Rob Promised Market Volatility And Boom There It Goes Again!

Happy Tuesday evening everyone. I hope that everyone is having a great afternoon. We had a great morning. What can you say? This market has been doing a great job of having lots of movement and lots of volatility. We saw it again today.

I shared with you the past couple of days that I was looking for this expanded volatility and we’re getting it. Now, the one thing that I find interesting is a lot of people are saying that it can’t get any higher. I just can’t go any higher. They are wondering why I’m still looking for long side trades (like I was this morning in the Live Trading Room). The problem is that from a historical perspective we actually can go higher in the market because the VIX can go lower. Back here (on my charts at 0:59), this is something you’ve heard me talk about the last several months, in 2005 through 2007 you can see just how low we actually got. We got to and under the 10.00 level in the VIX. Look at where we are now. We are at the 14.00 level. What does that mean? If this market wants to keep going up or the VIX wants to keep coming down the market is likely going to go up.

There is still room. There is still movement opportunities to the upside despite what a lot of people have been saying. Let’s take a look at a couple of other charts that are very interesting here as well.

I’m looking at GOLD and I find a great deal of interest in it. We had an inside bar day today. It was almost an equal and opposite from yesterday. I am going to be really paying attention to this 13300 level going into tomorrow and see if we can push back down towards the 13100-13110 area. I am not really expecting it to get all the way back through here and back above yesterday’s highs (on my charts at 2:14) unless Russia launches its attack on the Ukraine. Right now that is looking less likely but Putin is very unpredictable so we will see what happens. Right now, being on an inside day we are looking for additional movement tomorrow. First things first, we are going to see if we can get below that 13300 leave.

CRUDE OIL is in a similar situation. It is not quite an inside bar but very close. The close was higher than yesterday’s low and the high today was lower than yesterday’s high. It was not officially an inside bar day. I am going to be looking to see if we can get below that 10300 level and push down towards that 10140 and 10150 area. There is still some good range of motion down below there as well. Again, I don’t expect it to jump up above. We do have the CRUDE OIL inventory report tomorrow. So, if things are looking uncertain in the Ukraine and those inventory levels are greatly reduced that could be enough to push this back up there. That won’t be my desired move. Certainly the preferred trade would be to break below the speed lines and look for retracements back to the rising support underneath.

As far as the stock index futures are concerned, this is a big deal. We talked about this yesterday. I’ve talked about this for several days looking for movement. Basically what we have here is distribution bars above but we have the accumulation bars down below. You recall, those accumulation bars are very important. I noticed how we were having accumulation bars on all four charts yesterday and I specifically pointed that out because of what usually happens in a situation like this. When you get an accumulation bar in an uptrend you typically get retracements back up. That is why I had to very open minded for a long side trade this morning if we couldn’t push down through those accumulation levels.

You can see (on my charts at 4:11) not only did we not push down through them, frankly, we didn’t even really test them. We opened up yesterday near the close of the previous day and never looked back. We never really tested into that accumulation. It held as major support all day long. What did we focus on then? In the Live Trading Room we focused on long side trades and pull backs. That is what we did and that’s how I made the money. Now, going into tomorrow, are we overdone in the short term? Sure, but as I pointed out to you the VIX actually has an opportunity to let this go higher. I am going to be watching tomorrow for this. This is going to be very interesting because we have the NASDAQ right at daily resistance from yesterday. The DOW is right into a key band of resistance stemming back from earlier in the year (late last year). The S&P and the RUSSELL are actually above those previous highs. We are showing these new higher highs, which I’m sure you’ve been hearing about in the news all throughout the day. We have two of them that are above some key resistance and two that are into key resistance. I’m going to be watching the two against the four and seeing if the RUSSELL and the S&P get dragged down by the NASDAQ and the DOW or do they do the opposite?

Right now, initially, I am going to be focusing on long side trades. Why? Because we are above those all-important speed lines. That would be my first gut reaction and we will take a look it in the morning and reassess from there. The beauty is that we have GOLD, CRUDE OIL, and the stock index futures that continue to open up lots of opportunities for us. I will look forward to seeing you guys here in tomorrow morning’s Live Trading Room or tomorrow night’s videos. Take care!

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