A bounce makes sense

We had a whole lot of nothing going on today. That really isn’t true, a savvy day trader certainly could have banked some buck today, but I don’t have the time or inclination for that type of trading on a regular basis. Once in a while is fine, just not every day. I decided to keep my SPY calls thinking that we set up some nice up move signs today, and also thinking we may move up into the FOMC un-announcement. Personally, I think unless there is an interest rate change, we put waaaayyyy tooo much emphasis on the “wording”. In case you haven’t heard they re-use most of the statement. Everyone just wants that one or two words. IMHO, I think we still have another shoe to drop, a big shoe, and I think a lot of people are going to get hurt when it falls, and if I am right, then I will be prepared to strive mightily. If I am wrong, then I will do my best to keep trading the mkt. as it gives what it shall.

In the past, I have usually played the Fed as a counter play, almost every time. I wait for the initial over reaction, wait ( unlike Monday) for a nice looking entry point on the 5 minute chart, then go against the move. If I don’t see that counter forming very soon, then I look to go with the move because I think it is going to be a big one. Now, I don’t know if that will work tomorrow since this really is an un-announcement, but I will be watching for it. What was that? Enough gabbing, you want some charts? Well, fine then:

The VIX did break through yesterday’s support, and my target for the VIX is in the 25 area. Now, if the megaphone pattern keeps playing out, then we are headed to the 20 area and this mkt. will rise hard, but I don’t think that is the case.

I cleaned up the charts just for ease of viewing. Now, the DOW continues to look the most bullish long-term. The recent up trend is still in tact, there is significant support, and to make a h&s pattern here we would need to drop to the 9400 area, a long ways from here. If we break above 9900, we are back in rally mode, but I think it will hold this time, not because of the DOW , but because of everything else. Perhaps this is telling us that when this mkt. falls, the DOW stocks will be some of the best ones to be in.

The SPX really looks poised for a bounce here, hence me staying long SPY. Note that we are sitting on the bbb, and that most often predicates an up move of some type. I know that we have the 50 and 20 mas above, but we have blown right through them in the past and I think we do the same here. I also like that the RSI is so low, that give it room to move up.

This looks even more bullish to me right here, so why the heck am I in the SPY? Well at the time it was the right decision. In fact, I probably should have went long the QQQQ as well today, with an easy stop at this NAS support. This could be the beginning of a beautiful shorting opportunity that I am afraid everyone will be chortling about a few weeks from now. We could see the old h&s off a bounce from here after this nice doji followed by a huge bullish engulfing today. The only thing to note is that it stopped right at my resistance line, so perhaps this will be strong resistance. If we have any good pre-market news, a gap above would be fitting.

Again, much of the same on the SPY, on decent support but not as good as the NAS support.

Morning tweet, nice earnings, very nice range trading since August, looking for more of the same following this bullish engulfing near support.

Crucial point, mixed earnings today, beat by .07 but guided lower. It looks to me like the buyers are winning out and this support will hold. It will also make a great stop, in case the bears take over, either way there is a clear delineation.

A couple of the AG stocks looked pretty good to me, this is one of them. POT is testing the 200 ma and 4/5 times it has held. Further, the RSI is making higher lows and we had a bullish engulfing today. Yes there is resistance above, but I would classify it as minor. Given enough time before the whole mkt. starts moving back down, I could see us hitting 105 again.

AGU is set up for a bounce but on slightly different terms. It has earnings tomorrow morning, and I think if they follow suit we could see a very nice up move tomorrow with follow through. If that support gives way, the way I would trade it is wait for a retest then short, but that’s just me.

Let’s finish with some GDX. This was very, very strong today. The v was huge, the RSI is setting up great for an up move and I think $51 is there to be taken.

In closing: If you noticed, I put a lot of up charts on the blog today, because that is what I am seeing. I think we need some more up before we see more down. Of course the news the rest of the week can pretty much trash that theory and we could just drop like a rock, but you know what I think. I will be leaning a little more to the long side, just for the short-term. AKOT

Is DOW 10 k here to stay?

