Key Day 1/6/09

If you recall this was my reversal week, well it ain’t looking so hot for the reversal now is it? Several times this week I thought it was on its way, I really did. I still think it is coming, and who knows 3f, or opx week could be the catalyst we need. I still remain long term bearish, and I still think the longer we hang like we are, the faster and further we drop. I am still short several July contracts and I have watched the time decay eat away at me this week. But I will not sell until I see a sign that things have changed, and that sign has yet to been seen.

I noted early in the day on twitter that the VIX was not acting too bearish. In fact it rallied pretty hard after the gap down open and really moved up near the end of the day. It closed back above my support, and now the key will be to see if it fills the gap, and rallies or fills and falls.

The DOW has still not changed much, but there are a lot of long top wicks, a long wedge, and declining v, all keeping me bearish for now.

The NAS looks like it wants to fill the gap from Sept, and if it did I would be extremely bearish. However, I just don’t think it has the legs to finish the move. It has 90 points to go, and perhaps this is the main indicie keeping this mkt. in rally mode. I think if it was able to fill that gap, it would be with a huge strong one day move, followed by a quick sell off. I will keep watching, but with dissipating v and thin trading, I think it is running out of gas.

I named today’s post after the S&P 500 because that date is the high that is giving it so much resistance. I still cannot find a pattern, on 20 years of charts, that matches these past 9 days. Normally I would say the sell off at the end of the day today would be bearish, but it really hasn’t meant much lately, it just happens. I think that if the NAS moved up it would pull this into the down trend line, and between the two we would be in mega short territory.

The 30 min. chart show us still in the up range, sitting right on the support line. Will we ever make a new high or new low? Soon my friends, the move is upon us.

Remember my h&s formation I thought was going to complete? Well it did form, break and then quickly bounced right back up. It is a good thing I was in meetings all day, cuz I would’ve short this thing when that wick started forming on that second candle in the up move. It was a classic, picture perfect set up that did not work. Now that neckline becomes even more crucial as a type of pivot. Watch for it and see if it acts as support.

This is XLY from yesterday’s post. I thought we would see a down move, and we are, just not much of one. I like that the last two days have been black candles with decent v, I still think this is poised for a drop.

The XLF has formed a bit of a funky wedge this last couple weeks. It truly is ready for a breakout. Note the stronger v the last two days. Normally I would say this chart wants to break out to the upside, but I am not sure. It is on the 200ma, but not far enough to call it support yet. I expect a big move and very soon.

I put this on just cuz I think it is a classic v divergence that is about to come to fruition. Note the increase in v into the peak and the quick dissipation during the second up move and now the pitiful v as we reach full retracement of that original move. I think this is a great short right now with a stop of 24.75.

In closing: Tomorrow is that last Friday before 3f, so I would not be surprised to see a lot of options activity. Further, I am finally hearing some analysts saying this mkt. needs a pullback, and if they are heeded we could certainly see some selling into the close today, I will be watching for it. I am still bearish and the move may be next week. 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….

Finally the bounce we have been waiting for, next a drop?

Well it turned out to be  a very nice day for me. I sold the two long positions I had, and held the short, and went short again near the end of the day. Currently short X 2. Is there a technical reason for me doing this? Not really, I just have been similar plays lately and I will be very surprised if we continue the rally we had today. Sell on the news people, the news was released today and I sold. I am down quite a bit on JPM, but I really think it will turn back down and soon. I think all the financials were over bought today, regardless of what the President does. I think we will see sellers soon, but let’s look at the charts:

Check out the tail on this bad boy. Yet also notice that she rallied right back to rest on support. I really don’t know what to tell you, except that we are in a down trend and I expected a stall out near 41, which we gapped down right through. We have another level of support at 37.50.

You can see we are coming up to resistance at a 50 fib and 20ma, not near as powerful as the 200, but resistance none-the-less. 

The NAS gapped up and now rests on support. Yet the indicators are all low showing that more up is definitely possible. 

I thought I would revisit a couple of plays. This is PNRA, it moved up very little today with this rally. It is against hard resistanc, I would look for it to drop, stall near 200ma and drop some more. 

DRI, we played this down, then up and guess what, It may be down time again. On 200 ma, reversal candle, indicators in the middle and small move up on big mkt. up day. Would not be surprised to see this one drop again. 

 

So typical Wed. night post, short quick. In closing: I am not sure what to expect tomorrow, but I am playing for a pullback from today’s strong rally. We finally had that bounce I have been waiting for all week, and now it may be time to pay the piper with some selling. I am short 2X right now and will probably be so through Friday. I don’t anticipate a huge drop tomorrow, but it could be possible. I may try to go long UYG again in a day or two. I had to sell today to lock in some decent profits and I always worry about a pullback after a move like today. Trade for a reversal and prosper. AKOT

X marks the spot

Well I have to be honest, I really wanted us to open up a little bit this morning and then I think I would have felt a lot better about our chances of breaking some support. However, I thought we had some strength with that early down move and that we may continue down. But alas, we hit support and then the whole mkt. got all wishy washy on us. Let’s see where we stand.

