is it TIME?

Today started with tons of volatility, and then ended with a resounding thud. There was still no real volume along with some up movement. Things were not as bullish as they seem however. The VIX was up on the day, and as we will see tonight, there was some real selling in the spiders. Further, at around 3pm consumer confidence came out way, way worse than expected. This means that the consumer has less money to spend. I have a sneaky suspicion we are going to pay that piper, possibly as soon as tomorrow. This was a pretty bearish number that was shrugged of and ignored. But I suspect not for long. If we see a big down day in the next day or two, I submit that it will emanate from today’s consumer confidence number.

Further I read an article from one of my tweet buddies on Time’s site, TIME , which actually originated from Trim Tabs site, trimtabs, regarding insider selling. Basically, there is a lot of it. Biderman tracks the ratio of insider buying to selling and has since 2004. The normal number is 7:1, the highest he has ever seen is 24:1 in November of 2007, right now it is at 30:1. We had a pretty big down move that originated in Nov of 2007, not straight down, but down none-the-less. The part of all this that scares me is that TIME printed this article! Now onto the charts:

We are watching for higher lows, today we maintained a higher low. We will keep watching for higher lows and higher highs. It is that simple.

Not much to say on the DOW. The v was not great or even good for that matter. This is not a true three white soldiers or flag formation, but we did break and stay above that August congestion zone which coincides with a very long term support. In all honesty, I could see this moving up to the latest highs, or dropping form right here. I think if we see a v spike we drop.

I watch the SPX & ES and most of my charts during the day on 20 min. candles for buying entry points. I noticed we have formed a nice pennant inside a pennant with a gap waiting to be filled. I will be watching for a break down to fill this gap, and to look for this lower high to hold. If it breaks, I must go long.

I have highlighted two areas which may give us some insight into what is next. You see how we tested the fib line, dropped rallied and tested or approached the fib again? Obviously the first one was much more pronounced. But I am wondering if this long term down trend and fib will once again push us down a little and then we rally back up and blow through both those lines. I forgot to draw the bottom up trend which would be obvious support somewhere around the 1990 area. I think this scenario makes sense, especially after this nice hanging man on resistance from today. If it holds true to form, we will take out the recent lows on this next down move and take out that 1990 I spoke of and end up near 1900 or perhaps all the way down to fill the gap at 1800 before bouncing. I know, a lot to watch for, sorry.

On days like today, when I don’t trade too much, I like to play with fib lines and new indicators etc. I find fib fans fascinating, and I am surely no expert on using them. But when they make sense they make sense. Here on the XLE they seem to designate points of support and resistance quite often. You can see we are very close to one of those points right now.

Same chart a little closer. Notice today’s candle. Unlike in June, it did not blow through the resistance line then sell off, it touched then sold off. Pretty much everything on this chart looks bearish to me right now. Yes it is in an up trend, but I think it is setting up for some selling.

The XRT should get dealt a blow with today’s credit number, and it looks very poised to drop. I may play some puts on this tomorrow, I like it that much. However, I don’t like that the support line is so close, so it will be a quick play which is perfect in this mkt. I love the clear stop level at $32.85.

I thought this would rally to the top resistance, but it looks like the move is petering out to me here. Nice gap up hanging man, if followed with gap down tomorrow is pretty bearish with room to drop.

Here is another fib fan I tinkered with and liked. Now, this is a strong up trend, so it must be respected but the last fib line led to its testing and perhaps this is the one that leads to its break.

This is a 10 year chart on the XLI. We are at a resistance area that we just tested on 8/28 and again today. We gapped up into it today and it looks like it wants to hold. I would expect a drop to $24. But if it moves  up, then look for stronger resistance at $26.90. Again, nice ez stop.

Finally a little triple top action on teh XLB. Technically it is an ascending pennant which is a bearish formation, so we should see a breakdown with increased v.

In closing: I expected an up day, I did not expect such bearish news with no action. I think it caught the whole mkt. by surprise once it was lulled asleep by the days inaction. I think we will see the fallout of today’s number soon.

