Wednesday Trading Recap

I was looking at today's S&P 500 futures action and I couldn't help but see this perfectly formed middle finger.  It encapsulates the wild trading session better than any trendline or moving average.

The week was already off to a mirroring start.  Monday followed the previous Monday in posting a solid gain.  Tuesday stocks pulled back, just as they did last Tuesday.  Today the weakness continued, just as they did last Wednesday.  Now all that was left was a miracle rally back to positive territory.  After the FED minutes leaked, we got just that .  What a rip to the upside.  And then prices started to fade... and they collapsed lower into the close.  Of course not to the lows of the day, but OTL (off the lows).

2015, despite all the head winds, the rallies, the sell-off's, the wars, the currency crisis's, the bailouts.... its been almost 9 months of consolidation.

When is it going to end?  and when it does where will prices head?

In my previous recaps you know I've been looking for some separation.  I've been very cautious lately as the action has turned rather choppy and, at times, irrational.  Today's trading session speaks perfectly about what this market has been like the last few weeks.

With $IWM  separating today into the close from that $120 level I think we could be setting up for continued downside.   It's been a few weeks of trying to maintain that level - today it broke again, and I think there is a good chance we may have seen the last of that level for a little while.

If the action remains under key support areas tomorrow, I may start getting aggressive trading for downside.    $IWM continues to make series of lower highs and lower lows.  The most recent pull back looks to be a part of the next move lower.  I think this could send $IWM under $116 in the short term.

The $SPY remains somewhat aloft and still within a stones throw of fresh record highs.  Heck prices hit $210 today before plunging into the close.  Who is to say that stock futures don't spike 1% higher over night and vault prices back over key support levels?  Which is why I am happy not to be terribly committed to this market right now in either direction.  I own a few $IBB puts and some $XLE puts.  That's it.  JB talked about the market before the close today.  I agree.  

If you don't like the action don't trade it.  Don't force it.  Let it come to you.

$XLE has worked -  I talked about this in my video on Monday before the open and Tuesday.    Also here is a chart I posted in yesterdays update and I think it still holds true even after todays action:

I think the recent bounce was just another rip to sell.  It sold down almost 3% today and I wouldn't be surprised if it put in new multi-year lows tomorrow.

Crude plunged again today.  I've been pointing out the break of long term support.  I still see many calling for a bounce, but I think this could got a lot more ugly before it turns around.

Amid the wreckage today, quite a few stocks fought the tide - $GOOGL, $LNKD, $FB, and even $PCLN remained firm in the face of some nasty rip currents.  If the market doesn't crash tomorrow I think these will be the names that will continue to head higher, even if the pull back continues.  $LNKD moved back above long term support and is setting up for a $200 break.  $GOOGL continues to see analysts change their tunes and raise price targets.  $FB looks destined for triple digits.  To borrow a line from someone who blocked me on twitter (after I asked him how Lenny Dykstra was doing) " there is always a bull market somewhere."

The question tonight is - will that bull market be just a handful of stocks, or will we see a massive reversal to the upside tomorrow?

Let's look quick to see where we are.  If you are a bull - you've got  some short term  support working for you on S&P500 futures - which is kind of nice if your into that kind of thing.  Also we remain above last weeks lows.

On the flip side, that possible head and shoulders I was talking about ad nasueum a few weeks ago,  it's not going to work out.  Sorry.  She likes yoga, he likes Tonka trucks and Lincoln logs.


I'm going to let my Captain Obvious side show a little.

It's going to be a very key trading session tomorrow.

Have a great night.







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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