Expecting boring Expiration

Once again the volatility I expected with the news was nowhere to be found. Perhaps it is because the VIX is so low that we won’t see that volatility again until we see in bounce. Most indices still look very strong, but are now nearing resistance again. I don’t think we will see a top until we see a big day. I think these 30-40 point up days could chug this mkt. up and up and up. However, once again I did notice a lot of bearish engulfing candles when looking at individual stocks. When I look through the sectors, most of them look strong sans energy. Tomorrow is expiration day but there is no scheduled news and unless the healthcare bill miraculously passes, I don’t expect much action tomorrow. I have continued to trade intra-day ranges, and if you trade futures at all, you can look at the /TF or /ES on a 5 min. chart and see trade set ups. Unfortunately, I did not fare well today on my futures trading. I will do better tomorrow, if that mkt. moves at all. Chart time:

The VIX has clearly broke out of the gray square of death and is now nearing what I believe to be very strong support at 16. Notice that the last two times it hit 16 it rallied 14 points, almost 100%.

I am going to use the ETF version of the indices tonight. This is the DIA, you can see it clearly broke above the 61.8% fib on the last rally. The next resistance is at the Jan 08 low.

The cubes have not yet reached the next fib line, but they are very close. Further this coincides with the 11/07 low and 8/08 high so it should be strong resistance.

The SPY is right on the 61.8% fib, which too looks to be decent resistance. However, you can see it still has room to run to reach the top of the megaphone pattern.

Here is a close-up of the SPY showing that it formed a similar candle pattern to a couple weeks ago. Note that other than a lower open, this doji did nothing. Also note the V has increased three days in a row.

The UUP actually moved up decent on a mkt. up day. However, the SPX was down a little, but not reflective of this move. I still think this is set up for a breakout to the upside, maybe not for a few more days.

The IYM had a pretty decent bearish engulfing candle on a small v pop. It has been trending up the 20 ma, and if it drops here, I would expect support off the 20 ma.

The XLE has also formed a pretty strong bearish engulfing candle today, after a day of a big top wick. To me this is even more bearish. I drew out a possible scenario which would lead to a head and shoulders pattern.

CHK is in the energy sector, CHK. This is what I call a breakdown of a pennant. Look at the volume and look at that move today. Often these will be followed by and inside day which is often a great put buying opportunity. Sometimes, if it is really bearish, it will just keep dropping.

In Closing: I expect another small up day tomorrow with not a lot of action. I used to adore options expiration days for their trade-ability, but lately they have been lack luster. By the way, thanks Georgetown and Notre Dame for blowing up my brackets on the very first day! Trade well and prosper. AKOT

Hoops got in the way.

Sorry about the late post once again, but it has and will continue to be an extremely busy week for me. Tonight I sat through three High School hoops games, and I am fully convinced if they had terrorists sit on those hard plastic bleachers, packed in with hundreds of hot smelly athletes and parents, for a day, they would confess to anything we wanted.

Today was a really good day for me. I sold my all my puts about 30-45 minutes into the day. I then didn’t think I was going to trade any more, but then things looked like they were starting to lift, and after I saw the bull flag forming on the ES, I went long with some 110 SPY options. So I am sitting on those overnight. Now I am not sure if holding them overnight was the best plan, because I really think we are seeing some reactionary selling again, and with the news coming out pre-market tomorrow we could see more of the same. However, the fact that there was some strong buying into the close left me thinking the risk / reward was worth it.

The VIX actually looks like it is in a bear flag type of mode. It looks poised to either drop or stay sideways here to me.

The SPX is still in a down trend, and the histogram is still trending down ever so slightly. The RSI is moving into the over bought zone leading me to think this may continue down to sideways a bit.

One of the reasons I went long was the UUP. Remember I talked about this resistance, but I thought it wouldn’t take much to break through it? Will we got close, but then the UUP started loosing steam quickly, and originally the strength of the dollar seemed to be the main catalyst for the market drop.

You can see on this 30 min. chart the doji cross, followed by strong selling that caused me some pause.

This is the chart I was watching when I decided to go long. I liked the three strong rising candles ( 5 min. chart) then the consolidation, which was a pretty clear bull flag gaining strength. I figured I would use 1095 as my stop, so the risk was very minimal. But, holding overnight increased my risk profile, so will see how that plays out.

