NDX 100 @ Lifetime Resistance...again

Along with the Dow chart I posted yesterday the Nasdaq 100 is also trading at an extremely pivotal level.  The first chart is a chart that reverts all the way back to the NDX inception. The second chart shows the weekly channel resistance that coincides with the monthly.

NDX Lifetime Monthly

NDX Weekly

What needs to happen between now and tomorrow's close...

Here it is in 2 charts. The markets must close the week under /ES 1800 or all time highs are next. Period.

/ES weekly

/ES daily (w/ weekly and daily resistance shown)

The Bears Last Stand...

I don't have much to add from the post earlier.  The SPX closed down .49 pts and remains underneath the ST resistance levels between 1820-23.  The /ES close was a little trickier and it still remains a couple pts higher than I would like. I think tonight we will know our answer if a pullback or continued move higher is next. Meanwhile I wanted to post 2 final charts of the Dow. These charts are the most meaningful thing the bears still have in their favor.

Dow Jones Monthly

This chart clearly displays the Jan close and break of the uptrend that had been in place since the 2009 lows.  The chart below is a weekly closeup of the same broken trend line. As you can see, the Dow was pushed back by this new monthly resistance. If bears can get the SPX back under 1800 this week that should mean that the correction will continue shortly.

Dow Jones Weekly Closeup

Maximum Pain...

That's what it feels like being short the /ES right now.  I'm experiencing a much larger drawdown than I should be at the moment.  My only saving grace was I did put a stop in on 1/3rd  of my /ES position a@1804.50.  I had a limit order in this morning short that 1/3rd back @ 1822.  This is the only thing I seem to have done right in the past several days.  There is now significant support underneath the market around 1795-1800. That's the spot, no doubt about it. As of right now, I believe the SPX could trade down to that level and possibly bounce back 1 more time to 1815-1820. I put annotations on the charts explaining what I think might happen next. 

SPX Daily

/ES Daily

/ES Weekly closeup

Waiting for divergences...

If markets are destined for lower prices in the near term, a move lower should occur within 24 hrs with almost no upside from here (/ES 1800). Divergences in momentum and price are just now appearing on the intraday charts of the /NQ and since it has been the market leader since Feb. 3rd, I want to focus on it's price action the most. There needs to be some follow through to the downside today even if it is only for a few hrs. That will build in some more momentum divergences and hopefully trigger a resumption to the sell off. Time is ticking for the bears.

/NQ 4hr

/NQ 2hr

Short /NQ @ 3574.25

My total short exposure is now above 300%. I would not recommend trying this at home. I can do it because I have an extremely large payoff versus the risk that I'm taking. To play with leverage you have to have strict discipline or you will get knocked out of the game quickly.

/NQ Daily

Sold Feb(weekly) AAPL 530/535 Call Spread @ $2.30 credit => expires this week

AAPL is trading at the upper level of where I expected. If it trades much over 531 I will be forced out of both credit spread trades. AAPL should give back a couple bucks between now and the close if I am going to be right.

AAPL Daily Chart

Weekend Analysis: Markets At Resistance

The U.S. stock markets had their best 2 day percentage gain since the reversal off the Oct. lows. However, these are not the same markets as they were then. After grinding higher to close out 2013, Jan. was not avery kind to Ms. Market. It was the 1st down month for the S&P 500 since Aug. 2013. The difference between now and then is very different. Last Monday, Feb. 3, the SPX took out the lows for Jan., Dec. and Nov. The downturn in Aug. failed to take out any prior months lows. What we have here is a distinct change in market behavior. Many fundamentally biased investors/traders will be quick to dismiss this analysis because by the end of the week markets had rallied more than enough to make up for Monday's losses. The technicals are saying beware. The /ES futures at the close on Friday rallied right up to weekly resistance that repelled it the last week of Jan. Bottom line: We should see volatility pick up Sunday night through Monday's close in the S&P futures. If we do not see an emphatic break lower in the markets by Tuesday or Wednesday then the markets will probably make new highs (or at a min test the prior highs.) If the markets are destined for lower prices in the near term, prices should not exceed Friday's by more than a fraction of a percent. Included in the charts below is  2 charts of AAPL. The monthly chart shows that $420-430 is still in play over the next couple of months. If it were to close a month under that level, it means AAPL is headed to $225-250 over the next 24 months. The 60 min chart is what I was trading off of when making the bear call spread that I posted on Friday. Because they are Feb. options, I am looking to stay in this trade a relatively short period of time. Possibly, a few days.

