akoptiontrader

Well I ended up selling my longs and going short today. I know, I know I said long until Wed., but I did not like the action today. We moved up quite a bit more than I anticipated, which is a good thing when you are long, but it is also a bad thing because you start entering areas of resistance much quicker. YUM, did much bte after hours and will likely cause a pop in the morning, depending on how COST, FDO & MON do in the morning. I am hearing the overall the mkt. is expecting a lot of earnings beats, and if that is the case, then I may have went short prematurely. I still the biggest move will come on Thursday (when I will be traveling!) with the initial claims number. It has projected to be over 550k, that is not good people, and if it is worse, I think we will see this mkt. sell off hard, no matter what the earnings are. No matter what Brokaw says, a jobless recovery makes absolutely no sense. So my plan is to stay short until Thursday morning. On to some charts:

If you recall, I said the VIX looked like it had topped on Sunday’s video, ergo being long into this week, that turned out to be absolutely true. Now, I can’t say we have hit a definitive bottom, but we did form a nice tail today, showing a little strength, and we bounced off the 20 ma, which is coming into play a lot lately. It is in flux and isnt’ telling me too much right now.

I was more enamored by the DOW than the VIX. Notice our high today, right in line with the high from 9/30, not an area I had targeted as resistance, but it sure acted as one. I think if we punch back up to 9832, then I will be all long again, expecting another new high. But if you notice today’s v, it was more than yesterday’s, and today we had more selling and more bears stepping in than yesterday. I will be watching to see if they follow through.

The SPX broke back up through my up trend line. But ran smack dab into the 20 ma and pulled back to finish sitting right on both. I would not call this a convincing breakthrough, but if it had closed at the highs, then it would’ve been.

Again with the 20 ma, as the NAS tried to push through, but was unable. The NAS was not as strong as the SPX, but I noticed it held up stronger during the selling. I was looking to short the SPY or QQQQ, and I chose neither. Still, this has some room up to hit my trend line, but depending on the rest of the mkt. it may not make it.

Even the RUT broke through and ran into that dirty 20 ma, which coincidentally is almost exactly on my trend line, should offer some resistance.

The SPY has been good to me lately, both ways. But I couldn’t get a good enough read on it today to short it after I sold my longs. Now it looks much clearer, it has hit two of my resistance lines and recoiled. Now to see if it will make another run or continue to pull back. I think it may have to sell some to breakthrough to the top side. The v was not super low today, but not great either, not as strong as the selling days, which is par for the course lately.

I really like how the QQQQ reached up an kissed that up trend line, and pulled back a little, closing right on the line. Similar to the SPY, the v was not near the lows, but not near as high as the selling days.

My alert on LEN triggered today, and you can see why. I don’t believe in this up move at all, and I think this may be prime for a short play. Note the decreasing v into this lackluster up move, near my old support line. I will be looking at this one hard tomorrow.

RMBS has a bit of a bear flag going on here. Watch for a breakdown , likely when it gets near that combo 20/50 ma area, although it will not wait if the mkt. sells off before then.

ENDP rallied right up into the old closing high which is also the top of the gap. This should offer resistance, but it may have been tested already by that move up early Sept. If so, we could see a pop through here, but I think it may hold and we may see some selling move in.

It looks like the FAZ formed a bottom today with this doji star. The exact opposite of the up move from Sept. 23 area. I would look for an up move from here.

DUG is retesting that resistance that led us to shorting it last time. Note the pathetic v, causing a nice v divergence. I think this level will hold again, and DUG will be digging down.

Here is my main short of the day. Not so much from this chart, but due to the intraday action I was watching. I love clean resistance, which we have here, as it gives me a clear stop. I like that it breached it, but then pulled back very hard. I also like that there is an unfilled gap looming, so I thought there were a lot of signs pointing to a drop and I am currently short XLE. We do have crude inventories coming out tomorrow, so that could easily make or break this trade, but I am in.

In closing: We are meeting some resistance, mainly in moving averages, but also in trend lines. There is an obvious lack of conviction in the buying, even on a day when we were up over 130 pts. The mkt. moved up much faster than I anticipated, so I have now positioned myself to take advantages to the short side. As earnings kick off, this could be a trader’s mkt., very volatile swinging on the last earnings report and forgetting last week’s reports. I am still looking for bad jobs numbers, and any surprise to the upside will likely lead to a strong rally, so be very cautious holding options going into Thursday. I will be traveling the next few days, but I will be looking to post as time permits. Trade well and prosper. AKOT