We open with the VIX on a clean chart. Note how strong our lines are. Note the strong move up from 37.50 which happens to be right near the peak from February and, the area I originally used as support, the consolodation in September. The problem, it lept up fast and furious and then hit is head on some strong resistance. 

Same chart, 60 minute chart. You see how it bounce up, stalled a little and then took off until it hit that resistance. Note that other than the last candle of the day, it didn’t fly off the resistance. Also note the purple dashed line. If we open up tomorrow, I would look for a possible reversal on that line, which is 41.35, give or take a few. 

The dow almost fell right into the X before rallying. The DOW was leading the down turn all day. The NAS was trying hard to pull this fat baby up but it just couldn’t finish the job. Now we have to see who wins the battle. We still have a conflicted chart here, the indicators say down, the chart says bounce. I still believe we have to have a spike in v to move this bad boy down. If we don’t see it, then we will probably see a bounce up tomorrow. 

Here is the v since July. You can see we are on the lower middle range, not enough to break support, and it has been moving down the last three days. 

The S&P recoiled from this up trend line. Again, candles say up, indicators are saying it is time to move down. If we move up I would doubt that we break 935, in fact I would not be shocked to see us move up to 935 in a day, and then back down. That would take some serious v. 

The NAS, as usual, is a little more interesting. Notice we have a nice little gap to fill to the upside. We closed beneath support, which now becomes resistance. But of all the charts, this one looks most bearish to me, yet it was the leader of the up move today, and the lagger of the down move yesterday. There are bulls in this mkt. Let’s look a little closer.

Here some of the top Q holdings. MSFT, QCOM,GOOG, AAPL. Looking at these charts, the only one that looks possibly bullish is QCOM, and that could go either way. On the down side, there is support near by on each of these. 

Here is the v on the NAS, intra-day. You can see that it too has been declining the last three days, this is bearish for an index that wants to move up. 

We finish with, what I think, will be a sweet short play, SYNA. Check out this beaut h&S pattern with a move back up into it. The options aren’t great, but playable, but it could be a great short. 

In closing, I think v is key, and sometimes, pros want to sell positions on Friday’s to void any bad news over the weekend. That may be the key. Trade with support and resistance and prosper. AKOT

The witching hour has changed to the wishy hour.

So my bias has been to the short side, as you can tell. However, I almost went long this morning, but I didn’t want to mess around with the first 45 minutes of the mkt. and by the time I was ready, It looked like it was turning over ready to head down. We are in a tight area right now, a key area. Dow over 9000, S&P back to where I thought it might get for some great short plays, but for some reason this mkt. keeps rising. I have been trying to wait for the last hour of the day the last two days, and the last hour has been a major dud. That strategy is not good. I still think we are reaching dangerously overbought areas, but along the way we have made some new support. Let’s look. 

Let’s start with a 60 minute chart of the SPY. I know it looks messy, but that is what I wanted to point out. Look at all the support we now have. Granted, not all of it is the strongest support, but it is made with gaps and peaks, so it will offer support. On the indicators you can clearly see a bearish divergence forming on the MACD and the RSI, although it is a short chart, is clearly overbought. I think we need some v to break this support so we need to watch for it. 

Same chart on a D. Note how we are hitting resistance at the 38 fib. If we break above it, and that is a strong if since we seem to be forming a mini rounded top, then I can see us reaching the 50 fib at 1,000, yes 1,000. If that happens, I will back up the truck and short this mkt. big time. If we break above, I will try to play long along the way. Here too we can see we are overbought and a bearish divergence. Conflicted signs.

This is the Russell on a 60 min chart. Clearly we are in an up trend with resistance a ways away. Same type of support lines and same divergences and overbought. 

Same chart on a D. Here we go again hitting our head on resistance with an overbought chart. We should turn down, but without v, I don’t see us breaking the up trend line. If we get some conviction, then maybe we continues. Right now, this chart is bullish unless this fib holds which I think it might. Futures are flat as I write. 

So in closing, if we see a breakout above these fibs, then I think there is some $$ to be made to the upside. If these fibs hold, there is $$ to be made to the downside, but with lots of support along the way. Without v I don’t think we break that support. If we do break above, I will look for moves up to the 50 fib and then I am going short short short. Trade neutrally and prosper. AKOT

Too much Too Fast?

This is not a healthy market right now. I would have much rather seen some nice steady up movement, not 900+ in a day. I have a hard time buying calls and instead I am looking to fade this rally. Bearish? Mid term yes, short term I am looking for more volatility. Let’s not forget this is exp. week, normally the most volatile week of the month.