Bulls are back in business...

Trading is definitely an art. We talked about pattern violation yesterday but the big picture is still up. The tricky part is when do you sell and when do you hold long when pattern or pivot is violated. Practice, practice and more practice and believe it or not traders can be trained. Ok, to recap, we have the completion of daily and weekly H&S and 5 waves. Make a note, this is wave A of corrective ABC and using Fib ratio, it should theorectically reach 660 as an intermediate term target. The word intermediate is mentioned because as of today, intermediate up trend has started. Today it closed beautifully above 627 and tomorrow's numbers are 637, 627 and 622. A chart is posted again today to illustrate. Pivot numbers are important but one has to look at the forest too. Longer term hold will produce bigger results rather than crumb change.

2c

Weekend Update

Channelling OEX...

2c

Hmmm....

Forgot to mention yesterday that the buying sentiment reached peak and today's gap up to above r1 triggered off a wave of selling which kind of exaggerated to the close. Many are now calling for lower low targets. The bulls are not dead yet. Technically the pullback today is 38% retracement of the rise from the low a few days ago. Though it looks bad because it closed today at 622ish below 630 pivot. However, other indicators points to the trend about to turn especially in view of the FOMC meeting next week. Tuesday's numbers are 634, 627 and 614 and if it can close above 627we are back in business. Hang in there bulls.

2c

ok this is it....

All on board to go green. This a short term up trend within a larger down trend. Technically, it should be up till FOMC next week. Definitely don't short and just buy on pullbacks. Tomorrow's numbers are 636, 630 and 627. Conservatively, a near term target of 650 can be accomplished.

2c

Oh well, what do you know?

Thought AAPL was going to destroy the confirmation day. It was not because of the 75 bps Fed rate cut, which actually sent a bad message to the consumer in a sense. It was the banks and the regulators that got together to bail out the bond insurers. The Fed rate cut frankly will do very little to help the situation. Further, how do you size the risks of the fancy securities and derivatives that those big boys committed to but with very little understanding. In any case, with 250 billion in deficit a recession is almost certain in 2008.

Technically, today's low was a bit below s1 of 599 and because of the bond insurers late news which triggered off a huge short covering. Mind you, buyers were small by comparison. It closed at 627 well past r1 622. If you have a drop to s1-s2, you will get a rebound. The same thing can be said here. A rise to r1-r2 will almost always get a pull back. This is also in light of the fact the the DOW has traversed 500 points in one day. Now are we there yet? The weekly H&S was completed. Therefore we expect a rebound of approx 38% to 630ish and tomorrow's numbers are 631, 616 and 605. 631 is the forecasted number, only if it takes out 631 and closed above 637, the down trend is terminated. Volatility ratio has not indicated a turn yet and other inidcators are saying potentially but not confirming. The next few days are important but the feeling is that it is not finished yet. Expect more volatility to come.

2c

Fed panicky....

What a day. Actually, MLK day saved the market. Had to close out all remaining puts in the morning and also played a small long position during the day but left no open positions overnight. Technical, it has all the signs of a turn. The Fed's 3/4 bps made it a wide ranging day which typically signals exhaustion of a trend which in this case is down trend. But it needs confirmation. With a 15% haircut after hours on AAPL we may not get that confirmation tomorrow. VXO at 30ish, yes bottomish but no confirmation of a turn yet from volatility ratio. In this market it is better to wait than to be sorry, or day trade it. Tomorrow's numbers are 622, 609 and 599. See those numbers widening and today's close was at 613 and you notice where it sits in the range.

Have fun, folks

2c

Pivoting the way to profits...

This is old fashion trading and there is no need for fancy charts and graphs. As anticipated, selling into strength, short from pivot 631 and closed out at S1 617ish. One Feb 630 OEX put contract would have net you at least 700 dollars in one day. Imagine you have 10, 100....contracts? Anyways, Tuesday's numbers are 630, 623 and 613. Today's consolidation at the low of the day means more selling to come. Some forecasted the diamond formation of the DOW with target of 11,100 and that will bring OEX to below 600 when this is done and over with.

Good luck

2c