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Inflection Point
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Inflection Point

by The MoleAugust 16, 2009

First order of business is to announce that birthday wishes are way overdue as EvilSpeculator marked its one year anniversary on August 1st. I meant to post about it two weeks ago but then it skipped my mind. It doesn’t seem so long ago that I labored through a mid summer weekend and hacked together the early incarnation of what one year later now has become a fairly popular trading blog. We’ve come a long way since that first post and it’s been one turbulent year since then. I hit the ground running by announcing that a major crash was looming ahead, which of course fortunately turned out to be spot on . All in all we all had a pretty good run – most of my prognostications turned out to be in the ballpark and trust me – nobody is more surprised about that than yours truly evil.

The good news is that we’re just getting started and my goal for the second year is to guide everyone through what will probably be the biggest short trading opportunity in a lifetime. More about that further down.

Second order of business is to announce that I’m in the process of putting together Evil Speculator t-shirts designed by -273. No worries – they won’t be those lame pieces of crap they sell you for trade conventions – no siree – we’re talking first class designer stuff here. All evilwear will be designed and produced by -273 and will be available from their storefront. I could sell them from the blog I guess but I really don’t want to be in the t-shirt business – those guys know that what they are doing and I’m happy to let them handle this. BTW, good design is key here (I’m European after all) and I can no longer have you guys run around like slobs – it’s time to properly dress you up for the impending stock market crash of 2009 😉 So, please cast your vote on the new poll I put up so I can gauge the level of interest.

Alright on to business now – we have a lot of ground to cover. Last week I ran into an excellent piece titled The New Bull Market Fallacy put together by Naufal Sanaullah at Shadow Capitalism. I mentioned it here that very day but didn’t have time to finish reading it until Saturday morning. The article covers a lot of territory but the salient bit for me was the chart on page four which is a projection of monthly mortgage rate resets starting in 2007 all the way through 2016.

When studying the original chart I immediately noticed correlations between the wave pattern in the SPX and the initial surge of subprime resets which is now widely accepted to be the main catalyst of last year’s crash in equity markets.

After a a sudden epiphany (or call it a bout of madness) I decided to overlay my current wave count to date on top of the left side portion of the original chart – I even highlighted the current primary wave we seem to be completing. Now things were getting interesting – it seemed to me that peaks and lows in rate resets appear to precede inverse moves in the SPX. Which of course would make a lot of sense based on what we know today, however I had never actively attempted to correlate both data sets.

Of course I didn’t leave it at that – having already mutilated Nafaul’s poor chart I took it even one step further and started to align future peaks and lows in mortgage rate resets with my own anticipated wave count in the SPX. And voila – I present to you an early draft of what could be a rough time line adjusted wave count of what’s ahead.

I’m actually quite excited about this chart as it attempts to correlate future events in the credit markets with investor sentiment – or as Robert Prechter would call it ‘socionomics’. Which is the underlying premise of what after all defines equity markets: How does the public ‘feel’ about the economy and how does investor sentiment respond to macro economic events? Bad news don’t always immediately translate into a drop in market sentiment – sometimes, as evidenced by the past five months, ‘less bad news’ seems to be enough to reignite hope and lead even more lambs to the slaughter. Of course at some point reality must set in – as it always does. As a matter of fact, we are at the precipice at just such an inflection point, which will mirror and in the end thwart the events that took place in the second half of 2008.

Of course you all know I do not have the luxury of looking into a crystal ball (it’s broken and those damn gypsies keep telling me they are waiting for a replacement part). However, I have been bestowed with a relative rational mind which continuously attempts to use common sense to correlate existing data points and then extrapolate into the future. The chart above is my feeble attempt to incorporate the rules of Elliott Wave Theory (EWT) into the context of immutable credit markets events which lay ahead.

The current bear market rally is nearing completion, which however does not mean that the top is in. We could easily see 1050 or 1100 before we embark on Primary wave {3} of Cycle wave c. However, upside risk at this point far outweighs downside potential and like Prechter I prefer to be early as opposed to being late. To quote a key summary in Nafaul’s article:

Even if 1015 is taken out [Mole: that was before the 1018 peak], volume is diminishing, fundamentals are worsening, stocks are being chased, investor sentiment is at extreme levels, and supply will be entering soon. In addition, this current rally, the Dollar Index has declined from several-year highs to late 2007 levels, indicating a carry-trade, inflation-based nature to the rally in equities. Equities have become commoditized effectively, at least in the context of this rally, and their returns are being chased. Unsustainability pervades market internals.

As you all know I am not a fundamentalist but I would lie if I claimed that I do not consider macro economic data at least to some extent. After all, the missing link in EWT is the time dimension and thus we Elliotticians must turn to various market sentiment measures and complementary data to roughly time turning points in our respective wave counts.

Here’s a similar view but on the Dow Jones – I thought it was appropriate to reincarnate my ‘drop into the abyss chart’ one year after its inception. And this chart also reunites us with my trusted PPTPL indicator, which was named last year after a lower channel boundary which I termed the ‘Plunge Protection Team Panic Line’. In my mind Primary wave {3} will be confirmed the moment we breach and then fail a retest of the PPTPL. Depending on the timing we’re about 400 – 500 Dow points away from that event, but when it happens you want to be solidly invested on the short side as things will accelerate rapidly from there.

The same line will probably also be retested once more at the peak of Intermediate (2) of Primary {3} – which will be your last opportunity to back up the truck and ride the rabid bear into the abyss. So, draw it onto your own chart and keep an eye on it.

On a more short term perspective various possibilities are currently on the table. It’s very much possible that we make new highs before we can safely count Primary {2} as completed. To me frankly it really does not matter at this point – if you want to know why please refer to last year’s post titled Anatomy Of A Missed Opportunity. The situation I refer to in that old post is almost identical to where we are now. Let me demonstrate:

Assumptions:

  • You have $4000.- in long term capital.
  • You buy $2000.- worth of SPY March 70 puts and $2000.- worth of SPY March 65 puts on Monday.
  • You expect the tape to be lower than today come next March 15 or earlier.
  • You expect the VIX to increase markedly from the current level of roughly 25.

Now let’s see what that $4000 investment bought you. Even if the SPX drops to only 800 and volatility increases by only 20% you make out like a bandit and bank over $27,000. Of course you all know we can do a lot better than that.

Let’s take a quick peak at Mr. VIX, who’s currently stretching his legs at the 25 mark base camp. Last October (i.e. 9 months ago) it was touching the 90 mark, which was 260% higher than today’s reading. So, do you think that we can hit a VIX of 50 sometime this or early next year? I think so too – and that would only be a 100% increase from current readings. I have not even bothered to put that level on the profit simulation above – the highest mark is an increase of 80%, which would be a VIX at around 45.

Now you might get an idea of why it really does not matter where you load up at this point. We have to get away from trading the short term and focus at least a portion of our assets on long term trades. There is no way you will be able to predict and trade around the wild gyrations that we will see in the months to come. If you have any doubts about that just pull up a one year SPX chart and scroll over to September 18. I was 300% up that day and 65% down the next. In order to ride this bear market you will have to sit it out at least to the middle or end of Intermediate (3) of Primary {3}. Which per my extrapolations puts us around March of 2010.

