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