July 11, 2012

  • MSFT Testing Crucial support line and 200 Day SMA.
  • Price was unable to break above the cloud and started falling. Price closing below the trend line and 200 SMA should lead to 28.31 levels. Breaking this level will strengthen bears.
  • Holding above 200 SMA and the trend line should lead to an up move towards the resistance line again.

  • ES Four hour chart near channel support line.
  • Price is also near 200 Period SMA.
  • Breaking 38.2% Fib level and 200 Period SMA could extend the fall.

  • GAP on the first chart shows a possibility of an island cluster formation if the news on the result day is good. But charts are showing bearish possibilities.
  • Chart has a Death cross in place. 
  • Weekly chart is showing a bearish flag which is a continuation pattern.
  • Last chart of daily time frame looks interesting we had a bearish engulfing and a close below 50 SMA a day before the last results. One can look for similar clues this time too.
  • It's not a good idea to predict the direction for such news events so if one is expecting a large move its better to go with options. A straddle can give good profits if the stock gives a large one directional move.

  • SPY Near 50 Day SMA.
  • One hour chart too is showing a similar setup with price near 50 Hour SMA and 38.2% Fib level.
  • Supporting trend line shown in 2nd chart too may act as support.
  • For extending the down move price must close below these levels. Taking support here may result in a bounce.


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My Favourite Quote

"All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis."
—Jesse Livermore