Here is a chart of the Dow with those same support and resistance zones from Tuesday's post. You can see how the index played right into the areas that I drew. You can also see volume receding on the upswing as the short term move starts to gas out a bit:
(click on image to enlarge)
Wednesday now becomes pretty simple after Tuesday's price action. A push through the two-day high area of 8,600 opens the door for a drift up to the 8,700 - 8,750 area. Notice that I said drift.....because I expect light volume on the day before Thanksgiving. We might not see many Big Players pushing the market around Wednesday, so I'm not looking for an increase in volatility.(click on image to enlarge)
A drop below 8,250 opens the door for a rollover day down into the 8,000 - 8,100 zone. It's possible that we get a real dump instead of a downdraft because there are still too many less-competent Hedgies and Fundies facing redemption selling, but I'm still expecting lighter volume tomorrow.
At this point the short term trend has gone neutral so it's a toss of the coin as to which way the market pushes tomorrow. Keep an eye on those pivot points that I outlined above and watch to see which way the market tips tomorrow. If volume goes really light then the Dow could stay trapped inside Tuesday's high and low.
I will add to this post in the morning.
6:30 am MT: Wednesday Morning: Pre-market futures are down sharply on overseas trading and economic growth concerns. The Personal Spending number appears to have fallen off a cliff, which shouldn't be a surprise, but still the number was worse than expected. Unless the Durable Orders number gives the market a positive surprise, I am speculating we get something that ranges between a Downdraft Day and a Dump Day. Either way, the odds of the market rolling over today are about 60/40 in my experience. I will keep an eye on yesterday's range, but I speculate that the range will be broken to the downside. I am most likely to be watching for puts this morning, but I want to keep things nimble as always.
And as always, we shall see.....
Love the headline, Dwight! Thanks, as always.
ReplyDeleteThanks Dwight!
ReplyDeleteHappy Thanksgiving everyone and profitable trading!
Oh yes, happy thanksgiving to all US traders for tomorrow!
ReplyDeleteHope StevePutMan extraordinaire , that you do well today!!
And everyone else of course!
Francis
well,... here I was expecting a downdraft but the markets dont' seem to want to drop just yet!
ReplyDeleteSo 850 area is the first resistance bounce with the futures so far. Perhaps this will run out of steam and that's the time to strike?
Anyone else looking to go short or am I missing the point?
Francis
Laurie, looks like the stars lined up for your overnight put. Did you sell at the open?
ReplyDeleteCool name Francis! Looks like my first oppurtunity is coming up.
Happy Thanksgiving to all and good trading!
Wow, jedi mind trick right out of the gate on the 5's. Nice put set up gone wrong.
ReplyDeleteHopefully a better rest of the day.
Hey all,
ReplyDeleteNo, I didn't sell, Steve. Probably should have sold at least one at the open. I'm still profitable and hoping for the rollover. It looks like shorts are covering prior to Obama speaking at 9:45 CST. They did that yesterday, too. I'm trying to be more patient and less impulsive. Wish me luck!
I sold my FCX call for 25% gain when it hit my target. Saving $$ for family Thanksgiving feasts to be enjoyed several years down the road in retirement!
What's everyone else doing (besides cooking)?
Hey Everyone,
ReplyDeleteI should have sold my stuff this morning too, but didn't expect the market to head up to yesterday's highs. Still in my put from a couple days ago and hoping people sell off before the holiday. If not, I'll probably keep holding because I picked up after the big two day rally and I'm in an alright spot so far. Looks like right now might be a good put opportunity with the bounce off they highs, see if we head down..
Joe
Hey guys,
ReplyDeleteBreaking news: terror attack in Mumbai, Dubai outside financial mkt. Watch for market reaction.
Sorry, Mumbai is in India. CNBC had it wrong.
ReplyDeleteGold certainly didn't give 2 hoots to the Mumbai incident, markets closed up strong as well.
ReplyDeleteGuess turkeys are more important.
Well done to all.
No trades for me today.
Poised for next move.
Happy Thanksgiving all.
Francis
You could be thankful twice, Francis, and have Thanksgiving again!
ReplyDeleteI still have my SPY puts. Not down too much, like Joe in that regard, so hoping for some pullback Fri. or Mon. In respect to today's price action, it seems like there's been a rally at least two times in my memory when big money hasn't played. I think the last rally without the big guys was with horrible econ news which the market disregarded. Go figure.
So, Steve, do you think there's going to be such a drop in mortgage rates that they'll fall to below 4.875% for a 15 yr.? We've got 10 left on our note.
Happy turkey day!
Hey Laurie, that may be sooner than you think. I closed my main office where I had 15 employees +/- but I am still liscenced and what not. I'm now just doing referrals and stuff out of the house. Rates today on a 15 year or a 10 year are about 5.00 to 5.125. So rates are looking way better, now we just need values to come back a little!!!
ReplyDeleteDwight,
ReplyDeleteSold all of my APOL calls today. I thought a bird in the hand...But, I think I'll get another entry on a flag or pull back. Picked up some DIA puts as a hedge at EOD. Looking to see what this crazy market is going to throw at us next. Maybe some puts on RTH?