I have three scenarios in mind for today:
1) It will be a re-run of Tuesday where the market eroded the support at the October 8th gap (105.79 for SPY) by going mostly sideways with choppy action. Today, it would be eroding the support at the October 6th gap (104.05 for SPY), the top of which stopped the decline on Wednesday afternoon.
2) SPY will “echo gap” under the October 6th gap, and the SPX will proceed directly to test the October 2nd low at 1019.95. It could bounce and print a bullish hammer candle there.
3) A sharp short-covering rally, possibly triggered by an upside surprise in the GDP report that would retrace some of the plunge.
As I write this, the futures have held the 1037 level, making a low at 1037.25 just before 7pm, Wednesday night. So, that’s some solace for the bulls so far.
Let’s see what the GDP report is and how the market reacts to it. GS has likely lowered the expectations to very low levels with their downgraded estimate Wednesday morning.
I’m playing the 50 MA and the GS GDP bear trap.
Went long 12% SPY at 104.34 AH. Will double down at 103.45 to game the potential volatility.
I’m wrong and gone at 102.45. I was tempted to allow for the 10/2 bottom at 101.99, but this a MA play not a double bottom play.
Hank, I’ll double up if SDS drops to 10.20 LOL we’re really playing opposites here!
I meant SRS.. if SDS goes to 40 i’m in. lol
Hank,
Well, the market is about as oversold as it was at the March low (going by the McClellan Oscillator), so it certainly should be able to muster a bounce here. Good luck with the trade.
Matt
Matt,
Thanks. I am just playing the odds as I see them. In addtion to being that oversold, the 50 DMA has been strong support except in July. If am wrong it won’t hurt much.
Thanks again for a great blog.
K,
Never forget, TTIYF
IF we bounce off the 50 DMA, recent history shows we run for a bit.
Yup Matt and Hank, the McClellan is in WAY oversold territory…all my SDS has been stopped out, I’ve got about 40% cash in my trading account, and I am waiting for a bounce. If you guys want to hold it off for another day, so I can jump on it Friday, I won’t mind. Just print a nice morning star daily doji on Thursday to mark an intermediate bottom, so it will be bullish on Friday.
Amazing that AMZN has held its ground through this, BIDU had rebounded back to almost $400 (way to take the money and run Scotty), and GOOG has only dropped to support at this point.
FWIW – we fundamentalists have been wondering what’s driving this market. Particularly since the outlook is terrible for a long time, earnings aren’t good and PEs are going thru the roof. My current best guess is what we’re seeing is a Risk On liquidity driven trading environment where one damm thing after another is feeding itself.
http://llinlithgow.com/bizzX/2009/10/really_different_this_time_liq.html
Where this might concern y’all in the timeframes you work in is that any time reality trumps sentiment(think of this as the sentiment vs sense trading market perhaps?) it might suddenly tip the other way.
On the other hand the Fed will keep rates low until at least late next year, if not into 2011 unless this bubble gets completely out of hand. A good comparison in my mind is that the fundamentals were bad early in the year but it wasn’t until the March collapse that that reality sank in with results we all know.
Hopefully some food for thought…Bon Appetit’
Enjoyed reading the link dblwyo. Thanks. I know I am long term bearish (and many others here seem the same) for many of the same reasons outlined in the article. As a business owner, I *KNOW* what the economy is doing and how Joe Sixpack’s wallet isn’t full of that liquidity that was pumped into the system.
One by one, countries are taking steps to un-dollarize their economy. The latest is Turkey.
From Russian newspaper RIA:
Turkey is switching to national currencies in trade with Iran and China, ending dependence on the U.S. dollar and the euro for about 20% of its commodity turnover, local media reported on Wednesday.
