The Last Squeeze?

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please-don't-squeeze-the-charmin

All the selling yesterday and the gap down today... just got squeezed.  It seems that the bears never catch a break.  Will the market continue higher again tomorrow?  They are so close too the 11,000 mark on the DOW, that I think everyone is expecting it now.  Does that mean it won't happen?

I can't answer that, but the SPY did have a fake print on Wednesday of 119.35 on the 10 minute chart... which would probably be slightly above the 11,000 mark on the DOW.  Could that be the finally target before the drop?  Maybe?  But we also had another fake print today at 117.65 SPY.  Which one will play out is unknown... maybe up first, then down?

Currently, we are still in the channel up from the 1044 low last month.  We fell outside that trendline today, but rallied up and closed right on it.  The market is slowly starting to crack, and tomorrow is extremely important, as we bears are looking for a close outside that trendline to get the selling started.  A close tomorrow inside that trendline/channel would really hurt the bears that are looking for a sell off next week.

Next week is generally bullish, because it's option expiration week.  So, that is another strike against the bears.  They are truly starving every bear into extinction.   Will there be any selling next week?  I think they will, but I've been wrong many times before.

Typically, they will pin the market on whatever level benefits them the most.  So what level is that on the SPY?  You can look at the open interest at each price level too get some type of idea, but it's not always accurate.  Looking at the 117 level, there is now 213,816 puts and only 100,087 calls.  That could be the place they pin it next week.  Also, the 110 level, (which seems a long ways away from where we currently are), has 213,749 puts, and only 10,918 calls.

Needless to say... we're not closing below that level next week!  The 117 level looks more likely, and of course my puts will expire worthless at that level (because that's the strike price I purchased).  None of this means anything if they decide to tank it next week, (that's what many of us are hoping for).  On a dump out, you could easily see 50 spx points, which would be 5 spy points.  That would put us in the 113 area, which would also fill that gap up around that level on March 5th.

For now we must simply wait it out, as Fridays' usually have light volume... which means it's not likely to do much tomorrow.  I hope it does, but I'm not counting on it.  I'll just hang tight until next week, and see if they take her down or not?

Best of luck to all of us...

Red

101 COMMENTS

        • Gere64,

          Your comments were not removed. You and everyone else have a right to state your point of view. Other's may disagree with something you or someone else said, but they also have a right to state their opinion too.

          I hope to never be forced to remove comments from someone for simply posting their thoughts. I'm a bear, but other's here are bullishly.

          All I ask of everyone is too keep it civil between two disagreeing parties, and not just get in a pissing contest. So far, I haven't seen any of that, and don't see a reason to remove anyone's comment for simply disagreeing.

      • What does that mean Royal? I've visit Serge's site too, and have him on my blogroll too. I've never had to remove anyone's comment since I started the site.

        Everyone is welcome to say what they want. You might have other poster's disagree with something someone's says, but I don't remove comments for disagreements.

        Say what you want, I like to hear other's opinions. No one I know has been correct on all the calls, so if someone is bullish while someone else is bearish, one of them will always be right and one will always be wrong.

        But both are welcome to state their point of view. You posted yesterday that you think we are going to 1200 first, before a correction. I disagree with that, and I posted my thoughts on why I think we correction first, and then go up in the summer. That doesn't mean I don't value your opinion, but only that I believe differently.

        Personally, I like hearing everyone's point of view's as it helps me see other alternatives. Maybe I'm not understanding your comment, but you're welcome to post whatever you want, without fear of having your comment removed.

        Of course that doesn't mean that other posters won't disagree with what you or anyone posts, but they are welcome to defend their side too. Believe me, I'm very easy going, and hope to never remove an comments.

        So, post your thoughts. Right or wrong, it doesn't matter, as no one has all the answers. Believe me, I'm been wrong many times before, but I'm still here.

    • Monica,

      It's ok, everyone has equal rights to state their opinions here. I see no reason to remove an comments currently, and hope not to have too in the future.

      Thanks for your concern.

      • No no, the troll avatar right below. Of course, everyone has a right to their opinion but that is not Serge. Nevermind.

  1. Carl’s morning call:

    June S&P E-mini Futures: Today's range estimate is 1180 – 1193. The ES is on its way to 1200 and above.

    1171 -1185 actual yesterday (14 points)
    1187.25 high last night
    1180-1193 estimate for today (13 points)
    1186 currently, so estimate is -6 to +7 from here (neutral)

    • I used to think Mr Whipple was rather simple minded, but right now that seems the better approach to life.

