3/6 Market Recap.
Posted by jon on
SPY of the week
Percentage wise, this week we had a neutral week on the overall market. The important support level which we have been watching since last post – 164.00, has been breached. This breach has a particular attribute though: This complete move had a V-Shaped form which a lot of traders consider as a “shakeout” – A move that intends to “shake” all of those who thought of shorting the market below 164 level.
This break under 164 level and the quick come back tells us one important thing. Whenever the market gets a little cheap, there’s plenty of traders who are willing to capitalize on that move and load some more merchandise. Beware short sellers!
On the daily perspective, as the Laguerre Filter starts to flatten out and signal a neutral environment, we should be aware of the potential down channel that starts to form. Is it a top we are calling here? chances are still on behalf of the bulls, but we will certainly keep our eyes close on the market.
U.S dollar gets hammered
The dollar took a hit on almost every major currency pair this week. As few not-so-encouraging economic numbers were released, the pressure started to mount over the dollar which eventually changed a few key technical estimates.
The EUR/USD made an almost 2 month high, which brought the price back to the widely watched weekly pennant, waiting to be breached either way:
This continuing consolidation (On the weekly perspective of course) is historically a sign of a sharp move getting ready to take action, so prepare your mouses and flex your fingers…
On the 60 minute time frame things are much more clear. Here we have a clear uptrend, Laguerre us up, and the Darvas Box keeps telling us to go long:
3 profitable longs out of 3 , No Brainer…
Regarding the Dollar-Yen (USD/JPY), it’s about the same picture, strong weakness of the dollar effectuated by the Bearish Laguerre Filter and Darvas Boxes that pop up every single day to remind us of the short opportunity:
4 profitable shorts out of 6, we’ll take that…
One exceptional case in the recent monetary happenings is the Australian Dollar VS the U.S Dollar as known as the Aussie. This pair has been through 2 major technical events – It has broke the low of the year, and also the very important level of 1.00 (When 1 Aussie equals 1 American Dollar).
This pair experienced a steady decline over over the past 5 weeks. An important support level was drawn by the Darvas Box, around 1.20, which confirmed to be a very important one:
Oil on the breaking point
Lately, Oil price is less of a celebrity than it was used to be. Whenever oil prices gets close to $100/Barrel we are used to hear apocalyptic forecasts of the global economy from every economist that respects himself. The reason of the recent blackout could be associated to the fact that U.S dollar is getting weaker lately, which also diminished the real value of an Oil barrel, priced by U.S Dollars.
We brought Oil prices since they are on a special technical point, where prices could go higher:
As you can see on the above daily time frame chart, Oil price is hitting again that down price channel. looking more and more decisive about this action, an upward price break could be soon to come.
Gold
After a small positive move, Gold (GLD) has bumped (again) into Laguerre Filter and quickly changed its mind about that positive move.
Although it’s not so convenient to trade such a vehicle, gapping almost every day, it is a widely watched chart that gives a sentiment about the health of the “regular” economy, the one that uses paper as money. A rush to gold accompanied by higher gold price, expresses a lack of trust in the current economy modern pillars, and a return to the more traditional, time-defiant values of gold:
On the weekly time frame things look even worse. The year long consolidation, after the tremendous 4 year Bull run is coming to its end. The price of gold has broke the level of $1500/Ounce on early April, and does not show any sign of retesting that level, leaving a major Bearish bias more relevant than ever:
Ideas that make traders life easier
We, as traders, always look for a combination of indicators that will best help us to analyze the market. Sometimes though, There’s a lot of calculations, charts, plots and histograms, which generate a lot of information. That influx of information can be at times hard to process, especially when it’s all day long.
Recently, we got a call from a customer that depicted the situation above. He had some indicators applied to numerous charts, and had a hard time tracking all of them, repeatedly scanning the charts for a the right indicator combination, that will eventually yield a trading signal.
An alert system wasn’t relevant since the signals were generated quickly, and the process of typing the symbols over and over again was tedious and ineffective.
What he asked for was a way to automatically “Hide” the charts that does not meet the basic indicators requirements, and “show” them again when they do.
He wanted to reduce the visual process time to a fraction of the original, since in any given time, only 10% of the charts meet these requirements and should be further analyzed.
Here is a look of one of his workspaces:
As you can see, there’s a great amount of information to be processed by the trader. Imagine having to analize a few of these workspaces!
The solution we offered to the client was feasible thanks to update 20 of Tradestation’s 9.1 version.
This update lets us draw and change shapes programatically.
In our case, in order to “show” the chart, we would simply highlight the background with a bright blue, distinguishable color. “Hiding” the chart was done by removing that background color.
With that effect, the trader should only analyze the Blue charts, as he knows they meet the underlying indicator requirements, and ignore all the charts that does’t have that particular background:
This is how it looks when applied:
Here you can clearly see relevant charts that should be analyzed, and igonre all the rest.
Much easier isn’t it?