Jeff,
Thanks to you, I was watching that pivot point of the S&P. I "nibbled" some puts on a couple of your picks.

A work of bueaty!

I added and subtracted as the VIX blasted above 25!

Guys - Heads Up - Today's TOS chat is on technical divergences and how to spot a reversal. Some o'you might want to watch that.

Hmm, Was that a good time to buy calls right there? Delta denies the merger rumor, and we get a 100 point swing? Im bout to find me a bull and jump on without a saddle.

Jeff (from last post),

A. I meant to say Inverse H&S

B. Bullish Divergences in the financials and retail - take XRT for example, made me think about August - compare that to the bullish divergence you talked about in in the indexes. We are at the same point (upside of the head of the pattern) on the MACD as we were right before the second shoulder formed. COH appears to have both a small one forming (16-17days so far), and a larger one (July - current). ANF has already come back up to touch the neckline. JCP - okay not so much. MTB and STI have come above (not far but still) their shorter term downward trendlines (october through current), and were almost back to where I drew the possible neckline.

C. None of patterns are formed yet - just possibly forming (one shoulder and head approaching neckline or at neckline) and the bullish divergence seems to support the theory a bit. The stocks and spyders I mentioned look alot like the indexes did in August to me.

D. I already bowed to the MasterKohler in my original post, and said I was throwing it out there for argument's sake, and said I might be out in left field. I assumed you were reading charts better than I (duh, you're JK) but I know you don't look at MACD much (as you preach price action and volume), and when you did in August you proposed it as a possible turnaround.

E. I suppose I may be looking for reasons to be bullish.

Hey a guy can hope can't he? YOU DA MAN - I'm just taking a stab at bullish optimism (and probably bullheaded).

Jeff,

I so appreciate your post with the list of puts you were watching for today!!!! Thanks for taking the time out from your own trading to help us out. I didn't see the post until 1:00 CST...picked up three...helped balance out some of the losses I took on a dumb trade I took earlier today.

Thanks for all you do.

Krystal

I was looking at ABC. I think I'll go listen to TOS chat. Thanks

Denise,
I noticed your question from the last thread was not addressed. It is a bit hard to answer because I don't know what stock you are referencing. When I see a stock in an overall downtrend that is retracing with low volume, then it tells me there is little conviction in the retracement and it will likely resume its downtrend soon.

Thanks, Jeff for all of the great posts lately. These "transition times" in the markets have always been the most difficult for me and it has been nice to hear you talk us through it this time. I have also not suffered as much this time. I gave back a lot of gains, but stayed a bit ahead.

Today, I closed out the three remaining trades I had in my short term accounts. I am going to cash for Thanksgiving as I will be away from my computer next week and want to be able to relax with the family. I was wondering how to get out of the trades, but today was a perfect opportunity as all of them, bullish and bearish, were profitable today, so I sold them into the strength.

Felt a little weird and I hate having to cut profitable trades short like that, but I wanted cash for the holidays, plus I think I can use a few days away from the short term market to regroup.

But don't worry, I'll be back!

Krystal, congrats on your single position on NUVA. What a pick ;p

Jeff, thank you for the futures posts. Using multiple time frames, yes it was like clockwork. The E-minis's have helped out tremendously. Traded the 1480-1490 SPX channel on the 5 minute chart. The breakdown below 1480 was a clear spot to add to the short.
Another tool in the toolbelt supplied by the OA Master.

Jeff,

I got a put on KIM right before yesterday's close....saw that KIM made your put list today and that gave me more confidence in my trade. I also took a couple of other's also....Thanks for all you do!! :)

Dan B

Jeff,

That was an ideal setup on the S&P and I watched it wanting to load up with puts, but I had to hold off because I am curious on what CPI will do for the market.

Here is the thing though, that technical setup is a perfect downtrend, do you think a good CPI(bullish) number could break the trend?

I still don't get how the S&P or any index chart can work like that when it is a market of stocks, especially when they behave so much by those levels, like I said before it seems like a self fulfilling prophecy everyone watches the 1490 level then sells(or buys) depending on the trend.