  2. Second time in two weeks, divergence in money flow detected in the market. This time the divergence is broader. Yet the market is holding up well. The underlying moving average that has defined the jan-feb decline and Feb to present rally, has continued to support the bull structure, as per one of Sundancer's charts from yesterday.

    This is a brutal war of attrition. The structural conditions (overbought, over valued, rising yield pressure, extreme optimism etc) are there for a break in the rally. But certain technical conditions are absent (the bull structure as defined by Sundancer ma line). There are two risks here. The first one is the risk that the mad dash to the cliff has started. Even garbage stocks are attracting money. The second risk is that the market may crack violently when the bull structure falls apart. They keep pushing it and pushing it, eventually it is going to breakaway.

    So what should we do? Use put options and protect the rest of the capital.

    1. Take the amount of capital you have, and multiply that by the leverage factor you desired. E.g $100,000 * 2, to get a 2x effect.

    2. Use At The Money puts that has some time left. Eg. SPY May 119 Puts.

    3. To get the number of contracts needed to achieve 2x short : ($100,000 * 2 )/(119*100) = 17 contracts.

    4. For a straight put: You just buy 17 contracts of SPY MAY 119 put, $2.40. Total cost $4080 + commish.

    So from now till May 21, you are short 200%, at a cost of 4% of your total capital. 96% of your capital is safely in cash. (Before some smart asses want to point out that it is not the same as straight 200% short via futures and what not, yes, I know that. I am trying to keep things simple here.)

    (Caveat: The ATM options are not always properly priced. When vix are skyhigh, option premiums are priced skyhigh, making it not worth buying. You would need to know about the option geeks then)

    5. If you prefer, you can reduce the cost by getting a spread instead of a straight puts. A straight put gives humongous profit potential when Pee 3 doomsday occurs. With a spread, you give up the fat tail end of the downside profit, in return for smaller capital outlay.

    6. To create a spread: You buy 17 contracts of May 119 puts @ 2.40, and SELL 17 contracts of May 112 puts @ 0.68, for a net debit of (2.40 – 0.68)=$1.72 per contract, ie $1.72*100 *17 contract = $2924.

    I used the above as an illustration for how you can go about creating a 200% short positions while only putting 3-4% of your capital at risk. There are many different variations and nothing is set in stone. Options strategies can be very flexible, AND complicated. What the strategy does is to allow people to avail themselves to the Pee 3 of their dream, within a specific time frame, without having to put the whole account at risk at any one time. It doesnt mean one won't go burst keep betting on a Pee3 that never comes.

    If anyone wants more detailed assistance with option strategies, Anna at HOB/OBB is THE expert and she loves to help. But don't be leeches. Pay up, sucka! At least donate to her kitty rescue fund.

      • nope. U is the gem. 😉 I am just a broken glass reflecting sunlight once in a while. Unloved and unwanted. lol

    • SC,

      The one thing I would change, and the one thing that I find misleading in nearly all options discussions:

      Situation #1 (no options), 100% of capital is at risk
      Situation #2 (options), 3-4% of capital is at risk

      Right away, situation #1 makes more sense. But it's really more like this:

      Situation #1, 100% of capital is at risk for some loss
      Situation #2, 3-4% of capital is at risk for total loss

      Now, it's not nearly as clear which is better.

      • Yes. If you are skillful enough, AND lucky enough, then you can put 100% at risk w/o actually incurring real losses. Exposure to risk does not equal to actually incurring losses.

        The basis of my post is based on the scenario where people put all their money into 2x or 3x etfs in anticipation of a Pee3. Then losing 3-4% can be a daily occurence.

        Earl, you trade in and out of ETFs and you don't go all in. So a lot of the issues that pertain to position trading are simply moot points as far as your situation is concerned. But that doesn't mean all those concerns are moot points in general.

        • SC,

          You're right, I'm not about to do either one of those alternatives. I wasn't meaning to insert me into the discussion.

          I was just seeing the phrase “at risk” used to describe two completely different levels of risk.

          • Earl,

            I am glad you pointed out the theoretical risk vs actual incurred loss. Yes, a lot of the so called experts who make their living by writing instead of trading, love to mix up theoretical risk with actual loss, b/c they can't tell one from the other.

            Putting 100% capital at risk certainly does not equal to actually losing 100%.

            What we are talking about is a situation where we are comparing the high risk of losing a maximum 4% vs a high risk of losing MORE than just 4%. If you are 100% in 3x, you can lose 4% in one day. lol

          • SC,

            Agreed. Your case for the options alternative is much stronger when compared to 100% investment in a 3x inverse ETF.

