Head and Shoulders pattern predicted 47.50 target which was hit today.
Panic selling prevailed. A bounce is right around the corner as the VIX
historically does not stay at extremes.
VIX Daily Chart:
Monday, September 29, 2008
VIX: Head and Shoulders Update
Bingo!
Head and Shoulders pattern predicted 47.50 target which was hit today.
Panic selling prevailed. A bounce is right around the corner as the VIX
historically does not stay at extremes.
VIX Daily Chart:
Head and Shoulders pattern predicted 47.50 target which was hit today.
Panic selling prevailed. A bounce is right around the corner as the VIX
historically does not stay at extremes.
VIX Daily Chart:
Thursday, September 25, 2008
VIX: Reverse Head and Shoulders
The VIX has been hanging out in the 30 territory for a few days now, and if the reverse head and shoulders pattern works out (as they almost always do), be prepared for another leg down in the market and a 47.50 VIX.
Headlines on Marketwatch tonight prior to this post,
"WaMu Bank Failure Biggest in US History."
There is certainly enough fear building up to hit a 50 VIX, lets just hope
the Fed can step in to avert it. Although as I trader I can take advantage of it, I am more in favor of a stable economy and stable markets.
Be prepared and trade safe.
VIX Daily Chart: Reverse Head and Shoulders
Headlines on Marketwatch tonight prior to this post,
"WaMu Bank Failure Biggest in US History."
There is certainly enough fear building up to hit a 50 VIX, lets just hope
the Fed can step in to avert it. Although as I trader I can take advantage of it, I am more in favor of a stable economy and stable markets.
Be prepared and trade safe.
VIX Daily Chart: Reverse Head and Shoulders
Thursday, September 18, 2008
RUT: Huh?
The VIX chart told the whole story today and "on que" mounted the biggest intraday rally i've yet to see in my short 2 year trading career. As I'm typing this post the ER (RUT) futures are at 731. At 10:00 this morning (Pacific) they hit a low of 673.20. That's a 61.8 point move in just over 8 hours. Keep in mind that 100 points is a significant MONTHLY range to trade in.
On Monday I bought back all of my September positions EXCEPT some Sept 770/780 Call spreads because I thought it would literally take Jesus coming back down to earth for the RUT to trade back at 770 by Friday. I like to think that I am extremely disciplined on taking of my positions before expiry week, but if you sell spreads like I do there are sometimes one or two positions on the top side that are so far away that it does seem "impossible" for them to get hit on expiry. I'm writing this post as another gentle reminder (to you and myself) that it is always best to just take everything off by expiry. I learned my lesson months ago when a similar situation happened on Thursday at 12:00 when one of my top positions was 40 points away from the price action. I figured with an hour to go I was safe. The market rallied 20 points the last hour of the session and then gapped up 20 points piercing my strike erasing my profits and handing me a $500 loss instead.
With the high volatility there is EXTREMELY EMOTIONAL buying and selling going on, much that flies in the face of any technical set ups your looking at. Take advantage of this movement, but don't be fooled by these one day wonder moves and they are likely just that.
VIX Daily Chart:
On Monday I bought back all of my September positions EXCEPT some Sept 770/780 Call spreads because I thought it would literally take Jesus coming back down to earth for the RUT to trade back at 770 by Friday. I like to think that I am extremely disciplined on taking of my positions before expiry week, but if you sell spreads like I do there are sometimes one or two positions on the top side that are so far away that it does seem "impossible" for them to get hit on expiry. I'm writing this post as another gentle reminder (to you and myself) that it is always best to just take everything off by expiry. I learned my lesson months ago when a similar situation happened on Thursday at 12:00 when one of my top positions was 40 points away from the price action. I figured with an hour to go I was safe. The market rallied 20 points the last hour of the session and then gapped up 20 points piercing my strike erasing my profits and handing me a $500 loss instead.
With the high volatility there is EXTREMELY EMOTIONAL buying and selling going on, much that flies in the face of any technical set ups your looking at. Take advantage of this movement, but don't be fooled by these one day wonder moves and they are likely just that.
VIX Daily Chart:
Wednesday, September 17, 2008
VIX: 41 or 31 on Thursday... or Both?
The day ended with a fake-out rally in the early afternoon that fizzled to new lows in the last hour of the session. It was interesting the see the VIX chart end at the high of the day.
