Thursday, November 29, 2007

No changes

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No changes, in my mid-term. The NASDAQ 100 run over November 14 high, while the DJI is at this level and the S&P 500 is still below. It would be nice to see the S&P 500 breaking the 11/14 level to confirm the mid-term.

There is still possibility to see something like we saw after August 6-8, however, the technical indicators more point to the continuation of the up-move.

I would not play now short….

Wednesday, November 28, 2007

Bull Market

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Great last 2 sessions – see my mid-term report two days ago.

Overall, based on the index charts I track (NASDAQ 100, S&P 500 and DJI) my mid-term out look is bullish. I would expect to see tomorrow more up.

So far I see nothing that can stop the up-move, unless we will face something like on August 6, 7 and 8, when the indexes rallied up for 3 sessions in a row and then dropped even further. At this moment, many of the technical indicators look like they looked on August 6-8. However, 12 day VIX (volatility index) is dropping – it was rising on August 6-8, and average 5-day volume is dropping as well – it was rising in August 6-8. Those two indicators make me feel more optimistic and assume that the odds are on the up-move side.

I’ll try to post an extended report based on the index charts I track during the weekend.

Monday, November 26, 2007


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No changes in the mid-term outlook. See previous post – we still could see more to the downside, however, the reversal could be very soon.

For short term I use 15-dqy chart (1 bar = 15 minutes). Below you may see the NASDAQ 100 chart with RSI, MACD, Stochastics, Advance Decline oscillators, SBV and MVO.

I would not expect to see a short-term move up until I see decline in SBV, MVO, AD oscillators and MACD. In addition it would be nice to see RSI above 30 and Stochastics above 20. The similar situation could be seen not just on the NASDAQ 100 but on the S&P 500 and DJI.

Friday, November 23, 2007

Mid-term Trend

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The question is simple: is this the end of the mid-term down-trend, or we can see further slide down.

Below I have posted the S&P 500 and NASDAQ 100 1-year charts

SP 500

    We may see decline in the volatility index. Each time high volatility is seen near support levels and current decline is not an exception. The VIX is still at high level and it would be nice to see further VIX decline – it would confirm the reversal

    Each time at support levels we see high volume – now we may see that trading volume become lover. The drop in volume may indicate that there the selling power that pushed market down become exhausted

    MACD and Stochastic are still at low levels – it would be nice to see them moving up as a confirmation of the trend reversal

    Over the past few session we see that the NASDAQ 100 moves basically flat while S&P 500 and DJI moved down. The similar situation was in October when, on October 11, 2007 we saw the beginning of the downtrend that was not supported by the NASDAQ 100. There is a possibility we may see another NASDAQ 100 drop.

SP 5oo
    For advance/decline indicators I prefer using 60-day S&P 500 chart. The advancing AD oscillator would point to the possibility of developing up-trend. In some cases I use smaller the 1-year frame for mid-term analysis simply to more precisely define the sensitive periods when the mid-term reversal may occure.

Overall my view over the mid-term is that trend reversal indicators are strong and now could be good time to buy for mid-term players, for those who do not mind to stay in the loosing position if the market continues to be in the bear mood. Those who would prefer enter a bullish position more conservatively may choose to wait for more strong up-trend confirmation indicators.

Friday, November 16, 2007

Another volatile session

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Another volatile session: We saw strong opening (as I mentioned yesterday), strong slide down and strong recovery.

The Friday is over – November options are expired – now we should expect less influence on the market trend by option traders.

I still see the possibility that the market could be traded lover on Monday morning. However, I would expect the market move higher over the next few sessions, unless my indicators about mid-term resumption are wrong.

Thursday, November 15, 2007

S&P 500

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Market down again. Now, S&P 500 lead the drop.

We see the extremely high volatility over the last 6 sessions. Tomorrow is an option expiration.

Today indexes dropped, but did not hit the November 12 lows. I will not be surprised if we see the strong move up tomorrow. There is still possibility of hitting lows again.

Wednesday, November 14, 2007

Nice start and bad finish

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So what did we have today? - Nice start and bad finish. NASDAQ 100 did lead the market down again.

Even if the market will move towards the recent lows, I’m still under the impression that this is the end of the mid-term down-trend. Advance decline and volume indicators show that the market is heavily overbought and we may expect the strong move up.

On the other hand we should remember that while all the indexes moved into the down-trend (in October) the NASDAQ 100 was moving flat at the top. Now we see that the NASDAQ 100 is trying to get what it missed moving against the whole market and pushing it lower.

The day after tomorrow we will have options expiration – another factor that may affect the stock market over the next two sessions.

