Thursday, July 30, 2015

July 30, 2015

I am not going to delve into a bunch of what if's here today. As far as I am concerned the market did what it needed to do on an FOMC day. Higher today wouldn't mean all that much provided it doesn't close at a level above Wednesday. It won't take much downside movement to put selling right back on the table today and I would think they wouldn't want to leave a small gap at this level so I am hoping they fill the close yesterday. A break of 2103-2104 SPX could spell trouble from the bullish side of things.

A nice touch of the line I feel bulls need to gain control of if there is to be more upside.

 Testing that line but can the bulls get it?

Sunday, July 26, 2015

August NFP/Bradley

For the week of July 27th, 2015 the patterns I have are week 1 post-Bradley at an extreme, and pre-NFP. 

For the week 1 post-Bradley pattern, there are a few things that suggest this week could be ugly at the lows.  First note that last week we saw 56 down from 2133.  56 in the Bradley reaction week is more than any of the five most recent week 1 post-Bradley reactions (see column I in the study).  Looking at five previous instances where we saw MORE than 56 down in week 1, the results are as follows:
70/75/88 (January 2013)
57/99/114 (October 2013)
60/104/110 (February 2014)
77/144/197 (October 2014)
91/116/130 (February 2015)

From the differences between the first number and the second, this suggests a lower low, and by as much as 67 points, with a median of 42 among the five.  This would give us lower low targets this week all the way to 2010 SPX, with a median of 2035 SPX.  Please note that in every successful Bradley pattern listed since 2013, there was a lower low (or higher high) in week 1 post-Bradley, and in all but one successful Bradley pattern listed there was yet even a lower lower low (or higher higher high) in week 2 post-Bradley. 

On the other hand, in terms of bounce potential, please note column L with the max retraces listed.  In these patterns, we sometimes get very close to the Bradley reaction extreme level in week 1 post-Bradley, and off of the most recent June 30, 2015 Bradley extreme we even went beyond the Bradley extreme in week 1 post-Bradley.  For the five instances listed above, the maximum retraces were back within 54, 46, 55, 61, and 71 points.  These instances would suggest that perhaps we get only to something like 2087 (2133 minus 46) in a bounce.

This week is also a pre-NFP week.  As can be seen in column C of the NFP release study, the last seven pre-NFP weeks have all closed down, with max downs from down (7) to (63), and a median of (33).  This would give us an expected max down this week between 2017 and 2073, with a median expectation of 2047.  

On the other hand, each of the past seven pre-NFP weeks also had max ups between 0 and 20 points.  This would be perfectly consistent with what a bunch here (Eddy, 200) were looking for this week, so something up between 2080 to 2100 at some point this week would be perfectly within expectations.  Note, this would also be consistent with what we have above for the week 1 post-Bradley expectation. 

To summarize and propose a plan based on these patterns, this week I'm looking at 7/31 212 puts again, with the assumption that we get an early bounce.  At 2085 to 2100 I propose scaling into puts, with targets this week below 2040.  This might change a bit based on other data from my usual sources, but for now that's what looks good to me.  Hate to be sorta uber-bearish two weeks straight (three including two weeks ago when I shouldn't have been!), but this week I'm a bear, again.

And just in case, as a stop, I propose a stop out of any puts even one cent above 2100, and reentry once back below 2100.

Good trading all.  I think 200 is going to add something to this, hopefully at the top.

Edited to Add, so given what I'm expecting of perhaps 30 or 40 down this week, it seems SPY 205 is a pretty obvious target given that we closed SPY 208 last week.  There are three SPY gaps left open below from just the past three weeks, and two are just below SPY 205.  Looking at pricing, it seems SPY 209 puts for 7/31 would give the best bang for the buck for such a target, at approximately a triple from 1.33 if looking for an IV of 4.00 (or more) at SPY 205.  So that's what I'll be buying.