Shippers were strong, even in the morning today and I noticed this chart early on. I actually forgot about it and now wished I had not. If I had remember, I would’ve went long this instead of the SPY because I knew it already had some strength behind it going into earnings. A strong bullish engulfing off short-term support with indicators trending up.

In closing: I apologize for three short posts in a row, but like I said is has been a very busy week in AKOT’s house. My plan for the morning: See how the mkt. reacts to the econ. news, if it is an obvious over reaction, trade against it. If it is a slow-moving action, wait for a good entry and trade it. I think, unless we get way wte econ. news, the mkt. has digested some of the bad news with this volatility. So, considering today’s move, I will close my calls early in the day, and then trade against the first big move of the day, if it happens early in the day. If I don’t see it forming, then I will go into the weekend in cash. Trade well and prosper. AKOT

So close, but perhaps close enough.

Well that was a good start to the reversal. I would  have liked to see the mkt. pop up just a hair more, but I don’t want to sound too picky. This scenario was pretty darn close to what I was talking about yesterday, good jobs news, mkt. still down due to technicals. Now, I would imagine that we would have to drop a bit more if we are going to make another run at the 50% fib area on the DOW. This should prove to be a pretty strong resistance point, even to the level of actually causing a true reversal. Tomorrow we have Mich. Sentiment, which will probably be bte, and trade balance, which I have no idea how that will come out. Again, I think a gap up will result in a great opportunity to short. However, if we open down I would be watching for a possible repeat of Friday two weeks ago, and possibly taking out 10,000 again. Now some charts:

So yesterday we had the nice hang on support, and we rallied off that and closed a little above another minor resistance line. If we continue to rally up, and it looks like we might, we will be a decent trading range here 23 to 29.50 with one anomaly on each side.

It seems like looking at the post short-term tops, we should move sideways a bit before dropping. The v today was not too impressive, but the move itself was pretty impressive, finishing close to the lows of the day. I don’t see anything that looks similar in the past tops, and perhaps, with tomorrow being Friday, we may just have some weekend selling and not spend anytime going sideways this time.

This actually formed what would normally be a pretty obvious top. However, unlike the DOW, we did not get up to the top bb are as close to the 50% fib. If we keep going down from here, I think it is a very strong sign that this rally is tiring. I imagine we will see some support at 1074, but I don’t think it would be enough to stop a strong down move day. If today was the start of the reversal, I think we will be looking to move below the low we set on the RSI on our last move down and I will be watching that indicator closely.

Now, unfortunately the NAS did not lead this down turn like I have been saying it would ( thank you AMZN, AMGN and even AAPL to some extent) but it still moved down .83% today with a nice top wick and smashing of an up trend line. We are very close to support here, but again I don’t think it will withstand a strong move down. We also formed a nice bearish engulfing of the previous day’s tombstone doji, all very bearish.

Something key to note on the UUP, first there is a broadening megaphone formation forming (which I neglected to draw on here). Second, This is the first time since June that we had a move that closed above the previous moves high. And, if you count today’s move vs. the last four days, that would be twice in a row. This really looks like a consolidation forming here, and again watching the RSI should give us a clue if we will continue to break out higher. I would imagine that 23 will offer resistance, so we will need some buyers to step in to make it happen.

Now, the eur/usd is still in an up range, but it appears to be heading to the bottom of the range, which of course strengthens the UUP. There seems to be a lot of support at the 1.4717 area and if it continues down, I think it will at least stall out there.

The FAS is on support, but looking at the little bigger picture, you can see that I have a beautifully drawn potential head and shoulders set up. Also note that the RSI did not correspond with a higher high for the head; an RSI divergence and usually a sign of weakness. However, also notice the v was higher yesterday, but it was a pretty indecisive day unable to hold to the highs.

ESRX looked like it might want to break out of this ascending range, but now it appears that it at least wants to re-test the mid range of the range. Nice v today to end a v divergence.

