The DJIA closed Thursday at 10,271.21, down 1.39%  .   The Dow does have almost 600 points to drop before it confirms a downtrend – 9,620.   Although, a drop below 10,000 is the early (less viable) signal.   The S&P 500 is very close to a prior low, and a drop below it indicates broad selling pressure.

Fedex (FDX) can also be used as a market indicator.  Fedex closed down 2.93% to 81.58 on Thursday.  If there is a drop below 79.88 is could very well fill the gap we  saw in July.  That is a bearish signal.  When Fedex breaks it is a strong confirmation – it hasn’t yet, but it is worth keeping an eye on.

If the market can find support, it will have held above recent swing lows and indicates a range bound environment until 10,750 on DJIA can be penetrated to the upside.

Fedex Daily - FreeStockCharts

Cory Mitchell, CMT

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It seems that since I am from Canada some of my readers wanted to see a little more posted on the Canadian markets.  So without further ado, I take a look at Canadian market but the lessons really apply to US markets right now too.  Volume is low and price remains stuck in broad ranges, so even if you don’t trade on the TSX, you may still want to read through this.

This week saw continued low volume as the TSX 60 stagnates within in a large range.  For day traders this can make trading difficult, and requires a look back to some old trading wisdom which reminds us traders and investors don’t need to be in the markets at all times.  There are intervals when risks and rewards are harder to calculate and fills (on trades) are hard to receive at the price desired.   Therefore, there is no urgency to be in the market during each moment of the day.

When the iShares S&P/TSX 60 Index is looked at we see the Canadian markets trapped in a broad range.  When the overall market is trapped in a range such as this, the stocks that are traded become very important.   The time of day in which trades are made also becomes very crucial.  Looking at total volume numbers for a stock may make it appear as if there are opportunities, yet closer analysis will reveal that during times such as these the trades need to be very selectively.

The chart reveals that this is not a trending market.  Price will need to move through 17.50 on the upside, which only indicates a move to the top of the channel at 18.30.  On the other hand a sustained move below 16.20 indicates that further downward pressure is likely to be seen.

Figure 1. XIU.TO Daily Chart

XIU.TO Daily

Source: Free Stock Charts

On the 15 minute time frame (Figure 2) it is easier to see that the market is extremely choppy.   Mirroring the longer-term price action the shorter-term is also stuck within channels.  The downward sloping trendlines provide a barrier for prices through the beginning of August.  A breakout of such a barrier or failure to breakout can provide higher probability trading opportunities during this environment.  A breakout above 17.35 would put upward short-term pressure on prices; resistance comes in at 17.48 and 18.52.

A failure to move through the 17.35 level will mean the eventual re-test of the channel lows towards 17.12.  Beyond this 17.04 should provide support.

Figure 2. XIU.TO 15 Minute

XIU.TO 15 Minute

Source: Free Stock Charts

The volume data from both charts show volume is relatively low, low volume adds risk to trades in that it becomes difficult to enter and exit at the price desired.  Slippage on orders becomes more frequent, but can be minimized by trading intra-day during higher volume times.

Cory Mitchell, CMT

If you didn’t see my post earlier today, it definitely worth checking out.  You can get free trading seminars, streamed right on your computer – pause, watch, stop, re-watch, whatever you want.  This is a great opportunity to increase knowledge while the markets are slow. Instead of making that next trade, invest a bit of time in your future.  It is totally free, so you have nothing to lose.  Start trading better today!  And like I indicated above, wait for good opportunities…while you are doing that you may as well check out some amazing trading seminars.

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Friday saw aggresive moves, as the market opened lower and rallied furiously…only to finish the day basically unchanged.

The lows of the day came very near the short-term upward trendline, showing there is still support above 1070, as the S&P 500 hit a low around 1088.  The trendline crosses currently at 1086.

The stifled rally early this week shows signs of weakness.  From the rally off the bottom, 1010.91, if this were infact going to turn into a broader advance the wave higher we saw from the middle of the month should have extended further.  The fact it couldn’t indicates that we are lacking steam. The bounce off the bottom, the pullback, and then a resurgance higher should have brought additional buyers into the market, not to mention some short coverings.  That did not materialize.

