News Tremors

That was a bit more of a rally than I was expecting. In fact when the INDU was up about 120, I was looking for a sharp intra-day correction, that really didn’t occur until the end of the day and not until it rallied up another 50 points. I am still looking for a correction tomorrow, I am just not sure to what extent. The strength of today’s move surprised me and raises the odd slightly that there could be some follow through strength. I don’t think that will be the case, but I have to now consider it a very viable possibility. There is some minor news tomorrow, but pre-open there are a slew of earnings, no giants but possible mkt. movers on big surprises. The way things have been going, I would expect bte earnings to have a small effect as they have become the norm, and wte earnings to have a magnified effect. Chart time:

The VIX had a huge move up and now a huge move down. I looked back to 2007, where it was consolidated at this same level, when it would rally from 16 to 32 and saw something very similar to what we are seeing here. In 2007 it moved up to the 23 area, and then drop 5 points before heading back up. So I would not be surprised to see another move up, and I expected to find support near the gap.

The INDU managed to close above the solid resistance from the early April highs. Take note of the v however, notice that it has moved down two days in a row into this up move.

The SPX rocketed off the support, unlike the stall / bounce I was expecting. It took back the 20 ma rather easily, but a line once breached is much easier to breach the next time. I think if the SPX doesn’t take out Tuesday’s open by noon tomorrow, then I  will be looking for selling into the close.

The COMPQ closed beneath Tuesday’s open, but today was the first positive day of the last four, and it was significantly positive. Again, if it cannot stay above 2510 until after lunch, then I think a close around 2474 is likely.

I like this earnings gap down and mini rally to fizzle soon. I especially like the steadily decreasing v into this two-day up move. I think we see new lows very soon.

I thought HD would drop into the 20 ma and then rally into earnings. It looks like that is still a possibility here, seeing today’s uncertain hammer candle. I think this will be shortable tomorrow using today’s high as the stop.

In closing: I really feel like volatility is returning to this mkt. and I think we are set to see some more big moves. What I see is that the news is now causing mkt. tremors, instead of yawns. I am still looking for more selling before a rally to INDU 12k. There are a lot of logical support areas along the way and I will be watching them closely. 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

Weekly Video 2/7/2010

Yes I am back in America, back in Alaska, and back in the mkt. Sorry for the long absence, but man between the beach, surfing, exploring, my wife and friends, I just could not find time to give the mkt. the justice it demands. So I decided not to blog until I got my head back into the game. My head is freezing cold, but I am back in the game. I actually spent some time with a couple traders in Costa Rica and learned a lot of new stuff. I will be incorporating it just as soon as I run some tests etc., but I am very excited.

Things are looking a little different this time, similar to the move this past July. A lot more volatility, and we took out a previous low, both of which occurred in July, and you know how that worked out. Back then I thought that was signaling a top, and I think the same now, but I am much more cautious this time. Now onto this week’s video.

Video 10-18-09

Well another 3f or exp. week has come and gone, and with it we enter the season of earnings. We have some big names coming out with e this week and I expect these to move the mkt., especially Wed/Thurs. We also have some economic news that should cause action, like housing starts and initial claims. I note that we are still expected to be well above 500k on initial claims, which does not bode well for our economy.

When I looked through my charts this weekend I saw a lot of hanging man candles near the top of up moves, usually a consistent reversal signal. Not as strong as say a bearish engulfing, but significant. So I will be looking for some downside movement, probably at least on Monday perhaps through Tuesday, due to lack of news and over exuberance for DOW 10 K. Speaking of which, according today’s dollar, that is actually DOW 7500. So in short, I expect some earnings to be bte, some to be wte, but I will mostly be looking at revenue, are they making money or cutting costs. Further, a wte jobs or housing number will likely cause a big move to the down side. Now on to this week’s video.

Briefing.com

overbought and poised for a turn

It almost feels like I am starting all over again; it’s new and exciting, the charts are beaming with new information. Yet they are not pointing to direct moves, just giving us little clues. One of the clues, this market is really overbought. Also I tweeted earlier this week about the Newsweek headline, the recession is over. That my friends is a huge clue. Onto the charts:

The VIX did pop up over the long term up trend line. This should, and I emphasize should now offer support. Also note the VIX has move up three days in a row. It did, however, form a nice tombstone doji today which could signify a bit of a down move from here. But the fact that it is inching up shows me that fear is slowly returning.

