Shane E. Drozdowski's  Instablog

 Stock Market Outlook

Looking into the new week I see a pullback to 1070 as the most probable price point to be hit for Monday. Everything is lining up for a pullback here. Although my bias is to the short side beyond that, I strongly respect the fact that for every pullback we have had – just like the one I expect to have Monday – buyers coming into market support it the following day. Then it generally rallies beyond that to a higher high. Will it happen again? Who knows. This is just something I am keeping my eyes on.

Let’s look at the daily chart and call it a wrap!

Most technicals are still strong, but it appears that CCI and MACD will be weighing the market down come Monday. Volume still remains dry for this time of the year, and next week should be light again for it is Thanksgiving week. If we see a pullback on Monday, it may pay off to try and go long at 1070 on the SPX as buyers could remain the upper hand. However, a break down could mean volatility and bears are coming back into the market.

Good luck and happy trading!

Disclosure: No Positions
Source: http://financialderivatives.net/?p=1266

 Stock Market Outlook

Looking into the new week I see a pullback to 1070 as the most probable price point to be hit for Monday. Everything is lining up for a pullback here. Although my bias is to the short side beyond that, I strongly respect the fact that for every pullback we have had – just like the one I expect to have Monday – buyers coming into market support it the following day. Then it generally rallies beyond that to a higher high. Will it happen again? Who knows. This is just something I am keeping my eyes on.

Let’s look at the daily chart and call it a wrap!

Most technicals are still strong, but it appears that CCI and MACD will be weighing the market down come Monday. Volume still remains dry for this time of the year, and next week should be light again for it is Thanksgiving week. If we see a pullback on Monday, it may pay off to try and go long at 1070 on the SPX as buyers could remain the upper hand. However, a break down could mean volatility and bears are coming back into the market.

Good luck and happy trading!

Disclosure: No Positions
Source: http://financialderivatives.net/?p=1266

 Stock Market Outlook

Looking into the new week I see a pullback to 1070 as the most probable price point to be hit for Monday. Everything is lining up for a pullback here. Although my bias is to the short side beyond that, I strongly respect the fact that for every pullback we have had – just like the one I expect to have Monday – buyers coming into market support it the following day. Then it generally rallies beyond that to a higher high. Will it happen again? Who knows. This is just something I am keeping my eyes on.

Let’s look at the daily chart and call it a wrap!

Most technicals are still strong, but it appears that CCI and MACD will be weighing the market down come Monday. Volume still remains dry for this time of the year, and next week should be light again for it is Thanksgiving week. If we see a pullback on Monday, it may pay off to try and go long at 1070 on the SPX as buyers could remain the upper hand. However, a break down could mean volatility and bears are coming back into the market.

Good luck and happy trading!

Disclosure: No Positions
Source: http://financialderivatives.net/?p=1266

 Well as we approach the holiday season I am noticing one major factor in the markets, we are sustaining these price levels with support from light volume and anxious buyers. When the market starts to rise, many more individuals jump in which means the markets behavior is slowly getting back to normalcy. However, we must see the drying up of volume as a sign of caution for its a direct indicator of low demand at these levels. Which means demand is either much higher or much lower. Let’s look at the chart to start analyzing recent market movement.

Weekly Chart of SPX

Looking at the weekly chart we can see the 50% retracement level of roughly 1,130 being approached quite quickly. With all of the technical indicators shaping up for the bullish side, we think we are going to see another run up to these price levels next week. Once it is hit there will likely be a lot of selling pressure at this point in time. However, a break out above this level would send us much, much higher. I do not see any fundamental reason in the health of the economy to sustain such a move. That being said, the market is not going to be rational all the time. Bubbles happen all the time and this could be a huge rally unfolding under our hands without any logical purpose behind it.

In order to better time entries and exits, let’s look at the daily chart as well.

Daily Chart

The daily chart is telling a very similar story. Although there was some weakness on Friday, I am still anticipating some bullish moves early in the week. Maybe not so much on Monday, but on Tuesday is my logical start point. Generally before bigger moves, there it is preceded by a move on light volume in the opposite direction to fuel a squeeze giving bulls even more control. In a market with not too many reasons to buy, a rally will need buyers trying to protect capital while short to cover and buy up shares. That can fuel a market move up quite nicely.

As we can see in the chart, we have volume drying up dramatically. I truly think we are seeing the stage in which shorts will be squeezed into a bull market rally. If we break new highs again and I was short, I’d frantically cover or place hedges on trying to protect capital, inadvertently raising market prices. So if you are short be cautious for with low volume many bulls could manipulate the market with less and less money. If you are long, keep your eyes on pullbacks and add if we hit 50DMA’s as they have been great support levels.

Good luck and happy trading!

Disclosure: No Positions

 Looking at Altria I have been observing a nice run up for a stock with a real low beta. The lower a stocks beta, the slower it will move with in relation to the S&P 500 Index. That being said, I think it’s time to take some money off the table. The best way to do that without having to sell stock and risk losing the dividend is to sell some call options against our position. First, let’s see the chart to put a picture into perspective:

We can see the stock is in a nice uptrend and there is a lot of demand for shares right now. I think that we should prepare ourselves for some sort of a profit taking pullback just in case by selling some call options against the position. In order to better explain this, let’s pull up the December option chain for the call options on Altria (MO).

Keep your eye on the 19 strike call option. I think that 19 is going to poise as major resistance for investors. By selling this call option, we hold it through the third Friday of December and must sell at 19 if it rises. However, we will keep the $0.43 per share (mid point of bid and ask and likely market price you will get filled at) on top be poised to collect any dividends if dividend dates are within that time.

If the stock falls below 19 on expiration, we keep the shares, we then keep the $0.43 per share, and can write (sell) another option at the 19 strike if necessary for January to enhance our income even more!

Just my thoughts but good luck and happy trading!

Disclosure: No Positions

Source: financialderivatives.net/?p=1252

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 Looking into tomorrow we can see a move upwards is the probable direction to be picked by investors and traders given a strong trend up being made. That being said, we need to keep an eye on volume. Money on this move up has been steering away as volume declines rapidly. It may have had something to do with Veteran’s Day today, but volume has been declining steadily nonetheless.

Let’s look at the chart for tomorrow:

CCI is ready for a breakout buy signal and a new high has been made today. This to me means we could breakout upwards and poise a big short squeeze. We have been looking for the market to draw back but perhaps it has drawn back as far as supply would let it. If we make a new daily high tomorrow the sky is the limit yet again. Let’s see if we can get the highest close on the year tomorrow. Momentum traders will push the markets higher if so.

If the market fails to make this new close above highs, then the market should roll over again back to the 50DMA of roughly 1060, as it appears to be strong support. This is my thoughts for tomorrow.

Good luck and happy trading!

Disclosure: No Positions

Source: financialderivatives.net/?p=1244