Tis’ the Season

For the morning of September 28th, here are notes for the opening trade. We moved from -5 points in emini in the overnight to +5 by the early morning. we opened at 1044 and within 30 minutes touched 1054. Great for a short term momentum trade.

On the 5 min, 1 day candle trend chart I noticed the following observation which led to a market jump of 10 points in the S&P Emini.

  • A touch/bounce on the SMA 50
  • Higher volume with the engulfing pattern
  • Engulfing pattern on first open candle
  • Possible bull flag (turned out to be a bull flag)
  • Reversal confirmation with the break past 1048

Picture 2

The engulfing pattern doesn’t look true on this screen shot, but until the last second on the five minute scale it was. This makes the difference between watching a chart live and looking at past data for trading ideas.

Although not as strong, the hour chart had bull tendencies. After our run up to 1075 last week we had retraced nicely into the 1030s. This where we landed in the overnight. When Europe opened the we strengthened our support and went higher.

  • 10/30 EMA crossover on higher volume
  • Hour trendline break to the upside
  • Rising RSI still below 80

Picture 3

Simply because the morning turned out to be a bullish momentum trade doesn’t mean the rest of the week will. We still have a number of resistance points to conquer before moving higher. The downside to the 1020s still looks more inviting to me based on rapid advances of the last two weeks and selling power into the 1050s and 1060s. We are in earnings season as well. This indicates at one news break something could trigger the market to run higher or lower with no regard for technicals, or fundementals. For the week I would watch the following news events.

  • Tuesday
  • GDP for Q2
  • ADP Employment
  • PMI Chicago
  • Wednesday
  • Crude Inventories
  • Initial Claims
  • Construction Spending
  • Personal Spending
  • Thursday
  • Nonfarm payroles
  • Unemployment Rate
  • Factory Orders

Stay hedged, stay happy,

Margin of safety