No data and pent-up energy fixing to spring

Believe it or not, on such a miserable single trading day, there were a couple things to note. For instance, the UUP was strong until Bernanke came out and said that rates would stay low. Also, the VIX and VIXN were both up today, we did not have a huge correction. The bad news, tomorrow has the potential of being the same type of trading day. There is no planned news coming out. Now, FDX did guide higher, and they are often thought of as a beacon for the economy and for the holidays. I imagine that will give us at least a pop in the morning, but I don’t know if it will hold. More bad news, the only thing worth noting on Wed. is crude, and lately that has been good for scalpers, but not traders. More bad news, my stinking EXC puts hammered me today, but it wouldn’t close above Friday’s high, so I didn’t sell yet. It was an inside day and a harami to boot, so I surely have the potential to get it all back tomorrow ( are you trading on hope AKOT? Better not be!!). Let’s look at some charts:

back on top of our old support line, which lately has not been offering any real support or resistance, except for today. Since we have no real direction, I don’t think candle signals mean much of anything right now. What I see is the near perfect double bottom we had from Thur / Fri and that we did not break to new highs today. I except that 22.77 will offer resistance if we move up from here.

I noticed that we have formed a nice wedge here, and if it had been trending more sideways, I would call it a bullish flag. We are having a very hard time breaking the 10360 level, and I think if it doesn’t happen soon, we will likely bounce up off this thing and make some more new highs (gasp!).

The SPX is in a short-term up trend inside the longer term up trend. We nailed that 50% fib last week and I would’ve thought that would be the catalyst to send us south, yet sideways we hold. This looks very similar to that muck we got stuck in June before we finally had a decent drop.

This chart screams topping to me, but alas sideways we move. Note the RSI trending down, the four reversal candles in a row, an open gap. On the converse, the b bands are compressing and the 20 ma is now trending back up, but I still just have this very toppy feeling.

The fact that the UUP rocketed up to over 22.49, at least for a while should’ve been bearish for this mkt. In fact, it really didn’t sell off much from Bernanke’s comment, considering how much it moved up even today. Now what I will be looking for is to see if the little selling we did have was the typical over reaction. If so, we will see more up move with v tomorrow, watch for it.

DKS is walking off that cliff, as I like to say. I like this baby to drop here, I would like it even more if it had made it up to that big gap! The RSI is oversold, but I am still thinking drop.

Pretty nice breakout from an inverse h&s here. I don’t know if I would be right now, maybe wait for a little pullback. It would perfect if it sat on that support line.

In closing: The charts really seem mixed to me, the NASDAQ the most bearish, the others in small up trends. The dollar is strong, treasuries are up, the VIX is up, v was okay today, yet sideways we move. My feeling is that when we move, and I am still leaning to the downside, it will be a pretty big move, like 150 + points big. It seems when we have pent-up energy like this, when it goes it goes hard and fast, just like in June. Trade well with your trigger finger ready and some dry powder and prosper!

Lite Weekly Video 9-13-09

I am on the road this week trading and blogging from my two laptops. It is difficult at best, but I managed to get a lite video up for your perusal. I suspect we will see a volume spike this week, and I also suspect that we will see some selling with that spike. We made some nice bearish engulfing candles and spinning tops and the like this week. If they hold, we should see at least a couple days of selling. I really thought that the credit numbers from Tuesday last week would cause us some consternation last week, it was not to be. I was shocked to see how the mkt. just shrugged it off as if it meant nothing. This week we have retail numbers coming out, and I suspect they may be a little wte, and if so, we could see some follow through selling. Monday looks like it will be a down day, but I will be watching to see if the bulls step in again near the end of the day. Now onto the lite video for the week.

Weekly Video

Well we made it through another 3f week. I played the FAZ for the first time ever, and I am still long it right now. I am short BZH and I show both charts in the video. We have a few economic events this week, but they will most likely be not huge mkt. movers. I would not be surprised to see some up movement, but I am still bearish overall. The indicies are not all in alignment, which does not make it easy, but I have been calling for a sell off the end of May beginning of June, and I still think that is in play. This could be the week. 