DOW 10 k was all the rage this week, so is it here to stay? Well, if you have read my thoughts for more than a month, you know how I feel about that, NO is the short answer. In fact, I freely admit that I am very surprised that we made it to DOW 10 k so soon. I thought we wouldn’t see it for at least one more year, but then again fast drops sometimes lead to fast rallies and we have had both. Now, I still submit that this rally is propped up on bad data and propaganda, for as we all basked in the beauty of DOW 10 k ( including my retirement account just so you know that I am not always a bear) more news came out telling us that foreclosures jump to record highs and that more bank closures loom but things are great! Now I know that stock market is not the economy, but let me ask you this, what was this crash we are “recovering” from based on? Who was to blame? Good answer, the banks and sub prime mortgages. Who is still having troubles? Good answer, the banks and mortgages, now moving into commercial real estate like I have pointed out about in the past. Now I know JPM and GS are knocking the ball out of the park right now, but weren’t they doing that just before they all came tumbling down? Further, I have not done the research, but I would extremely curious to know exactly from whence their earnings are derived? Do they not trade? Just asking. Anyway, enough of this cheery stuff, let’s look at some charts shall we?

well the VIX finally gave up the ghost and closed beneath this long term support. I looked very strong early on today, and it looked as if it may push this mkt. south, to a “gasp” sub 10 k close, but alas it twas not to be. I did not draw them out, but I will on this weekend’s video, but Cash21 pointed out to me a very nice megaphone pattern forming here.

The DOW has had decent v the last two days into this surge up. Now I did say on my last post that I thought we would break 10 k if we got bte retail and earnings, and we did. I just felt that the bulls would suck this thing up if it got close, then I thought it would sell off, like today, which it did not . At the top of this chart note that 50% fib at 10,360, anywhere in that area would be a good technical are for a reversal. Further, as I point out on the chart, the last two moves have been about 225 points top to top, that would bring us to 10,075 another area to watch for a stall out.

The SPX looks pretty strong. The 1120 area is being touted as being the most likely reversal area as it is the 50% fib line. We shall see, but I say this chart still looks strong to me.

The NAS still looks the toppiest of all my indice charts. We actually have a tweezer top formation today, a very strong reversal formation, hence I am still short the QQQQ. But, if the other ones rise, this will likely be in tow so I will be tracking it closely.

I take that back, the RUT looks even more toppy than the NAS. We had an inside day with a bearish harami formation here, and this has the power to drag the mkt. a bit, so watch it.

I thought the dollar had formed a nice bottom for a rally near 22.50, but this looks even better. Near identical spin tops with a the same low, a tweezer bottom. This is a good technical sign for a move up from here.

Okay, I put AMB on here because I don’t recall ever seeing this formation. Check out the hammer , hang man – gap, spin top, hang man-gap, spin top, hang man – gap with increasing v. What does it mean? Heck if I know I just said I have never seen this before. If someone knows let me know, but for now all I can say is that the v is increasing into this up move, and it appears that we should look for gaps up off hanging mans, like today.

ESRX, on resistance of upward trading range with an inside selling day today, on increased v. Still looking for a drop from here, especially if the overall mkt. turns south.

Watching this for a breakout. If it makes a strong move above 15.10 it should be a good long up to the gap near 18. It may take a while to get there, but it would give us a very nice easy stop at 15.10. On the other hand, if it breaks below the 200 ma, then that would be a good short with the 200 ma as the stop.

RJF has formed a dark cloud cover in a resistance area ( not a tight line, but area) so we should be looking for a drop back to support from here.

XHB is meeting resistance once again. Note that it is above that bearish engulfing candle from Sept, but hitting its head on resistance.

The XLI had an inside day of trading on not great v, but it is coming up against the highs from Sep, which may offer resistance. Further, we still have an unfilled gap with a base of 26.50 so this has a lot of reason to move down.

In closing: I shorted the QQQQ last night just before the close because it looked to be the weakest. I did not do this based on TA,  just based on years of watching the mkt. and thinking that DOW 10 k was going to be a “fluff” and no fundamental move. Further, we had such a strong up move Wed. I expected to open down unless we had amazing news prior to the mkt. We did open down, but not much, and the NAS was the weakest, but not weak enough. I will hold those puts until Monday, as the Monday after 3f is often down, and opx prices are usually high on that day. A good day to sell.