Yet, the fact the market stayed above the support levels must also be respected. Primary support is at 1055 (just above), but a close next week below 1095 would provide some early indications the advance is in trouble.  Some additional support comes in at 1070-1062.  Failure to hold there means a highly likely re-test of 1056 and a further slide from there.  The 1055 can be used a pivot point – trading drops below it for further downside, but also watching for false breakouts (trading moves back up through it) due to the choppy nature of this market and the large intra-day moves.

Below 1055 little support comes in until 1033, 1016 and 1010.  The average (14) weekly range for the S&P is 59.55 points, and the market closed at 1101.60 on Friday.

A further advance is indicated by a move above 1122.  A former swing high lies beyond at 1132.  Pushing beyond this area clears the air, at least technically, for the market to run.  Minor resistance is at 1140, with more significant resistance at 1156.

Chart is below.

Have a great weekend!

Cory Mitchell, CMT

And while you are enjoying that weekend, check out this video if you haven’t already…

I have to admit, this is a little weird.

It’s a video that reveals a story about the #1 reason why most people lose money trading stocks…and how the “story-teller” himself was ultimately able to help those people make a life-altering “shift” in their trading.

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As you immerse yourself in the story, see how close it is to YOUR trading story…

(pay close attention)

Good Trading,
Cory Mitchell, CMT

p.s. Do you think it’s “weird”?

http://www.stockmasterymaterials.com/y/?u=2&i=1083859&l=f1

SP-500 Daily, FreeStockCharts

~Know your risks in trading.  See our Legal Disclaimer page.

It appears that the offer pulling may be working as this market once again breaks above resistance on falling average volume.  On Friday the S&P 500 broke above 1100 signaling another potential wave higher.

A large triangle was broken by Friday’s move, as well as the downward trendline extending down since late April.

Given that the market is able to stay above 1070 (currently at 1102.66), these chart patterns provide us with several upside targets.  Initial target is 1140.  If followed by another wave it could push the index into 1190-1210.

While it appears the bulls may have the upperhand over the last month, volume continues to be suspect.  Also, as day traders likely have noticed the movements intra-day while strong in price often lack punch – generally being moved more by offer pulling than actual buying of the book offer.  Of course it is not wise to stand in the way of this, the short-term trend is up and can continue to be for some time.

At this time the levels to watch below where we are currently are: 1070-1060.   A close into this area from where we are now would signal a false breakout to the upside.  A close below 1060 would confirm signaling a re-test of the recent swing low at 1020.  A close below that low has a target of 970.

The chart at the bottom shows the inside levels to watch providing a visual depiction of what is unfolding.

This may be the ugliest video about stock trading I’ve ever seen…but the message in the story is worth it.

It’s about how a regular guy discovered 1 “unusual” trick in trading the stock market…and how he was finally able to get an “edge” over everybody else – other traders & even his own broker – after years of trial & error.

Watch it through to the end here (it’s worth it):

http://www.stockmasterymaterials.com/y/?u=2&i=1083859&l=f9

Good Trading,
Cory Mitchell, CMT

~Know your risks in trading.  Please see our Legal Disclaimer page.

Any trader in the market right now has seen dramatic moves intra-day.  While investors may not typically be too concerned about intra-day movements, those large swings show just what kind of battle is being waged each day in this market.  The market is see-sawing, but is approaching an important level – this level could sway the battle for one side…at least for now.  With so many other levels beyond to watch it is important to be aware of points where the battle is likely to turn.

Adam breaks down these levels in this new video.  Here are his comments….

The battle between the bulls and the bears continues in the S&P 500 with neither side able to gain the upper hand. This choppy trading action will eventually lead to a large move one way or the other. The bulls are betting that we are headed higher and the bears are betting that the economy is going to tank.

In my latest video, I share with you some of the key technical points that are still in play and where the market needs to go in order to break out of the current logjam that it’s in.

As always our videos are free to watch and there is no need for registration.

