Merry Christmas and Happy New Year

This blog will be inactive from 21 Dec 2007 Friday till Jan 02 Monday 2008. Time for a trading break. Thanks and good luck to all faithful fans. Up or down, we will all hit it big next year.

2c

Remember those numbers

Contrary to what most people believe, life is all about numbers. The long trade from last night was closed out when OEX 685.5 was reached. Remember last night we had to memorize 686, 679 and 674. Without a doubt the market marvelously traveled in between S1 and R1, give or take a few decimals. This is a trader's market. Short from R1 and long from S1 and just suck the money out of the system. Tomorrow's numbers to memorize are 685, 681 and 676.

Now, longer term, are we up or down or what?? Looking at the numbers (sorry it has to be stressed again) tonight, it appears that the smart money has already left the table leaving the average investors to hold the fort. Selling sentiment has subsided but there were not many buyers. You can see in a 2 minute chart, it gapped up and down like a yoyo. Just thin volume trading in effect and moves will be amplified. The market is due for a bounce and this one may just be the last one for this year and it is with high probability that the market will continue downward after this one. Again OEX 690 is the line in the sand.

Good luck

2c

As anticipated

a bounce. It travelled in between S1(674) and r1(683). Did two good trades today. Shorted as soon as it fell below 680 and closed out at 672 (Fib 61% retrace). Went long as soon as it surpassed 680 and is still in the trade. The decision to leave it overnight is because VXO is falling and this gives the hint that the market will go up at least for the short term. But again 690 is the line in the sand for the bulls. Tomorrow's numbers are 686, 679 and 674.

2c

Target reached....

OEX 680 was reached and gone into lower band of 677ish. The whole day it was not able to rise above 684 which was the S1. It was a kind of orderly selling and has a sickly stigma attched to it. In any case, it has been six days of fall and there should be an OS bounce within one or two days especially when the Fib ratio is reached. The bull's case has completely collapsed and do not let any talking head confuse you. It has merit if and only if the market rallies hard back above 690, else the case is closed. Tomorrow watch 683, 680 and 674. Anywhere below 690 is shorting territory.

good luck

2c

It is about time .....

Finally dawned on the investors that we are in a recession with high real inflation and credit problems. We are as of today officially in a bear market. The all important bull support 690 was broken to the down side. Now will see if the official head and shoulder is realised. OEX 680 is near term target. If this line is broken, everybody should run for cover. Looking back at the last few days, could not help but to think how naive some investors are. Dr. B had alrady said no further rate cuts because of high inflation. Do people not know that this is a hint and that one would imagine Dr B would have advance information ahead of all of us and some of us has to wait for it to come out and still buy??? Whoever, advocates new market high should have his head examined. Of course, the market does not come down in a straight line but short on rallies is the theme now. Monday watch 693, 690 and 684.

2c

It is logical that the market is illogical

It still wants to go up in face of high inflation and credit problems. In any case it is oversold and the 686 area, the confluence of multiple moving averages, is providing tremendous support for two days now. Watch 690, 693 and 699 tomorrow. There is a very high probability that tomorrow is an up day, provided tame CPI of course . Whether, it will continue its down draft, we will just have to wait and see.

2c

This has to be a topping process

A wide ranging day suggests exhaustion of trend. Tomorrow's numbers are 706, 696 and 685. Yesterdays' dream still intact till
it is broken. Neckline is 670ish.

good luck

2c

Market literally pulled back 1 min after FOMC

Kind of expected the day after but that shows how much dislike the market is with the Fed's 25 basis point cut. Now the reverse H&S is broken and come to think of it, the right shoulder was kind of in a hurry. The market was at OB before FOMC and never understood why people would still buy going into the meeting. This is Oct31 all over again, the Fed still worried about inflation and hinting no more rate cut and this will put a damper on the market. The highs of Oct11, 31 and Dec11 form a resistance line which is stopping the advance of the market. The original forecasted 710 was good and it is always important to realise the market will reverse in between 61.8 to 78 Fib retracement. Today is approx 0.38 retraced from the rise from Nov26 and is sitting on forecasted value of 690. If the uptrend is strong it may bounce tomorrow, however, right now with the market sentiment, there is no reason to believe that it will change overnight. A conservative target would be 50% which takes us to 680 and tomorrow's numbers are 705, 698, 684 and therefore, if it continues downward somewhere around 680 to 684 sounds right. But then again the brokers will be coming out with earnings this week and may be they will lead us further down. Was waiting for the infamous FOMC 1,2,3 pattern to realise today before shorting but shorted the market anyways when the pattern failed.

More thoughts tonight....could not help but thinking about the weekly OEX chart which is forming a H&S right shoulder. The left shoulder started from Aug13 this year. Now if this H&S materialised the neckline is 676 and the projected target will be OEX 58 points down from 676 taking the market to OEX 618 which is lower than 624 of March 12 this year and this is what Bradley Model is predicting by Dec 22, only 10 days from now. A drop of 72 OEX points and DOW 1440 points to DOW 12000. Just dream on for now...


2c

FOMC

no pullback yet, so it looks like one of those times that pulls back after FOMC. Tomorrow's numbers are 709, 705 and 703. Played gold stock calls last Friday and sold today.

2c

Not surprised to see a pull back here

Now price and volatility at opposite extremes again. Expect a pull back to 695 the worst case. Monday's numbers are 703, 702 and 700. Still in uptrend pending FOMC of course. Have a good weekend.

2c

Who says market does not go up in a straight line

Well, nothing more to add. Tomorrow employment report and numbers are 707, 699 and 695. Now be watchful of the fact that every time the market goes out from its norm for more than 15-20 points, a pull back is expected soon.

Oh boy! Forgot the inverse H&S. This is huge and 35 points back up to old high 725. Hold all longs.

2c

A confirmed buy signal...yes

How about that! one day is confirmed sell the next is confirmed buy. The worst nightmare came true this morning. Comparing chart pattern, today was like Aug29. It flipped right back. Lucky only 1/3 of puts were reentered last night and was scrambling to get rid of them this morning. As it turned out with doubling on calls, it was a winning day today nevertheless.

Technically, it exploded past 690 and up trend was firmly anchored. Well, the good news today were, higher productivity, non-inflationary unit cost of production, and in addition bigger than expected crude draw down led to the oil rally. The Santa rally is here with FOMC next week and worldwide rate cuts. The only down side may be Friday's job number. The ADP report forecasted a higher than expected increase and basically saying what recession??
In any case, no shorting please if you want to stay alive in the market, and buy on the dip until otherwise. Further, volatility indicator has shown a trend change again today which means up ...Tomorrow's numbers are 697, 690, and 686 and the near term target of course is fib 61% which leads us to 710.

2c

A confirmed sell signal...but

if it were below 680 then no questions need be raised. However, since the market has made its first step into an up trend and comparing August 28, it could flip right back. But the economic condition was different then. The glimmer of hope from FOMC next week probably helps to slow the speed of the decline. Could not help but took profits at the open then reentered Puts later. Tomorrow watch 685, 684 and 681. If it closes below 680 especially 676 we are looking at closing the gap.

2c

Remain short

nothing more to add...except watch out for Fib 0.38 at 680 and 0.5 at 675....watch 690, 688 and 684 tomorrow....

2c

Near term target 695 reached

Short. price and vxo levels at opposite extremes...may be early but expecting to fall back to forecasted value 680ish...from 692 which is a resistance area for now, EW wave4?? and wave5 starting?????

2c

Helicopter Ben speaks tonight

and see if he can calm the market? Nothing much to say except the market is still in up mode. 693 area may create some resistance and if the market is to regain the up trend it has to be taken out. But would not be surprised to see some pullback when we get there. Tested the pivot theory today with going long when OEX pulled back to 682 and sold when CCI in overbought area. Tomorrow's numbers are 691, 686 and 683.

2c

Wow, it is impressive

It sliced through 672 as if it did not exist. The near term target of 681 was reached in one day. Now, we should be looking to 695. A few days ago 690 seemed like a dream. Finally the volatitlity index came down. The trend has changed and is up trend. Do not short the market. It has yet to go overbought. It is monthend buying and may continue till Friday. It is buy on the dip now. Many bears got burnt for the hardest thing is mentality change. It confirmed the completion of the wave5 and falling wedge scenarios. Tomorrow, watch 693, 682 and 675.

2c

Good signs for the bulls

Today the market spent most of the time between 663 and 670. Although the late bears tried again to push it down but could not do it much below 663. For the bulls though, the 670 area proved to be too much resistance for the day. However, the fact that it had broken the 5-day trend of closing at the low of the day was a major achievement. In fact, closing at the high of the day would provide the bulls with further upside momentum. In addition, this is the first time it closed above forecasted value 665. Tomorrow's values to watch are 672, 665 and 661. For the trend to turn it has to close above 665 and in fact it better close near or above 672 if it were to get to the near term target of 680. This is a falling wedge and break out to the upside is imminent. Also, parking money in high beta stocks such as RIMM proved to be an advantage so far. But and this is a big but, there is a dark side to it in that the volatility index better come down in a hurry or we will be down in the dump again. It is comforting though to know that the volatility indicator which shows the change of trend on Oct11 and Nov1 also appeared on Nov26 to a lesser extent.

