Monday, August 31, 2015

September 1, 2015

Sorry I missed you guys on Monday. Some stuff came up over the weekend and it couldn't be avoided. I noticed I didn't miss much. I am not sure how much I will be around on Tuesday but should be able to check in now and then at worse.

As I am writing this the futures are down about 25-27. I thought the market had to at least test the Tuesday open last week at a minimum. It appears that a break and especially a close below the 1932-33 area would send it happily on its way to do just that. This will be a price level I monitor closely however in case that is where the next bounce wants to originate before turning lower again. I remain in the bear camp until proven otherwise. I know there are plenty of gaps overhead and am sure at some point they get filled but for now I remain patient in getting long for more than a scalp.

Area to watch for on the close is range from 1920-1934 in my opinion on the low end.

Thursday, August 27, 2015

Throwing stuff...

'Bout time for a new post, and I wish I had something earth shattering to give you, but such is life.  There is one thing that has struck me about this sell-off, and that is the similarity between the current decline since May, and the sell-off we had back in 2011.  I frankly have no idea if this is an accurate analog for the current period, but it was something that jumped out at me as I watched it unfold, so here you go.

The three legged nature of the A & B in 2011 had me scratching my head, and frankly, at the time I was heavily influenced by EWI and their counts, and was all geared up for (oh god, I hate to even say it) P3.

Yep, sorry but true.  The 5 wave decline had me thinking we were set to plumb new depths, but that ain't what happened.  I throw this against the wall to see if it sticks.  A cautionary word, just in case.

2011:

Today:

Sunday, August 23, 2015

Week of 8/24/2015 (was last week a week too late or a week too early)

200ma: As far as the FOMC stuff goes I thought the inability for the Fed to find the 2108+ weekly close after the July meeting was key. Every other month since March this year the market managed a close above this level then a slightly higher high before a correction occurred. In July the close was under this level and has led to what we are currently seeing. On the break of the June close I thought it was game on but as per the norm they had to play their little game. This one left the bulls holding the bag. The degree of which this correction is taking surprises me a little but when you look at all that virgin space it really shouldn't. 5 months of coiling and going nowhere finally snapped. I only looked at this area because as we all know this is nothing more than manipulation by the Fed and CB's.

Yikes:
After the last 3 days, I'm seeing NYMO at -72ish (lowest since December), TRIN at 2.92 (highest since early July), New Highs minus New Lows at -1013 for the month so far (lowest since 1998), and VIX up by 184.7% for the week (biggest weekly increase ever).  And so on. Almost all in the past 3 days. Total put to call (CPC)at 1.69 Friday is the highest since February 2007 (h/t ukarlewitz).  That's gotta qualify as a crash of some sorts.

To be very, very clear, what I'm saying is that any buying here is very speculative knife-catching.  You do not buy a crash until it looks like its properly done crashing, including retests.  But if you are looking for something speculative, well here ya go...

From ukarlewitz, the SPX decline of >7.2% now is something that has happened all but three years (in the 1990s) since 1980.  Below 2000 almost had to happen at some point before Christmas.  

The crash also followed a Bradley extreme low at 2052 two weeks ago (more below), and from my Bradley study this would suggest we get above 2103 this week or else its the first failure of a reaction extreme 5 or more days out in years.  An upcoming Bradley this week on 8/27 is 100/100 on long term, and below 1970 (in the window) will be an extreme.  2015's yearly SPX pivot is 1963, so theres a decent target for a lower low to set the Bradley extreme below 1970 this week.  

Also, an odds-based DSI spread between bonds and SPX >85 noted by Chad Gassaway suggests an average 5%+ up expectation this week.  And several weeks in 2011 saw big moves of 5% or more after the initial crash from the July 2011 secondary high.  Indeed, the week of August 22, 2011 saw a max-up of about 6%.  Just about what a super speculative gambler might commit a few shekels to this week.

So a very speculative possibility this week calls for a slightly lower low below 1970 Monday or Tuesday and then a remote and outlandish possibility to somehow see over 2100 by Friday.   That's not going to happen by itself, so presumably any speculation will be a bet on massive CB intervention this week.

And with that, I'm hoping 200 edits this at the top to add some thoughts.  One thing he'd mentioned signalling this drop coming was his Fed week expectations, and I'm really trying my best to understand what he sees there.

Good trading all.

JP

Friday, August 21, 2015

August 21, 2015

I just wanted to toss something up quick due to the lower movement last night. This move over night is taking out the line off the October 2014 low so the move probably isn't done unless they can save this line today. The hope would be to fill the February gap and perhaps bounce off that. How far it bounces may be the biggest question.

The lower line just below yesterday's candle is the 1x1 off the October 2014 low. Typically a break of this would send it to the next line (1x2). There is also a possibility of a shake out below it where it will recapture it quickly.

Sunday, August 16, 2015

August 17, 2015

We approach August option expiration week almost where we started the year. How exciting is that?!? I am in a position where I think I can make an approach without being bias. I only hold some 209.50 puts that expire this upcoming Friday and September 200's as indicated having started in on this past week.

FOMC minutes get released on Wednesday if it means anything at all. SSDD when it comes to this it seems but perhaps this time their verbal garbage will be more direct. My feeling is when a .25% rate hike does finally come it will be bullish at least temporarily. This is one of the criteria I am relying on to get a more substantial correction because without a dip upside is limited in my view. 5% seems like a good cap at this point so how much are they going to benefit doing that from here?

