Not much happened. In main news, the GS and MS earnings were bad and the market decided to rally anyway. Those two stocks gained big gains anyway. Now what? Maybe some relief on those? I’m holding one GS 55 call. It’s at 78.
Anyway, the DOW is no longer going in a descending triangle only. On a smaller timeframe there’s an ascending triangle, as well. 8950 will be the main resistance point. There has been 4 days of touching that line. Two opening from that point and two closing at that line. Slightly below average volume. Mostly decent volume activity. RSI is over 50. MACD heading up. Stochs pointing up.
This is the Expiration week for options. That might help with sudden moves. It might yet fall considerably on Friday. It migth simply keep going up. This market has been very unpredictable in the many moves.
Well, it wasn’t so much uncalled for, as it was unexpected! It’s just odd. GS reported $2 billion loss and first loss ever since going public. What was the market response? It just pumped the stock up. The stock just went up $9.54 (14.35%). That’s just unexpected. Oh well, it is supposed to retrace a little tomorrow.
Additionally, looking at the DOW, another higher low has been put in. This market has been pretty well desensitized to “negative” news in the financial sectors. Wall street messed up! Banks made big boo-boos. Auto makers have been doing the same ole same ole for a good while. And a 8 year old shot his grandmother. Well, not really, but after a while people get tired of just constant “negative” news. People will eventually step up and say that they don’t care they’ll just buy something at these prices and hold. And more investors will start coming out of the woodworks. Let’s see the DOW chart.
We’ve started and ended from and at the 8550 level for 2 days each for a total of 4 days showing good support on that level. Hopefully, it will hold. If not, the 8380 level will show good support. Notice strong down days only have fewer candles. And if there’s more, they’re smaller. Up days have been nice and big candles lately. That should mean good news. Should being the operative word here.
DOW Analysis - Dec. 16th.
Let’s see the 300+ pointer day. It was something that wasn’t expected. Otherwise, I would have gotten some calls on something. Or puts on SRS. Currently, I’m holding one BAC put and one AAPL put. Both are unprofitable.
Let’s see, the DOW didn’t do any dramatic thing. Down 65 points. The volume is decreasing. A previous down line was broken on 8th of December and the candles has been above that line. A new trend line is holding. The DOW is between 50MA and 20MA. It has been bouncing off the 50MA for a while now. And it has stayed above 20MA for a good 6 days. Could this mean a possible reversal? Or a consolidation before falling below. If it move down, it would probably easily go around 8380 line and stay. If it breaks more, it might go to 8180. But more down move doens’t seem very likely. It might go up a little, then make a down leg.
With the options expiring this week, it becomes very important to know and understand and predict correctly which way the DOW will move. Some moves might be over amplified. For example, today’s end of day spike was very noticeable and inexplicable. No news around the time. I looked online to see if there was some announcement but nothing.
It might continue down tomorrow, move up Wednesday and then down the rest of the week. That’s a wild guess and anybody who has monitored the market long enough knows there is simply no way to predict the moves. The best we can do it is:
So Friday was a down day for the most part. And then towards the end it gavea surprise and closed green. From a daily chart point of view, that shows a green day but it doesn’t show that the entire day the erratic behavior was favoring a red close. In the end it was green, and to some people that might be the only important item of note.
DOW Analysis - Dec. 12th.
At this point, that chart just looks too confusing to me. I can’t figure out what it would really do. To be honest, the market has fallen a lot and it would only mean that it should slowly go up. Even if the economy were to go in a recesion (and it’s not in a recession at this point), the markets wouldn’t continue to fall at the astronomical rates that were seen in Sep. – Oct. period. It would be much slower decline in prices and that would mean business as usual for traders. Why is that? When the market settles in a trend, just as it was in an uptrend before the recent fall, it will continue in a direction with the normal ups an downs. The traders would normally use those up/down moves for trading. The investors would then start their investing buys at this low prices. The investors that have already bought will simply average down little.
However, a more likely scenario is that the market will teeter around this point for a little bit and then continue slow uptrend. That’s the scenario that I am currently, envisioning.
Let’s look at the DOW for two years. From a technical point of view, one could say that it fell, went back to Fibbo retracement, and should continue to fall. However, that would be the case absent any fundamental analysis. Fundamentally, the market cannot simply go to 0. That would mean the same thing that it would in case of a stock – the stock is worthless. The entire economy going worthless sounds a little dramatic. So then are we seeing a bottom yet? No one can tell for sure, but one of my previous post shows that some investors are starting to see the bottom.
