I must admit, I was very surprised by the strength the mkt. showed this morning. I thought we may see a little up move before the sell off, but nothing as dramatic as what occurred. There is a lot to like about today’s action if you are a bear. I think there is a huge possibility that we see a lot more sell off this week. On to the charts:
The VIX started the day dropping like a rock, and it was consistent with the mkt. move up. But then it started to slow down and reverse and it actually closed above my support line of 27.85. I think we will be above thirty by the end of the week.
The DOW looks very very bearish to me. You can see two topping signals, and a huge volume breakout today, with selling. All this points to more selling. I would see a reason for pause if we had a small down day tomorrow making three candles contained by Monday’s candle. If that occurs, then we could have big up day Friday, but I don’t think that is where we are heading.
This SPY has a curious little note: Look at my two green lines, you may have to pull this up on your own charts. It works best if you scroll so that the last day on your chart is 3/16/09. What you should see is a 3 day set up just like today. Those are followed by two huge up days. Could it happen again? Absolutely, but I think overall things are more bearish right now. We are on support here, but we are also engulfing and today’s candle was a bit more bearish than the 3/16 candle. I think we break out of our channel tomorrow.
Qs hit resistance and pulled back hard. V was not as impressive as with the DOW but I think we put in a lower high right here. That down trend line should be strong. On to a couple quick stock plays:
CCJ, this one really follows the fibs well. Note the huge decreasing v and resistance on the strong 50% fib. I say short to the 21.50 area.
One we played a while back, DRI, is ready again. It has rallied up and touched the up trend line and sold off and it has a gap to fill. Tgt. $30.
NUE is not so new that it can’t be played. Like this chart for a short; dropped hard off resistance, closed beneath strong support, good v and lower highs. Tgt. $35
BDK is forming a nice little H&S pattern off strong resistance and I am looking for a drop from here. Tgt. 27.50 area.
I still have puts in BZH, it has not dropped as quick as I thought it might, but man it looks more bearish than ever. Mini H&S forming, 200ma acting as resistance and housing is screaming sell. Check out the declining v as well. Tgt. $1.25.
In closing: Most signs point to more selling this week including; three day weekend, summer vacation, start of a sell off, no further mkt. moving news this week. Big $$ likely will not want to hold this weekend and maybe for a while, so summer trading is upon us and that is usually much more volatile. Hard to believe eh?
follow me on twitter akoptiontrader for real time trades and set ups as I see em. Trade well and prosper. AKOT
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