Stock Market Technical Analysis Blog
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In the market today the S&P took an early drop due to it stopping at its lower channel line right at the bell yesterday as I pointed out in last night's blog. Stopping at that line is what kept us from going long yesterday but by the closing hour of the day Team Yellen had prepared another weekend happy meal trade for everyone and we decided to take a bite, buying the SPY at 2:30 pm today. Over the past 5 weeks, the weekend trade has started earlier each week starting out as a 2:45 pm entry on the first one and then last week it started at midday with the bulk of the money being made in the run up to the Friday bell instead of a gap open Monday. If we had sold at the bell last Friday we would have had a nice profit for the afternoon but ended up nearly flat with the failed gap opening on Monday. Once again this is another high risk trade but as the pattern rotates earlier, we decided a closing entry today had the best chance of capturing lift tomorrow.
The reason behind our entry can be seen in the charts above. In chart 1, the S&P finally reentered the blue channel before the bell as the VIX dropped out of its blue channel. We combined these channel requirements with the lower chart above, one of our favorite EMA pairs, that is showing a high quality lift scenario ready to begin at the open tomorrow. Between the two, we felt it is worth the risk to trade Team Yellen's weekend happy meal once again. The question will be whether to sell tomorrow or go ahead and hold until Monday which is losing favor after the past two weekends.
Trade well my friends
Alan
