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Intra-Day Update: Pivot Time!
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Intra-Day Update: Pivot Time!

by The MoleOctober 13, 2008

UPDATE 11:20am EDT: So, Berk and I went shopping this morning: ISRG, BIDU, GOOG, CF, FSLR, AAPL

Seems we were a teeny bit early as the market turned on us and is now testing 1348 on the NQ, which is a minor pivot plus it’s a retracement level. Has been bouncing off 4 times by now, which made us a bit nervous. So far so good however. The Yen is shot to hell on the stochastics and we expect it to swing up, which would put pressure on equities. Our line in the sand is slightly above 1350 on the NQ, which would cause us to start cutting our puts. If we breacch 1370 Kansas is going bye bye and we would see a major rally, IMHO.

UPDATE 12:33pm EDT: Well, as might imagine, Berk and I took a beating this morning. We just touched 1370 on the SPX which puts the short term bearish case in question. Right now I’m waiting and see where we go from here.

UPDATE 1:43pm EDT: I decided to reload all of my positions about 20 minutes ago as things looked toppy. I recommend you guys to NOT do that, as it’s extremely risky and will most likely backfire in a big way.

UPDATE 1:50pm EDT: I’m looking at my pivot chart and it seems there is a large (institutional) buyer in the YM around the 9020 level. Everytime it goes near that I get a large candle up. Quite a battle going on here right now.

UPDATE 3:10pm EDT: Looks like today is not my day. We just breached 970 on the $SPX, which was my line in the sand – had to cut my positions. Not going long here as the market is completely overbought. Under normal circumstances I would have kept my positions but according to EWT rules the wave count of the a,b,c has been violated, thus I need to see where the market takes us today.

UPDATE Closing Bell: Okay, the market gave me an ass whopping today, as you probably know if you’ve been following the thread. However, I’m actually very excited about this, believe it or not. We finally got a ‘real’ rally and for me this means we’re most likely in {iii} of 1 of (4). A more concise wave count later, once I’m done licking my wounds. But seriously, this is good for us bears – with some luck we get the VIX down below 40 or even 35. Wouldn’t it be nice to buy affordable options again? In the last few weeks it’s been a losing proposition for bulls and bears alike. Had you bought an ITM DIA call today right at the bottom you might have made 175% at the close after the DJI rallied 936 points! That’s not a lot of reward for the risk you take. So, at this point I sincerely hope we get a monster rally for the coming week or so.

Will do a brief forecast once the bottle of Prozac starts kicking in – just kidding – I can take a haircut or two if it serves my evil master plan in the longer term.

BTW, if this isn’t a bullish signal then I don’t know what is – great timing. Hat tip to The Big Picture:


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.
  • Vega

    New here..
    What is NQ?
    My Scottrade account does not recognise this ticker ;(

  • BigHouse Aka Mr Vix

    XLF is still weak compared to the general market.Not good

  • BigHouse Aka Mr Vix

    Can you tell us the level in the nasdaq 100 cash.I dont follow futures. Thanks

  • http://www.FinancingIdea.com Serge aka "The Fork Master"

    It's a star in Vega galaxy

  • gagelle

    Molecool, I heard something about the dollar not trading today because of the holiday?

  • Paleface

    Nasdaq 100 Futures

  • C.C. Rider

    My line in the sand on NDX puts is 1355. Getting awful close here.

  • gagelle

    Now it's 1353.43. Symbol NDX on TOS.

  • molecool

    I also don't see the TNX move – probably.

  • molecool

    Rignt now it's a falling star.

    Vega – check out Nasdaq 100 Dec. futures. It should have Z8 in it.

  • gagelle

    TED spread still high.

  • gagelle

    NDX not keeping up with the rally.

  • molecool

    Awfully close… hanging in there thus far.

  • molecool

    How do you know? My URL only shows 10/10 tape.

  • Hansons

    If NQ breaks the upper channel I'd bail.

    http://www.screencast.com/t/qREJJURS1FR

    Getting very close, but not confirmed yet.

  • Lawrence_Chiu

    mole/berk, you buying puts or calls? It's hard to tell from your post “So, Berk and I went shopping this morning: ISRG, BIDU, GOOG, CF, FSLR, AAPL”

    Thank you

  • Paleface
  • Vega

    Got it.
    Thanks guys.

