In addition to the trend lines, JPM is moving above its moving averages each week.  I think the 200 day moving average could act as a floor to the downside in the near term giving the potential for more gains a little more credibility.  The 50 day moving average has held support the past couple of days which adds to the bullish picture.  The bears might point to the 100 day moving average which is still a solid hurdle for JPM to deal with.  Within the next few days we’ll see if the short trading channel continues to work for JPM or if the 100 day moving average offers more resistance than the trend lines can handle.

The biggest bullish indicator that seems to hold true on a regular basis for NDAQ is the Williams %R indicator for 14 and 28 day periods.  I’ve highlighted NDAQ in this space a couple of times in the past when this happens and today is another buying opportunity.  I’m already sitting on NDAQ February 20 naked puts and yesterday I bought some more shares outright in my IRA.  I think there’s plenty of upside left for NDAQ and see at least another $1.00 in it in the near term.  NDAQ is fairly volatile, but tends to trade in a range.  $18 is the bottom of that range and the top side has been shrinking, so I’m not sure how high it’ll go before taking a breather again.  Having GS pushing it could help get it out of its rut though.  I’ll be in for the ride for at least another 5% to the upside.

One of the biggest indicators to watch to see which way GS goes is the 200 day moving average.  GS fell below this line on Friday, after holding support there on Thursday.  One could look at this line two different ways.  GS has had a reversion to the mean so the downside might be limited from here or since GS couldn’t hold support here there could be more downside as GS overshoots the correction.  I drew two horizontal lines also.  The first one looked like it’d hold, but also broke on Friday.  The lower one is where GS found and held support Friday.  If this line breaks we could see GS trade down to the $140 range before finding a new area of support.

If GS can pull itself back up from these lows it will still be in its descending trading channel until it breaks above the $175 range.  To get there GS will have to climb above its 200 day moving average and then its 50 and 100 day moving averages.  Each will offer another chance for a bounce higher to fail.  I’m waiting a little longer before I get turn bullish on GS.  I don’t mind missing the first $5 up to have a stronger conviction it’s not a dead cat bounce.  I want to see how the 200 day moving average works for or against GS too and I’d like to see a move out of oversold on the Williams %R indicator as a final confirmation.

I mentioned the potential for CME to fail and fall below its trend line of higher lows.  That potential for CME to stall (or worse) increases based on how low CME’s 200 day moving average is compared to its current trading price.  At some point we should see a reversion to the mean and either CME will flatten out while its 200 day moving average catches up or it will falter and meet somewhere in the middle.  The chances of CME breaking out above the $346 line and its trend line of higher highs are slim, especially with the drag of its moving averages.  While CME could certainly be a good long term hold for some, I don’t think 2009 has a lot more to offer for it, although making it to $346 would be a 6% gain from CME’s current level.

Along with the moving averages, the trend line of lower highs is just above the current price.  Williams %R is starting to level out and is more neutral.  Waiting for NDAQ to head back closer to $19 might be a safer move right now.  I cannot call NDAQ a buy quite yet with the look of this chart.

This is one of my favorite charts to follow using the Williams %R technical indicator and I’m kicking myself for not closing my July 20 naked puts earlier when I saw it turn.  It could turn out OK if I’m right about its chart.  NDAQ is using the previous resistance trend line of lower highs as a new line of support for lower lows.  NDAQ is still going down, but at a slower pace.  The real key I see in this chart is that NDAQ just hit the bottom edge of Williams %R oversold for both the 14 and 28 day indicators.  Check out the lines I drew for the past five times this has happened.  You can see that NDAQ rallied nicely from each of those points.  It’s not guaranteed to happen a sixth time in a row, but does present a picture that shows a good risk/reward opportunity in my opinion.  I’m not doubling down from my naked puts I already have in place yet, but might have to consider buying July 20 puts for a really short term trade.  With those trading at a bid/ask of 0.20/0.25 buying calls could be a lower dollar, high percentage trade to make. 

• NDAQ hit its lower trend line of higher lows
• NDAQ’s Williams %R indicator is hitting the bottom of its overbought range for both its 14 and 28 day indicators

Opinion = NDAQ will likely move up from here.  Based only on the two bullets above, NDAQ has moved up when these conditions met in the past.  All trends break eventually, but I don’t think this is NDAQ’s time yet.  I sold June 17.50 naked puts on it yesterday and even said in my post that I thought it would hit close to $18.00.  It did and now I think it’s ready to recover, again.

• NDAQ is at the bottom of its trading channel close to the nearly horizontal line of lows
• Each time NDAQ got near these lows Williams %R showed a complete fall through the oversold indicator
• NDAQ is below its 10, 20 and 50 day moving averages – all of which are just above 21 and could provide some resistance to the upside
• The biggest resistance for each are the three trend lines above the current price
• All four trend lines I drew are sloping down with slightly lower lows and larger changes in the lower highs
• The top two trend lines will connect soon creating a new dynamic to watch

Opinion – Upside has more potential than the downside has risk