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Bears Running Out Of Steam?

Bullish pressure finally overpowered bearish pressure in the small caps. Volume was light. What would we need to see to have confidence in a trend reversal at this point? We will keep our bearish broad market trading bias till we see volume support a bull rally. Click here to get today’s free options advice; have A.J. explain option trading to you in everyday language.

Hey trading team,

This is A.J. on Thursday, October 13th with your Trading Trainer web log. We are your home of market insights for the serious options trader. This web log will cover the events in the market from today as well as prepare you for watching the market tomorrow.

Today was an interesting day with respect to technicals team. Let me explain why. I like to look at every day like a jury trial. Throughout the day, the two sides, in our case, the bears and the bulls argue their sides swaying the jury minute by minute, but at close, a verdict must be given. Today, in the broad market, we saw some heavy bearish pressures, but, you know what? The close was just about where the open was. In the case of the small caps on the Nasdaq, S&P600 and Russel 2000, the close was above. What that tells us is that when it came down to it, the bulls finally had had enough and they roared.

Now, there is a clincher to this. That is the drop in volume. If we go back to our analogy, the number of jury members that showed up was less today then in the past days when the bears won on a landslide. As well, none of today’s jury members were influential… or in real speak, we didn’t see the foot print of any of our institutional trader friends. So, was today just a fluke?

Here is what we would like to see on a trend reversal. The days leading up to the reversal having less and less volume and then the day of trend reversal and the subsequent days having heavier and heavier volume. In other words, we’d like to see an over turn in shares. What we saw today and in the past days was quite the opposite. So, what is the confidence that we’ve hit bottom? Not very high. But, today’s movement could be significant and raised enough flags that we’ll be looking for follow through tomorrow and into next week.

For now, we’re going to stick with our bearish bias.

My Techne January 55 Calls closed up today at $3.20 per option. I’m 47% into my initial investment on this one team after 9 days.

Team, till we see anything solid, we are bearish. We are still looking to be in short positions. But, we want to watch, especially when we get hints like we did today, for the bulls to finally fight back against the bears.

Always team, look for volume, before making a move. Volume will tell you whether its just a fluke or if there is something substantial going on.

Tomorrow is a day of morning news. Wait till the news settles before making moves team. Don’t get caught in the frenzy.

Okay, team. I’m done.

Till tomorrow, happy market watching, trading and money making. Trading Trainer is here helping you create your dream lifestyle.

Best regards always,
A.J.

Click on the below play button to hear the blog as an audio from A.J. himself!

Do you want to learn option trading? Full time options trader, A.J. Brown, reveals option trading secrets in his daily audio / video newsletter that are guaranteed to make you massive profits in less than 30 minutes a day. Visit TradingTrainer.com now.

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