Posts tagged opx
Still Holding On…
May 19th
The market had every chance to crash today, but it didn’t…
Even though the market did sell off hard, it recovered a lot of the early losses by the end of the day. It seems that the bears needed a breather before they can push it down again. However, for tomorrow, it’s going to be a tough call as to which direction I see the market going.
On one hand, we are pretty oversold on multiple charts… and it’s option expiration this Friday. The open interest on the put side is huge right now. That wants to make me believe that they will gap it open tomorrow, to get above that downward sloping trendline, (that I have on the charts from yesterday’s post). That’s about the only way I see them getting above the trendline, and rallying higher.
But the other part of me says that the charts are still pointing down. The daily isn’t showing any signs of turning back up yet. The 60 minute chart is trying to turn back up, and the 15 is a little overbought now. I just don’t know how to read it? So this post is going to be short.
If we gap open and run higher, the correction could be over for this week. It doesn’t mean it’s done for good, but a rally until opx is over with this week, and then more selling next week is possible. If we open flat, then I think we will continue selling off more. So for now, I’m not sure about exactly what will happen tomorrow, so I not going to make a forecast.
However, I’m still bearish because of the daily chart. It still tells me that there is more downside coming tomorrow, and Friday. Plus the week chart also is still bearish, and I think we will go lower then where we currently are. That’s it for now. That yellow downward sloping trendline is still intact for now, so not much has changed my opinion on the bearishness still in the market.
Best of luck to both bulls and bears… may we both get out at the ideal position.
Red
It’s Hard To Kill A Bull…
May 3rd
Well, it seems that small bounce up wasn’t good enough for the bulls, as they rallied back well above 50% of Friday’s sell off. Those bulls are pesky and irritating creatures… to say the least. But, I knew that it was possible that they’d rally it back up, as the charts were showing that the market was oversold on a short term basis.
However, today they ended overbought. So, I do believe we will sell off some tomorrow. I’m not looking for anything major, as I think everyone is waiting on the job’s reports on this Friday. That should be a big market mover. Of course between now and then, any news out of Greece or some other event, could spook the market first… and let the selling begin.
One thing of interest today, on both the 60 minute and the 15 minute charts, was how the market couldn’t get above this downward sloping trendline. It is clearly putting pressure on it, and if the market wants to go above it, then a gap open over top of the trendline, is going to be required.
It’s the same trendline shown in this chart below (found on Cobra’s blog). Problem is, there is also a lower trendline that is supporting the market, and preventing further selling. This is looking like a symmetrical triangle (credit goes to Cobra for spotting it, as I didn’t), which still has another day or 2 of room to trade in, before it reaches the apex, and must jump out.
All the other charts are still signaling that the market will pull back, but unless we get some bad news event to cause the selling, we are waiting for Friday to produce it… and that’s only if the jobs data is bad. You know how the government likes to erase some of the digits on the report. It’s just like giving the report card of the students grades, to the student first, and telling him to give it to his parents. Funny how easy it is to turn those “F’s” into “A’s”… So as much as I’d like to tell you that all the charts are pointing down, the chart above could go either way.
We are also now 3 weeks away from this months’ option expiration, and although the market sentiment is still extremely bullish, the amount of puts purchased versus calls, for the month of May, is way too heavy on the put side.
That doesn’t mean we can’t sell off this week, and rally back hard into opx, but the chance of the market crashing into opx is very slim. Those market makers are not going to pay out on all those puts. I’ve seen it too many times, how they sell tons of puts to the retail trader, and then rally the market, making them expire worthless.
Of course after opx is another story, but for now, the bears have really only got this week too get a sell off to happen. The week of opx, and most of the week prior to opx is already reserved for the bulls I’m afraid…
Red
Going Down…
Apr 27th
What a beautiful day it was in the stock market, as reality finally slaps some sense into it. When bulls finally run out crack, they sure do come down hard! It was certainly long overdue, I’m I glad to see it happen. It gives us option traders the volatility that we need to make some decent money trading them.
Not that it can’t be done in a up market, but it’s harder to do as the time decay kills you, due to the market moving up so slowly. The down moves are fast and furious, but don’t last long enough to make me happy.
Anyway, I’m looking for a small bounce tomorrow to get short again, as I closed out my put spread today around the first low of the day. I missed out on a little more money, as it continued lower into the close. But, nothing goes straight down… because “Down” is a bad word in the stock market, and “UP” is all that’s allowed to move continuously without dipping. (Not really, but it’s sure seems like that).
Moving on…
Let’s just focus on the key support levels for now, so we know about when to bail out on our short positions. Tomorrow is tough day to call. The best thing to expect is a “pause” day, meaning that after a large sell off, there is usually a day that the market goes sideways, to slightly up or down. That’s what I expect for tomorrow, but it’s not a guarantee as it could continue selling hard. (The futures are about flat now, so that tells me a bounce is more likely).
