Long time coming

Well I have been waiting for a day like this for a long time, and I took advantage of it; not full advantage, but most of the advantage. We broke through some major support that I had been writing about for months, and we broke through convincingly. We even took out some secondary support that was nearby. We have more news coming out tomorrow, but I am banking that wte may already be baked in to this news. If you noticed on Wed., we had nice v into the selling and then steady low v with the buying. Today, we had selling early, and then another attempt at buying, and I was nervous as I sat on my profitable puts, that we would have the same thing that occurred on Wed. However, every rally was beat down quickly. We even sold strong right into the close, which went against my plan of buying some SPY calls at the close, but I did anyway. I just have a sneaky suspicion we may see a reactionary bounce in the morning, and if so, I will be selling right away. The move into the close was so powerful, that my limit order got filled and immediately dropped about .04, hate that.

Things are making a little more sense than they did a few short months ago. The VIX rallied right through resistance, which is consistent with a 200+ point down day. Now to see if it will hold here, or drop again for another rally. Currently, it looks very strong with lots of support beneath it.

The DOW broke down hard. You can see my support level at 9623 held yesterday, and was the bottom. We are again getting close to support near 9400, drop in the bucket of 100 points.

If you recall, I have been bloviating about how I thought the NAS would lead this move down, hence me playing the QQQQ the last few times, including this week. The NAS broke through both up trend lines, the aggressive and conservative one. I see some good support in the range of 2014 to 2025, I know not very tight, but it is a sloppy chart. This chart looks like one of those that could reach up and re-test the bottom of the broken trend line quickly, and then sell off some more.

So I went with calls right at the close on the SPY, after selling all my put positions today. Why? Well you can see we ended up on the SPX right on my red down trend line, and especially after a move like today, I would expect a little bounce, and this chart looked the bounciest to me. This is a risky trade in this environment, but I have seen this happen often, so I took a small position to see if I could catch some of it. Honestly, I will probably end up back in puts sometime tomorrow, maybe again near the close.

Same chart a little closer so that you could see to what I was referring.

The RUT is sitting on some support from that last consolidation. I am not sure how strong it will be, but it held up the SPX yesterday, so it may do the same here tomorrow.

Readers will know that I put a lot of bearish charts on here. I prefer to play down rather than up. The breaks are quicker, the moves are cleaner and I am playing against my own retirement accounts etc., so I feel like I am hedging. I am just bent that way. But I still like to play to the upside when I can, so here is one to watch. SHLD held on support on huge down day, if it holds tomorrow, could be a good long opportunity, but there is resistance very close by so be wary of it.

PBY is similar, it found support on the trend line after breaking support. I think this one might hold, even though it crushed the 20 ma today in its down move. But if it breaks, then we are looking for $8.40, a good percentage move.

CBL was up today! You can’t say that about to many stocks. So here is my conundrum, it could not break through that resistance, yet it finished positive. If this was a normal trading day, I would be watching for a drop here, but today was not normal. I still think the resistance will hold and it will drop. A move above $9.90 and I wrong.

BAC is a hotly traded stock, and I usually don’t talk much about hotly traded stocks just cuz everyone else does that. I like to find hidden gems. However, this is tough to ignore. I think this is a serious breakdown of support, both via trend and via 20 ma. Further, I really don’t see any natural support levels until we get near$14, that is a huge percentage move. I will be watching for follow thru to the down side to see if I can profit on this one.

Simple chart, a nice bearish engulfing candle near some support. I could see this heading to support and then watching for break of it to the $70 where the 200 ma comes into play.

Finally, my favorite type of play the re-test of the trend / support line. This one is a beaut because it closed beneath the 200 ma as well. I would wait for a break beneath $29.90 with good v. The v has been increasing into this down move, and I think we may see anew low soon.

In closing: The charts still look bearish, but of the 100 or so I looked through tonight, I saw several with support nearby. I am expecting a morning bounce, news depending, and maybe even a little up day on low v tomorrow. If I see that, I will be very tempted to buy puts on one of the above charts tomorrow, depending on their action. Trade well and prosper and look for more charts on TWITTER @ akoptiontrader. AKOT

Uncle??

