Late Night Post

Well so much for that support on the 200 ma eh? Man, I expected a down day, but not a blowout down day like today. In fact, I bought some SPY calls at around 107.60, what I was pretty sure was going to be the bottom for the day. It seemed to be working according to plan, and then of course I had a meeting 1/2 hour before the close and slap my face and call me shocked, there was a big fat eod sell off. Of course this was blamed on Roubini saying the mkt. could drop another 20%. Frankly, I think he is right, however why did he have to say it after I had bought me some calls. Well I am still holding them, as odd as that may seem. I still think we may see an up day tomorrow. I know, I know, crazy, but I really think this thing is ripe for a bounce and my weekly plan was for Monday and Friday to be up days, and I am going to stick with that. Two charts tonight to show you the madness that I love. It’s odd, but I tend to trade better in a down market.

The SPY decided to go ahead and skip the 200 ma altogether, and just gap beneath it. Notice a near shaved bottom candle, usually very bearish. Also not that the v is increasing into the down move, once again a bearish indicator. Now notice that AKOT is looking for an up day tomorrow, possibly another bearish indicator.

Now notice the QQQQ, it actually found support on the 200 ma. It too has a near shaved bottom candle and increasing v into this down move. But if you recall, the NASDAQ and RUT have been the leaders of this rally. The RUT still has not reached its 200 ma. So I could see this two causing a stall out to bounce move.

In closing: There is definitely a stir in this mkt., but I am still holding out for one more bounce. It may not happen, perhaps fear will rule the day and DOW 10 k will go away. But usually we can expect one of those exhaustion gap up moves to signal the end. Most likely, I will be selling those SPY calls within the first hour of the day. There is no pre-market news tomorrow, so we should know early on how things will play out. Trade well and prosper. AKOT

Throw some puts on the barbie ( some calls eod)

Wheeeeeee, today was a great day for traders. We like days like this, solid moves with all indicators clearly giving us a direction to trades. Throw some puts on the barbie and the odds are great that they will be profitable at the eod. You may have noticed a slight change in the tone and focus of this blog over the last few months. I can feel me doing it, but I can’t help it. I have started trading futures and I really like trading them, and I am doing well. I am still trading stocks and options, but I am really focused on intra-day futures trading, and I noticed I have focused more on next day moves rather than week-long or month-long prognostics. I am not inclined to change it, so whoop there it is. In that vein, I closed out a couple of short positions today, one of which was BKS, a chart I had posted a few weeks ago. But I did something odd, I bought a small position of SPY calls about 20 min. before the close. Again, there was really no charting element to this trade, it was just that “feeling” thing again. I could be burned big time as fear tends to feed on itself, but I saw a few things that led me to believe there may be a small gap up tomorrow, and I was willing to take a chance to get a piece of that move. So I will be looking for a gap up, probably off of bte continuing claims and initial claims numbers. In fact I hope we see an over exuberance, with numbers that just crush expectations. Because I will then shortly buy back those calls and promptly look to sell short some /TF. Let’s look at the charts:

Obviously the VIX was up big today, but one thing I noticed that edged me to the call buying was that there was a pretty good wick on today’s candle. About 1/2 the body was top wick. I also noticed that lately any big move on the VIX was followed by a down day.

The INDU slammed through the bottom of the wedge and through support on another decent v day. However, you can see it tagged the bbb, something it has not done in a while, and rallied off of it. Also the 50 ma looms fairly close and the logical support would be the up trend line. But I still like it for an open bounce tomorrow.

The SPX tagged the 50 ma and pulled back a little. Again, a good area for a stall out. Of course if it does break it tomorrow, which is a possibility ( after a gap up) then there is a lot of open air to the next true support.

If you recall, I have been saying for months that I felt the COMPQ and RUT will lead this mkt. down, so they bear watching. Percentage wise, this was nearly a whole percent lower than the last two we just looked at. It to is very near the 50 ma, and it too has a lot of open air underneath it. Chart wise I could see a few things fitting here, an inside harami day, a gap up into the day followed by some selling, or no gap and drop. I am NOT looking to take out yesterday’s open, I just don’t think this mkt. has the strength to do that right now.  But if you had to make me pick, I would be looking for the gap up into the candle followed by selling and closing lower than today’s close.

