Coffee with GannFann

Strap Yourself In....Its Gonna Be A Rough Ride!!

Yesterday:

 

Prices attempted a rally off the open but could not break the prior high of 780, topping out at my 1^st resistance point of 779 (779.42 at 10:50 actual). I had stated that traders should watch out for a possible failure at this resistance point and that a change in trend could occur at around 11:25am. The high on that bar was 775.65 very close to my target price and traders looking at the chart could see a double top formation. Prices broke down off the highs and hit my forecasted low of 752 (751.75 actual). In the commentary there was quite an emphasis on a corrective move taking place soon and around my numbers.  I must admit that I was happy will yesterdays forecast but perplexed by several comments here are my comments…..

 

“We could get another attempt at the prior highs at the 780 range and the jury is still out whether this market has the legs to continue to reach the 800 or 820 range.  We could be looking at top to occur shortly a traders need to be mindful that this area has risk on both sides of the marketplace, if an entry is incorrect. “

 

“Since we had a retracement on a bull move, traders must expect an upside bias with an attempt at the prior highs.  Keeping in mind, there may be a failure near these resistance areas.”

 

“This rally may weaken soon and traders much watch for a valid topping formation.”

 

“Traders should look for tops that may occur at 799-800 or 818-820. Of course prices must break prior high set yesterday at 780.”

 

“Traders need to be mindful of a possible turn or changing trend at 11:25 or 11:30am.”

 

Jeff…. I pointed out that 780 would be important three times in my commentary and stated several times that we could top out soon….. Traders need to always watch for tops near prior highs and that should be enough of a call. I gave three important indicators which were the 780 resistance, the 777 resistance and a change at 11:25 (775.65 under both resistance numbers). I thought I painted a pretty bearish picture in my commentary and I thought it was rather straight forward.

 

Today:

 

The markets should start its major decline soon and of course the prior low of 740 will be and important factor. There could be some support at the 720 range so traders must watch those areas. The primary trend appears to be resuming and it could start to accelerate to the downside soon. The 750-752 is an important range here and traders need to watch the retest of the prior lows. Prices should trade into the 650 range soon and this break could be a quick move. The 650-660 range is an important retracement range and if we get a bounce before the 400 range it should occur there.

 

Bulls: The bulls need prices to hold the 720 and the 740 low or prices should reach the 660 range. Prices could not maintain the rally in a formation that very often is bullish. This speaks volumes for the state of the market environment and this is showing major sign of major distribution taking place. This is not the buy and hold environment of the past and investors on the bull side need to come to terms with that. The bulls need prices to hold in here and break above the 780 range but I am not to optimistic.

 

Bears: The bears are starting to see the primary trend resume and the fact that prices could not continue the rally means further declines are probable. The bears need prices to break the 720 range and they should see a great decline (over time) to the 650 range then the 400 range. This should be a rather fast decline and could start to get very ugly as fears set in. A break above the 780 would be a bullish sign but that is looking less likely.

 

Support / Resistance:

780-782 2^nd resistance

770-771 1^st resistance

740-742 1^st support

718-720 2^nd support

 

Notes:

We seem to be moving closer to a major break of the prior lows and acceleration of the primary trend.

Gannfann

Stress Test?

Yesterday:

 

Prices went through a corrective move on the open testing the 753 range close to my price target.  I gave a time target of a change around 10:20 and low occurred at 10:50.  So I was off by 30 minutes on my time target.  Prices rallied from there into the close reaching a high of 780.12.  Close enough as far as I'm concerned. Traders took profits near the close not wanting to hold positions overnight since there will be news in the morning for Job Less Claims. Here are my comments…..

 

“Prices should go through a slight corrective move but should hold the 756-760 range (752.89 actual off 3.11 from target) on the retracement. I do believe that we may have seen a major low appear for the time being and unless we get a break of the 740 range traders need to plan for a possible move to the 800 or 820 range.”

 

“The bulls should enjoy there day and they could see a change at around 10:30am.”

 

Today:

 

We could get another attempt at the prior highs at the 780 range and the jury is still out whether this market has the legs to continue to reach the 800 or 820 range.  We could be looking at top to occur shortly a traders need to be mindful that this area has risk on both sides of the marketplace, if an entry is incorrect.  Time has a major factor in these type of formations and the students that learn these type of techniques will have an advantage in near future trading.  Since we had a retracement on a bull move, traders must expect an upside bias with an attempt at the prior highs.  Keeping in mind, there may be a failure near these resistance areas.  There appeared to be tremendous profit-taking on the rallies, so traders must keep that in mind.