Dow Jones Industrial Avg. => Broken monthly trend line 

/ES Futures Weekly

/ES 4 hour

/NQ 4 hr

AAPL 20yr monthly

AAPL 60 min

Short AAPL FEB 530/535 Call Spread @ $1.47

I have a short leash on this. Probably close it out for a loss if AAPL gets above 525 for more than an hr or so.

AAPL 60 min

Daily Resistance Providing Pushback

A close above the red trendline today makes way for a move to 1800+. A close below it and the bears still have control. It's that simple.

/ES Daily

300% short @ 1780

I actually forgot that I had already placed a limit order to get short at 1777. So now we watch and wait...

Bot 50 March BAC 14 Puts @ .05/Bot 20 March BAC 15 Puts @ .13

Sold /ES longs @ 1759.25 from 1748.25

I still think there is probably more upside but I am not taking anything but ST daytrades on the long side. This one was successful and quick. The kind I like most.

60 min chart

How this may play out...

The chart I have shown below lays out the 3 different levels that I believe the market could retrace to. I am not sure which level is the most likely but if I had to choose I would say 1770+ should hold any relief bounce.

240 min chart

long /ES @ 1748.25

I'm looking for 10+ pts for this trade

stopped out of /ES short @ 1751.25

There is still a case to be made for staying short right here (1750+/-) but after the reversal off the lows I don't trust the market to fall out of bed like I was expecting 2 days ago. I'm going to wait for more evidence before I take a large position. On the bright side, I see the stars aligning for the potential of several good day trades.

That was your bounce bears...

I think this bounce has probably reached it's apex. I should have been more patient before re-entering shorts but I really don't think it will matter much. We'll see how the day finishes but I think you will see push back in the afternoon session.

60 min chart

Short /ES @ 1747

The market wasn't able to reach my 1750 level before I decided to go back to a full short position. I don't necessarily think the selling will resume today but the SPX could be on it's way to 1680 by Wed.

240 min chart

Covered 2/3 of /ES short @ 1734.25

I don't expect a big bounce but 15 pts is possible. With some of the ST indicators showing oversold readings I decided to go ahead and cover most of my short position. I will look to re-enter shorts around 1750.

$SPX Daily

McClellan Oscillator

60 min Tickq and Trinq

Markets Rejected

ES 60 min

SPX Daily

Bot FB March 55 Puts @ $1.04

200% Short /ES @ 1791.50

Markets are now testing ST and IT resistance.

/ES 60 Min

SPX Daily

Whipsaw

I was shaken out of my short from last night on the move back above 1774.50. I'm flat now and will look to re-enter above 1786.50.

200% short /ES @ 1769.25

The markets have reversed and I'm back to my full short position.

Support has held...but for how long?

Markets on sitting right on major support and have been able to hold on for 2 days now. The following chart shows the 1765-1770 area that has held the market up over the last 48 hrs. If this is breached overnight then a waterfall type move could happen. If we trade above 1774.25 in overnight trading then we could see another move back towards the 1793-1797 zone. I will probably cover my ES short on a move above 1774.25 tonight and look to re-enter around 1790. Also note, the VIX was pushed back today by daily resistance so that is also supportive for the bulls, at least in the short term.

ES 120 min chart

VIX daily chart

**Trade Note**

I closed out my 176 SPY Puts that expired in FEB last Fri but just realized I did not post it. I had been underwater almost from the moment I bought them. I was able to sell them for $2.29 so the .52 profit was welcomed since my timing was so bad. It was a small position which is probably part of the reason I forgot to mention it.

200% Short /ES @ 1786.50

I am back to a leveraged short position in the markets. After reviewing the charts and seeing weekly resistance being tested in the SPX I decided to re-enter my positions I exited Friday and Monday.

SPX Weekly

SPX Daily

A daily close above 1793 on the SPX will probably negate the current down move. However, I expect a move to 1650 before this round of selling is over. The next 3 days and 1st week in February will be crucial for the bulls. As shown in the chart below, once 1750 gives we should see a quick swoon to 1650-1700. At that point the backbone of the bull market will be broken. Volatility will be the name of the game in 2014 and should be a great year for traders.

Bot 1/3 of /ES Short @ 1770

I'm now out of 2/3 of my short position because from 1761-1772 there should be some sort of bounce. Possibly up to 1800+. Depending on what this afternoon looks like I might go ahead and close out the last 1/3.

Covered 1/3 of /ES short @ 1785