VIX versus SPY - Day Trade

The first chart is a 15 min. of the VIX and the second chart is the 5 minute SPY.

Last night in the technical post, we said, "If the VIX finds support and bounces at or near the blue line segment, a breakout on the S&P could get foiled. Failures, of course, are great opportunities for fast moves in the opposite direction."

It couldn't have been more clear in the opening minutes of the session after the big gap into support for the VIX and into resistance for SPY, that the fade was going to rip. Too bad we didn't get a whole lot of volume to back it up, but she was steady. I covered after the SPY printed a hammer just above a support zone. The attempt to retrace was really lame, on low volume, so I shorted the trendline break down to the second support level.

As usual, we rallied into the close, thus making the session as a whole, just another consolidation day in our narrow range box. More on that in the technical update later this evening.

Technical Picture - VIX versus S&P

The S&P did very little today despite the 5% drop in the VIX. Keep an eye on both charts. If the VIX finds support and bounces at or near the blue line segment, a breakout on the S&P could get foiled. Failures, of course, are great opportunities for fast moves in the opposite direction.


Agchem looks poised to attempt a gap fill.

Support/Resistance

TITN from the Trade-Ideas pre-market gap scan. TITN tested support in early trade. Support held on a closing basis, so look to get long. Good for a fast gap fill. Mapping out the obvious S/R levels ahead of time, makes the entry and exit a lot easier.

SOHU from the HCPG newsletter.

Technical Picture - Box Play

Few trading opps until we break out either way. Low volume with most of the action confined to either the first or last hour of the session.

Technical Picture - Sell the News

The S&P notched fresh 2009 highs in early trade, on better than expected non-farm jobs data. The enthusiasm was short lived and it turned into "sell the news" as the opening gap was quickly filled and prices fell further, to the next support level. The rest of the day was spent in an increasingly tighter range. That's the second failed BO of the January highs in one week.

As noted previously, we need to close above the January reaction highs and hold in order to declare a new bull market. I want to see this on the weekly chart. Ideally, I'd like to see a bigger right shoulder.


General weakness among commodities came as the Dollar index jumped 1.3% in its best single session advance by percent since January. Gold fell 2%.

The XLF (financial) failed on its first test of the downsloping 200 DMA.


My strategy going into a new week is short commodities on dollar rally. Monitor dollar with the ETF UUP. AGU, for example is developing a bear flag, so I would look to short break of blue trendline with a target of $44.00.

Buy pullbacks in biotech which broke out of a base last week.

Look for weakness in tech which is really stretched at these levels. AAPL and GOOG up 9 consecutive sessions and both carved out spinning tops on Friday.

Mail Bag - Gap Scan

Hi J

I noticed on your newsletter you said ANF from the gapper scan, are you referring to the Trade Ideas Scanner? If so, can you tell me which scan parameters work best?

Again thanks for your help.

Hi E,

Yes, I'm referring to the Trade-Ideas scanner. Basically, I started off with the TI pre-configured scan entitled "Stocks down big in pre-market" and I adapted to my personal needs. In the window specific filters I set a min . price of $6.00; min. daily volume of 200,000 shares/day; with a max up from the close of -5%. In the symbol lists, I exclude all ETFs, Holders, Ishares and special symbols.

In summary, I'm looking for a wide gap from previous day close, like an earnings gap or story stock. The settings I'm using limit the number of hits to a manageable level, and eliminates all those ETFs. When trading gaps, you want to focus on the momentum plays, which mostly involve individual stocks. Measure quality by number of days and check the daily for a good idea of support/resistance levels. In the case of ANF, although the number of days was few, the daily chart was setting up for a bearish island reversal because the gap was wide.

Technical Picture - Another Yawn

Why did oil rally to fresh new highs when the $USD was barely unchanged on the session? Because Goldman analysts were out early this morning pushing their new target of $85.00/barrel. Ha Ha! As if we've already forgotten about the commodity bubble. Anyone going long oil at these lofty prices is buying their shares from Goldman. My guess is that Goldman has a huge position in oil that they want to unload before the correction.

Jobs data tomorrow in pre-market.