 

Bulls: the Bulls had a pretty good move yesterday, and they where seeing profit-taking and higher lows that are being created.  There does appear to be accessed and selling pressure on the rallies, which is indicative of the major bearish trend.  Traders on the bullish side have more risk, since this possible double bottom is not completely confirmed yet.  Prices reached an important prior support ranges and was the reason for some of the selloff.  Care should be taken when entering the long side, because this could have been just a reaction off the lows and prices will retest the prior lows again.  It is difficult for me to contemplate a bullish move.  They'll extend itself in this market environment, but I did believe yesterday that we would have a decent move off the lows.  I had a target for the bulls of 777 that it had to break over.  It is my hope that those reading these commentaries, would allow for a slight margin of error.  Prices did not break that range in my mind, and the rally broke hard into the close. The Bulls should expect this move to break soon, since my target was 800 and 820 and we did not get a valid break over 777.

 

Bears: the Bears need to confirm that the double bottom is not in and allow this move to run its course looking for a decent entry near some of my price targets.  This rally may weaken soon and traders much watch for a valid topping formation.  The market has been rallying on bad news, but from a technical standpoint, it made perfect sense.  I do believe the Bears will have their day shortly, but it's important to allow this move to run its course.  Prices went through a technical retracement at the close.  So an upside bias, near the open is very feasible.  The follow-through on this move is of importance because it will show the strength or the legs of the move.  Traders should look for tops that may occur at 799-800 or 818-820. Of course prices must break prior high set yesterday at 780.

 

Support / Resistance:

791-793 2^nd resistance

777-779 1^st resistance

752-754 1^st support

740-742 2^nd support

 

Notes:

Traders need to be mindful of a possible turn or changing trend at 11:25 or 11:30am. Please keep in mind that these time frames may be incorrect and are only being given as a courtesy.  Traders must use their own common sense when using this information based upon their risk and trading philosophy.

 

Gannfann

Does This Bull Have Horns??

Yesterday:

 

The market rallied strong off the support range of 741 (742.37 new low) which was prior major low creating a potential double bottom. In my commentary I had pointed out that confirmation is needed and that momentum must step in.

 

Today:

 

Prices should go through a slight corrective move but should hold the 756-760 range on the retracement. I do believe that we may have seen a major low appear for the time being and unless we get a break of the 740 range traders need to plan for a possible move to the 800 or 820 range. A break over that could mean a retest of the prior high of 940. It is important to confirm the strength of the move to ensure that it has the momentum to sustain the move and validate that it is a double bottom formation. There is reason to believe that a major low is in and has been formed. If the bulls have any chance for any sustained rally it MUST occur on this move!!

Since this move is still in its infancy care must be taken on both sides of the marketplace, because the possibility does exist that this rally could be a counter move for a thrust at breaking the prior lows.  Traders need to watch for breaks in the newly created bottom formations and keep in mind that regardless of the potential move it WILL fail and break through the 740 range. This is the last attempt for the bulls to make something happen here. Let me make this clear that as a trader I must respect the fact that a double bottom may be in, but I am very bearish on the long term overall pattern and nothing will change the eventual outcome of a move to 400 in my mind.

 

Bulls: The bulls should enjoy there day and they could see a change at around 10:30am. There could be a corrective move or retracement but that should hold the 758-761 range and bounce from there. Prices need to break the 777 range and that should mean a move to 800. Traders must be mindful of a potential pattern failure, since the long term pattern is bearish.

 

Bears: The bears need to be mindful that this move may be valid and get some legs. Traders need to watch for signs of pattern failure and or signs of the primary trend resuming. I must say that I have good reason to think that the low could be in and this move could last for some time. The bears will have their day again soon but this needs to run its course. The bulls may have trouble with the 818-820 price range so that and the retracement of the 756 will be their test. The bears will see prices break the prior lows but this pattern must be respected or confirmed at the least.

 

Support / Resistance:

796-798 2^nd resistance

786-788 1^st resistance

758-760 1^st support

741-743 2^nd support

 

Notes:

 

This move will fail and could break early since we are in a major bearish pattern.

