So that was quite the pop today, a little more than I thought we would see. Maybe after the jobs numbers came out better than expected, but we hit our low of the day right near the open, then at 11 am we had some power buying. The pundits are saying it was the jobs nos. and good news on Greece. It doesn’t add up to me. First of all the v was not spectacular, just average. Second of all, the jobs news came out before the open, and we opened with a definite downward bias. Third of all, the Greece news is old news and has been improving for a few days. At this time I do not have any theories, but I will do some reading tonight. For now we have charts:
Yesterday I commented on how I was surprised that the 200 ma was offering support on the VIX. Well shut my mouth, it finally obliged and gave way. Note we still have not taken out the open of the big white candle, nor filled the gap. There is now a short-term up trend line that is mimicking the 20 ma. However, it is a short-term trend and ergo not very strong. Still it will show us if the VIX is weakening.
The DOW moved up big on avg. volume. However, it closed right on the high of Tuesday. This is about as high as I expected it to go, but the thing to really watch is the 10,300 level. If we close above that, then this short down move may be reversing. Right now I still think this is bearish, and if we get a hanging man or big down day tomorrow, then I will add some short positions.
The SPX is set up the same, except it took out that short-term down trend line today; barely, but it did close above it. Again, we can move up a little more and I will still be looking for a big drop. But if we near the top of that big black candle, then I may have to reevaluate.
The RSI on the NAS is trending up and it had a nearly 1.5% up move today. But it did close right on the top of last Thursday’s candle. If it closes above 2193, then it has made a new short-term high, and I have to reevaluate again.
The RUT is still in this seven month channel. The curious thing, if it rallies or goes sideways a little more here, and then drops, there will be a h&s formation to contend with. I know that is a lot of “ifs” but I could see it happening very easily. Note the 20 ma crossing beneath the 50 ma.
Here is another thing that doesn’t make a lot of sense to me, the eur/usd has been down 3 days in a row, and broke down from that small wedge. This should coincide with some mkt. drop, but it did not.
The SPY, my short trade, and yes unfortunately I am still short. I should be out, but I am not. I am being stubborn simply because I have a small position and I wanted to add to it. I still like it to drop and drop big when it does, but alas, I may have to just take the loss tomorrow, and then I guarantee it will be down big on Monday.
As I pointed out on the NAS, watch for a break of the last high. But looking at the v, I don’t think that will happen. It looks to be closing in a consolidation range and it is near the top now. A break to the upside with v and the tide will have turned.
FSLR is in a long-term descending pennant. It looked like it was going to be breached yesterday, but it had a strong day today on okay v. The 20 ma is diving hard, but this is playable either way. If it takes out today’s high, go long expecting a 2-3 mos. rise. If it takes out the base, go short for a quick drop. Even better, wait for the re-test.
I don’t think I have ever put this SLAB on here before, but I like it. I like it for a down move to the $43 area right now. But I like it even better after that. Either an ape bounce, or a h&s break. Either way it is a trade.
In closing: Things seem a little out of kilter right now, and I am being stubborn, not wise, stubborn. I will likely pay for my stubbornness as the mkt. is never wrong, no matter what I think. But I am not in a power trade so my risk is minimal at best. You, you be much more disciplined and you trade well and prosper. AKOT
Is DOW 10 k here to stay?
Tags: banks, bear market, bull market, doji, dow 10000, esrx, hanging man, home forclosures, Nasdaq, overbought, reversals, rjf, RUT, s&p 500, xhb, xli
DOW 10 k was all the rage this week, so is it here to stay? Well, if you have read my thoughts for more than a month, you know how I feel about that, NO is the short answer. In fact, I freely admit that I am very surprised that we made it to DOW 10 k so soon. I thought we wouldn’t see it for at least one more year, but then again fast drops sometimes lead to fast rallies and we have had both. Now, I still submit that this rally is propped up on bad data and propaganda, for as we all basked in the beauty of DOW 10 k ( including my retirement account just so you know that I am not always a bear) more news came out telling us that foreclosures jump to record highs and that more bank closures loom but things are great! Now I know that stock market is not the economy, but let me ask you this, what was this crash we are “recovering” from based on? Who was to blame? Good answer, the banks and sub prime mortgages. Who is still having troubles? Good answer, the banks and mortgages, now moving into commercial real estate like I have pointed out about in the past. Now I know JPM and GS are knocking the ball out of the park right now, but weren’t they doing that just before they all came tumbling down? Further, I have not done the research, but I would extremely curious to know exactly from whence their earnings are derived? Do they not trade? Just asking. Anyway, enough of this cheery stuff, let’s look at some charts shall we?
well the VIX finally gave up the ghost and closed beneath this long term support. I looked very strong early on today, and it looked as if it may push this mkt. south, to a “gasp” sub 10 k close, but alas it twas not to be. I did not draw them out, but I will on this weekend’s video, but Cash21 pointed out to me a very nice megaphone pattern forming here.
The DOW has had decent v the last two days into this surge up. Now I did say on my last post that I thought we would break 10 k if we got bte retail and earnings, and we did. I just felt that the bulls would suck this thing up if it got close, then I thought it would sell off, like today, which it did not . At the top of this chart note that 50% fib at 10,360, anywhere in that area would be a good technical are for a reversal. Further, as I point out on the chart, the last two moves have been about 225 points top to top, that would bring us to 10,075 another area to watch for a stall out.
The SPX looks pretty strong. The 1120 area is being touted as being the most likely reversal area as it is the 50% fib line. We shall see, but I say this chart still looks strong to me.
The NAS still looks the toppiest of all my indice charts. We actually have a tweezer top formation today, a very strong reversal formation, hence I am still short the QQQQ. But, if the other ones rise, this will likely be in tow so I will be tracking it closely.
I take that back, the RUT looks even more toppy than the NAS. We had an inside day with a bearish harami formation here, and this has the power to drag the mkt. a bit, so watch it.
I thought the dollar had formed a nice bottom for a rally near 22.50, but this looks even better. Near identical spin tops with a the same low, a tweezer bottom. This is a good technical sign for a move up from here.
Okay, I put AMB on here because I don’t recall ever seeing this formation. Check out the hammer , hang man – gap, spin top, hang man-gap, spin top, hang man – gap with increasing v. What does it mean? Heck if I know I just said I have never seen this before. If someone knows let me know, but for now all I can say is that the v is increasing into this up move, and it appears that we should look for gaps up off hanging mans, like today.
ESRX, on resistance of upward trading range with an inside selling day today, on increased v. Still looking for a drop from here, especially if the overall mkt. turns south.
Watching this for a breakout. If it makes a strong move above 15.10 it should be a good long up to the gap near 18. It may take a while to get there, but it would give us a very nice easy stop at 15.10. On the other hand, if it breaks below the 200 ma, then that would be a good short with the 200 ma as the stop.
RJF has formed a dark cloud cover in a resistance area ( not a tight line, but area) so we should be looking for a drop back to support from here.
XHB is meeting resistance once again. Note that it is above that bearish engulfing candle from Sept, but hitting its head on resistance.
The XLI had an inside day of trading on not great v, but it is coming up against the highs from Sep, which may offer resistance. Further, we still have an unfilled gap with a base of 26.50 so this has a lot of reason to move down.
In closing: I shorted the QQQQ last night just before the close because it looked to be the weakest. I did not do this based on TA, just based on years of watching the mkt. and thinking that DOW 10 k was going to be a “fluff” and no fundamental move. Further, we had such a strong up move Wed. I expected to open down unless we had amazing news prior to the mkt. We did open down, but not much, and the NAS was the weakest, but not weak enough. I will hold those puts until Monday, as the Monday after 3f is often down, and opx prices are usually high on that day. A good day to sell.
Now, I have to consider that DOW 10 k and the news it will generate, may cause a lot of buying, a lot of people who have been waiting to confirm this mkt. is stable and safe. If this happens, we could easily push this thing up much higher from here. This is what the pros like to see and this is what the pros love to short. I do think we will end up have a couple down days here if not tomorrow then Monday. Trade well, use stops, and prosper. AKOT