BTW, the lines I have drawn on the VIX chart are from last May – just for the record 😉

The Dollar seems to be at the precipice of a long term rally, the final {C} leg in its a-b-c correction, which should complete sometime mid/late 2010. After that the ole’ buck is toast and we’ll most likely switch from a deflationary to an inflationary environment.

A drop through 77.43 would put the short term bullish scenario on hold for now.

So, bulking up on silver puts might not be the worst idea right now – again, think long term – you want to buy enough staying power so that you can fade all those head fakes and sideways consolidations that will indubitably precede a relentless drop to the downside. Again, a widening in the Gold:Silver ratio would support a drop in Silver as well as Gold. As you all know by now – I think Silver will outperform Gold in terms of downside momentum/performance, so I’ll use every rip going forward to bulk up on SLV puts.

Alright, I think I’ve spoiled you rats enough for today – see you on the other side 😉

Cheers,

Mole

P.S.: Sorry for the late post but I was literally working all weekend on this one.

UPDATE 10:04pm EDT: Bonus Chart!

I had actually painted that one this morning but totally forgot about it. Bottom line is that the FXI just touched an important support line (in OHLC mode) and is most likely going to breach it soon. Also note how the CAF has been lagging the FXI for months now, which is mostly due to how the FXI (and GXC) are composed and that the CAF reflects real Chinese sentiment vs. the FXI/GXC which reflect American sentiment. You might want to grab some FXI puts – the bid/ask spreads are actually not too bad on that one considering the moderate volume.


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • Anonymous

    If the S&P is trading at 800, wouldn’t 70 & 65 SPY puts be worthless?

  • Divertom

    Great post..

  • St Deluise

    mole, hands down the best post i've read here or anywhere else in months. happy birthday ES, and thanks for all your work.

  • mechie

    Mole,

    Let me join that chorus. Terrific post. Looking forward to buying some of that swag too.

  • MJSgl

    Great stuff, Mole.

  • ACJ

    SICK!

  • BrassMonkyBalls

    Holy cow Mole…what a post! I'm exhausted reading it and need to go back over it a couple times!

    As for the shirts….great idea….also suggest that caps would be a hit. Everyone loves to throw on a cap in the morning when running off to the store, jogging, etc. Now if only i could get BrassMonkyBalls emblazoned on my shirt …I love odd looks from strangers.

    Some Rock n Roll

    http://www.youtube.com/watch?v=2Hgz-q76KtQ

  • Iguanadon

    Mole, so you're saying P3 starts tomorrow?

    Just pulling your evil leg. Excellent stuff. I bookmarked it so that in March 2010 I can look back and say “wow, I knew he was good, but this is amazing”.

    Thanks for continuing to spoil us.

  • T_dub

    Mole,
    Terrific post ! With such insight and clarity, you should be giving lectures to those pretenders out there. Your “Spring forward” post on March 8th was the last time I “bookmarked” one. Now this one is for the archives.

    I have been promising to contribute more to this blog (without doing so yet). Now is the time to start doing it. Will join the rat army for Wave 3 (or C) – either way, it will be a 5 wave impulse. Thanks for your great work.

  • alphadriven

    Best post of 2009! I feel like I have just looked into my own crystal ball.

  • Keirsten

    Happy Birthday ES.

    I've read Sunday night posts here for many, many, months. I've seen a lot of posters tell you it was the best by far, yada yada yada.

    This one stands alone and really is the best yet, Mole.

  • de3600

    I am in Mole you are right most of the time and when the chips are down I am not betting against you.This post is is a big four of kind aces up now show me the Royal Flush :)

  • Woolly Llama

    Mole,

    Awesome post! I don't want to be debbie downer here, but I think the vix charts are incorrect, as the 20% vol steps are the actual IV instead of % increases. A 20% increase in the vix would take us to 30.42, not the 45% you are showing as the green line. In reality the first green step would be an appx. 75% increase in the vix and the red step would be appx. 300%.

  • molecool

    “Mole, so you're saying P3 starts tomorrow?”

    Dude, go back to start, do not collect $500 and read my post again.

    Grrrrrr – I made it clear that we could see higher highs but for the long term perspective it does not matter.

  • Offtimer

    Excellente! Schones Geburtstag!

  • Iguanadon

    Dude, what part of “Just pulling your evil leg. Excellent stuff.” did you not get? Time for a nap buddy, you're burnt out. 😉

  • Implosion

    Mole, Nice post. However, I am skeptical that 4K divided between SPY 65 and 70 March Puts purchased Monday, would be worth 27K if SPY were trading around 80 a few days before expiration even if volatility incresed by 20%. That seems far-fetched.

    I'm no TOS expert, but it seems to me that the Probability date date only affect the Probability of Expiring. Seems to my that 65 and 70 Puts would be worthless a few days before Expiration if SPY were trading around 80.

  • BrassMonkyBalls

    Looks like the misses got some rest and lost the fro. I'm sure it will be back by weeks end!

  • keithpiccirillo

    Choice.
    I watched Prechter two times this weekend on Bloomberg.

  • Iguanadon

    I hope not… that fro gives me the heebie jeebies.

  • http://twojackstrading.blogspot.com TwoJacks

    wow, brilliant work. the blue scenario fits the best with my TRIN work. My crystal ball, which is more like a foggy spyglass, says the bears can put pressure on in the early part of this week but then the bulls get to push once more perhaps before we start to fall in earnest.

    Great post.

  • molecool

    Sorry – I worked probably 15 hours this weekend on this – I'm worn out…

    1+ for yanking my chain.

  • springheel_jack

    Great post Mole

  • molecool

    Duly noted – but I expect us to be way below that mark ahead of expiration. But yes – theta burn would start kicking in mid February.

  • anotherone

    Thank you, Mole. For a year+ of being evil and for a great post.

  • http://www.slopeofhope.com Tim Knight

    God Damn It, Mole. You continue to provide my only serious competition on the web.

    Oh, and I want a t-shirt!

  • Implosion

    BTW, I wish I had listened to you when you predicted that the Dow would hit 9K by the end of summer in one of your blog posts around a week into March.

    Hopefully I can muster up the guts to gradually into Puts even though my account is down big this year. The goons shook my out of my shorts and Puts a few weeks ago, and I need to scale back if I'm ever gonna recover those losses.

  • molecool

    You'll get the very first one Tim – of course :-)

  • molecool

    Bonus chart!

  • http://www.ryanbarr.com Covered (kzhat)

    Bravo mole, this is simple an amazing post. You've once again laid out the ground work and the the road map for the future. I've been pushing everyone I know to “get defensive” and start locking things down in accounts (401k's etc…) that cannot get short. It's better for miss out on just a few percentage points of gain to protect 50% + in losses!

    Great work!

  • OldManRiver

    You've got your groove back! This is the first time in a long time that your charts' various projected paths all point south. Markets have actually started on the way down already, beginning with the Shanghai Composite and other emerging markets last week. Better late than never….

    http://seekingalpha.com/article/156308-global-m

  • Keirsten

    ROFL! This week I'm down to business, so no monkey business until later in the week, I promise.

  • LOONIE

    Great post. Thank you.

  • Squidman

    I think the 1 year mark is probably as significant as the same amount of time successfully doing anything this difficult, like trading–congratulations! There is a lot in this post and I especially, as always, appreciate the lines in the sand–they really help me. I really want to start taking long term positions again and believing in them. I think it's close. I'm getting very tired, and that is usually when a finish line is close. Looking forward to the t-shirts.

