STILL SIDEWAYS

The market is still waiting. The FED meets tomorrow for its policy-setting meeting. This might be the trigger for the next move. We can move sideways like this for quite a while. If you look back to November 16, 2009 to December 21st, 2009, we moved sideways for 35 days. Let's hope that doesn't happen here...but realize that it could. One interesting thing to note from today was the move in the VIX. Usually there is an inverse relationship between the market and the movement of the VIX. Today the market was up 45 points, but the VIX was also up. Not by much, but it was still up on an up day in the market. This can sometimes be seen as a divergence. Why would institutional investors be running out to buy protective puts if they believed that the stock (or the market) was going to go up? Now this isn't a major divergence. The protective puts could be just an insurance policy because the market has been moving sideways for so many days...but it still illustrates the uncertainty that still exists in the market. Based on probabilities, when the market illustrates uncertainty with choppy and sideways behavior, it will often break in the direction of the previous trend. In the short term, the previous trend has been considered up...so the short term expectation is for the market to break upward. On the other hand, the longer term move up since July 6th also looks a bit choppy. This could mean that the longer term trend will soon break in the same direction of the previous longer term trend which is down. This is why we are still mostly on the sidelines. It is hard to tell the direction of the next significant move. I do have a few more patterns I like if the market continues higher. I still like NFLX. Today's pullback could provide another entry. You could place the stop below the 50 day MA. I think $123 and $128 are two targets that you can use. I do like the Virtual Investing Club pick on MED. This pattern is based on an Elliott Wave pattern that is similar to the one used for ADS. Elliott Wave patterns don't always work out (just like everything else in trading), but this is stock has a pretty good probability of getting to around $36...unless the whole market sells off and pulls it down. This is why you should use a stop loss on the trade...perhaps below the 50 day MA. AKAM is starting to look a bit like NFLX did a few days ago, but it would still be a riskier trade due to the stock being below its 50 day MA. PG still seems to be working well. IBM rallied back up today, but it is still below the resistance area around $102.50. AAPL looks like it is close to an explosive move. The question is, in what direction? I haven't seen AAPL move back and forth in this tight of a range for quite a while. For those that have been through Course 2, you could try a Straddle or Strangle on AAPL. I'd use the September expiration for added safety. In closing, I will reiterate that the safest place to be right now is in cash. These are just some ideas for you traders that want to be more aggressive. If these trades don't work out, remember that you decided to take the additional risk and not sit on the sidelines. The higher probability trades are coming...when the market decides to start moving again.