  • gagelle

    Heard it on CNBC.

  • gagelle

    I'm out. I only have one more day trade left. This rally may last for a while. I'll wait for Mole and Berk's next update.

  • Bartholomy

    I sell ES at 1020.

  • C.C. Rider

    Did you stay with a 1370 stop?

  • molecool

    We went short and had our ass handed to us.

  • gagelle

    The question I have is whether to buy some index calls for tomorrow. I stll feel uneasy about it.

  • gagelle

    Same here.

  • molecool

    I can't give you trading advice, gagelle – but if it was me I would be careful as the market has moved quite a bit.

  • gagelle

    I agree. I'd rather keep my cash for the next big shorting opportunity. (And we all know that this is for entertainment purposes only.)

  • humbledukes

    I just sold my Q's calls and made a nice 37% profit from Friday. The volatility is just so difficult to contend with. They opened at .88 and I sold at .74 even thought the Q's moved another 50 cents higher from the open. I will probably reenter tomorrow, if the price comes down due to IV. I will continue making this trade until OPex on Friday. I am playing the 38 in Nov.

  • molecool

    Yup, this is not a call buyer's market yet.

  • molecool

    Happens – let's look forward.

  • balljet

    I think if it breaks 1370. it will go to 1410, then I will go short… what say you?

  • gagelle

    GLD is up a bit.

  • gagelle

    The unemployment fallout has yet to hit. Retail, which usually hires this time of year, is laying off.

  • gagelle

    Congress is talking about another stimulus package.

  • molecool

    LMAO – more fuel to the fire.

  • molecool

    New updates above.

  • molecool

    I think you guys gave up on us today – LOL :-)

  • bts

    So, SPX is currently showing a beautiful morning star. We had a huge doji on huge volume yesterday, and today the market gapped up and is currently more than halfway up the black candlestick from two days ago. However, I'm suspicious. First of all, the Elliott Wave count suggests there's more to go – not to mention the fact that AM New York, The New York Times, etc., are all suggesting this may be a good place to buy. Second, althought the market in the aggregate shows this candlestick pattern, the nine sectors (XLF, XLY, etc.) show something entirely different. They either gapped up and are now trading below their opening or they gapped up but have not made it up the black candle from two days ago. This suggests to me that althought the market will rally, it will be short-lived. This is an expected bounce, but there's still some space on the downside. Watch for a sentiment change.

  • http://www.myspace.com/181419967 JZT_CHIL

    A lot of red flags going on still. Like some put premiums not budging or are diving despite the stock value increasing. Some spreads still very wide.
    I ain't buying if I'm not comfortable (or not sure) with the technicals & such factors: high vol, miss-matches of indices with shorts, geopolitics & hair-pulling sentiment).

  • Paleface

    Why? I want to learn, not worship.

  • http://www.myspace.com/181419967 JZT_CHIL

    Got that right… I almost worshipped the turtles for calling a bear when everyone else (“gurus”) were bullish last week! Lol…
    Still lurking around here…

  • molecool

    Yes, I went short at important levels and got kicked in the groin each time. Not a problem – I knew the odds and was on the wrong end. We are definitely above the 1.618 retracement of the a wave, at least on the $SPX, so although things are completely overbought the market keeps going up.

  • molecool

    Well, if you guys stayed out and watched you were better off.

  • gagelle

    testing my cell phone

  • molecool

    Didn't ask for that, mate – just wondered why it was so quiet.

  • Paleface

    I went to cash 15 min before thursdays close. (With good profits on IWM puts:)) Now I only enjoying the show and learning.

  • BigHouse Aka Mr Vix

    looking like maybe minor wave 3 ended and we are going into wave 4 .

  • Bartholomy

    Gvt garantuee the bank swap.
    Credit crisis is resolved in sort term.

    Going up for sure… Some do not move up … GE

    Patience before going short my friend, now follow the rally.

  • Growler

    Agreed. QID & SKF were my best plays today

  • molecool

    It does – I think we might be in a {iii} of 1 of (4).

  • gagelle

    Plus, everyone on CNBC talking about going long for great values. But who knows how long this rally may go.

  • BigHouse Aka Mr Vix

    I am thinking this will rally into the election then wave five comes :)

  • BigHouse Aka Mr Vix

    I wonder if we will be up 1,000 points lol

  • molecool

    That's the plan – as I said above. We seem to be in minor 4 of (3) now – expecting more upside from here.

