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Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: Gush who wrote (4011)	1/19/2005 2:03:00 AM
From: Walkingshadow	Read Replies (1) \| Respond to of 8752

Hi DaGushman, And welcome, this is a place where we all learn, regardless of starting point. Personally, I find questions like yours very very helpful---the best way to really learn something is to have to explain it to somebody else! I do not anticipate QQQQ going over 40. Instead, I think it will get halfway up that black candle from early January and run out of gas. 139.142.147.218 In general, black candles are bearish, white candles are bullish. But this is a very broad generality. Probably a more valid rule of thumb is to say that tall white candles that are associated with a lot of volume are bullish and supportive, and tall black candles that are associated with a lot of volume are bearish and resistive. So on the weekly chart I posted above, the white candle currently forming is bullish for several reasons. And I expect it to get taller. But it has a dark cloud above that will try to squash it---that tall black, volume-heavy candle from the first week in January. That will act as fairly strong resistance, and I think that is one factor that will stop QQQQ in its tracks. There are other factors that I detailed in my previous post. Then, there are market internals and sentiment, which I haven't posted much about, but which also mostly (not entirely) support this interpretation. << Do you anticipate the expiring of Jan options this Friday(end of business) to cause the market to loose strength? >> No. Expiry is often associated with increased volatility, which in turn tends to be associated with decreased price movement (volatility and price have a roughly inverse but fairly close relationship). That said, I would not be surprised if---coincidentally---that was the time when QQQQ began to reverse. In other words, I expect a rally into that tall black candle, where QQQQ will run out of gas and then begin to reverse down. That very well could take the rest of the week to play out. Re AAPL, I don't think we've heard the last from that stock. I think there are still big boys accumulating there, and various forces trying to keep a lid on the stock price. When this market resumes its long-term uptrend, I think AAPL will kick ass and take numbers. Personally, I think it would have been a better idea to buy at the money or in the money calls if you are buying front-month contracts (a very risky trade, as you know). That way, any rise in the stock price is almost all translated to the intrinsic value of the contracts. Oh, one more thing: dark bars don't scare me. They tell me where might be a good place to close a long position and consider a short entry (well... that's a bit of oversimplification, but relevant to the case in point, QQQQ). Big difference. So they can be just as friendly as a tall white candle. When elephants move, mice get trampled. I just want to know when the elephants are moving and in which direction and position myself accordingly so I don't get squashed. Hope this helps, T

To: Gush who wrote (4011)	1/19/2005 2:32:39 AM
From: Walkingshadow	Respond to of 8752

<< That with oil heading downward(imo) should spark a little green during the next 2 weeks... >> Well.... don't get your hopes too high there. Oil formed a reversal candle yesterday, and appears to have begun a short-term correction. I anticipate oil will move back down to test support at $47.50, which is the level of the previous peak that was once resistance, but now is support. Also, that is previous chart support (just look at how oil bounced off that level in November). futuresource.com Stocks and options and futures etc. all tend to "remember" areas of support or resistance. The stronger the support or resistance, the stronger the memory. I think the short-term correction in oil will be just that: short. Then, oil will resume its uptrend (but alternatively, could also begin a sideways trading channel). I think this will occur around the end of the week, possibly the beginning of next week. And right about that time, QQQQ will likely be running out of gas in this current short-term rally. The oil futures and stock indices tend to have a very rough inverse relationship; at least, when oil gets very high, that puts a damper on stock prices, and when oil is dropping, that adds wind to the sails of stock prices. The reason is because of the effects of the cost of oil on the many sectors that are in some way oil-dependent. The greater the cost of oil, the greater the cost of doing business, and the more erosion of margins (and enhancement of inflation, since business will tend to transfer as much of the increased costs as possible to consumers/customers to optimize their bottom line). T