Slow Start to a Big Week

This is going to be an action-packed week - earnings, the FOMC announcement, major economic reports. The whole schmear.

There wasn't too much action today, however. The market rushed higher, sold off to negative territory, and closed today with tiny gains. Basically nothing happened. While we wait for something more definitive, let's look at a few interesting charts.

Back on January 4th, the Dow 30 broke beneath a medium-term trendline. I've circled the event here. Notice how the most recent trading has stayed clearly beneath this former trendline.


Backing up in time somewhat, you can see this from a different perspective. I've pointed out in red the day the trendline was snapped, and I've pointed out with a green arrow the reversal off this trendline. As regular readers of this blog know, I am always fascinating by the "turncoat" nature of trendlines. We are now beneath the former supporting line.


If you believe tech is vulnerable, you might consider buying puts on the $MSH. It isn't very heavily traded, but there's plenty of potential downside here on the index (and thus upside on the puts).


The Russell 2000 remains my favorite index on which to buy puts. But we remain trapped in a trading range. If this pushes above $801, all bets are off. In fact, I'd get very skeptical if things even pushed above $796. This is a minute-bar graph:


The S&P 500 is a more popular index venue, although to my way of thinking this is not as vulnerable as the Russell 2000. But you can see trendline behavior similar to what was witnessed above with the Dow.


I haven't been trading the $XAU (gold and silver) for a while, but this index seems to be heading south. Even if it reverses, the recent high price is such an obvious stop-loss level that this is a pretty low-risk trade.


Now a few other short ideas to chew on. Exxon Mobil (XOM):


Chicago Mercantile (CME), which at these price levels easily gains or losses double-digits worth of points on any given day:


BP, which continues to be in the throes of forming a head and shoulders pattern (as yet incomplete).


And, lastly, Bank of America (BAC) seems to be finally falling - - with nice volume too! My puts on this have been inching higher.


My book is coming out in just a few more weeks! Stay tuned!