2c

No follow through

It was going pretty good in the morning, and exactly reaching 676, bounced around 670 until 666 could not hold. The selling at the close seemed a bit excessive but that was reflective of the market sentiment. Now the rising VXO was indicative of more selling to come, a slight rebound perhaps but pay attention to 670, 663 and 651.

2c

Short and sweet

The market surpassed 666 in no time at all and closed at the high of the day. All we need now is follow through on Monday. Watch 676, 670, and 667. Near term up target is 687. Any EW guy out there and shall we say wave5 completed from Oct11? Now corrective abc waves??

2c

The power of pivots.....

Notice how today's pivot number 673 act as resistance in a down trend. Conversely, in an uptrend, the pivot will act as support. If the pivot is violated, it signifies a change of trend. Well, what a sick market. One step forward and two steps back is the daily theme. Friday, watch 666 for direction, below it, expect 659 or lower. If above it will try 669, but it has to clear 675 for trend reversal. Therefore, you have an action plan for Friday.

It is only a matter of days now before this down draft will be broken. The 30 min down channel is bullish. As mentioned before, if you are adverse to shorting, park your money in AAPL, RIMM, GOOG Calls.

Have a nice Thanksgiving, although not quite sure what to thank for in the market.

2c

Bottoming process....

It tested r1, s1 and closed above pivot. Tomorrow's numbers to watch are 681, 673 and 666. If it can close above 679, the market is turning. Other good long candidates are AAPL, RIMM, XOM, OIH, GOOG and BIDU.

2c

A very disappointing day for the bulls

Could not take it above 678 and missed its chance. Now weekly 667 may give some support. Watch 672, 676 tomorrow, else short on rallies.

2c

This is trying...

It closed right at 680, but it tested 673 and bounced. But the best thing that came out from all these was 670 held. As mentioned before, the market came out from oversold and never reached overbought, unless the market is extemely weak, there is still upside to go. The bias now is up and if it continues next week, the target is Fib 61.8 retrace from Oct31 and that will take us to 704. Watch 682, 678 and 674 Monday.

ps. I see a reverse H&S on a 60 min chart from Oct31, kind of slanting, but if it is the case, it confirms target 704.


2c

Unfinished business on the up side

It is a frustrating day for the bulls. However, as much as the market wants to retest the low, it has unfinished business on the up side. Very tempting to day trade it but swing trade is the purpose of this blog. Until OEX 670 is broken to the downside, the game is not entirely over for the bulls. Today was very much like August 3rd. Daily pivot broken in a short term up trend. The bulls better take over tomorrow or the consequence will be grave. Playing with the house money now and if OEX 670 does not hold will "sell the house to go full force short" as they say. Tomorow's numbers are 687, 680 and 673.

2c

Scary close, but......

Since it closed above 682, the (near term) uptrend is still intact. A 10 point rise from 689 making it to 699 or or higher to 708 is still in the card. CPI tomorrow may just be able to do it.

2c

A no brainer day

As soon as the market opened, OEX 676 was surpassed in no time. Went long and remained long. OEX options still prove to be the most profitable of all index options. Chose in-the-money or near-the-money options as much as possible. The buy signal is officially out, simply because of WMT and GS. It is essential that it stays above 690 for it to advance higher. OEX 700 is the near term target. If it closes below 682, the rally is in doubt.


2c

The ultimate revenge...

Played the expected bounce in the morning. OEX 680 Nov calls it was, scraped 50% profit and is now completely out of Calls. No trades in the afternoon, for fear of selling into close and there it was. The market is still very weak, and no buy signals yet. Looks like it is heading for the August low. Don't leave positions overnight. Tomorrow's numbers are 681, 676 and 669. If you trade tomorrow, stay close to OEX 675 or 670 as much as possible to day trade both sides. It has to close above 676 to even consider leaving any long position overnight.

good luck

2c

Another one...

If the banks come out one a day with their subprime problems, we could see the market declines to no end. However, technically speaking many indicators point to a rebound Monday. The H&S should be considered finally complete. The sell off by the close was obvious that no one wanted to keep a position over the weekend. Since oil stocks are also retreating, the rebound will be anaemic. Right now it is not hopeful that it will go any further than 692. It has to close above 679 though.
2c

Rebounded.....without helicopter Ben

OEX 685 was right on target and more. Never thought the bull trap could cause so much damage. It is also hard to believe people would throw away quality stocks like RIMM and AAPL. Day traded RIMM today when it was down almost 14 points and rode it back up. it was a beautiful trade. Not sure if today was the capitulation day, but daily EMA 233 did attract and it halted the decline. Tomorrow on 30 minute chart one would be looking at 692 then 699, EMA 89 which is a Fib No. After that, OEX 705, EMA 233 which is another Fib no. It may be a stretch but another milestone if the market were to go back uptrend. Nasdaq will be under a bit of pressure tomorrow again, since QCOM beats but outlook is not good. Howver, NVDA tops estimates.

