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Thursday, September 30, 2010

Triple Play

SPX had an outside day reversal to the downside which is negative.  It opened very mildly higher and quickly reached the high of the day at 1157 before 7.am and started falling of the cliff and made a low of 1136 little after 9.00 and made a 50% recovery to 1146 and settled at three quarters of the decline at 1141.  This kind of action does not sound bullish at all. Yesterday was inside day so it made it easier to be an outside day (small bar big bar) but the closing at 1141 is the lowest for the week.   I am reposting three of the charts from yesterday with updated data.  They all have met the resistance lines and retraced back.  The daily top left hit the top line of the channel.  The hourly looks like the Starbucks meeting is over and the proposal to go higher has been turned down and lastly RUT has also turned back after meeting the top line of the channel.  This is what I was expecting to see.  Now if the analysis holds without going into detail calculation I should see 1070 and will reevaluate at that point.  If I see a 1158 that would be bullish.  Lets hope not.  I am bearish.  Once again unless spx takes out some key numbers first at 1100 then 1070 then 1050 and 1010 I am not turning into a full bear calling for the end to this recovery from 1010 yet. 

Wednesday, September 29, 2010

Everything is important

SPX started the week at 1148.67. It was down 6.5 up 6 and down 3 in the three days of boredom in trading.  You wonder what happened to those days when the range was great and volume was high and advancing and declining issues were in line with trend.  This is September  historically its a bad month stock lose 5% or more not this time.  Thats why I think everything is important and should be watched.
The picture on the left is an Gann emblem It gives important dates to watch for.  SPX made a 1010 bottom on July 01 the 90 calendar day point comes on October 1st.  Thats on Friday.  IMO since July 1st was a bottom October 1st should be a top.  OK following that logic where should that top be ? - right where we are.  On right is  my daily chart of SPX we are slowly inching ( should be millimetering) up. That top line of the channel has become ever so important.  Its around 1150.  No line is perfect.  If we were to tank right from here I would give it a OK.  The hourly spx on the left is all bunched up and should reach a resolution very soon.  This is also projecting top of some sort.  Also our very respected astro person "missmalibu" is forecasting quite few rough days ahead.  I am kind of timid to buy long side of this market a 20 point spx hit would make me brave to buy the shortsdie of the market.  However this is still short term at this point.  Unless spx takes out 1010 the trend is still up.  Anything below 1100 would make me get ready to short and above 1180 I would go long. 

Sunday, September 26, 2010

Critical point

Last week spx closed at 1125.79. This week spx data is given below. 
 Date Open High Low Last Change % Change
09/24/20101,131.691,148.901,131.691,148.67+23.84+2.12%
09/23/20101,131.101,136.771,122.791,124.83-9.45-0.83%
09/22/20101,139.491,144.381,131.581,134.28-5.50-0.48%
09/21/20101,142.821,148.591,136.221,139.78-2.93-0.26%
09/20/20101,126.571,144.861,126.571,142.71+17.12+1.52%
There are couple of observation SPX did go below (1122.71)  and above (1148.9) last Friday's close (1125.79).   This below and above happens most of the times We have done 155 weeks of trading since the infamous top at 1576 only 29 times (18.7%) we did not do above and below close. How do I play this information If I had just gotten a week where we did not do a above and below I would argue the odds are in my favor over 81% that spx would make the next 4-5 weeks a normal week with above and below. Or conversely I can either go long or short at the end of Friday's closing and be right either way.  Well some thing to ponder.
The charts I have are same as last week plus a monthly and a longer term daily from the famous 666 low in Feb. 09'.  Together they give true meaning to the words long term and short term emphasis. Of all the charts I look at this chart on the left offers me the most information on long term.  Very simply when I magnify this chart and stand about 4 feet away from it I can not see any thing but bullish pattern.  The channels are from BL to TR that is an up trending line.  Within the big and small and the mini channels there is tops and bottoms but generally it is up up and away.  Until we take out a significant previous low like 1010 and head south like this chart implies the trend is up.  The monthly chart on the right is an important one. SPX is within a tight channel and within reach of 1062 the top line of the downward  trend line.  If that line is busted and we go above that will one more reason to be bullish. But this is a rally of 99 points after a 137 point decline on a monthly closing basis.  The 75% is at 1152.  Given that I wouldn't be too surprised if we got a short term jolt. The weekly chart on the left is something I play close attention to,  for Gann said weekly charts were of great value.  The red ,green and black trend lines are the three last lines of defense left for the down trend.  Once these are broken (if?) there isn't a whole lot of resistance coming from trend lines.  SPX will have to make a short term high come down and start going up before I can draw another trend line from a previous high.  Until then this is the last line in sand like they say so I watch it intensely. This could be the end of b wave after the a wave decline from 1220 to 1010. The daily chart on the right points to a potential short term top as well.  The top line of the up trending channel is at 1162.  There is a distinct possibility spx may take a turn at that point.  Finally I have the hourly chart.  This as short a short term picture I want to see.  This chart on the left is pointing to a very short term top as early as -- in the next day or so.  The black trend line the blue trend line and Gann 1x8 lines are all have a Starbucks meeting.  My belief is that this cause a short term decline.  The full moon was on the 23rd now it is the declining phase and the spx should decline with it.   Also the astro guys are very active calling for something big to happen in the next few days.  They haven't been very right lately but the market gives everyone their fifteen minute of fame.  All that points to a decline to start shortly.  I am guided by my indicators modified DMRM, D2PL and others.  I want to short and short soon but not without the indicators.