VIX Spike of 35% in Four Days Is Short-Term Buy Signal
http://i104.photobucket.com/albums/m163/bl82/VIXup35pctin4d102809.gif
Zooming in a bit on the charts, I’ve made a 60min with a bottom trendline and Fibs. That diagonal line from the price peak to bottom of the last cycle is the Fib marker, not a trendline.
http://www.freestockcharts.com?emailChartID=4ee2f80a-a753-4bc3-9841-648f180a026a
P&G 1Q Net Falls 1%, Tops Views, As Margins Jump
P&G First Quarter Sales and EPS Exceed Expectations
This is kind of messy, but it’s a daily of SPY with the 60min trendline (yellow trendline) from that chart plus a daily trendline from the March lows.
http://www.freestockcharts.com?emailChartID=aee2f765-05d5-4bf1-8840-52dcb7e2da38
K,
I helped you with AAPL with my purchases, now I’ll help you with P&G – I’m going to buy some toothpaste.
I hope my changing one chart doesn’t mess up the original I sent, however, The second chart says it all so that’s the main one.
George,
I don’t have any shares or options but being right always feels good!
GDP blowout, lower jobless initial claims….time to reverse to the upside, right?
2thfixr. The gdp was factored in at the top. Only dumb money buys on news
K–I’m looking for the market to go up so I can reload on my SDS!
K,
Being right is the main thing. I believe that someone on the “outside” (which may or may not be you) looking at the situation is better suited to make calls. More objective and all that…
I also want a bounce to double up on sds srs and smn. Am willing to give up some gains to make more
I also believe any bounce will be a good shorting opportunity. But I’ll play it by the indicators because the longer-term indicators haven’t turned yet.
Here’s a SPY 5min showing a bull sign:
http://www.freestockcharts.com?emailChartID=ad17739d-c09f-419c-af7d-db727dce7047
K Says:
October 28th, 2009 at 4:32 pm
George,
PG options activity is starting to pick up, especially on the call front. Some 40,000 of these bullishly oriented contracts have changed hands on PG today.
Basically saying investors/speculators are expecting PG to beat estimates and climb 3-6 bucks lol. aka 5-10% gain.
——–
5% gain it is!
. Lovely isn’t it george? 
SPY nearing 15min 36MA.
K,
I LUV IT!
BBT pumpin’ but ICE melting.
Lots of intraday gaps to be filled by both sides. Not huge though.
SPY looks to be making a Humpty on the 15min. Will make it so if the one minute turns over.
GEORGE…..i see 5 waves up…..if we correct now i want to buy DDM near dow 9800….even if this is only wave 4
Changed my orders to double down at todays lows looking for another multiday rally. If we take out 104.86 I am gone with a 50 cent scalp. Better than a sharp stick in the eye.
GLTA
phil,
SPY looks to be failing at its 15min 36MA but it could be setting up to try again as it has in the past.
BOUGHT 1/2 DDM @ 38.96
Thus far, the daily charts are showing inside days.
GEORGE….thats why i picked DOW … its candle is about to engulf yesterdays….SELL TARGET is 9914
phil,
Nice. Tks
GEORGE………OVERLAP of DOW 9917 could lead to TEST OF TOP….of course i will sell before in case it does not happen
DOW 60 min candle closed above 18sma….this will probably turn out to be the B wave up with………..(sorry SCOTTY) the real scary C wave yet to come……..
BBT shot out of the gate. Stealth move up by SPY. It’s at the point it could Humpty on the 15min or back-test it and continue up.
That BBT move was not a reversal, just a 1min burst which it will do all day if it remains depressed.
Phil I am cool with that,just sitting on the sidelines for now.Be great to see a run to 1080-1100 one more time,could really reload on shorts for C wave.What is your opinion? Everyone was looking for crash as of yesterday not necessarily on this blog.
Scotty, I am now following your target to 1,250. Stick to your guns
INtraday tops/bottoms here.
Just joking Scott. I am now following a chart Paula posted a few weeks back.
And then we have this:
http://research.stlouisfed.org/fred2/series/BASE
Inside days = nothing happened – unless you day-trade.
Anyone having problems with SD? Some of my charts are not working.
Looks like that rally I was expecting is starting to kick in, I figured bogus GDP figures would boost sentiment. A break-out to 1250 is looking alot less likely, just have to keep Ben out of that helicopter.