  • SpeedSkt1

    Mole–

    Thanks for the post. However, I question the idea that timing the buying of put options is not that critical. I'm a bit confused by your P/L graph of the options. It seems that the graph does not consider the amount of days to expiration in relationship to the price of the underlying and the I.V. The input of “days until expiration” is going to be a pretty critical variable.

    Am I missing something?

  • Keirsten

    Blind Squirrel, I hope you're fine on those hog futures, and check in here at some point.

  • molecool

    Never lost it mate – have you been checking out my recent posts? All spot on! 😉

  • Joe8888

    Could the SH, Be providing us a Clue,to when this Rally may End….?

    http://www.screencast.com/users/chartwiz/folder

    .

  • Anonymous

    Great post Mole, thanks a lot.

  • GuyInStuff

    Thank you.

    I am not an active poster, but I read every post every day. I generally only take long term positions because I don't have the time to devote to anything else with my job. Your analysis is something I value greatly when making decisions and has helped me stay way ahead of the game over the past 8 months (I unfortunately didn't find this blog until December last year).

    I am definitely in for a T-Shirt too as I feel like I need to as this site is one of 8 on my bookmark bar.

  • Macrawn

    Great charts especially the overlay on the mortgage resets.

  • steveo77

    Great post Mole,
    I've been watching that housing mortgage resets for a while…Hussman does a great job of tracking that from time to time. Realty cheerleaders will try to convince otherwise….but there is some deep kin-chee ahead.

    Check out this really cool text to voice website. Highlight and drag a Evil Speculator blog post into the box, and you can listen to it, whilst you go make your coffee and breakfast. Or, you could listen to Fox news or other FET (Financial Entertainment Television/Bubble vision).

    http://www.research.att.com/~ttsweb/tts/demo.php

  • OldManRiver

    Just saying….

    EQUITY INDEXES
    VALUE CHANGE % CHANGE
    Topix 954.48 -19.09 -1.96
    Hang Seng 20,343.70 -549.63 -2.63
    Singapore Straits Times 2,578.72 -52.79 -2.01
    S&P/ASX 4,415.40 -45.60 -1.02

  • Rd99Hse1

    not bad. either we're done or almost done.
    better than using SDS as a marker, for sure!

  • jamesmarkii

    Hang Seng down 665 points

  • http://forkoholic.spaces.live.com/ Forkoholic

    Enjoy Free preview of Elliott Wave Forkology's
    CSI: Wall Street August 2009 Newsletter
    http://www.scribd.com/doc/18650502

    S&P500 projections til November
    Keys to the future down under
    Parallel Forking Guide
    China SSEC update
    Gold fractal: $600 or $3600?
    Stitching & stretching fractals
    Daily Markep UPdate
    New Club website
    Secret Forkoholics Lab Series
    RUSSIA:Bankrupted by oil?

    Enjoy & good trading to you!
    – Forkoholic Serge –

    P.S. Any similarities to CSI the TV show are purely coincidental and unintentional. 😉

  • TheMacroEconomist

    Now that's my type of post Mole!!! 😀

    My only caveat is that the forces of Plunge Protection are working within the overarching macroeconomic system. They will be fighting the inevitable every step of the way – possibly using the “debt shell game” again to rescue some of those mortgages and shove the problem off somewhere else.

    In the long run this is futile. The detrius of bubble WILL be worked off, no matter where it ends up. But it could certainly affect the timing. So as always we keep up our counts and follow them one wave at a time.

    And happy birthday to the Evil.Speculator, can't wait for the tee. :)

  • TheMacroEconomist

    And ES right now is at 999 and dropping.

    Maybe it was just as well I zoned out and didn't go long SPY at 2:30 Friday, we'll see.

  • faafa

    Wow, Mole! You've out done yourself again! Thank you so much, and happy belated birthday to ES too!!

  • http://www.facebook.com/screasy v8muscle

    hell of a post mole, excellent breadth and clarity of analysis and the charts are fantastic.

    As for positioning, should we really be taking March 10's? Wouldnt it be better to take some Dec 09's and roll them, especially bc things should get rolling in Sept/Oct?

    Right now I'm looking at the Dec09 IWM 50's or possibly Dec09 SPY 90's, possibly mixed in with some Novembers to give me extra leverage. Also, the XLF Dec09 and Jan10 puts look GREAT, especially the 11&12 strikes.

    Should we even bother taking puts on individual stocks? Seems like there are some deals on puts that could be mucho profitable

  • http://www.finz.tv/posse bhbgrouptrader

    Mole…that was the post of all posts tonight. So clear and ties in everything you have been writing about for the past few months. Glad to be here and glad to be a subsriber to not only reward my own account but to reward you for all that you do. I think everyone owes it to the great Molesky to subscribe to his work and show him how much you appreciate these kinds of posts with some hard cash. This is one of 4 blogs I check out on a daily basis and I have been at it for 15 years now.

    Cheers to you!

    Jamie

  • Blind_Squirrel

    Still above my entry, gave up some gain on fri., should start to move soon
    as depressing factor of aug. belly exp. is just about done, could have quick 10
    cent move. Bought Corn tonight too.

  • TheMacroEconomist

    Oh this is great Steveo – makes a WAV out of text, thanks!

    (Slightly Stephen Hawking-ish edge to the voice but it will do.)

  • http://trading-to-win.com/ DavidDT

    that is one hell of anniversary post!
    (Make sure you have time left for your better half!)

  • ropey

    Will be interesting to see if they can hold the futures at this level tomorrow but wouldn't be surprised ot see them ripping green or further down, it's impossible to tell.
    One thing that still irked me about the close on friday is the massive red bars on the price shooting up into the close – so the futures tonight correlate with the thesis that it was simply a short-covering squeeze into the close and nothing more…( well that's the way i read it, yell if you see different )..

    Thanks Mole for the summary, yes that mortgage real estate chart is a gem, i've kept that one hanging about as a reality check for the last few months when everyone is screaming the recession is over….this is going to be a painful recovery.

  • Keirsten

    I like the new site design DDT. Well done! I also enjoyed your weekend updates on Twitter- very convenient. I just went back through to read them all. Thx.

  • ropey

    Anything can happen as was witnessed 3:55pm on friday. they can swing this around however they please as the volume is so light. I just hope they don't send this right up to the moon again this week or i will be pissed off. A nice kiss of the 985 level would be perfect and then just chop and churn between 98-101 for the rest of the week.
    Thankye..

  • Keirsten

    Alrighty. There was something about the Chinese backing off pork over the weekend- I'm just now catching up on things, but worried about you when I saw that and the futures quotes. Stay safe BS. :-)

  • dollar

    Great post Mole!

    “Everyone's Waiting For The October Collapse”

    A theme that we've seen discussed more than once is the scary resemblance this year's stock market bears to last years.
    http://www.businessinsider.com/everyones-waitin

  • Rd99Hse1

    Good reply V8.

    I think there'll be (and we'll see) a plethora of good shorts.
    As you brought it up, I plan to use (when I see something developing) some more DIA and IYR puts.
    …AND many indiv stocks are already ripe for the picking.

  • BovineStew

    LOL! I heard they made a new wok that requires less oil. doubled cooked pork a bit more delicious apparently. They call it single cooked pork now. comes with two fortune cookies.

