Traders Corner   8 comments

After yesterday’s big drop, today presents an interesting problem for the technicals.

First, there is the McClellan Oscillator:

McClellan(hat tip to ETF Digest for the chart)

As you can see, it is in oversold territory. However, even though -60 is “oversold”, I prefer a -80 or lower for something more decisive. This could be “good enough” if I can get confirmation from other technicals.

Second, let’s look at the S&P 500 chart:

S&P 500(hat tip to for the chart)

The Williams %R at the bottom of the chart is oversold, but only for 2 days. But as you can tell from the history, the number of days doesn’t necessarily mean anything, although it hasn’t stayed oversold for long this year.

On the other hand, RSI is still neutral, and MACD is trending downwards.

The tip-off to me is the Bollinger Bands. With the finish below the bottom yesterday, we will get some upside “gravity” today. Notice on the chart when the S&P 500 dropped below the BB’s on June 20th? It had a small move up on the 21st, followed by another big drop on the 22nd.

The problem I see here is BB moves tend to be small. If we get a move back towards the BB’s today, I am not sure this will be a playable move. If you bought UPRO yesterday, you might be good for today, but I wouldn’t get greedy with any moves up today. Just think of yourself as the fish in the picture below, and get back into the “liquidity” (read: cash) quickly! The bears are lurking.

Bear Ambition

The S&P 500 levels to watch today:

UPSIDE: 1671 (bottom of the Bollinger Bands), 1679 (August 15th’s high), 1682-1684 (4 data points), 1686 (August 9th’s low), 1688-1693 (12 data points and the 20 day moving average), 1695-1696 (3 data points), 1698-1700 (2 data points and July’s high), 1703 (August 5th’s low), 1705 (August 6th’s high), 1707 (August 1st’s high), 1709 (2 data points and the all-time high), and 1711 (top of the Bollinger Bands).
DOWNSIDE: 1658 (August 15th’s low), 1656 (50 day moving average), 1654 (June’s high), 1604 (July’s low), 1597 (April’s high), 1581 (May’s low), 1572 (March’s high), 1560 (June’s low), and 1548 (200 day moving average).


Posted August 16, 2013 by edmcgon in Daytrading, Investing, Market Analysis

8 responses to “Traders Corner

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  1. Fox 1 sports network starts, Ed I know you are a fan if Disney stock but since the largest area of revenue is from Espn you have to worry. Look at the history of Fox, got the rights to NFL and took coverage to new level. Started Fox News and people scoffed that CNN would swat them away. Now Espn is thinking the same way as CNN did.

    This summer the investment firm Goldman Sachs downgraded Disney from its “conviction buy” list to “neutral,” citing concern about the increasingly intense competition for sports viewers, which also includes the CBS Sports Network, which specializes in college games, and NBCS, which is rebranding itself this weekend as part of its acquisition of Premier League soccer.

    • I own Disney for more than just ESPN, although admittedly that has been a cash cow for them. That said, I am still waiting to see how Fox Sports does. If they are anything like Fox Business, I’m not worried. (Fox Business is more like Fox News 2).

      Also, I think the cable channels in general are facing serious competition from the internet.

  2. I think this is a good time to visit accumulation/distribution for a clue as to were we maybe headed. Take a look at a 6 month daily chart of IWM. It bottomed on 4/18 and had a steady climb to 5/21. It then stayed flat until 6/19. This was the distribution period. The big boys can’t sell all at once because of their large positions. Prices would fall like a rock. They have to sell over time. We then saw a 3 day sell off and the start of a new accumulation period. They can’t buy all at once for the same reason they can’t sell. The latest run up lasted until 7/23. You can see we traded flat again until 8/14. Another distribution period. You know what happened over the last two days. So, where are we now? Simple answer, can’t tell. If you are looking at buying the dips, I would wait until you see a similar pattern to the one we just looked at. If we see weak bounces over the next few days we maybe in for more than a dip. Take a look at the stocks you are following and see if you can find the accumulation/distribution periods. You may find this more helpful than trying to guess the bottom.

    • Interesting observation. Thanks for the thoughts.

    • An additional thought, if you are having trouble finding accumulation/distribution for your favorite stocks look an see how it performs with its index. DOW,S&P or NASD. You might get to the same place with a picture that is easier to see.

  3. Looks like the final line is on my weekly covered calls.
    1) 8-12 TZA @ 25.00 Sold 25 calls for 50. Called out today for plus 50 2%

    2) 8-5 TNA @ 60.07 Sold covered calls totaling 2.59 reducing my average basis to 58.40. All have expired worthless. Since we have seen a drop, I may look to go out to the Sept calls. I’ll have to see where we are at on Monday. I’ll also look to establish another position in TZA if the market looks weak again next week.

  4. Not sure what just happened but investors are selling 1630es should bottom but bounce will be weak. If I understand this correct buckle up down we go.

  5. Bought spxu

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