Trade the opposite of the end of day move: Will it continue to work?

Once again, what looked like a promising up day early on was sold off faster than oil pumping into the gulf of Mexico. I was actually looking for some buying into the close and got spanked intra-day because of it. There has been a strong pattern of eod moves every day the last couple of weeks and I expect it to continue. Volatility is still very high, but not extremely high. Some of those eod moves were in the last 20 minutes. Looking back almost every eod move has been followed with an opposite move the next day, so here I go once again! I am looking for an up open tomorrow, but I also realize the claims numbers come out an hour before the mkt. Last week I would’ve told you to be cautious about this data, but after seeing the sell off soon after great housing numbers today, I don’t think it really matters this week. Now for a couple quick charts:

The INDU closed beneath 10k, but what is even more interesting to me is the volatility and uncertainty of the last two days. From highs to lows over the last two days it has moved over 400 points. Yesterday’s hammer looked like a clear reversal, but it was followed by a candle with a giant wick, not so bullish. There is very strong resistance at 10,200, and I don’t expect it to be broken easily. Despite the huge moves, it actually looks a little sideways to me.

The SPX also looks sideways to me. However, it looks like a plank walker as well. If it continues to move sideways like this without any up movement, then I think it is getting ready for a big drop.

The NAS rallied right up and through the 200 ma, but was unable to close above it. It also nearly closed that gap, something I missed today, and that would’ve been an obvious stall spot. I think if it is going to move back above the 200 ma, it will gap above it, or have a very large candle body. Until then the 200 ma will continue to be strong resistance. Strictly technically speaking, this chart would be screaming “short” to me. Perhaps I will be remiss to ignore it.

The RUT has managed to stay above the “flash crash” low, unlike the other indices. So it continues to show more strength than the big caps, at least for now. However, check out today’s candle, that my friends is a classic tombstone doji, a reversal candle. It is out of context however, so not as strong of a signal. Watch the 637 level, not so much intra-day, but for closes. If it closes beneath that and takes out that 200 ma, I will strongly consider moving all my retirement $ to cash.

All day, all week, all over all we hear is “financials, financials, financials” or maybe it is just the voice in my head. None-the-less, check out the XLF; Notice a pattern? Gap up move down, gap down move up etc. etc. So if this pattern is to hold here, and I see a gap down tomorrow, then I will be very tempted to go long the XLF again. Also note the v is declining into this down move, so it may be looking for a break back up to the 200 ma.

In closing: This week has not panned out the way I thought, but it has still been trade worthy. It also appears there are some patterns that we can use to determine the day moves. Remember, eventually all patterns fail, so don’t trade based strictly on past patterns, but trade when you see evidence those patterns are in effect. But most of all, trade well and prosper. AKOT

Jobs are on the way

There is some definite volatility showing, up moves are not holding, down moves aren’t continuing and the indices are not moving in sync. Things seem to be a little disjointed, but still the small cap and tech looks very strong. I know it makes no sense, but for some reason DOW 11,000 seems to be a little bit of a big deal.  I still think when it is taken out, it could be one of those big wick candles that signals an interim top. Tomorrow is consumer credit news, but I think the bigger news is Thursday with the continuing and initial claims. Have you noticed that our beloved government has been prepping the mkt. for bad jobs numbers? Be patient, the jobs will come, they are on the way…. yah in the form of 16,000 more government employees to handle all the bureaucracy of healthcare. Washington Examiner ( one of hundreds). Now for some happy uplifting stuff, stock charts:

The VIX is right back on key support, and I am still waiting for that big bounce up. But I know that the more support is tested, the more likely it is to break, and this is starting to look like spring ice.

Of all the indices, the 30 stocks of the DOW seem to be the weakest. That being said, it did have a pretty nice rally off the lows of the day, but in doing so it formed a nice long-legged doji cross. If you look closely you will see that a very similar cross was the start of this current rally.

