Doji Star on S&P; Google Pullback; Options Expiry
Red Alert: Today the SPYders formed a Bearish Doji Star:
Tomorrow’s action will tell whether that becomes a full-fledged Bearish Evening Doji Star or not. This formation is one of the strongest “reversal formations” you’ll see. How would I trade it?
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On a gap-down opening tomorrow, I’d look for any intraday setup to get short for a daytrade potentially turning into a swing trade by the close. A gap down, rise to today’s low, and failure would be perfect, which means it’s unlikely.
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On an opening within today’s range, I’d view it as a short-term swing, waiting for the break of today’s bottom of 146.65 for an entry, with a stop at the entry bar’s high.
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On a gap-UP opening, I might get short on an OGRe, but with a reduced position size. A gap up would indicate residual buying pressure, negating the Evening Star’s signal.
GOOG Pullback After Double Top
With all the 100% positive press Google gets, you’d never suspect that it was pulling back into a big ‘ole double top:
Note the volume pattern on that last upswing. Their earnings “news” Thursday had better be gangbusters, else we may see just how deep (and cold) that water is…
Don’t Forget Options Expiry!
Options Expiry is this Friday. That usually means a great excuse to take a 4-day weekend, as everything gets pinned in a range. However, you may want to have a laptop nearby as you grill and drink. Never know when we’ll have another Black Swan options expiry day like January 20, 2006 (if you click it, read on down- it gets more interesting towards the bottom). The current setup is ripe to be clobbered by a “precipitating event”; be prepared in case we get one.