Heads on Fire
Yesterday, traders bought puts like their heads were on fire.
TICK Extremes
Yesterday, we hit some TICK extremes. The TIKSP hit -262, which was the lowest count for the S&P 500 since June 6th when it hit -278.
The TIKI for the Dow stocks, which I wrote about a couple of weeks ago, hit -20. The last trip down to that level was on December 22nd.
I have more stats like this, but I don’t have time to type them up.
K;
If you watch 30 blogs each day, how do you keep up with that? Are you a machine – a bot?
May be a slow day today waiting on tomorrow’s unemployment figures.
George, can you do your thing on the 3-6 month time frame again? What do you see? Thanks mate.
Larry, the SPX is still in a daily uptrend. The weekly stochastic and MACD are “slightly” positve, but still, positive is what it is. However, the stochastic on the daily is cycling down. It really depends upon its continuation or turn back up to:
Have a weekly close above the 9 or 10MA – if it does that, there will be more upside. If not, it will take a big fall.
I bought SSO last night near the close. I’ve made that up with SDS this AM. Not at a free trade level yet, but working on it. lol
Simple mind, simple pleasures.
Matt
Your comment the other day about the McClellan oscillator being the highest you had seen it made me look at the distance from the 50 MA the price was at the time. The price at the time was some 11% above the 50 Period MA on the hourly charts. Have you ever tried to correlate the two? Distance from the MA and Oscillator reading? Also what about the inverse, what is the lowest and does it indicate an up move?
String
ICE coming close to 30min 36MA resistance. I’m in it with my new strategy of trading multiple time frames simultaneously.
Now, SSO has two intraday gaps to fill.
BBT went up just far enough to get its head above water for a fresh breath of air. It may try again at this depressed level.
lol.. BBT is drowning..
BTW.. seems like the SPX is trying to turn on the 1 min..
XLF is not following the crowd today.. sign that there may be some buying coming in soon too.
Matt said that shorts are hungry for profit, could be today.
Stringm,
Which price?
Matt
You got that buying right, Charlie.
Larry, I don’t have a “core” position in SSO like usual, I’m using a different method. However, I would have based upon the daily stochastic and MACD, then play the counter-moves of SDS.
I’d like to see $28 on SSO today or tomorrow. That’s just a *wish*, not a forecast, based upon the last intraday gap.
Today’s Cash Cow = UYG 5min chart.
Matt
I was looking at SSO and not SPY so that skews it, but I think when you made the Oscillator comment SSO was 28.38 and the 50 period MA was 25.86. $2.52 above the 50 or 9.7%, I think. Looks like SPY would be just shy of 5%
String
I just took a look at the SPY charts for the last four jobs reports. I’m thinking that the way the market takes the news depends a lot upon what the market has been doing up until then. If the market has been falling, then the bad news may be used by shorts to take profits, which produces a bounce. But if the market has been rising or steady, the news is more likely to deliver a jolt.
Yup George.. got me some SPY calls at around 901 for a short 1 day play.
up 10% so far on my calls
Lets see how much love this mkt can give me today…
String,
Well, when an oscillator like the MacOs hits an extreme, you will find similar extremes in many other indicators. So, that’s normal. I like to look at a lot of different indicators, and when they are all leaning in the same direction, bet against them to reverse to a less extreme state.
Also, it is important to keep in mind that the record MacOs readings represent a major “breadth thrust” which may be bullish in the intermediate term, if bearish in the short term.
Matt
Maybe that was it …
An important number to watch is IWM around $50. That was its breakout level, which it lost yesterday. It is trying to recapture it today. If it can’t, then the rally is in serious trouble since the IWM has been the leader of the big-four ETF’s.
Potential.. H-S pattern forming on the SPX 1 min. Not liking the looks of it so just sold my options on the “potential” right shoulder tip.
I see that SRS is taking it’s mandatory dump of the day.
BTW.. thanks for the tip Matt.. I was watching IWM and noticed that if it didn’t make a higher high.. it would be toast and would need to cycle again for more juice to go higher.
BTW… small H-S fully formed now on the SPX 1 min. target is around 901.
remorseful bears looking to get back in will add to the resistance to SPY at $90.7, 92, 94
SPX/SSO are hitting yesterday’s closing price as resistance. SSO needs to break through that 26.70 area to continue. 15min still positive although a down-trending positive which has less weight but still meaningful.
