Spread Them Baby!
Spread Them Baby!
UPDATE 11:17am EST: Wow, what a ride – and we find ourselves at the coveted 920 region. Now, the pace of the recent decline indicates that we might actually be already deep in intermediate wave (5) and in that scenario we’d probably bounce around here a little but then keep dropping. So, the question now for me is whether or not to turn my puts into spreads to hedge myself for some expected upside. After all – we’ve dropped 120 points without a real rally – it’s possible we keep dropping but the $NYMO was a bit oversold already yesterday at -34 and it’ll probably push towards -50 at the end of today.
After some consideration I have decided that it’s time to ‘virtually’ lock in some profits – thus I’ll be spreading as suggested in my Summertime post last Sunday. IF we breach below 800 I will leg out of the short puts side, thus turning back delta negative. 800 is a good level to watch – it’s a psychological level first of all and it would also confirm that the triangle/flat scenarios I’ve been pimping have been breached.
UPDATE 12:41pm EST: I’m starting to post a few thoughts about our usual suspects as I’m not sure if Berk will have time to post tonight. Let’s take a look at our favorite shiny metal, shall we?
So, that diagonal is officially a resistance line now – so far so good. Gold has been extremely stubborn and this is the point where I feel comfortable saying that the recent trend of higher highs and higher lows has been broken. Another important psychological level is now in sight, which is 800. My evil plan for Gold is to grab some short positions when we breach that level, then sit out the obligatory bear shake out up to about 820, add even more positions, and then cruise it down as it crashes to 650.
TLT (inverse to 10-year Treasury Note $TNX) has been rallying and is approaching levels where I expect a turning point very soon. I’d give to about 118 (61.8% fib) but that would be already pushing it. My stochastic/MACD indicators claim that there might be more upside, so I’m a bit cautious to leg into puts right here. Oh yeah – people keep asking me why I’m not going long TBT. Sure whatever works – maybe I just LOVE to go short 😉
UPDATE 1:50pm EST: We’re now at the ES VWAP which is significant – this where the fake outs separate from the real rallies. If we hold and push higher here I expect some large buyers to step in.
UPDATE 11:53pm EST: LOL – a minute after I posted this the buyers stepped in – 828 now, which is an EST pivot. Glad I hedged myself earlier this morning.
UPDATE 2:04pm EST: 832 – next ES pivot. I think we’ll whipsaw around here for a little – we’ve pushed up quite nicely. So, what did we learn today? Never get too greedy! 😉
UPDATE 2:11pm EST: 836 now – next ES pivot. Do you guys see a trend here? 😉 Actually I was expecting a big of a pullback but the Zero signaled a long ETA, so let’s trust that unless it goes flat.
UPDATE 2:47pm EST: If you guys think this rally was wild, wait until the bots kick in. A bird told me that they are waiting for the PREM (difference between front month ES [a.k.a. ‘spoos’] and SPX) to be above Fair Value, which today is -3.62. Buy orders won’t kick in until maybe -2. If that happens THEN you’ll see fireworks. This is nothing yet.
And now for something completely different (courtesy of ):