  • http://kkmoney.blogspot.com kkmoney

    Happy Bday ES! Mole this post is truly evil! The hybrid wave count / default chart could be one for the history books if you're right.

  • BrassMonkyBalls

    monkey business? This Monky heading to Sweden in morning and will miss much…back in time Thursday night to check my spreads and Flies for opex….. Get em Ms. all business K

  • Keirsten

    LOL! I won't start with the Confuscius jokes tonight or I'll never get any sleep you silly Steer.
    CYA tomorrow. Sparta!!!!!!

  • TheMacroEconomist

    If you notice Mole is using the Bjerksund-Stensland model, which attempts to calculate the IV and reflect it in the price. So no IV there but it will blow up really really big if the drop is really really fast. 😉

    Anyway, those put options are so far out of the money that their delta is practically zero. And they are so far out in time that their theta decay is also tiny. So timing the entry is not that critical (yes I'm an options guy).

    Selecting the strike price and making sure it gets there by March certainly are critical imo…

  • http://www.facebook.com/screasy v8muscle

    you really think those are the best choices? I dont think the IYR puts offer very good R/R, and the DIA puts are ok but not even as good as SPY

  • chemE

    I don't post here much but check in every day. Fantastic post Mole! Thanks for all your hard work. Many of us leeches and rats greatly appreciate your insights. Those that don't can piss off.

  • http://www.facebook.com/screasy v8muscle

    I'm thinking tomorrow we should trade in the 992-1007 range again. I plan on buying some September calls on IWM around 993 or so. I dont think this thing will roll over easily. If we don't plunge early on tomorrow (when shorts re-open) the trade will be on the long side.

  • KC

    Not If, Just When……

  • BovineStew

    Confucius say sleep well tonight and awake with rosy fingers. Anyways, floral patterns are in.

  • http://trading-to-win.com/ DavidDT

    never paid any attention to DJIA, but since Mole uses it in charts, did quick calculations.
    Mole – you might want to make your perfect post even better if you'll suggest JUNE 2010 puts – that would be time needed for W5 weekly.
    Targets
    DJIA 6080
    SPX 584

    http://screencast.com/t/0zD2DeJ2SLE4

    P.S. That was one funny statement from T.K. :)

  • http://trading-to-win.com/ DavidDT

    Show Mole The Money!

  • jamesmarkii

    6080 target?
    more like 2800-3200 DOW

  • TheMacroEconomist

    +1

  • jamesmarkii

    if the Dow mirrors Asia tomorrow we drop 228 and 26 on the SPX

  • SpeedSkt1

    I didn't realize he was using a different pricing model. Thanks for
    pointing that out.

    I was just trying to point out that if the markets trade flatish for the
    next few month into year end and the real drop doesn't begin until near March
    of 2010, then it will not work out so favorably.

  • jamesmarkii

    http://finance.yahoo.com/q/ta?t=1y&s=^N225&l=on…

    shouldnt be too much to ask based on this comparison

  • http://trading-to-win.com/ DavidDT

    always is – that is why most traders lose money

  • http://trading-to-win.com/ DavidDT

    are you absolutely sure you want to bet against me?

  • jamesmarkii

    1004-26=978
    9321-228= 9093

  • jamesmarkii

    Hang Seng down 715 now

  • ACJ

    don't count your chickens before TOMO 😉

    http://www.newyorkfed.org/markets/operation_sch

  • jamesmarkii

    betting against “you”
    im betting against the masses
    Let me be the 5% and the rest can be the 95%

  • http://www.aggressivelyuninformed.com nepharis

    This post is somewhere between “fucking awesome” and “jesus is pissing himself with jealousy”. Might have to print out that first chart and keep it on the wall, so I can check off each turning point on the way down.

    I have some SPY DEC 80 puts already, and I'm about to start scaling into the MAR10 options this week. My /DX long trade from this past week (still holding) has been very nice to me, and returned some dry powder to the storerooms. Let's ride this bitch.

  • http://trading-to-win.com/ DavidDT

    that is one BOLD statement :)

    I am surprised you still have to trade

  • OldManRiver

    The East Is Red

    FUTURES
    VALUE CHANGE % CHANGE
    Nikkei 225 10,320.00 -270.00 -2.55
    Topix 950.50 -22.00 -2.26
    Hang Seng 20,227.00 -710.00 -3.39

  • rhae

    Long term thought out of the box… When the dollar tanks… Our perception of value becomes inflated. So wouldn't / couldn't the numbers on the SPX stay generally the same… Of course a gallon of gas might cost 10 bucks.

  • innatedc

    Nothing free about it……tease…..shameless plugger

  • standard_and_poor

    77% of portfolio is long with stops in place as usual.

  • http://www.facebook.com/screasy v8muscle

    Good call… always seems like there are OMO's right when the market needs support lol

  • TonyMontana

    DDT,

    After reading your blog, I'm a little unclear about your speculation for this week's action.

    Half way through your post, you state that “S&P500 will NOT set new high till expiration Friday”, which to me it means that we'll see a new high by OPEX; but then you end your post by stating that the S&P500 will end at 970ish.

    Please explain and thank you for your insight!

  • molecool

    Now you're talking – yes we need some high beta stocks that we can add to our short list. I'd like to have a short list of 10 and perhaps a 'grand menu' of around 20. Get to work, rats!

  • http://trading-to-win.com/ DavidDT

    it is amazing how people tend not to see words typed in capital letters :)
    You are the third person who asks the same question.
    There is a saying – “it is always darker under the light”

    “S&P500 will NOT set new high till expiration Friday”
    “S&P500 will NOT set new high till expiration Friday”

  • molecool

    Yes, will follow up on that tomorrow – there are two POMOs this week I think.

  • maple

    Happy Birthday, und viele glückliche kehrt zurück!

    Cue the Einstürzende Neubauten soundtrack…

  • http://trading-to-win.com/ DavidDT

    that is what I am thinking too
    after dollar bounce deflationary bounce we'll finally see inflation and falling dollar will “support” equities prices, that is why I am quite conservative with my downside targets longer term.
    “Paranoia keeps me alive”

  • http://www.facebook.com/screasy v8muscle

    dow 36,000 might come true lol

  • http://trading-to-win.com/ DavidDT

    interesting
    I am holding Dec80p around $2 (bleeding)
    and /dx77.72 long

    All right – closed small short /es – time to take a nap

  • http://trading-to-win.com/ DavidDT

    thank you for Pretcher link

  • http://trading-to-win.com/ DavidDT

    I am hesitant to even post charts (my site's name is engraved) lately – police is not sleeping 😉

  • fa_q

    I can't speak for anyone from Goldman, since I worked at a different ibank, but that's the easiest 15k I've ever made. Covered 1/2 NQ at 1599, that's 16 points. So if anyone followed me on 5 trades we have 29, 23, 25, 17, 16. Full ES, 1/2 NQ and double IYR still running. Let the games begin this week.

  • Trick-Or-Trader

    Stuck with the plan and covered half of Friday's ES day-trade shorts at 996.25. Average price was 1003.25 and will use 987.50 to clear the balance. If filled, still short a few more and holding puts for my intermediate-term forecast.

