Ascending traingle on DJIA; possible breakout?

Flatbookers,

We had a great day yesterday and with pips on the board we will look to build on that today. It would seem that early this trading day the flat top we talked about in our previous post....



... is still in play, but for how long? The eagle-eyed market technicians among us will have spotted something of an ascending traingle, a continuation pattern, forming over the past few weeks. Should we break out and consolidate above 11160 apprx. then we will look for an entry long:






Despite recent success shorting the flat top at 11150, let's be mindful of the enduring uptrend currently playing in global markets:



Nothwithstanding the small short positions we effected at 11150 this morning, we understand that an unwavering bear will lose money in this market. We will stay short below 11160. Above 11160 however, and we will flip the trade in anticipation of a breakout and so a substantive move.

Safe trading Flatbookers

"Investing without research is like playing stud poker and never looking at the cards."
- Peter Lynch

DJIA Flat top @ 11150 within a long term ascending channel

Good Morning Flatbookers,

We sold short DJIA at 11145 yesterday, anticipating a pullback on the back of a near perfect triple top We are now out of that position for 70 odd pips



Our principal focus today however, is an entry long. As depicted on the chart below, despite small declines late in the trading day yesterday and early this morning (GMT), the DJIA is in the midst of a strong ascending channel and an uptrend which, at the time of writing, shows no signs of abating. We will look for an entry long then, circa. 11040 with an initial target of 11150.



Trade safely Flatbookers.

"Someone's sitting in the shade today because someone planted a tree a long time ago."
- Warren Buffett

Bullish channel: DJIA

As per the header and our fleeting post yesterday, technicals are looking fairly bullish on US indices. Ahead of Non-farm payroll data tomorrow, both the Dow Jow Industrial Average and the S&P have established 500 bullish channels:





Pursuant to this, we executed a sizeable long position post market close at 10385 DJIA with a view to hold this until we test the top of the channel or the market consolidates below the channel's lower parameter.

We also managed, though rather fortuitously, to execute a speculative cable short at 1.5123 on the back of enduring descending resistance:



As of 1533 this is looking like a protracted intra-day pullback and so we may add to the position if opportunity sufficient presents itself.


Safe trading flatbookers!

"Our favourite holding period is forever."
-Warren Buffett

Bullish channel on DJIA...

Long executed @ 10385.

More to come.....

DJIA - critical juncture?

On the back of recent price activity, we feel the market has betrayed underlying bearish sentiment and we will begin picking up shorts on rallies going forward. The Dow Jones Industrial Average has crossed, and more importantly consolidated below MA20, all the while in adherence with the descending channel pictured below.



While the debate over Greek aid rages on, here at the flatbook we looked for any significant technical evidence that recent highs of 10733 (DJIA) and 1150 (S&P500) may represent the beginnings of a second leg down. Resistance/support level 10650 on the DJIA and price action around this level is most worthy of mention. Having tested and settled above this level in January, June and July '06, the DJIA continued to the upside for the best part of 15 months to October '07 highs. In Sept '08 we failed at this level and the bottom dropped out of the market until March of last year when we finally stemmed the tide at 6470 (DJIA). Ominously, we tested and failed at this level two weeks ago and have since settled decisively below it.



Thirdly the candlestick pattern that formed as we failed 2 weeks ago at 10650 is comparable to that, formed at Oct '07 highs.



Though it's not quite an evening star formation (there is not a gap between the first and second sticks, and the second and third sticks respectively), the sentiment of indecision is still manifest in both patterns.

To conclude then guys, we are sellers of rallies below 10650 on the DJIA. 2010 could be a very bumpy ride.

Though we've posted it a couple of months back, we'd like to draw your attention once more, to the following video detailing Robert Prechter's (Elliot Wave founder) long term views on equities:



Safe trading all!

"Millions saw the apple fall, but Newton asked why."
- Bernard M. Baruch

S&P 500: Descending channel established? Continued...

