The 10 day moving average had a bullish crossover above the 20 day moving average yesterday which typically signals coming strength.  That makes the trend line mentioned above interesting since it disagrees with its own strength.  I’m planning to wait to add DIA to my holdings on a dip closer to 100.  That’ll put it near the current points of the 10 and 20 day moving averages.  Another 5% dip for DIA should be an ideal entry point for multiple reasons.  That’s close to the trend line of higher lows, the powerful 50 day moving average and would be consistent with how far previous mini-corrections have taken DIA before it finds its legs again.

If RIG can get above that hurdle, and I expect it will, it could head back up to the upper side of its trading channel closer to $95.  I don’t have a position on RIG right now, but if we see a small dip on Friday above today’s lows I’ll probably open up a small position.  Tomorrow will also show if Williams %R is going to move higher again.  If it does that’s another strong buy signal.  I’d have been even more bullish if volume would have been higher on this bounce today.  I’m waiting, if for nothing else, just to make sure this isn’t a dead cat bounce.

In addition to the moving averages and trend lines, Williams %R is getting close to an interesting point.  I say “close” because I see Williams %R as a better indicator when a stock or ETF pushes it out of oversold rather than just when it enters.  I highlighted the entry points into that lower grey area of oversold for the 14 and 28 day indicators to show how the last eight months have reacted to similar times.  Each one shows SPY move higher soon after that mark.  The unknown is if SPY will stay oversold longer this time than previously.  The canary in the mine might be the trend lines and moving average I addressed in the first paragraph.  Once the direction is chosen, I expect a quick 5% in either direction.  Hold on tight and get your trading fingers ready.  (Give a point or two in either side of my trend lines for my less than precise drawing.)

Before trying to get in front of the trade, it might be a wiser move to wait for Williams %R to give the buy signal first.  In green I highlighted this year’s moves above oversold for the 14 and 28 day indicators.  Notice how they foreshadow a good run for IWM in each case.  On a couple of them the run only lasts for a short period of time, but on others the bull run lasts much longer.  In either case, getting in before Williams %R gives that signal is a set up for more losses.  IWM is now set up to move higher, but it’s probably wiser to miss the first day or two of the rally to save the chance of missing further declines.

MON’s history shows it’s best to wait for it to pull above oversold in the %R indicator.  This chart shows it’s not time to buy yet.  Once MON comes out of the lower gray area of oversold, MON should rip higher for a few days to a few weeks.  The longer it stays in oversold, the longer the rise up tends to be.  I’m already long in MON in my IRA and plan to keep it as a long term position, but if I see it break higher I’m buying my covered call back and will sit back to see how high it can go.

Disclosure: I sold naked puts on EEM earlier today at the October 38 strike.  So that shows I expect it to find its footing within the next two weeks.

The big stand out from both is that QQQQ is nearing potential support of its multiple trend lines of higher lows.  I picked a few different starting points and they all point to close to the same area in the low $40s.  If these lines start to break we could see a big correction in tech stocks.  The 10 day moving average (dma) has been the center of a seesaw for the past week and until today only provided resistance once recently.  With that resistance cam the breaking of support offered by the 20 dma.  The trip to the 50 dma isn’t far.  It hasn’t come into play since mid-July, so watching it will be interesting. 

Keep watching these trend lines of higher lows and if they hold I expect another run to the top trend line of higher highs.

A few minutes after I charted the past three months I charted the past seven months.

My naked puts (good thing I was cautious somewhat with my strike) are now in the money, but I actually think FWLT has a good chance of rebounding from here.  It’s right on the trend line of higher lows from the past six weeks.  Just below that is the other trend line I drew last week.  It’s possible to help with support too.  The horizontal line marks the line of highs from August and is a few cents below the price around 2:50 pm today ($31.04).

The 10 and 20 day moving averages broke like they were nothing.  I left the 10, 100 and 200 day moving averages in the chart just to show how fast FWLT has risen from its lows.  If FWLT gets back down to the mid-20s it’ll be hard not to buy in again.

Disclosure: I sold naked puts this morning at the October 33 strike in a cautiously bullish move that takes the dip into account.