Focusing On What The Market Gives Me

The markets finally showed us a
little downside action yesterday, but frankly I was expecting more of a “panic”
sell. Is it due to summer slowness?
Institutions supporting the averages to prevent another wholesale
liquidation? Or maybe the bottom has put
in? I don’t know the answer, I only
know what the daily charts are telling me, and it looks like more downside is to
be expected. I need to forget about the
panic selling of 2000 for now which made for some fabulous trading and focus
just on what the market is giving me on a per-trade basis.
However, given that the indices are at critical technical levels, be
prepared to step up to the plate and take full advantage.

The three daily charts below
are not pretty. The S&Ps closed below
their 50% and 60% retracement levels and now have a downside confirmation as
indicated by the MACD. The next level for
the S&Ps is the previous low of 1174 from July 11.

The Nasdaq also closed below
its 60% retracement but did not close below the low set on July 11 of 1612.
Again, the MACD confirms the beginning of a downtrend.

Let’s not forget the Dow.
While it did close just above its 50% retracement of 10,232, it still
looks vulnerable due to MACD cross. The
Dow may still find support at 10,000 or 9,968.

All in all, the markets look
vulnerable, but make no mistake, there have been no “lay-up” trades just
yet, so don’t let your guard down, and use stops, mental or actual.
Please note some key technical intraday numbers for the futures:

S&P’s                       
NASDAQ1191.83                     
1655.67

1180.27          
          
1621.83

1166.73                     
1591.67

As usual, I will be in TradersWire
periodically sharing my observations. Feel
free to send me your comments and questions, davef@tradingmarkets.com.

Dave