Wednesday, April 24, 2013

Bot NFLX 180 June Puts @ $3.85

Too much resistance in this area.  Pushback will happen when the shorts are done scrambling for cover.

Saturday, April 20, 2013

The Big Weekend Review

The markets started their correction this week. You probably won't hear that from anyone in the financial media but that's essentially what has happened. How far it goes is still up for debate. I believe it will be the deepest plunge since the crash that occurred in the summer 2011, with striking similarities. The following charts will be weekly charts accept the first one. It is the intraday chart that will commence the next leg down. I believe it will start with a sizeable gap down in the futures Sunday night, before the NYSE opens for regular trading Monday morning.

One of the the things that you notice immediately after reviewing the weekly charts is how all the markets for U.S. equities are pulling back from resistance. These are formidable resistance points so the price reaction should display that as the move lower unfolds.

Bonds are acting bullish again after holding support and look destined to test their former highs. The first chart is an hourly chart of the 30 yr Treasury Bond Futures. The formation that has been created is bullish and odds are that it ends in a breakout to new highs. The shaded circle is where I expect bonds to open on Sunday night.
High Yield Bond ETF-HYG
Those money managers talking about a bond bubble are sorely mistaken. The next chart is a ratio of the 10yr Treasury yield and S&P 500. This chart speaks volumes. Stocks are going down and bonds are going higher for the foreseeable future.
Volatility Indices

While the VIX closed within it's overhead resistance this past week the VXN and RVX both broke out from from theirs. Now that the slope of the VIX is positive it appears it will be flying high very soon.


The final chart is a ratio of AAPL, GOOG, AMZN, GS, IBM and their relationship to the S&P 500 and 10yr Treasury yields. You can see how the bearish wedge appears ready to break.

ETF Roundup

Be ready to buckle-up next week. It should be filled with plenty of volatility and wild swings!

Friday, April 19, 2013

Friday Update...

Yesterday, after the close, I wrote that I expected a large down open today. However, it looks as though I was a day early. I still feel that is the most likely outcome and that it will occur on Monday the 22nd. When I posted my last chart yesterday I had yet to check all of the data. The reason for the delayed move lower is because of the oversold nature of the Nasdaq Trin/Tick. The chart below shows what I'm referring to.
This explains the 1 day delay. All the market is doing is resetting before the next leg down. I suspect the trading day will be fairly quiet going into the close. Resistance has held and I expect it to continue to hold into the weekend. Monday, the fireworks should start.

60 min. chart
5 min. chart

Thursday, April 18, 2013

Official Bernanke entrance music...

This video is the official theme song for The Federal Reserve. I have heard that whenever Ben Bernanke comes into the room for a meeting, this particular song is playing.
It's pretty simple from here. The grey area is resistance. If we open in that area tomorrow, selling should come in hard and heavy. The other option is a large down open of 200-300 points on the Dow and 20-30 points on the SPX. Enjoy!

Support broken. Wave of selling could start at any moment

ST support is now broken.  Nothing but air until 1515-1520. If selling to does not start today tomorrow will likely start with a large gap down open. Perhaps as much as 20-30 points on the SPX.

Wednesday, April 17, 2013

Markets succumbing to key inflection points

The markets are beginning to surrender. They have been fighting against some very important resistance areas over the past few weeks. Each rally that fails against these areas takes away crucial energy that the markets need to continue higher. The result will be no different than it has been in the past. You could compare it to a marathon runner who tries to sprint instead of jogging at a sustainable pace. Eventually that person will collapse and be overtaken by the pack. That is what I believe is in the process of occurring in the markets.

Sold my SSO May 69 Puts @ $1.82 avg

I also sold 3/4 of my BAC May 13 Puts @ $1.515 avg. I bought the SSO puts here and the BAC puts here.

Market at ST support. Will it bounce one more time?

The market is trading down to short term support again. If it holds it will probably delay the waterfall type decline that I have been expecting. If not, it will be starting immediately.

Notice the VIX stopping at it's ST resistance just as the SPX was trading at support.
However, the VXN and RVX have both broken out of their ST resistance areas.  They might pull back to ST support before continuing higher but the trend is now up.  This support could hold for a short time but should break from a tidal wave of selling.

Monday, April 15, 2013

F.U.B.A.R. These 5 stocks are about to plunge...

AAPL-Intermediate Term target, $360-370.  Long Term target, $250

BAC-Intermediate Term target, $10. Long Term target, $0
HLF-Intermediate Term target, $15
AMZN-Intermediate Term target, $200. Long Term target $90, then $50.
NFLX-Intermediate Term target, $110-120. Long Term Target, $30.