Most often when you see the kind of selling we saw today into the close, that is a bearish sign. I say most often because, to me, this mkt. has not acted like most mkts. That being said, this was a pretty strong and fast move today, and it caught many by surprise, including me. I am still short and long, and my longs took a beating my shorts are back at even. I think tomorrow may set up for a counter move, if the jobs numbers come in wte, then I will wait for a stall out and try to play a call, if it is vice versa, then I will wait for a stall out and play some puts. That is my game plan. I am watching quite a few charts for long and short plays, and am now leaning towards the short. I am going to do what I would call a “risky” trade tomorrow near the close, a long trade, but I don’t want to post it here because it is a new type of trade I am testing. I will let you know if it worked or not, either way remind me in case I forget. Now some real quick charts:
The VIX had a nice pop today and appears to be forming another bottom at $20.90. So I will draw another line and watch it.
The DOW failed to break through Monday’s high and formed another hammer. Note the v increasing three days in a row, higher on each day of selling. It truly feels like when we get some hard selling, it will snowball hard with v peaks.
What really stands out to me here is that this is the second breach of the up trend line in 15 trading days. Often times trend lines will be broken gradually after being breached a few times, and this could be exactly what we are seeing here. Obviously we would be looking for a close beneath 1074 to see a real move down, and if that happens we could be forming another dreaded H&S.
The RUT still looks the most bearish of the indices. Note the support break and failed attempt to reach new highs. I could easily see us testing that 50 ma very soon.
The NAS went from looking very weak to me to looking as if it might breakout, thanks to AAPL. But a failed breakout is a bearish sign. We have support very near by, so I will be watching the 2142 area closely, and a break beneath will be a sign for me to load up on some more puts.
Just one stock tonight, due to time. A low v chart at that, EXTR. A nice break of a h&S pattern on okay v, could be set for a quick play. BUT earnings come out after the close on the 26th, so get out before then, or wait till after to trade.