Now onto this week’s video. I keep going long on these things and I had more charts I wanted to show but I ran out of time. Follow me on twitter and I will post them there. Just search for akoptiontrader and whoop there it is. Trade well and prosper. AKOT

Bully Pulpit

Well that was a good ole fashioned bear smack down, and I felt it. That housing news came out as a surprise, but that wasn’t the only catalyst. In fact, the mkt. was already up over 1oo points, even 150 before, so either someone knew something or I am missing something. I heard one analyst say that this rally is still short covering. I find that incredible and hard to believe, but it does have legs and we did close above some key levels today. 

The VIX was quite puzzling today. I tweeted about it early on. I noticed it was not moving down, even though the mkt. rallied up 150 pts. the VIX still stayed positive. Then after the bte housing announcement, it finally started dropping. It did not break beneath our support line and that could serve as support and cause a bounce, especially after how it was acting early in the day today. It truly made me cautious about getting into a trade.

This is 5 yrs. of the DOW. Note we broke above a pretty strong long term fib. If, and I mean “if”, we hold above, that would be extremely bullish. I show this chart also for the pretty little yellow circles. Notice that for the last 3 April-May/June we have stayed up in the overbought area of the RSI. In the bull mkt. of 07, we had a quick small drop June 5. Last year, May 20 we started our free fall. I like to look at history and keep it in my mind when I trade because in the mkt. because sometimes it repeats itself. Keep this in mind.

The SP has rallied hard into our down trend line, which should offer resistance. It too has been in the overbought area for a lenghty period of time. It blew right through that fib, and I really thought we would see a drop here. Not so much.

The NAS has just reached a key point in its life, the 200ma. Look at this rally, it is like a sell off in reverse. You just don’t see rallies like this, point wise, or especially percentage wise. It looks much more like a sell off than a rally. That is one reason why I have a hard time believing we have put in our true bottom. We may have, but I think it will have to be re-tested, we just rallied way too fast. 

Hi ho, hi ho off to TMO we go.I throw this one on here because we have had a strong post e up move and know we have formed a bit of a doji cross, and if we have a black candle tomorrow then an evening star, which is a strong reversal signal.

This is one of my brokerage accounts, OXPS, so I give em a glance once in a while. Low and behold, e came out and it gapped up, but the gap appears tired. It wanted to drop today but rallied with the rest of the mkt. So I dug a little deeper and saw that 3 of the last 4 years this stock gapped up after e and then sold off, sometimes pretty strong. Could be a good one to throw some speculative $$ into. One caution, the 200 ma is on the bottom of the gap, probably strong support there.

KMP is one I have been watching for a while. I haven”t traded this yet, but we may be in a good spot to try some puts. It is in 6 month channel looking to move down. It hit the 200 ma and is falling off. I would look for the bbb to offer a little support before it really drops.

This is another channel type of play. ABC has rallied right into our 200 ma after dropping hard off the top channel. I say it doesn’t bust above it, but heads south from here.

Finally, given the current mkt. trend I figured we would end on an up play, how novel of me, EMC. A pretty basic play here, a bullish engulfing candle with support beneath it. Also it has bounced strong off the 50 ma and it is in an up trend.

In closing: I was caught off guard by today’s strength and cautious because of the way the VIX acted, but I did get into a play today right at the close. I bought puts on $BZH, I know crazy huh? Puts right after bte housing news what was I thinking? We will see and I will keep you posted on that one.

K-Fed in da house

Unfortunately, or fortunately as it may be, I was only able to watch the first 1/2 of the mkt. this morning, then I was on the road and test driving a new boat ( and yes it rode very nice). I tried to find a good entry before I left this morning for one of my trades, and nothing showed in time. I prefer trading the last part of the day anyway. Tomorrow will be a long one until the FOMC comes out around 2:15 mkt. time, so it could be a dreary day until then (hence the K-Fed reference) so buckle for the ride. Check out the econ. calendar for the week.

 

So what are they going to do, lower the rates? Nope, what is key is what they say and I predict no matter what they say, we have a spike the opposite way we are trading at the time. Watch for it.

