Monday, April 25, 2016

As I dove into the charts I was led to believe this could be bullish right into another fall high. Of course having said this there are price points above that would need to be cleared. All it would take is a slightly higher high around the May expiration to produce this the way I view it.

What matters this week is the ability to hold the 2111 high made last week and the line that sits overhead about 5 points higher than that. When I played with the math I found that the November high was an exact tag off the 1810 low and a projected 2306 high at 61.8 based on that low. Even when I was as bearish as I was to start the year I never expected 1738 to be broken immediately yet price projects lower targets than that. I bring all of this up because the bull potential is still very much alive in my view.

On to FOMC: Since last September our FOMC highs have been
September   2020.86
October       2116.48 (made 3rd of November)
December    2076.72
January       1947.20 (made 1st of February)
March          2056.60 (made March 22nd if using the immediate high after FOMC)

Off each low whether made the week of or week before the gains from low to high were +93.56, 99.26, 83.46, 74.50, and 87.35. The high made on April 20th would have had a rally counted from the 2022.49 low right after the March FOMC high. This was +88.56.

2020.86-2022.49 has been tagged before, during or after the last FOMC highs back to September aside from the February 1st high that fell short. Last September we created a low a week ahead at 1927 which if we recall was the secondary high off the January meeting.

At this point breaking the low last Monday at 2073.65 should hunt one of the other FOMC highs before a significant bounce. Basically a range of 75-100 looks likely based on history. Since we are sitting here going into a month without a Fed meeting I believe the corrective high should come about 5-6 points lower than the 2111 high. You can take note of what happened here back in August or for that matter the beginning of December near this level. Technical stuff favors the bears the way I see it here so the preference would be to see the April 20 high hold then reevaluate the trade and the trend. I am leery if we head lower first since we are sitting 6 months off the November high and 3 off the February high. A low going into the 1st week of May could create the elusive higher high that appears to be looming.

Yikes put together the list (hat tip) of FOMC weekly closes dating backwards: March 2050, January 1940, December 2006, October 2079, September 1958, July 2104, June 2110, April 2108, and March 2108

Saturday, April 16, 2016

Gaps and more for the week of April 17, 2016

So anybody here for awhile knows there's a few recent open weekly SPX gaps at 2092 and 1865.  A study has identified 31 such weekly SPX gaps (i.e., those that didn't close intraweek) since November 2011, including 27 that closed, 2 that have not closed after years and the 2 (in 19 weeks or less) that are open at 1865 and 2092.

  • 2 of the 31 closed after 19 weeks, and if 2092 closes this week it will be the 3rd because this coming week is week 19.
  • 2 of the 31 closed after 13 weeks.  All others that closed within 19 weeks were closed in fewer than 13 weeks.
  • Of the 2 that never closed, the closest retraces were after 5 weeks (within 13 points) and after 21 weeks (within 8 points).
One more data point to throw in is a gap from December 2007 that took 263 weeks to fill.  The closest retrace was at 20 weeks (within 36 points).

Here's the point.  Whether we fill that 2092 or just retrace even closer in the next week or two, there is that 1865 weekly gap below, and its going on week 9.  The end of week 13 is May expiration.  So regardless of what happens with 2092, my argument up here is that 1865 hits week 13 on May 20th, and week 19 on June 27th.

From my viewpoint, there's decent odds for 1865 before May 20th, and even better odds for it before June 27th.

But here's the left-field shot.  For the past 10 quarters, quarterly lows have alternated between the first month and the second month, and the 3 quarters before these 10 were all in the first month.  We are on schedule for an April low this quarter, and we have two weeks to do it.  If the wave 3 idea is right, we might be seeing 1865 before April 29th.

Let's leave this with two links just to put a point on it.

Falling buybacks:


Accelerating insider selling:

My position is SPY 195 puts for May 20th, and I'll be buying more for the May and June expirations over the next few weeks.

Friday, April 8, 2016

Preachin' to the choir


You guys don't need the likes of me to tell you what time it is, so I'll put up a pretty chart and call it good at that.

We all know this thing is on borrowed time, only question is when it starts down with a quickness.  Based on the NYADV chart, I think we come in on Monday to see a lovely shade of red.

Good luck and happy trading.

Friday, April 1, 2016

April 1, 2016 (Friday, NFP day, April Fools Day).  2080 or bust?

Some patterns to get April started, but note that the NFP week ends today so that pattern information is relevant to today!

Quarterly pattern:
Going back 10 quarters, lows have alternated between 1st month, 2nd month, 1st month, 2nd month.  This calls for an April (1st month) Q2 low.  The three quarters before these 10 were all 1st month lows too, so the bias would still be for an April low here. 

NFP weeks:
Second, NFP weeks. Working backwards, 52, -60, -122, 2, 20, 20, -78, -26, -24, -14, 8, 6, -34, 60, -13, 7, 14, -15, 5

Filter those NFP weeks to those that followed down pre-NFP weeks, and its -122, -24, -14, 8, 6, -34, 60, -13, -15, and the max downs were all down more than our -8 so far this week.  This gives a decent speculative shot that we close below 2028 today!

Post-NFP weeks
Past 5 post-NFP weeks saw max downs as -31, -70, -64, -83, -77.

Recent weeks generally in the uptrend:
Max downs for recent weeks: 
-28, -17, -31, -16, -27, 6 (this shows a strong uptrend)