    • DRYS (compared with $BDI) is my garbage indicator. The Baltic Dry Index is headed down, and DRYS is headed up. I also watch selected Chinese solar plays, too (LDK for one).

      I think that the wildcard here that will bring everything down will be oil. I think it is in the process of a breakout, headed first to $90 then maybe to $100 if asset-mania kicks into full-force. This will be what brings the markets down to earth, and causes the double-dip recession all the bears have been praying for. Of course, all the bears will be broke by then!

  3. Here are some setups for the weekly print:

    $SPX needs to close below 1192.22

    *If* $DJI closes above 10,927.45 it will have 6 consecutive higher closes than opens on the weekly.
    Frequency of more than 6 consecutive higher closes than opens on the $DJI weekly in the past 249 weeks
    1 (terminated @ 7 (5.14.2007))

    Ideal situation for the bears is to close today within spitting distance(5-7 pts.) of max contain on the 60 (1178-1179) which sets up a potential gap below max contain on the 60 come monday

  4. Carl at day’s end:

    1180-1193 estimate for today (13 points)
    1183 -1191.75 actual today (8.75 points)
    Carl was low by 3 and high by 1.25 -> pretty good

    Trades: in /ES at 1184.75, out at 1183.75 – loss of 1 point.

    Grade: C lost some money, but not much

  5. TNA opened up 0.25%. Monday’s gap from $55.95 to $56.03 was not filled. Today’s gap was filled. TNA was up 1.6% at the high, and closed up 1.4%.

    We are now in a Full Moon Trade, which tends to favor TNA.
    AmericanBulls has TNA with a Confirmed Buy signal yesterday. This trade bought TNA at $56.50, and closed today at $60.26, up 6.6%.

    Volume for TNA today was about average for the past 23 days.

    $RVX (VIX for $RUT) was down 2.5 % today with TNA up 1.4%. No divergence.

    TNA has now been up 6 of the last 12 days. Chop generally. Drifting higher.

    The high for TNA yesterday was $60.58, the highest TNA price since November of 2008. The high today was $60.40, off 0.3% from that high.

    Ultimate Oscillator for TNA rose from 60 to 63 today on a up day. A reading of 63 is Good for TNA.

    MACD on the monthly chart crossed over to the upside 4 days ago and has been flat since. Mildly good for TNA.

    Bollinger Bands for $RVX (VIX for $RUT): today’s black candle touched the mid Bollinger line and closed below that line. MACD seems to be topping. Looks like $RVX might fall tomorrow. Good for TNA.

    Bollinger Bands for $RUT: Today’s white candle for $RUT closed below the top Bollinger Band. It looks like $RUT may be riding the top Bollinger Band higher. MACD may be working back up. Good for TNA.

    Bollinger Bands for $RUT:$RVX ($RUT vs VIX for $RUT): today’s doji candle closed below the upper Bollinger Band, after a close three days ago above that band. The upper Bollinger Band is rising. Looks $RUT could keep rising. Good for TNA.

    TNA had a higher high, higher low and higher close – Good for TNA.

    Money flow for the Total Stock Market was $662 million flowing into the market. Bullish – Good for TNA.

    I will post the AmericanBulls candlestick interpretation a bit later.

    Overall, it looks good for TNA.

    • For some reason, the link didn't transfer correctly. Go to the bottom of the page, choose “all equities only”, keep only the 10 day moving average, and then date it back to before the crash in 2007.

      • Hi Monica!

        One of my lesson learned from this debacle is to take history in context. Yes, there are way too many call buyers and we should have corrected.

        I lump the P/C ratio in with McC Osc, Summation as breadth indicators. Markets can hold their breath for a long time. Pun intended 🙂

        This morning, for a short while, number of declining stocks and their corresponding volume was up and the NDX was dropping. Erin B on CNBC hesitated and said “that can't be right but I guess it is.”

        Interesting.

    • Looks like every time it touched (3 times, I see), it bounced back hard. What about the weekly chart? What do you see there?

      “9's” and “1's” in the close of the SPX… hmmm, wonder what that implies? Maybe nothing?

      • it means to call 911 on your April puts…. Codeblue… Flatliner alert! lol.

        Did you get any May Puts?

      • when the $SPX tested the TL back on 9.29.2008, it had a 5.6% reaction.

        On the ritual side of things: the operators make me laugh
        9.29 = 9.11
        today is the 911th day after 10.11.2007 $SPX all time high
        SPY close 119.xx
        today's date 4.9 = 4*9=36 sum 1:36=666
        Intriguing day to say the least

        • You don't have anyway to tell what the “real max pain” would be for the spy do you? That website that posts it, isn't accurate. Looking at the puts and calls at all the different strike prices only tells me that if I were going by open interest, I'd close this Friday at 117, as that where the most contracts are.