The RUT was down over 3%, again quite a bit more than the INDU or SPX, and even more than the COMPQ, all of which makes sense. You can see the clear breach and smashing of the 20 ma. You can also see this thing has a lot of clear air before it even gets close to the bbb or 50 ma. That 690 looks like a great place for a rebound.

I will finish with BKS. I was very fortunate here as I had been holding this for several days watching the premium eat away at my put options. I was looking for it to find some support on the 2o.80 line, which it didn’t, and then the 200 ma, which it didn’t. I closed it today because I thought it would definitely bounce from here. However, if it takes out the 200 ma again, I think it makes a great short to 17.75.

In closing: I expect the jobs numbers to be much bte tomorrow, and I expect that to induce the value buyers to do what they do best, buy. Then I will be watching for big $$ to step in and sell. There are tons of variables and we may see a 300 point rally tomorrow, but I don’t think so. If the jobs numbers come out wte, then you best be holding on because my SPY puts will be as worthless as excuses are to BP right now. Then it will be time to short and short fast. Trade well and prosper, AKOT.

network news

Well it is official, DOW 11 k has been breached and in case you missed it, it is headlines on the network news. NBC News CBS News

Now let’s think about this a little: This rally has happened on low volume; it has been assumed this was because the 401 k casual crew still has moolah on the sidelines; will they take this news as the “all clear” to get back into the mkt? If so, will the Pros take advantage of this? I assure you that if the first two premises are true, then the last premise will certainly be true. The weekend investor will invest off of what they hear on the news, on CNBC on the weekend radio. They will not do their own research and they DO NOT trade to the downside. The only trade to go up. My guess is that the news will continue to hype the DOW and the recovery and that they will do their best to push it to 12, 000. They want everyone to feel safe, everyone to throw their hard-earned money into the mkt. and push it up until there is no money on the sidelines anymore, and at that time, right then KABOOM. I have assumed this would have happened already, several times, and I was brutally wrong. But I am extremely confident it will happen, I am just not sure when. So until then I will continue to do short-term trades, by minutes, hours, a couple of days, while the only long-term trades I do are not covered in this blog, selling options, that is a whole other category. Anyway, I still think we will have a quick sell off before we get another real push up, but watch v closely, especially going into summer. Typically, If v increases in the summer, something is off and be cautious. Therefore, it would make the most sense for all of this to happen this fall, so that is my long-term thought.

The VIX closed beneath the gray box of support for the first time since 2007, I would say that could definitely be significant. The only caveat here is that it is a reversal candle, and if you look at the VXN it actually rallied quite a bit off the bottom.

This is a weekly of the DJI, or DOW. I put this up to show the breakouts and the next most logical area of strong resistance around 11, 750. I would imagine it would be very, very , very unlikely that we hit that without a significant pullback and I would also think that each next milestone will take longer to achieve, until we reach the top. There we will see a buying frenzy.

The NAS continues to rocket up and is very close to what I think will be the next significant resistance. I thought it would rally up and hit this on the same day the DJI took out 11k, but it did not. That is what I thought would trip the sell off.

This is the SPY. You can see it is achingly, slowly rallying up to near the top of this megaphone pattern. I point out that last time the SPY stayed over-bought for about 9 weeks, with one correction. In this current rally, we have no correction. Also note that the v is decreasing quickly. As you know, I think we are overdue for a correction.

In closing: I will do some stock set ups tonight on Chart.ly and Twitter. But on here, tonight, I wanted to share my long-term thoughts with you. I am open to opposing suggestions, thoughts, or analysis. Trade well and prosper. AKOT

The Friday Grinder

The charts all look pretty similar and they show some type of top forming. Likely, this will be a short-term top with more buying coming in on lengthened weakness. Unless there is an 80 point up move tomorrow, we will not reach DOW 11k like I thought this week. There is no planned big mkt. moving news tomorrow, so I think after the noise in the morning, and maybe a small move off of crude inventories at 10 am, the mkt. will pick a direction and grind that way. The last two days the selling was followed by buying, so perhaps there will be a big buy morning that spikes up and then is followed by some selling as traders close positions for the weekend. Whatever it does, I expect a very grinding afternoon. Chart time:

The VIX continues to hover around that 16 area. I am still looking for a big bounce off of here, but I understand that the longer it grinds around here, the more likely it is to fall.

The DOW has been in a very tight range. I don’t have it on the chart, but you can see where it broke out of the up trend via this sideways movement. Normally I would think of this as consolidation for a continuation move to the upside. But again, watch this range for the breakout / down move.

