Elliott Wave.com Free Week is Here!

Jul 20, 2009: 11:09 AM CST

A special announcement – every few months, Elliott Wave International (www.elliottwave.com) offers a “Free Week” for traders to see all about the services offered – this week is open and will run to Wednesday July 22nd.

It actually began last week but there is still time to check out what EWI offers for subscribers, including timely updates, market forecasts, education, large monthly analysis pieces, and more.

Click to visit and learn all what is offered from EWI’s “Free Week at Elliott Wave” page.

The free trial includes Senior Commodity Analyst Jeffrey Kennedy’s forecasts for up to 18 markets on daily and monthly timeframes.

ElliottWave.com is the leading Elliott Wave service which was founded by Robert Prechter, CMT and has expanded to a team of over 30 analysts who have been providing trading commentary, education, and analysis since 1979.

Like my site, they provide trading education along with analysis and commentary across broad markets that span from International Markets, Commodities, Bonds, Dow/NASDAQ/SP500, and more.

For those wanting to learn more about the Wave Principle, be sure to visit their free (and also premium) Education Section as a basis for where to begin.

Corey Rosenbloom, CMT


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India’s NIFTY Bounces off Confluence Support July 18

Jul 18, 2009: 5:40 PM CST

India’s “Nifty 50″ stock index gave us all an example of how to identify confluence support and what happens when price pulls back – especially from a bear flag – into this level.  Let’s learn a few lessons and look at what might be ahead.  For those of you who don’t follow India’s markets, this chart contains valuable lessons for you as well.

NIFTY Weekly Index:

The 4,000 Index level provided support for this week’s powerful 370 point or 10% rally off that level.  We’re slightly below where the prior week closed, as we lost 10% that week… so price is back to where it started in early July.

I mentioned in my last Nifty Index Update (July 4th) that odds were ripe for a correction, and that I view the whole structure as a larger corrective move (reference that post for the monthly structure).  The initial ‘next swing’ target was this confluence support level, which we have now achieved and held.

In terms of lessons, notice how we identified confluence support by noticing that the 200 week and 20 week moving averages converged at the same level, with the 50 week just below it – moving average convergences are almost always targets to play for, and areas to expect for support (that logic sets up the ‘cradle trade’).

It just so happened that price is bouncing off the 61.8% Fibonacci grid from the highs to the lows (I sometimes draw Fibonacci grids inverted).  This is using the ‘closing price’ method to originate the grid, which often gives better results than spike highs or lows.

Also, 4,000 on an index is psychological “round number” support… all of these held the price last week and set the stage for this week’s bounce.

Let’s drop to the daily chart now.

NIFTY Daily Index:

The lesson to learn from the daily chart is that price formed a significant Negative Divergence that preceded the recent correction down into the 4,000 area.

Also, we have completed an almost perfect Bear Flag down into this level, which also provided a basis for why price was likely to bounce – the price projection level of a bear/bull flag often provides a turning point in markets.

The level to watch closely in the Nifty is 4,500, as that would break above the ‘flag’ of the Bear Flag and would create a higher swing high which could open up a ‘magnet trade’ to the 2009 highs around 4,700.

Like most global markets, we observed a powerful swing up this week – we’ll have to watch closely for continued strength, but again, watch how price reacts to the 4,500 for clues.

If it fails to break above 4,500, then we are still in perhaps the early stages of a down-move.  A break above 4,500 would almost certainly set up a test of the 2009 highs.

For those interested in a broader perspective, I now offer the weekly “Intermarket Technical Reports” (click for more information) which take a top-down monthly, weekly, and daily structural view of key markets and highlight areas to watch, opportunities to play for (on given timeframes), and lessons as I observe them in Bonds, Gold, Stocks, Crude Oil, and the S&P 500.  Thank you to all subscribers and I would love to have you as well as a member!

For full information, please visit the new “Premium” Section of Afraid to Trade.

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A Lesson on Intraday Triangles and Divergences

Jul 17, 2009: 5:28 PM CST

The current S&P 500 60-minute structure (and SPY) give us valuable lessons in two ascending triangle breaks and multi-swing divergences.  Let’s see what we can learn from this chart.

In classic technical analysis, you are taught that ascending triangles (which there are two examples on this chart) are expected to break to the upside.

However, in today’s markets, my suggestion is to take triangles for exactly what they are – consolidation patterns as evidenced by the “Price Alternation” Principle.  Generally, a triangle breaks in the direction of the prevailing trend but doesn’t always give a tradeable edge.

