Monday, December 14, 2009

Day 23 - Tape Held Hostage

As we all muddled through our trades today, we're basically right back where we started from watching the sector and index rotation, while this so-called Santa Claus rally is still on the minds of many traders out there. I admit I have a bearish bias here, but can you imagine the same frustration must be brewing if you're bullish? Twenty-three days of basically going nowhere is not pleasant for either side of the tape. I still hold out hope that we at least get some kind of movement starting tomorrow based on economic news, but trying to predict anything past a 15 minute candle is futile at best. Still, I’d be just as happy grabbing the A Train on the long side as long as there is some sort of reasonable reward involved!  I'd like to share Osi's EOD wrap-up with you and his charts in the meanwhile.  (Thank you as always, Osi for giving us our fix!) Deep breaths everyone, and keep looking for the hidden treasures in the individual plays when/where you can. No matter what happened today, there were shorts worth trading as well as longs that had good breakouts. That may be all we have on this light volume for awhile. Thanks as always to everyone for constant contributions and watching each other's backs throughout the trading day. DDT- we're all pulling for your Mom, and look forward to your wisdom when you can get back with us in a huddle, but are thankful that you can spend important time where you're needed.

From Osi:
Today's SPY update.

The day's action seems to belie the indicators.

While they all remain bullish, we once again closed with yet another doji at previous TDST Resistance.

However, we are now within the wedge that first showed us the bearish overtones to come, even if we are again at TDST Resistance. The problem with the bullish scenario is that the last 4 days advance has been on declining volume and we also now have what appears to be a bearish hidden divergence between price and the RSI(2). (Here is an explanation of hidden divergence:

The Discrimminator is in cycle mode. That tells us that we can discount the upturned 21-day TEMA and the momentum turning up, as those are trend trading tools. Our cycle mode trading tool, the Fisher Transform has turned up. If the candles were more bullish than the indecisive doji, we would be bullish right now. Given the doji, we are in wait-and-see mode, while we enjoy the theta burn in our Iron Condors.

For now, the charts are mildly bullish. Nonetheless, do not be surprised at a sudden downturn; this market has too many of us discombobulated.

Here are the pictures that tell the story:



… a little Satchmo to cheer us up….


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