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Thursday, December 16, 2010

SNDK, AAPL and SPX

SPX made a LH and LL  and closed in the negative.  The range was 10 points and spx closed 1.25 from the bottom.  After being up for 6 days days in a row this was to be expected  but what was not expected was the way it came down.  SPX opened flat and a few minutes before 8 it made the high of the day and down hill after that finally bottoming at 12 noon. It made 50% recovery rally that fizzled and closed not too far from the bottom.  The reason I put the time frames for highs and lows of the day so I can note a pattern if one exists.  Second GANN 50% plays in so many time frames by watching the repetition I am learning to catch it when it happens.  For today the rally from 12 noon at 1234  to 12.40  at 1239.  Today was a pre cursor to options expiration.  IMO it was the negative day to reset the calls tomorrow odds favor an up day to reset the puts and hence a rally is to be expected.  RUT was down for the third day in a row.  The odds are a little over 51% that tomorrow will be a negative day.  
These two charts are SNDK.  The chart on the left is hourly and the one on the right is daily.  SNDK has very clearly defined channels.  In drawing channels what I have learned is  the channel that  can easily be seen and drawn first is only half the story.  I make it a point to draw a channel of equal width above or below and to follow the second one that is entered into. Currently SNDK is on the median line of the upper hourly channel and mid point line is around 45.  The mid point of the bottom channel on the daily is also around 45.  IMO SNDK first would  easily get to this point and bounce from here with the rest of the market.   I will be a buyer at 45 for the top line of the daily channel is at 60.  
The chart on the left is AAPL hourly.  This is another stock I trade from time to time.  It is excellent for option play.  It is on the bottom line of the bottom channel and should be bounce point.  However it clearly looks like some kind of distribution is occurring between the black parallel lines.  I see a very orderly retreat to previous lows that were made on its way up.  I also see a small H&S.  All in all I could easily understand if it were to fall to 311 as satisfying the H&S target and yet another previous low.  The open interest on AAPL for Dec. ( 2 days to go) expiration is even at 320.  But 310 is the point where most open interest  will pay the least.  I plan on trading this.
I am bullish because of the positive leaning during December option expiration.
Thanks for reading my blog and offering me encouragement. 

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