Thursday, July 23, 2015

July 23, 2015

I don't plan to have a strong bias as far as direction here. I still have prices overhead that have not been satisfied of which the biggest is the 2173. The way this market behaves to the upside it just has that feeling of any given day if it finally decides it wants it.

We still have that teeny gap left from 2119.21 on the SPX and something close to the 2115 ES level. Last night the ES came close so I don't think there is any reason to think it won't today. The double bottoms amaze but apparently that is where the ebb and flow of corruption prevails. I was looking to fill that gap today or very early Friday at the latest.

Next week we have our fickle FOMC stuff to deal with and as luck would have it 2107 is easily within range at this point. I don't know what the deal is but it appears to be a price FOMC has needed since March. I still expect to find at least that 2100 line on the chart and think once that breaks the bears grab control again. Everything I see and have had aligning still point lower but now we have a very recent price just overhead of major importance if it goes the other way. This is still a take what you can get and run market trade. February has been the only month that got higher by more than 10-12 points than the prior month so if we look at that then we are looking at around that 2140 level even if it decides to pollute the market a bit more by the end of the month.

Now it needs to break that line if bearishness is your thing. Tagged it on Thursday as hoped for. Now it is a matter of closing below it to get to the next (there will be an issue with a mid point as well on its way to it)

Sunday, July 19, 2015

Yikes12 checking in here to get us started for the week of July 20th.  For this post, I'd like to explain a bit about my studies this year on Bradley dates and monthly options expiration dates.  I also include a proposal for this week, which is completely moot if we don't see a high above 2130.

First, Bradley dates.  People blow off the Bradley dates like last week's 7/15 or 7/16 date because they don't always work, and the highs on 7/15 and 7/16 didn't work seeing as how the high of the week was on 7/17.  But what if we used a marker like a requirement for a five week high or low on or very close to the Bradley date in order to expect a reaction?  With that marker, what we have seen since at least the beginning of 2014 is a bunch of Bradley dates that actually worked solidly.  If you want to check for yourself, click on the link at the upper right for Bradley dates and back-test any date against the criteria (minimum 5 week high or low, as well as the reactions).  The study shows results for the week of the extreme, and week 1 after and week 2 after.  In all but one case, of the three weeks, the maximum reaction level was in week 2 after.  An example of a week 2 maximum reaction level was just recently shown this past week at 2129 from the 2056 level on the Bradley extreme low two weeks ago.

Next, monthly options expiration.  This one is easy.  Buy dips (AND NO SHORTING generally) into expiration, both seasonal and regular monthly.  Again, if you want to check for yourself, click on the link at the upper right for seasonal option expiration dates and back-test any date against the criteria.  The criteria is that most expiration dates the past year of any type, and the past 4+ years for seasonal expiration dates, tend to be very close to two and three week highs.  Only 3 of the past 14 were even more than 20 points from three week highs.  The idea is also to find a downward bias coming out of expiration dates.

In a few weeks I'll try to put together a flowchart/algorithm for what I would propose to look for using these studies, just in terms of biasing generally, as I think this information is very actionable.

FOR THIS WEEK specifically, what I would propose is that there is a Bradley date on 7/21 or 7/23 depending on who you ask.  Anything over 2130 is a minimum 5 week high and anything over 2135 is an all time high.  From any such extreme, the Bradley study would suggest a reaction down over the coming weeks, most likely with a maximum reaction two weeks from this week in the NFP week of August 3rd.

There are price patterns to be seen in relation to NFP weeks, but that explanation will have to wait for a later post, perhaps one with a flowchart/algorithm explanation of when these studies would suggest a call bias and when they would suggest a put bias.

One last thing to mention.  People here generally know I'm a fan of Tony Caldaro.  His count is actually making sense now too.  Basically, the way I see it maybe what we get is early weakness this week in a 4th wave correction of 1 up of 3 up of 5 up, and then a 5th wave into that high on 7/23 or so to above 2130 or even 2135.  The studies would suggest if you see any such new all time high on Thursday morning 7/23, that its a sell bias all the way through the NFP Friday in early August.  The Bradley reaction over the next two weeks would be the wave 2 retrace back towards 2044.

