Sunday, November 30, 2008
Thursday, November 27, 2008
Watch Nov. 26.08 :: Turkey Trade using Technical Analysis in Entertainment Videos | View More Free Videos Online at Veoh.com
Just wanted to share this interesting pattern I saw in the charts today. Could be very bullish. Let's call it the Thanksgiving day chart pattern and see how it plays out. Happy Thanksgiving traders.
Wednesday, November 26, 2008
Tuesday, November 25, 2008
Well I am still waiting for this market to show its direction. I am bearishly tilted right now simply because we have ran up 120 SPX points in 3 days and we are having a bit of trouble with the resistance overhead. Namely the 865 area we were turned away from today and for a while it looked like this market was going to fall off a cliff as it hit lows of around 835 before reversing higher in the last hour and closing pretty much unchanged for the day. We actually closed lower than we opened so thats something to take note of. 20 day EMA on the SPX is just overhead at 879 and I think the market will have a hard time breaking over that. With that said it is a holiday week and you should start to see light volume Wed. so we could see a continued dead cat fakeout rally into Thanksgiving.
I am still holding some SDS calls and will cut my losses if the SPX 15min chart closes above the 875 level. If we roll over from here I can convert my long call into a vertical call spread and roll down to lower strikes simultaneously lowering my breakeven without increasing my risk. I am starting to see a large falling wedge pattern develop on the daily chart, evolving from the descending triangle that has been forming for two months now. I will highlight this falling wedge in another post as it is still young in its formation. Even so it looks as if we are coming up to the upper part of the wedge/channel and should have a hard time surpassing the 875-900 area so be warned that probability of a selloff from here is higher than a rally. But like I said, holiday shortened weeks have a tendency to be quirky.
Monday, November 24, 2008
Sunday, November 23, 2008
Tim Sykes was nice enough to take a pic and give me a free book and sign it in between trying to short some stocks on his MacBook, lol. I enjoyed talking stocks with Tim and think he is a great guy.
Friday, November 21, 2008
Tuesday, November 18, 2008
Monday, November 17, 2008
Sunday, November 16, 2008
Thursday, November 13, 2008
What the hell was that? Lol, well just like I said 865 breakout gave the market one of the biggest short squeezes we have ever seen! The ES futures literally had like a 95 point range on the day. Just spectacular. The shorts got hung by the neck today in the last 3 hours as the market hit a low of 816.75 in true capitulatory fashion. Then recovered all the way back to breakeven, and virtually without pause, rocketed higher into the closing bell on huge volume (4.2 mil on ES, and 753 mil on SPY) to close around 910. Absolutely incredible. It was almost like you could feel it mounting as it rose and you knew it was just a melt up that would not end till they rang that bell.
I think this sets us up for at least a few days of continuation. Why dat? Simply because we had a classic textbook example of an outside day pattern today on pretty much everything! Outside day is a very bullish pattern that says a continuation of a few days is very likely. You ain't seen nothin yet!
Ok lets not fall in love with the upside here traders but when I see a rally like this with volume like this, I see several days or even weeks of continuation buying. Until this signal reverses or changes I will be bullish because this was a very important POSSIBLE inflection point. I am not calling an end to the bear market at all! But I am saying we are probably going to rally in the short term and why not make a few bucks to the upside right? If you think you missed the move today, just patiently approach the next few days with a buy the dip mentality and dont get too emotional out there. Basically throw a dart at the board and buy it on the dip. I like AAPL, INTC, AA, DRYS, as high beta plays in the next few days and in order of least risk.
Wednesday, November 12, 2008
If you are still in the SBUX trade keep your stops underneath 9. I am holding a very small amount of Jan calls but if this baby doesnt confirm strength Thurs into Friday we cut and run and find the next opportunity.
Anyway, what a terrible tape we have dont we? Like I said yesterday if we break 900 on the SPX then watch for 860. Well we blew right thru that like a hot knife thru butter and finished the day at 852. Now after hours we have INTC coming out and lowering revenue estimates and saying demand is falling off a cliff, lol good timing Intel, thanks. We are in the danger zone here folks. If the market was playing the role of Goose then I'm not so sure Maverick could help him if he tried.
I was expecting a big move in either direction today and wanted to go long an SDS strangle but I was a day late on that play as the SDS just ran away like a scalded dog from the open today and ended higher by about 10%. Unreal action we are seeing lately. Looks ugly out there and we are going to test those October lows imminently it appears. Closing low on the cash SPX was 846 and the intraday low on the cash on Oct 10 was 839. However the ES futures got down to like 825 that morning I believe. Either way you slice it we NEED to hold these lows or else you will some unpresecented selling action that could have us challenge the lows of the end of 2002. Yikes.
Futures are already down in the 840s as I type and Asia should not make things better when it opens up. I fully expect a gap down scenario in the morning but it will be very interesting just to see how much we open down. I kinda wanna see a massive washout tomorrow so we can just flush out who ever is left and plant the flag so to speak. Its like the market has food poisoning and just cant quite puke, lol. Interesting to see the VIX only at 66 today even as we get back to the lows of last month when the VIX of course hit 89. Hmm not quite sure what to make of the divergence just yet. Initial claims out premarket so that could affect the market. Sit tight and watch for relative strength whereever you see it. Otherwise watch out for volatility into the weekend and dont be scared to scalp the futures to the downside perhaps on weak bounces.
