Market comments for June 24th

Which way will today's market play out? That is what I have been asking myself. The market had been down over 200 points yesterday but managed to stage a comeback and close down only 59 points on the Dow. But as you can see from the 3 month chart below, there was a definite Sell signal confirmed with a Hammer Candlestick pattern not only for the Dow, but also for the other major indexes like the S&P 500. Notice also the higher volume yesterday on the lower chart of the Dow 3 month chart.

But still the market did save over a 200 plus drop in the Dow and that gave me pause. So I pealed back some of the data to see what the charts are telling me going into today. Below you will notice a 2 day chart of the Dow in 5 minute increments. This chart clearly shows the surge back up from the lows and does show a slanted upwards "W" pattern or Head and Shoulder pattern going into the close.

So as we are within a few minutes of the open, I believe today will be a struggle between the Bulls and the Bears for control. Watch the range be tight for most of the day as the Volatility will drop. Watch volume as it should be less than yesterday as well.

There are still major issues to be dealt with like the impasse of the Congress to raise the debt ceiling and you know all is still not well in Greece. So if I had to bet, I would say we have a higher chance of ending down today than up. Of course, on the other hand, the Fed still has some influence in manipulating the market with still some funds left to spend before the end of June. Maybe we should all just go away and come back in the Fall after all. :)

Market outlook for July 7th

Ok, so yesterday we went like a yo-yo, up and down and up again. Volatility is on the rise.The Put to Call ratio has stayed in the range of 0.98 to 1.26 in intraday moves. I think on a larger scale this will continue. The chart of the Intraday yesterday shows we formed a "W" pattern near the close which was slanted down. That infers that this market will go down this morning starting at least below the 9869 level of the low yesterday. Futures are pointing in that direction so we will have to see it unfold. We have broken below the Dow 9800 Support level for 3 consecutive trading days and not gone above this 9,800 support level, so we have begun our decline, drip, drip drip!

UPDATE 11:15am PST


Well as you can see I am surprised that we had this rally today. No real good reason for it but the Longs are very happy they have it as they were getting depressed. I have posted above the Intraday as I usually do but also have posted a 2 month chart of the Dow to show you again we have formed a "W" pattern and it is slanting lower. It doesn't mean we can't go up a day or a few days, but the inevitable is already baked in here, in my opinion. These are days to decide what on the Short side you want to own or what profits to take. I hope you are all doing that. I am adding to a few positions today on the Option side. One piece of data of particular interest is that the Volume is less than yesterday and that is always a cautionary move and one to have with suspicion as to the move's validity. Stay awake out there.

Update: 5:00pm PST

The market is closed and has been for a few hours before I got to posting this. But it was a barn burner today with the Dow rising about 275 points to close at 10,018. The Nasdaq closed up 65 points to 2159 and the S&P 500 closed up 32 points to 1060. To say I wasn't surprised would be a lie. I was as surprised as many. Also the volume actually surged in the last hour to close higher than yesterday's volume. That was impressive and deserves my respect and caution. The 200 Day Moving Average crosses the axis at 10,380 while the 50 day Moving average crosses the axis at 10,350. As these keep dropping it will be more difficult to go above these levels as they will provide resistance. I do not believe this rally will go over 10,350, which will keep the "lower high than previous high" in tact. With the Fed and the Government with plenty of money to manipulate the market, and summer volume diminished, it will be easy for them to achieve their goal of keeping prices from dropping too low for the politics of the season.

Double Witching Friday: Will the stock markets hold? UPDATE

This is the question of the day and many are nervous it won't. There isn't much data to point to, to answer that question. The only data I could bring forth today, as a piece of encouragement, was that the VIX Volatility Index closed at 47.08, down 1.38, as it still stays under 50. When the Volatility Index comes down it doesn't mean that markets will go up, it just means that people aren't panicking and selling like a mob, they are much more calm about it.

