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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

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* Trade Wars have escalated and now include diplomatic wars PLUS President Trump is cannibalizing prior U.S. market gains
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Thursday, July 21, 2011

Seeing Double?...YM, ES, NQ & TF...

Am I really seeing double? As I look at the Daily charts of the YM, ES, NQ & TF, I'm noticing something else besides their large sideways trading ranges since the beginning of the year...and that is the attempt to form double cups & handles. The first formation is delineated with the pink numbers, and the second by yellow ones.

Apparently, V-bottom cups don't produce as strong a signal for the handle to break out by 100% of the depth of the cup as the ones whose bottoms are more rounded. The first cup's attempt to form a 100% handle extension failed on the YM after a V-bottom bounce. The second cup's bottom produced a double bottom (and came close to hitting the bottom of the first cup) and bounced off the rising 200sma (pink). A potential handle is forming after a 50% fib retracement and bounced off the flattening/falling 50sma. A 100%  handle breakout from the top of Cup 2 could, theoretically, push price up to around 13600 by the end of August if the rising trendline trajectory plays out. However, volumes on the handle pullback should be lighter than those on the right side of the cup...the volumes on this pullback are heavier and may thwart such an attempt. Also, as I'm writing this during today's intraday action, volumes on this last bounce are lower than the last pullback. It remains to be seen as to how this will play out.



The first cup's attempt to form a 100% handle extension failed on the ES after a V-bottom bounce. The second cup's bottom produced a double bottom (and came close to hitting the bottom of the first cup) and bounced off the rising 200sma (pink). A potential handle is forming after a 60% fib retracement and bounced off the falling 50sma. A 100% handle breakout from the top of Cup 2 could, theoretically, push price up to around 1450 by the end of August if the YM's trajectory plays out and this follows suit. However, volumes on the handle pullback should be lighter than those on the right side of the cup...the volumes on this pullback are heavier and may thwart such an attempt. Also, as I'm writing this, volumes on this last bounce are lower than the last pullback. Additionally, a fib retracement of anything greater than 50% dilutes the chances that this is an actual cup and handle formation. It remains to be seen as to how this will play out.


The first cup's attempt to form a 100% handle extension failed on the NQ after a V-bottom bounce. The second cup's bottom produced an inverted H&S formation (and re-tested the bottom of the first cup) and bounced just beneath the rising 200sma (pink). A potential handle is forming after a 40-50% fib retracement and bounced off the flattening/falling 50sma. A 100% handle breakout from the top of Cup 2 could, theoretically, push price up to around 2650 by the end of August if the YM's trajectory plays out and this follows suit. However, volumes on the handle pullback should be lighter than those on the right side of the cup...the volumes on this pullback are heavier and may thwart such an attempt. Also, as I'm writing this, volumes on this last bounce are lower than the last pullback. It remains to be seen as to how this will play out.


The first cup's attempt to form a 100% handle extension failed on the TF after a V-bottom bounce. The second cup's bottom produced an inverted H&S formation (and re-tested the bottom of the first cup) and bounced off the rising 200sma (pink). A potential handle is forming after a 50-60% fib retracement and bounced off the falling 50sma. A 100% handle breakout from the top of Cup 2 could, theoretically, push price up to around 940 by the end of August if the YM's trajectory plays out and this follows suit. However, volumes on the handle pullback should be lighter than those on the right side of the cup...the volumes on this pullback are heavier and may thwart such an attempt. Also, as I'm writing this, volumes on this last bounce are lower than the last pullback. Additionally, a fib retracement of anything greater than 50% dilutes the chances that this is an actual cup and handle formation. It remains to be seen as to how this will play out.


In any event, the intraday swings continue to be large, sharp and unwieldy as this unconfirmed formation attempts to be built by the MM's in their bid to push the markets higher without any additional QE at the moment.