Thursday, October 16, 2008

10.16.08 - VIX Tops 80

Not pretty. Out in the a.m., will be looking for opportunities throughout the day, but no sign of a turn just now. Did get fooled by a short-lived turn in the Trin -- note to self, wait for more than a bar's worth of confirmation! There is certainly plenty of room to run in both directions.

8:25AM PST: Downtrend line broken by a hair, VIX peeling back slightly. Also, we hit and made a slight bounce off the connected Friday low points. It's something to watch, not trade yet...

8:40AM PST: OK, that could have been "it" -- don't forget that any longs in this market are highly risky! Unless institutions come in, the temptation for traders will be to sell it down. I'd now wait for a higher hi/low pattern to develop. Also, see how price behaves at the VWAP.

9:25AM PST: Possible resistive volume building at the pivot. What does this mean? When normalized volume (the red/green thin dotted line on my price axis) spikes and tapers way above typical levels, it often precedes either a pause -or- reversal in price action. Also bear in mind we are at the top of the downward trend channel from the Tuesday highs. Will we break or bust?

11:30AM PST: Last hour risk (or opportunity?). Tomorrow is options expiration. Transportation and Consumer Discretionary are the day's winners because... Oil is down over -5%. Chop Chop.

o Quant Edges - Scary Pictures

12:00PM PST: Fourth try to break the down channel. The more times we try, the more likely success. Still below pivot as most daily indicators have gone positive. Google coming up at the close.

12:10PM PST: Downtrend and pivot broken by a hair... Classic 'W' bottom, or a prelude to Quant Edge's 'Scary Pictures'? No way to know for a day or two. Right now I'll assume the former, but trail stops along the way.

12:45PM PST: The five day MAs should be viewed as possible resistance today/tomorrow (just under SPY $96). Below that is /yesterday's pre-fall peak (SPY $94.70). Also, there may be a desire to reduce risk ahead of GOOG unless it has already been leaked. Think I'm kidding? No, I haven't heard any rumors. However, the whisper number is reported at $4.75 versus the $4.08 consensus.

CLOSE: Note that daily momentum is showing a positive divergence and that volume today was much stronger than during the last two days of losses.

Never Investment Advice


Anonymous said...

O.K. Jeff,,

I am almost sure with the vix and s&p as they are,, my bet is the bulls will carry the day,,

how the day will end,,i am hoping
that its not a saleoff into the weekend,, every thing i have is pointing up,, but these times are uncertain for sure..


Jeff Pietsch CFA, Esq said...

I think that's right on both accounts. Use any vol to your advantage on the long side, but trail stops. The tough thing are still the CDS deliverys next week. Youd think everyone that is able would already be prepared... but could be some fireworks next week.

Jeff Pietsch CFA, Esq said...

The market is down on lower new home construction... you've got to be kidding me... best news ever!