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Kennys Stock Market Trading - The Week Ahead 29 May
May 29, 2011
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Issue# 0019 29 May 2010

Stock Market Trading

Traders Day Trading & Kenny's Elliott Waves Blog

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Hello,

Welcome to Stock Market Trading the new look newsletter for 2011 from Traders Day Trading & Kenny's Elliott Waves Blog.

*****

S&P 500 Cash Index - The Week Ahead

The Week That Was...
Another week, another weekly Doji candle.....the third in a row.

The various trend lines were eneough to provide support and allowed the bulls to recover 1325 on the first test, but did close under 1337 for the week resulting in a doji candle on the weekly chart.

It should be no surprise as Doji candlesticks are a sign of indecision and that mood was clear towards the end of the week.

Last week I was looking for confirmation of the trendline breaks and some continuation.....My comments on the forum and in Kennys Blog on Tuesday night, suggested that the S&P500 cash quotes should hit 1305 overnight after closing at 1316....
 

"Reckon there is a good chance that quotes hit 1305 before the open tomorrow."

"Going to stick my neck out a bit here and say that 1305 should print overnight and we could be quite a bit lower than that before the open......"

....quotes then fell sharply to hit 1305.1 overnight to hit my target. But contrary to my longer term analysis, the support there was much stronger than expected, and quotes then pinged all the way back up to close the futures opening gap before normal market hours. Cash then went on to close higher on the day.

The Week Ahead...
So where does that leave us for the week ahead?

Keeping it simple on the larger scale of things, what we had this week was a break and consolidation below 1337....Monday, Tuesday and wednesday then became all about 1325 and the channel trend lines supports.

The questions for us to seek answers to this week are, did the break of 1337 seal the deal, and how much support was built up from holding the trendlines? Enough for another run at the highs?

The market remains within the clearly defined down sloping price channel from the 1370 high. Prices decicively broke support and has been back testing the break of the long term rising price channel.

The support at 1305 and recovery back above 1325 does now cast some doubt over the validity of the break, and does open the possibility of that run at the highs I mentioned last week.

Pivots Monday Weekly Monthtly
R3 1345.75
1371.48 1480.68
R2 1338.37 1348.66 1410.82
R1 1334.73 1339.88 1387.21
Pivot 1330.99 1325.84 1340.96
S1 1327.35 1317.06 1317.35
S2 1323.61 1303.02 1271.10
S3 1316.23 1280.20 1201.24

Current Week Month   Stock Market Trading Trend Down Year  Stock Market Trading Trend Up
Open 0 1365.21
1257.64
High 0 1370.56 1370.56
Low 0 1311.80 1249.05
Range 0 58.76
121.51


Previous Day  Stock Market Trading Trend Up Week Stock Market Trading Trend Down  Month   Stock Market Trading Trend Up Year  Stock Market Trading Trend Up
Open 1327.24
1333.07 1329.48 1116.56
High 1334.62 1334.62 1364.56 1219.8
Low 1327.24 1311.80 1294.70 1011.40
Close 1331.10 1331.10 1363.61 1258.84
Range 11.33
28.31
69.86
208.4


Key Support and Resistance Levels

1381
Top?
1370

1360
1353
1344
High? 1340

1337
Current 1331

1326

1322

1319
1312

1310
1305
1303
1298
1293

1288
Low? 1273
1268
1257

1249
1225
Bold Numbers = Stronger Support and Resistance


Trade Set Ups for the Week Ahead

Last weeks trade entries were not filled.

The open position trades are currently running at 39 and 26 points in profit.

This may feel like an important point where it may be prudent to bank profits on long term trades, but it is important to distinguish between the different time frames for each trade.

Despite the short term confusion, the longer term analysis remains intact for now and there is no real reason to bank the trades other than for emotional or money management issues...ie, fear of losing some of the potential profits already there....at the same time, I do not want to succumb to greed by holding on to trades that are wrong, and I did not expect that the market would still be up here at the end of the week..

With this in mind, the issue is then to decide where the point is that the analysis becomes 'wrong'. That is not quite so clear cut, as we can all see what we want to see, and for every 10 technical analysts that you ask, you may well get 20 different answers to that question.

As ever, we will trade with no emotions, instead, relying on the analysis and money management strategies to do what they are designed to do.

Stop loss levels on both position trades should now be lowered to 1347

NB: As beforeThat is not to say that 1347 can not be broken before reversing again. It would just mean that the Blue wave count was negated, and I would want to lock in some profits on those trades, until it becomes clearer what is going on....if it happens.

Rightly or wrongly, rather than going on the defensive here, by using the analysis and money management strategies, I am going to trade this agressively. These points of confusion often result in very strong trending moves, and I do already have enough profit in this campaign to allow me to attack it with very little risk.

In real time trading, I may become less optimistic if price breaks up through the declining price channel but for the purposes of my strategy here with only a weekly update, it is all about getting the numbers to add up to a sensible trading plan.

******
NOTE: For this format I am using a 10 point stop loss on the weekly trade set up, 3 points on the day trade set up and 15 points on a position trade, unless otherwise indicated. 

******

Kennys Stock Market Trade for the Day

Market Trade Open Target Notes
S&P 500 Cash Index Sell 1333 1325 Trade Entry Valid
for Mon/Tues Only

Kennys Stock Market Trade for the Week

Market Trade Open Target Notes
S&P 500 Cash Index Sell 1333 1298 Trade entry valid
for Mon/Tues only.


Kennys Stock Market position Trade for the Week

Market Trade Open Target
S&P 500 Cash Index Sell 1333 1175


********************************

Open Positions

Kennys Stock Market Position Trade

When Opened Market Trade Open Target Stop
Week 2 May S&P 500 Cash Index Sell 1370 1175 1347
Week 9 May S&P 500 Cash Index Sell 1357 1175 1347

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