So AMAT came out with earnings and was bte. But notice it moved up into earnings. A lot of times this is a sell the news play. The whisper number is good, the insiders buy into earnings, heavy call buying is present going into earnings ( over 2 to 1 in this case) and then they beat and drop. Usually they will drop for a few days and then rally back and take out this high. But for now it looks like it will drop some more to me.

very low v stock, but it appears to be forming a bottom near support. Further, I like that the RSI is just coming out of being oversold showing us buyers will be willing to step in. I will be watching the support line and see if we drop to it, if it holds a potential great long set up is in play. If it fails, it could drop significantly with no support in the way.

We have been playing the GDX up and now I think we need to start looking down for direction. Here we sit on fib support, that, if broken, will likely lead to at least a $3 down move.

Finally, we shall finish with a pretty evident, but simple v divergence. You can see we broke out of the rising pennant on 10/26 and dropped for a couple weeks before this recent rally. Originally, I thought this looked a little like a bear flag, but we kept moving up. Now the v divergence has had a couple pops the last couple days, and today with a  pretty good down day. It just looks like it is set up to fall to the bbb.

In closing: The NASDAQ is showing surprising strength, but I really think it is over bought and could lose its loftiness quickly. Further, we came very close to what I would say is some very key resistance, close enough that with the Friday before 3f tomorrow, we could certainly see some heavy selling. However, in the past we have usually hung around this area for at least 5 trading days. I am leaning towards the former as this move feels slightly different, at least to me. Trade well, have a great weekend and prosper. AKOT

What’s in the future?

Once again short on time tonight. However we did make another nice move up, three days in a row. If you recall I thought we may go up three days in a row followed by a sell off Friday, but we went a little higher than I anticipated during those up moves and I thought we may see some inside days. Still this three day up pattern off a large black candle can produce like a falling three pattern, we will have to watch and see. If it does we will see a long black candle tomorrow. But overall, if we take into account the whole week, things still look a little bearish to me, not as much as Tuesday, but still slightly bearish. Let’s look:

The VIX really gave up the rally that it looked like it wanted to do. That was a significant drop today, but it did leave a bottom tail which can be ever so slightly bullish. The secondary trend line is in tact.

Interesting formation here, if you take Friday and Monday in account, we are still inside on these three days. But in reality I really thought we would stay below Monday’s open, which we did not. However, we have still not broken out and I have seen this pattern time and time again follow throw with bearish candle and vice versa if it was to the downside. Also, the v is still in an incredibly bearish divergence.

Very similar type of formation for the SPX, but the old resistance actually held a little. This chart actually looks a little more toppy to me than the DOW, and looks like it might topple here.

The NAS looks a little more poised for a breakout than the other two, but not terribly so. If we had stopped on our resistance line, I would have been very bearish, but the fact that we blew through it makes it a little more bullish. I am conflicted here, could see this going either way.

So you ask how can I still  be bearish. Well remember I thought the down move would be either Thursday or Friday, go back and look. So tomorrow is Friday and the two following charts are what I envisioned the above charts looking like today.

Three inside days, a falling three method block pattern. This is typically a bearish reversal pattern and it looks strong here. Three smaller up days in a row, all within the body of a large black candle, ending with a beauty of a tombstone doji. This smells pretty bearish to me.

Same thing on the NQ. This is a version of a bear flag, and if I was looking at only the last two charts, I would be calling for a pretty big drop in the next few trading days.

In closing: The regular charts look much more bullish than the futures. The futures look flat bearish to me and I think they may lead the way. I would not be surprised to see us close beneath Monday’s low tomorrow, but knowing how the buyers have been stepping in I may be dreaming. AKOT

P.S. I don’t have time to reveiw charts from this week, but I will try and do a mini post tomorrow on them, no promises though as I may be camping. AKOT

still stinks.

I only have time for a couple quick charts tonight. Sorry, late night. 

I have some concerns. Remember yesterday when the VIX actually rallied at the end of the day while the mkt. rallied? Well that don’t make no sense, as my friend G. W. would say. So onto today, the mkt. tanks and the VIX moves down, huh? Something still smells fishy and I am not comfortable yet telling you what it is. I don’t know what it is, but it ain’t right so I would be cautious if I were you.

Here is the DOW down nearly 1.5%, while the VIX was down nearly .5%. Two key points for me here, 8k and 8275. 8 is obvious support and round number, 8275 is the last high, watch both of em. Right now we are on the top bb, overbought, and I expect some more down move before we see another rally. The one factor that would have me doubt that theory is that the v was extremely low today. That does not show confidence in the selling. If it is low tomorrow, we should see a similar day.