 

Gannfann

Recovery....or Major Decline?

Yesterday:

 

In my commentary I had pointed out that we will have a retest of the prior lows of 741 and we had prices hit the low of 742.37.  There was not a great deal of price movement or momentum off the lows, suggesting further lows could be likely.

 

Today:

 

There is a question if prices will hold this prior low based on yesterdays movement. If we are to get a break through the prior lows it could occur today. There seems to be continued fall out and uncertainty in the marketplace that is bleeding through many of the sectors. The outlook for a break here to new lows are becoming very probable and it could gain some momentum if traders see prices break a major support low. A break of the prior low should indicate a potential move into the 650-660 range. Traders must be mindful that there can be a violation of a major low and still find support near that low creating a double bottom. This may appear to be strange to some but it may be helpful to think of it like a double top formation, where the rally fails before or moves past the top but breaks. Traders may just sell the open based on uncertainty and not wanting to be on the wrong side trying to move inventories.

 

Bulls: If the bulls are to have there day it should start today and show signs of strength. Prices of course must hold the prior lows here and begin to create some upside momentum or this move will break. The bulls need to watch for any sign of activity that occurs near a double bottom but my guess is we are not seeing that. Many of the rallies so far have been sold into and that may happen off the open.

 

Bears:  The traders that have been trading the downside movement very likely covered near the major low, so they should be in a flat or less aggressive position. This will minimize the upside risk that could occur today based on a potential double bottom formation. The bears have had their day and they will be looking for signs of weak rallies or a valid break through the prior low to gain positions. They should see prices move to the 650 range but of course we need to see a break of the 740 range. Traders watch out that the 718-720 range may hold if we do get a break through the prior lows, so watch out for a bounce there.

 

Support / Resistance:

 

770-771 2^nd resistance

751-753 1^st resistance

728-730 1^st support

718-720 2^nd support

 

Of course …watch the 741-743 range…….

  

Notes:

 

Traders that are playing the bounce off the prior lows to the long side need to be mindful of weakness coming in and a retest or break of the prior lows.

 

Gannfann

Breaking the Bank?

Friday:

 

The S&P bounced off the 754.25 range which is only 13 points from the prior low. The markets attempted a recovery but it did not seem a significant rally. On a side note I kept my drinking to a minimum on my birthday so my head would be clearer this morning…. I hope you all appreciate my sacrifice!!  lol :)

 

Today:

 

Prices will attempt an upside bias but much of this move will be sold into creating some downside pressure. In my commentary last week, I had pointed out that we would see on Monday if this possible rally had any legs. It just seems the more that washington continues to scream the words “Crisis and Catastrophe” the more panic is created, which leads to sell off. The combination of fear and uncertainty along with massive spending is a lethal combination. It also doesn’t help to suggest or imply that the banks so be nationalized. Since we are near the prior lows, prices need to gain strength in here if we are to have any chance for a rally. If a rally does occur here traders need to understand that it will be short lived and will not last long. The market in my opinion will never see new highs again. The strength of this rally or lack thereof will give us major clues as to the amount of bearish sentiment. My feeling has been that this market will experience a steep decline with weak rallies and so far that has taken place so far.

Bulls: It still appears that the markets are not giving sustained rallies and moves could be short covering rallies. The bulls need to expect a retest of the lows again since Friday’s trading appeared to be short covering. The bulls need prices to stabilize around the support ranges that were outlined on last week. So far I have not been convinced at a rally has started and that momentum has stepped in yet. Prices need to continue off these lows and break above the 800 range.

 

Bears: It still appears that prices are moving in the bears favor and that movement near the prior lows could be short covering. It also seems that today could be a retest of the support range and further sell off could continue. Traders still need to be vigilante since this area is still major support so your trading tactics must reflect that. Prices could hold the prior low range and the following numbers 720, 741 and 770 so plan accordingly. The bears should see a move into the 650-660 range and should bounce there but this may take some time depending on how long prices hold the prior low.

 

Support / Resistance:

790-792 2^nd resistance

779-781 1^st resistance

754-756 1^st support

741-743 2^nd support

 

Notes:

Traders need to watch for signs of recovery and a possible double bottom. If prices    break the prior lows look for a move to the 660 range. The next several days will give us many clues if there is commitment to the upside, my guess is that we could break.