The SPX still looks pretty strong, sliding up the topside of the bollinger band. The RSI looked like it was starting to trend down but it had a nice curl up today. The MACD isn’t quite there yet, but it is on the verge. I still think the top of this current never-ending ascending pennant may be the top of this move. That means SPX 1200 +.

The NASDAQ continues to be the bellwether leading the charge. Here you see another breakout, with a slight intra-day pullback. So it broke free of that support after 8 days.

I still like the EUR/USD to test this support, and then eventually break it.

KLAC is testing the bottom of this gap with two down v days in a row. Today it formed a spin top bearish harami doji, now that’s a mouthful. I think this is primed for a drop here, but watch for it to make a run at the top of the gap. Therefore, if I trade it short, I will use $32.98 as my stop, giving it a little room to play.

A very loose inverse head and shoulders that broke out. Now it is looking to re-test the neckline on declining v. If v continues to decline into this move, then I will look for bounce off that line. But it is playable either way using it as the pivot.

I liked the action on BKS today, and I am short it right now. EZ stop at $22.80. However, looking it I need to be cognizant of the up trend that it is in.

In closing: I will be watching for continued dis-jointedness in this mkt. and I will take that to mean that some sentiment is changing. As it stands with the RUT as strong as it is, this is a speculative mkt. I am leaning towards a slightly more directional day tomorrow and my game plan is to trade that way. Look for late night quick post tomorrow, oh and btw, trade well and prosper. AKOT

Blah

First of all,  a quick post tonight, and likely very short posts all week. I have meetings for three nights this week and then I will be traveling for two nights this week, for those of you new to trading, that equals 5. So every night I have something going on. Further, I once again feel as if I am coming down with something nasty, so my motivation and energy are currently very low.

As far as news goes, Case Shiller at 0900 and Consumer Confidence at 10, both can be mkt. movers. As far as the mkt. goes, the DOW was the only indice I saw that actually had a closing new high, all the others fell way short. So there is apparent strength in the big companies. I expect a kind of blah week as there are not a lot of traders on the floor this short trading week. Remember that the mkt. will be closed on Friday, and a lot of traders take this week off. Lots of times that leads to more volatility, but recently it has led to blah. The best way to trade blah, in my opinion, is through the selling of options, so I have been looking at that this week.

Despite being green for most of the day, the VIX finally closed beneath yesterday’ open, the first time that has happened in three days. I was told early on by Adam Warner Daily Options Report , that it is a Monday statistical quirk, and this guy knows what he is talking about when it comes to the VIX. Anyway, it eventually gave up the ghost and looks like it could very easily head lower here. Any near support does not greatly impress me.

As I mentioned above, the DOW did manage to close at a new short time high close, but check out that v. We have not had v that low since December . That was during that time when the DOW was hitting the same price level for 8/10 days, up and down. Great for some intra-day trades, rough for multi-day trades. I don’t have it drawn on here, but the DOW has hit the 10,850 level for 5 days in a row.

The SPX broke out of that bullish flag, but you can see that it failed to close at a new high. It too is blah and appears to be consolidating for a possible run up.

The NAS has a similar picture with that support I spoke of yesterday still holding strong. The big difference here is today’s candle. You can see it did not have near the strength of the other two, and remains in blah territory.

In closing: I will do my best to post some charts this week, and maybe even a few blog updates, but there are no promises. I will try to tweet some thoughts etc. so that I can keep in touch in case I cannot post updates. Sorry for the brevity, but sometimes that’s the way it goes. Trade well and prosper. AKOT

I’m your huckleberry.

Finally some real volatility, and if the VIX has anything to say about it, this may just be the beginning. Today’s early move was credited to the employment numbers coming in better than expected, which is certainly a mkt. mover. However, when you see good news being sold, or bad news being bought, that usually means that sentiment is not in-line with the move. Even further, after the close there was a big move down in the futures, and they haven’t bounced back.

The VIX has shown signs of strengthening lately, but today it closed strong for the first time in a while. It appears poised to breakout to the top side of the gray range, and the indicators are slowly turning up. This move up looks like it may continue, maybe not straight up, but trending that way.

