Weekend Thread

SPX Daily

Momo has definitely shifted to the downside. SPX closed on the 50day SMA at 1433ish.... and 1400-1410 seems inevitable. Equity index futures closed out right on the lows, and the S&P's traded the highest daily volume of the December contract. Sentimentrader short term indicators look ripe for buying, but daily chart indicators still have room for selling on S&P futures. This setup is suggesting a potential gap down Monday.

I just flipped through the COT reports released this afternoon and commercials have added to S&P shorts (now very heavy net short), reduced Naz shorts a little (still heavy net short), and are heavy net long VIX futures. They are also heavy net short Dow and Russell futures. Since we are starting to see momentum pickup on the downside, I think it's worth noting that these positions have been building to extreme levels for months. I'm starting to think we are putting in a major long term top here... and will say the same thing I've said the other times I posted about COT data: please be careful on the long side and honor your stops.  

Friday Afternoon - Droid

So far the bears are knoshing on bull parts as tech continues to get hammered.  Let it play out.  It's Friday and not a time to do something rash.

Friday Fire

Gator's Chart of the Day: FIRE

October monthly options expire today and there is likely to be some vicious action in tech with IBM and now GOOG missing estimates this week.  I think FIRE has a good chance of holding this support line.  Note the tall green volume bar that printed Thursday.  If you look at the intraday chart you'll see the stock moved steadily up all day and did not dip when the GOOG news hit the fan.  I am not currently in the stock but I have owned in the past.  (Like when it hit this level in July.)

The Trade
Don't buy if the market is down.  Friday may not be a good day to start this trade so if you do buy some stock don't go crazy.  The stop would be just below 40 so that's fairly loose.  This also suggests the first buy should be relatively small.  The target is the top of the channel which would include a move through the 200, 20 and 50 day simple moving averages.