Ben

SeanM,

Thanks!

That's what I thought it meant.

Ben,
I think that's exactly WHY it works. Eveyone looks at the same indicators and acts accordingly.

Tuba Todd, I've not been on the top of my game lately (with clean cups). Cut me some slack, will ya!?!? I've got diapers to change, ya know! :)

Kim, your last post was too, too funny.

Sadly, NUVA is still my only position as I got tied up with my son's speech therapy session. We'll see what tomorrow brings! The good side of that is that most of my account is not exposed to this volatile market rigt now. Stay tuned...

My view from the nest,

The longer term trend is still intact according to my charts. It has NOT confirmed a lower low and closed above yesterday's close. One day does not make a change in trend. Higher high's are not normally achieved in single day moves. I am not advocating a rush to buy tons of Calls but from all my teaching and experience the market is still in an longer term uptrend. Does anyone else see what I see or am I following a chart that was annotated with it's longer term trendlines while I was at the 3 day Live event in Utah? It has been my baseline for over 1 1/2 years now... Off I fly to look for worms... :)

You guys rock.

That is why I dare say, you guys are- How shall I say it? The Best Business Blog Community!

Professor K -

You taught us. :) We are all clones of the Kohler Army of Option Addicts!

Mrs. Hyde is back. Thanks for letting me rant.

I spent the afternoon drawing R5216 lines on all the plays Jeff suggested on this post plus some extras. With that in mind...

LEH, based on my 2 year line, is right at a horizontal resistance level and is moving up on increasing volume. I've been watching this one for about a week.

Early Bird I see your trendline trend line on S+P 5 years chart.Still intact. However I do see a clear double top forming for the intermediate term and definitely something to keep a close eye.

Early Bird,

That is my greatest aspiration. To have someone say I act too much like Jeff would be the highest trading compliment I can think of.

LEH and Jeff's post about online brokers.

LEH is in the online broker industry group. Check out the volume on Dec. paper versus Jan. plus the break above the 2 year horizontal trendline today and Jeff said to look at some of the big names.

I'm throwing this pick into the ring for consideration. My only negative...are they an online broker, too? I looked at the website and am unsure.

Forgot to mention...

Plus look at the volume today on LEH versus SCHW. Drastically different.

Is there a way to determine if people are selling or buying the calls? I haven't heard of any so someone please enlighten me if there is 'cause I need to know.

I love this stuff. I think we all should find a deserted beach somewhere to move to so we can all trade together. Mai Tai's and bikini boys (and girls) for all!

Can you tell yet that Dan had to pour copious amounts of wine down Dr. Jekyl to get Mrs. Hyde back? Not really, but not a bad idea.....

Okay, 4 out of 5 of the last posts have been mine. Now 5 out of 6...walking away from the pc.

One more thing...sorry! When I said volume on SCHW versus LEH I meant the call option volume. Again...wine...

Kim,
What do you mean by R5216 lines that you drew all over your charts???

Early Bird....you have the eye of an Eagle.

I am bullish. Long term trend is bullish, this is just a pullback. I agree 1490 is a key area, but just as we crossed it to the dwonside, we will cross over it again to the upside. CPI tomorrow will move the market....lets see which way....

DG, R5216 is from Raimo's "Trendline" thread in the Trader Chat Forum.

I took the plunge on ISRG calls and STI puts, one contract each. I hope that my expensive lessons (getting my ass kicked by the market) are over!

VA Beach girl,

For every buyer, there is a seller.

However, Lehman is more of a full service broker. Schwab has a decent online presence.

My post today was partially in speculation to E Trade being an easy acquisition target. Another broker could easily swoop down and buy up their accounts for a decent price. If this comes to fruition, this pulls more supply (E Trade) out of the online brokerage industry, which in turn causes prices to rise.

The reason I didn't give specifics earlier is because technically, I work for an online broker... Even if they let me trade all day.

I listened to Shadow Trader today and he brought up the 4 technical indicators he uses, one of which was the Money Flow Index. This measures money, in the billions, that is flowing into or out of a stock. Has anyone used this?