 

Gannfann

Blast From The Past!!!

Yesterday:

 

The S&P sold off on the open and hit the days high of 797.58 at 9:45am. Prices continued to sell off from the open and every counter rally sold off reaching the 777 range (price range forecasted in the prior days commentary), missing my target by 5 dollars……

 

“Prices should continue the sell off and could be seeing selling off the open. It seems that we will continue to see weakness as news will help drag down the markets.”

 

“The market should continue to see weakness and prices should retest the prior lows here.”

 

“Prices should continue to break down and counter rallies will be sold into.”

 

“We could be seeing a break of the up trend here and we will see over these next couple of days if prices weaken again. I do believe that we are seeing a possible top starting to occur but fortunately those shorting have covered into yesterday move and gives those looking for an entry the luxury of finding a good time and price.”    Feb…13^th

 

“There was a good rally on the short term prices may be over extended or overbought so I do expect a corrective move today.”  Feb 9^th

 

Today:

 

Prices should reach the important target ranges of the major low that occurred in 2002 and the 741 low so this is where if we are to get a bounce off the lows it will occur today or on Monday. Since there is a possibility for the double bottom at these levels it would be foolish as technicians to overlook that as a possible outcome. That being said it is still my contention that this break should occur soon and should be a fast move. If there is a bounce off these levels traders should expect a failed rally and look for the primary trend to resume to the downside again. I would like to point out that this long term chart is a very bearish pattern that dictates a major leg down to be quick in magnitude. If we break our lows of the 740 or 720 range then prices should move to the 650 range where we could bounce. Traders need to watch out for a quick clean up off of the major support ranges.

 

Bulls: If there will be a rally or recovery it must occur soon off of these support ranges and it could be a good bounce. The bulls need to be aware that if that is to occur it would not last long and be a suckers rally. The other level for a bounce where a rally may occur would be in the 650 range, but these rallies will not last long in time. Prices will eventually trade under those levels and reach the 400 range.

 

Bears: This is where traders need to know what strategy they are using. Holding a short position knowing there could be a bounce that could move higher and last for some time or cover positions looking for a reentry if the major low is broken or shorting the counter rally. This downside move will be a fast decline and could (if anywhere hold around the 650 range) where we could get a bounce. Traders need to watch the following levels for a potential bounce…. 720….740…770…..I know this is quite a range but its makes sense. We could see a quick clean up near these support ranges as traders cover near the prior low and buyers look to average down or buy for the bounce.

 

Support / Resistance:

 

791-792 2^nd resistance

786-788 1^st resistance

770-772 1^st support

761-762 2^nd support

 

Notes:

 

Today and Monday will be very important days for a possible change in trend here. Prices seem overextended on the short term. Traders should watch for a potential bounce that could occur at around 10:30 near the price of 769 and should hold the price of 764 if it is to hold at all.

 

Gannfann

Fuzzy Math?

Yesterday:

 

The S&P continued its decline as the rallies appeared to be sold into. There seems to be continued weakness here and as prices creep into the prior low, this could make a double bottom less likely.   This housing rescue plan doesn’t make sense… I don’t know maybe it is me… but 78 billion divided by 9 million people = 8,666!! Even if we only use 4.5 million that is 17,332!! We are also going to have Fannie and Freddie take care of this? Very scary!! Money mangers can see right through this and they are planning accordingly.

 

Today:

 

Prices should continue the sell off and could be seeing selling off the open. It seems that we will continue to see weakness as news will help drag down the markets. The markets need clear direction and confidence which they are not seeing. These programs and where or how the money will be spent (including oversight) is vague to say the least. This kind of environment will not instill businesses or banks to lend or invest. I know this is not popular but there is little that can be done since much of this has to run its course.

 

Bulls: The market should continue to see weakness and prices should retest the prior lows here. I have said before that the bull’s last hope here is a recovery from a double bottom. The bulls need prices to hold the prior lows and make a break above 805 range. If we see a double bottom it could be a nice move for the bulls.

 

Bears: Prices should continue to break down and counter rallies will be sold into. The continuation of bad news for the global marketplace is show how deep problems exist. The bears need to watch the prior lows for a potential bounce and the 805 range. I think the break down and that this pattern will create a fast decline once the lows are broken.