I will be out-of-town from Thursday on. I do not know if I will have internet access, but if I do I will post, even if it is short posts. I don’t know if I will be able to do Sunday’s video or not, again it depends on internet access. I will tweet some more charts as I can, and I will tweet a few others tonight. I will be back in town week after next. Trade well and prosper and you can always follow me on twitter @akoptiontrader. Trade well and prosper. AKOT

What if?

Finally we had big selling day, one that I thought a catalyst would cause. But today we had some pretty decent news, not great but decent. The ISM numbers came in solid bte and solid over 50% which is suppose to be very bullish. The mkt. reacted well and jumped up, and then it did something most did not anticipate, it sold off, and sold off hard. The bulls tried to step in several times and were thrawted with a smack to the face and a kick in the butt. Now what if; what if the banks names I have referred to had been revealed? What if the jobs numbers come in wte? What if some actual financial truth came out and was reported truthfully? How far do you think we may have fallen? Do you see the danger here? We fell over 180 points on good news, how far will we fall on bad news? The danger is that all we are hearing is recovery, bottom, recession is over….. all positive stuff. When all you hear is good news and you get real bad news, and reality starts to settle in, then you have fear and fear leads to panic and panic leads to heavy selling. Do I think we are there yet? No, not really. In fact I wouldn’t be surprised to see a small up day tomorrow, or I wouldn’t be surprised to see a big down day. Quite often, in a bullish mkt. when you have a sell off like this, it is an opportunity for buyers, so don’t be surprised to see them step in in the morning. But if they start getting beat down, they will sell and sell fast waiting for the next opportunity to buy. Chart time:

I thought a close above 28 would be very bearish for this mkt., well I think 29 is even more so. What is most impressive about the VIX today was that I never saw it go negative. I was watching it early on and as the mkt. rallied, it stayed green, up .40, but green. Look at today’s candle, shaved bottom and nearly shaved head. This was a one track mind day for the VIX. That being said, it is common for a day like this to be followed by a down day, not huge but down. If we go up more, that is extremely bearish.

The DOW closed beneath my initial support line for this period. Not by much, but below none-the-less. Again, I would not be shocked to see a small up day tomorrow. A big up day, now that would shock me. Once we break beneath this support again, my next target is right around 9060.

The SPX also blew through my initial support, but my next support for this is that up trend. It is already very close and I will respect that line until it is broken. In fact I have been waiting to move my retirement fund out of the S&P, but I have been waiting until that trend is broken, and I may wait for the retest.

I have said all along that I thought the NAS would lead our decline because I felt that it was the most overbought. But today it was the lagger. Yet is looks very bearish here with the next support near the 1925 area. Looking strictly at this chart, I don’t see anything much more than an opportunity bounce tomorrow, but looking at the charts as a whole, I see some support nearby on several of them.

This is the trend line that burnt me in the past. I thought we may pierce it in July, but she held, and then revealed herself to me. So now I will respect this trend line until it is broke. I really like today’s v, the highest we have seen since May, which is impressive considering we are still in early September. I imagine this line will hold at least a little, and possibly for a few days.

The SPY has a little more room to go before touching that up trend, but I have some nearby support that would correspond with that QQQQ hitting its up trend. The v was ridiculous, the highest since April, and a follow through would be impressive, but somehow I don’t think we will see a repeat tomorrow. If we do, then supports will be busted and I will try to get in on some puts for sure.

I usually tweet these and don’t put them on the blog. Why? Well because those in tweet land seem to like these kind of charts; ultras and inverses, but I honestly don’t trade them too much. I play them a few times a year, and this may be one of those times. Notice that immense v on this 3x small cap bear. Also notice that the v has been increasing for months into this down move. Today we had a super v breakout above a nice down trend. On a retest of that down trend or a hold at $14, and I will look at going long TZA.

I am throwing the XLP into the mix just to see if you are paying attention. What do you see? I see a possible bull flag. Crazy I know, but that is what I see. I won’t trade it unless I see the mkt. making some type of move up, but I just wanted to throw it out there to see if we can break to the upside in this environment. It will be fun to watch.