The VIX looks almost exactly like it did on Monday, closing right on support. The big breakout has still not materialized, but I think it will.

The S&P still very indecisive, but the bottom channel line is still holding strong. 

Now this I find intriguing, this is the DOW on my 195 min. chart, or two candles a day. You see the three red lines on the last group of candles? Well those are the second candles of the day of the last three days. All three have black bodies, the last two closing lower than the first candle. This tells me the big money is most likely starting to turn bearish, or at least there is some significant selling going on the latter part of the day. We need to be aware of this and watch for it to see if it continues. 

The NAS is still the most indecisive of all the charts, but it is clearly in a down trend in the midst of a longer term up trend, sitting on support. I have talked in the past about wicks, and how I watch them. Well take a look at this.

Here is the last six days of the NAS up close and personal. I was looking at the chart and I saw that we have some formidable top wicks forming. So I looked closer and I saw that we had not had this many top wicks in a row or in group for a while. Further, when they occurred in an up trend, it usually signified a turn. Check out the chart for yourself and see if you see something different. 

Leggo of my EGO. I know that is not how you spell Eggo, but I am tired and don’t want to think of another cutesy line. So this is a possible H&S forming, look for a drop to the 7.20 area , a bounce or stall out and further drop. You know the drill.

TMO, I have this one here because you can see it gapped down after e, rallied and then on the fourth day, today it formed a bullish engulfing candle, a bullish signal. I am looking for an up move from here with an easy stop near 32.10.

Let’s finish with a little R and R, or just R. Ryder Systems to be exact. I would’ve loved this to rally and fill the gap and then sell off, but when I looked in the past, I saw it filled a gap to the bottom of the window and sold off hard, so we shall see if history will repeat itself. My $$ says it will.

In closing: I expect a mildly boring mkt. until 2:15, then I expect a pop, and then if we hold true to form we will see the last 1/2 of the day be worse than the first 1/2. I will try again to enter on of this weeks plays tomorrow, but preferably tomorrow afternoon, if I am patient enough. Trade after 2 and prosper. AKOT

How about a cup of hot steaming volatility?

Today’s rally wasn’t really a surprise, what was a surprise is the way it rallied after the open. Looking at up v vs. down v, and all my internals, I really thought that early morning move up would be short lived. I jumped on some XLF puts, and I even tweeted that I thought I was a little early, but I knew I would not be by a computer all day, so I broke one of my rules. I jumped a trade, and that is not bad, what is bad is that I jumped it within an hour of the open, that is almost always suicide, and I paid dearly. However I do not think this mkt. is out of the woods, my prior thesis still holds true until I am proved wrong and one day’s rally does not a bull make . Now onto the charts.

Hmmm, what should we start with? How about the VIX. This is a classic dark cloud cover, well not exactly classic because it is not at the end of a sustained up move, but in this mkt. we will call it good. So, this is a reversal signal, signaling a turn down and a mkt. rise. But if you look at the red square to the left, the last dcc I could find, what happened that day? I realize we were in an up move, unlike now, but we did have a good engulfing candle. Last time we gapped down, rallied hard and ended the day up a little and then off to the races from there. Will history repeat itself? Time will tell.

The DOW, to me, is the bearishest ( new word) of all the indices. We have a very strong down trend line that has been tested three times. It would have been even better if we had tested it right at that fib, but none-the-less, it is still strong. It could rise up and test it again, and if it does I am going short.

The NAS used our support as a bouncing point. I said yesterday that I thought it would break that support, but alas it held strong. Still, it did not break above that nearest fib so now we are in a stalemate. We need a breakout, if we hit 1668, then short time is upon us, if we break low, then support at 1529.

We have two S&P charts tonight, This one is a 5 yr. chart. I show this so you can see how we burst above that down trend line the first time, and now we have dropped beneath it and back into our channel. I tell you what, these charts with that V bottom, they almost always look bearish to me. Those fast rises almost never sustain themselves. 

Same chart shorter time frame. Is it just me or does that look like a sustained bearish flag forming? Huh, must be just me. You can see we used that bottom channel as support and broke back above the down trend line, for now. Still have not made a higher high. I really think we are going to see a big move down soon.

