The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at
I am always open to questions, comments, or suggestions on how to improve this blog.

Saturday, June 16, 2012

week ending 6_15

After spending all week inside of a range (besides the sold-off outlier which started the week) price began to work its way higher, closing the week almost to the penny where it started out.
In the chart below; For the most part all dips were bought (highlighted 2c-2d conditions).  There were 3 larger sell-off moves (one last week) which were all contained within range and the latter two giving a regular and a reverse divergence.

So, we have managed to creep ever higher into the resistance zone we were looking at going into last week. There doesn't seem to be a case for overall weakness these past two weeks (aside from the prevailing overhead supply).  Price hasn't pulled back much at all since the island reversal, and a strong follow-through day above the 50-day  MA may likely cause big money to chase (as we've seen that play out time and time again).  The 20- & 50-MA's on the weekly still have a bullish orientation to them after holding that 38.2% retrace.  However, maybe not seeing much of a pullback is reason to believe in possible exhaustion at the 50-day MA.

The QQQ held major support at the $60 level.  I've blogged frequently about the 2c-2d setup, and typically the entry to that setup is the 3d criteria on a faster time frame, which is what we see on the daily chart below.  Provided it can get through the resistance point formed on Monday ($63.38) our first target objective would be the 50% Fib. projection at $65.

Now for the ugly duckling.  The IWM certainly the weakest looking of the bunch, particularly with that higher time frame structural lower high looming overhead.  The daily still has room to move higher before getting tied up in the 50-day MA and overhead trend line.

The DIA is leading the charge here and may be our "tell" going forward.  There is nothing bearish about the higher time frame at this point.  A strong V-bottom followed by higher highs & lows.  It has yet to form a lower high yet (though one can argue the case of a double top), so what happens from here is critical for both bull & bear camp.   Either we break out to new highs or fail to (isn't that always the case?), in which case we get a lower high and a steeper slide may likely unfold.
Next week should be very telling.  Either price is rejected off of the 50-day Moving Average that it just happened to close right underneath of on Friday, or we get a gap and chase rally?  The reverse divergence in place here is a bit concerning though (if bullish) as it often portends a "too far too fast" corrective or consolidating move.
I drew the Fib. projections on the daily chart with the 6/08 day as my high (rather than the 06/11 high) as that had the lowest low and, therefore, the steepest correction to date.  This means the 50% projection target is just within reach.

No comments: