Tuesday, October 21, 2008

Turbulent Tuesday

The market never really showed much strength today from the get go. The charts started to rollover after the 10am ET time and the futures sold off before rebounding multiple times all the way back to break even but the bounces were suspicious in my mind when I noticed that the futures had a hard time breaking thru the moving averages on the pivotal 15 and 30 min charts. The market just never really had anything going for it all day. Each attempt at a rally was sold into and finally the market broke down in the last hour after we gave up the 975 level.

Another great trading day with moves to bank on if you are watching your charts and keeping your emotions in check. It seems like yesterday we exhausted all of our gas in a low volume rally and today the big boys came in and just sold into those resistance areas.

Yesterday I mentioned that we came within a few points of confirming an inside day pattern on the SPX. Well, oddly enough we had an inside day pattern TODAY. I zoomed in on the daily chart above to illustrate this inside day pattern and also I outlined an interesting little symmmetrical triangle I identified. These triangles show the price action tightening into a narrow range over a period of time and eventually breaks one way or the another when it reaches the apex. On top of this we had an inside day pattern which is a very reliable pattern that predicts a breakout. Usually I see inside days begin a reversal. I am now slightly a bit more bearish looking at the short term, after all we just did have a 3 day rally in the SnP's that went from 870 to 985 ish. This market can easily trade down to the low 900s but I would prefer to see that level hold, however I gotta call it like I see it, and if we cant get over todays highs with volume then I will be shorting this market midweek.

After the bell, AAPL reported some decent numbers but dismal guidance (they always sandbag the upcoming quarter so its easy to beat). Anyway, the stock first blipped down into the 80s but closed the after hours session up a strong 13%. This is giving the Nazz a nice push up after hours and could definitely give us a positive open but just watch to see if any rally can sustain itself to determine if you should buy into it.

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