  • ProZachJ

    Today I traded a couple of stocks, Long OI: DZZ expecting them to gain throughout the day and then I used those profits as a hedge to get into short positions at the close today on some tech stocks. When gold gapped down I sold my DZZ and Bought DGP and rode the bounce for a small profit. Staying long OI. Went short RZ at 5.20 hoping for it to fall back towards 4.00 in the next selloff. Also went short goog at 379.99 towards the end of the trading day.

  • gagelle

    Amazing rally. Some stocks may have retraced.

  • molecool

    937 – close – quite a rally. Actually, I'm pretty stoked about this, believe it or not.

  • gagelle

    Mole, lack of traffic here is a nice bearish sign.

  • BigHouse Aka Mr Vix

    i am glad i went long UYG on friday.But it seems it didn't go up as much as the general market.

  • molecool

    LOL – don't say that! I am actually hoping for a monster rally – see above.

  • http://www.myspace.com/181419967 JZT_CHIL

    Honestly, I would've been better off if I had listened to you & Berk. [Sniff sniff)] :(

  • http://www.FinancingIdea.com Serge aka "The Fork Master"

    Mole,
    its a full moon in Aries (fire) – Fire = Rally :)
    Rally may set a temp top tomorrow.
    4:04pm is a full moon – expecting temp top around that time +/- 2-3 hours
    after we may consolidate for a day or 2 with final push into OPTEXP

  • molecool

    NOW he tells me 😉

  • http://www.myspace.com/181419967 JZT_CHIL

    Oh, cool. How exciting!! Rally into election makes sense… historical data supports that… but then this is a different kind of history the world is making right now.

  • jcoors

    Best daily return for me ever. My full account up 33%.

    Entered MS long on Friday @ 10. Sold today @ 15.02. Should have held on (closed at 18.10), but I was getting nervous about locking in my profits.

    I have a large number of UYG calls and a huge position in GS. Looking for 13 on UYG and 130-140 on GS.

  • molecool

    REKOGNIZE!!!

    That was a great trade – glad it worked out for you mate.

  • SwissCheez

    Mole and Berk, thanks guys for all you do! There is no trader who haven't been ass*aped by the market at least once, anyhow it's not easy for us bears in a (pretended) bull market. Me too, I had my butt handed to me when I only took 50% profit on what has become a clear double a couple of hours later today. Tis butt-handing of different kind, I know. No pain, no gain! No guts, no glory! No balls, no babies! Keep up the good work.

  • SwissCheez

    Mole, Berk, thanks a ton for keeping this blog alive. There is no trader who hasn't been ass*aped by Mr.Market at least once (and yours truly more than that). It is not easy for us bears in this pretended new bull market. Me too, I had my butt handed to me – I took profits when I was up only 50% on my calls, and in a couple of hours after I did those calls became a clear double. I know, it' a different kind of butthanding – but nevertheless. Keep up the good work. No pain, no gain! No guts, no glory! No balls, no babies…

  • http://embarqmail.com stoner516

    You guys do a great job. Love this site.I'm new to your site and E.wave theory so it's nice to learn ttrough all of you. Thanks, again.

  • http://www.FinancingIdea.com Serge aka "The Fork Master"

    Headline: McCain vows to fight for new direction for nation
    Cause: With Dow Theory confirmed trend change the direction is now DOWN! ;-))

  • http://www.FinancingIdea.com Serge aka "The Fork Master"

    get some good cycles subscribtion
    sometimes cycles are amazing

    and you have to become forkoholic
    I think we're going inside yellow or even inside green fork for the next 4-5
    http://forkoholic.com/images/spxforking101308a.jpg

    As always – no guarantees

  • http://www.FinancingIdea.com Serge aka "The Fork Master"

    Hank at http://www.elliottfractals.com has a free fractal week starting today

    After, when you get your password
    go to this login page
    http://www.elliottfractals.com/index_page.asp

    BTW anyone has any good book and/or a website with explanation about market fractals? Let me know
    coz I'm interested in this stuff

    Hank is publishing a book as well, soon

  • molecool

    Thanks Emmentaler 😉

  • molecool

    Well, you caught us on a not so great day – thank you for your kind words. We do fess up when we wind up on the wrong side of the market, unlike many other bloggers who simply go silent.

