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Day Trading Technical Analysis


Day trading Technical Analysis:         

Wow what a wild ride in the markets this week! These markets are irrational and extreme caution should be used.  As we examine the charts anything can happen here.   As we all know the rally on thursday was quite impressive however  internals are still negative and we are still in a downtrend.  We need to see the Dow recapture 11,700 and the S&P 1300 to get excited that a possible reversal is in place.   

 Dow Industrials:      Support: 10,800 –  11,120         Resistance:  11,500 – 11,700

The Dow Industrials bounced off support of 11,300 and is know testing horizontal resistance.  

S&P 500:  Trend line Support of 1210-1235   Resistance at 1260- 1270-1280

S&P 500 and the markets did bounce and is now  headed to  key resistance of 1260. Recapture of this level would be a good sign that this short term rally may have legs.

Spy:  Support  123.35  – Resistance 126.50 – 128 – 130

Spiders broke down support and rallied back to close at the highs.  The trend longer term trend still remains to the down side. If we can regain 130 and close above this level this would also be a bullish sign.

QQQQ  Support 42-88   Resistance 44 – 46 –  47.50

Q’S were still the laggard this week but also staged a impressive comeback.  It two had closed below support and snapped back above it.  This index is oversold and an expected bounce would be in the cards.

Iwm:  Support 71.75    resistance 73.30

Iwm was the strongest of the indexes however it did break its 200ma daily support. Iwm did retest the 70 area and recaptured  this key level.   

XLF:  Support 19.80  Resistance 22.50

Xlf held up again this week with a little help from the Federal Reserve.  To actually trade this index on a direction is anyone’s guess.  There is a ton of headline risk Use cation.

Quote of the day:

“I like thinking big.  If your going to be thinking anyway,  You might as well think big.

  Donald Trump

Keep in mind the trend is your friend.  Have a great day!!



  1. Luigi "spec" Vigilante
    September 13, 2008 at 5:49 am

    dear keystonetrading team, first of all, im very pleased about your blog, as its always important and interesting to share views and observations among pro specs. regarding the irrationality of this week’s markets, i always remind new traders that markets are very rational, its our mind’s limited capability to metabolize all information at fast speed that makes markets look like irrational. the concept of irrationality of markets is overly abused and feeds the blame game of clueless brokers and money-losing traders.
    e.g. on friday the irrationality view (e.g. the one marketed by tv networks etc etc) was implying that index futures would have closed down for the day because of all these uncertainties in financials/economy but the simple rational view was: do u really want to be short into the w/e? particularly given that last monday, market gapped up so much on a piece of news that we still still dont know if it was bullish or bearish? … most of traders are short-term memory animals, so the simple rational answer was no. and in fact, as a rational consequence, market rips into the close and spooz, naz, russell2000 even manage to close with a modest plus sign. But still, after the close, many players that got interviewed said markets got strong into the close because the financials problems will be smoothed by an announcement during the w/e and/or because there was some bottom fishing ahead of next week earnings, etc etc … ; all these explanations can easily be interpreted as irrational by somebody that “rationally” thinks that markets should collapse in the days ahead due to all the subprime mess (that is still alive and real) …

  2. Luigi "spec" Vigilante
    September 21, 2008 at 8:01 pm

    dear techtrader, markets are never irrational; it’s the human mind that, being unable to metabolize information at fast speed, makes markets gyrations look like irrational. the concept of markets irrationality is the result of the old blame-game of money-losing traders and clueless journalists. markets are simply governed by unpredictable determinism not by pure randomness.

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