Wednesday’s Trading – 6/16/2010

Grasso Gets Squeezed
On CNBC Monday and Tuesday, floor trader Steve Grasso said that the market is rallying due to quarter-end markup. Since when, may I ask, does the markup begin three weeks before the end of the quarter? And with the money gushing out of mutual funds, where exactly are they getting this alleged cash to take the market up? Answer: it’s all BS; there is no markup going on. The buying is all being done by shorts covering-up, and Grasso sounds like a trapped short.

Note to Grasso: it could be worse. You could be a pelican trying to dive for fish in the Gulf of “Peak” Oil.

Another note to Grasso: one thing you can be certain about in the market is that there is always a retracement.

Super Semis
The economic “canary in the coal mine” semiconductors are chirping a bullish song. The SMH is now above all of its major moving averages on the daily chart: the 20, 50, 100, and 200. It’s next challenge is the 61.8% retracement of the sell-off just above at 28.67.

Nosebleed Breadth
The McClellan Oscillator is now way up in the clouds at +249.74. This is the level where bear-market rallies go to die. But are we in a bear market? Time will tell. If we are still in bull mode, the market will give back a little ground over the next few days, and then blast higher. If you are short, you want to see your positions begin to produce very soon. My TICK indicators are also bleeding from the nose, so I would expect flat-to-down this morning – at least until the TICKs unwind a bit.

How’s that for Accuracy?
Here’s me at 12:57pm on Tuesday:

If the SPX takes out 1105, the next target up on my list is 1115.05.

And where did the SPX close? At 1115.23, only 0.18 points above my target. That that Nostradamus!

38 Responses to “Wednesday’s Trading – 6/16/2010”

  1. junglegirl says:

    String,

    We got the zig. Now I want the zag. Then another zig. The zag may commence sometime Wednesday. Not too deep; that will allow A=C to land us where we want to go. There are many methods of TA combined with the waves get us to the 1150-1160 or even up to 1175-1180 level. Some things I’m waiting for up there. When the math is right, load hard.

    2th, still looks like the A wave to me.

    Matt, yep, add the K-tangle to a host of other reasons to be up that high. Also add the future H&S that would form (via Minor 2 making the LS) to a 1.618 expansion of Minor 1 to project roughly the same level down. Tidy charts, yes indeedy, tidy charts.

  2. junglegirl says:

    Have to wait for the current portion of the ride to end, but looking for the next portion of the ride to be 880-900 levels or lower. Refine upon conclusion of the zigging. GLTA.

  3. 2thfixr says:

    you are good Matt. No doubt.

    JG, you’re in A of Minor 2, huh? I’m in C of Minor 2, looking at 1144 (1.62 x A) or 1170 (2 x A) since 1110 (C=A) was taken out. I’ve got iii of 3 of C on Monday the 14th.

  4. Mitch says:

    The good thing about nostradamus is that a shmuck couldn’t miss his predictions because the shmuck was OUT TO LUNCH! :) 12:57 pm est Matt T.?

    Hey Steve! Your little one must be walking now huh? Have fun and hold’m up high while you can.

  5. George says:

    Nice calls Matt.

  6. phil says:

    2th

    spy did go below 200dsma 830am..(prob some news came out then)…i bought SSO @ 37.23…now @37.39…small profit locked in now

  7. phil says:

    sso stopped right at its own 200dsma yest…will sell there@ 37.82

  8. phil says:

    sold SSO @ 37.57

  9. Joan says:

    Good Luck today everyone! I can’t bear another slow day so I am signing out!

  10. Mitch says:

    Joan,

    Can you do me a favor? Have fun!

  11. George says:

    SPY nearing a top and the 0% FIB marker.

  12. Joan says:

    Mitch,
    Favor granted, went out for a nice long lunch. After a 3 hour break, I am buying some OEX puts for a trade, expecting to make 1 point between now and the close.

  13. George says:

    You timed it right Joan. Wierd day today. A few swings were okay but no real direction.

  14. Joan says:

    George,
    After yesterday, I couldn’t see a reason to hang around. I tend to take a lot of time off during the summer. I got 10 options about 1/2 hour ago. If I make a point, I am happy. I will post when I close my pos.

  15. George says:

    Thanks Joan. The SPY 15min MACD has been going down on a divergence all day.

