Intra-Day Update: Two Point One

UPDATE 11:09am EST: I just had a long conversation with Berk of how rough the option market has been in the past few weeks. It’s tough to eek out a living in this environment, with the VIX sky high still you better pick your entries wisely. Anyway, 2.1 is what the TNX yield is at right now – wow – that’s pretty low. But remember to ignore the TNX after interest rate cuts, and accordingly equities are holding steady after the early morning drop. Berk and I are still holding those XLE puts – our line in the sand is 51.45 – the C wave of the triangle. I was tempted to cut this one early today, but decided to stick ‘with the program’.

Anyway, I have some hacking to do while this market is stuck above the 898 long RL. Based on the Zero signal I don’t think this one will be breached anytime soon.

UPDATE 11:16am EST: OPEC wielded the ax by 4.2 million brls. That one sent FLSR flying of course – I totally forgot about their meeting – darn it – because I expected them to cut.

UPDATE 11:21am EST: Let me give you an idea of how useless the latest rate cut was:

Here you see the target FFR stepping lower in the past six months compared with the effective (real) FFR. It’s basically been around zero for quite a while now. The target rate is simply kabuki theater – all they are doing is follow the market. Of course equity investors/traders still have not gotten the memo – massive amounts of assets are seeking shelter in treasuries while we keep rallying. Not that I didn’t expect this (see my charts) – but it still boggles the mind 🙂

UPDATE 12:10pm EST: MA is going to be one sweet short at 151 🙂

UPDATE 12:16pm EST: The Dollar has kept dropping to the point where I think we are looking at something else here. Does not look like an A-B-C to me anymore – or maybe this is part of a massive A leg.

Anyway, it’s obviously dead in here now – I think the X-Mas season is taking its toll. So, I won’t post as much for the rest of the day as the audience is shrinking – will devote myself to finishing ZI-RL.

UPDATE 1:36pm EST: The Zero is flashing green, and I was cautious about taking this one. The plain zero measures momentum, which is positive, but based on the 911 RL (91%) it doesn’t have enough juice. This is really strange and completely violates the data I collected yesterday. Either that – or 2sweeties’ probabilities are wrong 😉

I’m almost finished with ZI-RL – all the math and hard work is done. Now working on visualizing it. Should be ready tomorrow.

UPDATE 2:20pm EST: Well, we’re at 918 – best theory I have right now is that it’s an expiration week lure for the bulls. There is NO JUICE in this tape – I’m not arguing it and whatever the market does it does. But I am not going long here, suspecting a take-down by tomorrow or Friday. Remember that Wednesday is usually the strongest day of expiration week.

UPDATE 3:05pm EST: Some of the noobs here were asking about the Zero and why the original version doesn’t know about retracement levels (or senses them). It’s because the original Zero simply has no context of retracement levels. Doesn’t even know they are there. It sees that momentum is positive and according to its rules pops up a buy. Now, in a majority of the cases (90%) this is actually useful as it often pops up signals which are counter intuitive to us emotional trading rats (see recent tape) and either prevent you from going the wrong way, cut at the low/high, or keep you in the game. But there are these rare cases when you are up against a 90% retracement level (according to www.retracementlevels.com) and some big sellers (or buyers on a down trend) are letting the market slip by it just for fun. Then they strike and you see a sudden nasty plunge – which is exactly what happened today. Call it a bull trap or expiration week monkey business. This is the kind of stuff I plan to build into Zero-RL (Zero which is ‘aware’ of retracement levels).

Just a matter of time until the Zero develops a consciousness and embarks on its real mission to subjugate humanity. Mmmhwwuuaahaaaaahaaaaaa!!!!!