  • molecool

    Say again? I'm not sure I get what you're saying.

  • molecool

    Are you talking about Caroline's work?

    About 50% of the time I have a hard time making sense out of your comments, mate 😉

  • balljet

    LOVE emmentaler, best swiss there iss.. :)

  • balljet

    OK, this is my take fwiw, today was a bit over the top, everyone expected a rally and did we ever. Volume was not the best and I believe we need to see more volume coming into the market before we head down again. I am trying to figure this mass psychology thing out..

    lol!!

  • balljet

    BTW Mole and Berk, you guys are great!! I missed the last big slide, due to a fam. emergency. I'll try not to miss the next.. Thanks for doing all that EW stuff…

  • T.B. Aurelius

    I don't know why, but I get the feeling the market is ready to puke…
    Then again, when I see things wrong, I see them so completely wrong…
    Only time will tell…..

  • T.B. Aurelius

    The peculiar thing is…
    Over at the slope, almost everyone is congratulating profit on the long side…
    And it is talked about as if tomorrow's gap up is guaranteed.
    It seems way too inappropriate to talk about the eerie feeling I have, while fellows are still mostly long, so I did not…
    But Mole & Berk…
    Don't you find it to be peculiar that bulls and bears both cheering on and relatively nailing on the timing?
    Since when the market gave the mass such generous sums enough to go around as it is now???

  • BigHouse (Aka Mr Vix)

    Well i feel this is wave 4 but not sure what degree. One thing i am sure of is that wave fours love to be complex in nature.

  • BigHouse (Aka Mr Vix)

    Bush is speaking at 8am on Tuesday. You know what that means.Seems that everyone is calling a bottom. If we go up 300 early on i will unload my longs. This could be a big fake out.. classic in 4th waves.

  • RVAspeculator

    I respect this blog quite a bit more now that you made a bad call and was HONEST about it. I hate how so many blogs I read make wrong calls and then forget or deny them. I also run a blog and got bullish too early, but the key is honesty to the readers. Great job guys.

  • BigHouse (Aka Mr Vix)

    Dow futures up 144 after hours.

  • molecool

    “Over at the slope, almost everyone is congratulating profit on the long side…”

    The problem I had today was that the wave pattern allowed for a lot of room. I chose to not cut my positions until then, with obvious results. I'm not surprised that the bears are cheering this rally as well, as most us have been missing out on much of 3 of (3) due to the high VIX. Will it be short lived? I actually hope we get a week at least, and even if we drop a bit tomorrow I think we will continue climbing a little bit, which is just fine by me.

  • molecool

    The next one will be a lot more fun, assuming we keep climbing a bit from here.

  • molecool

    Wow, this market is not wasting time – LOL

  • molecool

    Thank you for your kind words – I think honesty is key. We are not infallible and sometimes we find ourselves at a fork in the road. Could have gone either way today but now that the market picked a direction things should get a lot easier.

  • BigHouse (Aka Mr Vix)

    now 220

  • Ukla the Mokk

    hi all…I was at work today and it's probably a good thing, because I was watching things from TOS WBT and there are trades that I thought about where I, too, would have had my ass handed to me. I actually put in an order on XLF toward the end of the day for ITM puts but thankfully was never filled. So lets get this market rally on so we can set ourselves up with some cheap puts for a change!
    In the meantime, I actually think I may do some short put spreads to cash in on volatility crush. I know spreads aren't the most popular thing here on this blog, but I do believe diversity is key. And options, arguably, have never been so over-inflated as they are now.

  • http://investingadventures.com Jorge

    And fair value's -100 lol

  • phoneymoney

    I'm looking to capture the same vol decay, but from the short call side. Clearly, there are issues on fire, and there are others that didn't participate as much in the rally. I initiated a few short vertical call spreads on selected weaker stocks today (GCI for example). I just don't trust the kind of market manipulation that can happen during options expiration week — thus I only looked at stocks that had no chance of rising significantly in the next few days.

