SHAKY GROUND

The support levels I was looking at on the DOW and Nasdaq were broken today, but the S&P 500 support at 880 is still holding. There are other possible support levels for the DOW and Nasdaq nearby, so my focus has turned to the S&P 500. The VIX moved up a little, but it has already hit some resistance from a previous support level. Admittedly, this is a tough market to read right now. I can see about 4-5 different scenarios playing out in the next few weeks...some bullish and some bearish. The trades I have been getting into lately have been more short term and I have been stopped out a few times. It is wise to look for confirmation on your trades...bullish or bearish. On the possible bullish ABC patterns I am seeing, I am looking for the stocks to get done falling and start upward moves with some increasing volume. For bearish trades, I would like to see a break of 880 on the S&P 500 with a continued move up on the VIX. I've seen some unusual option activity on AET and UNH...huge contracts being bought on bullish positions. One trader has apparently bet about 1.5 million dollars that UNH is going higher...both by buying the calls and selling the puts. Now I don't know if somebody knows something that we don't. I've been burned on my share of these unusual option activity trades...but both these stocks have "buy" signals from the Market Trend Signal software (www.orbisadvisors.com) and the short term trend is up. Here are other possible bullish patterns if they get some confirmation: JRCC, PCX, BTU, MEE, FCX, MFE, COST, MOS, RIG, FLR, CHK, TRA, APA, and DNR. One comment on the gold patterns I talked about yesterday...if the market goes up instead of down in the near future, those stocks could sell off. I often look at gold as a defensive move if I think that volatility can increase in the market. Watch those 50 day moving averages. SMG moved above its 50 day moving average today, making it a less likely bearish trade. Since it gapped up at the open and started moving higher throughout the day, I never got into a put option trade. I never received the confirmation I was looking for. Make sure you look at the charts and plan out your trades when you use this blog. I try to throw out several patterns that I like so that hopefully I can show you some of the things that I am looking at. It doesn't mean that I am trading every one of the patterns. I will look to see how the stock opens the day. I will wait for confirmation...the same confirmation techniques I teach in the mentoring courses. I use stops...some tight...some loose...and sometimes I don't use a stop...but I always quantify my risk. There isn't a lot of new buying in the market right now so it is difficult to see where the smart money is going. I still think it is going into energy...but in certain areas. Lately is seems to be coal, natural gas, and the oil services/drillers. Today it seemed to move into the agricultural stocks like POT, MOS, MON, AGU, TRA, CF, IPI, and SQM.