Monday Post Mortem

Stock futures opened lower Sunday night, bounced into positive territory and then sold off as the European markets opened for trade.  It was a bloodbath in many names as the Dow Jones Industrial Average dropped over 300 points.  Crude oil plunged to new 5+ year lows amid a glut of supply.  Bonds and the US Dollar were strong, as the VIX moved over the key 20 figure.

With today's sell-off already in the books, what will tomorrow bring?


So what will tomorrow bring??? The obvious answer is more turbulence.  A rising VIX usually implies increasing uncertainty and when the market is uncertain, prices can move around rapidly in either direction.  I do think from the $SPY perspective, support is here, which could keep a bid under the market.


The Nasdaq has more to go until it hits firm trendline support.  Some of the tech names were clobbered today.  There could be a hangover tomorrow.

Crude oil continued its rapid descent today, hitting fresh 5+ year lows.

Bonds continue to be strong.  I covered this in my 2015 introduction.  I think $TLT could see near $140 in 2015.

I said this about $TLT before the start of the year:

(5)  Bonds will continue to work the first half of 2015.  Last year inflation was supposed to rear its ugly head, bringing bond yeilds higher.  The exact opposite happened.  Inflation remains eerily low considering all the actions of central banks around the world.  Yields on bonds over seas of countries, who a few years ago were about to default of their bonds, are almost lower than government bonds here in the United States.... which is why we will see demand for US Treasuries remain strong in the first half of 2015.  $TLT, the 20 year Bond ETF, will be the way to trade this.  I think it heads to near $140 before the summer of 2015.

How about $AAPL?  Since hitting its record highs the stock is down well over 10%.  Is it time to get nervous?  I'm not so sure, but it bears watching if the selling continues.  The stock has suffered some dramatic declines in the past.  The good news for longs is that the stock has always recovered to higher prices.

$FEYE?  A strong stock today in the midst of chaos and carnage.  $FEYE closed up 3% today and I think this stock, and the cyber security space will be one to own in 2015, as I highlighted before the year even started.

The stock rallied hard at this time last year.  

I think it has a great shot at breaking over $40 in the short run, and I bought some calls in anticipation of that move.

Heading into this year I had a bullish bias, and I still think the $SPY $212.97 price will get hit and broken.  If we learned anything in 2014, its that these sell-offs can reverse suddenly and explosively.  While there is a chance we could see further weakness, I remain cautious going heavily short anything via puts in the short term as this nasty pull back today, could be met tomorrow with a bounce to relieve oversold conditions in a host of names.

Longer term my thoughts remain the same as last year when oil first started pulling back.  The rapid decline in oil prices will likely lead to more turmoil this year.  We also have Greece and the Euro ZOne back in focus.  Headwinds have been great buying opportunities over the last 5+ years, the issue is when will stocks bottom?  We have four straight down days, the last two days of 2014 and the first two of 2015.

At least we got one thing out of the way today:

A great stat provided from Kimblecharting.

Tomorrow brings another trading session and likely more volatility.  I like the odds for a reversal and would much rather see it come after starting the session lower, than a gap higher.


Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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