Take a look at ETFC. They lost 60% of their value on 11/12. Then pull up the Money Flow Index which has skyrocketed since the day of the bad news. Now look at the call volume for December and January. The street is betting on a quick recovery, if I interpret this correctly. Jeff, any insights??

Jeff, is that what you meant by tightrope without a net?

Raimo - tired eyes right now - more like those of a buzzard.

Va Beach Girl - You are there - I see your comments and think they are of great value!

et al - I have just posted a trader's Chat Thread with links to my S&P 500 charts going all the way back to the beginning of it and working back through the 10 yr, 5 yr, 2 yr, 1yr, and 6 months. You will need to copy and paste these in your search bar to go to them - no way to post active links for us on the blog. I hope they help those that need to see some examples of what a complete set of trendlines should look like. Note - I changed all the lines to black except for the 6 months and the support and removed the annotated resistance horizontal lines to minimize the clutter.

RAIMO - Wow. I just went into Trader Chat and read your trendline post. I've been drawing my lines like you (which is probably why I always seem to agree with your analysis) but the color coding is (expletive) brilliant!

I've always had to scroll back every time I run into one of my extended trendlines to see what it was. Annoying and a waste of time. THANK YOU! I guess I will spend Thanksgiving vacation redrawing all my charts!

Early Bird,
Thanks so much for sharing your charts and your insight on how you look at the markets. What do you use the longer term charts for?

As a new trader, I have been starting at the 5 year chart then zooming down to shorter term charts to confirm my strong areas of support and resistance.

I just saw a funny one on TV....."The market is volatile and Cramer is going to guide you through it".

I have a lot of respect for Cramer but frankly I would prefer to have Kohler guide me through it!

Cheers,
ARTY

Arty,
You're back!! I missed you :)

Christina -

Your comments made it all worth my "trouble" in posting the charts. I use the longer term (10 year and beyond) to gain that feel for the stock/index and how it behaves through time and many-many events. If you also notice these longer term trendlines will also still be in force in the present/future. This is a reinforcement of how important it is to always look at the past to gain knowledge of the future (as it pertain to the markets).

Glad it helped!

EB,
I just posted something in the Trader place. I get so confused...never know where to post. Anyway, I'll port it over here....brb...

-=-=-=-
EB,

Your idea of getting familiar on a daily basis with all the indices is something that I used to do but haven't done in a long time. I do look at them when I am trading them of course but it is wise to have an overall idea of what the NDX looks like if you're trading those stocks.

I do question why you do not draw additional lines when you zoom into the closer time frames. Those would be slightly different but if you found any that crossed or met you would know that that area was super strong as either support or resistance.

Also, if using just the very longest time frame, for the SPX to break that trend, would send us back to the 700 SPX level which I do not think is possible. That would mean the 500 companies that comprise this index would be worth a tiny fraction of what their real book (?) value is.

-=-=-=

Please respond here. Don't make me go over -------->
there. I'm trying to stay away from there so I won't be tempted to trade now. Thanks.

Sarah,

I would ask you to go back to the mid-1960's to see the Triple Top followed by a great ascent. Look again at the late 80's and early 90's at the Double Top that was once again followed by a great ascent. I just do not see it - it is still making higher highs and higher lows until proven otherwise and then we may have a confirmed Bearish Trend developing... trust the technicals until they prove otherwise. Remember they have the fundamentals already included in them - how you may ask? The answer is in the Price Action/Pattern. This is a result of Fundamentals and Technicals executed by Human emotion and behavior. All of which form the charts we love to look at and trade!!! Long answer but I needed to explain some things.

Raimo!!! Take me hunting pleeease - pretty pleeease!!! I will even do the skinning.

Doji Girl,

let me try to answer your questions. I believe based on experience that the longer term trendlines are the strongest if they are still valid. I said in my post that I had removed my horizontal support and resistance lines so as to remove the clutter for this posting. My chats have many lines on them. I have said in other posts about how I always draw the Key Horizontal Support and Resistance lines at areas in/around where I am trading to see how the moves may be affected by them or if the move is drastic up or down then where do I see it pausing or resting.. like the 1490 area as an example. If you notice on the 1 year and 6 month charts there is solid diaganol support at and just below the present position. Couple this with horizontal support and the higher highs/higher lows and you get very solid confirmation that we are sitting in good terriory for a continued upward movement. Not sure if that helps or confuses but the best I can explain it - I think? I can also post a chart link with my horizontal lines if that would help?

