Wednesday, December 22, 2010
SPX made a HH and HL and SPX closed in the plus column that is positive Range was only 6 points. It was a mini version of a cloud walk. Usually SPX is up about 20 points on a cloud walk but this one was tame. SPX made the low of the day a few minutes after 6.30 early in the morning and there was no turning back. The charts are 1 minute for the day. SPX is on the left and RUT on the right.
The chart on the left is Best buy. It was pummeled 6 days ago for reporting bad earnings. It opened $6 dollars lower. It was a news story and most of us were spectators of the action. But when I look at the action few days continuing the stock keeps loosing ground. My sense is even if initial drop is not caught there plenty of meat for the next few days. The chart on the right is ANF retailer. It is reverse of BBY. This stock ANF gapped up on three different occasions and has paid good returns after each one of them. My take away is gaps work. If there is an intra day reversal on a gap stock (it happens) then it is better to get out try another day another stock. The biggest secret is there is one that happens every day.
The is SPX daily. It is hitting the median line and looks like we are at the end of 1 of 3. I am of the opinion we should see some declines now. A good 2 correction needs to take spx to little lower than 1200. The timing is a little off. To catch on time SPX may just ride the median line until the time is consumed without going much higher.
This is RUT weekly. The 790 is the last line in sand. There are no credible resistance lines that can be drawn once it is busted. All others have been. Is this one going to stop the rally? I look at it this way if not now when if not this line then what line?. If I see a 795 on rut then I will hop in on the train.
This has been a traders nightmare of a market. When it goes one way it isn't worth while to trade. Profits made on one side are lost by going to the other side. I may skip a few days.
I am having a tough time being bearish. I am not planning on trading till monday maybe.
Thanks for reading my blog and offering encouragement