After initially busting through the top, XLK has dropped back to earth, and then some. It has moved back into the descending megaphone pattern on good v. Looking at this chart, I really don’t see technical support until $18.50. A small up day would present a great short entry with an easy nearby stop at the top of the phone.

If you were long FAZ ( like Cash21 was) you were probably a very happy camper today. And after looking at this chart, I would probably stay long the FAZ. This is a serious breakdown of a long term up trend, a bearish development. Often, these are followed by a retest of the bottom of my trend, and that my friends is one of my favorite entry points for a short. Any way you look at it, this chart looks mighty bearish to me, but it could certainly pop off of the $13.60 area, the lows of August, and I hope it does.

One more X before posting this blog, the XLB. I have played the XLB several times recently and have done pretty well. I was waiting for this move down, and I think it continues down. We have support on the bbb, but that could easily turn down from here. I see at least another $2 down from here, with a few minor support areas along the way.

In closing: I am watching for a possible small up move tomorrow, especially early in the day. I really think that last hour of trading tomorrow will be important to watch. Today was the first day in a long time that we sold at the open and sold at the close. If we see a push up followed by another sell off, I will then be inclined to think that the bears are taking over, but I still dont’ think this is the beginning of the major down move I have been anticipating.  Trade well and prosper.

Help wanted… or not

Surprisingly, the consumer confidence came in a little wte. I say surprisingly because I thought it might be bte. You see the way I gauge it is to listen or watch just the headlines, if the headlines are optimistic and saying the worst is over, or the bad times are slowing, then they influence consumer confidence. But if the headlines are bearish, the confidence will be down. I have noticed lately a slight change in the headlines, but I did not think it was enough to influence the numbers. I was wrong there.

The pretty quick move down without a substantial retracement up, shows me that this mkt. may be teetering on the edge of a cornice, waiting for the avalanche. Now, bearing in mind I was wrong about today’s c.c., I think the next two days jobs numbers may be a little wte. I think the numbers have been manipulated slightly lately, but I think they will have to pay the piper soon. If I am right, I think we see another strong move down, even more so than today.

Let’s look at some charts:

The DOW almost made a great tweezer formation, which is a very strong reversal signal. V was up a little and we closed beneath the 200 ma after after closing above it yesterday. Further, the H&S theory is still in play, and if we go down from here, it is a lrs, lower right shoulder, which is slightly more bearish. Be aware, we have very strong support at 8240.

The S&P is much the same, except we rallied right up to the resistance of the left shoulder. We have formed a couple of nice reversal signals and I could easily see us dropping from here.

I still think we will follow the NAS down when we turn. The NAS was the stronger of the main three today, but it did form a bearish engulfing in context after a nice doji. This thing should be poised to head south. I will have to respect that up trend line until it is broke, but I could see us getting to it quickly from here.

The cubes had the same formation going on as the NAS; a doji followed by a bearish engulfing candle, after an up move. There is still a gap to fill from 4 days ago that will draw the cubes down. If it is like the last down turn, it will start with one strong down day.

The SPY had slightly increased v today, on this down day. It also has the H&S still in play. I look for near support right around $90, the first fib.

In closing:

We have some definite mkt. moving news coming out the next couple days. This mkt. seems very fickle right now. It is changing from a mkt. that was rallying on bad news to a mkt. that is reacting to the news. If we get some wte expected numbers the next two days, we could see the start of the new down move. I bot Puts on YHOO, BDK, COF and NUE today before the announcement, not because I thought it would move the mkt. down, remember I thought it would be good, but because the flag breakouts are often to fast to catch and they looked primed to move. So far they are working out. I will keep you posted. Trade well and prosper. I will post some more charts on twitter tonight. AKOT

Weekly Video 6-21-09

We had a pretty good week last week. A little choppy the last couple days, but other than that it was very tradeable and profitable. I hope all of you did awesome. Now what does this week hold? Well we never know but we can see what it appears via some technical analysis. You can see below we have a ton of data coming out next week that is going to move this mkt. I think the housing news may be a little wte, all others possibly a little bte. I think by August most everything we be guided down, which going into then will make it bearish, but it also makes it easier to beat expectations. To me all the charts still look pretty bearish, and I will be poised to trade that way this week. BUT with key data M-Th, anything can happen. One of my old favorite trades was to trade the opposite of the news for the day. I would wait for the pop, and then quickly buy some puts on my favorite index. Or wait for the drop and buy some calls. It seemed to work much better with the pops than the drops, but it was effective either way. I have not done that trade lately because this mkt. has been acting a little spooky, but I may try it again this week. If I do I will twitter it so you can see if it worked or not. Well onto the video and economic data for the week.