And why not give a failure point while I'm here, in case anybody takes the trade if its made available?  Just to be sure, if the trade is made available and anybody takes it, the failure point to stop out or reenter after the Bradley date is whatever the high is on or very close to the Bradley date.  Once above, take a stop, and once back below reenter the trade for the downward expectation.  I hope that makes sense!

Good trading all.

Edited on Tuesday upon request to add the following in terms of Bradley reactions for price and time.  In the study, range week 1 is the week of the Bradley date and extreme.  So we are in range week 1 for this Bradley date now.  As can be seen, reactions in the range week 1 range from a MINIMUM of 12 points, a MAXIMUM of 91 points, and a median of 48 points.  If 2133 was it yesterday, then we've already exceeded the minimum, and the median would put us at a low of 2085 this week.

For week #2 (next week), the reactions range from a MINIMUM of 28 to a MAXIMUM of 144, and a median of 74.  The median would put us at a low of 2059 next week.

For week #3 (early August NFP week), the reactions range from a MINIMUM of 40 points to a maximum of 197 points, and a median of 75 points.  The median would put us at a low of 2058 in the NFP week. Please also note that the maximum reaction of weeks #1, #2 and #3 was in week #3 in all but one instance on the study.

My caveat as above is that I'm not convinced that 2133 from yesterday was the high for the week.  My original suggestion stands though, that any high above 2130 is a minimum 5 week high, and anything over 2135 is an all time high.  From this study, I'd expect another shot over 2130, and perhaps over 2135, most likely on Wednesday or Thursday. but this is of course not required.

Wednesday, July 15, 2015

July 15, 2015

I had hoped to see the 2010 mark this week and of course to this point it doesn't look like that happens. On the flip side of that filling the gap was the other idea. We have accomplished this now so the next step is to get a close under 2090 as soon as today. The way this market messes around and the fact it is Opex bearishness may not be all that easy but that is what I plan to bet on. This view will have to change if we close the week above this 2090-2096 level. I don't think it will happen but I am not in charge of the game.

There is still room for about 4 points higher and I am hoping that gets hit this morning and the correction starts. If by some outside chance it kept going higher I would have to think something else is going on. That is all I have and I have been waiting for today to get here so we shall see. For the record I would settle for a break and close under 2093 but would prefer 2090.

I did the math then drew the lines. You get to decide.
Ignore the bullish cross highlight, I didn't make them visible.

Saturday, July 11, 2015

Yer stuck with me, you poor bastards...

200ma is taking the weekend off and has left me to watch the shop.  While I'm not sure your humble correspondent is up for the task, here goes nuthin'...

From a harmonics point of view (starting at low in February), we appear to be in a Bat Pattern (yellow) that targets the .886 retracement at point D (1998.51) SPX.  We also have a Crab Pattern off the March low (green) that's a bit more bearish and would have us bottom out at its 1.618 extension, or 1980.96.  Breaking below the February lows would bring other harmonics into the picture, but we should have a significant bounce somewhere around these targets, so no need to get ahead of ourselves.

Add these to the H&S pattern that targets 2010 and we have quite a bearish outlook. (As a quick side-note, that H&S target occurs right on a line that is both the 1.272 of the green grid, and .786 of the yellow, so I would generally expect a bit of a bounce there).  The retreat from the June 22 high was swift, quickly eclipsing the previous low of June 9 at 2072 .  Add to that that the sideways movement since June 30 looks nothing if not corrective, and I maintain we have significant opportunities on the bearish side until this thing runs its' course.

