That's The Way (Uh-Huh, Uh-Huh)
Well, well, well. Quite a day, eh, kids?
The bulls had control until 1:55 p.m. EST when the Dow was up about 80 points. At that point, the market starteed falling, and all the indexes I follow ended the day down.
This is a really powerful reversal day, exhibiting "shooting star" candlestick patterns on many charts.
Here, for example, is the Russell 2000 ETF (symbol IWM). Just look at the size of that star! (If you don't know the term, you can read about it here). As always, click the image to see a much bigger version.
Looking at the longer-term trend, below is a daily graph of the S&P 500. Notice the ascending trendline. The price has pushed up against this resistance level several times over the past year or so. My view is that the index is going to start pulling away (and down) from this resistance. The S&P crossing above $1,300 would negate this view, at least in the short term.
3 comments:
How do you feel about the oil, natural gas, and drilling sectors Tim? I know Natural Gas has been getting killed and the drillers and such have as well, but do you think we can expect more downside? I'm currently short THX based on expanding volume and a breaking of the 200dma. As an amateur TA person does this look like a favorable position?
Thanks
Chris
I want to thank you Tim for helping people recognize certain patterns. Sometimes I get confused why patterns aren't working and one reason is that I'm not reading the volume with the pattern correctly. After watching some of your charting though I'm getting a better understanding when you highlight key areas.
I wanted to ask your opinion on where you think oil and natural gas is headed soon? I'm currently short on THX at 55.85 and was wondering if this is a good spot to be in this stock? Or do you see a reverse on gas prices which could drive oil stocks higher once again. As always I value your help and opinion.
Chris
Christopher, I'm sorry, I'm afraid I can't get to your questions right now.
Jeff's is easier to answer, so let me tackle that real fast - - yes, the bid/ask can be nasty. I'd avoid issues with thin volume (and by 'thin' I'd say less than a couple hundred contracts on average a day). On a percentage basis, even active markets have an enormous spread. But that's the price you pay to get into the volatility.
I sometimes use limit orders, but by and large that market is what the market is, and you just have to pay whatever the best ask price is. Hopefully what options move you are entering is so large that the bid/ask spread will be of little consequence overall.
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