One assumption is that the head and shoulder from Oct23 has been completed. But looking at the entire picture, we are not completely out of the woods yet.

2c

Subprime again...

Another one of those days when fundamentals just clubber the technicals and made yesterday's run up a bull trap. May be all those companies who have subprime issues should just step forward and get it over with a thousand point drop in the DOW. After hour CSCO outlook is not good and is down. It looks like tomorrow will be a capitulation day. After all, the original OEX target of 685 is still valid.

Could not get a good entry point to get in long on the OEX except at the end of day, may be early, but will see. Resorted to shorting OIH and playing long on RIMM. Got out when profit reached 10%. Will look to add more OEX Calls tomorrow. Helicopter Ben will be talking tomorrow and see if he can claim the market.

2c

It's a buy now

A confirmed buy signal was out midday and had to reverse to longs. See how it bounced off 701 and never looked back. If you had not gone long, wait until it retraces tomorrow and get in. Watch OEX 706 tomrrow, it should close above it and it also should retrace back to the level where it broke out today. Looking back and counting the number of days, this is the fourth day and is one day early than previously forecasted 5 down days till Wednesday. The real aggresive buy signal was actually out when the market could not break through 696 yesterday. You buy when the selling sentiment was the highest. You have to be a contrarian if you trade options. Since it closed way above the 702-706 level today we should forget about the downside 685 target and instead look to OEX 720 as near term target. Such is the beauty of trading the index, you do it both ways. Don't ask me why the market is still going up in face of all these adverse fundamentals. Just follow the trend.

2c

Shorted again...just couldn't help

OK so we did not get any bounce in the morning mainly because of the Pakistan and Citigroup situations. If your conviction about the direction is strong, you would have shorted when it rebounded in the morning. OEX 696 remains a stubborn support area for the bears to break. This area was tested four times now and around 2.30pm today due to the oversold condition, the market staged a reversal. Impression, but there is basically no change in fundamentals. Even technically, today's close was still below pivot 702 and far remote from 708. Tomorrow's numbers to watch are 706,701,and of course 696. It has to close in the range of 702 - 706 for the bulls to have any chance. If it hangs around 701 for too long, chances are that it will slice though 696 to 685 area. Will see.

2c

So where do we go from here?

We got our better than expected employment report today and the sell-off intensified as anticipated. OK then, what's next? If you were a bear you would have closed your shorts today because the selling sentiment peaked. You could almost feel the reversal by the end of day, especially after it bounced off from 695ish 3 times in the last 10 days. But, do not be fooled. It was mainly short coverings and it may even continue to a small bounce come Monday morning. Yes it is in oversold zone, but the selling is not over yet. Looking at the economic calendar there is really nothing major to push the market one way or the other in the next few days. The PPI report will not be out until the 14th. Watch 708ish closely on Monday and do not trigger buy until a close above 715. If you use the resistance/support line approach, the downside target will be OEX 685ish. This is a 45 point drop from the high of 730 and is approximately Fib 0.6 retrace of the whole upleg (730-655=75) from Aug low. The reason it bounced off from 695ish was because of Fib 0.5 retrace. A drop of another 20 OEX points from today’s close of 705 will bring the DOW to 13200, the long term support. These are rough estimates for trade positioning. Be careful about sites who forecast new market high. At the moment, it just isn’t there. Really felt for Flipper who was 100% long on the day after Fed day with a close to 400 point drop in the DOW.

Good Luck

2c

Uncertainty creates the biggest reward

It was a double overnight. When you have high oil prices, slowing economy, no more interest rate cut, falling dollar, and inflation concerns and you still want to invest in equities? Yesterday's close was a setup for a fall especially in light of the fact that the market had already travelled 30 OEX (600 DOW) points from the low. It was a bit of surprise to see it down this much though. Today's price action has broken the uptrend and there is more downside to come. If the employment report is good tomorrow, brace for another fall. Do not have a downside target yet but count the number of days. Count 5 and that will bring us to next Wednesday as an estimate for down days. Or draw a line to connect the two daily tops and a parallel line to connect the lows(just one formed at the moment) and you will see OEX going below 700 for sure.


2c

The end of rate cut?

