March 6, 2013

Logical Market Update: DJIA Hits All Time High & Hype – Trading Opportunities Intraday

DJIA Hits Another All Time High – But For All the Wrong Reasons – Don’t Get Caught in the Hype – Trading Opportunities Remain High on an Intraday Basis – DTS Continues to Shine!

The DJIA hit an all time high on Tuesday and then bettered that high on Wednesday, but for all the wrong reasons. The U.S. economy is not doing that great, the gridlock in Washington continues. Interest rates are still being artificially held lower via a continued massive printing of money. The Eurozone situation is again deteriorating; North Korea is threatening to nullify the treaty that ended the Korean War nearly 60 years ago.

The FED will continue to hold interest rates low at least for the balance of 2013 and likely into 2014. This has allowed corporate borrowing at rates unavailable to the general public and has improved corporate earnings in the process. This is what is showing up in the markets continuous march higher against all odds. As I have discussed previously and in greater detail, the DJIA, S&P 500 and Russell 2000 will continue to move to all time highs on a backdrop of negative input.

The markets continue to provide numerous trading opportunities to short term traders. Since no market continues to go up or down forever what becomes of importance is adopting a trading system that accurately identifies the shifts in trends. DTS offers three (scalper, swing, and trend) systems which when coupled with their Trade Manager offer a complete and unique system to trade with.

Observations from this week’s trade:

The corrections seen at the end of February were quick and steep as I thought they would be. The resumption of the rallies was just as quick and just as steep quickly pushing through resistance points that created the set up for new highs in the DJIA and S&P 500. The technical picture though has quickly gone from over bought to over sold to over bought again. If we begin to see volume slow and two-way trade evaporate, the markets would return to inching their way higher. So, it is the corrections that continue to provide fresh energy for the markets to continue along their paths.

I am again looking for a correction in the market, but one that is likely much shorter in duration and depth than what just took place. The rallies underway should continue with additional new highs put in along the way before a more sustained decline begins.

As for trading opportunities, the important factor will be to follow the trend and not your emotions. Trading opportunities should remain plentiful. Equities, treasuries, and the US $/Euro remain very active.

Here is an updated list of the markets that DTS (all three birds) are producing numerous signals and have been very profitable:

• US$/Euro
• GS (Goldman Sachs)
• AAPL (Apple Computer)
• GOOG (Google)
• LNKD (LinkedIn)
• E-mini S&P 500
• TLT (Treasury Bond Long ETF)
• TBT (Treasury Bond Short ETF)
• LNKD

Expectations for Thursday (3/7/2013)

I suspect some weakness will come as the markets shift into smaller corrections.

DJIA (basis the March Dow future): seems to be drawing all the attention as new highs were created on both Tuesday and Wednesday. Support (intraday) begins at 14250 to 14225. A break below 14220 would suggest a drop towards 14135. Resistance should be found at 14350 to 14400.

SPX (basis the cash): the S&P 500 traded basically in a 5-point range on Wednesday. A clean break above 1545 should clear the path for a sustained move to the 1555 to 1558 area before a more sustained correction would be expected. Support (intraday) begins at 1540 – 1537 and then drops to 1525.

Russell 2000 (basis the future): should find support at the 925 area before making an attempt at breaking above 933. A break below 925 though, would drop support to the 915 area. Resistance should come in at 940.

Treasuries:

The treasury markets continue to see strong two-way trade. The rallies while appearing weak managed to hold support throughout Wednesday, which does bode well for, follow through upside being seen before the decline picks up again. Basis the future intraday support is at 142’20 to 142’15. Resistance remains at at143’12 to 143’20. A clean break above 143’20 should clear the path for an attempt at 144’21.

10yr –note (basis the future) has support is at 131’00 to 130’25. Resistance at 131’15 to 131’22 and then 132’11.

TLT – support at 116.90 to 117 and then 116.70 to 116.35. Resistance at 117.50, 118.50 to 119.25.

TBT – support at 66.50 to 66.35. Resistance starts to thin out above 67 rising quickly to the 68 area.

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