Following on from our post yesterday, we have executed a short position at 1103.6 yesterday citing the market's adherence to the descending channel as illustrated in the charts below. We were initially hesitant as the S&P 500 looked as if our descending channel may be the flag of bull flag; upon closer analysis however, the gradient of the flagpole was not anywhere near steep enough when compared with the typical bull flag formation manifest in US Equities:



Post-market close, we placed another sell order - filled at 1100 - on the apparent enduring nature of descending channel resistance. Perhaps more pivotal was yesterday's price action formed something of a bearish harami on the S&P 500 D1(daily). We understand that it didn't completely fit the harami criteria as it didn't open below the previous candlestick's close, but the net effect is not too dissimilar: market indecision. Please see below examples of similar formations, manifest in the S&P 500:







Even as I type this, the formation looks to be playing out better than we could have imagined! Unfortunately however, we exited ahead of MPC and ECB rate decisons at 1092.0 as we didn't want to get clipped in what we would be choppy waters! Next time, eh?

Going forward we have a potential trade on Fiber - EUR/USD on the back of a falling wedge formation this time, but the setup is on the brink of being taken as I type this:



We are long at 1.3790 with a tight stoploss at 1.3750. This level really is make or break for FIBER.

Remember NFP tomorrow, so be sure to check back in the morning ahead of the number!

Profitable trading Traders!

"Remember, I am neither a bear nor a bull, I am an agnostic opportunist. I want to make money short- and long-term. I want to find good situations and exploit them."

- Jim Cramer

S&P 500: Descending channel established? More to come......

Short executed at 1103.4; s/l moved to breakeven. More to come--->

Is this wedge pattern is playing out...

Post Obama's Volcker rule announcement, we remain without position erring on the side of caution. As technical analysts we have to prepare for more downside as our many times mentioned bearish ascending wedge pattern, now begins to break down. Turbulent times ahead traders and so position yourself accordingly in this market. Worthy of mention is that we are not reneging on our medium term mandate which is to buy dips- but we are warning of further downside in the short term. Take a look at the charts and video below and let us know what you think!











Safe trading traders!!

"Wide diversification is only required when investors do not understand what they are doing."
- Warren Buffett

Long entry at 1137,,,

Good morning Flatbookers! We were long Friday at 1137 and 1133 on the S&P 500 on the back of the ever ascending, short-term support cited in our post on January 11th post. We intended to hold this position for the interim period. We moved stop losses to break even whilst the position was substantially in the black and were duely stopped out early this trading day for scratch.

Post slightly worse than expected results from Citigroup - -33¢/share vs -30¢/share forecasted, we will reject re-entry of this long position for now, despite the market offering us a better point of entry. Moreover, the formation of a bearish ascending wedge(see below) presents more of a case for a short position than a long. As such, we will do the only intelligent thing we can do when presented with contradictory evidence; that is remain on the sidelines.



Safe trading, traders!

"I’ve got friends, of course, but my business has always been the same – a one-man affair. That is why I have always played a lone hand."

Edwin Lefevre

Long entry at 1137; more to follow.....

S&P 500 support

Good Morning Flatbookers. Ahead of the ECB rate decision (1245 GMT), US core retail sales and US unemployment claims(1330 GMT), we will remain on the sidelines. Here at the flatbook, we seek to negate being stopped out of a position due to market noise and short-term volatility. However, we do see a prospective entry long at 1034.5 should we get there post 1330 GMT. Our stop will be very tight at 1027.5. There has been enduring ascending support as of mid-March 2009 and this provides the fundament of our 1034.5 play. Secondarily, RSI on the D1 chart is facing up and so is bullish.

Profitable trading Flatbookers!



"Frankly, I don't see markets; I see risks, rewards, and money." Larry Hite

What does 2010 have in store?

Happy New Year flatbookers! May 2010 be a profitable one for your all. Now down to business. To reference our December 1st post we believe that the S&P 500 has overcome the most robust technical threat since March in long-term descending resistance and November/December's flattop at 1120. Last Friday's positive reaction to worse than expected Non-Farm Payroll data (-85k actual vs -3k forecast), only served to underline the market's bullish mood.

