News, News, then Expiration will guarantee continued volatility.

First of all I apologize for missing last night’s post, but I am in the midst of soccer season, so time is very sparse right now. I guess you could call yesterday the “up” day I was looking for. We have two more days of economic news this week, and then expiration day on Friday. I expect the volatility to continue. I am seeing some support starting to rear its head, but the way this mkt. has been I am not too sure it will be that substantial. Remember a few weeks ago every sell off was met with buyers? Well now it seems that the buying opportunities are being shorted, and like today, shorted hard. I will now be suspicious of every gap up day, but keep in mind the “news” that caused the gap. For the remainder of the week I am leaning towards some more selling, and possibly another up day on Friday.

The VIX looked prime to drop yesterday, but alas, today it looks like it is ready to rise once again. This is definitely a week that could see the VIX testing its recent highs.

The INDU looks like it wants to continue dropping here and stall out at the close and open days post-flash crash. Then right beneath that is the 200 ma.

The SPX is right near support from the top of the mini-inverse head and shoulders that led to this current rally. The bollinger bands are widening and this often confirmation of down movement. Note the 200 ma looms nearby, as with the INDU.

The NAS, one of the leaders, is right back on this long-term up trend line. The line has been breached once before, and therefore can be breached much easier the next time. Today was a huge bearish engulfing candle and could be the signal leading to the smashing of the line. Once again the 200 ma looms nearby to serve as support.

The RUT, another indice leader has dropped right back to recent support levels and on the top of the slow ascending channel. You can see how much better the small caps have been performing by looking at the distance to the 200 ma as compared to the other ones we just looked at.

In closing: Although there are definite support levels nearby, I am not convinced they will be that significant. I do think that the 200 ma will offer some support. However, I would be prepared for a news bomb this week, I don’t know what it will be, but something that will be blamed for this mkt. making a major move, and it won’t be a fat finger. Trade welll and prosper. AKOT

One day does not a trend make, unless it is Jan 1.

Not one day does a trend make, unless it is the first day of January. Should we be surprised by such strong move today? Not necessarily, remember ony 63%  of the time the Jan 1 move was in the same direction as the last trading day of December. Also remember that, without exception in the last 10 years, whatever Jan 1 did a trend was based off of that day, the shortest one being 3 days. What I didn’t check was to see what kind of resistance those mkts. had.

Cash21 has a feeling that we will see some decent jobs numbers on Thursday. If he is right, we could really see a strong up move. I believe this because we have had this current rally with terrible jobs numbers. Sure they have been bte, but they are still awful anyway you slice it. So if we see some confirmation I think it will be plastered all over the place and money will flow into this mkt. That is also a great time for big $$ to look for selling opportunities, after playing the up move of course. On to some charts:

As I said on the video, I think that the $16 – $17 area is a very logical zone for the VIX to end up in. There is very good support at $16. Notice the RSI is making a series of lower highs, and it is in a pretty apparent down range right now. Early on today it seemed oddly strong before finally selling off.

I actually expected quite a bit more v today. Perhaps that guy who ran in through the out-door ( Raspberry Beret, Prince 1986?) in Jersey made all the traders late getting home. Either way there has been a four-day up trend in v and a clear breakout to the upside. If you note that down trending blue line we are near, that is drawn on the highs of the day in a down trend starting with the Oct 07 high. I usually use the bodies, but we have long since smashed through that. I don’t know how strong of resistance this will be, if any, but we need to be aware of it none-the-less.

The NAS gapped up and stayed up. It doesn’t look like much, but percentage wise it did better than the others, sans the RUT. And this after a beauty of a bearish engulfing candle, albeit on low v. I don’t think it is too often that bearish engulfings near top bb are ignored. So if we continue up, like we have in the past, that will be impressive.

The SPX took out the 50% fib and the up trend line.  There is a lot of open sky right here for an up move. But again, I harp with the being oversold for so long. It didn’t gap up, but is definitely showed strength today. I am very surprised that 50% fib did not offer a lot more resistance, I was pretty confident it would.