Sunday, September 19, 2010

Lets play the game and not guess the outcome

These are the stock charts that have me fired up tonight for tomorrow. The first one is hourly it is hitting against the 1x5 resistance line and upward sloping parallel line which was support previously and has proved to be resistance once before. That makes a very good case for decline to start right from here if it is going to start.  The second is daily chart that shows a line parallel to the most recent upward trend line ( joining of last 2 lows 2nd being higher than the first) This was support before and has been resistance on more than one occasion that is also an negative.  Finally I have the weekly chart that has red ,green,black downward resistance trend line.   If spx were or move above the black line I would be quite bullish but until that happens each these line is resistance and is hence a negative.  On TZA/TNA we had a 10/20 cross to up/down side but yesterday's action or no action has put a reversal within reach.  DMRM is positive for the market and we do not have clear decline of 22 points on spx for a negative trend.  Add to all this we had a HH and HL day which is also positive. Full moon is coming up a positive and Sep. 19th is 144 days from April 26th which is an important Gann date.  Unless the markets take a nasty turn and give a short signal I will continue to be bullish.

Thursday, September 16, 2010

Options in control booth







Tomorrow is option expiration at the end of quarter that means options on futures, options on stocks and etfs and futures all expire.  Today the markets were down most of the day.  TNA, TZA , $RUT , $SPX all made LH and HL meaning an inside day.  That is generally a pause and the trend from previous day would continue next day that is up and bullish.  In today's action stocks and etfs traded closer to round numbers at which they are likely to close tomorrow.  When stocks dropped today  call options became cheaper and were bought back and puts which were very expensive were sold naked.  IMO tomorrow we will see a higher market as the remaining naked calls rush to buy stocks to cover in case the calls are called in.  There may be a slight chance that the markets open lower and move up at a snails pace all day.  The best thing to do IMO is not to play tomorrow.  
As far the signals go we have a bearish 10/20 moving average  cross. That is negative but we have seen markets do exactly the opposite so as to go back and retest the moving averages that part is positive.  DMRM is negative but is extremely close to going positive.   SPX hasn't shown any signs of getting weak  we haven't even dropped 25 points on it.  The ETFs TNA/TZA have not gone thru the DOMA 77 which is again positive.  All in all IMO we should have a positive day.  How big  depends on how many naked calls were left open. 
I have spx daily chart three weekly charts they are dow, spx and rut.  SPX daily we are clearly above the 50% line and above any immediate resistance line.  It also shows inside days.   Dow is very close to penetrating the weekly downward resistance trend line ( I think it will happen) spx is next and rut is lagging behind.  Once dow and spx break the line rut will accelerate (more speculative stocks in that index) and pierce the line.  There will be a correction for this rally from 1039 when it comes we will know but I am not going to speculate and pick a top.

