Tempestuous Tuesday Rub Down

Alright, here’s today’s script as evidenced on the Zero Lite:

That strong downside signal at the open instilled much hope in some of my subs – which I immediately proceeded to stomp out in my usual gentle and delicate disposition. Sure enough – after the scripted snap back rally we had to sit through hours of mindless VWAP reversion followed up by the regularly scheduled bear squeeze wipe out at the close. Hey, did this sound cynical enough? I want to make sure it comes across 😉

Program Trading Report:

resident.evil/ES: -4.75
resident.evil/NQ: -3.75
geronimo/ES: +2.5 (We were sweating there for a while on the 2nd trade but this fucking thing keeps being spot on)

Nothing much to add to my prior wave count – I think 1010 and 1020 make excellent targets. BTW, I went into cash today after three weeks of relentless punishment. My realization was that the puts I was holding had been depleted to a point where they would be unable to sufficiently leverage the drop I am currently expecting. So, the plan now is to start loading up ATM options at 1010 and/or 1020 – all depends on the tape we’ll be getting.

CSCO is reporting earnings tomorrow and I expect some fireworks if they somehow managed to eek out a good quarter. I used to work there back in the dot com days and something I remember clearly is that they were always very good about managing their business – so at first I thought that we might get a repeat of INTC. However, then I looked at the August option chain:

This suggests that they might disappoint – so maybe the game plan might be as such: The futures have been busting higher in after hours trading – ES closed at 1005 and the NQ at 1630.25. Let’s hope this craziness will get us to SPX 1010 tomorrow and perhaps even to 1020. Towards the close I’ll hold my nose, grab my SPY puts, and hope that CSCO will be a wipe out (for the bulls this time).

Hey, what’s in the past is in the past – as a trader that’s an important lesson to learn. Actually the final reason for dumping my puts was that it now has cleared my mind a little and I can more easily reposition myself without having that overnight albatross around my neck. Let’s hope my evil plan works as expected – tomorrow’s tape should bestow us with some much needed clarity. As of now the wave pattern remains incomplete – also as evidenced by that last spike up.

9:44pm EDT: Great interview with Tyle Durden from ZeroHedge – must read. As you guys probably are aware of by now – I’m an avid reader of ZH and have no compunction about sending my own rats over there as in my mind Tyler’s work is very closely aligned with ES’ own mission (please note that there is no official alignment or does ZH endorse ES in any way).

I personally attempt to cover the day to day trading end of the equation with an concerted effort of giving retail traders the information and tools necessary to survive in an exceedingly lopsided trading environment dominated by insiders and government intervention. Tyler and his crew offer a unique background combined with the journalistic cojones, intelligence, and inquisitive nature required to rip the lid off the cockroach infested world we call the financial markets. In my not so humble opinion ZH has officially picked up the reigns of financial reporting where the main stream media abandoned them decades ago before it turned itself into a Goebbels inspired pimping outlet for the financial elite. My sincere respect and gratitude goes out to Tyler and his crew – please keep up the good work.