Now at 1145, it would seem that momentum to the upside has prevailed, for now, and as Technical Analysts we are now buyers of dips. "What's our entry?", I hear you cry. Here at the flatbook we are currently on the sidelines and waiting for a possible long entry at 1127. The hyptonuse of the aforementioned ascending triangle could act as support within the ascending channel (pictured), hence our prospective entry price. We will continue to monitor price action however, and will post if we move on anything.



Safe Trading all!

"The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think." Jesse Livermore

S&P 500 Update III

We were stopped out at 1120.5 on 22nd December. We theorized that the flattop would not break pre-2010, as traders wound down their positions and indicators continued to look bearish. In retrospect, we might've been better positioned had we paid attention to the ascending triangle formed on the d1, from November onwards:



We saw a similar continuation pattern on d1 Gold over a similar time period:



An oversight on our part; a small setback that we will take in our stride an learn from going forward.

"...there are no mistakes, only lessons." Cherie Carter-Scott

S&P 500 Update Part II

As per the post before last (Dec 8th) we are holding a sizeable short position. We came close to being stopped out, however, the flat top saved our bacon. It really does look like resistance is in place. Let's see where we go from here.....

Happy trading traders!

Where next? Robert Prechter of Elliott Wave on Bloomberg / Oscar of Live with Oscar

Two very contrasting opinions from two well respected technical analysts. Ah, the subjectivity of TA....

S&P500 Update

To be clear, we are still short the S&P500 and inttend to remain short for the weeks leading up to Christmas. The market failed at the descending resistance, highlighted on our post on 1st December and short-term indicators are now pointing lower. Both of which underline the quality of the thinking behind this trade.

I received a mail from a flatbook reader recently asking for proof that we take our trades. In response to said reader's email, please see below, a screenshot belonging to a key flatbook contributor. She currently holds one position: an S&P500 short on the back of our call on 1st December.

Wishing you all well this festive period!

Critical juncture for S&P500?

After another brief hiatus, here at the flatbook we are back. Posting for posting's sake is not in our nature and it was our feeling that over the course of November, market conditions yielded very few high probability setups.

Thanksgiving week saw an increase in volatility on light volume as was to be expected. As panic on the back of an allegedly exaggerated Dubai World crisis fades to black, we enter a week headlined by the ECB rate decision on Thursday and US NFP data on Friday, both of which have the potential to founder market gains. Technically we find ourself ensconced on tested descending resistance (see below). Notwithstanding indicators appearing decidedly indecisive, we have executed a sizeable, yet somewheat speculative short position at 1106 with stops above recent highs. Let the flatbook go on the record and say that we expect a healthy pullback into the Christmas period as traders unwind their books and take some chips off the table. Indeed this is a critical juncture for global markets, and our direction over the next couple of weeks may provide insight as to whether we are in a genuine bull market or a bear market rally.

Safe Trading all!

Long S&P500 @ 1043.5

Although we have profited substantially from shorts at 1101 earlier this week, let us not forget our mandate: buy dips! Since March lows of 666 we have consistently made higher highs and higher lows. Today, ahead of 3Q US GDP, the S&P500 is testing ascending support that has been in play since those market lows. Is this reason sufficient for us to effect a long position? In and of itself, no. Consider this however: The EUR/USD, often considered a mirror of global indice health, is also at a key level of support. The stochastics on both charts seem to bottoming out and RSIs both look to turning higher. On this basis, we have executed a sizeable long position at 1043.5 on the S&P500 with a moderate stop loss to compensate for the inevitable noise around the US GDP data. Please note, we would not normally effect a position ahead of such a key figure, howerver, the statistical and technical evidence in favour of our doing so is overwhelming.

Safe trading all!

S&P 500 support at 1054.5?

Here at the flatbook we will action a long position (in line with our 'buy dips' mandate) at 1054.5 with moderately sized stops - 50 pips. We anticipate a bounce from this level due to the considerable support as illustrated on the d1 chart below.

Safe trading all!

Short-term S&P500 support

Our target for our short position today of 1090.0, as illustrated below, was hit triggering our limit orders. We are considering effecting a speculative long position at the ascending support (1088).

Safe trading all!