The Fed indicated that the risks of inflation and slowing economy were balanced. One has to wonder if they are any forward looking. While cutting rate is good for the housing market, but detrimental to the dollar and causing crude oil to hit 95$ per barrel. These are all inflationary. Somehow, Jim Rogers might have a point in putting all investments in Chinese currency. Most of the gains in the market today was achieved before the Fed annoucement. As a matter of fact, the initial sell off was to due to inflation concerns. Although it closed above 717 and still in uptrend mode, it would not be surprised to see a sell off to 718ish. Watch 721 tomorrow closely. My original target of 725 was finally reached today. Option trading is like marathon running, it cannot stop. If it came down and regained its strength later on, although the market was higher but the option premium was not. Based on some early signals, took a small short position today, and sure felt lonely tonight.

2c

Helicopter Ben or with his landing gears out?

As expected, it was a lower high. The downside was a bit out of the norm for a pre FOMC day. May be the market was pricing in a quarter point rate cut. The uptrend has not been violated yet and the line in the sand today was 716ish. But watch closely tomorrow OEX 717 after the Fed annoucement. If it cannot close above that, troubles ahead.

2c

Out

of all Calls. If you had bought Calls on the 22Oct and sold them today the 29Oct, your money would have been doubled in six days. The target was supposedly OEX 725. However, the price action has gone from extreme oversold to extreme overbought. The decision was to liquidate everything without emotion even though the high of today was only 722ish. The pattern that formed today comparing to past pre FOMC days indicated that the probability of tomorrow's high exceeding today's high will be small. The more prudent thing to do would be to stay on the sideline until there is a definitive market reaction to the interest rate outcome, unless you are a gambler. Further, shorting is not advisable because the market has gone back to uptrend and counter trend trading is suicidal. It is also good money management in that if doubling the wagered money is the goal of every trade then once it is achieved, scaled out before the market takes it all back.

2c

Bulls in control again

After breaking out of 711, retested it and never looked back. Buyers were out in full force today and the near term target is still 725. Will look to unload some calls by then or by Wednesday and may leave some calls to play the Fed day. Everything as planned and could not ask for more.

2c

Bottoming process?

This bull/bear tug-of-war will have a decision soon. The bias is up. May be MSFT earnings will do it. It is up nicely after hour at time of writing. Today it traded in between 712r1 and 700s1 and closed above pivot. It better breaks out of 711 tomorrow if the bulls were to regain the long term up trend. Time is running out. Watch 706 tomorrow. If a break out occurs the near term target is 725. A break down is not anticipated at this point with only a few days to FOMC, but if it does, 701 then 691.

2c

Impressive reversal

It is with great pleasure not to have to trade intraday. Trading should be a pleasure, not a struggle. Consider if you can walk away the whole day without checking the market, knowing that you are on the right direction. Today it proves the point. From here on, on a closing basis, the market should continue to climb until of course the indicators say otherwise. The market fell as low as S2 today and from there a rebound was almost certain. Now that the market has retested its low and closed above 707pivot. It is free to go up. Tomorrow's numbers are 712R1, 704pvt and 700s1.

Good luck

2c

A Technical Buy

Buyers came out today with a good showing of closing above 706r1. Tomorrow's numbers are 711r1, 707pvt and 704s1. It is expected to reach the forecasted value of 717 and then onto retesting old high. But, one day at a time. Hold your longs.

2c

Turtle Soup + 1

This is an excellent setup. The day after Turtle Soup, more sellers came in, unfortunately they were the late-comers and the market reversed. In any case, it closed at 702.63 and the numbers for tomorrow are 705.71r1, 700.68pvt and 697.6s1. Looking at the close and pivot numbers, what do you think is the probability of an up day tomorrow?

2c

Horrible

This is when fundamental overides technicals. Because the selling sentiment reached peak level like in August, could not resist to obtain some Nov calls. It could be early but do expect a bounce to 706ish. Have a good weekend.

(Note : This is also a Turtle Soup Buy setup)

2c

Buy Signal finally out

Although long wave analyst predicted a crash in 2007 but right now it should go back up. Notice the low of the day was above 714s1 and it closed near the high of the day. Buyers were not out in full force yet but the downward slopping channel is bullish. Tomorrow's numbers are 720r1, 718pvt and 716s1. Nov OEX 720 calls are good.

2c

Amazing reversal

The anticipated reversal got delayed a day. The good INTC report and the tame PPI got hammered by the horrible 10% decline in housing starts in a month and the drag from IBM. This is what unfair weighting would do to the index. Luckily, it was a V reversal in the afternoon. It closed above the daily pivot 719. The numbers for tomorrow are 724r1, 719pvt and 714s1. There is a good chance that it will hit 727ish in the near term.

