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

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:

Could this be the ENDO?

Well we finally had a truly sell off day and I was fortunate to get a piece of it. I went ahead and played some Puts on the Qs today because they were the lagger yesterday. However I am not 100% convinced this will continue down. Late in the day I tweeted about the VIX nearing resistance and the resistance held. The stress news came out and the futures rallied, however if you read the article I posted yesterday, I think this rally will be short lived. Let’s look at some charts:

As I said the $VIX started the day strong, hitting the support zone and bouncing up strong. Then it got close to that trend line and that is when I tweeted about being cautious. Sure enough the line held and you can see the result.Even with the pullback, we still have a bullish engulfing candle.

The DOW is conflicted. The candle it formed is bearish,the v is most likely bearish, but look at the lines, a price level support and an up trend support. This actually looks a little bullish to me, but it surely is not crystal clear.

The S&P 500, well it stayed in the channel, hit the top channel and pulled back like a toe in hot tub. It closed beneath the up trend line and looks like it should move down some.

This is why I played the Qs. The NAS looked very bearish to me. It has been in what I would call an unsustainable rally, that is sustaining.. the worst kind. The good news, when it finally fails it fails hard and fast and it can be played. We have a very nice bearish engulfing candle, actually engulfed three candles. It looks like it still wants to go down from here.

ORH plays well with the fibs and it is forming a loose wedge, another bearish engulfing and some room to move down, then back up.

FULT is in a nice long term down trend and trying to rally for the last three months forming a nice wedge. Watch this for a breakout, probably down.

Here is an up play for you to chew on, EAT. Very simple, up trend line, if it holds buy, if it breaks sell.

DV could teach us something here. We have a nice wedge forming with a long legged doji. Could signal a turn down. Also I like these Elliot Wave / Step formations, and this one is classic. If it breaks down should form a new low.

ENDP is sitting on support right now and it sure looks like it wants to break through.  I think when it happens, it will be a huge percentage move down. This one is probably my favorite because of the nice easy stop area.

In closing: I have been waiting for a down move and I was fortunate enough to play it down using 20 min. candles. I would love to say that it would continue down, but I sure don’t think it is crystal clear by any means. I will be watching the Qs again tomorrow as the NAS is still the most bearish at this time. AKOT

I’m baaackkkkk

Well the akoptiontrader has returned from his 18 day Costa Rica vacation, and I did not make one trade the whole time. Looking back, I missed a huge down move, but I do not regret it one bit. Vacation was awesome, and I got to regroup and refresh and be ready to trade well. This will be a short one as I get back online. Let’s get to it.

the VIX has been behaving well since I have been gone. You can see the lines we had drawn prior to my trip, they have held well. Right now we sit on support, and we should expect a bounce, but the indicators are still trending down. We have a built in contradiction.

The DOW had bounced in great strength. You can see v is strong, but if you look closely, you can also see it has been lower three days in a row. I also notice that there is no strong resistance nearby, the next one I see is 7500. As I write this, I see that if you start a down trend line on the bottoms in Jan, you would have a some resistance soon. 

The S&P is a different story. It too had a great move up, most of the move was Tues and today. We are now against a fib, at the 750, that should provide some resistance and I would not be surprised to see a pullback from here. BUTTTT the indicators are still showing we could have a lot of up move to go. I would not be surprised to see a move up to 800.

The NAS is showing resistance closing in near the 1440 level, then near the 1490 level. The indicators still have room to move up, so be cautious. I am currently short, as I said on twitter the other day, and I got hammered today. I did not get a chance to sell so I am feeling major pain right now. I think we may have a down move simply due to the massive up move we have had this week. No technical reason, just the fact that we are in a bear mkt. and we have moved up strong, coming into Friday could lead to some strong profit taking. 

That’s it for now, I hope to be back into full swing by this weekend. Trade well and prosper. AKOT

Gone with the wind all in one day, Black Monday!

Well that was quick, I expected a down move, but not like Niagara waterfall. In fact, to be frank, I thought the days of 500 + point moves would start to disappear. Well that definitely wasn’t the case now was it? So the big question is what is next. Let’s take a look.

 

VIX

First on my list is the vix, I forgot to put it in the video yesterday. Look at how perfect it hit the gray circle of reversal and… it reversed. Imagine that. Now the big question is will it continue up? Fundamentally I would say yes, I still see no reason for a market rally. We are in a world of economic hurt such as the world has never seen and it is only getting worse the more the government throws money at the problem. Technically, I would say it is going to test the 80′s once again. We have room on the RSI and the MACD is setting up for a down move.