Tuesday, November 13, 2007

Mid-term up-trend has started today???

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Long week end is difficult, especially when yesterday we saw the continuation of the market crash.

On Thursday, November 8, I have mentioned I was bullish and on Friday I bought SPY options (January expiration). I preferred SPY over QQQQ because the S&P 500 index looked more bullish and heavier overbought then the NASDAQ 100 index.

I believe that there are good chances that the today’s recovery will continue. Maybe we will not see such strong rally, however, overall I would expect to see the indexes higher over the mid-term. That was the main reason why I decided to keep my options position opened.

Thursday, November 8, 2007

Will it be SUNNY tomorrow???

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As I expected yesterday “I would expect the further slide”, we saw the continuation of the yesterday rally.

The NASDAQ 100 was leading the market into the “hellhole”, while the S&P 500 and DJI indexes were struggling against this crush. It looks like after the strong drop yesterday the S&P 500 and DJI were ready to recover, however, drowned by the NASDAQ 100 they slide down as well.

The last two sessions have brought a huge output of the volume. No doubt, the huge number of stop losses was eaten and huge number of traders run out of the market. The tricky question is – “who has bought from those who in panic left the market???” And somebody was buying today…. Keep in mind that the volume is two side transaction: if somebody sold shares – that means somebody bought them….

Wednesday, November 7, 2007

Scary drop

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Scary drop. Good for me I have closed my position yesterday and did not trade. Now, you may see why I prefer to stay in the position as less as possible.

After such day it is difficult to be in the bullish mood. 3% down on the NASDAQ 100, S&P 500 and DJI – does not happened very often.

Now, I would expect the further slide, however, any time the market could reverse and we may see similarly strong up-move. Lately, the market is very volatile and we may expect to see the further volatility. The next week is an options expiration week and it could add to the volatility.

What is my point on the market? - I confused – I would rather stayed out and just monitor the market tomorrow. I think it’s too dangerous to trade short - at this moment since we could be very close to the end of the down-trend. At the same time I think it’s too risky to open a long position - the market can still continue to move down.

As I mentioned above I would monitor the chart for the reversal.

Tuesday, November 6, 2007

30% in one trading session

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Isn’t it nice – almost 30% in one trading session. Of course I closed by position by buying SPY put options.

I’m still bullish, however I closed my position. It’s just my personal trading style. I do not like to stay for a long time in position, but rather I would prefer have 1-3 short lived conservative trades within a month.

As I have mentioned above I’m still bullish and would expect to see tomorrow the continuation of he recent up-move. On the other hand the NASDAQ 100 index may still bring some unexpected surpises…

Monday, November 5, 2007

Volatile Day

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Wow. 1% down at the open, then almost complete recovery, then back to lows, then recovery again. When the market opens lower I was scared that my analysis wrong, the recovery made me more optimistic, however second decline brought fear again. On the second recovery I was already exhausted...

We saw very volatile market over the last few sessions. Such big volatility is usually happened at the resistance levels when market tries to collect more bearish players and cut bullish traders.

Yesterday I was thinking about opening a position, however sharp drop down put me in the waiting mood. I was ready to open a trade only by the end of the session. I did not buy options. I think it's too risky to do it in such volatile market. Rather I have sold SPY naked puts (SFBWQ) at $1.20.

Let's see what tomorrow will bring us. Now, I'm more bullish by the following reasons:

S&P 500 and DJI indexes did not break recent low levels
The indicator still show that S&P 500 and DJI are oversold
The NASDAQ 100 has become a little bit oversold as well

Friday, November 2, 2007

Will we see recovery tomorrow

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I mentioned in my previous post "my short-term outlook is not as bullish. I would still expect some further move up, but would consider staying in cash until I see clearer short term indicators." – good for me I stayed in cash…

Today the S&P 500 and DJI came close to October 22 and October 24 lows. Taking into the account hat this level is close to the August 8 and September 4 highs as well as to June 8 and June 27 lows I would say that this level is very sensitive to many traders. There should be a lot stop-loss orders around this level and as a confirmation of this we may see big volume surges on the move down for the last 2 sessions.

The day before yesterday I was more bearish in the short term, but not now. I did not played short, since I did not expect such strong move down (good for me). Now my short-term indicators showing that there is bigger odds for the market to move up tomorrow and this goes along with my mid-term bullish outlook.

I think tomorrow could be a good day to try open a long trade. I would not bet on the QQQQ options but rather I choose the SPY options ( maybe January calls) or if to be more conservative uncovered SPY put options (November expiration with $3-5 out of the money strike).

The only thing that makes me nervous is the NASDAQ 100 – it does not move along with other indexes…