Lastly, keep in mind that we haven't broken out of the (B wave) running triangle that we've been in since July 2nd, so it's not unlikely that we finished wave (d) Friday, with wave (e) next (to 2055-65 area?) and the final C wave thrust to start thereafter. I think 2090 should be tagged, and if it doesn't happen Monday morning, that may be the game.

Happy trading,

Friday, July 10, 2015

July 10, 2015

7 weeks into this correction and so far a whopping 90ish points off the May 20th high. It is retreating just as slowly as it consolidated and crept higher. News drives the market over night and sellers step in during the day. It is actually impressive that the VIX is approaching a double off the recent low with such a minor decline.

Although it has been less than impressive with the whipsaw here near the lows the market still has work to do before resuming the bull trend. I say this reminding myself this continues to be a bull market believing strongly a deeper correction is needed just for health purposes. If you are trading it be nimble and don't let it get away from you. I say it over and over again, there is always another trade.

Yesterday I convinced myself the Greece deadline was bullshit. In all honesty I still think it is until they actually ink this deal. I thought it was simple to appease by returning an agreement previously handed to them. Tsipras still has to deal with his own parliament. The EU will most likely have to settle on another band-aid (or several) before this is all accomplished.

I have no issues with market movement that is occurring. I do become impatient when something I believe should happen is delayed due to nothing more than manipulation. I don't believe we will close above last weeks high today but will point out there is room as high as 2085-2090. Doubtful in my play book that it happens but if it does it does. My plan only entails it not closing above this 2090 level next week and the fact that we could see another 7 weeks of the same shit. I don't believe for a moment the low is in. If you want to know the kind of crap they can put us all through you need look no further than January. Good luck and most of all....Keep 'em Green! Everybody has been profiting and I hope it continues.
This will look different today but next week has been where my interest lies.

Tuesday, July 7, 2015

July 8, 2015

FOMC Minutes Today at 2pm ET.
It seems there is nothing more fun than a moving day regardless of direction. Lately it seemed as though price targets were delayed a day so it was nice to actually have one get hit on the day it was looked for. I know most were on top of this and were able to profit...good job! The rally off the low was as expected and would think it still has a bit more to go before all is said and done. We basically came off the May high 90 points lower and half way back should be considered if not higher.

We have now opened the door for lower but we need to remember it is the Fed who runs the show. Keep this in mind and take what you get at all costs. There is always another trade. There is no road map and I already mentioned the half way back scenario but one has to keep higher options open as well. I believe there is a good chance we can get back above that February to June lows trend line but I wouldn't expect it to last very long if it does. Right now it looks like the perfect spot to jump on shorts again immediately but should you choose to do so, be cautious. There is no reason this can't test something as high the trend line off the highs in May and June. I personally feel if that were to happen it would get sold hard. Since this would be the perfect bull trap I am keeping the option open just in case. I put rather low percentage odds on it right now but if it were to find the 2107-2114 range it could happen. The market hasn't defined anything without taking advantage of a particular time table in the windows it has open.

I had drawn a new line on my chart below and aside from yesterday we have closed on it religiously or at least tagged it. Closes above this (not on it) is where I would be willing to risk a little bit higher prices. As far as downside I suggest one step at a time and I can't see where that next step isn't the February gap fill. From there anything can happen but we will approach that if and when we get to it. (I had to toss the IF in

You guys are great! Keep up the good work.
The trend line off the August and February low was tested as expected and the rally was on from there. A trading range should now be set up with this next high we are going to get. Just remember this is about price more than anything else. This is still a bull market and we are merely in corrective mode until proven otherwise.

Monday, July 6, 2015

July 6, 2015

I noticed the Greeks had an intelligent majority vote of "NO". This of course is the reason (sarc) the correction continues. I will put something new up after the close today rather than try to catch up and share all my thoughts without having reviewed a thing over the holiday weekend. Oddly enough I had drawn a new line on my chart and after the initial sell off we tested its upper boundary then managed to close on it consecutively after that. I won't be looking for that today however.