Assuming there is a bounce tomorrow, I plan to use it to take another position on the short side, as I don’t trust any long trades at this time. That’s because I don’t think we have sold off far enough to get a several day bounce in the market yet. (Day trading is different of course, but I only swing trade).
So, the support levels going down are at 117.50 spy (horizontal support line), 116.25 (50 dma), and 115.00 (horizontal support line). I expect the several day bounce to come in at either 116.25 or 115.00 level. If we make it down to that 115.00 (1115 spx) level, I would expect a decent bounce.
But, we might stop on the 50 dma around 116.25 currently. We just have too take it one level at a time for now. Let’s not forget the fake print of 107.38 spy from last month, and the DOW 10,000 fake print Sundancer caught too, as that might be our final target, before a summer rally?
However, I don’t know if we are headed down to that area first, and then a rally into the May option expiration, or a rally into opx from a higher level (then the fake prints), and then a sell off to the fake print areas after opx is over.
Time will tell I guess…
Red
Weekend Update…
Apr 25th
So here I sit on Sunday afternoon wondering what to write on this weekend post? It seems (or at least feels) like I keep writing the same thing every weekend. “The market is way overbought and should sell off ASAP!” I said that last week, and the week before that, and etc, etc…
I feel like the boy who cried WOLF… for the hundredth time! Well, I’m going to cry Wolf one more time, as this FAT Bloated PIG of a market needs to shed some weight ASAP, before he explodes violently!
I don’t have a lot of charts to show you, as it seems that “Overbought” can remain overbought for unknown time periods, so I’ll just show you this chart of the Put/Call Ratio (courtesy of the chart pattern trader).
The percentage of Bears is now at a record low of 17.4%… which means that 82.6% of the people are now Bullish on the market. That’s an insane number folks! And you and I both know by now that the market doesn’t reward the side of the “majority”, but instead it takes their money from them. When, of course is the question we all want answered?
If I could answer that question accurately I be filthy rich by now… so of course I have to guess at it, just like everyone else. Currently we are only a little over 10 points away from the magical Fibonacci retracement level of 61.8%, coming in around the 1228 spx level.
You know that everyone and their brother knows the significance of that level, and that in of it’s self should tell you that the market isn’t going to just go there, stop and wait for people to short it, and then reverse allowing the average retail trader to make money from it. It’s never that easy my friends.
That simply means that we must either fall short of that level, or bust on higher past it. Since we have already been given our final upside target of 118.16 DIA, which should be around 1270-1280 SPX (guessing here), we have to calculate the odds of another parabolic move straight up from the current level to that all time yearly high.
I don’t know what the odds are, but I simply can’t wrap my head around the idea that the market could get through all the huge resistance overhead, without a pull back first. That would probably make the bullish percentage in the low 90′s by then. I don’t know if it’s ever got that high before a pull back?
Logic (but again, the market isn’t logical) tells me that they will take the money from those bulls way before going that high, just like they did the bears… on this insane rally up. Plus, they will actually need the bears to be heavily short, so they can use them as fuel to rally higher. Without the ability to squeeze the bears, and with no bulls left buying, they must rely solely on the PPT money… and I just don’t think that will be enough to overcome the negative news being constantly released, and the huge overhead resistance.
Of course I’ve said that before, and been wrong before, so why is this time any different? I don’t know? I only know that the odds of a correction first, before going up to the final top for the year, is even higher this coming week, versus last week. Odds, numbers, and percentages are really all you can trade on now, as the typical TA charts don’t correctly tell you when the market is going to turn.
Obviously, the super computer algorithms are much smarter then the average trader, as they combine all the data in a fashion that isn’t predictable by humans. I’m sure there is a reason behind the madness of it all, but I don’t know what it is?
However, there is little doubt in my mind that it’s all politically motivated, and of course “Financially Motivated”… meaning that they are trying to time events around key political issues, like the health care bill, and now the bank reform bill. And let’s not forgot that the elections are this fall, which tells me that any correction we get will be short lived, as they need to rally the market into the elections.
After the elections are over… well, does the old saying “Katie bar the door” paint a good picture for you? Or maybe “Timberrrrrr”? I’m sure you get the picture by now. Once all the new and old Democrats and Republicans get re-elected, there isn’t any reason to hold the market up until the Presidential election in 2012.
The market could fall hard all of 2011, and then rally in 2012 for Obama to look good just before he tries to get re-elected again. Of course none of this helps out our short term trading accounts, as forecasting the next weeks’ move is much harder then the next year or two.
But, who ever said picking a top or bottom was easy? Could it happen next week? Possibly? I hope so, as I’m really tired of the never ending bull rampage. It’s quite sicken to see so much deception and manipulation in the market.
I do know that is coming soon, as the insiders are moving to a short position, as explained in this article by ZeroHedge. A 10% (or more?) correction is planned, as these guys are the “Smart Money”. I’m hanging tight, with my short position (even though it’s underwater now), as still see a sell off before OPX in May.
I leave you with this chart from Cobra’s blog…
Red
