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.

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

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.

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

is it really worth posting a chart?

I mean they are all jacked up right now, so they won’t tell us too much. I do know that prior to the “drop” we were headed down significantly. In fact I was waiting for an entry point to short, and about 5 minutes before the “drop” I actually entered a short trade on the /ES. I was on a conference call at the time watching my computer and my iphone. All of a sudden I saw the bottom fall out and my computer was completely different from what I saw on my phone. Two totally different prices, way apart. But I saw that my profits were piling up faster than I have ever seen. Unable to decide what the real price was, I frantically tried to buy back the /ES and close the trade, but after two failed attempts, and when I finally decided a mkt. order was the way to go, and determined that my iphone was actually keeping a closer proper price than my computer, it was too late. My humongous profit was all but gone, and I sat beating my hand against my head. I was not prepared for anything like that and I sat there like a deer in the headlights forgetting everything I ever knew about trading for 10 fateful minutes. All that being said, it was pretty exhilarating, something I do not like my trading to be.

So as I look back what have I learned? If I ever see a move like that again, and I am fortunate enough to be involved, put a stinking stop order in right now! Do not wait for it to bottom, do it on the way down. You can always move it. Just get it in. In fact the better trade would be to have my stop in place prior to the order, then I could just move it. Now there is not guarantee that would’ve worked, most of the brokerages seemed to be locked up. But it certainly would’ve been better than sitting there doe eyed trying to put a sell order in on a mkt. rising faster than my blood pressure.

So what I am looking for tomorrow? Well normally I would expect a bounce, but there a few things to consider.

1. This has now been all over the evening news. Everyone knows about.

2. The last few weeks Obama has been touting the financial reform because the banks are out of control.

3. GS threw a stink bomb on the mkt. with their so-called “shenanigans” which further enforced the need for bank control and increased fear within some investors and the general public.

4. Tomorrow is Friday. Take in consideration 1-3 and after seeing a 1,000 point drop, Greece going under, the Euro collapsing, and all this splashed all over the news, do you think people are going to want to buy going into the weekend? I am leaning towards no. In fact as I have said before, fear feeds on itself, and today my friends was scary.

That being said, I am willing to bet that CNBC, Bloomberg, CBS, NBC, ABC and FOX will all try to convince everyone that this was just a “mistake” that there is no problem at all. That it is very safe to be in stocks. I wonder if they will believe them. Remember this post about the VIX. This is the one where I comment on the huge v increase on VIX calls. Who do you think bought those VIX calls? I have my GueSs. Who do you think knows stuff that we don’t know? I have my GueSs. I smell a rat, and in all honesty, this may be just he beginning of something. I am not sure yet, but I will be watching, and yes I am leaning to shorting tomorrow, probably after a morning bounce. Trade well and prosper. AKOT