From the weakest to the strongest. Seasonally this is the heart of strength for the RUT and it is showing it. It sure looked like it was giving up the ghost in Nov, and now we have a pretty clear breakout here. Note that once again the long-term down trend on this w chart. It could certainly offer some resistance.

UUP is in the zone here, the gap zone. There was a nice little v spike with the move and it seemed to have bounced off of the 20 ma. Looking at the past buying v, I would expect to see another spike of buying if we get down to the $22.50 area. But, I expect this gap to offer support, so I think we will likely see some strength in the $22.75 area, and I may be looking to buy this there.

I have been watching this for a while; I like the re-test of the neckline, but it is now caught between the 200 ma and the neckline. A move up with some v and play up, a move down below 200 ma and short to $13.50 area.

You can see a series of lower highs and with shorter time periods. But what really intrigues me is that we have lovely bearish engulfing candle  followed by a bearish harami. This thing really looks like it wants to drop soon to me.

In closing: Based on my short-term research, I think we will see some more up move tomorrow and perhaps the rest of the week. Today may have been the bulk of it, but if we get much bte numbers during the week, it may have been just a taste of what is to come. Yes, I still think this mkt. is clearly overbought, but as I have said before it can stay that way for a while. Trade well and prosper. AKOT

The 20 ma is in play

Well I ended up selling my longs and going short today. I know, I know I said long until Wed., but I did not like the action today. We moved up quite a bit more than I anticipated, which is a good thing when you are long, but it is also a bad thing because you start entering areas of resistance much quicker. YUM, did much bte after hours and will likely cause a pop in the morning, depending on how COST, FDO & MON do in the morning. I am hearing the overall the mkt. is expecting a lot of earnings beats, and if that is the case, then I may have went short prematurely. I still the biggest move will come on Thursday (when I will be traveling!) with the initial claims number. It has projected to be over 550k, that is not good people, and if it is worse, I think we will see this mkt. sell off hard, no matter what the earnings are. No matter what Brokaw says, a jobless recovery makes absolutely no sense. So my plan is to stay short until Thursday morning. On to some charts:

If you recall, I said the VIX looked like it had topped on Sunday’s video, ergo being long into this week, that turned out to be absolutely true. Now, I can’t say we have hit a definitive bottom, but we did form a nice tail today, showing a little strength, and we bounced off the 20 ma, which is coming into play a lot lately. It is in flux and isnt’ telling me too much right now.

I was more enamored by the DOW than the VIX. Notice our high today, right in line with the high from 9/30, not an area I had targeted as resistance, but it sure acted as one. I think if we punch back up to 9832, then I will be all long again, expecting another new high. But if you notice today’s v, it was more than yesterday’s, and today we had more selling and more bears stepping in than yesterday. I will be watching to see if they follow through.

The SPX broke back up through my up trend line. But ran smack dab into the 20 ma and pulled back to finish sitting right on both. I would not call this a convincing breakthrough, but if it had closed at the highs, then it would’ve been.

Again with the 20 ma, as the NAS tried to push through, but was unable. The NAS was not as strong as the SPX, but I noticed it held up stronger during the selling. I was looking to short the SPY or QQQQ, and I chose neither. Still, this has some room up to hit my trend line, but depending on the rest of the mkt. it may not make it.

Even the RUT broke through and ran into that dirty 20 ma, which coincidentally is almost exactly on my trend line, should offer some resistance.

The SPY has been good to me lately, both ways. But I couldn’t get a good enough read on it today to short it after I sold my longs. Now it looks much clearer, it has hit two of my resistance lines and recoiled. Now to see if it will make another run or continue to pull back. I think it may have to sell some to breakthrough to the top side. The v was not super low today, but not great either, not as strong as the selling days, which is par for the course lately.

I really like how the QQQQ reached up an kissed that up trend line, and pulled back a little, closing right on the line. Similar to the SPY, the v was not near the lows, but not near as high as the selling days.