 

Support / Resistance:

 

805-807 2^nd resistance

796-798 1^st resistance

770-772 1^st support

759-761 2^nd support

 

Notes:

 

We are seeing a drifting and selling on every rally and we could see the market break soon. Of course prices must violate the prior lows…..

 

Gannfann

 

Bottoms up!!

Yesterday:

 

The S&P gapped down right on the open trading under the 820 range opening at 818.16 holding my forecast high of 818. Prices sold off on every rally and held the resistance range of 802 (801.20 on the counter rally) and then retested the forecasted low of 789 (789.17 actual!!).

 

Today:

 

Prices should continue the decline but we should see a counter move that will likely be sold into. The trend is clearly down but since we are close to the prior lows we must watch for a bounce or a double bottom that could occur.

 

Bulls: There could be another surge but the bulls may get a bounce soon since I do see a change in trend for tomorrow. This of course depends on how today plays out. For example if the bulls attempt a recovery today we could see a break to the downside on the 19^th. If we continue the sell off from yesterdays move we could see the move complete (on the short term) after reaching my targets. A potential for a double bottom or holding the prior lows are critical for the bulls or we could see a major decline into the 650 range.

 

Bears: We are seeing the breakdown of the counter trend but traders must still be careful of a possible double bottom. There may be an attempt to hold prices in here or around my numbers but this will eventually break down, but just be mindful of the double bottom since that is major support. I do think that these moves will be sold and the decline could be a fast move once the lows are broken. I still feel there is nothing that can stand in the way of prices breaking into the 650 range and then 400. We should get a bounce off of the 650 range but it will not last long or prevent the major decline. We will start to see prices reflect the troubles from around the world and in our markets. We are seeing moves into gold as the financial sector takes a beating. We will start to see the commercial real estate become a problem and banks will continue to have a problem.

 

Support / Resistance:

 

818-820 2^nd resistance

806-808 1^st resistance

777-779 1^st support

768-770 2^nd support

 

Notes:

 

This financial crisis has only just started and there will major fallout in all sectors and markets that will create a very long decline lasting many years…..

 

Gannfann

 

 

Double Down??

Friday:

 

Prices attempted a rally but could not break the 840 range (839.43 actual high) and then sold off to the 825 range (825.21 actual low). Prices appeared to see distribution and we were seeing signs of the primary trend resuming.

 

“Look for a possible retracement move to support around 820-825 and resistance in the 840-842 range.”

 

“Traders should watch for weakness on the open holding the 841 range and moving into the 825 range….”

 

“I do believe that we are seeing a possible top starting to occur but fortunately those shorting have covered into yesterday move and gives those looking for an entry the luxury of finding a good time and price.”

 

Today:

 

Prices should continue the decline as the primary trend resumes, moving back to prior lows of the 741 range.  As prices reach the prior lows traders must watch out for a potential double bottom that could form. Since the prior low was a major low this should provide major support and a potential for a bounce off those lows.  If I was to pick an area other than the prior low of 741 for a potential low then it should occur at the 770-772 range. I do see that prices could break through the prior lows as the primary trend accelerates to the downside, but traders must be aware of the potential of the double bottom and factor that into their trading.

 

Bulls: Prices may hold the 800-802 range and bounce off their on the short term but since prices could not break the 840 range the new short term top for the bulls is the 818-820 range. The bulls will see some weakness and further declines but can expect some bouncing from the important support points along the way. This could start to get ugly for the bulls as the primary trend resumes.

 

Bears: Watch out for a potential bounce off the 800-802 range off the open as this may be important support for today. The trend has been playing in the favor for the bears and prices should continue to decline reaching the prior lows. Bear traders need to be aware that prices are reaching important support ranges and will get a bounce in some of the ranges noted. I do see prices reaching the prior lows and eventually breaking the prior lows, but this may take time so plan accordingly.

 

Support / Resistance:

 

838-840 2^nd resistance

820-822 1^st resistance

802-804 1st support

787-789 2^nd support

 

Notes:

 

Look for a possible change in trend around the 2:15-2:20 time frame.  Prices should start the major decline but traders need to be mindful trying to play the break of the lows. These moves can take time and does give traders a opportunity to get positions.

 

Gannfann

Yesterday's Bounce off 808!! Via... Gannfann!!

Since there appears to be some question as to the effectiveness of Technical Analysis I have posted a Chart.....