Here is Friday's Post so that you will be able to comment to one another today. Today is a shortened day of trading, so expect light volume and possibly some more drifting like Wednesday. Most traders won't be around for today's activity, so don't read too much into the price action. The day will be short, so this post is short as well.....
Friday, November 28, 2008
Tuesday, November 25, 2008
Market Drifts Up on Light Volume
On Tuesday the Dow played right to my resistance and support targets. The market made one more push in the morning just as I anticipated, and then consolidated just as I speculated it would. I was looking for more of a bullish flavor on the day, which also played out as the Dow finished slightly in the green.
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.....
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.....
Bounce Day Three
The short term bounce is likely to make one more push this morning. Pre-market futures are up on some more government lending initiatives, but in reality this is simply the finishing out process of the current swing.
I won't be surprised if the Dow takes one more shot at the 8,600 - 8,700 area. The best case scenario in the current swing is a push up to the 8,800 - 9,000 area, but I will be watching for instant selling to come in at any time in the 8,700 - 8,900 area, so I will be scaling out of any call plays if the market reaches into those zones. The more conservative estimate is one more push into the 8,600 - 8,700 area since the Dow has already moved over 1,000 points from low to high in the swing. I had a nice couple of call "paper" trades on the DIA and SPY yesterday that averaged about 20% gains intra-day. I will look for calls again this morning, but more cautiously.
Support is the 7,800 - 8,000 area and then again in the 7,500 area. I'm expecting one last push today before consolidation, so I'm in nimble mode.....we shall see.....
Here is a chart of the Dow:
(click on image to enlarge)
(click on image to enlarge)
I won't be surprised if the Dow takes one more shot at the 8,600 - 8,700 area. The best case scenario in the current swing is a push up to the 8,800 - 9,000 area, but I will be watching for instant selling to come in at any time in the 8,700 - 8,900 area, so I will be scaling out of any call plays if the market reaches into those zones. The more conservative estimate is one more push into the 8,600 - 8,700 area since the Dow has already moved over 1,000 points from low to high in the swing. I had a nice couple of call "paper" trades on the DIA and SPY yesterday that averaged about 20% gains intra-day. I will look for calls again this morning, but more cautiously.
Support is the 7,800 - 8,000 area and then again in the 7,500 area. I'm expecting one last push today before consolidation, so I'm in nimble mode.....we shall see.....
Monday, November 24, 2008
Market Bounces After Deep Drop
Big Money started picking up stocks on Friday after a deep drop into the Cheap Valuations Zone. Traders are carrying through with the bounce this morning. Pre-market futures are up, which is what I would expect after such a large snap back on huge volume Friday. I will have to get myself re-acquired with the price action to start naming the battle points of support and resistance, but I will name the 8,250 area on the Dow as short term resistance for now on the horizontal and the diagonal trendlines and from previous price action. If the Dow can clear 8,250 then it opens the way for a move back into the 8,500 - 8,700 area. Support is the 7,500 area.
The zones are pretty wide and the price action pretty violent still. Redemption selling and capital gains selling appear to be slicing the market pretty hard.....and Big, Smart Money appears to be willing to let the market slide on the selling deep into the discount zones before buying. I suppose I would do the same thing.....Why buy too soon when you know there is enough legitimate fear (capital gains selling) and less competents (redemption selling) out there to keep sliding the market down.
The net result of the volatile price action is a higher degree of uncertainty (lower probability and lower visibility), which means that I am still looking to play intra-day swings on the majority of a position and not hold a full position overnight. Today I will be looking mainly at calls, and as always, we shall see.....
The zones are pretty wide and the price action pretty violent still. Redemption selling and capital gains selling appear to be slicing the market pretty hard.....and Big, Smart Money appears to be willing to let the market slide on the selling deep into the discount zones before buying. I suppose I would do the same thing.....Why buy too soon when you know there is enough legitimate fear (capital gains selling) and less competents (redemption selling) out there to keep sliding the market down.
The net result of the volatile price action is a higher degree of uncertainty (lower probability and lower visibility), which means that I am still looking to play intra-day swings on the majority of a position and not hold a full position overnight. Today I will be looking mainly at calls, and as always, we shall see.....
Friday, November 21, 2008
Friday's Trading Day
Here is Friday's Post so that you will be able to comment to one another today. I will be gone Wednesday - Friday on personal family business. I will open posts each day for your comments and communication to each other. All the best with your trading.
Thursday, November 20, 2008
Thursday's Trading Day
Here is Thursday's Post so that you will be able to comment to one another today. I will be gone Wednesday - Friday on personal family business. I will open posts each day for your comments and communication to each other. All the best with your trading.
Wednesday, November 19, 2008
Wednesday's Trading Day
Here is Wednesday's Post so that you will be able to comment to one another today. I will be gone Wednesday - Friday on personal family business. I will open posts each day for your comments and communication to each other. All the best with your trading.
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