Thursday, February 26, 2009

Obama Drops The Bomb

Well Thursday began pretty bullishly as we rallied into the 780 mark on the SPX. Even as we came back down to test the pivot midday I thought we would rally from there but then Obama revealed his budget plan and the market showed him what it thought. And folks the markets are never wrong. We sold off into the 750 level by the close and seem to be setting up for more downside Friday.

We broke an uptrend line of a larger triangle that has been forming on the 15min chart since last week. With this breakdown I think the market could retest the breakdown zone in the low to mid 760s and then sell off further into the weekend. As for now we are still in this range between 741 and 780 that should determine the trend going forward, once broken to either direction. My bias now is lower but we shall see what happens.

As for Friday the pivot on the ES futures is at 760.25. We are in the low 750s after hours right now and if we even make it up to that pivot in the morning then you can bet on some fading to the downside to come in. Sellers will more than likely make a stand at the pivot and even if we get over the pivot a short ambush sets up at 764.75. Bottom line is don't hope for a rally because resistance above here is tough and I doubt the market busts thru it going into the last trading day of the month and week.

Wednesday, February 25, 2009

Analysis for Thursday

Wednesday was a wild day as the market sold off in the morning and then reversed to almost close positive on the day if it weren't for the last half hour. Either way, I'm still a little bullish here as we held the 750 retest today and seem to be forming a nice inverted head and shoulders on the 15min chart. Neckline over 780 so if we could get over that mark then we could rally fast into the 800 level imo.

As or Thursday, I'm looking at the pivot point of 764.75 to hold support and lift us higher. If it does not and we hover below it, then I'm selling into any bounces or flags that form because the shorts will have momentum below that area. Like I said, I think we can get up to the 800 mark to test but if we do get over it then we could run all the way to 823 where we have a gap to fill from last week. Not saying it happens this week but it could be something to watch. Trade safe.

Tuesday, February 24, 2009

Bullish on SFLY

After reporting blowout earnings a few weeks ago and rallying, SFLY has quietly consolidated into a nice bull flag pattern. It has retraced roughly 50% of the sharp advance it made and now after Tuesday's nice candle looks ready to bust higher thru 8. I want to see some nice volume as it gets over 8. This is a small cap that is a bit thin on the volume side so always use limit orders. I think it has a great shot at rallying into the 200 ema just under 10 where I would take profits.

Buy SFLY on a breakout over 8
Stop loss at 7.43
Profit target at 9.85

Rally Time?

Well it looks like the market has bounced off double bottom support at 741 and after todays rally it should get some continuation higher. I do think this will prove to be an oversold rally within a downtrend but those can be fast and furious so get your seatbelts on. Of course we are not even back to where we were on Friday's highs so we still have plenty of work to do before the charts look great. But for at least one day I think we have a shot of a nice short covering.

Specifically, Wednesday's pivot point is at 763. We are s bit above that after hours and I think we will probably stay above that mark. Pullbacks to the pivot should find support Wednesday and I think we can see upside into the 782 level as a first target. Above that and 795 could be seen. If we happen to to somehow lose the pivot and volume increases to the downside then you will want to think about going short more than likely.

How Do You Like Your Bottoms?

After seeing a small rally early Monday morning the market just grinded lower all day and closed near the lows of the day around the low 740s. We are essentially at the Novermber closing lows in the SPX now. It looks like we will continue lower but if we do then I think it will not be the same kind of panic selling from the fall of 08. After all how many people are still left to sell?

On the other side of this you can make a case for a double bottom at this area because it seems to me like everyone is expecting this big scary selloff once we break the November lows. I mean I just cannot stop hearing it on CNBC. This tells me that just perhaps the market might do something the crowd is not expecting. We shall see but don't bet all your chips on a selloff.

The currencies are at an interesting area too. The Euro is back down to November lows and should see the same move the SPX makes. The Yen is rolling over as I type and that dollar/yen pair is finally back over 95 which means the rally is alive and I bet it goes to 100 by the spring time! Gold will probably pull back a bit this week after the amazing up month it has had. I think gold in the mid 900s is a buy. Oil is simply not done goin down imo so don't try to catch it. Overall the next month on oil could see it retest the mid 30s and if that fails watch for 29-30.