2c

Reversal??

The first down side target of 717ish was reached today. Although the price action shows no sign of turning, the volatility index indicates early sign of reversal. It is still in OS zone and it has to clear 719 tomorrow for any sustainable long. The next downside target is 708ish. This of course depends on CPI Wednesday. After hour, INTC announcement of 3Q profit leap elevated related technology stocks such as RIMM, AAPL and GOOG. All were up nicely after hour. Tomorrow’s numbers are 721r1, 719pvt and 716s1.

2c

This came as no surprise…

ID/NR4 is a powerful setup. As soon as it failed to break above 729r1, OEX Nov 725 puts were good.It has entered oversold zone, and whether it will stay there depends on CPI tomorrow (my mistake, it should be Wednesday Oct 17 instead). If tame, as in PPI, a rebound is in place. Watch 728r1, 723pvt and 717s1 tomorrow. See how the range expands after a contraction. If it cannot close above 723, brace for more downside to come. Today, the technical damage is done. All observations mentioned in the past few days materialized. Even Bradley is on target.

As an aside, there was a block of approximately 3,000 AAPL Nov 170 call contracts went through today. Someone must be expecting another blow out earning from Apple Computer, come Oct 22.

2c

Tame PPI

So the bears did not get the follow through today. OEX spent most of the day hovering around the pivot 727ish. The numbers for Monday are 729r1, 727pvt and 725s1 and once again we have a small range and is an ID/NR4. The market will break out from this range. The daily bias is still down. It is hard to believe that the mini-correction lasted one day. There is a very high probability that it will continue next week.

2c

History does repeat itself

If you can identify certain patterns and interpret them by mathematical algorithms, you have a winner. The sell signal was already out yesterday and warning signs were written all over a couple of days ago. One has to discard the intra- day variations to maintain the overall picture. The rally this morning was based on one company’s (WMT) outlook on retail. The rest of the retail industry was lack luster. Further, if one examines closely the Trade Deficit report today, the import price index was inflationary. However, the rally kept trucking along until finally one ECB came out to say specifically that inflation was rising, everybody ran for cover.

OEX Oct 730 Puts and OIH Oct 200 Puts proved to be winners. Money doubled in one day. The numbers for tomorrow are 733r1, 727pvt and 719s1. The anticipation is for the correction to continue albeit tame PPI tomorrow. The widening of r1s1 range depicts WR7 which indicates trend exhaustion.

2c

Toppy

It was a classic sell signal today, although the rally in oil stocks saved the day. It closed at about pivot 728. The high of the day came within 2 points of target 732. Tomorrow's numbers are 730r1, 727.6pvt and 725s1. The trend change of Apr02 to May07's mini-correction was 42 OEX points, and the trend change of Sep11 to Oct9 was also a count of 42 points. If history repeats itself, a mini-correction of 10 to 15 points to OEX 715 is not surprising. The momentum of total index put/call ratio has increased again. For what it's worth, bear in mind the Bradley Model turn date of Oct17 (+ or - 7 days). OEX OCT 730 puts look attractive at this junction and OIH Oct 200 puts are good for more adventurous day traders.

2c

Scaling out....

of OEX 720 Oct calls by the close. The anticipation is one more day of advance with the target of 732. Watch 727.8pvt tomorrow. As mentioned before, it is getting too close to the possibility of a retracement for comfort.

2c

Columbus Day .. The market was lost

With the Bond market closed today because of Columbus Day, the market did not know where to take the cue from. Today’s close at 724.1, although below pivot, is very close to the forecasted value of 724.3 and is still above trend. Tomorrow is another narrow range day with 724.9r1, 724.4pvt and 723.5s1. The uptrend is expected to continue with at least hitting the old high of 728 again. This of course depends on the last FOMC minutes and the earning report from Alcoa tomorrow. One observation was that the lower band is rising to meet the forecasted value and a mini-correction may be in place soon to take the market down to 710ish. The momentum of total index put/call ratio rised today in synch with a rising market. However, it is also a precursor to a fall after the last phase of an up cycle.

2c

Just follow the trend

As anticipated it broke out of the narrow range, to the upside, because of the employment data. Got OEX OCT 720 calls as the market retreated back to 723r2. Now we have a range expansion. Next set of numbers are 732r2, 729r1, 725pvt and 722s1. The near term target is 732r2. It should be riding on r1. This is a classic buy signal with VXO's ugly head coming back down. Conservatively, there should be one to two more days of up momentum. It would not be surprising to see Tuesday’s FOMC minutes giving the market another push. After that, it will all be about earnings. Coincidentally, total index put/call ratio has dropped to a low point.