The DOW has a clear tombstone doji, a reversal candle, but v is suspect here not giving clear confirmation.

The SPX IS down for second day in a row. If that big top wick wasn’t there today this would be the start of a bull flag formation. But taking the wick into consideration, and the crossing MACD, I think this thing still looks short-term bearish.

The NAS has formed some pretty clear support. In fact, I think if it breaks it, it may be one of those big down days or gaps down right into that up trend line and 20 ma.

This is the ES and you can see what I am pointing out is the similarity between candle formations. I like the v with today’s candle, and it is the opposite of the bottom candle. This is the most bearish looking of the indice charts to me.

HITK looks to be forming a head and shoulders formation here. It will likely find support on the bottom trend line, but I will be looking for it to break to the downside from there.

Existing home sales were good, new home sales were worse than expected. I think the XHB may be poised to pay for that news.

In closing: Tomorrow there is more news, the most important will be the Mich. sentiment numbers due out after the open. I will keenly watching how the mkt. reacts to this news. Will it be wte or bte and what is the follow through move? I think this will give us a hint of the direction we should look for going into the weekend. ( I have written this whole post with my left hand and a baby in my lap, so it is shorter than usual, but you get the idea. If there are any typos it is due to little Jude’s toes on my keyboard). Trade well and prosper. AKOT

Deja Vu demain?

First, two words; Soccer Practice. My blog scheduling will be sporadic this week and I don’t know how it will be next week. Basketball is over and now I am a soccer dad.

Well today went pretty much as expected, except I thought we would see a small move instead of a mixed bag. As you will see, the NAS actually looked pretty decent, but the others were lagging. I would expect more of the same tomorrow as there are no earth shattering earnings or expected economic news due out. Again, I reiterate, fundamentally I think this mkt. is a house of cards, technically it is pushing higher. Since I am a trader I will trade the moves. I will look for the best set ups, up or down, on my watch list, look at the best option action, then make the trade. Currently, I don’t like to be in my trades for more than three days.

There is not a lot to talk about tonight, as I can see by the three sentences in my trade journal, so let’s look at some charts instead:

I was expecting this support to hold, and it did. However, when I look back at the past moves up, they are almost always pretty strong bullish signals. This is not. Perhaps it will rally a little to fill the gap, but I am not feeling the conviction behind this move that I have seen at other VIX lows.

The DOW continues to push up against the bottom of this channel. Today’s candle is very similar to a pair we saw last week, and the week before. Both broke to the upside. I would expect a similar looking candle tomorrow.

The SPX threw out a clear doji cross, again normally a pretty decent reversal signal. However, I will be waiting for confirmation tomorrow before I decide if it should be heeded.

The NAS was the only one that had a true breakout today. It took out this year’s high, with a small pullback. This actually looks like a good long trade, so let’s look at the QQQQ……

Hmmmm, not quite as strong a chart eh? I love this volume spike on the bottom, those are great confirmations. However, since then v has been slowly declining and still declining into this up move, which is now clearly at resistance. Before I go long, I would want to see a move above this with some v.

The SPY doesn’t look too much more attractive to me. I don’t like being late to the long trade, and without a pullback I will not be going long here. There are plenty of plays to be had.

This thing gaps so much it makes me want to PUK. However, if you have followed me at all, you know these are some of my very favorite trades, the post earnings slide, then rally back into the bollinger bands, and that little sideways movement. I like to trade these setups to the short side. I will use $16.05 as my stop.

This is a pretty decent down trend. I like the v into this move, and I think it may be heading for $2.90.

KGC is in a down trending channel trying to re-test the 200 ma. Today it had a bearish engulfing candle on slightly increased v.  I will be looking to trade to the downside with the 200 ma as my original stop.

Finally let’s finish with a little Texas. TXN has broken out twice of these last two wedges. However, this time I think this move may fail. Note today’s bearish engulfing candle after the breakout and also note the very nice v spike with the move. I have a feeling this thing may be heading to the $22.50 area.

