Options Wonderland

[*~1Best~*]

Yes, WB, of course, since the future was trading down as we have seen today.

Also, we need to pay special attention to the Fed speaker tomorrow since market could react to the Bernanke speech.

AAPL is also mildly sold off, taking profit after the recent run up.

Good luck

http://www.trend-signals.com/index.htm


Qs bounced up from S2, 44.83, after trading in a narrow range as it waited for AAPL earning report. As shown on the 60m chart, it bounced off from 3-wk up TL within the mega phone formation. Since the 44.80 +/- is the breakout testing and since it retested it today, market reaction to AAPL earning report will impact the market direction. As shown on daily chart, it traded between support 44.86 and DTL resistance 45.40. Trading above this level, it will trade to, as noted before, 47 which is the breakout target. However, we will likely see a mild pull back based on market reaction to AAPL earning report and also, as shown on the 60m chart, a pull back is overdue.

SPX traded to 1435 which is UTL R, then retrieved to below the DTL R. Again, I noted that SPX 1438 is a strong resistance, so with overbought condition, we could see a mild pull back even though we had seen NASDAQ/QQQQ have broken out during the last week.
DOW is continuing to trade up with negative divergence. It traded to a new high, 12614, and reversed during the day. As shown on the COT chart, all speculators, commercial, large and small, are showing bullish on DOW while commercial is heavily hedging its position as we can see heavy put buying activity.
NASDAQ has shown doji yesterday and now we are seeing it retrieved to the breakout 2475, then it bounced. Again, with market reactions to INTC and AAPL earning reports, we could see a mild correction. However, we need to remember that market sentiment does not quickly change unless speculators have a reason. For example, we have seen a May 2006 correction because of the Fed's cautionary statements on inflation, therefore, market has reacted to the Fed stance, as it has traded down.

I commented on VIX breakout during Jan-Feb 2006 that we will likely see a breakout from 4yr DT and was observing a breakout. In Jun 13, 2006, I alerted the VIX breakout with climactic sell-off. Now, VIX traded down below the LT DTL and is still below the resistance as shown on the LT chart. Also, VIX is still trading below ST resistances on three different levels; thus, VIX moving above the resistances will be additional signal for a market pull back.



AAPL earning report in AH: it traded to near 100 which is the option speculative target price; then, reversed to downside. Even though AAPL beat the earning, it guided lower. The initial reaction to earning report is to take the warning as AAPL being conservative; however, considering the recent run-up, we are seeing taking profit since it didn't guide higher - sell on the news, especially after the conference call when a few warning signs for the company were discovered such as slowing inventory turnover.

Commented on MSFT VISTA in Aug06 that it will help NASDAQ to trade up. MSFT is broken out of resistance and it is, now, continued to recommend to buy by different analysts. Too bad that MSFT is getting much attention while many tech including chip stocks are making 1yr low or are trending down below Jan2006 while NASDAQ is multi-yr high.


A couple of weeks ago, noted GOOG testing 513 as it bounced up from a pull back, now, it traded to 513. Of course, the stock is favored to break above 513; however, it is showing, "double top" formation as of today. Again, NASDAQ is making multi-year high based on a few big caps.