Tuesday, November 18, 2008

Be There Seen That

Today looked awful after the morning's double top high around 865 and prompt sell off that went all the way down to the 825 level. The last hour we saw a crazy short covering rally that brought us right back to the 850s. I don't think this means a damn thing. Forget the hype on CNBC. This market is still making lower highs and in my opinion every rally is made to be sold. The momentum to the downside is simply too strong to ignore.

With that said its definitely possible we get a muted rally attempt into tomorrow because we do have options expiration this week and it looks like they wanna push this baby a bit higher. Options ex is known to whipsaw traders out of positions. This week looks to be no different as the call and put holders try to defend their positions and finish in the money. Expect continued volatility midweek with a chance at retesting that pivotal 880 resistance level on the SPX. We are pretty much still in the triangle I outlined yesterday and are working our way towards the apex. A breakdown is probably inevitable sooner or later here but lets allow the charts to guide us into options ex this week.

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