  • http://www.FinancingIdea.com Serge aka "The Fork Master"

    coz I'm russian, u – german
    we still have unresolved issues since WW2, dude :-))

  • Ukla the Mokk

    The problem with a call spread though is that they are negative vega trades…meaning this: with a short call spread you want the underlying to move down away from your short call spread.  However, as a stock moves down, the IV increases, working against your trade.  For this reason, I'm as much a “put” person as I am a bear person.  Long puts are positive vega and negative delta…so when you have puts on a stock and the stock goes down, the IV goes up (positive vega) and the delta “increases” (really it just moves farther away from zero on the negative side), so those two things work for you.  If the stock goes up, you can sell naked puts or put spreads and if it keeps going up, IV goes down and delta “decreases” again, giving you a one-two punch that helps you buy back that spread for much less than what you sold it for to enter the trade. 
    Of course, if the trade goes against you with puts, these things work against you just as quickly, which is why puts are more volatile than calls typically.

  • Ukla the Mokk
  • http://www.baobau.com segaa
  • http://www.baobau.com segaa

    On days like these we could expect a great whipsaw action before continuing up till expiration Friday.

  • http://www.baobau.com segaa

    “Clarice, there's nothing I'd love more in the world than to chat with you. Unfortunately, you've caught me at an awkward moment. Please forgive me.” (Hannibal Lecter)
    Heh, guys you're cool, my word, I started visiting you more often then SOH – too crowdy there lately :)

  • SteveInChicago (spsnomad)

    They do love to be complex. My read is that that first burst on Friday was minuet wave 4, and we're in minor wave 4. Wave 4 can't shoot into wave 1's space, so if we have any meaningful jump tomorrow (past 1010 by my count), it's the minor wave.

    Also, minor wave 2 wasn't complex (straight up 150 point S&P shot), so wave minor 4 probably will be. I'll defer to Mole and Berk, since they are much more expert on Elliott Waves than I am.

  • Geo

    'Expect a huge trading range this week” – SectorVue by David Schultz at Decisionpoint.com

  • http://www.beanieville.blogspot.com beanieville

    Bulls ready to steamroll, RELENTLESSLY, the bears into year end. Be careful.

  • phoneymoney

    I'm looking to capture the same vol decay, but from the short call side. Clearly, there are issues on fire, and there are others that didn't participate as much in the rally. I initiated a few short vertical call spreads on selected weaker stocks today (GCI for example). I just don't trust the kind of market manipulation that can happen during options expiration week — thus I only looked at stocks that had no chance of rising significantly in the next few days.

  • http://www.FinancingIdea.com Serge aka "The Fork Master"

    coz I'm russian, u – german
    we still have unresolved issues since WW2, dude :-))

  • Insect Overlord

    The problem with a call spread though is that they are negative vega trades…meaning this: with a short call spread you want the underlying to move down away from your short call spread.  However, as a stock moves down, the IV increases, working against your trade.  For this reason, I'm as much a “put” person as I am a bear person.  Long puts are positive vega and negative delta…so when you have puts on a stock and the stock goes down, the IV goes up (positive vega) and the delta “increases” (really it just moves farther away from zero on the negative side), so those two things work for you.  If the stock goes up, you can sell naked puts or put spreads and if it keeps going up, IV goes down and delta “decreases” again, giving you a one-two punch that helps you buy back that spread for much less than what you sold it for to enter the trade. 
    Of course, if the trade goes against you with puts, these things work against you just as quickly, which is why puts are more volatile than calls typically.

  • Insect Overlord
  • segaa
  • segaa

    On days like these we could expect a great whipsaw action before continuing up till expiration Friday.

  • segaa

    “Clarice, there's nothing I'd love more in the world than to chat with you. Unfortunately, you've caught me at an awkward moment. Please forgive me.” (Hannibal Lecter)
    Heh, guys you're cool, my word, I started visiting you more often then SOH – too crowdy there lately :)

  • SteveInChicago (spsnomad)

    They do love to be complex. My read is that that first burst on Friday was minuet wave 4, and we're in minor wave 4. Wave 4 can't shoot into wave 1's space, so if we have any meaningful jump tomorrow (past 1010 by my count), it's the minor wave.

    Also, minor wave 2 wasn't complex (straight up 150 point S&P shot), so wave minor 4 probably will be. I'll defer to Mole and Berk, since they are much more expert on Elliott Waves than I am.

  • Geo

    'Expect a huge trading range this week” – SectorVue by David Schultz at Decisionpoint.com

  • http://www.beanieville.blogspot.com beanieville

    Bulls ready to steamroll, RELENTLESSLY, the bears into year end. Be careful.