Larry – great link to StL Fed.
UPWARD ACCELERATION now would confirm 3 or C up….even if its only a b wave..with C down still to come
NDX is weak…..not good ..spx stronger….dow strongest …may drag rest up …for a while that is…..
FWIW – on this day, 80 years ago, the stock market began its crash that ushered in the great depression…
Is anyone else concerned that half the GDP increase was cash for clunks, the other half government spending?
Randall, I have thrown all fundamental analysis over board for the time being. I am now reading Matt, Phil and Paula’s chart.
Low allocation
TNX up +1.00.
I AM GOING to bail at the first sign of weakness
SOLD 2000 DDM for 58c gain
GEORGE yes TBT is up nicely
Larry can you post Paula’s chart.Phil watch for short covering EOD
Unregulated $203 trillion derivatives time bomb
still ticking. These derivatives are bought and
sold over the phone. And what I post in my
books may not be what you post in your
books.
Treasury says they wnt to regulate this market
…but the big boys are fighting them all the
way…I think the big boys will win until the
next bomb goes off. Time TBD…but it should
take the SPX to Junglegirl’s desired target of
400.
SPX 400!! JG? Mercy.
Phil, NICE!
GEORGE….thanks for reminding me about $TNX……SOLD 2000 TBT for almost a 1 point gain
GEORGE ,,,,,,i am off margin now…dont like to hold too long at 8% interest going to charles schwab….lol
My doubling up trades executed except srs. Missed target by 6 cents
In other news. The hottest brazilian girl complimented me today lol. The workout routine is working
K now drive srs to 10.19 so I can double up
That’s better than 25% going to a credit card.
At least you’re making more than you’re paying.
You’re pump’ed, and so is ICE and BBT. Both got a Tres Cruzar this AM.
Thanks for taking srs to 10.19. So (10.20+9.66)/2 is my new average price
Ok markwt do your thing at 3pm. Thanks and see you down under.
ICE up over $4.
SSO calls getting raped,have been watching and the decay factor is killing them
i came into today with very profitable Q puts fearful that i was going to get killed at the opening. Opening prices weren’t nearly as bad as i had feared. I sold them on the first mkt dip getting whipsawed a tiny bit. They’re much lower now.
Yesterday, i wrote down “Sell puts on close”. But, i talked myself into staying in them because of the double tops in DJTA & IWM confirmed by broken necklines which should have led to more downside mkt action before any rally. I knew that we were very oversold but those “doubletops” were worth staying in for.
All in all, i don’t regret too much about the puts. I do have an inkling about a huge move ahead, but i’ve got to convince myself of it.
Huge move down dave? If so count me in.
DOW 10000 again ….. perhaps test of dow top coming…as ndx lags badly…..sign of sick market
Dave,
I sold my SDS yesterday before the close but held on to T. Seems like divy safety was in play yesterday. I did that mostly because Hydrocodone limits my attention span. I am drug free today and feeling like a new man. I was lucky I guess or a REAL good doctor. My surgery pain was less than presurgery worst just different. This rally hasn’t even taken out yesterdays high, so I think there is a chance us bears can get some more puts soon.
String
STRING…..glad to hear you are doing well…if you dont pick the right doctor…you could die
Stringm,
Hope you’re doing well.
STRING…i will tell you a story from my DOCTOR of doom personal experience after 4pm
Phil’s comment puts things nicely in perspective
I am fine just a little sore around the cut site. Just walked a mile real slow so I should be back up to speed in no time. Lot better than I expected. I really didn’t expect him to wad the drill up in my nerves, but he said that was the worst case scenario. Sure was good to move my feet when i woke up I can tell you that. All in all I am very pleased.
I see we took out yesterdays high before I even finished that last post. The 36, and 200 periods MAs lie ahead on the 60m chart.
String
DOW and SPX have confirmed that the decline from TOP is a corrective wave…..looking to buy dips again
1108 back in play
Hi Gang,
been ages I have posted anything. 2 kids is a LOT of work. How goes the gang?
