Houston, We Have Lift-Off
What a day! As the DOW cleared the
11,000 level that held it in check all these months, the Bulls ignited the
rocket jets and blasted the index to an amazing 11,215 close. When I saw the
TICK explode to 1273, I stopped out of a DIA short very early on in
the trading today. This rally, while not on the most remarkable volume, was
certainly awe-inspiring in its non-stop ferocity.
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If you were lucky and long, congrats! (I
can’t help myself and have to point out, once again, that the markets held
this morning at a price cluster that Carolyn Boroden identified in her morning
S&P future charting service – thank you Carolyn!) Now, if you are long,
it’s important to look at the market for areas to look for exits as well as
signals that perhaps this move may have been an “impulse” move up,
and not the “birth of a new bull market” as I’ve seen heralded in so
many articles this evening. While the DOW certainly made an explosive move
upwards, it was not confirmed by the Utilities Index. The Nasdaq 100 cash
index is also lagging behind in price action and continues its
non-confirmation trend.
can’t help myself and have to point out, once again, that the markets held
this morning at a price cluster that Carolyn Boroden identified in her morning
S&P future charting service – thank you Carolyn!) Now, if you are long,
it’s important to look at the market for areas to look for exits as well as
signals that perhaps this move may have been an “impulse” move up,
and not the “birth of a new bull market” as I’ve seen heralded in so
many articles this evening. While the DOW certainly made an explosive move
upwards, it was not confirmed by the Utilities Index. The Nasdaq 100 cash
index is also lagging behind in price action and continues its
non-confirmation trend.
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I’ve included a chart of the QQQ and the QQQ
Volatility Index. As you can see, the last time the Volatility Index dropped
to the 50 area, we marked a high on the QQQs and sold off precipitously from
that level. I think it’s important we watch this indicator tomorrow on any gap
up for a potential short entry on the QQQs.
Volatility Index. As you can see, the last time the Volatility Index dropped
to the 50 area, we marked a high on the QQQs and sold off precipitously from
that level. I think it’s important we watch this indicator tomorrow on any gap
up for a potential short entry on the QQQs.
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Below are a few charts of some key
indexes, with commentary included to illustrate various areas of
resistance.
indexes, with commentary included to illustrate various areas of
resistance.
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There’s no doubt the Dow’s performance today will
continue to bring in idle money from the sidelines, as investors become more
bullish and more fearless (as evidenced by the volatility indexes on both the
NYSE and Nasdaq). There is an old saying that everyone is right during a
market trend but wrong at both ends of it, so be on the lookout. At present,
it seems as though the markets will never trade lower again, which in-and-of-itself
can be a warning signal. I’m not suggesting stepping in front of a freight
train, but be armed with key support/resistance levels on your favorite stocks
so you’re prepared for a potential turn.
continue to bring in idle money from the sidelines, as investors become more
bullish and more fearless (as evidenced by the volatility indexes on both the
NYSE and Nasdaq). There is an old saying that everyone is right during a
market trend but wrong at both ends of it, so be on the lookout. At present,
it seems as though the markets will never trade lower again, which in-and-of-itself
can be a warning signal. I’m not suggesting stepping in front of a freight
train, but be armed with key support/resistance levels on your favorite stocks
so you’re prepared for a potential turn.
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Happy trading,
Carolyn