March 15 Educational 15 minute chart

Mar 15, 2007: 6:50 PM CST

Today was a consolidation day, and one with very choppy action that whipsawed many traders, myself included. It was difficult to find direction today, and I suppose the story will be similar tomorrow as it is Options Expiration Friday. It is actually a “Quadruple Witching” Expiration Day, so my recommendation is to take the day off and enjoy a nice, three day weekend after all this wild market action recently.  Andy Swan suggests the same, yet goes a step further to predict a possible bearish mauling (strong market decline) next week.  I don’t know if I would go that far.

I wanted to post a quick chart of the DIA 15 minute chart over the last few days and note some educational momentum divergences forming in the creeping action we have experienced.

The most striking point to me – again – is the volume spikes on March 14th during the afternoon. The Big Picture hints that this might constitute a “Key Reversal Day”. I admit it is worth a thought. It is certainly comforting for the bulls to see possible capitulatory selling action here.

Notice the two divergences (black lines on the bottom pane 3/10 MACD indicator). Keep in mind that momentum readings are voided in a range bound environment which we have at the moment. Momentum is winding down to a market equilibrium point, and a directional bias will soon be established.

Take time to do some research and be careful should you decide to scalp or trade on Friday. Odds favor consolidation and choppy market action due to the uncertainty of the “big boys” unwinding futures contracts and options adjustments as necessary. This will take precedence unless some major news or fundamental action occurs. Have a great long weekend.

4 Comments

4 Responses to “March 15 Educational 15 minute chart”

  1. jonnels Says:

    Hi Corey,

    Just wanted to say that I have found your blog to be an interesting read. I myself don’t use MACD. I’m just a price, volume, and moving averages guy. But you seem to know your stuff. You’re in my feedreader. Keep up the quality posts!

  2. Simply Options Trader Says:

    Hi Corey,
    Another quality commentary. I’m not sure if its just me, but the 2 recent DIA charts that you posted seems to have spill over to the right side column of your blog and partially hidden.

  3. Corey Says:

    Thank you, Jonnels. In the beginning, I used 5 or 6 indicators beyond price and volume. I had all these lines drawn and everything conflicted and I got excited when everything lined up but – as you can guess – this happened rarely. A lot of professionals only use price and volume alone (along with support/resistance/trendlines) and will use one or two key moving averages. Indicators are all derivatives of price and are just crutches to help you see what’s already there. We are all different and what most people find is that keeping charts simple works best.

    Thank you so much for the add and the comment. I promise not to let you down!

    And, yes, I noticed the same thing, Simply Options Trader, on my friend’s computer this afternoon. His screen resolution is smaller and thus viewing area is smaller. I use a widescreen monitor and the posting section of the blog appears to be formatted with variable width for each user’s screen. I will try to shrink these charts and post smaller charts from now on, or I will link larger charts on different pages, rather than on the blog. I am a fan of large charts, and feel like the above charts are too small. I will continue to work on this and I thank you for your comment – without it, I would not have known.

    Corey

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