Glad to see everyone is still here: George, K, Phil, String, JG.. and Matt of course
I’m thinking SPY will try for its 60min 36MA resistance.
Hi Charlie. Good to hear from you. Good stuff going on.
Not a lot of selling going on, SPY may make one more push up into the close.
Now Stockcharts is screwed up. TIme for Realtime charts!
K,
“Super” call on SRS.
phil… imo too early to speak. We hit the lower target zone, now close to higher target zone. No breach so far.
Hi Charlie, hope your kids are doing well
Bulls had the bears on the run today. Tomorrow will be different.
Matt,
it looks like #3 in your post was correct.
George, do you see a reversal tomorrow?
String,
Glad to hear op went well. Will email you later about my past week’s physical travails. Let’s put it this way. Yesterday was the first day i was able to stand up since last Thurs.
“This rally hasn’t even taken out yesterdays high” We had outside days on both DJI & SPX.
DAVE…sorry to hear you have not been well..but glad its sounds like you are improving…..
Phil,
Thanks. Gout. Right foot last Weds (first time in over two yrs). Worsening. Then left foot at the same time on Fri. Then right knee on Sat. Feet got better, but knee was at least an inch larger. I watch my diet pretty carefully. Things got so bad Sunday i took a Tylenol arthritis w/o water because i couldn’t stand up or walk to get any water. The gout was made worse because i couldn’t stand on my feet to cook anything.
This gout attack was stress related (not mkt related).. All the yrs i was a floortrader i never had any gout attacks… before & after but never during those yrs.
i’ve never been big on mirroring, but have been peeking at this since 10/19
http://www.timingpointprojector.com/
My TA methods have made me ST bearish for the month of Nov but that ‘analog’ better fits the sentiment pic & turnaround pic of the last two days.
George,
My doubling up prices weren’t that “Super” but PG was. I think we might have executed a buy order for PG and XLP today. Too little too late I think but anyways.
Its nice to have a plan and stick with it. I gave up all of yesterdays gains and added more but sticking to 3 symbols keeps me focused.
take with a grain of salt but here goes
We spoke to a few trader friends of ours early today who told us that today would be the ultimate sucker’s rally.
In their view, the good economic news would drive the markets up, creating selling opportunities for anyone who had built up long positions during the long rally since March.
A few weeks ago, lots of traders and investors were hesitant to get out of the market too early. Many got into the rally late and were afraid of getting out too early. Having missed a lot of the upside on the first leg up, they didn’t want to miss the tail end upside.
No one we spoke to feels that way today. In fact, the folks who told us today would be the ultimate sucker’s rally said they think we’re headed right back down next week.
http://www.businessinsider.com/was-today-the-ultimate-suckers-rally-2009-10
interesting presentation style
http://slopeofhope.com/2009/10/gods-gift-to-the-bears.html
Guesss Whaaat?
TED is up 5+% again (final confirmation after 8pm though)
what does that mean?
WOHOOOOOO
That means that me doubling up = good business
aaaaand here is your GDP truth!!
http://www.businessinsider.com/chart-of-the-day-motor-vehicle-output-2009-10
The Federal Reserve’s seven-month $300 billion treasury purchase program ends today.
It’s a big moment since this program has helped keep ‘risk-free’ interest rates artificially low in the face of global concern towards the dollar, U.S. deficits, and the U.S. financial system.
Low U.S. rates have heavily influenced other countries, especially those whose currencies are linked to the dollar, mildly to massively inflating asset bubbles depending on your view.
Good call on the rally Hank. I dabbled in a little SSO and turned a small (K sized) profit (buying yesterday below George’s triangle and getting above that today). I’ve got to hit the gym myself, so I haven’t finished looking at things from today. I’ll see you all on the board tomorrow except for a few moments when I have other appointments planned (over lunch on the East Coast). Go TBT!
julie’s time bomb
http://www.businessinsider.com/california-ag-demands-answers-about-optionarm-ticking-time-bomb-2009-10
K,
It sounds like that Brazilian girl was hitting on you.
Matt