Yesterday, I said to be ready for a pullback when SPY approaches the lower boundary of its TARP Gap. And that’s exactly what happened. Tuesday afternoon’s sell-off began (blue arrow on chart) when SPY came within nine cents of the lower boundary, which I have at 119.34 (click chart to enlarge):
There wasn’t much in the way of bearish catalysts at that time. CNBC was talking about the Citigroup FINRA fine, but I doubt that would have put a dent in this monster bull market on its own.
While the gap appears as vacant space on the chart, in actual reality, it is comprised of bulls who have been trapped up there with horrific losses for 19 months. When they sell in relief to finally get out even, which is a very popular way to “invest”, they create the resistance. How many are there? How much buying power will it take to clear them out? I don’t know, but I would make two predictions: the gap will be filled at some point during this bull market, and it will require a struggle lasting from several days to several weeks.
The TARP gap will be conqured. Why? Well, the reply is the same as in the Marine Corps when told to take a hill; “because it’s there”.
Futures Prices
Market Last Change %
Crude Oil 86.36 -0.48 -0.55
Natural Gas 4.109 +0.013 +0.32
Corn 346.50 +0.75 +0.22
Soybeans 944.5 +8.5 +0.90
30yr Bond 114.71875 +0.31250 +0.27
10yr Note 115.218750 +0.218750 +0.19
NY Gold 1136.0 0.0 0.00
NY Silver 17.985 +0.054 +0.30
Emini S&P 1182.50 -3.25 -0.27
Emini Nasdaq 1974.75 -4.00 -0.20
Emini Dow 10894 -19 -0.17
Hank
Don’t know how long I will hang with my TWM. This will be a TMAR adventure I am sure.
String
Matt,
I think you have identified MARS – the TARP gap.
After,
Thanks, one small pullback for wo(man); one leap up for wo(man)kind. Except this time, it’s not the moon, it’s Mars.
GEORGE……bought back SCHX in pre market @ 28.07
Here’s an updated MOO/DOO with Matt’s MARS implanted. FYI, there’s a lot of DOO down below. Patience is warranted.
http://i44.tinypic.com/2qxtklv.jpg
I completely understand the thesis Matt, but honestly, do you think there are that many bull investors (not buy and hold investors, but traders) that bought and held this gap area without buying more dips for profits that weren’t shaken out a long, long time ago that have an intention to sell once back to even? That would be some mighty deep pockets, a stomach of cast iron, and a long trip to get to even. Just sayin’. I’m sure you are right, I’m just not 100% on board with this thesis.
Phil,
You can trade that in after-hours trading?
GEORGE……..DOLLAR soaring but stocks dont really care….remember everyone was looking for stocks to crash with strong dollar…..i warned that was erroneous thinking long ago
george i just did
“Not always there when you call but always on time”
>>>>very popular way to “invest”, they create the resistance
Phil,
Agree about the dollar coorelation. Also true to some extent with treasuries.
And precious metals.
GEORGE……..especially gold….it is rallying with dollar..THAT is very significant if it continues…if so i will step up gold purchases
Us is still the safest place to put the money lol.
Until we tell the world to take a hike.
SOLD gold…..its outside daily bb…….will rebuy on pullback
Ha, when I saw Phil go long I tightened my stops.
Not long after (pun intended) I was stopped out for a nice profit on the SDS and SPY PUTS.
Phil, I locked in profits at the open so your post did not change my plan, just improved it!
Hank
I had to take my pennies and run in the premarket.
String
2TH…bought TBT on dip yesterday@ 50.11…..target is 51.20
Lots of consolidation going on the intraday time frames. Change a comin’?
SRS consolidation:
http://i44.tinypic.com/2eo8mbm.jpg
SPY resting on 15min 36MA support. Looks negative on that time frame but the 5min is trying to bounce its MACD. I’ll go with the 1 and 5min.
String, as George says a profit is a profit. In Phoenix premarket is pretty early
Also it’s not an option for PUTS — sorry for the groaners I couldn’t resist 
George, I agree the market is clear as mud. I’ll wait for a better entrance.
Hank,
Nothing better than consolidation to clear up the water:
http://i39.tinypic.com/10okxuo.jpg
HANK….profits are profits…good work!
Retailers are trying to fertilize those green shoots. That’s working better than the Round Up. But when the hot sun hits those shoots… watch out!
George,
I want to play the next multi day downdraft. They seem to be getting stronger. I will wait for it to start rather than fight the tape anymore.
Phil,
Thanks. Suspecting that I was wrong again about the start if the next downdraft I took my cookie and went home.
Anyone notice AAPL is up 25% in two months?
HANK….dont focus too much on the down drafts…they are buy opportunities…..i think SPX 2450 is viable once we blast above 1550
AAPL has been amazing. Now a $1 move is only .40%. It’s starting to sell off a little now.
Phil,
I agree the trend is up. This could be like the mid 1990′s who knows when it stops.
However, I suspect the next big moves are down then up.