My alert on LEN triggered today, and you can see why. I don’t believe in this up move at all, and I think this may be prime for a short play. Note the decreasing v into this lackluster up move, near my old support line. I will be looking at this one hard tomorrow.

RMBS has a bit of a bear flag going on here. Watch for a breakdown , likely when it gets near that combo 20/50 ma area, although it will not wait if the mkt. sells off before then.

ENDP rallied right up into the old closing high which is also the top of the gap. This should offer resistance, but it may have been tested already by that move up early Sept. If so, we could see a pop through here, but I think it may hold and we may see some selling move in.

It looks like the FAZ formed a bottom today with this doji star. The exact opposite of the up move from Sept. 23 area. I would look for an up move from here.

DUG is retesting that resistance that led us to shorting it last time. Note the pathetic v, causing a nice v divergence. I think this level will hold again, and DUG will be digging down.

Here is my main short of the day. Not so much from this chart, but due to the intraday action I was watching. I love clean resistance, which we have here, as it gives me a clear stop. I like that it breached it, but then pulled back very hard. I also like that there is an unfilled gap looming, so I thought there were a lot of signs pointing to a drop and I am currently short XLE. We do have crude inventories coming out tomorrow, so that could easily make or break this trade, but I am in.

In closing: We are meeting some resistance, mainly in moving averages, but also in trend lines. There is an obvious lack of conviction in the buying, even on a day when we were up over 130 pts. The mkt. moved up much faster than I anticipated, so I have now positioned myself to take advantages to the short side. As earnings kick off, this could be a trader’s mkt., very volatile swinging on the last earnings report and forgetting last week’s reports. I am still looking for bad jobs numbers, and any surprise to the upside will likely lead to a strong rally, so be very cautious holding options going into Thursday. I will be traveling the next few days, but I will be looking to post as time permits. Trade well and prosper. AKOT

Weekly Video

Well we had the sell off we thought would occur after some wte jobs news. The curious thing is the sheer lack of v. So now here is the million dollar question; knowing that the v will likely increase significantly on Monday, will it be buying or following the lead and selling? We will not know until Monday, but I still believe intermediate term we are in a bearish fade. I expect more selling to occur this week, maybe not every day, but I would expect us to close the week below 8260 on the DOW, perhaps way below. I think Thursday is our key news day in a light news week. I am still short and expect to be see most of next week. Watch for a bounce perhaps on Mon/ Tues but I feel some selling coming after that. If we don’t get the bounce, hang on tight.

thanks to briefing.com for the economic calendar.

Now for this week’s video: Please for you to enjoy!

Retail is in the house

Today started exactly as I was looking for, in fact I felt a gap up +150 or so followed by a quick sell off would be the exact sign of a top. We got close to that, but again the end of day was strong. But, the big difference, the beginning of the day was even stronger, and we did not finish in the green. This still feels like a nasty reversal is upon us and I want you to be prepared. I am not going to post a ton of indicie charts, just a couple, and all the rest will be retail charts so let’s get going:

The VIX opened very low, much lower percentage wise than the rest of the mkt. Then it rallied and it rallied hard finally finishing with a sell off at the end of the day. The key is that it is still, once again above the support line. If it cannot break this support then I expect it to rise and rise quickly.

Here is the one from last night, the RUT on the 60 min. chart. You can see we broke that neckline and retested it beautifully. I really thought this was set up perfect for a huge drop right here, but alas it rallied hard the last hour of the day. Eventually, these end of day rally’s are either going to slowly fade or just disappear, and then we drop, and I think we drop fast. Now onto retail.

