Well at least there was more volatility, sure it wasn’t down like I thought, but at least it moved. I really thought we were going to have a very weak day. Why you ask? Well if you noticed, pre-open there was some pretty decent economic news that came out, and cause a small move up on the futures, but not as big a move as I anticipated. When that happens, I tend to lead to the short side. I also expected the housing numbers would be wte, as they were, and I thought this would be the catalyst to send the mkt. to over 50 points down. The mkt. did drop, but instead of having the late day drop, as I noted, it had a late day rally, a pretty decent one at that.
Tomorrow we do it all again. So far all the employment numbers this week have been bte, and most of the econ. news tomorrow is employment related, and out before the open. This should give us an idea which we should be trading for intra-day. I have a sneaky suspicion we will end the day on another up note, but there will be some key levels I will be watching as you will see on the charts:

One of the reasons that I have really been looking for a volatility spike, and in a bearish direction, is the VIX. You can see how reluctant it is to enter the gray square of death. But, the longer it sets here on top, the more likely it is to drop. The last move up was after three days at one level, so I think tomorrow is the day that will decide the short-term direction.

The DOW, lead by DIS’s near 3% up move, closed above that down trend line for the second time since January. I was really pretty confident that this was much more bearish here, so I was a little surprised to see that late day rally that took this down trend out. I know that it is not the strongest trend line, but it was just setting up pretty as a great short area. Of course the DOW took out the 50% fib without a re-test, so I guess I shouldn’t have expected much here. One thing to note here, it did not approach yesterday’s high, so it was an inside day, not a very encouraging bull signal.

Of course we all know that the SPX is a much better overall measure of the mkt. So I see here that it is still under resistance, but it looks to be forming a loose bull flag. Therefore, I would be looking for a break to the upside, but I will be ready to short on a break of the 1116 line.

The NAS has really defined resistance here this last three days. So the trade here is pretty simple, a close above 2294, I will be looking long, but more sideways or down then I will be shorting probably beneath yesterday’s open.

I spoke of the disconnect between the UUP and the mkt. lately, yesterday. So here the UUP was up .55% and the mkt. was up almost as much. So I did a little research and I found that…

… if you look closely where, theoretically, the UUP and SPX cross, you can see that it is not uncommon for them to move for a day or two in the same direction. The black candles are the SPX the blue ones are the UUP. You can see in July / August when the SPX really started moving up the UUP started dropping, and at about that time frame they crossed. There the UUP seemed to lose momentum for a bit. I don’t know if this is happening again, and I don’t understand why it would, but I look at a lot of mkt. history to see how it acted before, and I noticed this. So it may be the two are set to cross again and that is why this apparent disconnect is showing. Or I could be wack!

I talked about XLE as a possible short yesterday as it had some nice reversal candles on resistance. It ended up down today over .50%, on a mkt. up day. So I thought we would look at a couple of energy charts. This is NOV and it had a big bearish doji hammer engulfing candle, or a bbdhec for short. Speaking of short, methinks this is one.

I also like HAL as a short set up. This could be a double top, but it certainly is a bearish engulfing on decreasing v. I like those type of set ups.

I like trading DVN, as you can see by this chart. I used to trade HAL a lot, but lately not so much. Perhaps tomorrow will be another opportunity. Back to DVN; This is simply another bearish engulfing a hammer. It feels pretty bearish here to me, even though it rallied off the lows. I would like it if it opened just above the close or gaps down a little.
In closing: I think tomorrow will be a pretty important day for the VIX to give me a little direction. Further, although the DOW did break out above the trend, the others have not, and the DOW stayed beneath yesterday’s high. I am still not full force bullish, still cautious and watching for cracks in the rally. Trade well and prosper. AKOT
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Is it rude to disrespect crude?
Tags: bidz, DOW, Nasdaq, spx, spy, uup, vix
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