  • http://misinheritance.com/ misinheritance

    “Intermediate (3) of Primary {3}. Which per my extrapolations puts us around March of 2010.” -mole

    Wait, March 2010 for intermediate 3? That could be the beginning of it but I don't know. Primary 3 may be extended, if we are actually in a correction of Grand Supercycle degree. Primary {1} took 17 months, Primary {3} may take around 30 months, with some big time rallies in between.

    I think we will have some major major volatility ahead of us. If you will be day trading, don't fall in love with the bearish side, love the PPT, they give you massive swings to trade. Remember when they banned short selling that thursday of september options expiration? You better not be pissed because of the manipulation and CNBC spreading rumors nonsense, because I'm telling you now the NY Fed is increasing their trader total from 240 to 400! Why do they need traders? To rally the markets through REPO's, POMO's, and all kind of other things the Fed can do. It doesn't matter how disgusted you may be, those rallied provide good trading opportunities, use them!

    And if you aren't a day trader and you just have some long term/weekly shorts, pick /es or /nq at potential rallies, and if it hits, you will hedge your losses.

  • http://www.aggressivelyuninformed.com nepharis

    You've been slaying it out there, congrats. Keep us posted, I love your trading style.

  • CandleStickEmUpper

    nice post Mole, love the charting. Looking forward to what Manic Monday brings to the market considering asia is down.

  • Vardoger

    Shanghai getting smoked, down 6%

  • de3600
  • TheMacroEconomist

    A few minutes ago I closed the overnight ES short I'd opened late evening, as it finally started to show something of a bounce (and I need sleep or will be a vegetable tomorrow).

    That was at 985 so a complete and utter rout of the S&P is the only way to describe.

  • Royal With Cheese

    Fuckin' A ! That's a greatest post you've done since a long time ! +1

    P.S : I'm still in St Topez chillin with the ladies .. wanna come Mole ?? 😉

    Willkomen !

  • tafse

    hi.. im posting from norway and love this blogg.. just have a quick question: what online broker you recommend for options on SPY? very limited number of norwegian broker offers this service.. :) thank you very much

  • CaptainAnarchy

    Awesome post, Mole.

    Looks like I've caught your insomnia. If the action in the futures holds, I may sleep better tomorrow though. Markets are taking a swan-dive into an empty pool and I'm still holding 3x short etfs at a small loss from a few days ago. Should be interesting.

    Also speaking of long term, does anyone know if candle patterns are supposed to apply on a weekly scale? Because on the SPY I see both 1) An inverse head and shoulders which doesn't look resolved, and 2) a thin perfect doji put in this past week.

  • peder1001

    Hei Tafse,

    Im also in Norway, you could try thinkorswim or etrade. You should be able to open a us equity/options account on either of them and theyre much cheaper than these norwegian ones like nordnet etc.

  • Paleface

    Mole, watching your friendly turtle turning into an evil monkey was a journey from ignorance to realization for me.
    Thanks for all the hard work!

  • http://thetickerstreet.blogspot.com/ TickerStreet
  • http://thetickerstreet.blogspot.com/ TickerStreet
  • tafse

    perfect.. im gonna try out TOS :)

    thank you

    and once again: great post Mole!

  • Carl V

    Guys, I intend to subscribe to Zero but have no idea of where comes the zero primary indicator from; is it based on the underlying price or a breadth data? I tried to localize the email of the blog owner but could not find. Any insight more than welcome. Thanks.
    Carl

  • Iguanadon

    A beautiful morning for us bears (and Australian Cattledogs) but let's remember that this is OPEX week and even moreso than usual we need to respect the “expect the unexpected” mantra. Let's hope for the best but be prepared for the insane.

  • http://trading-to-win.com/ DavidDT

    this is priceless “CNBC Market Tips: US to Exit Recession Next Month” http://www.cnbc.com/id/32443932

  • Iguanadon

    And you see how well received that was in Japan today…

  • Iguanadon

    And the headlines keep coming… “Lowe's Shares Take Hit as Earnings Miss Estimates, Company Gives Weak Guidance”

  • http://www.genxantihero.blogspot.com LostIllini

    Need some help from the greybeards…..

    For an entry point this morning (short of course)

    1) at open as thing is just going to run away or
    2) will it make an attempt at a feeble gap fill allowing a better entry?

  • http://www.genxantihero.blogspot.com LostIllini

    The Peak of the Atlantic Hurricane season is September 10th… might be a buy the dip situation.

  • Kemal_1

    Very nice and long post, Mole. You put in a lot of work and passion.
    The key is the timing. When and from which level does the next leg down take place? I think we are not yet there. Probably another 4 – 6 weeks to go.

    The SPX is in the c leg of minor b, IMO. This c leg started on Friday and will encompass a five wave pattern down. Friday, we saw wave 1 and wave 2 (the rally into the close).

    Today is wave 3 down. My conservative target for the complete c leg correction is just under 970 (967). Should hold above 950.

    EUR/USD: is still in the b wave down (following a leading diagonal in the a wave position). Target should be around 1.40. I was too early on the turn around. I anticipate the bottom this week.

    I am going on vacation this week, so won't be able to post much.

  • C's & 3's

    I think this little sell off completes a. I want to buy some calls during c of b. I already have some puts and look to add more next month at higher prices.

  • keithpiccirillo

    Happy birth-day.
    Let us eat some cake.

  • Iguanadon

    More proof that the economy is stablizing… idiots.

    http://www.cnbc.com/id/32443772

  • fuw

    I can only join the choir; awesome post Mole! I will re-read it and probably print it to use as a longer term reference.

  • Coldwarvet

    Nice post, thanks! Seeing all this red this morning almost makes the pain of the last two months worthwhile. Just let me see another hundred handles off the .spx in the next month.

  • http://trading-to-win.com/ DavidDT

    just twitted chart for SPX – cannot post it here

  • Iguanadon

    Keep things in perspective though. Mole has 3 out of 4 scenarios showing one more leg up. Even if this is the blue line, it'll bounce soon. Be patient and cautious. I'm of the thinking that there isn't quite enough exuberance yet. If we bounce from all of this recent bad news it'll have the bulls on cloud nine and that's what needs to happen before P3 begins.

  • shortcover

    …”to cover in pre-market or not to cover”…That is the question…

  • http://trading-to-win.com/ DavidDT

    $SPX target was 978 – do your math

  • http://trading-to-win.com/ DavidDT

    enjoy your vacation – market will be here when you'll come back :)
    meanwhile I will try to find your blog

  • Me_XMan

    oh SHITES! Bulls gonna need a lot of help today! CNBC can you turn up the volume!

  • http://alphahorn.blogspot.com/ alphahorn

    Happy Birthday ES/Mole, what a year! And great update Mole one of your all-time best!

  • thelefteyeguy

    love the avatar…

  • thelefteyeguy

    …im having no luck either…

  • http://trading-to-win.com/ DavidDT

    Courtesy of Kiersten ( I believe so )

  • http://trading-to-win.com/ DavidDT

    Discerning whether the market is in Wave C or Wave 3 is a challenge for Ellitticians

  • wex

    Thanks for your posts. Very helpful

  • thelefteyeguy

    btw…great call last Thursday…”Black Friday/Monday”

  • Bricks

    Good Morning Everyone!

    First off – Congrats to Mole and ES for creating a fantastic blog which has steadily grown over this past year. You have nowhere to go but up from here (as opposed to the markets)

    Second, it's nice to see the world wakeup a little bit and realize that…oh shit…the world is in a huge economic storm and everything in the markets is overvalued. Let's see if the big boys decide to agree or if they fill this dip in with concrete too.