Please let us know your thoughts.

http://www.ino.com/info/591/CD3784/&dp=0&l=0&campaignid=3

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub

The following is from Adam Hewison and was originally posted on July 7.  Very interesting.  I hope you enjoy it….

In today’s short video, we look at two important aspects of the market – one
is an intraday technique which I will show you how to use to determine where
markets will turn, and the other is the infamous “death cross”.

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The death cross does not occur that often, in fact, in the last 2 1/2 years
we’ve only seen this happen three times. The most recent occurred just last
week and is something that every investor and trader should pay close attention
to. I believe that this video will help you understand what the death cross is
and how you can construct it and use it in your own trading. A lot of traders
and investors watch this very closely so you should too.

As always our videos are free to watch and there’s no need for registration.

If you like the video please feel free to comment on our blog and give us your
thoughts on the market.

http://www.ino.com/info/580/CD3784/&dp=0&l=0&campaignid=3

All the best,
Adam Hewison
President of INO.com

The following comes from the digital studios of Ino and Adam Hewison, and is worth taking a look at.

In today’s short video we look at Amazon, not the river, but the stock. Yesterday (6/28/10)
I spotted some market action that I wanted to bring to your attention. Unfortunately, I could
not release this video any sooner because of scheduling.

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Amazon is in a whole lot of trouble in my opinion. Not only are our “Trade Triangles”
negative, but also an important technical element for Amazon was breached. This one element
is one of the simplest, yet most powerful technical tools you can use in trading.

I think you’ll enjoy this very simple approach as it has worked consistently over the years.

http://www.ino.com/info/576/CD3784/&dp=0&l=0&campaignid=3

As always our videos are free to watch and there are no registration requirements.

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub

The end of the week saw Thursday and Friday strong but on very low volume.  A sign of buying weakness or just the start of summer?  Ultimately this will be revealed by where price goes and the levels that need to be watched.

The rally through the early part of the year was also on low volume, but the market continued to push, thus volume is not an immediate indicator but just a warning signal.

The downward trendline on the daily chart currently intersects just above 1100 on the S&P 500, which is in close proximity to two former daily highs.  This creates a resistance band between 1100-1106.  Respect of the band indicates continued downward pressure moving forward.  Pentration above that band indicates buying pressure and a further correction.

Since the trend is currently down beware of false breakout above that band, even though it would be a breach of the dominant trendline.  Volatility remains high, although it has subsided somewhat from the later part of last month (see VXX, an eft which tracks volatility).  The weekly average range of price price movement on the S&P has increased to almost 50 points; this can be used in estimates likely moves going forward for future weeks (it is an average so it is continually changing).

If pressure once again flips to the downside, the ultimate test will be if  the the 1040 area holds.  With the market closing at 1091 this week, that is within the weekly averages grasp.    Penetration of those lows is very bearish although there are multiple support levels below as can be seen on the chart via horizontal lines.

Resistance above 1106 comes in at 1115 and just below 1150.

Chart is below.

Cheers,

Cory Mitchell, CMT

~Know your risks.  See our legal disclaimer page.

Robert Prechter believes deflation is a primary concern at the moment …

Deflation: How To Survive It
Important warnings about deflation from Robert Prechter.
By Elliott Wave International

The M3 money supply in the U.S. is contracting fast, and deflation is suddenly in the news again. It’s a good moment to catch up on a few definitions, as well as strategies on how to beat this rare economic condition. And who better to ask than EWI’s president Robert Prechter? Here’s a free excerpt from a collection of his most important essays on deflation.Read more.

S&P 500 Daily, Free Stock Charts

Another volatile week for stocks.  Traders simply did not want to put out large orders for fear of getting run over.  But, introduce fear (from longs and shorts) in thin liquidity and price levels have a tendency to “overshoot”.  Prices are taken to extremes and then snap back like an elastic – in both directions.

I have never seen individual securities with such “sketchy” bids and offers.  No one wants to be trapped in a big move, and because no one wants to be stuck in a big move, big moves occur because there is a rush for the exits (for both longs and shorts) as traders grab what liquidity they can.  It has made for some very interesting trading days.  Volume may still be high in some securities, but traders are “order-cancel happy” at the moment.  And with good reason – this market is on very shaky footing.

