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Weekly Market Recap

Notes to Charts:
                                               
Daily Chart:

• This Daily chart here defines the trading range the market which started back in November 2004
• Market broke through the support area in Mid April ( A ), however a quick return above the 20 day EMA alerted us to a possible false breakdown
• MAs went into an uptrend at ( B) with the MA crossover up.  This marked the start of the uptrend to new multi-year highs
• Recent pullback in the market was supported right at the MAs ( C ). 
• Last two significant market retracements (Aug & Sep) were supported by the previous resistance area
• 20 EMA has crossed below the 50 EMA, representing a new Daily Chart downtrend ( D ). 
• We do note a minor support area within the trading range, that the market found temporary support (gray line)
• Market rallied today to close above the 5 day EMA ( E ), changing its short term bias to uptrend.  Frequent crossover of this EMA is characteristic of a sideways trend
• Market also rallied ahead to close above the 20 day EMA.  We have noted many longer term trends use this MA as a critical support/resistance area.  We will continue to monitor market action around this MA carefully
• Stochastics nearly turning down but remains in an uptrend( F ).  We do not put much weight behind crossovers in the middle of the 20 and 80 lines 

Hourly Chart:    

• Hourly Downtrend starts with crossover down ( G )
• Market rallied off its bottom to the downtrending MAs ( H ).  Note that the Hourly Market remained in a downtrend with the 20 EMA below the 50 EMA
• After a gap down near the trend lows, the market surged ahead to trade above the previous resistance area ( I ), creating the look of a double bottom. 
• The surge past the previous resistance failed miserably creating a false double bottom signal.  Note that despite the rally, the 20 EMA remained below the 50 EMA, keeping the downtrend in tact
• Market rallied ahead to take out the highs of the last rally.  More importantly the MAs have turned up into an uptrend with the 20 EMA now above the 50 EMA ( J ).  While we are still below a resistance area, we do note a change in trend
• Market downturn today has created yet another MA crossover ( K ).  Due to the market's sideways trading range we do not put much weight behind of this.  We will continue to look at the recent lows and the 1202 resistance area for signs of possible breakouts/breakdowns

5 Minute Chart:                                                                             

• The intraday market went into an intraday uptrend with a crossover up at point ( L ).  Note the smooth trend above the 20 EMA that followed

Assessment:

Due to the recent weakness in the market, the long term trend is now down with the 20 day EMA below the 50 day EMA.  The market is still in a large trading range, so we do not put too much weight behind of this.  We will keep a close watch of the market near the 20 day EMA.  This can often times provide key resistance/support areas for larger trends. 

The short term trend is still sideways to down with the 20 EMA below the 50 EMA.  Daily chart does exhibit some warning signs to the downtrending bias with prices above the 5 day EMA and stochastics in an uptrend.  We will continue to watch this resistance area and the factors noted above closely for any changes in the short term trend.

Both the long term and short term market trends are bearish.  However, the Hourly chart continues to trade in more of a sideways range, which produces very tough trading conditions.  We will therefore trade very cautiously while looking for opportunities in both directions (slight bias to the short side of the market).

These charts are here to help you get a visual picture of where we stand in the market from a broad to a very detailed perspective. Recognize where we are and what kind of trend we are in, rather than trying to predict market direction.

Join us on our nightly newsletter as we break the market down on a nightly basis to help traders identify major market trends and opportunities.  We also point out significant warning signs that lead up to market reversals before they happen.

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Enjoy swing trading...

Ken Matsumoto,
CEO & Swing Trader, SwingTrades.com