Wk4: Market Recap

26 Jan

2009 has had a rough start to say the least. With the S&P and DOW down 8% and the NASDAQ down 6%, the actions over the next few weeks by President Obama should be a major market mover. The Energy Sector (XLE) was the only S&P sector ETF to be up on the week, the other 7 being (XLB, XLF, XLI, XLK, XLP, XLU, XLV, and XLY). The volatility index (VIX) jumped 10 points on Tuesday, but formed another inverted hammer on the weekly chart.

As shown above in the internals box, Friday’s choppy action is clearly displayed with a positive Breadth Ratio and negative A/D Line, something that is very uncommon, but indicative of sideways action.
Looking at the Banking Sector (BKX) we saw a huge push lower on Tuesday with an extremely bearish candle with virtually no shadow. While it seems to be forming a bear flag, the government is pumping in fiscal stimulus in the billions of dollars to help these banks from collapsing.

On an even more interesting note looking at the XLF FEB 10 Calls, 272k contracts were traded on Friday. To put that in perspective of how large that is, the next highest are the FEB 11 Calls at 46k. A very big hitter is buying an enormous amount of call options in anticipation of a move higher. While we cannot know for sure which way the market is going to move, we can analyze the facts and historical trends to make highly probable speculations.

3 Responses to “Wk4: Market Recap”

  1. Justin Maciuk January 28, 2009 at 4:25 pm #

    Long GILD – just broke out of its tight triangle formation, holding onto some nice profits.

    Long PALM – bought over the hammers high of yesterday, it is also breaking out of a bull flag formation.

  2. Justin Maciuk January 29, 2009 at 5:20 pm #

    Took profits on PALM today, staying in this trade wouldn’t have been a bad idea considering the relative strength it is showing today, but we locked in a 100% profit on the 7.5 calls!!!

    Took CTX 10 puts this morning when CTX was at 9.98, since then CTX has dropped about 7%!! In this trade we were looking at the recent breakdown in the head and shoulders pattern, when prices break the head and shoulders patter a retest is usually in the near future and thats exactly what we were looking at in this trade, we waited for prices to retest back to old support , new resistance, and bought some puts!!

  3. Justin Maciuk January 30, 2009 at 6:28 pm #

    As the week comes to an end, we are extremely pleased with our trades this week. CTX we bought puts when the stock was just under $10, we took profits on those puts today when CTX traded down to the 8.60ish area, excellent move!! We will have a recap of all of our trades up this weekend! Stay tuned!!

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