If SSO 5min can hold support hre on 36MA, then it will continue otherwise…
And there it goes..
The market is giving the “thumbs down” to the Obama plan. It flopped right over during his speech.
and target reached…
Seems like it .. Hey Matt.. any highlights from that you think they took the stinker too?
George, thanks.
Charlie,
He didn’t say anything new that I could see. Maybe shorts were just holding their fire until after the speech was out of the way.
Matt
Investors have been Pavlovianly programmed to fear speeches because in the past it usually meant a bear-reaming move up. This has been wrong in recent months. Speeches have been greeted with sell-offs. (However, of course, the “bailout” taxpayer reaming announcements have fueled the phony rallies.)
Looks like the mkt wants to go a bit higher from here.
or not.. I guess it was a bear flag and not a turn..
The SSO 15min is still valid. Its stochastic is cycling, but MACD is fine. Depends upon how the stochastic ends up.
Gee, even Wal-Mart had a lackluster holiday season. Can’t even give it away.
I think you’re right George.
George,
check out http://www.google.com/reader
i add the 30 blogs there and ever new post shows up as new. i actually have some 75 blogs just 30 are economics.
Hey George.. does SSO still have a pulse? I think that we’re in a little bit of a trading wedge right now. It’s symmetrical so it’s going to break 1 direction or the other soon.
positive divergence on the XLF right now so I’m thinking this market may turn upwards.
I added more SPY & SMH shorts. I had to use Etrade for SMH because IB did not have shares. I hate to pay $10 commision vs $1 on IB, but I was in the black by the time the trade confirmed
K, you are the Master Multi-Tasker. Thanks for the link.
btw.. have any of you guys used Think or Swim before? It is up huge as they are being bought by TD Ameritrade.
What does everyine do about tax prep? Gainskeeper or some other service?
Charlie, lol, yes, there is still life in SSO. If it can get past the 1min double top, break resistance on the 5min MA, go positive on the 30min stochastic, and impulse above the closing price, we have a winner.
Seriously, I’m in it and have been scalping. The 15min will hit some resistance around 26.75 and the 30min MACD is 1 tick away from going positive. I won’t exit until the 5 or 15min turns over.
Yeah George.. needs to make a higher high here for it to be a legit turn here.
It’s struggling a little here though.
whos buying SDS in the 8 handle?
didn’t make it past the double top on the SSO. Typical fake breakout and then drop behavior in a bear market IMO…
Is SRS going to continue to suck? Or is the REIT temporary resuscitation going to fail here, as people make the connection that bad retail sales = trouble for shopping mall reits?
The market is now testing double bottom support for the day.
Hi Matt, I am glad to see you are planning to study EW. I have followed it closely for quite a few years and studied it. I do not label charts but do get wave counts from several analysts I consider reasonably reliable. The major issue on EW, as I am sure you have heard already, is its subjectiveness. It is very difficlt at times to decipher what pattern is what, especially during corrections. If you are interested in seeing wave counts from analysts who have a decent history IMO, I would suggest you review 1) Mish Shedlock – he believes the market is most likely in a wave 4 upward corrective phase that may take the SP500 to 1005 or so before the final, powerful wave 5 down (made up up five down waves, two of which are corrective rallies on the way down) which should take the SP500 to about 600 points, give/take 50 pts. 2) David Waggoner at Minyanville – posts an update every few months. I don’t like his writing style as it is catered to highly experienced EW users. His count aligns somewhat to Mish. 3) Ryan Henry at Wavespeak.com – I use to be a subscriber until the summer but then had to cancel as I lost my job. He is very reasonable and writes in a simple to the point style. I have not seen his most recent count, but up until the summer, he did cover the devastating decline as an alternative and provided key levels. His rate was about $20/M and for the money and his record up until the summer, he is definitely a good source for EW. He also provided a quick reference guide to EW right on the site free. 4) NeoWave – This is a proprietory, hybrid EW variation created by Glenn Neely. He is expensive but has a good track record. 5) EWI – Of course, the biggest firm. I do purchase occasional reports from them. They have been wrong on the nominall wave count for years, yet a lot of what they forecast has already happened. They are a good source for education and fundmental analysis, but i would take any wave count with a grain of salt.