          But, that doesn't mean that the market makers have that target as their max pain. Do you have a better way to figure out what the likely pinning price is this opx?

          • I've never really paid attention to the max pain theory so I don't have any special resources on that.

            Should the operators dump the $SPX next week, it'll blow through 1170.

        • for those that can't remember the 9.29.2008 ritual (9.11) it's where congress had the dog & pony show vote on the stimulus
          $DJI closed down -777 pts.
          That was a fun day

  6. The Daily view from Americanbulls

    TNA yesterday had a SELL-IF signal that did not confirm today, so TNA is back to a Hold. The TNA buy was at $56.50. TNA closed at $60.31, up 6.7% since the buy. The candlestick today was a White Candlestick (normal buying pressure).

    TZA yesterday had a not very highly reliable SELL-IF signal, and that signal confirmed today so TZA is a confirmed SELL. The candlestick for today was Black Candlestick(normal selling pressure). The TZA buy price was $7.04. TZA closed today at $6.43, down 8.6% since the buy.

    Two recent TZA Buy signals have failed and may perhaps serve as a warning:
    Buy at $7.33, sell at $7.14
    Buy at $7.11, sell at $7.05
    Buy at $7.04, sell at $6.51 (opening price today)

    For that matter, recent TNA Buy signals (until this last one) have also been uninspiring:
    Buy at $55.36, sell at $55.43
    Buy at $55.69, sell at $55.63
    Buy at $56.50, up 6.7%

    Summary of $RUT based ETFs & a few popular ETFs & stocks (Market positive):  +17
    Hold: GS(up 3.6%), ERX(3x energy, up 6.1%), DRN(3x, up 10.8%), QQQQ(up 1.3%), IWM(1x, up 2.6%), UWM(2x, up 5.5%), TNA(3x, up 6.7%), URE(2x, up 2.6%), IYR(1x, up 1.4%), DIA(up 0.96%),
    Wait: DRV(-3x, down 11.7%), SRS(-2x, down 7.4%), RWM(-1x, down 2.3%), TWM(-2x, down 4.7%), ERY(-3x energy, down 12.7%),
    New Confirmed Sell: TZA(-3x)
    New Confirmed Buy: SPY

    Transition to Market Positive:  +1
    Highly Reliable BUY-IF: AAPL

    Transition to Market Negative:  +2
    Low reliability SELL-IF: GOOG, AMZN

    Market Negative:  -4
    Hold:, SCO (-2x oil, up 3.8%), DTO(-3x oil, down 11.6%)
    Wait: USO (oil, down 1.9%)
    New Confirmed SELL: UCO (2x oil)

    Comment: Bullish overall, Bearish Oil, Bullish Energy, Bullish $RUT, Bullish Real Estate
    Action for tomorrow: None

  7. For those wandering why the Operators continue to push the mythical Greek bankruptcy charade:
    Don't be fooled by the ritual:
    Greek : Zeus : G-Zeus : Son/Sun : Ritual Sacrifice
    Son/Sun ritual sacrifice occured last friday 4.2.2009
    $DJI closing 4.1.2010 = 10,927.07 (Thursday)
    $DJI closing 4.8.2010 = 10,927.07 (Thursday)

    Pay very very close attention to the numbers, I've been pointing them out hopefully some of you are starting too see things through a different light.

    • The closing price on April 2nd, 2009 was 7978 $DJI. The week opened with a price of 7522 on Monday March 30th, and closed on April 3rd with a price of 8017.

      The following Monday closed at 7975 (opening at 8017). Tuesday gapped down to open at 7863, and closed at 7789. That was the low of the week, and the remaining days the market went up to close out the week at 8083.

      As for the 10,927.07 closing price on both Thursday's, I'm not understanding what it implies? Odd that they are exactly the same, but it doesn't stand out? I can't reasonably make the numbers 9-11 out it, so that one leaves me puzzled?

      • 4.1.2010 was April Fools day just so happened also to be the Pi ritual, day before the Son/Sun sacrifice on 4.2.2010
        Operators closed the $DJI @ 10,927.07
        7 days later the operators closed the $DJI @ the exact same value of 10,927.07 from April fools day,Pi ritual.
        How do you fool a fool.

        9.11 = 666
        9*11=99=66=6*6=36=Sum1:36=666

        Take 666/Pi and you'll see through the 2012 myth

        The Haiti earthquake Sun Ritual
        Text 90999 to donate money, well 9=6 so your texting 60666 to donate money for the sun ritual

    • If I remove the “27”, and focus on the 10,9**.07… I have a date of October 9th, 2007, which was the TOP in the market. What followed was 2 weeks of selling before a bounce.

