Daily Directional Forecast:

Mohan's Market Force Daily Directional Forecast
by Mohan

October 7, 2009

Directional Forecast: The market is expected to attempt to push higher but traders should stay on high alert for a stronger drop anytime. There are huge underlying problems with the US stock market right now short term.

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Recap of Tuesday's Action:

Good morning and welcome to Tuesday's trading action.

Things on Wall Street are shaping up for some real volatility soon. I am seeing strong conflicts on both sides of the bias and this should signal strong movements in prices soon.

Our Directional Forecast for Monday, as shown on the chart above, was looking for resistance at the 1045.00 area with 1047.75 as Key 2nd level resistance.

Subscribers should know that when the market penetrates the 2nd level resistance or support that a stronger move in that direction is about to occur. Especially when you see a Mega Bullish or Bearish tape favoring that penetration, just trade on that side.

In Monday's case, when prices held above 1048 steadily it was time for a higher boost. However, with the warning of a mid session pullback in the headline DDF we would want to be cautious of new highs.

The Intra Day Swing Trade setup was a stand aside on Monday. Sure, the tape had turned Mega Bullish (except $BKX was lagging a bit) but the market had already rallied substantially off the pre market globex 1036 lows. Thats a HUGE rally.

Logic combined with our Market Force reading of Neutral along with the call for a pullback mid session would not get us long on the BreakOut (B/O)for a further +10.00 handle rally. Also, because we are in a short term bearish mode it would also be a tempering factor for rallies.

It is important, especially for our new subscribers, to remember that the Daily Directional Forecast is a day trading tool for extreme short term traders.

The bias readings I give on our headline Directional Forecast change from day to day. I usually discuss the short term (2-5 day) bias as well in our work here. The goal is to get on the right side of the markets moves TODAY primarily though.

Today's Market Force reading remains Neutral with bullish, higher prices expected but with a great caution underlying the bias.