The Sleeping Tiger Waits in the Wing!

The Sleeping Tiger may be the Play!  Watch the Price Action and the MACD!

SPY 2 Day Chart - Very narrow range on Friday.  This is winding up the Spring short term.  We could have same explosive up or down action on Monday.  A sideways action such as this is a temporary "truce" between bulls and bears.  It usually resolves with one side advancing and the other retreating.

The Memphis "Pippin" Exemplifies Volatility

We can go into a lot of definitions and technical jargon to explain "volatility."  The fact is that anyone who has traded in the market has either been the beneficiary or victim of "volatility."  Trading and taking positions in periods of high volatility can extract a cost that oftentimes is unexpected.  When prices are on the move, the market makers increase the spread between the bid and ask price.  On the other hand when there are periods of low volatility these spreads may only be a penny (vs. 5-10 cents).   Therefore, periods of low volatility can be opportunities to take positions that will be "goosed" by the increased volatility.  The Bollinger Bands demonstrate volatility by showing the "second" level of standard deviation from the norm.  The Bollinger Bands capture 95% if the price action, and should the price go beyond that, it is more than likely that a new direction has been established.  

Click on the Following Charts to Enlarge the View

SPY 3.8.10 - One Day, 15 min. - There was an expansion of volatility yesterday as the market moved up.  Today was a "Sideways" day, and you can see that the Bollinger Bands contracted.  In fact, even though I had a position from yesterday which went up, the value went down due to volatility.  The present contraction of the Bollinger Bands is actually an opportunity the benefit from an eventual expansion of volatility.  All contractions are followed by expansion and all expansions are followed by contractions.  It is the job and art of the trader to anticipate these moments of changes in volatility as well as market direction.

Click on Chart to Enlarge

SPY 5 Day, 15 min. - This 5 Day chart demonstrates the gap up on Friday and the Bollinger Band expansion.  During this period of time the "spreads" between bid and ask on any issue broadened.  It is often felt that a contraction of volatility and subsequent narrow Bollinger Bands is "boring."  To the contrary, this may be a great opportunity to take a position (up or down) and when it occurs (if you are right on direction), you will benefit by expansion of volatility.

There is a Strategy called "Sleeping Tiger" explained by Toni Turner that shows how to take advantage of this situation.  It is one of her favorite trades.  You can find that is the Sidebar on the Blog.

Volatility Opportunities

The Market and the Kangaroo have Similar Patterns of Volatility

Bollinger Bands have periods of Expansion and Contraction.  One will follow the other.  There is no alternative.  Traders can take advantage of this probability.

Play Action - Take a Position and Make the Play!

All plays do not work, but no play never works!

200 Day MA Up!  20 Day MA Up! 2 Days of Consolidation.  The Play should be Up!  It may not work, but the Edge is to the Upside.

Crashing the Party?

There Comes a Time and I'm Ready to Fight!

Head and Shoulders suggests possible move to the downside.

Cross Currents Create Uncertainty!

What started as a Bullish Day ended with a Whimper.  What's Next?

Market Behavior and Direction Currently Attached to the US Dollar

S&P Futures (/ES) in Bullish Trend - Are we back a Support?  Will it Hold?

SPY 6 Month, Daily shows pullback with Bounce back to Upside.  Today was Bullish but ended with a Whimper.  Is this just a lower high or a pause on the way up?  The Market is the final arbiter.  We will see!

Do the Bulls have it in 'em?

Lot's of Bluster but is there Substance?

Dollar Rally in Retreat.  This has been Bullish for the Market in the Past.

Bull in the Head Lights!  What's Next?

Bullish Move in Recent Action.  Will it Keep it Up?

Intermediate Trend and Short Term are both Upward.  Volatility makes a directional call difficult.

Crossroads Week Ahead

Mixed Signals on Market Direction for Now

US Dollar Rally in Near Term Decline.   Short Term Bullish for Market.

S&P Futures have been Bullish.  No clear signal as to what is ahead.

Dollar Breakout! Market Likely Lower.

US Dollar Rally continues to have an Inverse relationship to market price action.

Federal Reserve increases Discount Rate 0.25%, Dollar Rallies, Market likely to move Lower.