Tuesday, March 31, 2009
Monday, March 30, 2009
Sunday, March 29, 2009
Thursday, March 26, 2009
Wednesday, March 25, 2009
Tuesday, March 24, 2009
Monday, March 23, 2009
Monday the SPX got just what it needed. A powerful rally thru 800 resistance and a close at the highs around 820. This rally was quite impressive from my perspective as I was looking for a bit more of a pullback into the 740 support level but that did not happen and now looks like you got to be a buyer of dips. Of course the market did just rip up 500 pts so a few days of consolidation wouldn't surprise me.
The rally was broad based and tech and the banks led the way. The internals were strong again as I believe this was the 5th day in the past few weeks that the up volume hit 90%. That is simply telling you that when you look "under the hood" of the market, the internals are saying you that there is real buying and real strength being showcased. It doesn't really matter whether the bear is gone or not, the point is that we are in a strong rally and you should be bullish until the charts tell you to stop being bullish. Trading is really that simple, its when emotions become involved that we get into trouble.
For Tuesday, the pivot point is at 806.50 and it really is amazing to be back in the 8 handle. I think you gotta be bullish here above 800 but that doesn't mean chase strength. As always above the pivot and I am bullish intraday. I think we could get a pause day or even some profit taking. However, I do think this rally is real and has legs perhaps into May or beyond. Next few resistance areas to watch are 840 and 876 with obvious support down at 800 and 770.
Thursday, March 19, 2009
Wednesday, March 18, 2009
Monday, March 16, 2009
After a euphoric gap up in the morning we hit a high of 771 on the ES, which was roughly 105 ES points up in the course of a week. The market is due for a pullback and did so in the last half of the day. Now the focus turns to seeing whether this is a small retracement of the prior advance or the next leg down. I honestly have no idea, lol, but I will let the charts tell me. I'd like to be a bull and say we blow thru 800 this week, but of course that would be hope talking.
So now I am looking at that important 741 support level and seeing if we hold it. If so, then we could really gain some steam as its expiration week and those have historically been somewhat bullish.
For Tuesday, the pivot point is 757.25 and will be the line in the sand. With price closing in the low 750s today that means it might be a difficult to get over the pivot and the first attempt at it should be faded. If we do not get over that pivot then I fully expect this market to retest 741. If it holds is another question.
Sunday, March 15, 2009
A Large-Scale Wave Count on the S&P 500 Monthly Chart places us in Wave C of a very large three-wave correction that began in 2000. The Peak in 2000 represented a final 5th Wave most likely of a larger 3rd Wave, which puts the whole Bear Market from 2000-2009 into context as an ABC Three-Wave Correction of a larger 4th Wave.
Wave A formed at the 2000 peak down to the 2002/2003 lows, while Wave B was a rally back up to retrace just over 100% of Wave A which lasted from 2003 until 2007, and we are currently in the third corrective Wave “C”.
The market peak occurred in October 2007 which began the C-Wave Correction Down which has just broken to new lows beneath the A-Wave (2002 Bear Market) lows as expected. Reference the “Ideal” Elliott Wave Count diagram - C Waves almost always break to new lows beneath Wave A in a correction.
Noting the Wave Structure from 2007, we see that a 5-wave formation is very near completion, and as of this writing, it would seem that a fractal fourth (4) wave up followed by a fractal fifth (5) wave down would complete the 5-Wave major decline from the 2007 peak and suggest that a large-scale Three Wave Correction to the Upside - which could last months or longer - is expected next according to Elliott Wave Theory.
So this can make the claim that the worst is over as we are in the final stages of the 5th wave down in the bear market that began almost 18 months ago now. Of course the other side to this argument is that we are only in a very extended wave 3 down in the bear market and still have a retracement higher to come before the final wave of selling makes new lows.
So which one is it? I honestly am not an expert in Elliott Wave Theory, and only a student. But I would think at the very least what began last week was the 4th minor wave within the primary 5th wave down in the bear market. Assuming this, that would mean we retrace a bit more this week before eventually falling back to retest the 666 lows on the SPX and completing the 5th minor wave within the 5th overall primary wave.
Whatever it may be, it is worth paying attention to, and like everything regarding technical analysis, not one single tool or method is always right.
Thursday, March 12, 2009
Wednesday, March 11, 2009
Thursday will be interesting because of the jobless claims in the AM and the pending mark to market news. I would expect a big move either way. If I was a betting man, which I am, I would say we go higher to hit 741, or at least attempt to. But keep an eye on Thursday's pivot on the ES which stands at 722.25. If we slip below that in the morning then it might be difficult to avoid a down day.
Tuesday, March 10, 2009
Monday, March 9, 2009
So on that note I would not be surprised to see some strength on Tuesday with of course the assumption that we can hold above the pivot.
For Tuesday the pivot on the ES futures is 680.75. We are trading a bit higher after hours so it could be a interesting day if we can get some momo above that pivot and even more so if we get over Monday's highs in the 695 area. If we cannot breakout of the range we had today then it may a choppy sort of flat day so don't overtrade it. Trade the trend.
Implied volatility on SKF is north of 190% so I would prefer using a spread strategy to hedge some volatility risk because once the SKF sells off hard then the implied volatility will get crushed too.
Buy the 200/150 March put spread.
In this trade you are buying the 200 put and selling the 150 put for a net debit of around $10.
Max loss is that original $10 if SKF closes above 200 by March expiration.
Your breakeven point at expiration is at 190
Max gain is a possible $40 if SKF gets under 150 by expiration.
Again this is a somewhat risky play since SKF is insane. But if you think we are near a short term bounce in the banks then this is a good way to play the options imo.
Sunday, March 8, 2009
Thursday, March 5, 2009
Wednesday, March 4, 2009
Wednesday was an up day that seemed to get everyone pretty darn bullish. I don't really think it was that impressive of a day with the last hour sell program and lack of financial sector participation but call me crazy. Nonetheless we did finish above some key levels, like the daily pivot for tomorrow so can this market be ready to jump on Thursday?
I think there is a decent chance at seeing a short covering rally into the weekend from here. Of course dont fall in love with the upside but dont be surprised to see it. I would definitely think that the banks need to rally in order for any bounce to sustain itself for more than a day in this environment. Wednesdays rebound was mainly due to the new Chinese stimulus that got all the commodity bulls jumping.
For Thursday, the pivot on the ES sits at 711.75. We have sold off after hours and are trading a bit below there. I think you gotta expecting a continuation rally off todays move as long as we stay above the pivot. The end of day selloff was not great but I think it was just a sharp pullback after that midday run up. Until it proves otherwise, with something like more selling below the pivot, then I think we could actually run into the 730s at a minimum with an eventual retest of that big 741 ceiling.
Tuesday, March 3, 2009
Monday, March 2, 2009
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