If you are not using multiple time frames for your stock chart analysis then you can leave important edge for your trading business on the table.
I use multi time frame chart setup for my stock analysis and also stock trading software. I recommend it to you too.
I noticed on charts of Nasdaq nad SP500 that volume declined during this week. It means that stocks are moving up on lower volume then was during strong sell off. It means for me that buyers are not coming strongly into market. It was much more short covering rally. It is also another signal for me to be more bearish then bullish.
I put a lot of importance on stock volume analysis. When price move is accompanied with good volume it is strong signal for me.
Current situation on US stock markets is good example. You can see like during correction period (approx. last 3 weeks) volume came down. Institutional investors (big banks, asset managers, fund etc) were not participating on these moves. They were waiting.
And therefore I did not believe rise of markets. And finally strong downtrend move happened on Friday. And volume picked up again. It is strong signal. Big investors are not in buying mode now. They are going to sell or short more. And they expect markets to drop much more.
It is totally what I feel . Therefore I made huge profits on short trades in last 3 weeks. Selective shorts worked very well. GOOG, AMZN, APOL are some of examples. And I want to short more, will wait for any bounce for good stock swing trade short setup.
and buyers are not coming. Market moves are driven by short term traders. Quick reversals can happen. And stock market volume is low.
Time to be conservative in both ways. I slightly prefer to be more short as markets are still weak.
I did technical analysis of stock market yesterday. I went through charts of all major indexes I monitor. This is my opinion about them.
Most bullish is Nasdaq 100 index.There are higher highs and higher lows on weekly chart. What is interesting on this chart that resistance near 2200 points could be last level before strong move up. If you look to history you can find that last and strongest move of 2000 bubble started right after breakout of 2200 level. So if Nasdaq 100 index will be able to manage this breakout , we can see similar “bubble” uptrend like in 2000.
Dow Jones and SP500 are in the middle of their ranges of last 6 month move. They look more bearish then bullish. Dow Jones industrial has head and shoulders chart pattern on its weekly chart.
Most bearish from my point of view is Rusell 2000 (small cap index). It has broken major support level (now resistance) in 780 -800 area. I expect it will go down to next 680-700 support level (I have to prepare some ETF short swing trade setup)
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I went through stock market index chart in my stock analytics software and I have to say that markets moved into negative territory again.
But I feel that markets cannot decide if they will resume trend up or will start new down trend move. They are in ranges abound or near important 200 SMA.
Trading in ranges is difficult for me as I do more breakout pullback stock trades.There is only one advice for range trading: short in resistance areas, long in support areas. This is what most professional traders do in trading ranges.
Right now I am more conservative and will follow advice of old traders - preserve your cash . The most important for every trader is to have cash - if you have not enough cash , you cannot trade. That is why stop loss should be used.
I see really small trading volume during this week. Where are big boys ? I think everybody is already waiting for next week , for FED decision about interest rates. Most of traders expect another cut, issue is only how big. I think that it will be 0.25% .
Last 2 days rally activated most of my stops in short trades. So I am now more in cash then in positions. For new longs I prefer to see some buyable bounce.
Right now I noticed significant weakness in RIMM and EBAY stocks. So they could be good candidates for short stock swing trade.
Stock market indexes formed bearish candlesticks accompanied with high volume on important resistances. All of these signals are bearish indications for further market development.
Small cap Rusell 2000 index and S&P500 index are weakest or their charts are most bearish. Good opportunities for short swing ETF trade . You can use inverse short or ultrashort ETF shares for these trades. I plan to use them too.
Yesterday volume was small. I expected it will increase after holiday week.
Also there are no big buyers on markets right now. So it looks like markets will go down. Nasdaq broke 200MA, Dow and SP500 are also on their track down.
I expect Dow is now on the track to the 12000 points support level and Rusell (Small cap) to 700 points. I would like to short these two indexes in case they will provide some bounce. I will use Short style ETF like DOG, RWM or DXD, TWM
