Rough Intraday Selloff

May 21, 2008: 1:34 PM CST

I figured we might get some continued downside in the broader market today, but I’m always surprised at how swift and rapid these sell-offs actually are.  Let’s take a quick look at the action so far as we near 2:30 EST in the trading day.

I’ll be using one chart created ‘on the fly’ from Tradestation, showing the DIA’s 5-minute chart with the Breadth window overlayed on the chart:


(Click for full-size image)

I’ll try to analyze the action later this evening, but the day began with a near perfect bear flag into resistance (via the combined 20 and 50 period moving averages) which set up a nice trade (which was confirmed by a new momentum low – this is my “impulse sell” trade).  The target was the intraday S1 pivot (pink line) which was exceeded.

I still expected lower prices and held a core position with a stop just above the falling 50 period MA which came ever so close to being executed, but I’ve found to play core positions with a looser stop because large moves in the intraday market are often preceded by a ‘false’ swing which often take out close stops.

Nevertheless, price fell back down into a new impulse down to the bottom of the Bollinger Bands before swinging back up to form yet another classic “doji at resistance” trade set-up which surprised those who took the trade with a large intraday windfall profit (with the target above the S2 Pivot, which was quickly exceeded).

We’ve formed a new momentum low and a large impulse down.  The 15-minute chart (and somewhat on the 30-minute chart) showed a classic bear flag for the intraday action so far (check it out).

I’m also including a ‘real time’ (intraday) image from StockCharts.com which shows that the DIA rests at the rising 50 period moving average (while the Dow Jones – not pictured – actually went beneath this level today).

Let’s see how this wild day (but welcome because of its increase in volatility) resolves into the close.

2 Comments

2 Responses to “Rough Intraday Selloff”

  1. PC Says:

    Q: How do you overlay the $ADV w/ the $DECL on the same chart in TradeStation? Appreciate your work. Thanks.

  2. Corey Rosenbloom Says:

    PC,

    It’s actually easier than you think. I was in a hurry and wanted to get the post up quickly and so all I did was drag the smaller chart window I use to follow the AD lines into the 5-minute chart window and took a standard screen cap.

    I have separate windows for the different indicators I’m following in small windows at the bottom of the screen. It’s just dragging them where you want them – there’s no way to show such a display within the same window.