    Third, although it's probable there will be lots of good shorting opportunities today, here is one I am considering. JCP – http://screencast.com/t/HJp3vY7iR8d6
    It's on the back of mediocre earnings, bad retail numbers, breaking below a bearish channel with chart support (horizontal support and 50 DMA) at the upper range of the target. Depending on the speed of the drop on open (or the size of the pop…) I'm looking at some Sept $35 puts.

    Happy Hunting Today!

  • Trick-Or-Trader

    Great advice for the coming seasonal patterns!

    http://www.youtube.com/watch?v=JJAVe57yH-o

  • annamall

    Great work Molester! Sign me up for a T-shirt (I hope they have petite!) Also good work on the charts! very nice

    I am reposting an apple BF for this OPX week in case anyone missed it, great R to R and lots of OI on all strikes
    http://content.screencast.com/users/Annamall/fo

    Short term the DXY looks overbought and I am looking for some retracement and closed out my EUR/USD short
    http://content.screencast.com/users/Annamall/fo

    http://content.screencast.com/users/Annamall/fo

  • innatedc

    No David at least you contribute to the board, that forkoholic idiot does not contribute anything….drives me nuts….he should be banned.

  • ckeltner

    Good morning all. Back from vacation and ready to get back to work. Good job Mole, appreciate the posts, especially the weekend posts from you and opex related from Fuji.

  • Bankrupt

    black monday? come on now… 2-3% fall doesn't qualify for a black monday in my book.

  • http://trading-to-win.com/ DavidDT

    yup – it was just a matter of speech (after all the beating YOU BEARS took)
    As our Reverend Mole says “5 points drop is a Xmas”

  • http://trading-to-win.com/ DavidDT

    “GDII” knows

  • shortcover

    thanks for the advice. i'll see what the day holds…maybe close half…i'm going to attempt a longer term horizon assuming Opx week is countertrending through Friday…and give the rest a few days to work…

  • biffermas

    Happy Birthday, Mole, and thanks for the excellent post. Whatever happens, 2009/2010 will be a crazy time to trade the markets. Let's just hope our country isn't in smoldering ruins when the whole crazy game plays out. I think this coming crash will ignite the wave of public pathology that will sweep the banksters and corrupt polititians into the historic dumpster, at least for a several decades.

  • bsummertime

    Agreed. Happy Birthday ES/Mole, I look forward to each post especially Sun night. BTW, loaded up with SPY puts on Fridays close, played it safe with SEP's, wish I had AUGy's

  • Me_XMan

    Too many Asian gamblers gonna get smoked!

  • jamesmarkii

    counted chickens and they all hatched

  • anton

    Just follow the market and don't try to predict it:
    http://www.alphatrends.net/2009/08/historical-m
    Here are two different scenarios. One is Up, another is Down. Almost like mole draw it every day :)
    Just keep it in mind.

  • ropey

    Kemal, can you tell me what the lottery numbers are for next week aswell? 😛 You're predictions are getting good, i like..

  • innatedc

    And now I am kicking myself for not picking up more shorts EOD Friday….oh well….be looking for good entries today.

  • ennuigo

    How far out we going on those FXU putz?

  • http://thinkwest.wordpress.com @torbjornrive

    Yes, you are right that SPY offers my best option. No need to “diversify” in
    indexes – just pick the best.
    Good one.

  • Keirsten

    Just a quickie as I'll be really busy today:

    No island top unless SPY opens below 98.08 and does not fill the gap. I'll watch and pop in later to confirm. G/L to all Rats today. :-)

  • shortcover

    don't kick yourself too hard…it wasn't the high probability trade on the surface, but if you factored in the longer-term trend and the fact we've been overbought for a while it seemed to make a bit more sense…

  • annamall

    You too! IM me when you can, when you have a sec! :)

  • http://trading-to-win.com/ DavidDT

    Brian is one funny guy
    and he is always 100% correct on 50/50 scale – “that was easy” :)

    The funniest part is that the big money are in major trend reversals and you cannot catch those (especially if you trade options and want to accumulate position while directional IV is low) by “following”

    Anyone who is saying “do not attempt to catch tops/bottoms” just not good enough…therefore they write books

  • GDII

    happy birthday u little cute babie! in china we eat noodle for birthday. help yourself mole. kakaka
    the chinese tree eventually collapse. i am proudly telling all my fellows, p3 starts.

  • pricey

    Superb post Mole and Happy Anniversary!

  • fuw

    The dollar index might be in the process of retesting the neckline of the inverted HS right now (sloped neckline, now at ~79.2). However, the neckline is a bit messy to my eyes, and the failure (so far) to breach the 79.4-79.6 area can also be seen as a failure at the neckline (seen as a horizontal neckline).

    IMO a breach of 79.7 would confirm the inv HS, and a break below 79.2 would put it on hold.

  • Iguanadon

    Thanks for the island top info!

    Locking in profits. 1% trailing stop on the TZA that I bought at the close on Friday.

  • http://trading-to-win.com/ DavidDT

    closed out 1/2 SPY Sep98p reopened after down/up trade Friday – 50% profit

  • http://trading-to-win.com/ DavidDT

    can you please drop me an email?

  • http://trading-to-win.com/ DavidDT

    gotta love Monday gaps..yet another one

  • shortcover

    nice work iguanadon…

  • chumprop

    Anyone else having problems with TOS?? It won't let me place trades or log back in :-(

  • GDII

    damn. i sold my 98p way too early way too cheap.
    how can i know it will be itm today. :'(

  • thelefteyeguy

    Moles Green / Blue Scenario is playing out…crossroads

  • Keirsten

    Way to go Iggy! I'm adjusting my stops in about 2 seconds over here.

  • innatedc

    Thanks for the comfort….at least my SPG short is kicking ass- locked in profits with trailstop….

  • Pingback: Not A Bad Start | the evil speculator - one nefarious trade at a time()

  • Iguanadon

    I got tired of locking in losses. 😉

  • ckeltner

    Yeah, I have an order to sell a position active for several mins now that is not filling, even though the position has since moved higher then my sell point.

    Self edit – sat for 4 mins under mark and finally filled.

  • fuw

    Thanks for the heads-up. I hope that the bears use this opportunity to lock in bulls on the island.

  • fa_q

    I know there may be more but covering the other 1/2 NQ for 43 and 1/2 of ES for 21.

  • molecool

    I grabbed some puts at the Friday EOD spike – just closed them out – they were up 150% this morning :-)

  • onorio

    Morning rats!

    Are we crashing?

    Mole your weekend posts keep surprising me week after week, thanks for sharing your work and your time with us.

  • http://tradingperspective.blogspot.com perspective

    very nice post mole – very nice.

    just wanted to give an update of my trade performance since returning to the turret a week ago. all of my trades use either FAZ or FAS. why on earth would you feel the need to complicate what already is a tough enough game.

    ALL of these trades are made in real time and are in the daily logs.

    tradingperspective.blogspot.com

  • jamesmarkii

    VIX +4.00
    :)

  • chumprop

    same, I got filled to short /ES at 981.50 … took me about 8 mins to get logged back in…

  • ropey

    yeah sam ehere, had to quick, reboot and restart – i couldnt cancel a trade i had placed on and it went through meh..

