akoptiontrader

Today I was on the road for all but the first hour of trading. I must admit, I was a wee bit perplexed prior to leaving with the way the mkt. was acting. But now that I have made it home and had time to mull over the happenings of the day, I think I see what is going on…. we filled some cavities or gaps as they are known in the trading world. I saw a lot of evidence of this looking through today’s charts. Speaking of charts….

(VIX) You may notice today that I took some stuff off of the charts, mostly the studies. I do this once in a while to clean off the noise and to see things in a different light. When I looked at this two things struck me right of the bat. 1. We just about perfectly filled the gap we created yesterday, with a pullback. 2. The low today was almost the exact high of the last two days prior to the gap, forming new support. 3. ( I know this is a bonus) We only lost 3% of the 10% gain from yesterday. IMHO, this points to some more up move in the VIX.

The DOW formed a base right on our support, the 7500 area as expected. It may play around this area even more, but  I would not be surprised to see some strong selling tomorrow in reaction to hard we sold off the last part of the day today.

The SP moved above our support, then ended up closing right beneath it. It’s gap was not filled, but it was attempted. Every time it does not close above the 800 line it makes it stronger resistance.

Now the NAS, the NAS knows how to fill a gap. Look the beautiful up move with a nice sell off leaving yesterdays’ gap filled. I thought it would take a month to fill that gap, but it took 1 day, amazing. I definitely feel today’s tape lends itself to bearishness.

Now look at the Qs in relation to the NAS, its tracking stock. Not quite as evident of a down trend, but check out this triple top, that is bearish, especially since this last one did not reach the 31.60 line. It also filled the gap from yesterday very nicely. I would not be surprised to see a move down to the 26 area again.

XLV, health-care sector, I just put this up because it looks like it has been banging its head against resistance. It looks like it wanted to move up, but I just don’t think it has the support it needs to break through, and I think that it will have to sell off and make another run at 24.50 to break it.

XLU, utilities, very similar to the XLV, except even a little more bearish. It is in an actual down trend already and sold off strong today. Again, a filled gap is apparent, I see more down move coming.

Here is BKE, which has had a great move up, and I think eventually it will continue, but for now it seems we must fall a little. You can see the strong resistance 33 is giving us and a great bear engulfing candle and a fib, all great signs of an imminent down move. This stock split recently so I expect in the long run it will continue up, but for now down is in play.

ATVI has been in an up trend channel and I look for it to continue. It filled a gap today and could move down a little before the next up move, maybe around the 9.75 area. This too recently split so keep it in your watch list.

Finally a chart in all its glory, DRI. The reason I show you this one is I saw it this morning prior to my road trip and I liked it for a put play. But I wanted to wait until the mkt. started selling off, if and when it did. So I kept checking it on my iphone until about 45 minutes prior to the close. It was difficult to trade without seeing a chart, but I knew what I wanted and I entered the trade with a very tight limit order. A tight limit order is an order below the ask. It was filled right away. I am up a little on the trade already and I will use today’s high as my stop. I choose this trade for the following reasons, huge open gap, bearish engulfing candle, close beneath fib, magnetic pull of the up trend line. My target is 30. 

In closing: It seems to me when we are in a bear mkt. and a bull move gap gets filled so quickly, that is a good place to go short. AKOT