Now, I have to consider that DOW 10 k and the news it will generate, may cause a lot of buying, a lot of people who have been waiting to confirm this mkt. is stable and safe. If this happens, we could easily push this thing up much higher from here. This is what the pros like to see and this is what the pros love to short. I do think we will end up have a couple down days here if not tomorrow then Monday. Trade well, use stops, and prosper. AKOT

Weekly Video 9-9-27

We had three down days in a row last week, and I managed to play puts on each of those days. If you remember, our last move down was four days in a row, and I could see us hitting that mark again. However, we have now moved into areas that may offer possible support. We are not right there yet, but we are close. We are still inside most of our trading ranges on our indices and ETFs, and until we breakdown through them, we have to continue and play the up moves.

I like that we are starting to see the v perk up a little with these moves, offering some confirmation. We have a slew of news coming out next week that will potentially move this mkt., with heavy emphasis on Thursday. Now onto the video:

Weekly Video

Well we are in breakout city now aren’t we? All the major indices broke to the upside and the new highs will now become crucial pivot / support areas. Bernanke says things are peachy and getting better, cash for clunkers is a government masterpiece (heavy sarcasm), and even though the jobs numbers continue to fall, things are much better (we will likely see a little pop in the jobs # due to GM hiring back workers). Well I plan to play these up moves, but cautiously, and I believe, along with many savy traders, that the emperor wears no clothes. But the market will do what the market will do and our job is to trade it. That is why you have seen me adding more upside trades over the last few weeks. I think Tuesday’s consumer confidence and Friday’s personal spending numbers could be market moving events. Please for you to enjoy:

briefing.com

Weekly Video

Another weeks in the book, and another one on deck. This week could be a big week. There is a lot of economic data coming out, lots of e, and on May 7th the stress test. Earlier I thought this could be key to moving the mkt., and it still could. However, as Cash21 pointed out to me, the govt. is the one doing the test, so it will be what they want it to be. Still, verbage is key. Fundamentally, I am still bearish. There is no reason for this mkt. to rally as it has, and I don’t see any great news on the horizon. When the bubble bursts, I want to be ready to pounce. Now onto the econ. calendar and this week’s video.

I wouldn’t bank on it

Well lookey there, people are finally starting to wake up to what I have been talking about for a couple of weeks, the bank earnings are not what they seem. The problem is soon and very soon everyone is going to know it and then it will be too late to play the move. I think they time for bank puts is now, buy on the rumor, and sell right before May 4, I think that is my plan. Of course plans are meant to be changed and flexible so I will have to be too. If you haven’t already read this, then do s0:  Bank Fraud it is similar to the one I posted last week, but even better.

Check out this HUGE candle on the VIX. It basically engulfed the last 6 candles, yes 6 days. It did not even dip into my red zone, like I thought it would. This was over 15% up, that is huge and that is a lot of fear and volatility about to appear in this mkt. 

The DOW showed a nice DOJI with a nice confirmation candle to the down side. We broke through two supports and now we don’t have a lot of support on the way to 7500. 

The NAS broke through, convincingly through its up trend line, however we have a lot of support along the way, one at 1600. If the volatility stays the same, we should have no problem breaking it. 

The S&P has almost filled its whole channel in one fierce swoop. It now sits perfectly on support, which could cause a pause tomorrow, or even for a day or two. 

The XLF, the financial etf, has a gap waiting to be filled and a huge down move today, over 11%. I still think we have a lot more to go. I expect us to meet 8.60 easily and even lower.

Same chart, look at it closely. I have four sets of fibs on this chart, all with the same bottom and different tops. Each of the four line up with today’s close, I don’t think that is coincidence. This could cause a stall out if it holds and I hope it does so I can get some puts at a good price. 

We have a wedge forming here on the XLF and it looks like it should bounce, but it would have to break some resistance. If it fails, then it should be a quick hard drop.

In closing: I expect financials to be very weak for a while, but when the stress report comes up May 4, everyone will expect it to be really really bad, and so if it is bad but not so bad, then I would expect a bounce. Clear as WFC financial statement? AKOT

What’s happening blud?

