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Thursday, April 8, 2010

Stock Market Trading Today-- April 08, 2010

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Stock Market Trading Today-- April 08, 2010

Time is now 1:05PM. QQQQ at 48.80. Models are telling us to start to short, and to be careful of eventual break of high of two days ago, which is at 48.90. Only 10 cents away. Models tell us that risk reward would be worth it, and to scale in if needed.

1:20PM: QQQQ just retreated to 48.70. At this point, if there is a retest of high we do not want it to go above the high of yesterday which is at 48.87 area. We also want this retest NOT to take place after the next 20 minutes.

1:31PM: QQQQ is heading back up towards today's current high. It is now at 48.77. We want this retest to fail.

While waiting for market to decide. We did a quick analysis of SPY for today.

1:40PM: SPY is at 118.80. Models indicate that SPY EFT is now entering an area of 10 to 20 cents width where it might stop rising and possibly turn down. This place a top of today estimate of between 118.80 and 118.95.

2:03PM: So far so good. QQQQ at 48.67. SPY at 118.78.

We take a break, and would be back later. It is usually more active after 2:30PM.

After the trading session:

What is to the follow is after the close of April 08, 2010 session. The above prediction were good in forecasting the top, but gave only little profits. As noted earlier in above comments, models indicate that if a retest and retreat does not happen after 2:30PM it would mean a much less likelihood for market to sell off. That is what took place. The afternoon session was essentially a small range action, but the high of the day were well time by the models (with 2 cents for SPY, and I think exact top for QQQQs).

Note that the 48.77 Level for the QQQQs still hold.

Tomorrow: April 09, 2010:

If market gaps up at open, we expect it strong sellers for the QQQQs to be in area of 49.13 and up (probably around 49.25). We would then expect the market to retreat to the 48.93 level.

The murky part is if they gap it just a little and open it at where it was, then we would have to wait and see.

If it goes down first, a buyers level on QQQQs should be around 48.53 (20 cents lower than the close of today). That level contains pain in pain who shorted at the bottom area of today April 08, 2009, it would also contain those who shorted today towards end of day or who would take some profits. There are also those who like to buy pullbacks, thinking of a green close on Friday.

The market has set itself at a point where both down and up options are left open. However VIX is on low range, and if a bad news comes along, the market can go down real fast. We would prefer a scenario of pump and dump in the manner of a large gap up on open (such as in area of 49.13 to 49.25) for QQQQs. This should take the weak short sellers out, and suck in non smart money longs for a later dump, and the building of a supply of losers to form a lid on price on the upside.

An obvious pattern to all is the lower low and the lower high of today with respect to the day before. It is this obvious pattern that is a cause for worry on the short side. We find that the long side has little reward, and not worth the risk.

There is the option of watching from the sideline! Sometimes it is the best thing one can day in certain days.

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Happy trading,


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