I thought this morning was kind of a funny day. When the market direction opened up and then began to fall, the media was filled with tales of woe. A number of interviews followed with bearish investors who are doom and gloom. But shortly after 1:00 the market direction was moving higher and the indexes were green. The mood changed and analysts discussed some buying opportunities and sure enough on came some interviews with bullish investors. No wonder trading is so hard for most investors.
Market Direction Intraday
Here is today’s 1 minute chart around 3:00 PM. I missed the pull back in the morning but I caught a very nice penny trade around 1:00 PM. Once again you can see the morning low. This time the S&P pushed below 1650 to 1646.47 before turning back up. Now trending above 1660 as the House leaders meet to discuss possible interim ideas for the debt ceiling. Overall though this still looks like a rebound rally.
YUM Stock
Lots of email from investors about YUM Stock. For myself I am holding 15 naked puts at $67.50 and have no plans to do anything today. If the debt ceiling gets resolved shortly, even if it is interim, we should see a pop in the market direction and that will also pull up YUM Stock. Strong support in YUM Stock is around the $65 level. Longer term support is at $60. Inbetween there are little areas of support but not much to speak of. YUM’s earnings disappointed but they have been warning for most of this year that earnings would be impacted out of China.
Coca Cola Stock
If you look closer at the move by Coca Cola Stock from the Lower Bollinger Band you an see that it has been setting up higher lows daily for the past 3 trading days. Today I am hoping that the trend continues. I am still holding my stock which I thought would bounce back to at least the Middle Bollinger Band. If not then I will sell calls to get out of the stock. Meanwhile I sold puts three days ago at the $36 strike for Oct 25 expiry. Put option Volume has really dried up though on that strike.
Meanwhile the Slow Stochastic and Fast Stochastic are both extremely oversold but neither is issuing a buy signal yet. Today the Slow Stochastic is signaling possible move back up while the Fast Stochastic is signaling a move lower. I like Coca Cola Stock but investor mood is sullen toward the soft drink makers. I recall the years from 2000 to 2008 were no very kind to Coca Cola Stock so let’s hope that’s not going to happen again any time soon.. You can review those years through this link.
Market Direction Outlook The Dow
Intraday the Dow Jones Index reached the 200 day exponential moving average (EMA) around 11:00 AM and bounce off of it on the news of the meeting of House leaders. Even without that news the Dow was probably going to bounce. it is rare when a 200 day exponential moving average (EMA) is just broken through and the market direction keeps heading south. If you look at the past trading days you can see that the 50 day simple moving average (SMA) was broken in 2 days and the 100 day exponential moving average (EMA) broke in 3 days. Honestly I would have expected more testing especially at the 100 day level. This shows how weak the conviction is among investors.
Market Direction Outlook Into The Close
I am not looking for much into the close. I think we will stay green but whether the market will continue higher I think is doubtful. Remember it is rare when the 200 day exponential moving average (EMA) of any of the indexes breaks on the first try. This is just the first move of the Dow to test 200 day support. It should retest it again shortly. I don’t think though there will be more testing today. The close should be interesting. If the S&P 500 can hold above 1600 we may see further advances tomorrow. I’ll reassess after the market closes later tonight.
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