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Another Rough Week In The Making
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Another Rough Week In The Making

by The MoleSeptember 23, 2019

Rob Hanna over at QuantifiableEdges has presented data that suggests high odds for a sell off in week #39, which of course begins today. He has been tracking the SPX since 1960 and his data suggests that “the week following the 3rd Friday in September has produced the most bearish results of any week.” For more stats please head over to his blog – he is doing great work and happens to be one of a handful of quant traders I follow.

My own SPY stats show a bearish bias as well but less so, which isn’t overly surprising as these stats only go back to 1993. The reason why I’m using the SPY and not the SPX is because of the Yahoo data used in the script which I eventually plan to replace with a python script that connects to IQFeed. That code has been written but I haven’t had time to refactor the script yet.

On the event front we have Draghi scheduled around the time the NYSE opens, which should be good for a few fireworks. Wasn’t the man officially retired? Either way he’s on the way out and whatever comments he may offer have the potential to roil markets.

SPX option traders are pricing in a ~41.5 handle move for this week – should Hanna prove to be correct then we are talking a drop to roughly SPX 2950, which at a FV of 1.46 makes it roughly ES 2951.50.

Price action on the daily and weekly shows us a reduction in realized volatility and a support zone near ES 2950 followed by ES 2925. The technical excuse for a 2950 support zone is the 25-day SMA which I concede has been largely ignored lately.

Thus a drop to the 100-day SMA at ES 2925 or even the 100-week SMA at ES 2930 is more likely. Let’s see if option traders get it right and prove wrong all those silly lines I enjoy drawing on my charts. Let’s not forget that SMAs have rather little predictive value in that they are based on hindsight data while option prices are based on forward expectation of volatility.

My gold campaign has taken its merry time but eventually resolved higher late last week. The daily panel shows us a possible breach through a Net-Line Buy Level which is no guarantor of success but a big step forward.

A breach through GC 1535 will be needed for things to truly pick up momentum.Β My trail now advances to the break/even mark in hopes that Draghi is not going to stomp on the gold bugs one last time.

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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 the usual social media waterholes.
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  • https://evilspeculator.com Sir Mole III

    Special thanks to @Ronebadger who pointed me to Hanna’s new post

  • http://www.captainboom.com/ captainboom

    I was thinking of doing the same thing, so good for him. I read the QE blog regularly.

    BTW, I finished the Price Action class, and am working my way through the System Building class. Good stuff, and thanks for the evaluation of trading platforms. Seriously thinking of MultiCharts, in part due to TPO and Footprint chart availability.

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • ridingwaves

    Ronebadger, the long island shredder……got to love hurricane swells….
    be vigilant for the growing great white population….welcome to my world…
    https://www.boston.com/news/local-news/2019/09/20/great-white-shark-surfer-photo

  • ridingwaves

    btw Mole, the stats might be moot with all the repos, rate cuts, fed actions throwing any normalcy of stats into trash bin…

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • http://www.captainboom.com/ captainboom

    That doesn’t look like AZ…

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Ronebadger

    I’m on his free email alert list…go to his site and sign on?

  • Ronebadger

    The good news about great whites; they are more easily dissuaded than other species with a poke to the eye or gills. Smacks in the snout…not so much.

  • http://iberianviews.blogspot.com/ catracho

    NDX 100 watching 7750 – for possible breakdown – as the breakout was not convincing

    https://uploads.disquscdn.com/images/09bbaec6c9ecfc3540b70edfeb2f9485ba0f42ab8fb3e953b54d87a960def1e0.png

  • ridingwaves

    the bear adage works here too, be the fastest paddler..

  • Ronebadger

    That’s what my Oceanography prof told us in class (1975)…always use the “Buddy System”…there’s a 50/50 chance the shark will get your buddy…

  • ridingwaves

    even in shark infested waters, its crowded, plenty of buddies…..sea snake pattern on bottom of board might help also….

  • http://www.captainboom.com/ captainboom

    I just pull up the blog nightly as a part of my homework. Keeps my inbox a bit cleaner.

  • https://evilspeculator.com Sir Mole III

    FINALLY!! πŸ™‚

  • https://evilspeculator.com Sir Mole III

    Yeah most people think AZ only has deserts. You go up to Flagstaff and get this:

    http://www.kiplinger.com/kipimages/pages/20725.jpg

  • https://evilspeculator.com Sir Mole III
  • https://evilspeculator.com Sir Mole III

    How’s everyone?