Well what can I say but uncle! The bulls have been taking it to me and I have been humbled. I have made only two trades this week and I was stopped out of my first one and the one I am in now, DUK, will stop me out if we move up tomorrow. Ouch. I still don’t believe in this rally, it just makes no sense to me, and that may be my problem, I am trying to make sense of the senseless. 

The VIX closed beneath the 200 ma and our support, this is bullish for stocks. 

The DOW has stalled out right oun our resistance, now if it continues up we have to go up with it. I see the bb are widening which is making room for this to move up if it so desires. 

The S&P looks similar to the DOW, but it is clearly above our down trend line and support line which should offer support. 

This to me is the most bullish of all the indices. If it closes up just a little tomorrow, it will have made a higher high, an easy bullish sign. Watch it closely, and watch..

XLK, the tech ETF. It too is moving into that same area of making a higher high. If it closes in our above the gray square, the feat has been accomplished. 

I figured I better show some possible call plays, so here we go. This is SHLD, if it closes above 50.80 bullish. 

EPIQ is in an up trend and moving north. If it drops a little, it could be bullish for sure. 

WMT, if it can break above this line is bullish. Then I would turn around and short it at 55 when it fills the gap and nears the 200ma.

Finally, this is the play I entered today. It sure looked like it was going to drop today, and it did for a while, but then it rallied with the rest of the world. My stop is 14.75 so I am still in and my target is 12.75, so we will see how this goes.

In closing: I see a few more bullish signs, but I am still not sold on this rally. AKOT

Is it already time to put my shorts back on again?

Well today pretty much acted like we thought it might in yesterday’s video. If you recall, we thought that either today or tomorrow would be the down day, but most likely we would have a rally of some kind on Monday with a sell off, that my friends is bearish, and it is exactly what we had. Personally, I think we have just begun the down move.

The VIX bounced just as we discussed yesterday. The move was over 3% up, but still not as strong as I anticipated. It did however hit its head on resistance and will need some volume to bust through it. 

The DOW has formed a good reversal signal, and days like this are generally bearish. Support? I would say the whole numbers, 7k, 6750, 6500 etc. 

The SP has also formed a reversal signal, and I thought it may rally up more to hit that down trend line. It did not make it and I don’t think it will this time around. It is sitting right on a fib line, and right in line with the lows from Nov. Key areas of resistance. It has support at 725, but I don’t know how strong that will be. 

Now my favorite chart from yesterday, the one that reeked of bearishness. This is the NAS, you can see the bearish engulfing candle hit resistance and a down trending RSI. I really think this has some room to drop, and due to the steepness of the up move, it could be quick. It was the leader of the down move today and I look for it to continue. 

Now onto some plays:

I had a hard time choosing which put to enter today. I am in SPY puts and wanted to enter another one near midday as things started falling apart. I tweeted about 1/2 hour after I entered the trade. I was torn between QCOM and INTC, and after looking at both option chains and potential down move, I chose INTC. I used a shorter chart to enter the trade, but I believe we could see a $3 down move. QCOM is still a great put, as I put in yesterday’s blog.

SHLD is another put I saw this morning and it too looks great for a put play. In fact most everything I looked at in the NAS looked primed for puts, hence my bearish bias yesterday and today. I think we break that bottom support line.

Here is WEN, you can see it is set up to one of my favorite plays, the move up to the 200 ma. This has the potential for a nice down move. 

Here is DRI, you can see a type of triple top with strong resistance at the 29 level, prime for a down move to the 25 area.

A rally? Really a rally?

The market today was really messed up. All the internals, breadth, winners vs. losers, new highs vs. new lows, etc. They all point down, yet at the end of the day we had a rally? Really, a rally? I thought we would end up down 150 plus the way the day was shaping up, uhh I was wrong. That, my friends is why I have not been playing the indexes too much lately. I am sticking to stocks. Why? Because even when the mkt. does not cooperate, you can still have a good play on the stocks. Well let’s take a look and see if anything makes sense.