Here is this weeks economic data, thanks to briefing.com. If you don’t subscribe you  should.

Now for this week’s video, please for you to enjoy:

Support is near, volume still low.

We definitely got some follow through today. As I expected the housing numbers came out bte, and the mkt. rallied. But it sold off convincingly, which is very bearish. We again tried to rally near the end of the day, but that too sold off hard. So in two days we dropped 300 points on the DOW, and I think there is a lot more to come. However, not without some upward movement, which will be good for those of us who like to play short / puts. FDX reports tomorrow, and often times it can move the mkt. as many consider it an economic indicator. Watch the futures and you will see if it is in play. Also, prior to the open we will have Core CPI and CPI, both of which I think may meet estimates, or even beat a little. If so we could set up for a similar day tomorrow, but support is nearby.

The VIX started the day down, and the internals looked decent early on, then things changed quickly. The VIX looks strong, giving nary a glance to the gap it has left behind. I know it will be filled, the key is when. In two days we have blown through three resistance lines, easily. There is a lot overhead still and the next resistance will be around $34.

The DOW has broke down pretty strong, v was a little higher than yesterday, but still nothing to shout about. You can see I have significant support at 8250 and would expect a stall / bounce in that area.

The S&P too has dropped strong. I actually see support above my 875 line, near the 884 area, which coincides with the 78 fib line (not shown, sorry but draw it yourself you lazy buggers! as well. I will be expecting a stall out at the minimum in this area.

The NAS was trying to hold strong all day. In fact the cubes were in the green for much of the day, which was bad for my Q puts. But something key happened near the end of the day, the NAS finally broke through this strong up trend line. You can see 1771 looms as support.

You can see this H&S patterns on all the indicie charts, I just chose to show it on the Q since it is my favorite one to trade. We have yet to break this up trend line, which could stall us out a bit more, and after two heavy days of selling I would not be shocked to see a bounce. BUT, I am still waiting for a heavy v down day to get this drop started. We have not had that.

The Russell 2k had a great breakdown, but the 200 ma and old up trend line should serve as support.

I had someone on twitter ask me about this one. I was very intrigued by this chart. Does this explosion in v mean that people are getting increasingly bearish, and instead of buy puts or shorting stocks, they buy 3x short ETFs? I wonder if this will affect the VIX as well. Either way I see a strong ceiling nearby, but with this huge v we may blow right through it.

As I called for last week, the QID bounced off that support, now we are near the top of the window. I see it hitting resistance and stalling there.

I really really like this chart for a great put play. This is ONXX, and other than the 200 ma retrace, this is one of my favorite trades. A breakdown of support, a rally back up to support that is often followed by an even greater drop. This one is prime for picking, but beware pharma stocks can get good news anytime then kaablam, they take of like a rocket. Play with caution.

In closing: There are possible H&S set ups all over the charts, which all entail a bounce coming shortly.  I would not be surprised to see a bounce tomorrow, but I think it would fit better on Thursday or Friday. AKOT

Cop to some puts?

Well we had a nice sell off today, but most of the move came early in the day. I have noticed that over the past few weeks, we have not had the giant moves as a rule the last hour of the day. It used to be almost every day you could count on some type of huge move, and during this exp. week, I have been surprised at how little it has done that. Now the next question, do we continue down from here? 

I could easily see the VIX rallying to the underside of that mini up trend line, near the $35 area. 

The SPY has dropped back to its trend line, and could very well bounce from here. If it breaks through this up trend line, obviously I would be looking to go short.

