Off to the Races!

Mar 11, 2008: 1:27 PM CST

I think the Market shocked a lot of people today by making such a large volatility upwards price move, both in reaction to the Fed announcing a $200 Billion stimulus package to help the credit crisis, and by shorts covering to avoid being steamrolled (combined with new longs buying in anticipation of a bottom – or bottom fishing).

Let’s peek at the intraday action just before the close:


The opening gap that was beyond 100 Dow points was the first major clue that a trend day up was likely to occur. Breadth was highly skewed to the upside, though the near 50% gap fade took care of some of the disparity, only to have it resurface into the afternoon.

Both on the 5-minute (not shown) and the 15-minute chart, price pulled back to key moving average support before pausing and rocketing higher into the later afternoon, forming a neat 45 degree angle bull flag which has just now achieved its price projection target (which also corresponded with the falling 200 period moving average on the 15 minute chart).

Although the pattern is similar on the QQQQ (NASDAQ ETF), price breached the key moving average support levels there (further confirming my preference as a Dow Jones ETF and @YM Dow Mini Futures trader):

Also, I have not annotated this QQQQ chart so you can see the pure price patterns and momentum readings as they exist currently. Notice the recent divergence that has formed as price made its most recent up-swing into resistance.

The bull flag pattern here also completed its objective and appears to be failing currently at resistance.

Today will be an excellent day for you to go back, print out for your records, and annotate the action for the betterment of your pattern recognition skills, and will serve as an example of a reversal countertrend-day up.


2 Responses to “Off to the Races!”

  1. “The Day it Was” Links | Stock Picks and Discussion at Says:

    […] Off to the races […]

  2. Stock Market Divergences and Other Pattern Recognition Themes for Tuesday | Forex Hour to Hour - Forex Trading News, Forex System Reviews, Twitter Updates Says:

    […] More Pattern Recognition – Check out the chart-based pattern recognition post on the Afraid to Trade blog that captured the day’s action. And, for a different pattern that […]