I will get to a brief analysis in a moment, but this week was a major reminder that no matter what time frame we trade on, as individuals we don’t need to fight the direction of the market.  Today there were large swings, and bidding into falling prices was a stressful time to say the least (or shorting into a rally).  At times like this hopping onto momentum is the best option – because there is no solid rules for how far something can take you into the negative at this point.  Just as this is true for day traders trading daily swings there is no reason for swing traders to buy as prices fall.  Most individuals traders transactions will not affect the price in the aggregate, and thus there is no reason to predict a reversal – we can simply wait for it to start.  And with the volatility right now you could be in that trade for a nice swing.  All said, these markets are shifting on a dime, be awary and don’t get tied to a trade or a direction.

Shifting focus.  The daily chart still has a down trend.  We saw new swing lows, this week, moving below the “flash crash” levels.  We also moved below the February lows – a major swing low.

I am not bullish till 1134. Not this this would turn my attitude completely, but at the moment that is a level I am watching on the upside.

A drop below 1040 would create a new low on the S&P 500 and warn of a further correction.  The S&P closed out the week at 1089.41.  So both of these levels are a ways away, but we moved close to 15% in May, so 40 points in either direction is nothing.

A more detailed analysis will be upcoming in this weekend’s newsletter.  If you aren’t getting it – you should!  It is free and you can sign up on the right.  It is sent out on the weekend.

Also, there’s only one week left to download Robert Prechter’s free 10-page market letter. Our friends at Elliott Wave International are featuring the free download through June 7.

The free issue, titled “A Deadly Bearish Big Picture,” contains recent research and market analysis that goes beyond the news headlines to give you urgent,independent market forecasts. Prechter’s market outlook has changed dramatically since February of 2009 when he informed his Elliott Wave Theorist subscribers to turn bullish.

The markets have turned more and more volatile by the day, with huge market swings spanning hundreds of points! It’s time to prepare yourself.

Get your FREE copy of Prechter’s latest research through June 7 – Download the Theorist now.

Cheers,

Cory Mitchell, CMT

~Something is only worth as much as someone else is willing to pay for it.  Period.

Know Your Risks – this month a bear ate a bull.   Please read our Legal Disclaimer page to understand market risks.

These markets continue to have unbelievable moves each day.  The S&P 500 re-tested the “flash crash” lows on Thursday and Friday, and after breaking below rallied back higher.

Last weeks analysis is still in play.  At the moment I don’t think there is much reason to be buying this market unless someone is unleveraged and buying for the very long term.  Current trend is down and for individual traders there is no point in fighting that.    Short-term traders that remain nimble in their position size likely continue to have a field day both long and short as the intra-day trends can be large in either direction.

Friday’s action does deserve a second look though; down aggressively early in the session and then very strong into the close.  We finished just below the half way point of Thursday’s action.  While it is not quite technically a Piercing Pattern (see: CandleStick Trading For Maximum Profits), Friday did significantly “pierce” into Thursday’s big slide.  This is a bullish pattern but while it may push prices higher early in the week, ultimately we need more confirmation than this to get bullish over the longer term.

Levels to watch at the start of the week include the Friday low at 1056  - a drop below will likely see further selling.

A rise above 1092 is likely to test the Thursday high around 1108.

Beyond these levels we are into the other support/resistance levels shown on the chart; all these points can be used as trading pivots.  Chart is below.

Cheers,

Cory Mitchell, CMT

I found this frank, straightforward, and “no B.S.” video presentation —-> It leads you to a TON of “dirt cheap” stock market training that will give you the upper hand when dealing with brokers… & a big edge over all the other frustrated & clueless “newbies” out there.

So, sit back, relax, & see if you relate to this “stock trading tale” here:

http://www.stockmasterymaterials.com/y/?u=2&i=1083859&l=f1

(Make sure you watch the whole thing, because I think you’ll be ”floored” by what’s revealed at the end.)

S&P 500 Daily