The DOW is in a big divergence, a v to price divergence. V has steadily been decreasing into this up move, and look at how steep of a climb this last move has been. Also note the bb are separating, this often signifies a significant move is imminent, and just looking at this chart, I would say the move could easily be down. Also note though, that we have a very large inverted head and shoulders, the neckline of which we are now above. I think that will definitely offer support if we do drop, around the 8750 level.

Much of the same on the S&P. BB widening, lots of sideways to slightly down movement, lots of indecision. I think this could easily fall to the up trend line, where it will likely find support.

The NAS is really perplexing me. This is still the most bearish of the indicies to me, hence my reason for buying puts on the Qs. If I had bot puts on the SPY that same day, I would be doing Okay, but with my Q puts I am down a little right now. I really thought this gap would offer strong resistance and be the catalyst causing our down move. I guess that’s why I never go “all in”, always using contract management. We still have a nice gap to fill and I still think this chart is massively bearish and needs to retrace.

I picked all of today’s stocks off of earnings, so some of them will be very thinly traded. Be cautious when trading thinly traded stocks, they can have quick amazing moves, or just be flat. I find UAM interesting. I like the move up into the huge dip, then it is moving down, at about the same rate after the dip. I think I will name this the seagull formation. You heard it here first! Anyway, it guided higher so even though it formed a nice bearish harami today, I think it may pop to the upside, maybe even to the 200ma. This is a think stock and a bit of a risky play, so I would play the stock not the option. It is only an $8 stock so very playable.

TGI, another thin one. This one missed on earnings and guided lower. This should lead to a pretty good drop, probably to at least the neckline that I think is forming.

NTRI actually did bte on e, but it guided lower and it has been in a nice up trend. I think it will drop to the bottom of the wedge from here.

FMC missed and guided lower. Very bad news for this stock. You can see the great retest of the neckline, one of my favorite trades that I completely missed. We may not be able to play this as it may move down too quickly tomorrow morning, but if it bounces a little, I think this could be a great short trade.

I offer this to show how important knowing e dates are. This is TSO. looking at this chart I would say we should expect more down movement from here. But, it had e today and did bte and did not offer guidance; further it often pops after e in August. BUT the oil numbers were very bearish today. So if I go strictly by the chart I say short, if I go by earnings I say buy, if I go by oil numbers ( which don’t mean tons right now) I say sell. I say we see a pop in TSO tomorrow, and that goes against my tech. analysis.

In closing: This last few days have been a tough mkt. It starts very bearish and continues that way before rallying all day long. The second half of the days have definitely belonged to the bulls, which generally means we have a bullish mkt. But I still think we are truly overbought and due for another sell off soon, I will be watching for it and I am already trading for it. Trade well and prosper. AKOT

Free fall Friday?

Well today’s tape was down like I thought, but not as much as I thought. I figured we would be looking at a at least -200 day on the DOW. We hit -200 but then we rallied. In fact my thought process was that I was going to sell if we had a big sell off at the end of the day because I would’ve expected a bounce Friday. I did a little research and there doesn’t seem to be a real discernible pattern on the Friday before Memorial Day, other than low volume. If we open up in the morning, I would expect a sell off, if we open down I will probably sell my puts.

The VIX rallied hard into the red zone and stalled out at the top of the zone. You can see we have an up trend line in play and that should offer some support. It was actually a pretty huge move up the last two days.

The DOW is sitting right on support and the v was not near as huge as yesterday, so yesterday may have been the big pre-holiday sell off. Tomorrow could be flat.

The S&P broke beneath the up channel line, but hit a little support and bounced. We now have two areas of resistance making this chart bearish. 

Now this chart is not exactly right, I have been having problems with my COMP or NASDAQ chart. However the wedge is accurate and still in play and still offering support. If it breaks, it has support right beneath it. I would be looking for a big move down in one day to eventually break the gravity of this chart. 

Couple quick charts cuz I am very tired. MSFT, if it breaks this support short this like Vista. It has to close beneath it and I think it is definitely a possibility.