In the end, EW is one tool i use, and not the main one. It is useful for perspective but for me, not reliable enough as a main decision tool. I do think the most critical and groundbreaking contribution from EW is the underlying theory that the mood/psychology of the public is what drives the large markets such as stock markets, not news. I would recommend you review Socionomics.
Only my 2c worth.
Cheers
JO
good support at 897-898.
if we do break it however 880 is next. before market closed yesterday i called 897. lets see if we’ll see 920 first before hitting 880 tomorrow
JO,
Thanks for the info. I read Mish from time-to-time, but I haven’t seen his EW charts yet, so I’ll poke around his site, as well as the other ones that you mentioned. I think Sherry uses NeoWave…
Sorry to hear about the job loss. What do you do for a living, and how do things look now for your field?
Matt
Hi Matt, I appreciate the kind words..that is life and unfortunately, the number of people in my situation keep growing by the hour. I have worked in retail financial services for my entire career, most of that with a large credit union here in Canada. I started with a large bank as a loan/investment officer and then worked as assistant manager for a few yaers. My last 3 yrs were in MF compliance. The prospects in MF compliance are limited for the next few years IMO, but there is always work in branches and operational audits, etc that I think i can get soon. I expect to be back within 4-6 weeks if things go well. I am also looking at doing school PT.
Keep up the good posts.
JO
JO,
Good luck with the job search. Hope you find something soon.
Matt
SSO still good on the 15 albiet a little backsliding going on.
Still time to make my $28 call on SSO. If not today, tomorrow.
SSO at the same place – fighting closing resistance.
and now i feel mad not picking up drys when my signal told me to haha. am sick so no trading today. need to think straight first.
There were a lot of stock holders at the close yesterday, now they want to sell and get out. Once they are flushed out, shorts and buyers may carry the market higher.
K;
The important thing is that your signal was correct. Kudos for that.
The market bounced after a story CNBC did about how bankruptcy judges can write down mortgage principle, or something. I don’t know why banks would bounce on news like that, but they are. Cramer sez it will ignite a housing turn-around, which is about the hundredth turn he has predicted over the past few years.
909 is nice resistance with both 50SMA and 50EMA crossing. if it passes it am still looking for 920 to short before tomorrows data.
Does anyone trade GS?
no but i got the first buy on GS since the sell signal back in august.
Jan 2nd.. 86.76 BUY but i need to learn how to have the system alert me instead of me having to search
we’ll be making another test at 897.
when it reaches 895 a woman will begin moaning and i will get out of bed to see how far we’ll crash. hahaha yeah i will be using alerts.
Here’s the story that I mentioned in my last comment.
I would think that having judges reduce mortgage principal would be a bad deal for banks, but maybe it isn’t. Maybe the BKX bounced on this news because the deal was a stumbling block holding up the rest of the TARP funds, and the stumbling block has been cleared away. Banks will lose money as deadbeats weasel out of mortgages, but more TARP money will make up for it.
Can you imagine the FLOOD of homeowners who will bombard the courts asking for mortgage reduction??? WOW – this could be the final nail in the coffin for the American taxpayer. Mortgage writedowns paid for by TARP monies paid for by the American taxpayer. I wonder how many trillions of dollars this could be???
Matt,
There’s more to that story, but I can’t remember where I read the details. It has something to do with the tax implications for the companies and individuals during a renegotiation. If I recall, the companies still have to pay taxes on the full amount of the mortgage if it is reduced. Obviously, the big companies don’t like this and it would usually be forced upon the individual, making the renegotiation impossible or impractical. That was a major sticking point and it sounds like they may have removed that restriction if the stock market liked this news. That may not be exactly correct, but I sure remember reading something a few days ago about it. I’ll let you know if I find the original article.
PS – sold out of my short term, short position this afternoon with some healthy profits. Still have my long term SPY puts, of course.
OK, thanks towelie. Congratulations on your trade today.
JO – thank you for the great reference on EW and excellent discussion, my sadness for your job loss but sometimes life has a way of opening new doors when we lose what we have had.