DOW

The DOW filled the gray box of death all in one day again! This time coming back down. I have added a new line at 8860. This now becomes an important area of resistance. Now if we break the bottom of the box, we will continue to head down to at least 8000, most likely, I am afraid to say we may break 7500.

NAS

Doesn’t this look like a bearish flag? It does to me and it did last week, that’s why I still had bearish leanings. Guess what, I still do. This is an engulfing candle engulfing 3 days. That is bearish. Support? 1300?

sp

Here we see the S&P is already near some support, will it hold? Not likely. If this was the only indicator we had, I would expect a bounce but since the other three charts are so bearish I don’t know that we will get it. However, don’t be surprised if we get a dead cat bounce tomorrow. Such a big move down sometimes, not always, but sometimes you have a bounce that doesn’t last. Watch for it, but I really think you could possibly play it to the down side. If we open up a little and start moving down, I will try and get an entry point to play down expecting a big move.

Check out the watch list, made some good $$ in there if you jumped in any of those plays. I think most of them are worth holding a bit longer, but if you bought enough, take a little of the table, don’t be a hog. Check out TRV, that one really paid off. Also, EXC still has some room to go so that may still be a viable play. Sorry I am so short tonight, but on the road and I have things to do. Trade short and prosper. AKOT

It held, and I was on!

Well that was an interesting day. The good news is that all the supports held and held like the Spartans! However, if you remember, the Spartans did eventually lose, but they put up a good fight. 

 

dow, nas, s&p combo

As you can see, each and every support held. As Cash21 noted, this rally actually had some v and it was viscous, violent, and vigorous. I was doing OK on my spls puts then bang!! Stopped out like a man who’s bungee cord broke. Ouch. The good news is that we may actually get that stinking rally I have been waiting for all week. The bad news, next week is expiration week, which usually tends to increase volatility. If you can increase volatility any more than this, I may have to take a few days off, buy two more computers and a redundant Internet connection just to make a trade. Speaking of volatility, did you see the VIX?

 

vix

Remember this line I drew in yesterday? Remember the green up trend I have been talking about? It hit that resistance, blew past it, but closed right on it. We should, notice the word “should” see the vix move down a little. Beware, when it moves back up from that down move, it is going to have to go much higher to reach that green line again. Check it out intra-day.

 

vix 10 minute chart

You can see how well it hit that green trend line and how violently it pulled back, with one little stall out. You can see the nice little move above the resistance and how quickly it went back down. It spent about 40 minutes above it, in one strong up move. Now check out the nas intra-day.

 

nas 10 minute

Notice the inverse peak; how hard the sell off was, and conversely how hard the buy was. Decent v as well. I have heard a lot of theories, probably the most plausible is that the instutional buyers and their black boxes kicked in buy orders once dow broke 8k, sp 850, nas 1500. With the massive force of this move, that would make sense to me. Now the million dollar question, will it continue. Well if instutions began buying, do you think they would turn around and sell the next day? I don’t think so. We could see some profit selling, but I am inclined to think we will see some more buying. We need to watch the v very carefully to see what is happening. The v was steady today, not the typical U shape move, up early , low mid day, up end of day. Had a nice spike at the beginning of the up move, hence the black box buying theory. DIA shows this pretty good. 

 

dia 5 minute chart.

I actually messed up, it is a 5 minute up move not a 10. So bottom line, the futures are down almost a percent as I write this, but that doesn’t mean much. We could see a sell off tomorrow due to profit taking, but I think I am leaning towards some more up move. That’s what I will be watching for. Trade nimbly and prosper. AKOT

Where’s the beef?

A vailed attempt to an 80′s icon. Instead of beef I would say where’s the v? Yes the v. We had decent volume, but not the type I would like to see with a record type move like this. 

 

DOW

Note the volume from early 07, it was much more than now. Today’s v is little more than this past summer, but not enough for a rally like today. It did however break strongly through the top of that triangle. 

 

SP

The S&P used that bottom support as support and did what it was suppose to do, however it did it a lot more than anyone could have anticipated. This too closed above resistance from both the triangle and a support line. Could we continue up? Perhaps, but I would be inclined to believe that this will be similar to the 10/13 move. We open up, maybe even gap up but then come on back down.If not, if it continues up, we could see some of our old resistance lines come back into play, like DOW 10,000, SP 1000. 

 

NAS

This one interest me the most, the fact that the NAS closed right on the down trend line is not as bullish as the other indicators. As I write this, the NAS futures are down 15.00. I absolutely would not be surprised to see a decent pullback tomorrow. But I will be ready to play either way, because it is very hard to game this market right now. Oh btw, good thing I sold those OXPS calls eh? That one cost me. Trade long and prosper. AKOT