Wednesday, September 15, 2010

Lets not be in Denial


I have five charts that I have put up today.  They are all telling the same story some in different language but the moral is the same.  If the newest trend line is from left to right and going up then the trend is up and vice versa.  I will  point out some very minor differences but that in itself does not change the story.  SPX has passed the 50% point at 1115 where as $RUT hasn't.  This is option week and anything can happen but the market has been in a tear. $RUT has gained 11.16% and SPX  8.4%.  September was supposed to be a real bad month but the way media (Maria Bartiromo) has been mentioning it this just may not happen and then the same media can say the experts were wrong.  My study said we would be down 5% or so by mid Sep. here we are up 8.4% My study said we would take out the Aug closing and we are up about 70 points on SPX.  Unless some kind of blood bath starts soon this may be a Sep. that doesn't fall in line.  We did not make a higher high in $RUT and SPX today. negative and we made a lower low another negative.  Indices are close to hitting some class A resistance line and thats negative.  Particularly TNA and SPX on the hourly charts above.  I am turning bullish unless we take out some upward trend lines and start new downward channel confirmed ( down and then a up and a rally failure) I find hard to justify to be bearish.  Modified DMRM is what I will use to guide with tick charts and DKODs. Tomorrow is  a day before triple witching on Fri and there should be some action.  Since we haven't had any down draft IMO tomorrow could be one it may be just a one day event for option balancing.

Thursday, September 9, 2010

How much juice can we squeeze out of this lemon?







 It is all about $Rut today.  It is the most speculative of all the indices.  It is made up of small stocks and they fluctuate a lot more than SPX or DOW.  I primarily play TNA/TZA which is based on $Rut.  The four charts you see are the four lows that $rut made in its decline from 746 to 588.  In the first decline from 746 to 638 (flash crash) $Rut snapped back 75% to 719. (A1). After making the second low at 618 $Rut snapped back only a little over 38.2% at 667 (B2).  From the third low 607 market recovered 50% to 677 (C3). 

On the final low at 588 the $Rut snapped back over 50% to 672 (D4).  Every time we have had a decline $Rut snaps back at least 38% or 3/8 of the decline.  The highs have been lower high albeit by a very few points and the lows have been lower lows.
Once again we are rallying from a low but the this low is not a lower low (588 and previous low 587) and should we go up make a higher high it would be the first indication of a trend change.  With September syndrome and option expiration next week it will take some major news making to move $Rut and the market  none the less it will be worth keeping an eye on.  I will continue to depend on DMRM (I have made some changes to this and have mentioned it in our CIL) and other indicators.  It was DKOD to the negative side on Thursday.

Monday, September 6, 2010

September



I have done studies with August and September data to see if September really is as bad as people say.  My conclusion is yes it is.  On the basis of close to next months low September has the highest number of occurrences followed by October in the top spot.  Comparing close to next months close the declines are 34 times and average 4.94% and advances are 24 times and average 3.8%. On August close to September low basis only 3 times in 60 years we have not had a low that is lower than August closing.  Comparing August closing to September low the average is 5.3% and August low to September high is 3.3%.  So far we have done a 5% rally from 1049 August closing spx has not made a low that is lower than 1049.  IMO odds increase every day that the rally in spx will end soon and we will come down to take out 1049.  I am bearish on that account.
The 38.2% rally point is at 648 for Russell's decline from 746 to 588.  Looking at the weekly CHART $RUT is at the top of the channel line which has proved to be a resistance previously.  There is no upward channel that can be drawn in $rut weekly.  
Looking at TNA It is at the top line of the downward trending channel in red and also at the top line of of the upward trending channel in blue.  I tend to believe these will hold and as such we have topped out or within parallax error of topping out.
The SPX weekly and daily are singing the same story.  On the weekly spx is on the top line of the down trend channel. On the daily it is hitting against the line parallel to hi low line in red and also against the resistance black line line from
1220 to 1129.  Finally on the third chart the 50% point for the decline from 1220 tp 1010 is at 1115.  It is also extremely close to Gann 1x4 declining line.  This will prove to be a strong resistance.  Summing up  we are in September a declining
month Both russell and SPX are pointing to a topping action in their respective charts.  New moon is coming up generally is not good sign for socks.  SPX closed at 1004 which is 4 points above the round number that is also bearish.  I am very bearish and am speculating Tuesday could be an DKOD with a strong open that fades away.   I will be using DMRM to set the signals and trades.