Wednesday, February 15, 2012

Huge Distribution Day, A Sign We're Near A Top?

Only a small gap up this morning, but it got faded none the less. Yesterday's high/close became support and we bounced back towards the opening levels/high of day. But just when the market was printing new highs in SPY and QQQ, the market started a big sell-off, comparable in character with yesterday's late rip higher.
Next support was Monday's low. Another small bounce, a re-test of the forementioned lows but still the bleeding didn't stop. Next support: yesterday's lows. And that finally stopped the bears.

A big distribution day, especially in tech. Are we finally going to see a pullback? A close near the lows doesn't help. And the bearish engulfing candles on the indices are suggesting a top might be near. However, the trend is still intact and as long as indices don't step outside their respective ranges (see daily charts below), there is no need to go short this market (yet). A close under the range would be a possible short-signal.

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM:

Metals, oil, euro: metals and oil did the same as indices. The gap first got faded, then a small bounce followed.  Oil was the only one that could hold onto it's gains, gold giving back some but not as much as silver.

The euro sold off deeper and barely bounced, it has a bearish look the last couple of days. And that's why I covered half my position in the bull risk reversal option trade. Selling the 136-calls and buying back 2/3 of the 123-puts and 1/3 of the 140 calls.

Articles for tonight:
Is It Time for AAPL to Cool Off?
What Does Declining Gasoline Consumption Mean?
Many AAPL-blog posts today. Here's one from Josh Brown.

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