This has been my baby for the past week, the QQQQ. I have been trying to remember to tweet every time I enter a trade on here and I have shorted it 4 different times the last 5 days. It still looks very bearish from here, but I don’t have any fib lines or support lines on this chart, so that could offer a bit of support. However, we are strongly below the 200 ma, and that is often very bearish. I would expect us to retest the 200 ma at least once before a big sell off. 

I know retail disappointed us recently, but I still think ARO could bounce off of this great up trend. If it breaks it, would be a great put play. 

I have to give a shout out to my boy rdizzle for this and the next trade. This is HRZ, he was showing me that a guy he works with bought this stock today! Now whether you study charts or not, I ask you, would you buy the stock here? June puts perhaps, but not the stock. I expect a huge percentage drop from here.

Finally, this is one of rdizzle’s favorites, COP. It is in a simple channel down, and it looks like it should be heading that way from here. 

In closing: Wed. is always my quick night, so this is short and sweet. Any time you have a big sell off, you could have a bounce the next day, watch for it. If we do not, that would be very bearish. The SPY and QQQQ are in conflict, so it could be a tricky day tomorrow. If you are holding May options, you may want to dump them tomorrow.

Pam, make a xerox of this please

Very quick post tonight, late busy night so I will get right to it:

The VIX has really broke down, and convincingly. Our next area of support is in the red square. Take this with a grain of caution because the VIX has been acting awfully weird the last few days.

The S&P closed right beneath the up trend line and if we get a down day tomorrow, then that would be a reversal signal. We won’t know until tomorrow, but at the writing of this the ES was down over 1%.

The NAS is in the same situation it was in yesterday, on the 200 ma and still in an up trend. The 200 seems to be acting as resistance, we will see if it continues to hold, it certainly has helped stall the up move.

SO you say what’s next? SO is next. You can see this great down trend and it is just beneath a fib. It is oversold, but still wants to move down. Could be a great put play with June’s options. 

ILMN’s chart is truly illuminating. We have a nice wedge forming and we have broke beneath a very nice up trend line. Further we are sitting on a fib, which will probably break down tomorrow. A quick down trade could be made if it breaks and then probably back up again.

Finally XRX is worth a second look ( get it?) . It has rallied with the mkt. up to a strong fib line and appears to be losing momentum. I would watch for a v peak and then a sell off from here. It has a clear stop above the 50 fib. 

In closing: I still believe we are in a bear mkt. rally. We have moved up too much too fast and the charts are not looking like buys right now. AKOT

Criss Cross makes you wanna jump jump…

I tweeted earlier that I was going to go against the trend and short this mkt. late in the day, and I did. But I played a stock AFL ahead of e, which is not usually a smart thing. But after reading up on insurance e coming out, I felt they would guide lower and they did. The bad news, the did quite a bit bte this Q, which will most likely put a hurting on me. I have no idea why we were up as strong as we were today, especially after the GDP news this morning. But that is usually a bullish sign when we rally off bad news. 

The VIX is in a state of flux, check out this odd reverse wedge it is caught up in, or the criss cross. This is the 195 chart, so you can see a lot more indecision the second half of the day. It is in a little up trend, but in a big steep down trend too. 

The SP is still in a clear up channel but it did hit resistance and pullback. It truly is stalling out a little near this up move, either gaining strength for a power move up, or losing strength. 

The NAS is still very strong looking blowing through resistance and continuing higher, for no apparent reason. Not a lot of resistance nearby.

The ES is sitting on resistance that has now become support. We will see if it holds overnight.

In closing: I still cannot believe the strength of this mkt. and I don’t understand why we continue to move up. There is no reason for it other than a new prez rally and that has to be what it is. Do people not realize the other shoe still has to drop? I am anxious to see what this stress test does to the mkt. when it is released next week, that may be the down catalyst.

Those filthy swine.

 

Apparently today’s mkt. was moved by the swine flu, at least that is according to all the news. I don’t know if that is the reality or not, but I do know v was low. So let’s look at some charts.

The VIX moved up above one of our support lines, it has also broke out of the wedge to the upside, now after breaking to the downside yesterday. Much more indecision.