This is the XLY, or consumer discretionary spending spider. You can see the fib from NOV Hi to Mar low is now serving as support. Today we formed a decent bearish engulfing candle, near the top of a move with pretty decent v. The mkt. is expecting .5% retail sales after a series of negative numbers. I would not be surprised if we make that, but only because the news has been so bullish. I think if we meet it, the mkt. may gap up a little and then again sell off, if we beat it, gap up huge and possibly sell off, and if we miss, well then, I think the end is near.

a lot of the retail charts looked like this, JWN. A strong move up to prior resistance, a drop and then a sort of move up. I like this chart because we have both sides of the trade. We have clear resistance and a trend line. If we gap down tomorrow, I would wait for a move up, and then try to get a good price, and vice versa. You can also see a great wedge forming which I neglected to draw in. Also note declining v.

FRED is also in a wedge formation using the 50 ma as support. If it breaks, short, if it holds long. EZ

DLTR also has a pretty wicked wedge, I would say bias to the down side here. Watch for breakout and note support.

DDT, this one is real puhrty. Again, a hard rally up to prior resistance, a great tombstone doji, and also I think a great short opportunity.

I was just at COST, and like usual they didn’t have enough checkers open. Good $$ saving mode, bad for customer appreciation. Anyway, we are channeling. Another ez play, if the bottom holds go long, if it breaks go short. We could also wedge this chart.

finally let’s finish with BKS. You can see the great double top and a very bearish candle today with decent v. We broke the 50 ma, but the up trend is still intact.  A close beneath $13.00 and it is short city.

In closing: Nothing has really changed, except today was slightly more bearish than yesterday, and I think tomorrow may be more bearish than today, depending on the retail numbers and initial claims. All this happens before the open, so it should be pretty easy to game intra-day. Trade looking sharp and prosper. AKOT

Got a chute?

 

Another strong close going into the end of the day. The way we opened, it seemed fitting to close up nearly the same amount as yesterday. Tomorrow is 3f so option prices are going to be ill priced, be cautious. Judging from the last two days moves, I would be surprised to see any really big moves. I have a strange feeling 3f or OPX will go quietly into the night. But I do think we are near the end of this bear rally and I will show you why. 

First we have the VIX and it has been all kinds of jacked up the last week. It was up when it should be down and down when it should be up. It broke support and is clearly heading down, but we have strong support at 32.50, that I think may be the key area. 

Same chart up close. Check out this mess!! That my friends is huge indecision. 

So here is the S&P and now on to why I think we may be close to a top of this bear rally. You can see the clear drop down here and now we have rallied from here. But we have only been here once and if you look closely at this chart….

This was the bear mkt. of 2003. What I want to point out to you is that we tested the bottom within 30 points 3 times, twice right on the button, before we rallied, and that rally was right near 25% before it had its first full fledged sell off. 

So here we are today. Note we have only hit bottom once and we have not yet retraced even near it. I think we must retest it at least once and we are nearing the 25% area, a great area for that turn around. I will be watching closely if we get to the 880 area, it could even happen right at the peaks of the beginning of the year, watch for it. 

here is one I told you to buy puts on in the Sunday video, me thinks you would’ve been happy with BGG. Note my note I wrote on Sunday, this thing gaps down after earnings and lo and behold she gapped like Alfred E. Newman. I think there may be more down to go.

MNTA is another one that my be ripe for a wee bit of a put play. I love how it touched the 200ma and 38 fib and backed away as if it were a hot tin roof. A close below 10.50 would be a great put signal.

Great Scott! We have another stinking put play. This is PGNX and she be in a down trend. Simple play when she breaks the half way mark buy puts.

This is one we have made some $$ on before, RL and she beckons us again. You can see the sharp up move into the 200 ma. She may have enough to break through, but I don’t think it will happen the first try. If we close below48.20, could be a great put entry. 

Finally, here is the DOW. I wanted to show you this because we have had lower v every day since our last big sell off. Yes we are above 8k, but I am not too impressed. Check out when we broke 7k and then 75k, once through we never closed beneath them again. Since we have broke above 8k we have closed beneath it 4 times, and that is in 9 trading days, nearly half the days. Today happens to be the highest close and I would not be shocked to see us move up a little more or even have a big sell off, but as I stated earlier I think a huge one is soon to come. Trade with you parachute and prosper. AKOT