For Tuesday, the pivot is at 754. We have rallied into the 750s after hours and I see a ambush short at 759.50 if we get there. The pivot point is the line in the sand for the day's bias but if we hold above it then I would look for weakness into that 760 level. If we get over that area then we could see a nice short covering into the 780s. Below this 754 pivot and there will be selling and probably some hardcore selling. Trade safe.

Sunday, February 22, 2009

The Weekly Trade 2/23

For this week I am slightly more bullish and expecting a snapback rally of some sort to begin things. News out Sunday that Citi wants the gov't to take a stake has the futures rallying but don't fall in love with the upside. Looking at the chart of the SPX lately we are oversold on the RSI and stochastics and have been riding the lower bollinger band the last few days. This coincides with the lows from November coming into play now and it is likely we see a relief rally becuase of all these factors coming into play. I would not be surprised if we retrace back into the 20 day ema, which sits around 824 currently.

I still think the intermediate term trend is lower and if we don't get this bounce then we def could break those November lows quickly. But at this time I think the charts are pointing to at least a small retracement of the prior decline.

Economic data for this week includes:

Tuesday- Case Shiller Home Price Index, Consumer Confidence, Bernanke Monetary Report
Wednesday- Existing Home Sales
Thursday- Durable Goods Orders, Jobless Claims, New Home Sales
Friday- Q4 GDP-Prel., Chicago PMI, Michigan Sentiment

As for Monday, the pivot point is at 766.75 and the futures are up in the 780 area currently. I think we are gonna see some short covering as long as we stay over the pivot on Monday. There is lots of news coming out intraday lately so its been choppy and violent. Below that pivot area and I think the market will be in trouble so add to shorts below that level.

Overall, I will start off neutral to bullishly biased this week but that can change at any time as I'm sure plenty of news will be coming out. I also plan to start posting individual option trading ideas soon so look for that addition to the daily blogging. Trade safe.

Thursday, February 19, 2009

Under Pressure

Thursday was a grind down sort of a day where we actually gapped up a tad in the morning and then sold off to close near the lows at about 777. Although I would have expected a more violent selloff below the 800 mark, it has still be a week of red and big money for the bears. Options ex on Friday should be choppy and I think we could be headed lower since the close was not all that inspiring on Thursday.

As for Friday the pivot is at 783.25. We are trading down after hours to about 771 and I do not think this market has a chance at goin up Friday unless we get back over the pivot point. If we gap down it could be a ugly day alll day long. We may see options ex tug the SPX towards the 750 strike which should be interesting. There is a great short trade around the pivot that should fail if the bears want it to. Above the pivot and we could maybe just see the thing get to 800ish. But I would not be betting on any upside into the weekend.

Wednesday, February 18, 2009

Whippy Wednesday

Wednesday we saw a early selloff bottom at 778 and then we rallied into the 790s before coming back down to about 785. It seems like the market is pausing for a potential fakeout bounce or just marking time before the next swing low.

Gold was working again and the dollar as well. The dollar index is getting up to big resistance at the 89 level. Expect for some shake and bake action in the currencies here pretty soon. The dollar will either breakout of this area higher and the Euro head lower or the dollar makes a double top and rolls over. If I had to guess I would say the dollar pops its head above 89-90 and then pulls back.

As for the ES futures for Thursday the pivot is at 786.25 and we are a bit below that after hours. the pivot is usually my line in the sand for the intraday action and its bias. I really am not looking for much upside trading right now but if we get over that pivot then you gotta be ready for some short covering at least. Below the pivot and I think we head down to test the 767-770 area. Options ex friday so be ready for some choppy trading.

We Return You To Our Regularly Scheduled Bear Market

After gapping down hard on Tuesday the markets did very little in the way of move through the day. It was actually a very boring day if you ask me. The range was no more than about 15 SPX points during trading hours. However, the important thing to know is that we broke the 800 level and hit a low of 786.75, closing just above that. We are now right back to late November and struggling to hold those lows. The SPX still has a good 50 pts of downside before it reaches that 740 low. Anything can happen of course and I do think we will test the levels soon but I'm not so convinced we break below them.

As for Wednesday, the pivot point is at 791.75. We are actually trading jut above that after hours and I think we could see a small bounce in the morning session if price stays above the pivot. Heck we can even retrace into the 810 area if the market feels like it. For the day I will be bullish intraday above that pivot. However, below that pivot and its a whole notha' story. There is very little support beneath that 790 area and if we were to fall then I think we could see 767-770 quickly. Trade safe.

