Gap fill — next support levels and some Zen

  • Posted by
  • on June 11th, 2012

 

The bears pushed the $SPY below the 20sma which means they could try to gain some momentum.  Next areas of support and possible trade ideas:

 

$IWM will likely be the first to gap fill — near 74.6, and possible overshoot into what will be S1 tomorrow at 74.3.   As our readers know we like the idea of one index hitting and going through, and then buying the next support level on the second index.   Note recently how $SPY went through 200sma but $QQQ held like a champ (and perfect bounce on the $NQ_F).   Same idea.

SPY has a number of juicy support spots coming which can either be traded as targets to (trade trend)– or wait and trade against (contra).   The 200sma will be at 129.1 while gap fill and S2 will be near 129.3.   If market hits those levels we would be stalking for a trade long against those areas.

$QQQ gap fill near 61.1 with S2 coming in at 61.26 tomorrow– that zone should be of interest if bears can push that hard.

It’s a volatile tape and we like to approach it zen-like.  We have a plan short (if trending on EMA, get short with aforementioned support levels as targets); long (wait until support hits and buy against that with fixed stop); and break-out longs if market catches mojo with a host of decent alerts above.   We’ve been saying this to our subscribers since 2006 but it’s even more true today than it was back then:  “Have all the opinions you want from 4 PM to 9:30 AM but once the market opens, go in empty, and just trade the set-ups.”

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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