Henry Ford's MarketWatch LIVE!

3:57 PM
MARKET WRAP
The DOW closed at 8482.39 ...2 points below the magic 8484 Fibonacci 38% retracement. Ending on the lows of the day normally calls for more weakness tomorrow. 8400 is the next Fibonacci number which would be fine with me, but we could trek a little lower. At any rate, once again the RECTANGULAR TOP pattern proved to be a real winner if you were prepared to short or hedge your positions. It has near 100% track record and the Rectanular Bottom pattern is almost as good to the upside with a 98% success rate....We can't always be right, but it is days like this that vindicate technical analysis, (even though it is driven by the fundamentals of supply and demand and investor psychology)

:: Henry Ford ::

3:43 PM
UPDATE OK curbs are in and traders have put in their MOC orders and it is obvious which way they are betting.....Amazing what a difference 15 minutes makes! Got some buying that came in as we broke 8500 and gave a bounce for the nonce.
:: Henry Ford ::

3:26 PM
UPDATE Really trying to hold the line here, but I still think the best bet is a pullback. The DOW if it breaks decisively below 8600 and sticks should see 8484 and very possibly 8400, but that should be the extent of it. We still have some major intermediate term patterns battling out for supremacy, but I see the retracement as both likely and desireable. During this period I am holding long term option calls and hedging with short term puts. As long as we are range bound the positions stay flat...If price begins to drop I make profits faster on the puts than the calls which I will dump at the bottom and allows the calls to make money in the recovery. If price rises and breaks away I have made a small sacrifice to the Bull Gods.
:: Henry Ford ::

3:19 PM
UPDATE Got an email from a subscriber who was mystified by the market's reaction to the FOMC meeting results...There isn't any mystery here.....It is a completely emotional reaction...always has been. Within 2 days even the effect of a rate cut is lost on investors... The same holds true of just about any economic news...It has an extremely short life cycle of relevance and any impact begins disappearing immediately. Once the news is out of the way, the markets continue to do what they needed to do anyway. Many times the news is used as an excuse and had no real meaning one way or the other.
:: Henry Ford ::

2:42 PM
UPDATE One thing that is pretty much a certainty ...whichever way it goes, the eventual breakout/breakdown is liable to be explosive...We have been consolidating for 4 days on low volume. By the way, you can use these techniques with any stock, not just the indices. The same supply and demand rules apply. I choose to watch the indices for clues as to which groups of stocks I should be watching, then look for individual industries and stocks within those industries that are behaving similarly. Don't buck the trend of the indices...it doesn't pay for very long.

Right now I AM concentrating on trading the major indices (or proxies for them like options on the SPY, DIA and QQQ), because in my mind it is easier to deal with the major trends that developing than trying to pick individual stocks right now in this volatile market. Once the trend begins again we can concentrate on stock and sector picking once again.
:: Henry Ford ::

2:27 PM
UPDATENow we are getting some volatility...The close will be most important here as we now have the strong possibility of a double/triple top in the short term and a rectangular top that mimics one we saw two weeks ago that saw a 400 point decline. I will clear off all the old patterns and mark up a new chart for you.
HERE YA' GO

If you recall, this pattern has one of the best success( or failure, if you are Bullish)) rates of all patterns. Nearly 100% of the time it is successful on the break. 53 % of the time once broken it will return to the breakout line before continuing on to its predicted target which is a 20% decline. It will meet its predicted target 77% of the time ...usually it exceeds it.
:: Henry Ford ::

2:16 PM
UPDATESo far the effect is muted, but it's early yet
:: Henry Ford ::

2:14 PM
UPDATENo change in rates...not surprised...let's see if the markets are

:: Henry Ford ::

2:10 PM
UPDATEWith five minutes to go will throw up a DOW chart so you have a point of reference for what happens next

:: Henry Ford ::

1:44 PM
UPDATE Half hour till FOMC announcement...Over the last two hours we have been running the limits of today's range as we mark time before the announcement....like treading water.
:: Henry Ford ::