Tomorrow will be a fun one. Crash? Capitulation? Rally? All of the above?
Even after 9/11 the banks, broker/dealers and insurance companies we're still intact.
We may be entering a new era here and the markets could be headed back to an environment as we saw near the dot.com bust where VIX ranges were in the 25 to 35 range. Only time will tell.
VIX Daily Chart:
Tomorrow will be a fun one. Crash? Capitulation? Rally? All of the above?
Even after 9/11 the banks, broker/dealers and insurance companies we're still intact.
We may be entering a new era here and the markets could be headed back to an environment as we saw near the dot.com bust where VIX ranges were in the 25 to 35 range. Only time will tell.
VIX Daily Chart:
Monday, September 15, 2008
SPX Monthly: The Grim Reminder
We've been talking about a double top on the SPX Monthly Chart for over a year now, and at the time it was just an observation that we were rising but there was some longer term resistance in the 1550 area.
Fast forward a year and it's playing out the way many of these price patterns magically do. Now the question for us all is, "how far will it fall."
Notice on the chart that so far the September monthly bar has broken the upward trendline that has been intact since the bottom in 1991. Keep your eye on that monthly candle at months end and draw you own conclusions. (remember as we saw in today's SPX daily chart that trend breaks can be significant)
SPX Monthly Chart: Double Top Pattern (bearish) Playing Out
Fast forward a year and it's playing out the way many of these price patterns magically do. Now the question for us all is, "how far will it fall."
Notice on the chart that so far the September monthly bar has broken the upward trendline that has been intact since the bottom in 1991. Keep your eye on that monthly candle at months end and draw you own conclusions. (remember as we saw in today's SPX daily chart that trend breaks can be significant)
SPX Monthly Chart: Double Top Pattern (bearish) Playing Out
SPX: Trend Basics
I can't figure out why ANY TRADER was surprised by today's action.
The intermediate trend is down.
The 200MA is pointed down.
There has been a continuous series of lower highs and lower lows.
Recent upward trend was broken.
This is why they say to trade the trend.
SPX Daily Chart:
The intermediate trend is down.
The 200MA is pointed down.
There has been a continuous series of lower highs and lower lows.
Recent upward trend was broken.
This is why they say to trade the trend.
SPX Daily Chart:
Friday, September 12, 2008
RUT: Another Positive Day
The RUT finished up in positive territory today at 720.26 and so far seems to be hinting at the possibility of a short term rally next week to retest the recent highs in the 740 area (if it has enough mojo).
The evidence of this potential strong bounce off of 700 on Thursday and todays higher close above yesterday. While there is lots of nervousness about Lehman and AIG, chances are that someone will pull a rabbit out of the hat this weekend to sooth the markets fears. Once soothed, the bulltards are likely to buy with reckless abandon and we get to experience another emotional rally. That's were my head is at this Friday, but I am going into the weekend with negative Delta since it's a lot easier to control the upside then the downside. If the rabbit doesn't appear it could be an emotional sell off to the other side. (All of that above is just worthless opinion).
The charts are showing a neutral to slightly upward bias for next week, but there is some overhead resistance at 730 and 740 that it will have to break above and hold before the short term (6-8 week) downward bias is erased.
Beware, as there is still a long way for the RUT to fall on nasty news.
RUT Daily Chart:
The evidence of this potential strong bounce off of 700 on Thursday and todays higher close above yesterday. While there is lots of nervousness about Lehman and AIG, chances are that someone will pull a rabbit out of the hat this weekend to sooth the markets fears. Once soothed, the bulltards are likely to buy with reckless abandon and we get to experience another emotional rally. That's were my head is at this Friday, but I am going into the weekend with negative Delta since it's a lot easier to control the upside then the downside. If the rabbit doesn't appear it could be an emotional sell off to the other side. (All of that above is just worthless opinion).
The charts are showing a neutral to slightly upward bias for next week, but there is some overhead resistance at 730 and 740 that it will have to break above and hold before the short term (6-8 week) downward bias is erased.
Beware, as there is still a long way for the RUT to fall on nasty news.
RUT Daily Chart:
Thursday, September 11, 2008
RUT: Volatile Day Ends Strong
The RUT decided to kiss 700 this morning before getting a 19 point bounce (albeit a very volatile bounce) to close at 719, a point above the 200MA.