In closing: I will post some more charts on twitter, even some bullish ones. But I expect more of the same tomorrow, and then by Wednesday things should get more interesting. Again, my schedule will be wacky this week, and as always Wednesday night’s post will be short and late. Trade well and prosper. AKOT

A lack of volume leads to a lack of conviction

It is no secret the bulk of the mkt. moves each day is the first hour and a half and the second hour and a half, but it seems to me that it has even been more brutally true this last couple of weeks. Usually you can snipe a play during the lunch hour, or around 2 pm., but it seems to me this mkt. has been very tight during the middle of the session. Today, for instance, by 11 it had moved right into its range for the day and traded from 1113 to 1115 on the SPX for the rest of the day. Now, I won’t sit in front of my computer all day trying to force a trade, so I have been waiting for the open and right before the close to make my trades. It seems to be working right now.

Today we took out some resistance, and I will be watching for follow through with some v tomorrow. This weekend when I was looking through hundreds of charts, I saw a lot of potential head and shoulder patterns setting up. They weren’t there, which is why I didn’t post most of them, but I was watching for them to materialize. If we get more of today’s action, then I will be looking for more breakouts instead of breakdowns.

The VIX continues in its down-trend and there really is not a lot in the way of support. The arrows point out the two levels that kicked off the last move up. The VIX has been very volatile itself and coming off that big down trend, I still think this is forming a bottom, albeit a time-consuming one. So watch $17.50 & $18.50 levels for logical bounce areas.

The DOW has once again butted its head against that long-term down-trend line. Volume is about average, but I think it will need a bit of a v pop to break out. I don’t know if it has the v behind it to make it happen or not, but it is close enough that tomorrow should be the key. I am looking for a close above, not just a move above.

This is the SPX. It had a definite breakout day today, taking out February’s highs. I have highlighted what looks like a very sloppy, mini inverse head and shoulders formation. If I drew the line truly from left neckline to right neckline, the SPX would be right at the bottom of that line today. It looks strong, but often these are re-tested before the true breakout.

The NASDAQ filled the gap and then some. The indicators are trending up, sans the histogram which is rebounding a little of the recent down-trend. This was an impressive move, over 1% up today, exceeding both the SPX and the DOW. I think we have to watch for follow through, perhaps after a re-test.

Check out the resistance line we have been watching for a while now. The UUP reached up and touched it once again before falling. Most of the time, strong resistance like this requires the stock to move down a little and make another run at it, preferably gapping above it. I think the UUP might be there right now. Unless it has a huge v pop, I think it will fall a little before making another run at 23.88, and breaking through.

Here is a clean chart of the QQQQ, you can see the gap above the down-trend line on okay v. None-the-less, this is a breakout and as long as the bottom of that gap holds this should head higher.

The SPY also had a breakout. My only issue here is the declining v into this up move. I wouldn’t mind it so much if it was flat, but it is clearly in a down trend, which creates a divergence. This surely could move up much more, but before I buy long-term I need to see some v behind the move.

I spotted this potential double top this morning. Technically, it did break above the Jan top, and with decent v, so it may be broken. But, I don’t think it is enough yet to call it broken so I am going to continue to watch it. I really like double tops and bottoms for decent size moves.

I twitted this one a while back as a trade off the up trend, and it is making its move. I would love to see some v and the indicators turn up, but this move may be over by then.  A little riskier trade because of that, but I would use today’s low as a stop.

Another breakout with strength. BDK mad a strong move today on average v. I think this move has legs and BDK is heading for $80.

In closing: We have our lightest data day of the week tomorrow, so I will be looking for another trend day. The econ. news continues to be consistently wte, but the mkt. clearly shrugged that off today. I don’t expect that will continue all week, although when we look at the indices, other than the DOW we are seeing breakouts. In my mind, breakouts are best traded on re-tests, so that is what I would like to see. Trade well and prosper. AKOT

Weekly Stock Market Technical Analysis Video 2-28-2010

We have a busy news week ahead, and I expect that to add to the volatility. I have noticed that the news is starting to turn decidedly bearish and I would expect that to continue this week. I also expect that if we have some big down movement, then our President will be on T.V. to tell us about all the jobs that we did not, or may not have lost because of the stimulus package.