Tuesday, November 11, 2008
Monday, November 10, 2008
Anyway, interesting article out of Schaeffer's on Monday talking about the discount to Historical volatility that the VIX is trading at lately. In other words HV, or volatility of the SPX index itself, is much higher than IV in SPX options and therefore the VIX is trading at a discount to the SPX historical vol even at these lofty levels. The reason this is important is because before a bullish advance in the markets you would want to see the VIX trading at a significant "premium" to historical volatility, and it is not. As the chart to the left shows, during much of this volatility since Sept. the HV of the SPX itself actually traded higher than the actual VIX. This happens only very rarely and is sometimes troublesome as Joe Sunderman, Vice President of Financial Market Analytics, goes on to say:
It is difficult to draw a quantitative conclusion when there are so few historical references to draw upon. I do feel that this discount in the spread is a troublesome development. I remain concerned with the complacency I am seeing among option players. Bulls would want to see the VIX trading at a steep premium to SPX volatility, as a sign that fear is rampant among the investing community.
He makes an interesting case that perhaps we might have not seen the height of fear just yet. Either that or volatility is a screaming sell up here still in the 60s! Lol, but because of the fact that we have just been drifting lower in the VIX and not really seeing any meaningful collapse tells me that he could be on to something and we might just have to watch these markets for a little more turbulence. I mean you can make a case for both sides of the map here but being aware is the best way to make a decision so I will leave it at that and say keep watching that VIX; and be sure to check out Adam's site at Daily Options Report as I think he has some of the best thoughts out there on the VIX, and is a daily read imo.
Sunday, November 9, 2008
Friday, November 7, 2008
The market was watching and waiting this morning as Oct jobs data was being released and to me it was almost like this market was ready to rally but just wanted to make sure the amount of jobs lost was not a worst case senario (like over 300k jobs lost). We sold off sharply the last two days EXPECTING a bad number to be released today and we got one. The economy lost 240k jobs in Oct, the Sept number was revised up to 284k from 159k, and the Oct unemployment rate moved up to 6.5% (highest since March 1994!). Yikes. So why in the world did we rally 250 pts in the face of this nasty news? I heard of someone still yacking today about how the Obama caused the selloff the last two days. Unreal how people think markets work. This is simply not the case because "the market"--which is simply a collection of all aggregate supply/demand and its behavior that it produces--prices in future expectations way before the Average Joe even thinks of them.
Anyway, it was a productive day overall I would have to say on the major averages. I was expecting at the least a small bounce off the 900 level from yesterday and we actually ripped into the close to finish the day at the highs, roughly 930 on the SPX. Not a bad way to go into a weekend. Honestly cant remember we finished a Friday at the highs of the day. That being said I would not be surprised to see a continuation into early next week, but will go into detail on that more Sunday night.
Barack Obama gave his first public press conference since the election today, during market hours, and actually the markets rallied afterward. Maybe this is a new trend we can look forward to, lol, instead of looking for selling every time Bush and Bernanke come on tv to speak. I gotta say, regardless of your political preference, Mr. Obama does seem to inspire confidence in people and thus the markets when he talks. Even myself I feel encouraged to see this new sort of energy in the air that he has created. It is pretty neat and something we have not seen out of DC in a while. No matter if youre black, white, blue or purple you are firstly an American and we together all are trying to accomplish reasonably similar objectives, just with different paths of getting there. That being said he is our new leader come January 20th, like it or not, and we should be open-minded and support his plans as they are put into action.
Don't want to get too political here but wanted to share what was on my mind. So have a great weekend and we will see what the markets do next week but remember the waiting is part of the game :)
Thursday, November 6, 2008
So this is it we are in a trading range and it has played out well the last several weeks just as I predicted last month. Another big selloff in the market on Thursday which ended near the low 900s. After a 10% down move in two days, on relatively light volume by the way, I gotta start to look for some kind of stabilization in the markets going into Friday or at least next week. Friday is a wild card however because we have the dreaded jobs report due out pre-market. My opinion is that the market has priced a terrible number the last few days so if we get anything reasonably close to the expected 200k jobs lost in Oct then we could actually rally into the weekend. I'm not too sure we see a number like that though. If we get more like 275-300k jobs lost then watch out for a nasty day Friday where we could even get down to the 880 level or lower. But like I said we are down 10% in two days, markets snap back to their averages and we are a bit overextended in the short term so a small bounce or even rally could transpire.
Bottom line is we are stuck in a range for the foreseeable future (850-1000 on SPX). The way to play a range is to buy when we hit the floor (keeping a tight stop underneath) and selling when we hit the ceiling (keeping a tight stop above). When the market gives you the money, take the money and run as Mr. Steve Miller once said. Don't get greedy, don't get fearful; because the market doesn't care about what you want, so you will lose your shirt if you play this market, or any market for that matter, with your emotions. So don't! And of course always obey your stops traders.