The edge from triangles comes from expecting an ‘expansion’ or impluse swing/move once a clean break has occurred and trading in that direction.

We see in this example that price cleanly broke out of the triangles with gaps… and though you may have thought you were late to the party, odds favored lower prices yet to come due to the expectation for range expansion.

Moving on from triangles to divergences….

We see two examples of a ‘three push’ or multi-swing divergence as we turn the corner into July – both of which preceded tradeable price reversal swings (including this last swing up, which I mentioned as a likely course of action in last Friday’s “Idealized Trades Daily” report).

Generally, when you get a triple-swing divergence, price will form a reversal swing in the direction momentum is building.  I discussed this principle and how to trade “Three Push” patterns in my presentation last Wednesday with FuturePath Trading and LBRGroup – the slides are now available on Linda Raschke’s website for download for attendees.

I wanted to highlight these chart examples as lessons to you.  Each day, I share in-depth “Teaching Moments” and how to recognize trade set-ups and type of day function in my “Idealized Trades” Daily Reports, which also allow me to share my bias and expectations (along with levels to watch) in the upcoming trading day.

Please take a moment to view more information about this new service which is designed to teach you the skills and tricks of the trade necessary to become a better trader through multiple examples of these concepts each day.  Seeing these patterns repeat and having them described to you increases your confidence to trade these patterns and recognize the day’s structure developing in real time “in the heat of battle.”

Corey Rosenbloom, CMT
Afraid to Trade.com

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A Quick Daily Look at Google GOOG and Intel INTC

Jul 17, 2009: 12:53 PM CST

With Google (GOOG) announcing earnings that ‘disappointed’ Thursday night and Intel’s (INTC) earnings earlier in the week surprised, let’s take a quick look as of July 17th at these two market moving stocks.

First, with Google (GOOG):

Google, like Apple (AAPL), has been in a very strong uptrend off the early March lows.  With only one pullback before the June highs, price rose almost without pausing.

The run-up into the June high was tremendously powerful (that’s why people trade Google – for the action and volatility) which terminated in a doji that gapped up into an exhaustion/reversal bar just above $440.

We had an “abc” move down off those highs into what appears to have formed a “double top” at prior resistance with a slight negative momentum divergence.

Notice how volume spiked Thursday as traders/investors took positions in expectation of blow-away profits (similar perhaps to Intel).  Playing the ‘earnings game’ can be very risky, as expectations were not met by Google’s latest announcement.  We are now in a ‘pullback/retracement’ mode.

Next, on to Intel (INTC):

As opposed to Google, expectations for Intel (INTC) were  lower, and so better than expected numbers caused the stock to surge, driving the S&P minis up nine points after Tuesday’s close (which preceded a trend day on Wednesday… though strangely enough Intel formed a doji on Wednesday and a ‘trend day’ on Thursday).

Volume surged to a new 2009 high as did price and the 3/10 momentum oscillator – all signs of fresh and enduring momentum that should lead to higher prices in the established up-trend (though expect a pullback/retracement instead of a parabolic rally – the new momentum high indicates a short-term overbought reading, as do all oscillators).

So it’s a different picture as painted by two market leaders.

For the latest ‘trade triangle’ signals and trend analysis on both Google and Intel – along with any stock of your choosing – type in a stock into MarketClub’s “Trend Analyzer” tool (free) to see what might be in store from a combination of proprietary technical indicators they use.  Alternatively, consider joining Market Club for even more signals, analysis, scans, research, education, and trading videos.

Corey Rosenbloom, CMT
Afraid to Trade.com

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NASDAQ Hits New High for the Year

Jul 16, 2009: 7:44 PM CST

I almost let this bit of news slip me by!  The NASDAQ Index crested above its June high today, creating a fresh new high for 2009.  As strength in the Technology Index can foreshadow strength in the broader market, this is definitely worth a second look.

Without going into too much detail, I mainly wanted to highlight the pop to new highs that took place today.

There was resistance about the 1,850 level but buyers seemed to have no trouble at this level… so far.

Volume is not running at a significantly high level (it’s actually beneath the 50-day average) so buyers would like to see higher volume to confirm the move better.

As long as we’re at new highs, whatever your bias is, buyers are in control.

Corey Rosenbloom, CMT
Afraid to Trade.com

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