HANK…you could be right….however i still have not ruled out a huge up gap yet…i would not want to be short if that occured…you could be trapped short for years
Phil,
I’m in cash now. Interesting concept of being trapped. I see that in many places but never understood it. If I’m wrong the stop takes me out – even on the ugly side of a gap. NEVER let a mistake become an ‘investment’.
Almost all of my serious money has been in cash since early 2008.
In my industry (Semi’s) things are rocketing up with no end in sight.
I plan to put some 401k money back in SPY if we do correct.
Do you still have your wife in cash?
HANK…she still has 15% long spx fund
SPY has yesterday’s intraday gap to fill. That could be a turning point for a move higher. At least that’s what I would be looking for.
GEORGE…..MAX pain is 117 spy….more realistic than last month eh????
Phil,
15% long does not seem very bullish. Fear > Greeed?
This from a man at 0% looking to get 10% long.
Phil,
Will MAX pain work this time? It didn’t seem to do too well the last time. Else I missed something.
One thing’s for sure, this sure ain’t a MOAR – yet. Orderly pull-back.
10-year note auction results at 1pm. $30 billion worth, I think. Let’s see if it wakes up the market.
I get those auctions on my iPhone from CNBC. It will be interesting.
VIX is inside its BB today on the daily.
U.S. Auctions $21bln 10-year notes, high yield 3.90%. (Source: CNBC-RT)
CNBC needs to tighten up – that’s a 33 minute delay.
Certainly NOT “Real Time.”
SELLING some 10 yr notes on any further rally
SOLD SCHX for tiny profit..i think B wave rally is over for today..C down coming…will rebuy if we get smash down
So, you want the “real”, real-time? That will cost you $29.95 per month, Grasshopper.
LOOKS like C wave down now..i want to buy a break of todays low
bought partial position here
George
Look at PXP!
String
Stringm,
Hope you’re in PXP! WOW
FWIW,
If this is for real, could have a lot further to go.
SMH, BKX, AAPL & GS still positive, once they go…
“Just sayin’”
CNN is showing a live shot of a high rise fire 6 blocks away,
can smell the smoke.
Phil,
I agree as long as SPY can stay above the daily 9MA.
NO – I was just checking out a tool at TD called motion detector. Needless to say I will be watching it more closely. PXP is moving to fast for me.
String
K,
Close to getting one of your triple triplets -111.
Mini-MOAR on a Wednesday? Sup with that?
TNX closed -1.05. Back down to 38.63.
The short-covering coming soon will tell a lot about what this is.
Joan,
Good observation. Especially if BKX goes negative. Fire not good.
Two down, two to go.
SPY gap filled just now. Here we go.
Consolidation play on SRS working good. Couple of places for entry:
http://i41.tinypic.com/35a0l5i.jpg
K,
Are you anywhere near Beacon & Mass Ave?
Eh, K, not even twin triplets. No natzi soup for Mr. Market today.
Joan,
I was downtown today giving a big presentation of my fund to some big shots.
I finished talking ~1:30 and look what happened to market.
They loved it and so did the market cause it crashed.!
hehehe!
Nice SRS analysis george!!
I think that we have seen the highs for the week.
K, you will see it on the news, but there was a massive high rise fire on Beacon at Mass Ave, it is out now. Bravo, BFD!!
Oh I was walking in the common when my friend got a text from his friend about it. WOW I didn’t make much of it. I take it you live near Beacon and Mass ave?
BFD is awesome!!
Comm Ave & Clarendon, close enough to smell the smoke!
just saw it. Amazing rescue indeed
I’ll have to catch it on youtube
George,
http://wbztv.com/local/man.saved.condo.2.1618154.html
Matt
I figured you might have a comment about this post on ZH.
http://www.zerohedge.com/article/now-about-alleged-increase-tax-withholdings-government
I got called by the census bureau yesterday and I am suppose to show up for training on 4/27. Work is suppose to last for 6-7 weeks. Just so you will have a frame of reference for us door knockers.
String
Phil, looking to reload TBT below $47 at this point.
Sitting in lots and lots of cash in trading accounts. 70% invested in 401k.
Greecefire anyone? GLTA trading. Phil sounds like he is on fire right now.
String,
The BLS does their surveys for the jobs report in the middle of the month, so it doesn’t look like your new job will be counted in the April report.
If I have time, I will write a rebuttal to the Zero Hedge post. But if you look at weeks 9-12 on their first chart, you will see that there was indeed an increase in the raw data for March. And they didn’t even mention the withholding tax credit that is still in effect and has reduced withholdings by a large amount for the past year. So, March was stronger still.
And the concept of “net withholdings” is just dumb. We are not studying the finances of the federal government. We are trying to figure out how many paychecks were cut.
Thanks for the heads up,
Matt
Thanks K for the link. 9 Alarm… serious fire.
Today was a great day to ‘short heavily at yesterday’s close with a stop above yesterday’s high’. I think Julie liked to something like that. Just saying…