Gone like a freight train

All, I apologize for not posting, but this spring has been amazingly busy. I literally eat dinner every night after 9 pm., the minute I walk in the door. So in the balance of my family, sleep, trading and the blog, the blog lost. I hope to get back to regular posts soon. Right now I am still leaning towards another sell off. If you look at all the indices, they are holding up on some decent support, and I think that will break, and if it does, we drop and drop hard. I will try to throw up a couple charts and a video this weekend. Trade well and prosper.

Weekly Stock Market Video

The volume continues to drop, as expected, and with the v dropping the mkt. rises. I continue to watch the eur/usd and it currently is in a uptrend, but that up-trend is coming in the form of a bear flag. There is a lot of resistance nearby for all the indices that would seem to coincide with another breakdown of the euro. There is not a lot of economic news next week, but the heavy days will be W / Th. Don’t forget that Friday is Quadruple witching, which always makes for an exciting week. I expect the volatility to continue and will be watching the key resistance for the next two days, to key another move down.

Back in saddle, at least for today.

All right so I sort of disappeared without notice, but I warned you last month that I am coaching soccer, two teams, and that this blog plays third fiddle to that. I have four more road tournaments so things will be sketchy through July, but I do have some time tonight.

I have found this mkt. to be very tradeable, especially intra-day in the futures. However, the longer term trades are more difficult to game, as they often are in the summer. Right now is no exception. Despite the looming bearishness all over the news, I am still looking for a bounce soon, not a technical bounce, but a relief bounce. Simply said, I think value buyers will have no choice but to eventually step in because they cannot stand to have their $$ on the sidelines. The more sideways this mkt. moves, and with smaller down moves, the more likely that is to happen. That being said, I am starting to doubt whether it will have enough juice to re-test SPX 12k like I thought before. Chart time:

The VIX is grinding its way up. I have not added nor subtracted anything from this chart for a few weeks, and you can see the loose up trend is still in tact. It closed beneath it once in the last 5 days, but has stayed above it for 18 days. A clear sign that volatility is still on the rise.

Yesterday it looked to me like the INDU was ready for a little rally, and most of the day I was right on the $$. Boy did that change quickly. Now it looks to me like it is forming a type of bear flag here. If it stays between 10,075 and 9750 for a couple more days, then I will be shorting for a mid-term move. I do think this will eventually make another run at the 200 ma, and likely fail there.

The SPX looks very similar to the INDU. You can see the breakdown of the last wedge and now it too looks to be forming a bear flag. There is clear support at the 1040 level and resistance at the 200 ma level. So either way I will be looking for a volume induced move before I continue to trade in the direction of the break.

Forget the flag, this thing looks bearish just the way it is. I will use yesterday’s low as support and also as an area for a great short.

This is the most interesting chart I have seen. Again, these are the same lines I have had on here for quite a while and note where yesterday’s low was. Now note today’s high was. Further, this looks like it is laddering down , notice the series of lower highs. If this is to continue, we should be looking for about 5 days of sideways movement and then another move down. If it takes out this support, and not by a little but a close beneath it, then I think we are in for a ride to the downside.

So there you have it. The NAS and RUT are looking pretty bearish, and the others could look that way in a hurry. Jobs numbers come out tomorrow, and although good news may lead to a little pop, a hint of bad news will likely lead to a big drop. I will try to post some stock charts to twitter / chart.ly tonight, but I wanted to get this out first and early. I am leaning to some selling tomorrow, but I am not anticipating a great big down close, not yet anyway. Trade well and prosper, and I will not be posting tomorrow night, nor Friday. I will get the video out Sunday though. AKOT

Let the charts do the talking

I don’t have much to comment on regarding the mkt. The charts pretty much say it all. Again, as I have been saying for a few weeks, volatility is the order of the day, and I don’t see that changing any time soon. So let’s let the charts do the talking tonight:

Although the VIX sold off big today, it is still in a pattern of higher lows. I don’t give VIX trend lines as much weight as indice or stock lines, but they are worth noting.

Now the INDU si showing me a few things here. First it is still beneath the 200 ma. As usual I think it would need a gap up or strong move through the 200 to break back up to the upside. Second, the v is in a steep decline, again as expected post Memorial Day holiday. Third, this is a type of bear flag formation or an ascending wedge, with the 200 ma as the top. So all in all it looks somewhat bearish to me, barring a close above the 200 ma.

The SPX is very similar to the INDU, but notice that its highs are actually declining, unlike the INDU. Because of this it has formed more of a symmetrical pennant or bear flag beneath the 200 ma. It has given two great levels to watch, 1055 and 1110, each a key to the next big directional move.

The NAS, on the other hand has a completely different picture, mainly due to the 200 ma. It seems to have bounced off the 200 ma here, but I noticed something. If you look back to the last three big up moves, they have each shrunk a little in size. So the NAS bulls seem to be losing a little steam. Now if you look from the current down move, this right now looks to be an up move consolidation that will lead to the third move down in this current move.

The RUT looks very similar to the NAS, with a very nice support level to watch. However a close beneath this level is not the big sell signal, the 200 ma still looms large.