The SPX actually looks like it is forming a bit of a bull flag here. You can see it has done this repeatedly during this current up trend, each leading to another leg up.

The NASDAQ has entered an even tighter range than the DOW, with a very clear level of support at 2396. If it closes beneath that, then it will also be closing beneath the 20 ma for the first time since Feb 12. I think once we see that close beneath the 20, and not just a tail but a solid close, then we will see a significant correction of this current trend.

GLD had a nice breakout yesterday with a small follow through today. If it drops a little more or goes sideways, I will be looking to go long. Note the RSI is moving into the over-bought range, bu that it has no problem hanging out there for extended periods of time. The MACD still has room to the upside.

MON gapped down on earnings, then rallied back up to fill the gap, but those top wicks leave me suspicious of any further follow through. I am going to be bird dogging this for any weakness.

In closing: I am going to be looking for some very short- term trades in the morning, then I will likely take the rest of the day off. I don’t expect a lot of afternoon movement, and if I am going to enter any options trades, I will wait until very late in the day looking to not absorb so much weekend decay. Trade well and prosper. AKOT

Expecting boring Expiration

Once again the volatility I expected with the news was nowhere to be found. Perhaps it is because the VIX is so low that we won’t see that volatility again until we see in bounce. Most indices still look very strong, but are now nearing resistance again. I don’t think we will see a top until we see a big day. I think these 30-40 point up days could chug this mkt. up and up and up. However, once again I did notice a lot of bearish engulfing candles when looking at individual stocks. When I look through the sectors, most of them look strong sans energy. Tomorrow is expiration day but there is no scheduled news and unless the healthcare bill miraculously passes, I don’t expect much action tomorrow. I have continued to trade intra-day ranges, and if you trade futures at all, you can look at the /TF or /ES on a 5 min. chart and see trade set ups. Unfortunately, I did not fare well today on my futures trading. I will do better tomorrow, if that mkt. moves at all. Chart time:

The VIX has clearly broke out of the gray square of death and is now nearing what I believe to be very strong support at 16. Notice that the last two times it hit 16 it rallied 14 points, almost 100%.

I am going to use the ETF version of the indices tonight. This is the DIA, you can see it clearly broke above the 61.8% fib on the last rally. The next resistance is at the Jan 08 low.

The cubes have not yet reached the next fib line, but they are very close. Further this coincides with the 11/07 low and 8/08 high so it should be strong resistance.

The SPY is right on the 61.8% fib, which too looks to be decent resistance. However, you can see it still has room to run to reach the top of the megaphone pattern.

Here is a close-up of the SPY showing that it formed a similar candle pattern to a couple weeks ago. Note that other than a lower open, this doji did nothing. Also note the V has increased three days in a row.

The UUP actually moved up decent on a mkt. up day. However, the SPX was down a little, but not reflective of this move. I still think this is set up for a breakout to the upside, maybe not for a few more days.

The IYM had a pretty decent bearish engulfing candle on a small v pop. It has been trending up the 20 ma, and if it drops here, I would expect support off the 20 ma.

The XLE has also formed a pretty strong bearish engulfing candle today, after a day of a big top wick. To me this is even more bearish. I drew out a possible scenario which would lead to a head and shoulders pattern.

CHK is in the energy sector, CHK. This is what I call a breakdown of a pennant. Look at the volume and look at that move today. Often these will be followed by and inside day which is often a great put buying opportunity. Sometimes, if it is really bearish, it will just keep dropping.

In Closing: I expect another small up day tomorrow with not a lot of action. I used to adore options expiration days for their trade-ability, but lately they have been lack luster. By the way, thanks Georgetown and Notre Dame for blowing up my brackets on the very first day! Trade well and prosper. AKOT

Is it rude to disrespect crude?

Once again, pretty much as expected. However the +50 point up move on the $INDU was a little surprising. It was accredited to the CSCO “game changing” news. That seemed to me to be an obvious sell the news type of news, but the selling didn’t happen until the last hour of the day. I looked at the VIX throughout the day, and it started green and finished green. Unfortunately,I don’t know if tomorrow will be any better. I know there is econ news, but it is wholesale and crude inventories. Two – three years ago that was great mkt. moving news, nowadays, not so much. Enough babbling about nothing, let’s look at charts:

This is the VIX on a 60 min. chart. Check out today’s last full hour before the close. That is the biggest increase we have seen in two months. You can also see that it is slowly trending up. I just find it interesting that perhaps we may be seeing a pattern forming, so watch for more selling late in the day, on a strong VIX.

