Tuesday, August 12, 2008

NASDAQ Technical Picture - Snooze Fest - Low Volume Inside Day

The markets opened on a slightly negative note following some unfavorable news items from JPM, MS, and UBS, and a number of downgrades in the broker banking sector. The NASDAQ didn't do too much except chop around most of the session, resulting in an inside bar.

In light of the recent run, and the overbought posture, I'd like to see more retracement.

Maybe the economic data will provide a catalyst - Import/Export prices; retail sales in pre-market; Business inventories at 10:00; Crude inventories at 10:35.

NVDA and CREE trading up in AH on earnings.


This is a 15 min. chart of the S&P Emini futures. I waited all day for a short to set up. It was a quick move to the next support level (blue line) after much consolidation. It's important to review intraday charts the night before and examine potential trigger points.

How to draw a proper trendline:

1. Start from the lowest low;
2. Include shadows ie. total prices not just closing prices;
3. That said, the point from which price carves out its highest high, must touch the trendline. In the ES chart above, Friday's ORL was the point from which, the market moved the highest, so I had to redraw the trendline to touch that point. In so doing, we notice some minor trendline breaches, but we ignore them.

2 comments:

Anonymous said...

Hey Jamie,

What is the source of your point #3 in how to draw a proper trendline? I have not seen that point stressed much.

Jamie said...

Jim,

Trader Mike

# 3 is so important, otherwise you can never be sure if the trend line is accurate.