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

News, News, then Expiration will guarantee continued volatility.

First of all I apologize for missing last night’s post, but I am in the midst of soccer season, so time is very sparse right now. I guess you could call yesterday the “up” day I was looking for. We have two more days of economic news this week, and then expiration day on Friday. I expect the volatility to continue. I am seeing some support starting to rear its head, but the way this mkt. has been I am not too sure it will be that substantial. Remember a few weeks ago every sell off was met with buyers? Well now it seems that the buying opportunities are being shorted, and like today, shorted hard. I will now be suspicious of every gap up day, but keep in mind the “news” that caused the gap. For the remainder of the week I am leaning towards some more selling, and possibly another up day on Friday.

The VIX looked prime to drop yesterday, but alas, today it looks like it is ready to rise once again. This is definitely a week that could see the VIX testing its recent highs.

The INDU looks like it wants to continue dropping here and stall out at the close and open days post-flash crash. Then right beneath that is the 200 ma.

The SPX is right near support from the top of the mini-inverse head and shoulders that led to this current rally. The bollinger bands are widening and this often confirmation of down movement. Note the 200 ma looms nearby, as with the INDU.

The NAS, one of the leaders, is right back on this long-term up trend line. The line has been breached once before, and therefore can be breached much easier the next time. Today was a huge bearish engulfing candle and could be the signal leading to the smashing of the line. Once again the 200 ma looms nearby to serve as support.

The RUT, another indice leader has dropped right back to recent support levels and on the top of the slow ascending channel. You can see how much better the small caps have been performing by looking at the distance to the 200 ma as compared to the other ones we just looked at.

In closing: Although there are definite support levels nearby, I am not convinced they will be that significant. I do think that the 200 ma will offer some support. However, I would be prepared for a news bomb this week, I don’t know what it will be, but something that will be blamed for this mkt. making a major move, and it won’t be a fat finger. Trade welll and prosper. AKOT

Weekly Stock Market Video

Volatility continues to be the story of the day. Further, despite a trillion-dollar bailout, Greece, and frankly the Euro is in a state of flux. All this will continue to add to fear, and continue to make the dollar and gold strong. However, nothing ever moves in a straight line. So I am actually looking for a bit of a reprieve this week, likely on Monday, and a possibly a couple other days depending on the news. It would not surprise me to see an up move on Monday. There is a lot of earnings and economic news this week, but the bulk of  it is from Tuesday – Thursday, so Monday seems to be a logical place for a move up. Further, on Friday there was the big sell off, but if you recall, there was an eod rally into the close. However, we must remember that things are very dicey right now, and any bit of news can spook this mkt. quickly, so I will not be going long at all without some evidence pointing me that way, and I will be nursing the positions the whole time. Now on to this week’s video:

Trade long with the strong and weak with the meek.

I don’t know if you have noticed that the last 5 days have been down, up, down, up,down….. so tomorrow should be up right? Well the pattern has to be broke sometime. I think tomorrow will be a messy day, not a lot of direction. But the late sell off today leads me to believe it will be a down day. My thought is if we gap up a little, then I will be looking to short something. I am already short SPY and I will look to add. Further, did you notice the jobs numbers came in worse than expected? I did. I also noticed that it was not headline news. It was just…. nothing, no big deal. Well tomorrow there is a lot of data, retail numbers pre-open, Michigan sentiment post open. All of which will likely move this mkt. on a Friday. I am looking for one of those “trade a lot intra-day” days, or a TALID day.

The SPX has met resistance at the 50 ma. It was an inside day today, and it could easily breakout to the upside tomorrow, but somehow I think there will be a move to sell into the weekend.

The NAS really tried to rally, and it was succesful early on. However, it too gave up the ghost. You can see it found some support here, but it too is finding resistance from the 50 ma.

I made a mistake today trading the RUT (TF) short intra-day when it was showing more strength than the ES. I usually try to trade long with the strong and weak with the meek. It still worked out because of the late day move, but it would’ve been much better if I had traded the ES. I tell you this because the NAS / RUT have not yet turned over to be the leader of the move, and when they do I think we will see a very fast move down.

Trade well and prosper.

another late night quick post

This one is going to be quick. To me it appears as though the charts are conflicted right now. I am expecting another down move again tomorrow, but that is not what everything is pointing to.

Even the VIX looks conflicted in itself. In one hand it engulfed yesterday’s candle and failed to breakout to a new high, on the other hand there are two long tails in a row, usually a bullish sign for the VIX. Further more there is a gap left to be filled. But at first glance I felt it was looking to drop. But I am absolutely conflicted on this one.

The DOW has rallied back up into the base of the ascending channel. Note that v has decreased three days in a row, and today was a typical reversal candle and has met resistance at the 50 ma. So this looks ready to drop. But on the other hand….

The recent leader of the pack, the RUT broke out and could easily rally off the 687 support. And furthermore, the NAS looks much the same.

In closing: ( told ya it was gonna be quick) things are conflicted to me, but I am expecting selling tomorrow. I will be watching the RUT and the COMPQ closely to see if they start to turn, because when they do, the others will fall in soot quickly. Trade well and prosper. AKOT