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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (41221)	5/28/2004 2:11:05 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69326

AFTER MIDNIGHT Market Commentary by Toni Hansen May 27, 2004 Good morning! Wednesday had a very narrow range as a result of the prior day's trend move. The rally from Tuesday exhausted the market and it needed time to correct. Therefore, we got the back and forth action off support and resistance levels just as we were looking for going into the day and it was a nice day for pivots. Unfortunately, the range was so narrow that those pivots and the trades that came with them meant that you had to spend the day scalping, which not every trader is cut out for since it tends to involve a lot more confidence in being correct at identifying your support and resistance levels well, not to mention quick execution skills. Along with the trading range itself, the action was choppy and there was a lot of overlap from bar to bar in terms of prices on the 5 minute charts. This mean that you really had to time things well, although overall I felt it was not a difficult day at all to see the support and resistance levels themselves. The moves were very comparable to each other throughout the day and the market traded well technically speaking. Off lows the pivots followed through a bit more strongly than they did off highs where they tended to pivot and then form 2 minute Avalanches a good 4 or 5 times throughout the day coming off each high so this gave a slight bullish bias into the afternoon. What this more bullish action actually did though was serve to make me more and more reluctant to go long, because each new high was only breaking moderately. Since that is just trapping more and more bulls with each try who then get stuck on the pullback, the market can flip quickly and sell off sharply into the afternoon. It looked like we might see this going into the news conference on the terrorist threats around 13:30-14:00 ET, but we never got any confirmation last the 2 minute Avalanches and the range just ended up holding into the close with more of the same. Going into Thursday the daily Commodity Channel Indexes are coming into prior highs in the Nasdaq, SP500 and Dow Jones Ind. Ave. These are in the +200 levels which tend to indicate that the market is overbought at least in the short term. I do still have the same concerns as well that I had going into yesterday afternoon where we have slightly higher highs but no significant breakouts, which can tend to create panic if the buying does not follow through. As a result, while I'm not going to rule it out because there isn't quite that strong of daily resistance levels hitting yet, I would urge a great deal more caution on longs. I do not have any reason to go short though at this point since we did hold up Wednesday afternoon and that was rather impressive in my book, so I'm not going to try to fight the trend from the last two days but will just wait and see what the intraday action brings me. Typically a trend move like this intraday does not last more than 3 days max without a larger correction on the 15-30 minute charts. Upcoming Economic Reports and Events: May 27: Chain Deflator-Prel. for Q1 (8:30 am), GDP-Prel. for Q1 (8:30 am), Initial Claims 05/22 (8:30 am), Help-Wanted Index for Apr (10:00 am) May 28: Personal Income for Apr (8:30 am), Personal Spending for Apr (8:30 am), Mich Sentiment-Rev. for MAy (9:45 am), Chicago PMI for May (10:00 am) May 31: Chicago PMI for May (10:00 am) Jun 01: ISM Index for May (10:00 am), Construction Spending for Apr (10:00 am), Auto Sales for May (12:00 am), Truck Sales for May (12:00 am) Earnings Announcements of Interest: (A)= Earnings after the close, (B)= Earnings before the open, (?) = Earnings time not specified at the time of this writing Only stocks with an average daily volume of 500K+ are listed. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing May 27: COST (B) Toni Hansen is a Market Analyst and Trader with www.tradingfrommainstreet.com. She can be reached at Toni@tradingfrommainstreet.com. Disclaimer: Trading in securities may

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