Another surprising day to me, I should know by now not to be surprised. The strength amazed me, especially after the wte jobs claims came out. I was pretty confident that we would see a bit of a sell off today, and we did, but we were up 300 at the time so that really doesn’t count. Things really aren’t adding up to me right now. This rally has no economic, chart or mkt. reason to rally, yet onward and upward we go. The best thing we can do is make some great trades on the up moves, which I have NOT been doing. I am just having a hard time trusting the up moves. Let’s see why:

 

So the VIX stalled out twice on our support line and then smacked right through it today. You can see how far it fell and then it rallied like crazy the last few hours of the day, almost going positive several times. For the huge up move we had today, the VIX did not react as it should have. It closed right beneath that support so now it turns to resistance and we will need some conviction to break through it. This last few weeks has been a complete mess. Tomorrow is Friday, and often times Friday’s sell off so that people are not holding positions over the weekend. I would say this hammer candle today would signal a reversal, but look at the last one on the 23rd, the next two days were down, so I am not 100% convinced of that. In a normal mkt., if there ever was or will be again, I would have expected a reversal move to the upside tomorrow. 

The DOW has created a beauty of a reversal pattern, very close to deliberation, which the last two similar times this occurred led to a down move. We did not close above 8k, although we spent a good portion of the day above it, and we sold off hard and fast the last hour of the day, all things to consider for tomorrow. I really really hate to say it again, but I would be cautious of playing up moves.

On the S&P we formed another gap that will have to be dealt with. We popped up above a fib and then retraced. We are in a very confused state right now and it makes for some tricky trading. We still have not made a higher high, so ultimately we are still in a down trend mkt. wide.

This is the most intriguing of the four charts to me. You can clearly see we are overbought, we gapped up huge today, but closed right on the last high, and we sold off hard the latter part of the day. We are above our down trend line which will now act like support if we do fall. Due to the mass consolidation the last 8 days, at the top of an up move, it looks like we are forming almost an abandoned baby type reversal pattern. That being said, I could see us easily making a right shoulder on an inverse h&s pattern. Either scenario requires a down move.

Now onto some plays. I had to throw a couple of possible up moves due to the way the mkt. is reacting. So here is MXIM, it is in an up trend and didn’ tsell of too badly today. I could see it continuing up.

Another possible up move. MCHP is in a strong up pattern with clear support at 21. If it drops near there it is a buy in my eye. 

One of our old stand-bys, HPQ. I think this is a strong sell. It gapped up filled a gap with a gap up, left a huge top wick and closed beneath support. All signals point downward and I would be very very surprised to see it move up without some retracement.

Let’s look at one of my personal emotional stocks, XOM as in the Exxon Valdez Oil Spill. Back when that happened I was a commercial fisherman and that event really affected my life. Check out this chart very similar to HPQ, a gap up filling a gap and hitting a fib. WE should see a move down from here, although they are not as overbought as the others. 

Let us finish with my BLUD, and I think it is set to be losing a lot of it soon. You can see that it looks to be forming a great h&s pattern with all signs pointing downward. I would say there is some support near 22 and 20.50, but I really like the pattern setting up here, and even the big picture is forming a great strong down trend.

In closing: As much as I want to be bullish, I am having a hard time seeing how this can move up even more. Can it? Absolutely, I just can’t see it and I will have to play it intra -day if it does. My DUK puts kept working today and my DRI puts put a whipping on me today, so I am looking for another good move. I saw a lot of shooting stars adn abandoned babies out there on the charts, but I also saw a few more up trends and strong looking charts, so this mkt. is currently mixed. I am still a bear, grrrrroooooowwwwwlllll. AKOT

Lee Iococca, you’re fired!!!

So the catalyst for this down move was the firing of Wagoner from GM, and the govt. essentially taking over a couple of our car companies. That’s it, that’s all it takes? (heavy sarcasm) Actually, this mkt. did not move down as much as I thought it should, as you saw in my tweet, from the events that caused the move. Most of the move occurred prior to the open, with what I thought was going to be a big sell off about an hour before the close. Instead we rallied into the close shaving about 50 points off our losses. We do have some support coming up that could make things interesting, and we have loads of economic information forth coming. Onto the charts:

Let’s start with a little perspective. Here is the VIX 5 year chart, still seems high no? Also, you can see a bit of  a wedge forming from the beginning of the year. Now, I think it is possible we are consolidating for a move, and I think it may be ultimately to the upside. It is above the 200 ma, the SRSI is low with room to rise, and it is near the bottom bb.