2c

A day about nothing

It was such an uneventful day. Everybody was waiting for the employment number Friday, otherwise, sellers would have been out. Technically, it is short term down trend. Once again, a contraction of r1s1 range which is basically an NR7. The market will break out one way or the other. The numbers for tomorrow are 721r1, 720pvt and 719s1. The market will tell, just follow the trend.

2c

Follow your plan

It is all about numbers. An expansion of R1 S1 followed by a contraction is equivalent to a wide ranging day followed by a narrow range day such as a doji day. In an extended uptrend, this setup represents trend exhaustion. It would be prudent to scale out longs and position shorts. Today was a no brainer. Shorted at pivot 722ish and closed out at S2 718ish. (yes, it was Oct 720 puts. named the pivot option) It was an easy trade. Since it closed below pivot of 722 today, it is in near term shorting territory but long term uptrend is still intact. Watch r1-722, pvt-720, s1-717, s2-713 tomorrow. No buying below 720 and take note of 715, 713 and 708 when shorting. Below 708, the game is over and the market is in long term down trend. It is not surprising to see the market chop around until Friday. There is also the 30 minutes downward sloping bullish channel and eventually it will swing back up.

The ADP employment report today indicated that only about 60K private sector jobs were created last month. If the forecast is 100k jobs come Friday, a total of 40k government jobs are required to fill the gap. The probability of that happening is slim. Further, the report stipulated that the financial and retail sectors were worst off and it is not difficult to deduce that the sub prime problems have already over spilled.

2c

It was a good scrap trade

It was 20% profit for OEX Oct 715 puts overnight. (Thanks to a reader who corrected the mistake, it was actually OEX 720 Puts. The confusion was in translating between OEZVD and OEZVC ). The reader actually brought up a good point. It is important to trade around the pivot and it seems to have the best punch for the buck. Buying sentiment has decreased and the momentum of put buying has increased. The most peculiar technical thing is the constriction of R1,S1. A narrow range of 3 points. The last time it happened was around July 17. It was obvious what happened a short while after. For continual strength it has to close above 723 tomorrow. It may depend on the ADP employment data which is a predictor to the real thing on Friday.

2c

It is impportant to remember the numbers

As soon as it opened today above pivot 715 and headed up, it was clear that shorting was out of the question. The overbought situation turned into a stochastic pop. Greenspan is still influential in moving the market. His comments on subprime issues being over, coupled with mediocre ISM data, fueled the rally. It is important to remember the daily numbers for trading. Price action lower than s2 would trigger a rebound and by the same token, price action exceeding R2 would trigger a pullback. It would not be surprising to see a pullback to 720 which is the pivot for tomorrow. Got a small OEX 720 put position by the close. Slightly early, but let see if the scrap will be successful. This is also in light of the fact that the volatility index is slowly raising its ugly head.

2c

A perfect trade

OEX 715 puts it was and a perfect day trade. Rebounded at S1 712 which was the time to close out. Now, where do we go from here? The market is overbought, VXO gave a sell signal and the buy sentiment was cut in half although the sellers were not out in full force. This is not a buy point. From past experience since this is up trend, shorting will be best served by day trading. Do not leave shorts overnight. But 707 is reachable. As long as it is below 715 short it. s1 is 712, s2 is 707. Close your shorts if it rebounds at 707 and remain short if it is below 707.

2c

All Out...

of OEX 710 calls with profits. My forecast target of OEX 720 may still be reached. But I was warned by one very reliable indicator this morning. The market will sell off as early as tomorrow or Monday. This inidcator has reached the high level equivalent to that of Aug 8, 24, Sept 4, 13 and there were sell-offs afterwards. Although this time, other indicators are not exactly in sync. But this is a tired bull. It is prudent to take off longs and position shorts. OEX Oct 715 puts are good.

2c

Breaking out or trying to at least

Got in OEX 710 Oct Calls finally when the market retraced and is still in the trade. If nothing bad (or nothing economically too good) happens in the next two days, an anticipated target will be OEX 720 by Friday. Keeping my fingers crossed.

2c

Early Buy

As planned, shorted from 711ish to 706ish with OEX OCT 715 puts with small gains. Now to go with the flow, the market is oversold is attempting to retest old highs. Tried to low bid OEX Oct 710 calls at the close but did not get filled. The way it closed today was interesting with an upsurge at the last minute. As long as it closes above 709 tomorrow, OEX Oct 710 calls look attractive.