Close up of SP. Note we are near the top bb, overbought, but right above support. I would not be shocked to see 1-2 more down days then another bump up. We have several support lines and a resistance line close by as well. I was hoping to short this today, but it did not set up the way I like so I stayed out. I tried to get into one play today, but I missed my entry point:

AMGN looked to be setting up a great short, and I was right, but alas I missed my entry point and unless it rallies in the morning tomorrow, I will have to pass on it for now. 

In closing: Me thinks something fishy is a foot, wait for the smell to clear and then trade to prosper. AKOT

We have arrived

Yesterday I thought we could rally a little today and end with a sell off. Well we reversed that, we sold  off early and rallied on the Fed “news”. Either way, we are right at the critical point on most of the charts, and now it is time to see where we go. If resistance holds, then we drop, if it does not, we continue up. It is that simple. 

I did not enter any trades today. I did have a conditional order on the XLF, but it never triggered, which is what I love about conditional orders. I am currently traveling, so this will be a quick post. 

Here is the S&P, you can see we moved right into the down trend line and the resistance line. This should hold just as we talked about yesterday. If it does not cause a reversal, it will certainly cause a stall out. It is picture perfect, and I said I would be shorting here, so here I will short. BUT… since things have been wierd, I will use conditional orders only. 

Check out the SP futures on the 60 min. chart. You can see it laddering up since the 8th. It has now trapped itself in the peak of a triangle, and must break out one way or the other. I would say the down trend line is much more powerful than the up trend line, therefore I think down wins. Of course I have been saying that for days, but that is what I see and I need to tell you what I see, whether I like it or not.

Now the DOW is not as perfect as the SP, I wish the SP’s indicators would turn down, but not yet. The DOW would be better if it had actually moved up a little more, but it did happen to stop right at resistance, just not the down trend line. 

The NAS is in the same boat as the DOW and it is close to be set for a great move down. 

In closing: We moved up just about perfect on the SP, and very close on the other 2, so I really think we are near to the reversal, and I have a feeling when we do reverse, it will be brutal and fast, unlike the current up move. If we do not reverse, and continue up and create a higher high, then our down trends are broke. I think that is unlikely, but nothing is impossible in this mkt. Trade this key resistance point and prosper.

Wreck of a night

I apologize for the late and short post tonight, I was actually hoping to go over some stocks to watch this week, exp. week, but unfortunately I got stuck in an accident right at my road for over 3 hours, and then had to run back to town. So I left the house at about 0630 this morning, and the first time I stepped back in was 9:30 tonight.

A couple of things to note, 1. this is exp. week, 2. The mkts. worldwide were pretty much down, down, down 3. The stimulus plan passed, but it is being heavily criticized, and unexpectedly so. The world is grim right now and me thinks it will be reflected in the mkt. this week. Just a couple of quick charts to look at:

This is the SP futures on a 60 min. chart. On Twitter I was talking about the 810 and 805 area, you can see we established a move beneath the 810, and are very close to our 805. It should serve as some support, but if it releases then we will have downward momentum. Pretty decent little h&s pattern on here eh?

You can see the NQ futures are sitting right on strong support, both from an intra-day support and a down trend line. If you keep up on the blog, you know that I have been waiting for a strong down move on this indicie soon. Therefore, I have the opinion that this support line will not hold. Again, as I Twittered, 1207 is key, we break it and hold, then we should continue to move down. 

Note: I will try to have some stocks to play tomorrow, but that takes a lot of time and I don’t have it right now. The accident I was stuck in today, at least one person died and several high school kids, on their way to a chorus event were injured. Very tragic. So please keep their families in your prayers. Also, I leave for Costa Rica in 2 days, and during my travels, I doubt that I will be able to blog as much, so look for quicker posts and insights. It will be easier for me to twitter them as they come up. The blog will NOT go away, it will just be light for a while. AKOT

