Friday, November 28, 2008

Expecting a pullback...

Expecting a pullback sometime monday or even starting today. Does not mean SPY may not make a final push upwards, perhaps a gap up monday to 90.73 (61.8% FIB from the 11/04 high). The rising wedge (low volume, ok so what its a holiday :-P) suggests that SPY is definitely running out of steam on this bear market rally.

Looking at a minimum pull back to around 81, depends on where we make our high. I expect to exit the majority of my options at that point and hold a small percentage in case we retest the lows.

Did not increase my put position today, but will buy more if we reach 90. Today I added in SRS. I recommend the JAN or FEB 09 SPY puts at the moment.

This could be the next catalyst

The second largest mall owner in the US collapsing could help ignite the next drop (commercial real estate).

Still still holding...actually bought more

Loaded more puts in the 87-88 area. Also added SDS and QID. Will add more if we get to 90 today.

Tuesday, November 25, 2008

Still holding...

Scalped a few trades with SPY DEC 75's today. Still holding. I will most likely exit 50-75% of my position as we near 80. The rest I will scale out as we go lower or higher.

After that I will start building a call position, most likely starting in the middle of next week, but really depends on how the market plays out.

Any call position I build now will be using Jan 09 calls. After I exit my current position, I will only use Dec options for day trades.

Monday, November 24, 2008

Extremely over bought

I layered out of my call position between 82.5 and 83.5. I accumulated a put position between 83.5 and 86.4. Target #1 is the open gap left at 80. Target #2 is 74-75. Target #3 is a break down to 70 or below.

A move past 87.6 will force me to start layering out of the position.

Saturday, November 22, 2008

SPY update

The light green areas represent some good strong resistance in the 83.74 area. Its going to be tough getting through there in the near term. Add to the fact that SPY reversed right at the 80.8 resistance area (blue). Also the Stochs are showing over bought in the 30 minute chart (red), but a turn here would produce a stoch on the 60 that is trending down.
News that will effect this coming week:
Obama did announce a 2 year stimulus plan to create jobs (could be good, or bad).
Existing home sales - Monday
preliminary GDP, consumer confidence, chain store sales - Tuesday
jobless claims, new home sales, consumer sentiment - Wednesday
Thanksgiving - Thursday
Half session - Friday

Trading should be light next week with the holiday. Technical indicators mostly pointing down, the market should drift down. But watchout...the drift down might accelerate into a waterfall.

I myself am looking at 70 during the first week of December.

Off Topic: Duke Energy

Been a bit busy of late, I will provide a SPY update later this weekend. But here is a little DUK goodness:

Above is the 10 year chart on DUK with the fibonacci retracements from 03 lows to the 08 high. We see there is extremely strong resistance over the 16.71 area as well as resistance at the 15.74 area. $14.33 provides support with the next support at about $12.66.

Now a closer look at the 20 day chart:

We see that there is strong resistance above the $15.23 level. Between 11/4 and 11/19 the $15.74 area did indeed act as strong resisance. For the near term, 14.83 will offer some support, as well as 14.17. Below that is 13.30 (from 10/06/08 low).

To sum it up, the new trading range is likely to be between 14.17 and 15.23 (with bumps at 14.83, and 14.33). If 14.17 breaks, then 13.30 is the next stop and after that its 12.66.

So, you want to buy near 14.17, and sell close to 15.23. Do not be surprised that 14.17 may break.
Also remember these are not exact numbers these areas in which the stock is likely to turn in price. It may turn prior to achieving the level or slightly shooting past the level.

Thursday, November 20, 2008

Fall or Rally?...BOTH

A whole host of indicators has turned bullish, but there is still a bit of room to run. I expect the market to crash to the 2002-2003 lows (around 780), and then start a massive rally back up. Its going to kiss it ever so lightly as everybody jumps in.

Monday, November 17, 2008

Bear Flag in a Bear Flag in a Bear Flag...

A closer look at the inner most bear flag:

Sunday, November 16, 2008

Repost of my chart from Stocktock

Note: the counts along the trendlines are NOT e-wave counts. I will provide an updated e-wave count later in the week. Though at junctures like this e-waves tend to forecast possibilities in either direction with equal likelihood.

1. The day ended EXACTLY on my green trend line. That line was draw with the help from a posting on either traders-talk or atilla's blog the night before (11/13). I didn't even see it until I was showing a friend something on the 60 day and he asked about that line. It is roughly the negative slope from the high point at C to the low point near D. It was drawn in order to get an estimate of where it would cross the upper trendline for help locating where a potential E would occur. You know what? E was right there at Option expiration.

2. We went vertical too fast on 11/13. We needed correcting in a big way and to follow the rise and fall at similar rates to over waves in the trading range.

3. This overall count was one proposed by Craig much earlier, before the recent events. You can see it here:
and that was from just 11/13!

4. The wild ride has effected everyone's emotions. Everyone and their brother is expecting the market to crash on Monday and are preparing to try to short any rise. Wouldn't it be interesting if the big boys send it up on a wild ride, so high that the bears become bulls, and then ripping the floor out from underneath them?

ps. Or it could just go to hell in a handbasket on monday :)

Bull Flag

There is a bull flag that has developed on SPY. Looking for a short term top around 100.5. While that is the target, I am scaling the trade back starting at 92, and expect to be fully out by 97. This is still a bear market and countertrend rallies are extremely dangerous. Watchout for any type of break down and support at 84, 82, and 80.