Well let’s start with my favorite, the VIX. It tried, all day it tried to get into the box and stay in the box. However, it could not stay up. I did notice that my option prices moved much much more in sync with the mkt. today, and for me that was a good thing. Last week put a hurting on my only open position, but it made a glorious comeback today, partly due to the VIX actually moving up a little. Notice it hit the down trend line perfectly and retreated. Now we need to see if it makes another run at it like I think it might. 

I re-drew some lines on the DOW, finally. So as you can see it is testing the bottom trend line for the first time, allowing to make me an up trend line. Note that it hit the line and pulled back, similar to the VIX. Also note the very low v which I think will continue for the remainder of this week. 

The S&P has broke through its up trend line. Now for it to move up, it will have to break through two lines. I don’t know that, with the meek v we have up coming, it will be able to do that. Therefore, I think it will move down some more.

The NAS closed right on our old support line and beneath our up trend line. It is now trapped! The most logical move, sideways. But looking at the indicators, I think a down move may be imminent. Usually when I see a tail like it had today, I think an up move is coming, but I see a lot of resistance out there right now. Now onto some stocks.

I like the way XOM is setting up. It actually moved up above strong support and sat right on it. Now it is hitting its head on the up trend line. If it breaks above the trend line then play up, if it closes beneath the support line, then play down. 

Here is my current play. I got in puts at the gray circle, so you would think I would be smashing this one out of the park, butttt… the option prices were so messed up last week it actually put a hurting to me. For some reason this stinking fib is holding major support, which I did not expect, so every day is killing my option price. But, the good news, if it breaks support, then I think I will make some $$ on this play very quickly. You may be able to get in yourself if it breaks support here. 

This is MHK, and I just like the way it is sitting on the resistance line. I love the indicators and the op prices are good. Definitely playable. 

This one looks to be a really good play if it moves like I think. Right now the 200ma is serving as strong support but we formed a bearish engulfing candle today. I am looking to see it fail, soon and then it should fall to that 50 fib and possibly the up trend line.  A decent move, but be wary this stock moves fast. The option prices are good too. Oh when it hits the up trend, then I will turn around to play up. Oh did I mention this is GILD. 

Finally my favorite play of the day! This is a new one for us, DRI, Darden Restaurants. Look at this beauty of a chart. A gap up into awesome resistance at the 200ma with a nice red candle and a great gap to fill. The gap will be filled near 25 so that will be my first exit, and if that holds, I will be looking for another run at the 200ma from there. 

There you have it. It appears once again that I am bearish, so trade short and prosper everyone. 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

I guess it was door #3.

Well I gave my three options this morning, and the one I wanted the least to happen, happened. Now it is time to use it to my advantage. First I have to figure out what that is. So here we go. Tomorrow, tomorrow, in my mind is key. Looking at what the Fed did and how the market reacted, it sets tomorrow up to be a key player in the market. 

So, hey let’s start with the vix. It started the day pretty good, up a few percentage points and moving upward, and then the Fed did option 3 and cut more than expected. There is no more room to cut now. So if this does not work ( and I don’t think it will) what do they do next? Anyway, back to the VIX. It looks like it closed right on my support line, but let’s take a closer look shall we?

Same chart, 60 minute candles. Now you can see it blew through my up trend line and did close beneath support. However, if you look at the RSI, it should have a bump up. If it stays beneath the 52.50 area tomorrow, I would say that is bullish for the market, short term. If not, then back to the bear den. Now let’s see how the indices stacked up.

The DOW was poised to have a cow, but instead it rallied. However, look what it hit its head against. That light down trend line from Monday’s post. The key is will it hold. It is at a crossroads, right at the edge of the last up trend line and at the bottom of the current down trend line, tomorrow is key.

The S&P blew through that down trend line and closed above a fib line, bullish tendecies for sure. Tomorrow is key.

The NAS looks similar to the S&P. This was the one that looked the most bearish to me yesterday, so it only makes absolute sense that it was the most bullish today now doesn’t it. That down trend line should now serve as support for any down move. Tomorrow is key.

Now a couple of stocks:

I really think this is a great entry point for some puts on SHLD and I may partake myself tomorrow. I love the fact that is was up 0.07% today, that is awesome for a market that was up 5%. 