Uhhhhhhhhh

So this tape has been a wee bit rough. However, I think the key may be to play stocks instead of indexes. As I write this, I am long one index, the Qs, long UYG, a type of index, and short JPM, a stock. If the market holds as it is right now, my longs will work well, my stock will put me in a world of hurt. And as some of you may notice, I am conflicted, my UYG is a type of bank index, and JPM is a type of bank. What gives? I just really liked the JPM chart for a short play, so I went for it. Tomorrow could be tough day for that play, and if we have a big move up, I will not sell, I will hold for another move down off the up move. On to the charts:

The VIX on a 60. You can see we dropped more into the normal range area and we have been dropping steadily. You can also see we blew through strong support, and are very close to our next support near 41. I would look for it to stall out there a bit, and perhaps rebound a bit. Like I have said, I think we will be in a range for a while, perhaps lower than I first thought, but a range none-the-less. 

Here are the sp 500 futures on a 60 chart. You can see the gap up tonight and now it is moving towards some resistance at the 50 fib. It will be interesting to see if we can break that resistance. I would definitely keep an eye on that level at 875.

Here is the NQ futures on 30 min. You can see the furious rally up through resistance, now sitting upon it above the 1205 level. Look at the volatility in this thing, a day trader’s paradise, of which I am not, at least not too often.

Now onto the Qs, of which I am in calls right now. What I have been doing is buying near the very end of the day, based on what I see happening during the day, and it has been working OK, about 75%. What I do is sell right away if we open with move in my direction. If not, I hold and wait for the opposite move, which has been coming, and sell flat or for a small loss. What I have been noticing is a decrease in v with the up moves, that is bearish and we may be getting close to finishing these small up days, be cautious.

Let’s finish with the SPY, one of my favs. I like this a lot for getting a great fell on the overall mkt. This is a 30 chart. Notice how we are beating our head on some decent resistance. We need a strong push with some v to pop us over that. Right now the ES futures are up nearly 2%, so if that holds over night, then We could see that jump up in the morning. Be wary, and watch for reversal within an hour after the open. If we don’t have one, it could be a banner day. We will see if I have the courage to hold on or if I sell quickly, it will depend on many factors that I look at intra day. I know I showed all index plays, the opposite of what I said at the beginning, but I thought they best showed the volatility and what we are up against, and I have given you plenty of stocks to watch in the watch list, many of them set up perfectly. Trade long and prosper, but don’t be long for long. AKOT

We vix you a merry Christmas, we vix you a merry Christmas….

I can’t stop getting the vix off my mind. It is just acting so odd and I imagine a lot of it has to do with this being expiration week and quadruple witching tomorrow. We could see a bailout of the big 3 anytime, which would probably move the markets, but barring any news, let’s see what the charts say.

I said we were at a critical point and we still are. The markets are not moving as much as I thought they would over the past couple days. A key thing is how the support of the VIX held strong. It has closed near support and I would not be surprised to see it rally up a little. Also, it was down most of the day and then near the last couple hours it started to push up. It is still not normal for the VIX to be down when the market is down, so I would submit the last couple hours of the day are bearish overtones for the overall market. 

The S&P has broke out of its wedge and is now sitting on an up trend line after hitting its head on a fib line. The key is going to be if the trend line holds or not. The RSI is moving into overbought territory. 

The DOW has filled its wedge with a large red candle. This is ready for a breakout, but to which side? Methinks it may be down. Look at the MACD starting to curl down and the RSI moving into the overbought area. 

This, again, is the most interesting to me. A very nice up trending triangle hitting resistance for the sixth time. This too is poised for a breakout move, most of the indicators are getting ready to roll, but not yet. It is hitting the 20 & 50 ma, so a move up will take some serious strength and v.

Now here is the E-mini NQ futures. Note how it has stalled its up move right on some resistance which includes a fib fan line. 

Here is the E-mini SP, it actually broke above its fib, but then retraced. You can see how well this how been living with in its own fib lines, so I put a little more weight on them when I look at this chart. Now will we have a strong enough move to break that up trend line? That remains to be seen. If we do, then I think we go down to at least 825. 

Finally, here is SHLD, yet again. I jumped back in today with a stop at 40.88, tighter than normal, but I don’t want to risk a lot on this trade. I like how the RSI and MACD are lining up and I love that it looks to slide down the down trend line. Well see how it plays out. Watch for a big move tomorrow and prosper. Remember Exp. Friday, get rid of your options. AKOT