The $INDU made another small body big wick day, not a perfect hammer, but close. It is sitting on support but still stuck beneath the “weak” resistance up trend. If it doesn’t move up this week, then I will be looking for a pretty significant drop next week.

The SPX has a couple of reversal candles in a row now. However, the last time it did this was March 2, and you can see it then formed that bullish wedge that it broke out of.

Again, the $COMPQ still looks strong. The 2327 support has held strong, but it did have a pretty big stinking wick today. Normally when I see those in fast up moves, I get just a little cautious. It is not a reversal candle, but it is often a precursor of a reversal candle. However, I usually look for a pattern of them occurring.

The $RUT too looks strong. It is clearly over bought, but it can clearly stay that way for some time. In fact, today it formed a bullish engulfing on support, which would be a much more powerful candle at the end of a down move.

This is the UUP on a 60 min. chart. I am not sure if this wedge is bullish or bearish. In fact, I don’t have the indicators on here, but they would be no help anyway. This thing is hopelessly sideways and crying for a breakout. It is sitting on the 50 ma and 20 ma which, surprise, are on top of each other. So that should offer support and perhaps give the upside breakout the edge. All I can say is that it really looks like it wants to breakout.

To me, this is a classic way to use indicators. Look at this flag and look at the indicators, now you tell me where you think this might go. The first one to email me with the right answer gets free access to my site for a year!

Now I admit, I would like to see a lot more volume here, but at least there is an increase. This is an earnings move up and a breakout of a rounded bottom. If you like “cheap” stocks you may be able to get .25 out of this, maybe more. If you trade it, I would use $2.15 as my stop. I likely won’t trade it, but I wanted to share it. Note the tons of top wicks on the left side of the rounded bottom formation. That is what I call a pattern of wicks. Note also how quickly the disappeared on the up turn.

In closing: We are seeing a slight increase in volatility, and I think it may continue tomorrow. But ultimately, like today, I wouldn’t expect huge fireworks. Thursday and Friday, well that should be a different story. I will be looking for more of a directional day tomorrow, something like an up open, then early day sell off. 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 Video 2-21-2010

What surprised me about this last week is that we did not have one day that approached the volume from the week prior. I really expected a volume pop on Friday, with some selling. The v was better than the rest of the week, but very unimpressive and uninspiring, ergo so was the action for the day. This is the last week of trading for February and we have potential mkt. moving news Tues- Thurs. I am sticking to my theory that big v days will lead to selling. I am expecting a pretty directional day tomorrow, but I will have to watch the first 1/2 hour to hour to see which direction that will be. Monthly the indices look toppy, weekly the indices seem to be moving off the current up trend, and daily they are in a definite up trend right now. On to the video, trade well and prosper:

Late Night Wednesday Post

Just ate some dinner and wanted to put up a couple of quick charts. We did not take out any of the highs I have been watching. We did take out the bottom gap on the VIX, but the next level is still in tact. Considering the great housing numbers that came out today, I would’ve expected a much stronger day. Therefore, if we get in line numbers tomorrow, or wte numbers, then I think we will see some selling pressure. In fact, if we get much bte numbers, I may be looking for a sharp move up, followed by selling. I have time for a couple of quick charts:

The VIX has been taking out supports left and right. The next one is at 21, and it should offer more support than the last couple. The indicators are screaming down, but the histogram may be peaking. Watch for a smaller day tomorrow as a sign the VIX may slowing its down move.

Check out the resistance line from yesterday. A close above it and we should re-test recent highs, and probably break above them.

The SPX stalled out on minor resistance, but still remains clearly below the 1105 line from yesterday. The indicators are still pointing upward and onward.

Finally, there is clearly a disconnect on the SPY. There is a v divergence, a doji candle today, but the indicators are still aiming upward. It is still beneath the last high, but close, and still beneath the 5o ma. Like I have been saying, if we see a huge v day, I think we see selling.

In closing: Keep a close eye on recent highs, and watch the VIX in the 21 area. The dollar was strong today, which was another disconnect, so things could crumble quickly. Stay on your toes. 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