  • mrclam

    good trades +1

  • http://alphahorn.blogspot.com/ alphahorn

    seems I recall someone calling for a gap down on Monday, hehehehehe

    http://alphahorn.blogspot.com/

    60 min SPX:

    http://www.screencast.com/users/alphahorn/folde

  • annamall

    Reloading my SPY puts on any bounce, also long USD/JPY Good luck everyone! our time has come! :)

  • molecool

    Hey folks – I took profits on my puts at ES 978 – we might drop a bit lower here but I decided to sell into weakness.

  • Keirsten

    Watching FAS- support at 66.26, then 62.56
    Pivot on SPY at 98.80 and 97.89

  • annamall

    uuuuhhhhh was that you?? 😉

  • molecool

    Well, I'm glad I listened 😉

  • http://partiallystapled.com/ gxti

    Got 5x SPY SEP 09 100 PUTs on fri. @ 2.74, now up 50% and wondering whether to cash out or hold out. This is a pretty big reversal, so while it's likely that my overnight profits will erode I'm thinking there's a good bit more downside left this week.

  • Keirsten

    Good job Alpha- did you get my e-mail btw?

  • chumprop

    It was some issue with their server I think, I tried to log on from my laptop and I couldn't connect… seems to be cleared up now though…

  • jamesmarkii

    im still waiting for 960

  • Bankrupt

    nice trade comrade mole, I like your style 😉

  • molecool

    Yeah me too – but they were August lottery tickets, so I should count my blessings and shut the heck up.

  • onorio

    Im thinking in lock my profits from 1008 SPY and 1.4195 in EUR/USD shorts…still waiting.

  • anotherone

    Made my first trade in weeks. Picked up 15 SPY Puts Mar 80 for 2.85.

  • http://alphahorn.blogspot.com/ alphahorn

    yes thank you very much!!! forgot to check it over the weekend

  • de3600

    short dtg what a pos paying off nice this morning :) short 500 23.51

  • innatedc

    Bought this bounce for short term scalp…..

  • rhae

    Probably grab some TNA to hedge shorts… been rolling in and out of TZA/TNA… splashing in the kidde pool

  • MJSgl

    Just sold my SPY puts bought on Friday about 20 min before close. Was hoping for a gap down and got it. Not sure at moment if I was lucky or good. Either way, I'll take it. Did a little better than double my money. Thinking we're not going too much lower today, now the big boys will push tape up, return to norm.

  • annamall

    Just another BF for OPX MA is showing Huge RS in this tape, I am doing a 200/210/220 for debit 1.95
    reward @ or before Aug OPX is 8,05

    http://www.screencast.com/users/Annamall/folder

  • http://trading-to-win.com/ DavidDT

    did u scale out or just dumped all?
    I am holding 1/2 (Sep thou – had my share of playing front months – don't need it no more)

  • MJSgl

    Ditto at 981.

  • http://trading-to-win.com/ DavidDT

    gotta hit SPX 978, I'll be damned…

  • onorio

    No more bounces A.!

    Sell sell sell!

  • http://www.ambgtrading.com/ amgrant

    I've been trading options for a while but I have ALWAYS had a hard time trading flys…my ability to gauge direction (or lack thereof) on individual stocks really bites. I usually butterfly off positions to lock in gains but I cannot trade them from the outset. Kudos that you can.

  • Iguanadon

    Sold my TZA as mentioned earlier, now in TNA just because I'm insane.

  • http://www.finz.tv/posse bhbgrouptrader

    long the USD versus the Yen….hmm thats brave…u should be long YEN and USD against commod currencies if you believe we are going lower in stocks…don't ya think?

  • annamall

    Hi AG, I have been doing them for about 8 years and love them (when they work) it's such a low risk high reward trade, when it works. MA is really strong in this tape, down a little more than 1%. So a cheap lotto ticket. :)

  • Bankrupt

    I like your style. Wanted to go long myself, but I am not in a hurry.

  • ropey

    Nice – fingers crossed on that one anna :)

  • ropey

    where's the cut off though if it starts turnin sour?

  • rhae

    Just stay above 33.73, my strong 60m line for TNA

  • http://alphahorn.blogspot.com/ alphahorn

    it will, this is just wave iv

  • rhae

    Don't you want to catch the bottom tip of the falling knife… j/k

  • ropey

    SPY gap still not filled at 98.08

  • annamall

    thanks Ropey, what do you think?

  • annamall

    I say if MA breaks 195, then I am out. :)

  • Bankrupt

    went long @ 981

  • TheMacroEconomist

    A few quant blogs are pointing out that when we gap down at the open about 2x the prevailing (1-sigma) daily volatility, we typically not only retrace all of it, but actually close up from the open.

    Past performance is no guarantee with those things, but careful trying to catch a falling knife now…

  • TheCrowe

    Congrats! I held my Aug 101 puts over the weekend as well. Glad I did.

  • annamall

    I want a pop to reload, looking @ 989.50 I am doing Mole's March puts but doing the 75 strike

  • TheMacroEconomist

    We try again another day. At least the bears showed up for work promptly and took out the overnight lows in ES.

  • http://trading-to-win.com/ DavidDT

    I still cannot calc W5 tgt, but looks like 965

  • ausdude

    Congratulations on the 1-year mark. Awesome! Wishing ES several years in the future.

  • http://trading-to-win.com/ DavidDT

    not listening :)

  • rhae

    TNA 30m short term intraday bulls might be looking at this congestion, look left… several charts probably the same…

    http://screencast.com/t/bW8Mg7N2

  • molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨
    ¨°º¤ø„¸ N E W „ø¤º°¨
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • carlvan

    hey what about buying JPM March35 puts, trading around 2.68 right now ? Too early ya think?

  • GDII

    some math/geometry to share.
    i count march low to early june as a, june to early july as b, and july to early aug peak as c
    using close price, a=270 points, b=67, c=134.
    b=24.9% of a, c=50% of a !!!
    if 50% works, the current drop may be 50% of b, which will be my target at 979.55

  • Keirsten

    I don't want to get ahead of myself, but my downside target on SPY is support at 96.11. I like what I see with the short term SMAs this morning on the daily and price is below the 20 currently. I've placed loose stops for now and will decide to either cash out before EOD and roll into straight inverse ETFs or sit tight.

  • http://partiallystapled.com/ gxti

    Cashed out @ 4.00; 46% profit. I would have held on longer but I saw some unpleasant action in the dollar.

  • Me_XMan

    Mole. I hope you've dumped your ES longs late last Friday.

  • ropey

    Yes that seems about right although for me i may jump out a little earlier, just me…the issue i see is the 210 being the most profitable but you saw how it had a hard time around 205 so maybe a 190/200/210 BF maybe better but the R:R is 1:1 :/..not a disaster but still, we like the 1:4 lol
    I like the relative strength so we'll see how the market deals with the low here…gap on SPY still needs filling at 98.08..

  • string01

    That is the most ominous foreboding piece of cake ever.

  • http://trading-to-win.com/ DavidDT

    I do that a lot, but not in order to catch W4 corrective wave – that is just silly

  • http://trading-to-win.com/ DavidDT

    Mole – when you twitt – message should be no more than 140 characters (it looks liek your last twitt was cut off)
    try to avoid periods, and in general try to stay under 120 chars – someone might be interested in yuor twitts and when “re-twitted” – your message will be truncated more

  • Iguanadon

    Dang… TNA got stopped out while running an errand. Oh well.