Monday, February 16, 2009

This Week's Trade 2/17

As we start a 4 day week in the markets we are on the verge of breaking down below critical support at the 800 level. It just seems like this market is posied to retest the November lows around 740. The futures Monday night are lower at 807 so we should see a gap down Tuesday.

My bias to bearish and I think we could see those November lows retested this week if the market doesn't get going quick. We could see a retracement into the 820 area to fill the gap from Friday but if not then watch out below as there is very little support under the 790s. It think if we break 800 this week then we see the 767 level fast.

Tuesday- Empire St. Mfg., Net Long term TIC flows

Wednesday- Housing starts, Building Permits, Capacity Utilization, Industrial Production, FOMC Minutes

Thursday- PPI, Jobless Claims, Leading Indicators, Philly Fed

Friday- CPI

The one thing I will say about the markets is that it seems everyone is expecting this retest of the November lows so mayyybe it just might not happen. The market has a way of surprising you and when the herd is thinking one thing, the market will do another, so just a thought.

Overall, I think it could be an ugly week in the equities with plenty of shorting opportunities. The gold market looks to continue its rally of late and the dollar as well. Trade safe.

Thursday, February 12, 2009

How Do you Like Your Short Squeezes?

Thursday was hell of a short squeeze after the shorts got "Obama-ed". That is a new verb used for days like today when Obama announced a Socialist housing plan to subsidize mortgage payments to troubled homeowners. As a result, the "free" market went nuts and we erased the 225 pt loss in the Dow in an hour.

For Friday I think we can rally higher into the weekend as no shorts wanna be short into a 3 day weekend, especially with Obama pulling out his guns. The pivot is at 823.75. We are trading in the mid 830s currently after hours and I think as long as we stay over that pivot then we rally into the 840s perhaps. There is a long ambush 50% retrace trade down at 819.50, but I think the pivot is the line in the sand and should dictate the path of least resistance going into Friday.

Wednesday, February 11, 2009

Is The Selling Done Yet?

Who knows but the graph here shows the evolution of the market after the crash and then ensuing depression way back when. Obviously we are not in the same boat as we once were, but it's worth a look.

As for our current market, and how to trade it, Wednesday was a typical day that you get after a big sell day. Slow, choppy, and relatively low volume bounce back.
Gold was the story of the day as it rallied nearly 40 dollars to new 7 month highs up at $945. I still think this is just the beginning of the gold train. If you are in GLD or any gold miner, stay in, as I think breaking out of the 930 level was pivotal to gold's direction for the next month or two. It ain't done.

For Thursday ES futures pivot is at 829.25. We are right there after hours and the morning trade should be interesting. If we open up above this pivot point then I will be looking to go long and holding for a move to the low 840s possibly. There is a short ambush still up there at 841 so IF we actually do retest that area then I think the sellers may come out.

On the downside if we fail to get over the pivot then I will be short bias and looking for a break of the 820 support level. If 820 fails there is some support at 816 but below that and I think we could head straight to 800 on the SPX. Be ready for anything going into the weekend.

Tuesday, February 10, 2009

Terrible Tuesday

Well Tuesday was definitely not kind to the bulls. But like I said in Monday's post, if we could not get above the pivot then we would have every reason in the world to selloff. And boy did we. After gapping down in the premarket the ES futures came back up to just about almost fill that gap and hit the pivot point of 866.50 to the tick. That was the high of the day and the trade of the day. Selling the pivot.

The remainder of the day saw several good setups to take on the short side ambush trades. Flag after flag setup preceeded to breakdown and make new lows. We ended up hitting the 820 level and some shorts covered into the close.
Going into Wednesday I have a short bias but think we could see a snapback rally at least in the morning session. A day with selling as overextended as Tuesday sometimes bounces back like a rubber band and suckers in some new longs who go "shopping for cheap stocks".

The pivot for Wednesday is 836.75. We are trading 829 currently and I would be a seller of any rally into that pivot. There are a few short ambush 50% retrace trades out there. One around 830 or so and the other up at 841. If we do get over that pivot beware of that 841 zone that could see selling pressure. That short trade has a target of 809.50. Trade safe.