The RUT is still in a short term downward channel and under the intermediate downward trendline, but if it can stay above the 200MA and/or break out of the downward channel I would have more of a neutral bias. I'll be watching the next few days to see what happens.
Next week is expiry week which can tend to be bullish so we'll just have to wait and see how this plays out. The candle today was bullish and if it follows through to the upside tomorrow, look for some resistance near the 20MA (732).
RUT Daily Chart:
The RUT is still in a short term downward channel and under the intermediate downward trendline, but if it can stay above the 200MA and/or break out of the downward channel I would have more of a neutral bias. I'll be watching the next few days to see what happens.
Next week is expiry week which can tend to be bullish so we'll just have to wait and see how this plays out. The candle today was bullish and if it follows through to the upside tomorrow, look for some resistance near the 20MA (732).
RUT Daily Chart:
Wednesday, September 10, 2008
RUT: Weak Retest
The RUT took a bit of a bounce today after yesterday's thrashing, but the follow through was weak and closed under the 200MA on the daily chart.
The 3 Week trend is down, and the charts seem to still be pointing toward a short term bias to the downside. The evidence is a lower high and lower low on the daily.
I'm eying 690 as my first target to the downside. Although my bias is down, I still have some positions open for September to take advantage of an expire week rally in the 730 to 740 area if the bulltards decide to take it there. It are times like these when it feels like the market is going to fall off a cliff that the bulls can come in with surprise buying spree to the upside. The short covering provides a steep move up very similar to what we saw in July and early August.
In summary, we're in the 700 - 740 chop zone so be prepared for a 40-50 point move in either direction the next 5 days. (keep in mind there was an intraday swing yesterday of 30 points)
RUT Daily Chart:
The 3 Week trend is down, and the charts seem to still be pointing toward a short term bias to the downside. The evidence is a lower high and lower low on the daily.
I'm eying 690 as my first target to the downside. Although my bias is down, I still have some positions open for September to take advantage of an expire week rally in the 730 to 740 area if the bulltards decide to take it there. It are times like these when it feels like the market is going to fall off a cliff that the bulls can come in with surprise buying spree to the upside. The short covering provides a steep move up very similar to what we saw in July and early August.
In summary, we're in the 700 - 740 chop zone so be prepared for a 40-50 point move in either direction the next 5 days. (keep in mind there was an intraday swing yesterday of 30 points)
RUT Daily Chart:
Tuesday, September 9, 2008
RUT: Bottoming Tail, Smottoming Tail
The RUT is rolling and is now back under the downward trendline and the 200MA on the daily chart. This could be a hurking-jerking ride down, but so far the chart is showing us that the short term direction is down.
RUT Daily Chart:
RUT Weekly Chart: (at 50% retracement)
RUT Daily Chart:
RUT Weekly Chart: (at 50% retracement)
Thursday, September 4, 2008
RUT: The answer to yesterday's question...
In answer to yesterday's question, the answer is "falls apart like the rest of them."
Yesterday I was amazed at the relative strength the RUT showed in face of the collapse of the other indices. The question was whether it could hold up or not and the answer was a resounding "no."
Tomorrow we get to see if everyone really heads to the exits, or we get a little relieve bounce before another leg down. The RUT is holding on to the 200MA by a thread, but important to note that it was only August in the last 10 months that it was able to stay above the 200MA. With the current intermediate downtrend and the current economic outlook my bias was be for the RUT to trade at or below the the 200MA in October. The DOW, NDX, and SPX are ALL trading WELL below the daily 200MA, and from a pure economic perspective, it would make no sense in the current market conditions for the small caps to have strength when everything else is cracking down. I think we started to see the beginning of the end of the RUT bulltard run today.
There is lots of room for the RUT to drop under this area with some potential support in the 700 area. Just looking at the chart it would make sense for the RUT to drift down to the 700 area to retest and build up a base again before moving up again.
(that's just my observation and not a prediction - just voicing an opinion)
RUT Daily Chart:
Can you notice the start of a classic collapse forming on the daily chart here?
It first started with a strong steep uptrend (Mid-Jul to Mid-Aug).
It then broke below it's steep uptrend line (Aug 19th).
It then found support on the 200MA (Aug 25th & 26th).