The DOW has moved right into the tip of the wedge and right on support lines. I am still be looking for a breakout and I am still leaning to the downside. One thing to watch is that we had very very low v today.

The S&P is more of the same. It is in an up channel still, but in the lower side of the channel. I did widen the channel lines and they lined up nicely, so we need to watch how they contain. Short term it sure looks bearish.

The NAS still looks very strong. It has broke up above resistance, which will most likely become support, but the ascent is surely slowing.

TKR, I like the way this chart looks for a couple reasons. It is in a nice strong down trend, it had e come out yesterday gapped down strong and rallied into the close. I would not be surprised to see an up move tomorrow, and then some more down to come, a lot more to come. 

ONXX is in a wedge. It is in the bottom portion of the wedge and it looks like it should bounce off of this support. There is a nice reversal signal, but we do have e coming up and that could act as a catalyst either way.

KMP is in a down channel, and guess what, it is at the top of the channel. This makes for an easy trade, if it breaks up above the up channel, you are out, if it holds then we should be in a huge down move. 

Now here is EMC in an up channel sitting on the middle of the channel. It has closed beneath our support line and beneath the middle channel, so it has a down feel to it for sure.

Old BBBY has had some huge option volatility today and it has broke through a steep up trend line with a gap left to be filled. You can see that e came out and caused this huge gap up, and often these moves don’t last. Again, I like this because it has an easy out if I am wrong about the direction.

Let us finish with one more wedge, APL. This one is intriguing to me. As you can see a year ago this was a $38 stock and now we are wavering in the $4 area. We are in a key are with e coming up, I have a feeling this one will continue upward, especially when taking the RSI into account. It has a clear up trend in motion.

In closing: This is an extremely tough mkt. to trade. I look at a lot of stocks and then look during the day for an entry point. I have a lot on my watch list, all with great potential. I will try to remember to tweet when I enter a trade. So tweet well and prosper. AKOT

Their goose is cooked

I could see early on that this would be a tough day to trade, very tough, and I stayed out. I tweeted early on that I would try to get in on some GILD puts, but I did not get a decent entry point, and I did not like the looks of the tape today. Sorry for the late post, but it has been a very busy night.

The VIX, well the VIX has been fuhhhlaat. If it continues, we are making a new support line at 37.15. I broke it down a little better to see what is going on.

Same chart on 195 min. setting. I did this because it breaks the day up into two candles and sometimes it can help clear a picture up. In this case I think it helps us see a wedge is forming with a possible breakout. We have had 7 candles since the huge up day and of those, 2 have been clearly bearish and one clearly bullish, the other 4 quite indecisive, so that is where we are at, undecided.

The DOW is flat too, really nothing to report here except that I have noticed that the v is steadily declining, meaning that interest is waning. Going into summer v should decline. One note, we did close beneath 8k again, a bearish sign.

The NAS has stayed beneath our up channel. It has been overbought for so long, I am beginning to wonder if that even matters. I still feel this up move is dying a slow painful death.

Here the SP is very similar to the NAS, but it has not broke beneath our channel yet, and I emphasize yet. Look at the last three day’s candles, talk about a messed up mkt. At least that down trend line has served as support, so something is working. Will it hold, probably not. 

This is the SPY, with this circle I am trying to show that we may be forming a rounded top. If I am right, then I would say we won’t see a significant move downward until late May or so.

Remember this, SBUX, I called for a breakout to the downside going into e as a long-shot, whoops, missed that one by a hair. I still think a put going into e may still work, but it is a long-shot so be very very cautious.

Here is FDO, I like this bearish engulfing candle, I like the previous day’s long top wick, and I like the unfilled gap. I like this for a put play is what I am trying to say. 

EAT, going into a resistance zone after a great rally, look for a sell off to the up trend line.

Let’s finish with the duck, I really like AFL rallying up to resistance, this gives us an easy stop and a huge potential for a put. E is in a couple days so be wary about holding through, and this play may not materilize until after e but it is worth watching for sure. 

In closing: this mkt. is feeling tired and tired mkts. often fall. AKOT