So there you have it from my view. I kept thinking that we would see another leg up before the big sell off, however as of right now the charts look pretty bearish to me. If we see some follow through to the upside tomorrow, then perhaps that will be the start of that up move I have been waiting for. However, if I am to be honest, it does not look hopeful to me right now. Again, posts will be sporadic due to soccer. We have a tournament this weekend so I will be out-of-town until Sunday. I should be able to get some charts up tomorrow. Trade well and prosper. AKOT

Weekly Stock Market Video and Commentary

As we finish up May, it has been clearly evident that this mkt. is showing glaring signs of weakness. However, I am still anticipating another run up. I certainly could be way off base, and this may be the beginning of a big drop, but I just think that the bulls have one more shot in them before getting taken out to the woodshed. The 200 ma has been taken out by most of the indices, and looks to now play the role of resistance. However, the more it gets tested AND breached, the less of a factor it will become. There is a distinct possibility of a head and shoulders pattern set up on the SPX, and that would require another leg up from where it is now. All in all, the VIX remains high, the v will likely shrink into the summer, and there is a lot of bad news out there, so I think we will continue to see very volatile days, weeks and months. Now onto this week’s video.

Trade the opposite of the end of day move: Will it continue to work?

Once again, what looked like a promising up day early on was sold off faster than oil pumping into the gulf of Mexico. I was actually looking for some buying into the close and got spanked intra-day because of it. There has been a strong pattern of eod moves every day the last couple of weeks and I expect it to continue. Volatility is still very high, but not extremely high. Some of those eod moves were in the last 20 minutes. Looking back almost every eod move has been followed with an opposite move the next day, so here I go once again! I am looking for an up open tomorrow, but I also realize the claims numbers come out an hour before the mkt. Last week I would’ve told you to be cautious about this data, but after seeing the sell off soon after great housing numbers today, I don’t think it really matters this week. Now for a couple quick charts:

The INDU closed beneath 10k, but what is even more interesting to me is the volatility and uncertainty of the last two days. From highs to lows over the last two days it has moved over 400 points. Yesterday’s hammer looked like a clear reversal, but it was followed by a candle with a giant wick, not so bullish. There is very strong resistance at 10,200, and I don’t expect it to be broken easily. Despite the huge moves, it actually looks a little sideways to me.

The SPX also looks sideways to me. However, it looks like a plank walker as well. If it continues to move sideways like this without any up movement, then I think it is getting ready for a big drop.

The NAS rallied right up and through the 200 ma, but was unable to close above it. It also nearly closed that gap, something I missed today, and that would’ve been an obvious stall spot. I think if it is going to move back above the 200 ma, it will gap above it, or have a very large candle body. Until then the 200 ma will continue to be strong resistance. Strictly technically speaking, this chart would be screaming “short” to me. Perhaps I will be remiss to ignore it.

The RUT has managed to stay above the “flash crash” low, unlike the other indices. So it continues to show more strength than the big caps, at least for now. However, check out today’s candle, that my friends is a classic tombstone doji, a reversal candle. It is out of context however, so not as strong of a signal. Watch the 637 level, not so much intra-day, but for closes. If it closes beneath that and takes out that 200 ma, I will strongly consider moving all my retirement $ to cash.

All day, all week, all over all we hear is “financials, financials, financials” or maybe it is just the voice in my head. None-the-less, check out the XLF; Notice a pattern? Gap up move down, gap down move up etc. etc. So if this pattern is to hold here, and I see a gap down tomorrow, then I will be very tempted to go long the XLF again. Also note the v is declining into this down move, so it may be looking for a break back up to the 200 ma.

In closing: This week has not panned out the way I thought, but it has still been trade worthy. It also appears there are some patterns that we can use to determine the day moves. Remember, eventually all patterns fail, so don’t trade based strictly on past patterns, but trade when you see evidence those patterns are in effect. But most of all, trade well and prosper. AKOT

Soccer is getting in my blogging way

All I apologize but soccer has taken over my nights and I am struggling to find time to post. I expected an up day Monday, then I really expected an up day today, both failed. However, today was very interesting in that it rallied hard off today’s lows, and continued to rally after the close. Although long-term I am bearish, I do feel that in order to continue down (in an orderly and trade-able and “normal” fashion) this mkt. will need to have a relief rally. Here I go again, it looks like it may be poised for a move up tomorrow, at least early in the day. Volatility is still high, and I imagine over the summer it will go even higher. Which is good for selling options and for trading futures intra-day. But short-term, I think today’s rally shows that there are still some bulls out there willing to bargain shop, and I was one of them. Again, SHORT TERM. I have time for a couple charts, but that is all you need to get the picture.

The VIX looks like it will continue to drop here a little with support in the 32 area.

A drop below the 200 ma almost always leads to a re-test of the same. Today’s hammer with a long tail and decent v may be the catalyst to spur that re-test.

The RUT is finding support at last Sep/Oct highs and the 200 ma. It looks like it is set for a move up here, but if it closes beneath 625, then I think it will make a beeline for 600, and you want to be aboard that train if it happens.