Monday, February 9, 2009

Tuesday Analysis

Monday was a slow and choppy wait and see kind of market day. Everyone is sitting on their hands waiting any bank plan news. The high was 873 and we just kinda glided lower into the close. After hours the market is lower by a decent margin. The low after hours is already in the low 850s. If this level holds then we are in a nice size gap down in the am. Expect at least a 50% gap fill in the morning either way.

The pivot for Tuesday is up at 866.50. If we get back up there on a gap fill or anything then expect some harsh resistance in the area. But if we surpass the pivot on Tuesday I think we can go straight to 876. On the downside if we cannot get over the pivot then I can see this market retesting the 845 level where there is a large long ambush trade waiting. If we can hold that level then the -23.6% retrace target is up at 886. Let's just see if we can fill the gap in the morning and get back over the pivot. If not, then I will have a short bias to start the morning.

Sunday, February 8, 2009

This Week's Trade 2/9

Going into this week I am looking to have a bullish bias from the onset. Looking at the daily chart to the left you can see we are just under that 50 day EMA. The first touch of this area this week could show some selling but I do think you gotta buy the dips here. The indicators on the chart are looking more and more bullish. The level to watch for this week is going to be 876 in the SPX. Thats the high from a few weeks back and I think if we get over 876 then we could have a green light to the 940s.

Obama and Congress will have a lot of attention this week as the bank bailout and stimulus are on everyone's mind. If they do resolve this then we are technically setup to really have a hell of a rally in the markets.

Aside from the bailout and stimulus news, we have a light week on economic data and it includes:

Tuesday- Wholesale Inventories
Wednesday- Trade Balance, Treasury Budget
Thursday- Jobless Claims, Retail Sales, Business Inventories
Friday- Michigan Sentiment

It looks like the Nasdaq wants to lead this rally if it continues. The banks are getting some hard short covering and if it continues then this market looks ready to surpass 876 this week and close in on 900 once again. On the other hand, you got to remember that the market's are running lately because they are anticipating this stimulus and bank plan to be announced. It could be a buy the rumor, sell the news type situation.

For Monday I want to buy pullbacks and see what happens. My bias is bullish but that can quickly be changed if we fail at key areas like the 850s. Trade safe.

Friday, February 6, 2009

Lift Off

The rally in the markets on Friday was definitely a long time coming. We finally broke out of that key 850 resistance I have been yelling about. The market is NOW telling you that it wants to go higher. Bad jobs number. Yada Yada Yada.

The banks ripped higher today to lead the way on the short squeeze. BAC is now up an insane 63% from Thursday's lows! Just nuts. Tech was also a strong leader on the day and the QQQQ looks good for next week to continue this rally.

This does seem to have a "buy the rumor, sell the news" smell to it. Monday's Obama speech on the bank plan is what to watch for. The market is already getting ready for good news. Thats why we rallied from 817 to 869 on the SnP's since Thursday's lows. I think we should be looking at a big continuation next week for the SPX. If we get over the 880s then its off to the races. This could be the beginning of a multi month rally in the SPX. A bear market rally it may be, but remember that these could be wild and you wanna be a part of them.

I am now thinking we could get to 1000 SPX by April. Let's go baby! Enjoy the weekend. See ya Monday.

Thursday, February 5, 2009

Yen Cracks

Just when it looked like the SPX was gonna break down to test the 800 level on Thursday, the Japanese yen fell off a cliff. We then rallied hard into the 850 mark which again, held as resistance. However, I think this move in the Yen is just beginning. Basically when the dollar rises against the Yen, the equity market of both countries, rises. So watch for this Yen trade continue to be unwound, and as a result, I believe we could start to rally higher in the SPX.

Of course we have a jobs number Friday morning which is sure to be nasty. The estimate is for 540k jobs lost and 7.5 unemployment rate. I think the market is already pricing in a bad number higher than this. I would say as long as we don't top 650k then the market can rally. Sounds crazy but just watch.

Its all about the 850 resistance we have been fighting and if we blow through it, then I think we could have one hell of a short squeeze rally Friday. The pivot is at 836. We are trading 841 currently overnight and are probably going to gap in one direction or the other after the jobs number premarket. If we open up above the pivot point then I want to go long expecting another retest of 850. This would be the third test of 850 in three days. As traders we just love the law of three's. Usually when a level is tested three times then it breaks through. Not always but usually. So if get over 850 then I think we have a green light target to 870 where we have a gap to fill from last week.

