Thursday night, the talking heads on CNBC said that they were “encouraged” by Thursday’s trading. Well, if you think a low-volume, failed back-test of the broken neckline of a massive head-and-shoulders top is “encouraging”, then I can’t be responsible for what happens to your long positions.
The last three days have likely formed a classic bear flag, which looks pretty obvious on an SPX 60-minute chart. A 100% extension of this flag would take the SPX down to about 858. If you see high-volume selling begin any time soon, I would recommend not standing in front of it.
Stringm,
just to continue the discussion on your mysterious T shares away.. seems like there is a chance that someone is expecting the shares to rise since the market was fairly oversold.. so why not buy the shares and hope for a rise vs. take a loss on sold calls.
T options are quite thinly traded, so maybe the intention of the buyer was to buy the shares all along.
Lot of big ranging candles going on here. Someone buy/sell at market?
I think those were caused by SD because I don’t see those long-ranging candels on other charts.
SPY going for its 15min 36MA. Then wait and see.
Some of these spikes are legit.
SKF filled yesterday’s down gap.
George:
SKF is registering all the criteria for an entry except, well, the cross?
Mitch,
Yes, it crossed on my charts. I’ve been in SKF since the 15min turned up with stochastic and MACD around $45.70, so I haven’t been watching the 9/36/15.
Often, there will be a cross, it backs off to test the 36MA, then resumes up. That’s why I use price crossing the 36MA as well, in the event that happens any loss will be much lower or break even. Also, if price crosses the 36MA then stochastic turns down, I take lots of profits and let a little bit ride. I can always get back in.
george… mitch….nasdaq …the leader…is hinting at explosive rally ahead..even if it is only the c wave of wave b up…….then we go down in wave c to finish the correction…….
http://3.bp.blogspot.com/_TwUS3GyHKsQ/SlZuKJvaYvI/AAAAAAAABDk/hEuqV3kQPq4/s1600-h/spx50.png
could try a short @ 895spx
phil Says:
July 9th, 2009 at 2:26 pm
marty ……i guess it is today……tlt now 94.54….going to buy back 1/3 of what i sold yesterday………………………………………………………………………………………….marty ……sold again now@ 95.98…….are you still in tlt?
Mitch
I have stumbled onto another good read. This is an e-book though. It is an interview setting with someone referred to as “Phantom of the Pits”. Let me know if you want a link.
String
phil:
Very good move. Currently hitting highs on TLT. Watching this movement into T’s carefully . . . . .
phil:
It’s money going in but I can’t tell whose it is.
Some double tops/bottoms here where inverse could pull back some it resistance is strong enough. I just look for it to break the 9MA on 15min chart if it’s going to do it.
mitch….im glad to sell to whomever it is that wants to buy tlt .. especially as we get near 98 and above
Look at SSO 15min and the MACD trendlines have gone straight down. It is now making a “Stochastic Double Bottom” where it went below 20, bounced up a bit, now it’s below 20 again and will make some sort of comeback when the 5min starts turning up.
nasdaq needs to turn up soon or we will not see that c wave up
max pain spy=91 qqqq=36……will they let it fall further away than it is already????
Q’s only down .12c. BBT only down .12c. Gaps mess up perception of what should be.
also aaii shows 55% bears…..getting crowded in that cave
Cashed in on remaining SKF and get back in when/if it makes a move back up.
I only did that because I have some errands to run. Not able to watch.
Bought some GS 135 AUG puts this morning when it was @ $144.40. Up about 8% so far.
Kinda makes up for my loss from yesterday.
Charlie, you have those options down good now.
Shorts been doing some covering here in the past hour. They may start selling again. Ain’t going to be easy one way or the other – no more bombastic moves since the beginning of the year. I expect that will continue. I am looking for inverse to gain some upside, especially SKF after its daily up gap is filled.
SKF fighting 5min 36MA resistance here.
George,
have you considered our short FAS/FAZ shares idea? If we are going to be in a grind for a while, then those will surely fall from the current levels that they are at due to the 3x leverage nature of the funds.
BTW.. if GS breaks current pennant and goes decisively below $142.20.. things will get ugly fairly quickly. Right now.. it is fighting for it’s life at that level.
Charlie,
No, I have not on FAS/FAZ, do you mean trade the stock, not the option?
charlie….i read an article recently that if you can stand the volatility short both fas and faz because they will both eventually go to zero
phil,
Is that possible – both going to zero?
Man, BBT going down to toward that $20 mark again. Trying to make a comeback here. I’ll help if it gets going.
george…yes eventually they will both be almost zero…they erode daily due to the leverage…..
http://tradenakedoptions.com/2009/06/why-fas-and-faz-drift-to-zero/
George,
given the nature of these 3x funds.. they are destined to go to 0. That is why FAS did a 5 to 1 reverse split and FAZ did a 10 to 1 reverse split recently.
imaging this.
If FAS starts at $10 and goes down 10% and up 10%.. then the resulting price is: $9.9. Repeat this over the course of a few months and it could be down 50% even though the market is flat.