OXPS has hit a fib and made a couple of great Dojis. I think this is a great short here. 

This chart is EPIQ. I like the 200ma in play, the gap and the decreasing v. Short.

 

In closing: I think the most probable situation tomorrow is a relatively boring day with very low V. Enjoy your three day weekend and I will see you all on with a new video Monday night. AKOT

A cherry on top

This is pretty much the type of day I have been waiting for, and the type of day that I think may precede a big sell off. I held my Q puts today because this tape never seemed bullish to me, despite the VIX dropping like a rock. Instead it seemed more like a top forming, and I thought we may end the day up 20 on the DOW, which would have been a great top signal. But instead we end up down nearly 30, and all that occurred the last few minutes of the day. That my friends is bearish in my book. I think financials are just about to be in for a beating and I am still long the FAZ. I also think home builders are going be hurting and I am short BZH. So as you can see I am bearish right now, and if we have a rally tomorrow, well then I will have to move quickly. But I have a sneaky suspicion we may see the Wed. sell off I was talking about yesterday. On to the charts. 

I tweeted early in the day when the mkt. opened down well see for yourself…

so early on I was looking for a bounce, but instead we broke support and I thought uhoh! Here we go this mkt. is going to take off. But it didn’t and that is when I started thinking that we may be experiencing an intermittent top. You can see I have another support line in that we got close to, but I would expect us to move into the red square again if we see any strength in selling tomorrow.

Still in the up channle, but check out that tombstone doji. Support at 880, major resistance at 940. Should see a move down from here. 

Something very interesting on the DOW, there you see the nice doji much like the S&P, but check out the v. Down 4 days in a row. Also check out the circle, that was a top in Feb. and it looks very very similar to what we are seeing right now. If we get a big down day tomorrow, I would look for a couple of sideways days then another big sell off. I thought the same thing with the doji from early May, but instead we rallied and we could do the same here, but I doubt it. 

I had some trouble with my NAS charts on TOS, so I had to use my Strategy Desk charts. You can see we are sitting on the 200 ma which is bullish, but you can also see that it did not hold last time and it may not hold this time. Another large top wick, three out of the last four days.The tides have turned and this is the most bullish of the indicies, at least to me. But if the others turn and turn hard, this too will follow. 

I could’ve showed you hundreds of charts with dojis today, but instead I decided to go a different route. This is AIG and it is clearly in a strong up trend. But notice today we did not have a doji, that was yesterday. Today we engulfed yesterday’s candle, and v has been declining for the last 4 days, just like the DOW. The way I would play this, if the trend line holds go long, if we break 1.62 go short. I just thought it was an interesting chart in today’s mkt. 

In closing: Tomorrow is another key day. If we have a huge sell off, as I suspect, then I think we may have a big down move, a little earlier than I expected. The VIX is acting odd and that can signal a top and it is also beneath the bbb (bottom bollinger band for you newbies). 2/3 of the indicies feel bearish and the other one has been most of last week. In short, I am short and am expecting big things this week. AKOT

We have lift off.

Before I get started, I wanted to let you all know that this is soccer season and I am a soccer dad. I coach at least one team, and my boys play in two traveling teams. So my main team is me and my car and me driving to and fro. In AK we have sunlight until at least midnight this time of year, so we are out late and my blogs may be later for a while. 

Obviously I did not expect a 235 point up day on the DOW today. I thought we would rally and then sell off at the end of the day, instead we rallied and rallied harder at the end of the day. But you know me… I bot some Q puts right at the end of the day. Now well see how dumb that was in the morning. I think we see some selling tomorrow, maybe not right from the start, but sometime tomorrow we will likely have a sell off. Although we had this great move up today, I noticed that v has been lower the last three days in a row, not by a lot, but lower none the less. All my put plays took a thumping today, but I will be watching for better entry points, or perhaps to go long. Now onto the charts:

Mr. VIX has been pretty bearish which has been bullish for the mkt. You can see how it based right on our red rectangle of support and also on the long term up trend line. I could easily see an up move from here.

At first glance the DOW looks pretty bullish, but take a look at the v, notice it has been trending down.

The S&P 500 looks a little more bullish, bouncing off the bottom of the up channel line and smashing the down trend line.

