Friday, August 29, 2008

Ouch the water is cold

Well, the market definitly turned yesterday. As you could see I widened my range anticipating a strong day. Have to admit that I am pretty stocked to have hit my 3rd high down to the cent. As I said I had entered a short position on wednesday that I needed to close at market open. I re-entered at the end of the day though. We gap opened which will require a fill, we entered overbought at the end of the day on the 60min chart, traded on very light volume and have very limited upside potential.

We closed above key resistance and technical lines yesterday and have one last leg to go before I am convinced of the upside - and none of this super light volme crap - 2 strong days and I am a bull for the short term. The trade pattern we developed yesterday is almost a replica of our previous top at 1312. Today is going to be interesting as we have a long weekend ahead of us and quite a bit of pressure.

Time and Price
3rd high 1321 - believe it or not this is a possibility today. Watch for stalling half way.
2nd high 1312 - of course our previous top and my magic number =)
1st high 1306
open/close 1300
1st low 1292 - of course expect support here, break will bring us back to 1282
2nd low 1282
3rd low 1276

Time wise we have three scenarios today. It is very likly that we will continue our rally on light volume to hit the 1312 with a potential of topping at the 1321 mark. Second scenario is a sideways day as we have a long weekend ahead. Third one is the sell off I was expecting yesterday though I have to admit it is less likly to happen today. If we are not selling off today we will have a very strong sell off on tuesday.

Trade Watches
This is a new section I am adding to give specific pointers at stocks or sectors that may make some moves.
1. Financials may find a top here as well. Watch the XLF and potentially enter some puts.
2. Retail is currently trading at key resistance lines as well. WMT and HD both need to breakout to continue on the upside. Watch both of them closely for a break or a drop. I anticipate a drop as the steam is out of this run
3. Dell got beat up in earnings but I feel there is a lot of potential. Pool HP, Intel and Dell together into a single position and you should see some gains.

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