Crocs Will Need a Strong Day Tomorrow.

Look at the chart to the left, which is a daily chart of Crocs Inc. (CROX) You will notice that today's action violated the uptrend line and it remains to be seen if tomorrow's action will be able to reclaim that line. The pull back was with slightly higher volume than the prior day, indicating that the institutional selling was probably not a factor. However, it pays to remain vigilent. This type of action is never good but jumping too fast onto the short side of the trade is also not advised here. It could be setting up for a bear trap.

If you're short, you'd ideally like to see overwhelming rise of selling volume. But today's action was none the less painful to watch if you're long as the stock shed over 3%. But this is a momentum stock and follows the current market sentiment. The momentum line as you can see has taken it on the chin but despite today's big percentage decline, you will notice that it has held above support. If the stock fails to reclaim the uptrend line, it will likely fall to $72 where it will find support. I don't think that this support will hold and we may then be finding out that we are testing post gap support level, where there ought to be strong support at $64.82 level.

This market has had some stomach churning days that resembles sentiment change, only to roar back and slap the shorts straight across the face. The recent sell off is due to Greenspan's never relenting presence and renewed boisterious opinionation and reaction to housing and durable goods data that really is a lagging indicator. Much interesting tell will be the numbers related to existing home sales, which at this moment, I would like to think that it is still in bear mode. If that is the case, the numbers are below expectations, expect the market to rally and rally hard, probably on low pre-holiday volume which should add to the intensity. Historically, pre-memorial day market day ended in higher index numbers.

I expect no different tomorrow. I got "bold" and added 205 contracts of July $80 Crox calls today at "discount" prices. If my theory holds, I should make out like a bandit as Crox will run into the split date.