The NAS appears to be heeding the up trend line from January. It is almost making the huge March sell off look like an aberration, but I don’t believe it. I have said before that there was some serious support and you can see it is doing its job. What has been catching my eye is the very large shadows or top wicks, usually a sign of selling. If those supports break, we should have a strong sell off, or we can follow this up the trend line.

Here is the QQQQ. Looking at this you would probably say, this looks bullish, but again, look at the declining v. Also, it looks a little like a bearish flag. But this is not why I bot some puts at the end of the day, this is….

The NQ is why I bot puts. It has rallied hard and hit its head up against resistance, with the RSI and MACD looking to turn down as well. That is why I bot some Q puts today. Crazy? Maybe like a foqz. ( too cutesy? I thought so too.) 

So what else would I do but show you short plays on a 200+ up day? You would expect nothing less from me. So here is MYGN, I have shown this in the past waiting for the breakout, but what caught my eye today is that it was down .22. Big deal right? Well when the rest of the world is up 5% it can be. I am calling a bearish signal, breakout to the down side. 

Another bearish play? What am I thinking? TIVO, I like how it has rallied back up to resistance and has formed a bit of a doji, I am a seller.

So we will finish with long play. I give you APL, not AAPL. Very simple up trend line, with v that declined with the down move and should increase with an up move from here. Play it till it closes beneath the up trend line.

In closing: I expect to see a bit of a sell off from this huge rally today, maybe not tomorrow but I would say by Wed. I still think we have a sell off coming soon, a real one. Until then trade with the mkt. and prosper. Check me out in Twitter for real time trades, like the Qs today @ akoptiontrader. AKOT

Pam, make a xerox of this please

Very quick post tonight, late busy night so I will get right to it:

The VIX has really broke down, and convincingly. Our next area of support is in the red square. Take this with a grain of caution because the VIX has been acting awfully weird the last few days.

The S&P closed right beneath the up trend line and if we get a down day tomorrow, then that would be a reversal signal. We won’t know until tomorrow, but at the writing of this the ES was down over 1%.

The NAS is in the same situation it was in yesterday, on the 200 ma and still in an up trend. The 200 seems to be acting as resistance, we will see if it continues to hold, it certainly has helped stall the up move.

SO you say what’s next? SO is next. You can see this great down trend and it is just beneath a fib. It is oversold, but still wants to move down. Could be a great put play with June’s options. 

ILMN’s chart is truly illuminating. We have a nice wedge forming and we have broke beneath a very nice up trend line. Further we are sitting on a fib, which will probably break down tomorrow. A quick down trade could be made if it breaks and then probably back up again.

Finally XRX is worth a second look ( get it?) . It has rallied with the mkt. up to a strong fib line and appears to be losing momentum. I would watch for a v peak and then a sell off from here. It has a clear stop above the 50 fib. 

In closing: I still believe we are in a bear mkt. rally. We have moved up too much too fast and the charts are not looking like buys right now. AKOT

Criss Cross makes you wanna jump jump…

I tweeted earlier that I was going to go against the trend and short this mkt. late in the day, and I did. But I played a stock AFL ahead of e, which is not usually a smart thing. But after reading up on insurance e coming out, I felt they would guide lower and they did. The bad news, the did quite a bit bte this Q, which will most likely put a hurting on me. I have no idea why we were up as strong as we were today, especially after the GDP news this morning. But that is usually a bullish sign when we rally off bad news. 

The VIX is in a state of flux, check out this odd reverse wedge it is caught up in, or the criss cross. This is the 195 chart, so you can see a lot more indecision the second half of the day. It is in a little up trend, but in a big steep down trend too. 

The SP is still in a clear up channel but it did hit resistance and pullback. It truly is stalling out a little near this up move, either gaining strength for a power move up, or losing strength. 

The NAS is still very strong looking blowing through resistance and continuing higher, for no apparent reason. Not a lot of resistance nearby.

The ES is sitting on resistance that has now become support. We will see if it holds overnight.

In closing: I still cannot believe the strength of this mkt. and I don’t understand why we continue to move up. There is no reason for it other than a new prez rally and that has to be what it is. Do people not realize the other shoe still has to drop? I am anxious to see what this stress test does to the mkt. when it is released next week, that may be the down catalyst.