Monday, February 9, 2015

My Daily Notes - Patterns and Surprises

*****There 's no doubt that any news event can trigger a surprising action in the markets. What is often forgotten however, is that much of the so called "news" that triggers the market action is most often already anticipated.

I'm not speaking of sudden disasters, but I'm speaking of news events that are often enough discussed, but not necessarily known. The patterns tend to actually foretell these better because, on the whole, people are waiting for the news. In short, the so called "news" is anticipated and financial institutions, market brokers, traders, are ready to act quickly on the announcement.  Real surprises very seldom happen; in fact in the last sixteen years I can only remember two. Real surprises will take the market up or down rapidly and in unison, locally and globally. They tend to tear markets apart so I am all for keeping those to a minimum.

Often we'll see anticipation in the patterns not knowing exactly whether it will fail or continue, but we can certainly plan for their direction according to historical and usual behavior.

The $DJIA ended Friday at a point of indecision rising higher once it broke above the 17428 I mentioned last Monday.  Now looking to possibly test the 18k and the high of December, but it may be a harder sell in this environment to keep it at that level.  Watch the 17890 to 17950 area as resistance points. Testing the 17660 is also possible once it breaks down the 17745. We also have to keep in mind that in this environment, 200+ point ranges are not surprising. So certainly  they can be anticipated.

Pattern on the $NDX  suggest possible breakdown below the 4215 even with the 4200 support to the 4175 level. A higher trend will need to wait for topping 4275 and will have a struggle unless it can break above and hold the 4300 at which time the 4325 to 4350 become possible.

Next, the $SPX has a challenge to top the 2072 with much needed faith in being able to hold and reach for the 2080 and then to a possible high test. It will also have to hold the 2040 and 2020 levels.

The struggle is evident in all charts as faith is being tested at these levels, so let's hope for no surprises.

Happy Trading, Living and Dancing

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