Pushing The Time Frame Out
Recently, the column has been
trying to portray the lack of volatility in our bread-and-butter HVT setups. So
we’ve been, as indicated, “pushing the time frame out.â€Â The last few days have
had it all in the way of whipsaws, hard S&P reversals at key levels (892, 886,
882, 871…), and even some good news on the war front. We have received several
e-mails from our readers searching for a reason as to the current whipsaw nature
of our beloved market.Â
I think the lack of follow through comes in the fact that
we are currently at a decision point for traders. The market is being forced to
digest a wealth of data including the possibility of war, economic and political
factors that all have a death grip on the market right now. Â
We have many hard reversals at key technical levels with
great institutional participation. We, as well as the institutions, are trying
to play these key levels that are very heavily traded. With all the current
events, traders are jittery and hesitant to take a stand on the direction of the
market. The lack of follow through, as mentioned yesterday, comes in as the
institutions will be right there offered a half- to 1 point higher on a move up
to just to put the breaks on, or of course, bid right below on a move
down…because no one will take a stand.Â
Take a look at the chart below. What it looks like a mess
to me is also exactly what I’ve been describing above, whipsaws at key technical
levels with little conviction once the reversal has been established.
 
Seriously though, I think it just could be an ABC pattern
forming after the 5-wave pattern down beginning earlier this month. Moral of the
story, we will break, and soon. Want to see evidence…take a look at KLAC. Look
at all 4 key reversal points on the daily over the last two months. They all
occurred with a volume spike 30% above average as well as above average volume
on the days preceding and following the volume spike high. Oh, plus it’s at 38%
retracement to the 20-period DMA
These volume spikes all tie into what I was speaking about
above. Buyers and sellers battle at certain points by trading shares with
greater intensity and frequency at key levels. Eventually one group will win,
one group will lose, and consolidation will end with prices moving away from the
battleground either to the upside or the downside. This is what happened today
in KLAC, we had the heaviest volume in almost 2 1/2 weeks combined with the
smallest range in the same amount of time. There is a battle going on and a
winner will emerge. As far as the S&Ps, I would feel suspect about continuing
higher without the gap below us being filled first at the 840 level.
Key Technical
Numbers (futures):
S&Ps |
Nasdaq |
| 902 | 1029.50 |
| 897 | 1024 |
| 895 | 1021.25 |
| 891 | *1007-9.50* |
| 889 | *1002.50* |
| 879-81 | 995 |
| 870 | 984.50 |
| 865-66 | 976 |
| 854 | 971 |
As always, feel free to send me your comments and
questions. See you in TradersWire.
Todd Gordon.
P.S. Can you believe Ralphie is finally gone?!
Â