Thursday, December 11, 2008

End of Day 12/11

A relatively exciting day, finally got a clean directional move that I caught on the short side for a fair profit.

The DOW finished the day down 196 points, the S&P down 2.9%, the NDX lost 3.5%, and the RUT lead again with a 5.3% loss.

I’m not going to try to justify the selling, other to say there was a treasury auction that didn’t go so well and Jamie Dimon (JPM CEO & N.Y. Fed member) made some negative comments about financials which were also killed, the XLF gave up 7.7%!

Internals were negative by about 4 to 1.

REITS got slammed. IYR lost 14.4%, giving SRS a rocket ride up 25% on the day!

The transports also got killed, the index lost 192 points, nearly as much as the DOW! That’s a feat when your index is only at 3,200 points. They gave up 5.6% today.

Below is a chart of the DOW daily, note the increasing volume and the clear sell signal on the stochastic. Also note that it is being squeezed between the black uptrend line and the green 50 day average that is down sloping. Looks like a resolution one way or the other has to come pretty soon.

Next chart is the SPX 10 minute. Note the light blue lines which make a potential bearish wedge. It held. Now look at the darker blue flag channel… we hit 870 perfectly and bounced right at the close. That’s a potential springboard for tomorrow if prices want to gravitate back to the top of that channel. Note the fresh buy signal from oversold on this 10 minute timeframe on the stochastic. The 20 minute and 60 minute fast are also oversold (slows are not), which may indicate higher prices tomorrow, thus I took profits into the close today from my short positions. Look at the congestion/support between 870 and 830… there’s a lot there. I wouldn’t get heavily short again until we clear the 850 area (today’s close may have been a good long entry point, but not for me).

The last chart is the VIX, 5 minute close up. It returned to its triangle which is not bullish, but it did diverge in the fact that it was barely positive on a fairly large down move in equities. Once again I’m cautious here. I liked today and did well. For me to get long, the VIX would have to exit that triangle and stay out. The fundamentals certainly don’t support that move, as those who do not have a job could attest.

Have a great evening,