Now here is our close up of the same chart. You can see we gapped up near some minor resistance, and we closed off the highs of the day. Still we were up over 10% which is big. You can clearly see the consolidating occurring right before your very eyes. 

I found this very interesting, the DOW closed right on our support. It dipped beneath it briefly and rallied to sit right on it. Now I still have both of the possible down trend lines on the chart and they both are still in play. We are still over bought, and we had more v than Friday, another bearish day. I would say our next support is near 7250, but would not at all be surprised to see a bounce after today’s sell off. However, remember economic data will likely rule the day tomorrow.

The S&P looks similar with a little less of a sell off, as it was designed to do. You can see it closed right on our down trend line, and we have some pretty good support at 750, I would expect at the very least a stall out there, or a possible reversal.

The NAS has thrown a really nasty gap to deal with. The good news, it is right beneath a fib, the bad news, it closed right on the down trend line. Now if we look back to the Feb gap, you can see it took us a little over a month to fill that one, and like this one, it too was to the down side. We have definite support at 1440-1460 area and I look for support there. 

I did not throw any stocks in here because all of my put calls look genius and my two call calls are still in play. It is gap city out there baby and we will have to deal with the consequences. 

In closing: We did not make higher highs as I kept harping on last week, which if it holds is definitely bearish. If we continue this down move, I think that we may make a new low in the next couple months. If the support serves as a turning point and we make a new high, then we be bullish, it is that simple. In the meantime, trade treading those gaps, support, and resistance. AKOT

I think the tank may be running out of gas

I know I have been saying that this mkt. is going to turn around and drop, and when it does it will be like an anchor. And yet, it defies my understanding of charts and emotions and traders. Still, when I look at charts I see a market that has rallied too steep too fast and may be starting to head south. The anemic v of last week may be a sign of things to come. This could be an interesting first week of April, hang on to your hats. Please for you to enjoy….

Arm and Hammer helps take the fish smell away.

Boy that last 1/2 hour was a real doozy. But at least the VIX finally started acting right in accordance as to what was happening in the mkt. and that made me feel a little better. Now off to the charts:

You can see the VIX touched, even breeched our support and quickly moved back up. I think this thing wants to move up. It has great support with the 200 ma and our support. It did bounce off of our trend line, so that is offering resistance. 

The DOW, which had a mad rally at the end of the day, finished up 1.17%, vs. the VIX down 1.7%. V was again low and that could be a sign this rally is petering out. However, we now have support at 7500 and a little below on the down trend line. We are still in overbought territory. Notice something else, we almost never form a bottom with a single move, so I am not convinced we have done so yet.

The S&P has been dealing with the 800 support line for the last three days. Notice also that the bb is starting to widen, this normally would be a bullish sign in an up move, or bearish in a down move. The most important thing on this chart, to me, is that the gap filled today, this would give us a reason for a down move. All the candles on today’s indicie charts show great indecision, a battle between the bears on the bulls, and with the v taken into consideration, it appears the bears may be wearing the bulls down.

NAS, more of the same, indecision, support line, decreasing v, down trend line as possible support. 

On to some plays: I tried to get into two plays today unsuccessfully:

DLTR was my first, but it did not move down like I thought. You can see why I thought it would, and I will watch it closely for some puts, especially after this very nice move up today. 

My second try was TGT, my limit order was not filled, but I may try this one too in the morning, as a put. The next ones are some I found tonight and want to share with you. This will give me some great prospects for tomorrow. 

SO, moved up to a fib line as resistance and turned down sharply. It looks like the down move will continue to around at least 29, with a very easy stop.

GS, I have been thinking that financials should be good for a short and this one looks good. It is coming right up to the 200ma, my fav, and within a channel and overbought. You must realize it is in an up trend so we would be bucking the trend, but I think we can play inside the trend. 

GPC, hitting res. at fib and at great res. line, should turn but wait for conformation.

Let us finish in honor of my favorite sweet sixteen team, DUK(E). I like this as a put off a nice rally. It may be forming a cup and handle, so it may not drop too steep, but I do think it will drop.

 

In closing: It does not smell as fishy, and with decreasing volume and clear lack of conviction from either side, I say we may be in for another down move, maybe not huge, but at least some. AKOT