      The closing price on that day was 14,164.50 and then 13, 567.00 on the 22nd of the month. The bounce took it back up to 13,930 on the 31st of October.

      The following weeks were down to 12,270 on January 23rd, 2008. If this is the correlation that they are implying, then we should have 2 weeks of selling coming up.

      • first look @ the middle 3(111) numbers of 927
        here's our co-relational ritual
        9 + (2+7) = 18=666
        (9+2) + 7 = 18=666

        • I get the 9/11 and the 666 but why if it happened on Thursday was the market not affected yesterday? And I don't understand what 666/3.14 means? If I do the division I get 212.1019. I see the numbers 9/11/2012 in there but I am not sure what that means?

        • Ahhh… I was looking for 9-11, not 666. The Illuminati are just like a “flashy” Pimp… always wanted to show off in public! Hide in plain sight, and everyone won't see you… ha!

          Still wondering what will be the reason to sell this time? I guess it really doesn't matter, but I'm sure something will be blamed for the coming sell off. Let's just hope that people don't die from the event blamed… unless it's some of “them” of course.

  8. The Weekly view from Americanbulls

    TNA has a weekly HOLD signal. The candlestick this week is a White Candlestick. AmericanBulls has this trade starting at $44.23 on March 3rd, and this week closed at 60.31, up 36%.

    TZA has a weekly WAIT signal. The candlestick this week is a Black Candlestick. AmericanBulls last placed a SELL on TZA at $9.83 on February 19th and this week closed at $6.43, down 34%.

    Summary of $RUT based ETFs & a few popular ETFs & stocks (Market positive):  +12
    Hold: QQQQ(up 14.08%), IWM(1x, up 11.05%), UWM(2x, up 23.3%), TNA(3x, up 36.3%), IYR(1x, up 18.4%), SPY(up 9.8%), AAPL(up 23.5%), USO (oil, up 5.4%)
    New Confirmed Buy: ERX(3x energy)
    Wait: RWM(-1x, down 12.8%), TWM(-2x, down 24.4%), TZA(-3x, down 34.5%)

    Transition to Market Positive:  -3
    Not Very High Reliability BUY-IF: GS, DRN(3x), URE(2x), AMZN
    Highly Reliable SELL-IF: ERY(-3x energy)

    Transition to Market Negative:  +5
    Low Reliability BUY-IF(2nd week): DRV(-3x)
    Not Very High Reliability BUY-IF(2nd week): SRS(-2x)
    SELL-IF (2nd week): DIA
    Low reliability SELL-IF: GOOG
    Not Very High Reliability SELL-IF: UCO (2x oil)

    Market Negative:  -2
    Hold:, SCO (-2x oil, down 7.8%), DTO(-3x oil, down 7.2%),

    Comment: Bullish overall, Bullish Oil, Bullish Energy, Bullish $RUT, Neutral Real Estate
    Action for next week for TNA or TZA: None

      • Obama once said that we are a Muslim country. I believe he meant it.

        Our tilt away from our all of our traditional relationships with our traditional friends is getting the world nervous that they don't quite know what we will and what we will not do.

        This encourages all the bad actors out there, and drives oil up.

          • The VAT tax is a clever way to tax the poor and all those making money illegally, or with ways around paying income taxes.

            It's also a great way to get back some of the money the government pays out when people draw social security, or receive government pensions.

            It's coming.

          • Well said!

            And it is insidious as most folks equate it with a National Sales Tax; which it s not.

            How long will the market shrug this off?

            To your earlier comment, I am very concerned about Pres Obama's 'dising' of our allies.

            I am concerned that I will wake up some day soon to an invasion of Iran by Israel. It will not come as expected. They are no dummies over there.

            Still waiting for Kuwait to adopt Democracy which was to happen after the first Gulf War.

  9. The VAT tax is a clever way to tax the poor and all those making money illegally, or with ways around paying income taxes.

    It's also a great way to get back some of the money the government pays out when people draw social security, or receive government pensions.

    It's coming.

  10. Well said!

    And it is insidious as most folks equate it with a National Sales Tax; which it s not.

    How long will the market shrug this off?

    To your earlier comment, I am very concerned about Pres Obama's 'dising' of our allies.

    I am concerned that I will wake up some day soon to an invasion of Iran by Israel. It will not come as expected. They are no dummies over there.

    Still waiting for Kuwait to adopt Democracy which was to happen after the first Gulf War.

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