Wednesday, October 3, 2012

Wednesday evening

SPX squeaked out a close above 1450, and S&P futures managed to close above the 20day WMA for the first time in 7 days. The OEX P/C ratio dropped back down today, although it's still giving a bearish signal for the market. Sentimentrader short term indicators are looking mixed, although they're getting closer to ripe for selling again.

The first presidential debate is scheduled for tonight, and I think we might see some volatility in equity futures. Kick off is at 8pm ET.

Relax :)

Wednesday afternoon

S&P futures bulls are trying hard to keep this rally going, but are beginning to run into heavy resistance. An intraday pull back would probably set things up for another run into the close, although if we get it.... I'll be keeping a close eye on 1443ish (the intraday break out level).

Only Strong traders Go here.

Gator's Chart of the Day: OSG
It takes a special kind of trader to mess with shipping stocks.  If you don't have nerves of steel and a strong stomach to ride the volatility don't even consider it.  I doubt you will find any analyst (or sane person) that recommends a shipper with the oversupply that is pervasive in nearly all segments of that transportion group.  Don't bother looking at the financials.  They all stink.

The Trade
Tuesday produced a bullish engulfing candle as the stock made a 9% move on heavy volume.  The 50 day sma has flattened and is just now joining the 20 day in a move higher.  This trade will require relatively wide stops so don't go crazy with position size.

I wouldn't want to chase so the entry really needs to be somewhere between the 50 day (6.50) and 7.20.  If the first bite is near the top of that range there will be 10% downside in this trade.  It is worth the risk as the upside could test the 200 day and that is 33% above the entry range.  Again, keep your position size smaller than usual on this one if you choose to trade.