In this week’s video, I pull back and look at some monthly charts, and from my eyes, we are slowly turning down. We have some small signals that are starting to show that the winds of change are blowing. In the video you will also be reminded that the current rally we are in started on March 6, 2009, one year ago. I have a feeling this will be an exciting week, and I can’t wait to trade it. Trade well and prosper. AKOT

Late night Wednesday Post

We were looking for volatility today, and thanks to the “jobs” bill, we got it. Unfortunately, I think this “jobs” bill is nothing more than another type of stimulus package. All of the volatility came in the very first couple hours of the day, and then we pretty much flat lined the rest of the day. I was going to try to short that crazy bounce up, but I did not find a good entry point. I still think we have some more down movement to come, and I expect some directional days the next two days. Obviously we will have some pops and drops intra-day due to some minor economic news, although Friday we have Mich. sentiment and housing numbers again during open hours which considering the Tuesday numbers will probably be big mkt. movers. But most of the big news will be pre-market, so the brunt of the move will be digested in the futures giving us a clearer picture into the day. Let’s take a quick peek at some charts:

This is the DOW from Nov. 07. I did this to remind you of the long-term down trend line that was briefly breached, but appears to be acting as resistance again. If this was a failed breakout, then it will likely be followed by a pretty big down move.

The SPX had an inside day, ergo forming a bearish harami. Not the strongest of reversal signals, but a signal none-the-less. It looks like it is poised to test the up trend line once again.

The 60 min. NASDAQ chart shows that this new down trend line seems to be holding steady. If it breached 2288 with strength, then I think we take out the recent lows.

This is a long-range UUP chart, because I just noticed that the lows from December 07 acted as resistance this past week. However, I would expect them to act as stronger support than resistance, so I wouldn’t be surprised to see this taken out on a re-test.

In closing: As usual, I have to do a quick post on Wednesday night. I think, if anything, today’s up move could be a catalyst for an even bigger down move either Thursday or Friday. Of course this is contingent on the economic news that comes up, but I am starting to sense a negative tint starting to show up. Trade well and prosper. AKOT

Synchronized Signals

What a way to kick off the week. I could not see a direction for most of the morning, the breadth, internals, everything was up and down, but that didn’t last too long. Now the NAS already blew last week’s highs out of the water and was the early leader last week. I was looking for that big down day, and now, if we move up a little more, I will instead be looking for some consolidation, then more rally. I really want to be flexible and be able to grab some of these great moves. I missed out on today because I wasn’t ready and wasn’t by my computer when the move went off. You will note I added the MACD to tonight’s charts. I use the MACD a lot, for confirmation and direction, but I rarely put it on my posted charts. I do this just to keep the charts clean and easy to read. If you guys don’t like it, let me know and I will clean them back up, but let’s try it for a bit. On to the charts:

As I talked about yesterday, the bottom of that gap would be a logical place for the VIX to find support, and it did. The next most logical place is near 21.20, the previous low and the 50 ma. We could see a hold / bounce here, but if not we will likely hold in the 21.20 area.

One reason I put the MACD w/ histogram on these charts is to show how I look for confirmations. Check out this beautiful move in unison, its like synchronized swimming. Usually this will lead to at least a little upside momentum. However, at the blue arrow is some very obvious resistance, and I think it will be pretty decent resistance. If we take that out, I think we head towards 11,000.

You can see the same thing on the SPX. I took the liberty of pointing out some of these unison moves and you can see the corresponding SPX move. I see decent resistance at 1105.

Originally I thought this was a cliff walker; moving sideways off the bottom bollinger band. But then it took out the top of that big black candle and is nearing another resistance line. This looks strong, very strong, but strong moves often have a pause and that is what I am watching for.

The RUT looks even more impressive than the NAS. It has already taken out the 20, 50 and previous high. I would be watching for a buying opportunity on any small pullback.