This latest market drop, back to the November lows, looks well managed, in my view. The daily moves are modest and not like what it was like when we first reached the lows, back in November, when the VIX was between 70 and 80. I tend to think it is Wall Street wanting to send a message to the politicians in DC that they don't like what the Obama Administration is doing to solve the Credit crisis, the Mortgage crisis nor the Stimulus package. The problem with this point of view is all those voices have come up with no new ideas other than reducing taxes. It is the only action most right wing Republicans can come up with.

So I still believe we are going to hold around this current level. We may go as low as 7,200 on the Dow, When I first put the chart together projecting the lows of about 7,300 when no one thought we were ever going that low, I also said it could go to 7,200. The reason for the discrepancy was that the uptrend line which I constructed and analyzed started from about 1975 to the mid 1980's. I did not enter all the data in a spread sheet and use an equation to determine best fitting line. I used existing charts for the period of 1970 to September of 2008 and drew a line that while imprecise hit at around 7,200 to 7,300. So when I said we will hold, I really believe we will. We just need to get through today rightfully labeled "Double Witching" for this month's Options expiration. It will be a measured test not a panic drop but the shorts want to extract every penny they can from these lows. Keep the faith!

UPDATE: 8:45am PST.

Well we have gotten as low as 7,311 today and still appear to be holding, and the S&P 500 has gone as low as only 762, which is also good news. The VIX has risen to as high as 50.36 but went back below 50 again.

UPDATE: 10:00am PST.
I wanted my readers to know what I am currently doing. I have just purchased additional shares of the ETF Ultra Long of the S&P 500, symbol SSO for $18.48/share and also purchased additional shares of the other ETF I own, symbol TNA, for $17.49/share.

The VIX is now up over 51 and the Dow is down to 7260.

Market Outlook for Feb. 19th, 2009 to week's end: Holding above Nov. lows!

Well we did not do badly Wednesday in the market, all things considered from Tuesday's abysmal showing. Today the Dow hit a low of 7451, which is ever closer to the previous November low of 7,392. The S&P closed Wednesday at 788 but did have a low for the day of 780. Looking at the charts on both indexes it looks very much like we are in the process of retesting the low of 7,392 on the Dow this week. It may only be a brief moment but my sense is that we will bounce back up off the bottom if we do touch it. The S&P 500 is a different story as we are still about 40 points above the November lows of 741, and we would have to have a more drastic drop in the S&P to get there than the Dow, which seems unlikely. So the Index to watch will be the Dow for the retest.

Friday is what they refer to as Double Witching fro Options expiration. Usually that means increased volatility. Volatility as measured by the VIX index today actually went down slightly from yesterday closing at 48.46. However on Tuesday it leaped up touching 50 before backing off to close at 48.66. While it is over the 20 and 40 Day Moving Average, it most likely does not look like it will go to the highs back in November when the market hit its lows. back then the VX hit between 70 and 80. Based upon this fact alone I do not see us in for a meltdown this week. I do see instead an opportunity to take some risk and buy some stocks as the market will have a rally most likely next week.

Supporting evidence to me are several stocks. Apple, symbol AAPL is still above its 20, 40 and 60 day Moving averages and no where near the lows. Another indicator is the Nasdaq closed at 1468 which is well above the November lows of 1295. In conclusion, this week is a buying opportunity and as I said earlier in another post 3 weeks from now many are going to kick themselves for not getting back into the market. Some I own and like are TNA, SSO, AAPL. I think you will see Gold and other precious metals like Silver drop, as World markets reflect our move up.

UPDATE: 6:00am PST

Weekly Jobless claims were up only 8,000 keeping Weekly Claims at 627,000 jobs lost. Continuing Claims reached 4.99 Million jobs lost. The CPI was up 0.8% and the Core inflation rate was up a surprising 0.4%.

Market action Feb. 3rd, 2009: A waiting game

Markets are quiet, volume is low and volatility has decreased. All eyes are awaiting 2 important bits of information. First, what happens on the Stimulus package in the Senate will be very important as not only is it affecting the market but will have an impact on how President Obama's Administration was successful or not in his jawboning Republicans and Democrats to get a Bill passed. The other information will come out on Friday and it is the Jobs report for January. Until these two independent variables are known, the market will be dullsville.