  16. George says:

    Within a 15min divergence, price can move quite a bit while the major up or down trend doesn’t change much. That creates conflicting signals and confusion.

  17. Mitch says:

    Thanks George. I was intimidated but now I get to see if I read it really wrong.

  18. Joan says:

    1.9 and I am out. Re: clarity on the divergences – they usually pan out if they occur on multiple indices, but alone aren’t that great on timing.

  19. Joan says:

    Interesting. Transports just made a new LOD

  20. Mitch says:

    Joan,

    If you would of left the room mid-trade and given me discretion I’d of done exactly what you did. However, you would have had to initiate it and close it. LOL

  21. Joan says:

    Mitch,
    I’d give you the job if you were in Boston.

  22. Joan says:

    They were the jun 505 puts

  23. Mitch says:

    Joan,

    I’ve always wanted to see Boston. Marky Mark town!

  24. junglegirl says:

    Wedge broke.

    Bearish harami cross on the daily.

    Looking for tomorrow to be down… B. Today was fun!

  25. Mitch says:

    Joan,

    I had MOO (Ag businesses) May 39 itm calls that I bought and lost on dabbling in the front last month – lost my giddy up a bit on that.

  26. George says:

    Joan,

    WTG. Nice trade.

  27. George says:

    There you go. BP suspends its dividend for the year and puts $20bln in escrow for damages. That will take care of one month havoc, how about the others?

    …just askin’…

  28. Mitch says:

    Joan,

    Sorry, it was a May 40 itm call I bot May 11. I tried to forget it.

  29. Joan says:

    Mitch, I chuckle and cringe at the same time….
    Marky Mark

    RE: Front months – the only time that I do not trade the front month is if I am selling premium (when the VIX is abnormally high) in some way out of the money options. I sometimes trade deep in the money expiring options on expiration, sometimes I make the switch to the next month that day – depends on volatility and if I am setting up for a longer term move (like a week or so).
    One thing that we all seem to have in common here is that we all trade some form (derivative) of SPX. Our analysis is of the broader market rather than individual stocks. I find it much easier to trade this way because it reduces variables that may be present in corporate equities (BP, Lehman). Anyhow, I use options (OEX) like some of you use SPY, SSO, SDS and SCHX. I have noticed that some have referred to “scalping” – that’s not me, but the larger directional trades I make with options. I have found success sticking only with indices because of the wide variety of indicators available and their predictive value.

  30. Joan says:

    Thanks George

  31. 2thfixr says:

    Nice trade Joan.

    yup Phil, 200 day was a nice bounce today and a mini-test of the rectangle top that Matt mentioned in the meme (did I use that word right, Matt?). Glad you got a long trade in.

    I saw those divergences as well on multiple time frames, and then saw the MACD kiss on the 60 min SPX. Will the channel hold the wave 4, or will it revisit 1090? The channel provides support at 1108 at the open tomorrow. Max pain is way down near 1080 on SPY. What is the SPX index option max pain at the open on Friday? I’m guessing the retail investor has puts, so going higher would actually help the MM? Just an uneducated guess….Joan, any thoughts?

  32. 2thfixr says:

    Nice post at 4:33 Joan. Thanks.

  33. Joan says:

    2th,
    Any Market Maker (good one) is hedged on any remaining june positions. Anyone who knows what he is doing won’t care if we are up or down. I trade very lightly in the few days prior to expiration because of what I refer to as “the expiration wild card”. What “should” happen often does not during exp week. I know that looking at open interest is a popular way of “guessing” the level of the close on expiration. Sometimes it works, often it does not. As I said earlier this week, most pros (prop traders, institutional traders) have rolled out to the next month by now so it would be unusual for them to have much effect on friday due to an expiring position – SPX futures and options last trade day is thursday anyway.

  34. Joan says:

    2th,
    You’re welcome, hope it helps.

  35. 2thfixr says:

    RArely trade options, just as a naked put or call play in a direction typically. Sometimes a spread, but I’m not a big fan unless premium is high on the option I want.

  36. Joan says:

    2th,
    Best to avoid them unless you are VERY comfortable with them and how they trade.

  37. Joan says:

    Have a good night all!
    String, make sure you are wearing green tomorrow night!

  38. stringm says:

    Joan

    I might even spray color my hair green, GO CELTS! They have not lost any back to back games in the playoffs, no time to start now!

    String