  • aviat72

    CAF has huge variations from NAV. Though I like the idea of the CAF vs FXI chart, CAF is not an ideal instrument for comparing China vs Hong Kong. It represents the perception of US investors about the Chinese markets which perhaps is an even better indicator of US risk appetite!

    During the 2007 bull run, US investors were taking profits at significant discount to NAV (30%) because they had raked in a lot of moolah. I am sure MS makes a lot of money redeeming shares at a 30% discount!

    http://www.etfconnect.com/select/fundpages/disp

  • CaptainAnarchy

    Capitol One Finance:

    Fundamentals – Mountains of credit card debt as assets. This plays quite nicely into your thesis about stocks inversely mirroring mortgage resets. Every bankruptcy from and ARM reset should wipe out some credit card assets with it.

    Technicals – Stochastics nailed to the ceiling for over a month. Struggled a lot in late may through June. EMA 50 still below EMA 200. Avg. volume half of what it was around June. Main downside is that it seems to benefit massively from market interventions. It's very volatile, so volatility option spread may be the ticket.

  • http://thebhbgroup.com TheBHBgroup

    long the USD versus the Yen….hmm thats brave…u should be long YEN and USD against commod currencies if you believe we are going lower in stocks…don't ya think?

  • http://www.hotoptionbabe.com annamall

    Hi AG, I have been doing them for about 8 years and love them (when they work) it's such a low risk high reward trade, when it works. MA is really strong in this tape, down a little more than 1%. So a cheap lotto ticket. :)

  • Bankrupt

    I like your style. Wanted to go long myself, but I am not in a hurry.

  • ropey

    Nice – fingers crossed on that one anna :)

  • ropey

    where's the cut off though if it starts turnin sour?

  • rhae

    Just stay above 33.73, my strong 60m line for TNA

  • http://alphahorn.blogspot.com/ alphahorn

    it will, this is just wave iv

  • rhae

    Don't you want to catch the bottom tip of the falling knife… j/k

  • ropey

    SPY gap still not filled at 98.08

  • http://www.hotoptionbabe.com annamall

    thanks Ropey, what do you think?

  • http://www.hotoptionbabe.com annamall

    I say if MA breaks 195, then I am out. :)

  • Bankrupt

    went long @ 981

  • TheMacroEconomist

    A few quant blogs are pointing out that when we gap down at the open about 2x the prevailing (1-sigma) daily volatility, we typically not only retrace all of it, but actually close up from the open.

    Past performance is no guarantee with quant things, but careful trying to catch a falling knife now…

  • TheCrowe

    Congrats! I held my Aug 101 puts over the weekend as well. Glad I did.

  • http://www.hotoptionbabe.com annamall

    I want a pop to reload, looking @ 989.50 I am doing Mole's March puts but doing the 75 strike

  • TheMacroEconomist

    We try again another day. At least the bears showed up for work promptly and took out the overnight lows in ES.

  • http://trading-to-win.blogspot.com/ DavidDT

    I still cannot calc W5 tgt, but looks like 965

  • ausdude

    Congratulations on the 1-year mark. Awesome! Wishing ES several years in the future.

  • http://trading-to-win.blogspot.com/ DavidDT

    not listening :)

  • rhae

    TNA 30m short term intraday bulls might be looking at this congestion, look left… several charts probably the same…

    http://screencast.com/t/bW8Mg7N2

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨
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    ¸„ø¤º°¨ P O S T “°º¤ø„¸
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  • Carl V

    hey what about buying JPM March35 puts, trading around 2.68 right now ? Too early ya think?

  • http://readingtowin.blogspot.com/ Boris

    some math/geometry to share.
    i count march low to early june as a, june to early july as b, and july to early aug peak as c
    using close price, a=270 points, b=67, c=134.
    b=24.9% of a, c=50% of a !!!
    if 50% works, the current drop may be 50% of b, which will be my target at 979.55

  • Keirsten

    I don't want to get ahead of myself, but my downside target on SPY is support at 96.11. I like what I see with the short term SMAs this morning on the daily and price is below the 20 currently. I've placed loose stops for now and will decide to either cash out before EOD and roll into straight inverse ETFs or sit tight.

  • http://partiallystapled.com/ gxti

    Cashed out @ 4.00; 46% profit. I would have held on longer but I saw some unpleasant action in the dollar.

  • TheMacroEconomist

    What I liked about today was that we completed (I think) the leg down in the “real” market hours.

    What bothered me about Friday's action was that the bulls really didn't show up for battle at the open. The double top triangle touch at SPX 1018 (ES 1016) did occur, but in was in premarket trading on the ES. So there's a ledge still left on the wall of worry for the bulls to shoot for.

    I want to thank you (and Mole) for keeping me focused on my corrective wave counts instead of the bull-crap hype last week. Key was when Mole posted the big channel in his Thursday rub-down…and then you observed that the SPX was moving steadily to the right in that channel.

    Enjoy your trip! :)

  • Me_XMan

    Mole. I hope you've dumped your ES longs late last Friday.

  • ropey

    Yes that seems about right although for me i may jump out a little earlier, just me…the issue i see is the 210 being the most profitable but you saw how it had a hard time around 205 so maybe a 190/200/210 BF maybe better but the R:R is 1:1 :/..not a disaster but still, we like the 1:4 lol
    I like the relative strength so we'll see how the market deals with the low here…gap on SPY still needs filling at 98.08..

  • string01

    That is the most ominous foreboding piece of cake ever.

  • http://trading-to-win.blogspot.com/ DavidDT

    I do that a lot, but not in order to catch W4 corrective wave – that is just silly

  • http://trading-to-win.blogspot.com/ DavidDT

    Mole – when you twitt – message should be no more than 140 characters (it looks liek your last twitt was cut off)
    try to avoid periods, and in general try to stay under 120 chars – someone might be interested in yuor twitts and when “re-twitted” – your message will be truncated more

  • Iguanadon

    Dang… TNA got stopped out while running an errand. Oh well.

  • aviat72

    CAF has huge variations from NAV. Though I like the idea of the CAF vs FXI chart, CAF is not an ideal instrument for comparing China vs Hong Kong. It represents the perception of US investors about the Chinese markets which perhaps is an even better indicator of US risk appetite!

    During the 2007 bull run, US investors were taking profits at significant discount to NAV (30%) because they had raked in a lot of moolah. I am sure MS makes a lot of money redeeming shares at a 30% discount!

    http://www.etfconnect.com/select/fundpages/disp

  • CaptainAnarchy

    Capitol One Finance:

    Fundamentals – Mountains of credit card debt as assets. This plays quite nicely into your thesis about stocks inversely mirroring mortgage resets. Every bankruptcy from and ARM reset should wipe out some credit card assets with it.

    Technicals – Stochastics nailed to the ceiling for over a month. Struggled a lot in late may through June. EMA 50 still below EMA 200. Avg. volume half of what it was around June. Main downside is that it seems to benefit massively from market interventions. It's very volatile, so volatility option spread may be the ticket.

  • http://trading-to-win.blogspot.com/ DavidDT

    at least he is funny…eh… I meant like a clown