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    absolutely dumb-struck with oil.
    Saudi refineries massively hit, and it’s like “MOVE ALONG, NOTHING TO SEE”.

    dumb-struck.
    a small orange Tweet and the Market’s going fuck’n nuts?
    Powell Farts and the end-of-the-World?
    China cancels a goat-petting trip? OMG.

    a physical multi-site attack? (yawn).

    [USO]
    https://stockcharts.com/h-sc/ui?s=USO&p=D&yr=1&mn=0&dy=0&id=p76374356242

  • ridingwaves

    I like Williams or Sedona better….

  • pepe

    After spending most of the weekend digging into more advanced options strategies and starting to get my head around the greeks I’m putting on my first short call vertical spread in ENPH: sold $27.50 and bought $32.50 for net credit $1.45 (max return; max risk $3.55). The hypothesis is that ENPH will drop in price and the options will either expire worthless or I will buy them back when the vega and theta has dropped down the bell curve. Pretty chuffed as Jeff Lynne says. πŸ˜‰

  • ridingwaves

    Thomas Cooked its way to BK, what a boondoggle …..had some friends in Newport beach that scammed there travelers checks in a big way before video and digital was around….went right back up there nose…

  • BKXtoZERO

    ouch: “all those silly lines I enjoy drawing on my charts. Let’s not forget
    that SMAs have rather little predictive value in that they are based on
    hindsight data while option prices are based on forward expectation of
    volatility.”

  • BKXtoZERO

    L TVIX day size 12.83… holding a afair amount that I am down on too… 15.7 14.3 area

  • ridingwaves

    what is fair amount equal too?

  • HD

    FWIW it doesn’t feel like this wave from the aug low has terminated. a new high would complete one potential pattern. 3000 still LIS, seller there.

  • https://evilspeculator.com Sir Mole III

    GG – don’t try to make sense out of anything that happens in the Middle East.

  • ridingwaves

    GC Opex on Wednesday….October is active month for gold contracts not so much for Silver

  • https://evilspeculator.com Sir Mole III

    The truth hurts πŸ˜‰

  • BKXtoZERO

    more than I should have left on…. few Rs each

  • https://evilspeculator.com Sir Mole III

    If you intend on benefiting from a drop in vega then you need to play a diagonal spread, not a vertical spread, as the latter is mostly (not completely) vega neutral.

  • HD

    That looks nice. Sedona comes to
    Mind too. Most people have no idea. Southern AZ, south of hell(PHX), has so many sky islands you can actually experience every riparion zone AZ has in one place.

  • https://evilspeculator.com Sir Mole III

    It’s a more advanced topic which we’ll be covering at RPQ.

  • https://evilspeculator.com Sir Mole III

    Psssssshhht – don’t tell anybody πŸ˜‰

  • https://evilspeculator.com Sir Mole III

    Because you are a hippy πŸ˜‰

  • pepe

    Haha – just when I thought I had it figured out… πŸ˜‰ Seriously, that’s what I really love about options, that there is always so much new to learn with a beginner’s mind. But I think I got the big picture: as long as the stock stays under $27.50 I need to do nothing as opposed the naked puts where I had to fight decay and contraction of the greeks. Grateful for the feedback!

  • ridingwaves

    Long AVXL, IDRA…
    scaling into CPRX on beat down….
    66x Avanex (avxl)drug mentioned on NIH article…at Ladenburg biotech conference tomorrow, results from Retts data to be announce at conference in Retts Europe meeting in Finland on Friday…..they just might have parkinsons, retts and Alzheimers disease key to unlock their grip on those suffering these CNS afflictions….hope is a good thing….painting bullish hammer right now….break out possible…

    https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6468724/

  • pepe

    SQ still dropping but I realize now I played it wrong with long puts. Four bucks down and I’m still flat. Lesson learned.

    Looks like today’s pop is being sold into so we should see accelerated drop to the downside and one step closer to the strike. I’d say we close around $56 today.

  • Darkthirty

    Working hard to keep ES up………..

  • Julie 35 – 25 – 36

    The Southern Rockies are beautiful AZ NM We have always liked them When you mention AZ people think of desert but not true like the Chief and GG have illustrated Oregon too people think of rain and forests but 1/2 of Oregon is high desert and Eastern Oregon receives 300 days of sunshine per year
    JULIE

  • HD

    The stats for this bull market are 6 red and 4 green for this week of Sept. each wave has unique characteristics imo.

