08-17-14 Trade Plan

Things couldn't have gone better last week with regard to the reversal in the indices.  To recap, the 30 minute trend was established on the way down so for there to be a reversal I was looking for the 30 minute trend to turn back higher with price making higher highs and lows.  Even with the big sellers that came in Friday, the 30m trend reversal is still holding with higher highs and lows.

The goal of the bulls is to get another 65m or 130m trend in motion and keep it going for weeks so the 30m reversal is just what price is using to try to get there.  The sellers have one last chance to gain any kind of control by holding the 130m trend lower in the SPY & DIA.  This would mean they hold SPY under Friday's high and break Friday's low, which would be lower highs/lows and a reaction off of the 130m trend.  Bulls still have more control right now though.


Looking at 130m trends this weekend.  The QQQ and IWM both have neutral 130m trends, and looking at the SPY you can see the reasoning for saying this is the last chance for sellers to take control before a new uptrend starts.  These three indices are looking completely different, so just have to pay attention to swing points in relation to the trend in play.  Without predicting anything, I think if QQQ buyers held price near these highs while holding Friday's low and consolidated while the 130m trend turned higher this would be very healthy for a new uptrend and provide market leadership.  QQQ chart here.  This would also give time for SPY to regroup, attract more buyers, and allow the 130m trend to turn around.  SPY chart here.

Keep in mind that whether there is a consolidation or we just keep going straight up, there will be good stock setups triggering.  As long as sellers haven't taken control, stock setups/trends have a much higher probability of playing out. Keep the list manageable with the best looking charts and have a grip on the market conditions you are trading in (the indices).  Use the intraday trends to trade the daily charts.

NFLX above $450, YHOO above $36, CELG above $90 all great looking charts.  Without extracting what swing points to use to manage risk and without being able to know when something is in play or not (intraday trends), the charts are useless.  What swing points you focus on and what trends you focus on are time frame and goal dependent, but they are the reason for technical analysis.  Too many overlook that.  Thanks for reading

Trade well,
-Michael