In closing: Although I was wrong in thinking that the first 2-3 days this week would be up, I am back in that camp again today. I just think this thing has sold a little too quickly and the buyers will rear their heads once again. Trade well and prosper. AKOT

Weekly Stock Market Video 5/23/10

As I skimmed through charts this weekend, something became very evident to me, there are a lot of stocks very close to strong support and there are a lot of stocks with bullish engulfing formations. Therefore, I think we will see a slow down in the current down move, and likely a nice up move this week. Obviously I don’t think every day will be up, but barring any unforeseen news, it looks like we could see a positive week.

Now there is economic news every day prior to the open, so that will be the key to how I trade the day. I will be watching for the initial reaction and looking to see if there is follow through. I have been noticing that the jobs numbers have slowly been worsening, and even some housing numbers are stalling. So the fear could easily ramp right back up again, but I would imagine that would occur closer to the end of the week, with the Thursday claims and then on Friday with the income numbers. I speak in the video a little about the start of a disconnect between the euro and our mkt., so I will be continuing to see if they come back into line, or stay disconnected. It is always nice to have another indicator to watch. On to this week’s video:

Late Night Post

Well so much for that support on the 200 ma eh? Man, I expected a down day, but not a blowout down day like today. In fact, I bought some SPY calls at around 107.60, what I was pretty sure was going to be the bottom for the day. It seemed to be working according to plan, and then of course I had a meeting 1/2 hour before the close and slap my face and call me shocked, there was a big fat eod sell off. Of course this was blamed on Roubini saying the mkt. could drop another 20%. Frankly, I think he is right, however why did he have to say it after I had bought me some calls. Well I am still holding them, as odd as that may seem. I still think we may see an up day tomorrow. I know, I know, crazy, but I really think this thing is ripe for a bounce and my weekly plan was for Monday and Friday to be up days, and I am going to stick with that. Two charts tonight to show you the madness that I love. It’s odd, but I tend to trade better in a down market.

The SPY decided to go ahead and skip the 200 ma altogether, and just gap beneath it. Notice a near shaved bottom candle, usually very bearish. Also not that the v is increasing into the down move, once again a bearish indicator. Now notice that AKOT is looking for an up day tomorrow, possibly another bearish indicator.

Now notice the QQQQ, it actually found support on the 200 ma. It too has a near shaved bottom candle and increasing v into this down move. But if you recall, the NASDAQ and RUT have been the leaders of this rally. The RUT still has not reached its 200 ma. So I could see this two causing a stall out to bounce move.

In closing: There is definitely a stir in this mkt., but I am still holding out for one more bounce. It may not happen, perhaps fear will rule the day and DOW 10 k will go away. But usually we can expect one of those exhaustion gap up moves to signal the end. Most likely, I will be selling those SPY calls within the first hour of the day. There is no pre-market news tomorrow, so we should know early on how things will play out. Trade well and prosper. AKOT

Still room to go……..down

The week is going pretty much as planned, but that doesn’t mean it will keep on that track. But if it does, what I will be looking for tomorrow is a gap up, maybe not huge but a gap non-the-less. Then I will be looking for that gap to be filled and then some, with some buying into the close. Again, there is a lot of support nearby, but I am not sure how strong it will be. I am convinced that the 200 ma will offer at least enough to stall out the move, if not cause a bounce. I know I was saying that I thought DOW 12k was a forgone conclusion, and it is still a possibility, but things are looking more bearish every day. If tomorrow turns out to be a big move like I think, then I will be looking for Friday to be maybe not so adventurous.

I was looking for the VIX to move up today and it did not disappoint. However, it obviously was not a strong move, with a huge sell off from the highs. The last gap down resulted in a four-day move before gapping up, today was day four in the current gap island. This makes tomorrow a prime for a gap.

The INDU briefly took out support, but was unable to close beneath it. The v was very good, and I think this makes it prime for another move beneath that support, perhaps closing right on it or right beneath it.

Note where the SPX bounced off, the 200 ma. It is starting to come into play already. However, that nice rebound has left a lot of room for this to head back down and re-test that 200 ma again. Note the last hanging man two days ago, what followed? A big down day.

The NAS closed beneath the minor support of the up trend line. It has a ways to go to get to the 200 ma. It looks even more poised to drop to me than the others. It has clear resistance right above at 2330.

The RUT continues to look like the NAS. It closed beneath two levels of support today, the channel top and the 678.50 line. What is scary about this chart is that there is free air until the support level of the “flash crash” near 640.

I like these quick re-tests of support as great short opportunities with clear stops. Once it moves beneath this support, and looks like it is beneath to stay, then I short.

That’s my BEBE took out the 200 ma on good v, I think it will fall to the gap fill.

In Closing: I know I keep talking about a drop for tomorrow, and I know that I could be 100 percent wrong, but that is how I am planning to trade tomorrow. The claims numbers come out an hour before the open, and for some reason I am leaning to them being wte. But that goes against my perfect play which would be a gap up, or a move up right after the open. At that time I will be going short at the first sign of weakness. IF it does not look good, I will change may game plan and change it quickly, and I advise you to do the same. Trade well and prosper. AKOT