2c

Sell signal out

If it does not close above 712 tomorrow expect one to two days of selling. Possible targets 705 then 697. In and out of 720 puts with profits. If the Fed were not trying to inflate their way out of this mess, I would have left my puts overnight. Will reenter again tomorrow especially when 712 fails.

2c

Outlook for Monday

It closed at 713 which is the pivot for Monday. Although, it can go either way, and perhaps eight points on either side, the odds favour the downside. Would not be surprised to see a test of 704 before further advance. At this stage OEX OCT 720 puts are still the best bet. Have a good weekend.

2c

Out

Closed the OEX 720 puts with a small profit. Although it closed below 714 today, other indicators point to the possibility of one more push to the upside. 30 minutes down channel is also bullish. Tomorrow is OE day. It is best to stand aside. Just too overbought to buy at this point but not overbought enough to get a good short. Need some news to push it either way.

2c

Day after Fed Day

The big rate cut from the Fed distorted the norm. Took a small short postion when it reached 716ish. The Oct 720 puts are so cheap. Could be early but expect at least a retracement to 710. If it does not close above 714 tomorrow, it will be lower into the weekend.

2c

Surprise, surprise...

The Fed rate cut of 50 basis points only signals that there is a serious problem with the underlying economy and that they missed the whole ball game. Only a month ago, they were saying the subprime problem was contained. However, the market only dwells on interest rate. Negative news do not mean much. Such a cut would only fuel rise in oil price and inflation. Tomorrow's CPI reading will be interesting but the Fed has already sided with issues other than inflation which is supposed to be their prime concern. In addition, a crumbling dollar would make foreign investment in the US equity market less attractive.

In any case, the forecast for a down Monday, an up Tuesday was on track. Is it going to be a down day after the Fed day tomorrow? The Fed move has drastically changed the technical picture and certainly one would expect continuous up trend. However, this does not exclude a pull back tomorrow especially with a 300 point rise in Dow. Watch 716 and 703 for actons. Would be tempted to short if it gets to 716 area or if CPI is bad tomorrow morning. It has to come back to reality.

2c

The all important Fed day tomorrow

If it were not for the Fed meeting tomorrow, one could short the market blind-folded. OEX closed below pivot 693 and right at S1 691. This does not bode well for the bulls tomorrow. By this time, the market should have rallied into Fed meeting. Somehow, the market is smart enough to sense what's coming ahead. Contrary to most beliefs of a 50 basis point rate cut, the market seems to tell us that either there will be no rate cut (as echoed by Mr. Greenspan) or only a 25 basis point cut. This will invoke a sell-off and if uptrend is to be maintained then it should halt at 685ish.

2c

Predictable

The market is getting to be too predictable and is scary. The pull back this morning stopped at exactly S1 690ish the upper ternd line and reversed from there. Could have pulled the trigger for a short last night and got out at 690 this morning for an almost 50% gain. But the Fed meeting complicated matters. Bought a few in-the-money calls for RIMM for a day trade for a small gain because of its upgrade.

Now OEX closed just above pivot 694 today, but it was not higher than yesterday's close and is "Hammerish". Besides the daily upward running channel is bearish. There is a more than 80% chance that Monday will be a down day. The VXO gave it away. If Monday is a down day, Tuesday's up and Wednesday is down. If Monday is up, then sell the news, Wednesday will be down. Either way you look at it there is a high probablity that retracement will start within 3 days.

2c

Scaled Out

OEX target was accomplished on time and was exceeded. All positions were scaled out. If it were not for the Fed meeting on Tuesday, scaling in some OEX puts would be in order. The way it pans out, slight pull back to sideway activities is expected, with Wednesday after the Feb meeting a perfect short opportunity. Though, bear in mind the trend has changed to up, with the majority of profits to be made on the long side.

2c

Pausing......

However, since it closed above 685, expect at least one more push to the upside tomorrow and your OEX options will be doubled in four days if you had bought on Sep 10.

2c

Trend Reversal

As long as OEX closes above 685 tomorrow the near term minimum target is 693ish. This is expected to be achieved within 2 to 3 days and by Friday the latest. The realization of this up leg will reverse the market into uptrend once again. If you have bought OEX in-the-money calls the last two days, you are in very good shape. Hold on and let the profits run.

2c

First Post

Some of you may have known my "2cents" from other sites. I have decided to try my own blog for a change. My trading style is mostly statistical. I only trade OEX options for they give you the most leverage for the buck. This is the first post and will evolve as time goes by.

I will keep it short for the first round. It is a buy tomorrow if OEX closes above 683 and more selling to come if it closes below 678. Since it is only 2 weeks to expiration, it is prudent to go for the in-the-money option such as OEYIO (Sep 675 call)

2c