A couple of observations on today's price action, FWIW:
1) If you believe in contracting triangles, today's action was a decent example. It broke out before the "point" would have been reached, as is typical, and made a mad dash, also typical.
2) A low at 10:30, what a surprise. It held until the big market-wide selling program at 3:15 or so. If you need to buy back covered calls, 10:30 is still the time to do it, IMO. There's almost always plenty of time and price (e.g.: at least nine out of the past eleven days) to re-position yourself later even if it eventually goes even lower, like today. (That will change before too long though, but we'll be well into the 60's by then.)
3) Speaking of the big market-wide selling program, note that the Micron sellers cut to the front of the line and started at 3:00 as everything else (judging by today's S&P and DJII graphs) was actually reversing from a sharp down-spike and starting a 15-minute move up.
4) Pretty good volume on the sells today, both the "early" sell and the overall sell. There were three big blocks in the first 15 minutes or so before the market-wide sell program kicked in.
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76 1/2 looks like the (high) line in the sand for the next few days. Once it broke through 76 on the way down, it broke through an area that it really didn't want to go above in the first place.
There's a gap at 77 3/8 - 78 from today's open, and "the gap is always filled", as the saying goes, but price returning to that gap is a place for adding to a short or put position, not a place for opening one, IMO. We might not see that gap filled for a while, or we might get a nice down-draft before coming back and filling it, or it might not be filled at all.
FWIW, I'll be looking for about an hour or so of follow-through tomorrow morning, and then waiting for that end-of-January mutual fund money to be put to work at 2:40-3:00. (Guess what time I'll be looking to buy back some covered calls. :-) )
We might not see much beyond a 74-78 range for the rest of the week, but that's just a guess. |