The UUP really gave up the ghost today on light v. It makes sense for this to drop to the 200 ma and hold. I think when we see another big v day, we see another big up day.

I still like BWLD to head to the $40 area. It was weak on a very strong day today, and all the indicators are still signaling a drop. I do think it needs to move sideways or up slightly for a day or two before falling more.

I like this simple chart. Strong up move on earnings, gap down move up a little more the next day, then a bearish engulfing today. I think this is headed to $7.

In closing: The RUT and NAS look very strong, and the SPX and INDU are very near looking strong. I think the key is whether the SPX will take out its previous high. If it does not, then I think it will drag the others down with it. If it does, then I am going long. Trade well and prosper. AKOT

Greek salad or just a bunch of Feta?

So that was quite the pop today, a little more than I thought we would see. Maybe after the jobs numbers came out better than expected, but we hit our low of the day right near the open, then at 11 am we had some power buying. The pundits are saying it was the jobs nos. and good news on Greece. It doesn’t add up to me. First of all the v was not spectacular, just average. Second of all, the jobs news came out before the open, and we opened with a definite downward bias. Third of all, the Greece news is old news and has been improving for a few days. At this time I do not have any theories, but I will do some reading tonight. For now we have charts:

Yesterday I commented on how I was surprised that the 200 ma was offering support on the VIX. Well shut my mouth, it finally obliged and gave way. Note we still have not taken out the open of the big white candle, nor filled the gap. There is now a short-term up trend line that is mimicking the 20 ma. However, it is a short-term trend and ergo not very strong. Still it will show us if the VIX is weakening.

The DOW moved up big on avg. volume. However, it closed right on the high of Tuesday. This is about as high as I expected it to go, but the thing to really watch is the 10,300 level. If we close above that, then this short down move may be reversing. Right now I still think this is bearish, and if we get a hanging man or big down day tomorrow, then I will add some short positions.

The SPX is set up the same, except it took out that short-term down trend line today; barely, but it did close above it. Again, we can move up a little more and I will still be looking for a big drop. But if we near the top of that big black candle, then I may have to reevaluate.

The RSI on the NAS is trending up and it had a nearly 1.5% up move today. But it did close right on the top of last Thursday’s candle. If it  closes above 2193, then it has made a new short-term high, and I have to reevaluate again.

The RUT is still in this seven month channel. The curious thing, if it rallies or goes sideways a little more here, and then drops, there will be a h&s formation to contend with. I know that is a lot of “ifs” but I could see it happening very easily. Note the 20 ma crossing beneath the 50 ma.

Here is another thing that doesn’t make a lot of sense to me, the eur/usd has been down 3 days in a row, and broke down from that small wedge. This should coincide with some mkt. drop, but it did not.

The SPY, my short trade, and yes unfortunately I am still short. I should be out, but I am not. I am being stubborn simply because I have a small position and I wanted to add to it. I still like it to drop and drop big when it does, but alas, I may have to just take the loss tomorrow, and then I guarantee it will be down big on Monday.

As I pointed out on the NAS, watch for a break of the last high. But looking at the v, I don’t think that will happen. It looks to be closing in a consolidation range and it is near the top now. A break to the upside with v and the tide will have turned.

FSLR is in a long-term descending pennant. It looked like it was going to be breached yesterday, but it had a strong day today on okay v. The 20 ma is diving hard, but this is playable either way. If it takes out today’s high, go long expecting a 2-3 mos. rise. If it takes out the base, go short for a quick drop. Even better, wait for the re-test.

I don’t think I have ever put this SLAB on here before, but I like it. I like it for a down move to the $43 area right now. But I like it even better after that. Either an ape bounce, or a h&s break. Either way it is a trade.

In closing: Things seem a little out of kilter right now, and I am being stubborn, not wise, stubborn. I will likely pay for my stubbornness as the mkt. is never wrong, no matter what I think. But I am not in a power trade so my risk is minimal at best. You, you be much more disciplined and you trade well and prosper. AKOT