I don’t know why I am showing yo ADBE, it has a lot of conflicts but for some reason I think it may go up a little. I could even see it breaking that nice trend line to the upside. I am pretty sure it will be in the gray zone this week and then from there we will see. If it moves above I am buying calls, below some puts. It is in a range right now so I think the up move is coming and possibly playable. Tomorrow is key. AKOT

After much consternation, frustration and aggravation, it’s video time

Hey, I am still experiencing technical difficulties, and not just mentally, real ones with my computer. Also, this is an insanely busy week for me, so my posts may lag a little this week. Next week looks to be a little better. So I have a short video. I lost my cool intro and end so I will have to redo those when I get a chance. I apologize for any quality issues and bear with me this week. I am still overall bearish and probably will continue to be so for a while. Here is this weeks video. AKOT

Oh, wait I did want to throw one chart in here. XOM, it has been in a great up trend, but I think we will see a small pullback before it continues, err if it continues, up. It has tested the 200 ma 3X, with no succes so I would not be surprised to see it move back down to the 77.50 area. If it stalls out there, could present a good call play to the upside. Now, here is that stinking video.

Couple Shorts

All right, sorry about last night but man was I frustrated. I will work hard to rectify the issue this week. Currently I am having problems with my screen capture as well, go figure. Anyway, I wanted to make it up to you so here are a couple of plays I talked about last week that look to be setting up well. I am in puts on one of them right now. 

This is SHLD, one of my old favorites. If you can see it is down nerly 5% today and I still think there is more room to go. Remember I tried to play it last week with tight tight tight stops and got stopped out. Well today would have been a good day. I would wait for a small move up if you are going to enter, but I don’t see any reason for it to rally until it gets to $30. 

This is TGT. I like it because it is very liquid. I feel the same about this one as I do SHLD, but like I said it is more liquid. I guess you could say I am short retail right now, although SHLD is more real estate than retail. Anyway, take em for what they are worth and I hope you make some $$ on these. I would not play SHLD with this months options just because it is not as liquid as it used to be. AKOT

Wed. nite post always late.

I am very busy on Wednesday nights so I am always late posting. I apologize. It will be a quick one tonight. First let me throw a thought out to all of you. If it turns out Obama is mired in with the Governor of Illinois, after saying he didn’t know him, I honestly think we will have a major tank in the market. Why? Because I think that one of the reasons we are rallying a little and holding strong, is because we have a new president bringing “change” with the same old people. So I think if chinks start appearing in his platinum armor, it will affect the markets negatively. Just wanted to throw that out there. On to the charts:

Here is the vix and yes it has moved below our first trend line, but, I cheated a little. You can see the blue dotted line is my new trend line that hits the bottom wicks of the candles instead of just the bodies. Now, if you look at the RSI, she is ready to rise, I would not be surprised to see a strong up move tomorrow.

 I found the DOW interesting. We blew out of the wedge and now we are cruising up the up trend line. Will it hold? That is the question. I could see it breaking that up line and then hitting the down trend as support. 

S&P has multiple triangles formed. It is quite volatile right now, even though it feels dead. I am learning more about E waves, but I don’t know enough yet to use them here, however I think they would play well right now. All indicators still show up move, but watch the new resistance line, see if it holds.

This one really intrigues me. This is the NAS and check out the up move and three day stall out on the 38 fib. I am not sure if this is a turn around off the fib, or a stall before the up move. If I take everything I have seen into consideration, overall I really think we are due for some down pressure before we move up some more. 

Finally:

Here is one I tried to play puts on today. I say tried because I kept my stops super super tight and I used an 8 minute chart to enter the play. However, I started off good and even moving up a little and then bang, in about an hour got stopped out. Noticed that option prices are still tough to play unless you have  a big move. I will be watching this closely to see if it breaks this support, I am in with both feet. Looking at indicators, they are still pointing up, so I knew I was early but I thought we might have some selling pressure at the end of the day, we did, but selling from up 120 was not what I had in mind. Trade short and prosper. AKOT