Wednesday, October 22, 2008

Today's Markets

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Despite the large move today (SPYs down 5.61%), we're still within my range which is roughly 90-108. However, the overall tenor of the chart is still negative -- all the SMAs are moving lower, the shorter SMAs are below the longer SMAs and prices are still below all the SMAs.

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Both Trader Mike and Afraid to Trade are looking at the SPYs as a triangle consolidation pattern. I don't disagree with this read. The chart above demonstrates a triangle is very clear.

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However, given the high volatility of the market right now along with the wide-open nature of the economy and overall situation, I'm more comfortable looking at this solely from a trading range pattern. I'm also more concerned with the chart's lows. I still think 90 is the most important low -- if we move through that level I don't think the lower points near 84 are nearly as strong. That means the market really needs to hold at the 90 level.