Price juncture where we sit is almost as neutral as I can find it of late. The close we got this past Friday was the one I had looked for the prior week. As I looked at the weekly chart I saw 2 possibilities on the week. The bullish sent us up to tag the upper line once again as has been the norm since the March 2040 low. This would basically fill the gap and get a reaction. If this was somehow able to bleed into the end of the week there is a possible close scenario around the 2118 level that would leave everyone feeling more bullish going into the following week. The bearish side of things suggests a close in the 82-92 or lower range. With all the seemingly bearish behavior of late we have yet to close a week below 2076.

I say flip a coin based on the Friday closing price and to use it this week as your bull / bear line. This market seems to react to both sides of the trade from the 82-87 area so this is where bears will want to see the market trade down to and below. It has been pointed out that option expiration has been bullish (until it isn't). I am not willing to chase upside and will need to see something larger downside to take any new positions. Without a substantial move higher during the month of August I am skeptical about another higher high until 2016 begins. I will look for the FOMC levels again in September before assuming anything. My intermediate term view remains the same but the interference isn't making it easy.

In closing, I find this price difficult so when in doubt....


I am going to use this space to let Yikes and Airyk know they can put up a new post anytime they feel the urge. My permission is definitely not needed. This is a team effort from all.

Wednesday, August 12, 2015

August 12, 2015

Tossing a new post up for the sake of a new one. Everyone here knows I am and have been looking lower. The market has been resilient in giving me the target(s) I have below but I remain bearish until it is wrong. On the other side of that you all know I stayed bullish right up to the last part of June. I still believe there are higher prices on the horizon but until the market suggests a buying opportunity I can't dip my toes. We have consolidated and moved higher most of 2015. These gains are now dissipating albeit slowly.

Up until the July FOMC meeting this market had found a way to close in the 2107-2114 area during that week. We failed to do so in July and this leads me to believe we are in a turn. The next FOMC is in the middle of September and at that time this price again becomes important if this market is to find those higher targets pegged by many of us. 2015 has been a traders market more than one for investors. It is wise to take what it gives you and move on to the next trade. Make a plan and execute it.

By now most of you have seen what the futures did overnight. I just want to point out that gap downs like this with lower lows have a 95% chance of being revisited. Yesterday the market had every chance to do what it did overnight and didn't for whatever reason. The 2072 area is important today (at least for me).

Thursday, August 6, 2015

More questions than answers...

I tend to get too myopic, looking at the SPX/ES most of the time, but while reading an evening update of the Seven Sentinels the other day, I was struck by just how similar the SPX Equal Weight index was to the Dow Industrials.  With a bone to chew on, I started looking closer at the trifecta of the INDU, SPX and SPXEW to see if I could come up with a satisfying EW count for each (I am quite convinced that those of you who do not subscribe to EWT, nor see endless counts disturbing otherwise peaceful dreams, live much happier and productive lives...  but I digress.)

Anyway, I think it's quite likely that after peaking out in May, the Dow has seen its ATH for some time, but I'm not so sure about the SPX.  The Dow, as you'll see on the first chart looks like it has completed (or soon will) 5 waves down in an expanding wedge, probably bottoming in the next couple days if not today.  From there I would expect the typical deep retracement that you tend to get after such a formation.  The second chart shows how 52 week lows and the cumulative advance/decline seem to have a divergence at the low on July 27th, compared to today. The implications of a strong bounce in the Dow would obviously have the SPX driving up to new ATH's, once again thwarting many a bears' dreams of untold riches.

Juxtaposing bullish wave patterns against the incredibly weak internals we've seen in the last few months, and it's hard to believe we could get to new SPX ATH's.  To be honest, I really don't know how we continue with this bull market in the face of such weakening, but this is what I'm seeing.  If it is to fall apart, now is the time...  but calling for doom and calamity has not paid the bills for a long time, so caution is warranted.
(footnote:  the arrows are only indicating potential action, and not specific price levels.)
Happy trading.  :)


Sunday, August 2, 2015

First week of August

Here we are going into the first week of August, having retraced to within 19 points of the Bradley extreme at 2133 in week 2 (column V in the study).  This is actually the lowest retrace for the week of the last six Bradleys, but still more than (I) expected due to the size of the initial move off of 2133.

The Bradley expectation is still for a lower low this week, for two reasons.  One is that in the past three years, only one Bradley reaction extreme has occurred in just five days (column Y in the study), and that was in April 2014.  Two is that  since 2013, twelve extremes happened in the second full week after Bradley, only two in the first full week (also column Y in the study).  If last Monday's low was it, this would be like the reaction after April 6, 2014, with a quicker reaction extreme in only 5 days (in April 2014 five days, April 2015 seven days).

This is also an NFP week.  Five of the past fourteen NFP weeks saw max downs of 40 or more (column H in the NFP study), so an expectation for a lower low this week is not completely outlandish.  However, only one has closed down more than 40, so if we do see below 2064 even for a second this week, a stop on shorts will be in order!

In terms of the potential for an ATH this week, we would require 31+ points, but only one of the past 14 NFP weeks saw a max gain of more than 31 points, and that was in February off of a Bradley low.

So for a game plan this week, I'm looking for 2064 as a lower low, and this is negated of course by anything over 2133.  But if we do see that 2064, that's my only real expectation here (based on Bradley), so after that please don't get caught in any squeeze, and be mindful that it could be considered a C wave of 2 where the next move up is a 3... up!  Hopefully 200 and/or Airyk set me straight above.