akoptiontrader

So I forgot that I have a meeting tonight, tomorrow night, and then Wednesday I head north for the weekend. So my posts will be short and sweet. I don’t think you will see much from me Wed – Thur unless I have an inspiration of some sort. Perhaps I will throw up a couple of my favorite videos for you to munch on. I will try to do a post tomorrow night, but like I said I have a meeting that usually lasts till about 10 pm AK time or 0200 hrs. New York time.

I expected an up day today, but I did not expect a mega up day like we had. I did not expect the DOW to make a new high, but it sure did. Now, I know this is not a big deal, or perhaps it is, but it is things like this that irritate me. It is either blatant ignorance or blatant propaganda, but none-the-less, throughout the day I saw this headline popping up.

Now if am not mistaken( I am not) , the housing numbers came out at 10 am mkt. time. So let’s look at a thirty minute chart:

The housing news came out at the high of the day, I know I was watching. The mkt. pretty much sold off from there, despite the “great” housing numbers. Now what does this have to do with all the tea in China? Well it does affect sentiment, not on us traders, but on the headliners, the people who read just headlines or watch Letterman and Leno for their news; Basically, overall sentiment. I don’t think it is a huge deal, just one of those little irritants that we all have, or maybe it is just me. Anyway, one thing it does show is that this mkt. continues, for the most part, to rally on bad news and sell on good news. On to some real “news”:

The VIX dropped to another low, despite me thinking that the bottom trend would hold. However, check out that support line I drew last week, it held up rear pretty. We could easily see a bounce off of this support.

This is a weekly chart of the DOW. I put it on here because it just so happened to rally right into my down trend line that started in Oct of 07. This would be another good area for some resistance, the next beyond this will be over 11, 000, but looking at the other indices, I don’t think we are headed there just yet.

Again, as I said in the video, I expected an up day today, just not this much up. However, the DOW, despite being the lowest of the three percentage wise, seemed a little stronger to me today. It was the only one that made a new high. You can see the SPX got close, but pulled back. In the note above, I point out that we had a similar day in about the same place in all these moves. In fact, the last move down, we actually made a new high, but then sold off strong the rest of the day closing lower.

The NAS rallied right into resistance in the form of the bottom of our short-term up trend. We ended the day selling off and leaving a decent top wick. Further, we now have another gap that will desire to be filled.

The UUP broke down again with an almost exact doji star as last week. That star lead to a nice gap up, and I will be looking for more of the same here.

The TLT found some support on the 20 ma, but is beneath a weak down trend line. It may make a move to fill that gap, but it looks like it is wanting to bounce from here. Again, the 200 ma looms overhead.

Most of the sectors were running high into resistance, but the XBI, seen here, found some support on the 200 ma. Further, v has been declining into this down move. However, I would have liked to have seen a white candle here today. Overall, this looks like a potential inverse head and shoulders if this thing bounces. If the 200 ma gives way, this should be a great short.

Going against my trusty Stock Almanac, I entered a couple of Jan put positions today. This was one of them. I like a lot about this chart and about today’s action. I will use yesterday’s high as my stop.

The other one was from a chart I posted a few days ago. I like this because it is completely different that WSM in that it is not at a high but in a down trend with a mini bear flag breaking support. I think we may stall out on the 200 ma, but I will be tempted to hold and see if it gives way.

In closing: Most of the charts I looked at tonight were against some type of resistance, including most sectors. As expected v is low, we have a lot more news coming out Tues and Wed, and that is a recipe for volatility. History says we will likely go up into Thanksgiving, but the charts seem to be saying else wise to me. I am going with the charts. Trade well and prosper. AKOT

I will post more charts on TWITTER.