Sean -
Id would say your thinking about ETFC is right on. There are probably a couple reasons why it is so easy to bet big on a 'recovery' of the stock. One obviously, is that the price action was so dramatic that etfc was ultimately a bit oversold. A second reson is that the stock is cheap and well, it didnt really have much more room to fall. Lastly, as jeff has touched on, etfc has now become a blatant takeover target. It is a struggling company (bankruptcy rumors) in a growing industry...and there are pleant of sharks out their to make them an offer they cant refuse. Naturally, it became a hot buy. hope this helps.

EB,
Not necessary, but thanks. I've got horizontal lines drawn on my own charts. You said "Double tops followed by a steep ascent". A double top is a reversal pattern. It does not have a steep ascent or it is not a double top, I believe.

Bottom line, we will never break the.. um, 80 year trend line. But that doesn't mean we can't have a bear market for the next several months. Or years even.

Just my 'pinion which probably isn't worth much, and I may be sticking my neck out here, but I see 1400 before 1600 on the SPX.

*********I Faked It*********

Okay, guys... there's been a lot of talk about CPI and PPI. What the heck are those?!?!? I, of course, proceeded to punch in those ticker symbols only to find, well... I don't know what.

So with all the talk about these two "entities," I didn't want to be the goofy one to ask what the heck they are. But, alas, it has come to this. I can no longer fake it. I have to ask: what the heck are you guys talking about?

Doji Girl -

I like "touching swords" which is something you seem to enjoy as well as displayed in in your snide little remarks but no worries - I like the spunk!!!

As for the steep descent comment? Where did I say that? I may be losing my mind earlier than planned?

As for the 80 year trendline being intact? You have missed the point - BIG TIME! There is a Diaganol Trendline below the present position and then there are all the key horizontal support and resistance areas that are on my charts and what I offered to post for you. Yes we could have a Bear Market but not yet... the technicals just do not indicate it - when they do then we will be in a Bear market until a reversal comes - all shown in the techs.

As for the 1400 before the 1600? I do not have a crystal ball - just the charts and when it happens then we will know until then upward we climb...

I have enjoyed the exchange for sure and hope that we can continue to be cordial to each other... like Raimo I can rise to the occassion if need be - just do not like it all that much. ;) LOL

PPI is the Producer Price Index - It measures average changes in prices received by domestic producers for their output,

CPI is the Consumer Price Index. It is an index number measuring the average price of consumer goods and services purchased by households.

Krystal - These are both statistics used to measure inflation in the economy. If the CPI or PPI comes in above anlyst's estimtaes, this could be bad news for the economy, and you would "expect" a bearish reaction. However, these days, who knows how the market would react. Usually, in times of inflation the federal reserve will raise interest rates to reduce the money supply and fight inflation. However, right now it doesnt seem likely because of the subprime mess.

Wall street hates higher interest rates becasue it depresses consumer spending and reduces the likelihood of merger & acquisition activity.

LETS HOPE FOR ANOTHER LOW NUMBER

Hope this helps

EB,

I'm not sure what remarks you are referring to as snide but that was surely not my intent! I mean you no disrespect and if I misinterpreted your original post, I apologize! Perhaps I read it too quickly in my haste to play catch-up around here.

Forgive me. I'll go back into lurk mode.

Doji Girl,

Maybe my bad? I took it as a challenge to my Type A - Male Ego - High Testerone Level personality... Please forgive me, afterall I am Raimo's twin.. :)

Please do not go back to lurking - I was there for a very long time and was trapped and forced into the open by my alter-ego... I will do my best to control it.

All kidding aside - I am here to learn and to share with a sprinkle or two of fun in the process... LOL

Norcal, that was very helpful. Thank you! I googled it, but the way you spelled it out was much more clear.

Thanks so much!