Monday, May 30, 2016

"May" it end Red...

I hope everyone enjoyed the holiday weekend and did so safely.

As May comes to a close on Tuesday the charts remain bullish. In the last post I mentioned a similarity with 2014 when we had a May expiration low that led to the market creeping up into September's 2019 high. This isn't looking much different at the moment but that could actually change quickly as long as the 2105ish area holds. I haven't taken the time to look into the charts very deep. The weekend became tediously busy for me. What I do know is that the line I track for FOMC has broken out upwards. This doesn't come back without a solid test of of 2080ish and if that breaks we can start looking lower again.

It took nearly a full month to correct some 85 points and now in a week or so we are nearly back to that level. The 2100-2110 area is the last resort for the bears to gain any kind of control if a weak summer is going to present itself. If we fail to correct during the upcoming week I cannot find a reason not to hunt the 2200+ numbers that had been tossed about previously. This market is obviously of a one track mind out to put a legacy on an administration that has turned America into fools. I don't have the energy required today for me to put on a good ramble.

Stay with the tape til it turns and Keep 'em Green.

Bullish cross back on but can it last....

Wednesday, May 18, 2016

May 18, 2016 (Release of April minutes)

I have a little time for myself this morning so though I would use it to toss up something new.

FOMC minutes for April get released today at 2pm ET. Our last FOMC low was made on 3/24 at 2022.49. This is my mark. I noticed the chatter of 2033.80 as well so perhaps from an EW view that is where the failure occurs. 2 weeks ago I tossed out the notion of this thing being in a range headed into this week. Happy not to have had May expiration positions since it has basically been stuck. A break of 2022 can easily send this down sub 2k into around the 1993 Fed support. Break this and game over for the bulls in my book. There is a trading void (free air) that has sat in the 2013 range for a couple years, so heads up here too. I always have issues with VIX:VXV at current levels and considering where it has been of late it's due....

I want to remind everybody what happened in 2014 cause at the moment there are similarities. We made a May expiration low and rallied drudgingly aside from a pull back in August right into the 2019 high made that September. I have issues with this scenario playing out but until 1738 is broke I have no reason not to keep the higher high target on the table. We are at a juncture where the high made this past Monday is probably the only thing that matters. If we only make a slightly lower low there isn't much reason not to think there won't be a monthly high made next week ahead of the Memorial Day weekend. For now 2072 fits fine so I wouldn't be long til that is breached. Even with an inverse H&S here it seems highly likely to test 2022 minimum in my view. All in all I am fairly neutral and am pretty confident in the level bears need to capture for an onslaught to continue. The minutes today could be the catalyst. You guys all know how I am about my 225 so in closing I will toss out 3 years x112.50 off the May 2013 high and let ya do the math. You can do the same off the May 2015 high -112.50. Good luck, stay focused, and Keep 'em Green!

Wednesday, May 11, 2016

Waiting for Godot...


Not feeling too verbose today as we wait for something to happen, so I won't blather on about this or that.  Just want to point out the VIX though-  as you can see from the chart the BB's on the daily chart have been forming a tube for over a month now and the BB width is just about a narrow as she gets.

Something has got to happen, and I have my doubts that VIX breaks for a strong run to the downside.

Sunday, May 1, 2016

Thoughts for the week of 5/2/2016 (Sea Legs and Yikes12)

Sea Legs from 4/29/2016 (Friday):
     We have four different markers that suggest the 2040ish area next Monday: The H&S pattern of the topping process over the past couple weeks targets 2045; the C=A x 1.618 is also at 2045-6; the apex of the running triangle we had from March 22 to April 12 is at 2045; and last but not least, the bottom channel line from the Feb low crosses 2043 on Monday COB
     All in all this looks like a pretty solid target zone and I'm not expecting more out of this move, I may start a long there as well once I get to see the shape of the divergences that low sets up. If not there, then I certainly will if we cross above 2100 again because I find it very unlikely we don't see 2150 or more should that happen.
     The most important thing at this point is to see either a five wave down sequence to confirm that the trend is (FINALLY!!!!) down, or to overlap 2100 to likewise confirm that the trend is still up, regardless of divergences on the daily charts.

Yikes12 from 5/1/2016 (Sunday)
Max downs over three week periods into expiration, backwards through July 2015:
-8, -16, -130, -160, -97, -60, -49, -86, -133, -57
*suggests decent odds for 50+ down into expiration

Max downs in NFP weeks the past 12, backwards through May 2015:
-8, -16, -68, -126, -48, 2, -59, -86, -36, -45, -21, -40
*suggests decent odds for 40+ down this (NFP) week

Max downs in Mays the past 6, backwards:
-18, -24, -17, -106, -52, -146
*ugh, not helpful to my bearish case!

on gaps:

1.) only three monthly gaps have stayed open since mid-2011
     a.) January 1212 at 1258, which retraced to 1267 (closest) in June 2012
     b.) January 2016 at 2044, which filled in March 2016
     c.) March 2016 at 1932, still open and not retraced
     * suggests decent odds of a 1932 fill in May

2.) only weekly gaps have stayed open more than 10 weeks since late 2011
     a.) January 2, 2012 at 1258, which retraced to 1267 (closest) after 22 weeks
     b.) January 16, 2012 at 1289, which filled after 19 weeks
     c.) August 6, 2012 at 1391, which filled after 13 weeks
     d.) September 2, 2013 at 1633, which retraced to 1646 (closest) after 5 weeks
     e.) May 26, 2014 at 1901, which filled after 20 weeks
     f.) October 5, 2015 at 1951, which filled after 13 weeks
     g.) December 7, 2015 at 2092, which filled after 19 weeks (two weeks ago)
    h.) February 15, 2016 at 1865, going into 11 weeks, still open and not retraced at all
     *  This does not suggest 1865 by the May expiration.  The two that filled in 13 weeks both saw max-downs of about 4.2% the last three weeks.  That 1258 which took 22 weeks to even retrace is a nightmare for my 195 put ideas for May and June.

     This suggests to me that my best bet for 1865 is not in May.  Accordingly, going forward I will be selling (remaining) May 195 puts on weakness, and buying (more) June 195 puts on strength, and rotating even to the end of June quarterly 195s starting soon.

Happy trading and good luck!