Both funds started in the $60′s when they first launched and it took them less than 1 year to reach single digits.. If the same thing were to happen this time around, it should also take a few months before these guys go to single digits.. in which case, another reverse split should happen again..
Mitch,
DId you get any SKF?
phil,
UYG doesn’t have far to go… it’s at $3.41 now.
Charlie,
OMG… I didn’t know that. Is that true with the 1×1 inverse, or only the 2x-3x?
I have SSO riding the top channel line on the 15min. So, I look for a break above or below. It has been hugging that line for the past hour.
However, SKF and SDS are both up on their 9/3615min crossovers, in the money.
it will happen to 1x slowly, but 2x and 3x degrade further and faster..
Charlie,
Thanks. All those poor suckers using inverse to hedge really need to know how to do it. Else they will make a correct trade but lose profits. Bummer.
I only trade swings on those so I’m not affected. Otherwise, I’d probably never see my entry price if I held. Isn’t that what happened to K?
Just watch shorts cover at the close. Someone needs to tell them this is Friday.
This creepy-crawlie move by the inverse is killer if trying to follow it on the 1min. I crawl up to the 5 and 15 to swing these and let everyone else fight it out.
just sayin’
out of my GS put options. GS seems a bit oversold and the last 1/2 hr of the trading day of the week is bound to be crazy.
+10% on the trade.. makes up for losses from yesterday + additional profits
BTW, nearing doubles but not sure if they are very powerful. SPY still going sideways.
Charlie,
WTG. I should have done some BBT puts.
George:
Re: SKF
No I did not get in. I did, however, use the action to take a look at the Amigas in action.
Charlie,
Most fixed-income folks don’t make 10% in several years.
George.. I think so.. using a inverse to hedge really is no good unless you plan on hedging for only a short period of time. The degradation of the values of those 2x / 3x funds as well as options is killer. I guess the trick is figuring out how to use that in your favor.. eg. sell options which degrade in value so you’re the one suckering someone else.
SRS is disappointing. Green shoots in CRE?
Mitch,
Good. As that fellow said in that nice article link we got yesterday, observation and all is great education.
Adios amigas.
my options scalping has definitely been paying off as of late
BTW.. you have options capability now George?
I think that with your skillz.. you could making a killing. The key is those highly traded options as that might fit your style a bit better and make sure you find someone with low commissions as options in general cost a bit more to trade than shares.
Have fun!!
Bulls will make a run for 880 spx as the close to preserve the H-S neckline test. Also.. expect higher volatility next week due to options expiration!
Still holding my SRS.. Dressguard.. you should sell some covered calls if you are still holding shares.. premium on the $23 July Calls for SRS is about $1. That’s another $1 buffer for the stock to fall before you begin to see red.
Bonjour amigas.
Have a great weekend George
BTW.. really glad I let go of my GS puts when I did.. it is making a mighty bounce into the close it seems.
Liver-lillied shorts covering. Now let’s mop them up.
You too, Charlie. Good tradin’.
Charlie/George:
Have a good weekend.
Ps – I was lookin at some SPY July 90s
Calls that is . . . .
Mitch,
Look at SKF 15min MACD. see the fast line never crossed above the slow? Then look at SSO 15min and you see the reverse where the fast line was above the slow.
These are divergences in and of themselves although they are not the normal things we think of as divergences.
When price moves down but those don’t confirm it, a move is coming in the opposite direction.
You may already be aware of this.
FWIW
Mitch..
also know that after the weekend, there will only be 5 days before those options expire.. Now .. we could see a gap up on Monday which would be good, but if the market opens flat.. the time premium on your calls could take a beating..
just be aware of that when trading options so close to expiration. I usually try and hold options overnight only if they are far away from any options x date. I’ve had the case where I bought options on Friday.. the markets gapped in the right direction, but my options were flat because their value had decayed so much over the weekend.
I didn’t know about divergences until Matt pointed them out, now I see them everywhere and in various forms.
SPY barely went above that upper channel line on the 15min.
George:
I’ll check that out. I admit not seeing divergence and setup but I’m trying.
Charlie:
Thanks, I was looking at those calls early as we were moving down . . . . they were getting cheap and went up 5 pts after I considered them. . . . . you’re very right about time and the unknown weekend and Monday open.
Mitch,
I didn’t mean you specifically, I was just throwing that out as general information FYI stuff. I don’t know anyone’s level of knowledge, etc. so it isn’t right for me to send that kind of stuff and insult someone. There are things all of us know that are beneficial and sharing that is valuable.
Hope that didn’t offend.
Charlie – think you’ve got that exactly right.
George see what you think of this: http://tinyurl.com/nzez8w
A Stockcharts 20Day/30min of the SPX using the G-toolkit plus with SloSto and MACD but with the parameters set so it’s not so noisy (all bumped way up against the infamous 9 multiples).
Part of the trick here was it turns out that for us modest $ customers this is the way to trick SC into giving you more than five days on intraday charts. But it also might be useful in itself.
FWIW
Charlie:
Options are not intuitive to me yet, so you have been helpful to me. I’m refreshing like a bandit over here (I could RSS) waiting for a response to my ideas. Unfortunately I’m color blind with red and green -lol- may explain my contrary habits.