Ok just a quick once over on the markets prior to the open for tomorrow.
Right now the /ES is down about 2.50 handles, the /NQ is down about 3.5 handles. We had a fairly weak close into options expiration on friday. Now that is behind us i am looking for some kind of further continuation of the weakness at least into the first half of trading monday and then see some kind of stance by the buyers…but we shall see..
Anyway first up, here is the /ES March contract snapshot from tonight
As you can see, that inverse head and shoulders pattern appears to be in progress ( i’ve signalled it with some rudimentary lines )- it does seem a little obvious but we’ll see how it goes as the week progresses. The market stayed in the expected range of 1820 to 1846 all last week. We did come off a hell of a low around that 1730 level so more chop and sideways action is to be expected i think.
I can see 1810-1815 getting tested again, if that goes, it will warrant another look but for now i’m playing the tape with the expectation of a right shoulder building out and expecting the market to build energy ready for the next push higher to 1900 and above.
Here is a snapshot of apple.
You notice i post a lot about it, it’s not because i am a fanboy even if i do like the company as the biggest ATM in the world but it’s just such a big stock in the index so i like to see how it behaves as a bit of a proxy for the market. I do have several other stocks i like to watch in conjunction but i’ll cover those another time. I remember watching some show a while back and some hedge fund guy said he was always long s&P and short apple, kind of interesting right? Is this the reason why the stock continues to get punished unfairly on a valuation basis ( 12x versus s&p 16x? ) who knows.
All i am looking right now on this chart is the gap at $510 approximately and it’s highly probable apple will test that area. I’m then looking for a higher low to be put in place from that 493 level and if that fails then expect a low for the year around 473 all else being equal ( read that as, as long as the rest of the market doesn’t fall apart ).
Lots of if’s and but’s with this one right now and as always nothing is 100% guaranteed but the trend line down is pretty damn distinct so if that does break on the upside, it’ll be an epic momentum play for probably $100 or so. I am in the camp that if apple runs to $600 then the tape will probably tie in with about 1900-1950.
On a more statistical basis, we are getting to a fairly bullish phase of the month according to the stock trader’s almanac. Apparently the 26th or so is the most bullish part of a month. No guarantee of course 🙂 but the book has plenty of interesting trivia from which you can derive ideas from.
We also have the usual plethora of economic releases through out the week which can make the tape swing all over the place aswell as a few fed speakers. I am keeping my eye on the run into the GDP report on friday prior to market open.
End of the quarter about 5 weeks away and the market is trading around the range set by the first day of the year …1820 to 1840…funny that.
Good luck trading and investing.