12:10 PM
UPDATE LUNCHTIME...not much likely to happen till we get close to FOMC time
:: Henry Ford ::

11:51 AM
UPDATE So far, just looks like noise ahead of FOMC...no clear breakout or breakdown.
:: Henry Ford ::

11:03 AM
UPDATEAs we discussed earlier, that smaller Pennant on the DOW has now reformed into a flag formation ....that may not be the end, however. It could turn into a rectanular top such as we had last week or could end up being a flag breakout...much to early to tell, so we keep watching and waiting.
:: Henry Ford ::

10:44 AM
UPDATE The potentially bearish Falling Wedge we identified on the NDX failed with today's action and we are now looking at a large symmetrical triangle pattern which is neutral until decisively broken, but much more positive than the falling wedge should it have completed.

:: Henry Ford ::

10:33 AM
UPDATE The NASDAQ 100 Tech Index is very close to breaking through the 953.38 high of 2 days ago...could well be a fakeout breakout, but bears watching.
:: Henry Ford ::

10:08 AM
UPDATE As we have been discussing the last few days, we really have confused and mixed signals in the short term. I will attach the current DOW chart, but frankly I am running out of colors we have so many converging patterns. The overriding pattern is the large triangle bounded by the bold red and green trendlines. That has decisively broken out to the upside, but many times we pullback to the breakout point or upper trendline before launching the real rally...(I won't go through the stats again, you can look back in the archives and review)

Then we have the rising wedge indicated by the thin yellow lines which is a potentially bearish shor term pattern. Then we have a medium term support line (heavy yellow) and finally a sideways consolidation bounded by purple, that provides the short term support for the last 10 hours or so....Its triangle is approaching 80% completion, so it should break one way or the other in the next few hours. All together, it's a mess. I would concentrate on the major pattern triangle and I am hedged right now against a pullback to that support which also appears to be either the 38% or 62% Fibonacci lines represented by the light blue horizontals. That would allow deeper consolidation and still keep the higher-low patterns intact.

Because these patterns are dynamic, the last pattern can change depending on short term price change. As an example a short term pop to yesterday's open would cause us to redraw the pattern into a sideways consolidation flag instead of the Pennant it has currently formed.

By the way, that thin wavy line is the 13 hour RSI which we follow as a major indicator of overbought/oversold and used to help to "time" the movements of the patterns. Currently it is declining and in the best case scenario would drop below 20, then reverse back above, indication that the current price action has become oversold and prone to a rally. Two things can make this indicator drop. A drop in prices OR a sideways consolidation. Right now the biggest influence has been the 3 days of range bound trading we have seen.
:: Henry Ford ::

10:00 AM
UPDATE As we come into the 10AM hour major trendlines are holding and we continue the sideways consolidation, albeit in a large swing range, but that has been the nature of the beast for a while. I don't really expect much of anything today until we get near FOMC time at 2:15. Under "normal" times we would see a rally begin about an hour before announcement time and then subsequent volatility on the announcement.
:: Henry Ford ::

9:45 AM
HERE'S THE EARLY MARKET SNAPSHOT

:: Henry Ford ::

9:16 AM
GOOD MORNING Retail sales came in at the high end of consensus, bringing some relief to traders, but also confusing their perceptions of what actions the Fed might take at today's FOMC Greenspan meeting...Modest gap down opening looks in the cards, but impossible to conjecture beyond at this point...[BRIEFING.COM] S&P futures vs fair value: -7.2. Nasdaq futures vs fair value: -3.0. Equity futures have improved somewhat but continue to point to a lower open as traders head to the sidelines ahead of today's Fed meeting. Moody's downgrade of Brazil less than a week after an IMF $30 bln loan package is also taking a toll... Over the last few minutes, the futures are appear to be ticking up on Deere & Co.'s (DE 42.02) strong quarter.

:: Henry Ford ::

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