So the red candle broke below that up trend line. That would be bearish. It came close to resistance around 8380 that was identified in my previous post. This was bearish but not too bearish. It didn’t break below that line. Volume is also on a downtrend. RSI is 48. MACD is uptrending.
So today’s close was a pretty small green close. It was up and down during the day. In the end, it closed green. However, it’s riding into the wedge corner. It’s going to have to break up or down.
The down trend line (blue) is holding. The up trend line (blue) is holding. Tomorrow should break out of the almost symmetrical triangle. If it breaks up, then it will have to break thru and closed above 8950 level to be bullish. If it breaks below the ascending trendline, it will probably head down to 8380 support line. If it heads down, it will also be possible to break below the other support lines. It will need multiple days to do that.
In the short term, it would appear the path of least resistance is down. Mainly, because the bailout should be announced by tomorrow. Once it’s announced, the market will probably closed red as the bailout was seemingly already priced in.
In other technical analysis, the price touched 50 SMA, didn’t cross it. It would seem to go down from here.
DOW Analysis - Dec. 10th.
Volume was low today. Mostly, because the bailout announcement is going to help the next buy of sell frenzy in the next few days.
Has the uptrend stopped? No. It isn’t confirmed in the first palce. There’s signs of uptrend starting. But until confirmation, it isn’t an uptrend. There’s a reverse head and shoulders patterns unfolding. If it forms correctly, then it might give an indication of an uptrend.
Looking at DOW today, the down trendline has been broken by the candle yesterday and today’s candle stopped above it. It also broke the resistance/support line that it broke yesterday and thus that line is no longer a support at 8850.
The uptrend line of the ascending triangle shown in blue is holding ok so far. If tomorrow’s candle breaks below 8640 and or the bottom blue trend line (from lows), then it might short-term go to 8160. If it holds above that line, it will have to close either in the red by few points or green.
Many of my charts are drawn each day so the lines are almost in the same place. However, the numbers might be slightly off. With the numbers being in 8000 range, it doesn’t matter for the number to be off by 50 or so points.
What a day! Was expecting the DOW to be red today. However, it just kept going. No bailout news or other news would slow it down. This doesn’t mean that it will continue going up. It might have a little correction. It pierced thru the 8845 level mentioned in the yesterday post. It also opened above the previous close and stay above the 8580 mark. It opened and closed above the trendline. The gap open is normally filled and that might not be a good thing here. But red or green, to a trader only movement matters. The direction doesn’t. Especially, options traders do not care so much about the direction but more about the movement/volatility.
Volume is interesting to note. Volume is slightly higher and holding ground since the last 700 pt drop.
Tomorrow might be red to do a short term correction – just a little. Or it might continue on with the green candle.
This week, Legg Mason’s Bill Miller, a celebrated value investor but whose stock picking is far off the mark this year, said the “bottom has been made” in U.S. equities, and forecast opportunities for strong gains once markets rally.
Miller said that all long-term investors believe that stocks today are cheap, but credit markets must regain health before equity markets can rally. It “looks as if the bottom has been made” in U.S. stocks, said Miller, who runs Legg Mason’s $7.6 billion Value Trust fund.
At the Reuters Investment Outlook Summit this week, 15 prominent portfolio managers including legendary hedge fund investor and philanthropist Michael Steinhardt will discuss if U.S. stocks have indeed hit bottom.
So it would seem that many large investors are starting to think this is either the bottom or bottom is in sight soon. I have also been thinking, based on the divergences, for a while now that the DOW has been signalling buy. However, to make money from that, one would have to buy and hold. Investing is the right thing for this time of markets. Daytrading requires a different strategy. One must find daily movements and make use of those.
The past month of real trading has been an eye opener for me. I have really realized that daytrading stocks and options are really different. The stocks can be held for profit if the trade goes against you a little. The options simply keep losing money. So with each passing day, the underlying security must make a more drastic move than the day before for the options to show profit.
533K jobs lost in Nov. That’s a lot of jobs. The market rallies anyway. Either this means Monday will be red as in blood red, or that the traders/investors are tired of hearing negative news and just want to buy a little at this point.
Market Recap - Dec. 5th.
Very aggressive!
Holding spider Puts for Dec. in practice account. On the 4th it went down. There was the symmetical triangle and then then the descending triangle. Sounded like it would break below the support line. But it would appear that the bottom is forming. It might still fall a bit for a few days but it would seem that it is reversing trend here. Of crouse, the reversal is not shown in this chart, this is from the 4th. The char on the 5th shows a good green candle.
