would be a little longer than first expected as the charts yesterday and today did not cooperate with confirmation of the next move, which is the pullback.

The 30 min chart is leading negative, not positive at all and this is where I get the idea of a strong pullback. You may recall, because of the 60 min and 4 hour chart, it still seems likely that after a decent (stronger than most would expect) pullback, we could still see that short squeeze move that only saw a few sputters and spurts on intraday moves.



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