It then kissed the back of the uptrend line at 755 and formed a topping tail (Sept 2).
It's now pearched on the top of a long road down to the next new low.
Yesterday I was amazed at the relative strength the RUT showed in face of the collapse of the other indices. The question was whether it could hold up or not and the answer was a resounding "no."
Tomorrow we get to see if everyone really heads to the exits, or we get a little relieve bounce before another leg down. The RUT is holding on to the 200MA by a thread, but important to note that it was only August in the last 10 months that it was able to stay above the 200MA. With the current intermediate downtrend and the current economic outlook my bias was be for the RUT to trade at or below the the 200MA in October. The DOW, NDX, and SPX are ALL trading WELL below the daily 200MA, and from a pure economic perspective, it would make no sense in the current market conditions for the small caps to have strength when everything else is cracking down. I think we started to see the beginning of the end of the RUT bulltard run today.
There is lots of room for the RUT to drop under this area with some potential support in the 700 area. Just looking at the chart it would make sense for the RUT to drift down to the 700 area to retest and build up a base again before moving up again.
(that's just my observation and not a prediction - just voicing an opinion)
RUT Daily Chart:
Can you notice the start of a classic collapse forming on the daily chart here?
It first started with a strong steep uptrend (Mid-Jul to Mid-Aug).
It then broke below it's steep uptrend line (Aug 19th).
It then found support on the 200MA (Aug 25th & 26th).
It then kissed the back of the uptrend line at 755 and formed a topping tail (Sept 2).
It's now pearched on the top of a long road down to the next new low.
Wednesday, September 3, 2008
RUT: Still Holding
The RUT held up amazingly well today in face of all the other indices getting hit hard for most of the session.
The RUT closed up 3.40 points and remains above the 8MA, 20MA and 200MA on the daily charts. This is in start comparison to the other indices that are under most of them. The big question now is whether the RUT holds on here, moves up or falls apart with the rest of them?
RUT Daily Chart:
The RUT closed up 3.40 points and remains above the 8MA, 20MA and 200MA on the daily charts. This is in start comparison to the other indices that are under most of them. The big question now is whether the RUT holds on here, moves up or falls apart with the rest of them?
RUT Daily Chart:
NDX: In Search of Support
The NDX had another down day today, but managed a little bounce at 1825.
Below is some more support at 1800 and 1775, and after a couple weeks down it may be time for a little relief rally back to test the 200MA again.
Note the break of the wedge to the downside.
NDX Daily Chart:
Below is some more support at 1800 and 1775, and after a couple weeks down it may be time for a little relief rally back to test the 200MA again.
Note the break of the wedge to the downside.
NDX Daily Chart:
Tuesday, September 2, 2008
RUT: Mixed Signals
Lots of euphoria from Midnight to 7:00AM Pacific Time and then the air got let out of the balloon until the 12:00 reversal time (PT).
On the daily chart this is sizing up to be a potential pull back to the 200MA and a retest of the 720 area. Note however that it did retest and held both the 8MA and 20MA on the daily chart today.
The weekly chart looks strong, especially if it can hold the 720 area.
RUT Daily Chart:
On the daily chart this is sizing up to be a potential pull back to the 200MA and a retest of the 720 area. Note however that it did retest and held both the 8MA and 20MA on the daily chart today.
The weekly chart looks strong, especially if it can hold the 720 area.
RUT Daily Chart:
RUT: SEPT Paper Trade "The Tight IC" UPDATE 2
The RUT continues to chop near the 740 area so our position is still increasing in value as our Theta increases now on a daily basis.
Our goal is still to buy back the position between Sept 9th and 15th to maximize our profit as best as possible without putting the position in a lot of GAMMA risk.
The current Mark (mid-price) to buy back this position as market close today was $7.80. We had sold the position originally for $8.50 credit leaving us with a $1.50 risk.
Our current profit is $.70 (with 1.50 risk), therefore current ROI is 46%.
Our goal is still to buy back the position between Sept 9th and 15th to maximize our profit as best as possible without putting the position in a lot of GAMMA risk.
The current Mark (mid-price) to buy back this position as market close today was $7.80. We had sold the position originally for $8.50 credit leaving us with a $1.50 risk.
Our current profit is $.70 (with 1.50 risk), therefore current ROI is 46%.
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