If we do sell off under the pivot then my bias is bearish. 850 is a big level in my mind and if we cannot close over it for the week then we may have some problems. Pivot is crucial to me on Friday to see if the longs hold into the weekend.

Wednesday, February 4, 2009

Trading Baby

Wednesday was a day to sell the morning rally. After touching the 850 level we quickly sold off into the close and the action left us underneath the crucial 830 level. After hours CSCO gave a gloomy outlook on the economy and the futures sank further. I am looking for more weakness into Thursday.

The pivot point is at 834.75. I'm not so sure we get back up to that mark Thursday, especially if the jobless claims come out bad in the morning. I will be looking to sell a gap fill assuming it occurs. I think it will difficult to get any moves over the pivot Thursday. The ambush short from Wed. worked out perfectly as it rolled over in the 840s and headed down. The target on that large short is clear down around 793. Not saying it happens this week, but it definitely has a shot.

Either way I would be lightening up on any longs (if you have any) until we show some strength up above the 850s. For now I think we are headed for at least a retest of 800, and perhaps lower.

Tuesday, February 3, 2009

The Dish

So Tuesday was a pretty quiet day till the last two hours when we ripped higher on what seemed to be a decent short squeeze on low volume that sent us to 840 or so. While this market will be seeing some ugly data the rest of the week it will be interesting to see exactly what is priced in. We definitely have a chance at rallying further but I'm not convinced of a huge break higher unless we eclipse the 850 resistance level soon.

The setup for Wednesday is simple. The pivot on the ES futures is 830.50. That is also a nice sized ambush long from the late day rally Tuesday. Buy the pivot and expect it to hold if we are going higher. The target on that trade is 844.

Overhead I mentioned 850 as a key resistance level we need to breakout of if this rally has legs. That is the 61.8% retracement of the selloff we have had since last week. There is a larger ambush short at 842.25 so if we fail near that level and rollover then the selling could get real nasty. Just watch the pivot to tell you the bias for the day.

Monday, February 2, 2009

Boring Monday

Monday was a choppy day that ended pretty much flat overall. The best trade of the day was probably going long at the open for a shot at the gap fill, which was achieved. We ended up with some short covering in the last hour and even that was on low volume.

Going into Tuesday I am expecting a possible bounce but I am still bearish on this market so I would not be looking for much to scalp on the upside. With the daily pivot at 819.25 we could setup for a chance to go long in the morning. We are trading in the low 820s after hours currently and I would think this market could actually trade into the 830s if it holds the pivot after the open.

There is a small long ambush play at 820 that has a target of 831 if hit. But we also have short ambushes up at 828 and 842.25. Both of which could halt any rally as selling pressure mounts. If we do not hold up above the pivot tomorrow then I would be looking to sell retracements all day long as I think we could get back to the low 800s in that case.

But don't be surprised if we bounce a bit, because after all, even dead cats bounce when they fall out of a window.

Sunday, February 1, 2009

This Week's Trade 2/2

Last week did not end well for the bulls after the early week rally, it all fizzled away. I was focused on the 830 level last week to hold as support but it just could not. We closed the week a bit below that area. Going into this week I am bearish on the SPX as I believe we are now headed below the 800 mark and it could get ugly fast.

Looking at the chart, the SPX has some good support here in the 812-82o area but below that and we could selloff quickly. If we do get a bounce off current levels I would not be convinced of any rally until it got back over 850s at a minimum. It does look like that intermediate term trend is switching to the downside again.

This week should be interesting as a stimulus package will probably grab the headlines. Also we have the jobs report for Dec out this Friday and we all know how that will be. Plenty of news driven trading coming.

Economic data this week includes:

Monday- Personal Income & Spending, ISM Index, Construction Spending
Tuesday- Pending Home Sales, Auto and Truck Sales
Wednesday- ADP Employment, ISM Services
Thursday- Jobless Claims, Factory Orders, Productivity
Friday- Dec. Jobs Number, Consumer Credit

Monday the pivot point is at 829.25. I would be a seller of any retrace to the pivot on Monday. If we open up with strength I would not fall in love with it. I still think this market is in trouble and has to prove itself much more than it has lately if it is going higher. For now, I dont think it will.

There are a few short ambush setups possible right under the pivot around 827.50 and also a bit higher at 833.25. The shorts will sell into these zones so be aware and look for weakness IF we even get back up there. Trade safe.