A couple plays to end the day… This is OSIP, a pharma. Check out this channel with a great spinning top reversal. Should see a move up from here, but be aware next week is e for this stock.

GS actually looks a little bullish to me, which goes against my XLF put theory. But a break of this mid-line will result in a big down move, but that is a bull engulfing candle right there isn’t it? Could pop tomorrow. 

Here is that little turkey XLF that spanked me today. What I do like is that we did not break yesterday’s high and we may have used the bottom of the gap as resistance, time to short again ( let me fly solo on this one folks)

This one is very high octane and speculative so do not trade this with $$ you really need. This is SBUX forming a nice gentle wedge on the 200 ma. What do I see, well right now nothing, but next week is e for this stock and it looks to me like it is prime for a breakout. I think e will be the catalyst for that breakout and I speculate that move will be down. The last 3 e have resulted in good down move, why should this one be any different? It could be, but the potential is there.

In closing: I was not surprised by today’s bounce, but tomorrow could be key, it could be the pivot day to lead us down the primrose path to the rest of the week, even the month. We still have a lot of e to go, so hang on to your belt and trade well. AKOT

It’s Golden

Well it seems GS went ahead and smacked e right in the butt after the close today to send more good news into this mkt. In fact, they raised enough that they want to give $5 billion back of tarp money. So how will this affect tomorrows mkt. ? We will see if we can figure it out. Today was very interesting, we opened down, went down in fact into triple digit loss for a while. What was interesting about it? Well the VIX was up all day, and there was quite a strong rally that started at 12:30. This rally really seemed to pick up steam near the end of the day. In fact I tried to play some calls for a quick small profit, but my limit order did not get filled. Then, bang right at the very end of the day a very strong sell off, making me glad that I did not get my order filled. It was definitely a wild day.

 

The VIX moved up strong, gapping up and closing right on our support line. It was actually strong all day, even through the late day rally. Now we have to see if this support line holds.

The DOW is clearly in an up trend and rallied off the up trend line. It is also still above support with decent v again today. We should also note that we formed a decent hanging man today, which can be significant, but more so if it were on the top bb. The major trend is still down as we have not made a higher high.

Here is the S&P on a 60 min chart. I used this chart to show a channel a little clearer. You can see we reached right up and touched the top of the channel line and immediately retreated from it. I would expect a turn down from here, but we are in an earnings driven mkt. right now and any bte earnings will lead to volatility. 

The NAS is still the most bullish of all the indicies, creating a new high and still continuing to rally. However, today we knocked our noggin up against some serious resistance and pulled back. We need to see if this resistance holds, and I have suspicion it will and that we may turn down a little from here. We still have the gap to fill as well. 

NAS on the 60 min. You can see the channel, and in this view it looks like we could pop up a little from here. But after looking at the D chart, we know that we are against strong resistance. 

Here is the XLF, this has rallied hard from the WFC and today the GS anticipation and actual news. Notice though that there is quite a gap left that will be drawing the XLF down to fill it. We may have a bit of sell on the news with GS today, especially after the false WFC rally that we endured last week. Now onto some possible plays for the week.

ILMN, I like how it is sitting on the 20 ma and how the fibs have held. I look for this one to rally from here , possibly setting a new recent hi. 

AZO, I will be watching this closely to see if this trend line holds. If it does, play calls, if not puts, gotta love that.

Finally let’s finish with BRCD. This has been on a rocket, and now we have hit our heads on the 200man. I would look for it to drop a little from here before taking out the 200 ma, if it does. 

In closing: Earnings are going to drive this mkt. right now and anything can happen. But it has been very volatile intra-day, playable but you must be very quick. Watch for surprise e to cause huge rallies within the day. AKOT

I think the tank may be running out of gas

I know I have been saying that this mkt. is going to turn around and drop, and when it does it will be like an anchor. And yet, it defies my understanding of charts and emotions and traders. Still, when I look at charts I see a market that has rallied too steep too fast and may be starting to head south. The anemic v of last week may be a sign of things to come. This could be an interesting first week of April, hang on to your hats. Please for you to enjoy….