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

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:

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

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.

Quick Update

I just rolled in once again, so I am going to keep this short tonight. I was expecting some up movement, maybe not quite 400 points up, but it was still very playable this morning. I got to trade until about 9:30 AK time and unfortunately I was unable to trade the last hour of the day, which was phenomenal today. I hope you guys all caught it. My thought was that we would have a couple of moderate up days, but today may have changed the picture for the rest of the week. One thing to note is that we are still under DOW 11k and depending on the morning news, I expect a bit of down open tomorrow. If it does gap down, I will likely trade the futures long for a bounce. I think this was too much euphoria today to be sustained. It would’ve been healthier to have a +100 point day today, but like I have said, volatility seems to be back in action. so I am expecting a bit of a pullback tomorrow, perhaps just enough to go long on Wed. Chart time.

The VIX has moved back into the gray square of consolidation. Note that today was a doji star, which could signal a bounce from here. However, if you look at the VXN……

It looks decidedly more bearish. So this could signal a conflict tomorrow between the SPX and the NAS. Looking at this, and this alone, I would say that the NAS should continue up tomorrow. But that’s why we look at several things.

The COMPQ had a great gap up today, but note that not much happened after the gap. It was like the first stage of a rocket launch with a failed second stage. No follow through is not usually a good sign. Ergo, it makes me a little cautious to be long NAS stocks.

Meanwhile the RUT looks a little stronger like the others. It broke out to the March resistance levels and out of the up channel once again. However, I don’t trust straight up moves, and this is stick straight.

In closing: Watch the morning pre-open news, and I am leaning towards a down open. Personally I am enjoying having some volatility back in this mkt. after the last 9 months we had to endure. I will be late again tomorrow night, and then gone the rest of the week. You all will have to pick up the slack. Trade well and prosper. AKOT

Throw some puts on the barbie ( some calls eod)

Wheeeeeee, today was a great day for traders. We like days like this, solid moves with all indicators clearly giving us a direction to trades. Throw some puts on the barbie and the odds are great that they will be profitable at the eod. You may have noticed a slight change in the tone and focus of this blog over the last few months. I can feel me doing it, but I can’t help it. I have started trading futures and I really like trading them, and I am doing well. I am still trading stocks and options, but I am really focused on intra-day futures trading, and I noticed I have focused more on next day moves rather than week-long or month-long prognostics. I am not inclined to change it, so whoop there it is. In that vein, I closed out a couple of short positions today, one of which was BKS, a chart I had posted a few weeks ago. But I did something odd, I bought a small position of SPY calls about 20 min. before the close. Again, there was really no charting element to this trade, it was just that “feeling” thing again. I could be burned big time as fear tends to feed on itself, but I saw a few things that led me to believe there may be a small gap up tomorrow, and I was willing to take a chance to get a piece of that move. So I will be looking for a gap up, probably off of bte continuing claims and initial claims numbers. In fact I hope we see an over exuberance, with numbers that just crush expectations. Because I will then shortly buy back those calls and promptly look to sell short some /TF. Let’s look at the charts:

Obviously the VIX was up big today, but one thing I noticed that edged me to the call buying was that there was a pretty good wick on today’s candle. About 1/2 the body was top wick. I also noticed that lately any big move on the VIX was followed by a down day.

The INDU slammed through the bottom of the wedge and through support on another decent v day. However, you can see it tagged the bbb, something it has not done in a while, and rallied off of it. Also the 50 ma looms fairly close and the logical support would be the up trend line. But I still like it for an open bounce tomorrow.

The SPX tagged the 50 ma and pulled back a little. Again, a good area for a stall out. Of course if it does break it tomorrow, which is a possibility ( after a gap up) then there is a lot of open air to the next true support.

If you recall, I have been saying for months that I felt the COMPQ and RUT will lead this mkt. down, so they bear watching. Percentage wise, this was nearly a whole percent lower than the last two we just looked at. It to is very near the 50 ma, and it too has a lot of open air underneath it. Chart wise I could see a few things fitting here, an inside harami day, a gap up into the day followed by some selling, or no gap and drop. I am NOT looking to take out yesterday’s open, I just don’t think this mkt. has the strength to do that right now.  But if you had to make me pick, I would be looking for the gap up into the candle followed by selling and closing lower than today’s close.

The RUT was down over 3%, again quite a bit more than the INDU or SPX, and even more than the COMPQ, all of which makes sense. You can see the clear breach and smashing of the 20 ma. You can also see this thing has a lot of clear air before it even gets close to the bbb or 50 ma. That 690 looks like a great place for a rebound.

I will finish with BKS. I was very fortunate here as I had been holding this for several days watching the premium eat away at my put options. I was looking for it to find some support on the 2o.80 line, which it didn’t, and then the 200 ma, which it didn’t. I closed it today because I thought it would definitely bounce from here. However, if it takes out the 200 ma again, I think it makes a great short to 17.75.

In closing: I expect the jobs numbers to be much bte tomorrow, and I expect that to induce the value buyers to do what they do best, buy. Then I will be watching for big $$ to step in and sell. There are tons of variables and we may see a 300 point rally tomorrow, but I don’t think so. If the jobs numbers come out wte, then you best be holding on because my SPY puts will be as worthless as excuses are to BP right now. Then it will be time to short and short fast. Trade well and prosper, AKOT.