  • Ronebadger

    Ohhhhhhhh….you said “wave”…..

  • Julie 35 – 25 – 36

    SPX Looks like a 9 day consolidation to me
    JULIE

  • Mark Shinnick

    Does you system begin adding more at a point of max expected drawdown?
    I’d imagine those systems would be triggering for something like that around now.

  • https://evilspeculator.com Sir Mole III

    This guy used to consult to all major European banks and lead the integration of the compliance process. So not just another pundit:

    https://www.youtube.com/watch?v=7CKLiw4k8y8

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • ridingwaves

    What people can take away from a movie-

    “learn the joy of hope born out of both sorrow and tragedy within a couple men that society ignored for different reasons”…..

    Shawshank Redemption (25 yrs old today) Didn’t win one Oscar, it was the year of Forrest Gump….yet now rated as top movie of all time

    https://www.youtube.com/watch?v=9K30e9O3Nng

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    If you are going to crawl half a mile through sh!t, make dam sure there isn’t a welded grate on the exit pipe!

    https://www.youtube.com/watch?v=lSq4f5q4TnY

  • ridingwaves

    made the top of my list…..

  • BKXtoZERO

    Manual but I have gotten better about spacing it out.

  • http://iberianviews.blogspot.com/ catracho

    Could be – various paths
    market probably needs a new high – whether that is after a shake out ( some negative divergence on recent move up ) or not we’ll see https://uploads.disquscdn.com/images/8b1f6cd817a3e62c42994de6b9e39158b5946c9519b6ddbec762525c3c186cf6.png

  • ridingwaves

    well, when you have to pay a fee to deposit money in a bank, times are tough….what a mess……

  • Julie 35 – 25 – 36

    Guys With the technology of cars that drive themselves plugging in a destination Drunk driving could be a thing of the past. Municipalities and counties must find another revenue source Thinking outside of the box of what could be a possible trade with this developing technology
    JULIE

  • Julie 35 – 25 – 36

    RW Safe manufactures could be a trade
    JULIE

  • Ronebadger

    BUT…someone might “spike” your gas…then your car WILL drive drunk…

  • Mark Shinnick

    For myself, I’m getting more short triggering but not yet taking them all for the same reason of this clustered scene the past few months.

  • ridingwaves

    the problem is drunks still like to drive and like spinning the wheel thinking they are going to land on red 20, most of the time its black 6…often leading to death…..

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Julie 35 – 25 – 36

    GG Your’e driving me to drink lol
    JULIE

  • http://iberianviews.blogspot.com/ catracho

    The missed out “life”

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    oh, you started down that road a long time ago.
    πŸ˜‰

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    Time check.

  • Julie 35 – 25 – 36

    1 glass of red wine after dinner. An occasional shot of Fireball perhaps once a month if that. That’s all for me
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    I knew you might say that.

    https://www.elle.com/uk/beauty/skin/a40482/effects-alcohol-on-skin/

    “Optimistic we know, but surely it’s not all bad news? Alas, according to Bolder there’s not much hope with this one:
    ‘I know some people claim that red wine contains antioxidants which are good for your skin but the alcohol and sugar content alone outweigh any benefits that they may have on our skin.”

  • BKXtoZERO

    Out of most of day position TVIX 4 CENT GAINER!!!! Leaving a little on adding to my pile.

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Julie 35 – 25 – 36

    GG You can certainly look at someone’s face and tell if they are heavy drinkers or smokers. Cyd and I have never smoked or even taken drugs not even pot. Wait we tried pot once at a party
    JULIE

  • BKXtoZERO

    I remember when penny candy was a penny. That is 4 red liquorice fish there

  • HD

    Idk. Not sure prosecuting drunk drivers is actually a revenue source.

  • http://iberianviews.blogspot.com/ catracho

    i bottle (in Spain)

  • Darkthirty

    Youngster, that’s almost a candybar!

  • Darkthirty

    Never trust anyone who hasn’t tried pot…..

  • http://www.quemango.com Herb InCebu

    Or a Bazooka Bubble Gum. But then if you were left with nothing but a jar of pennies, at least you would have copper.

  • https://evilspeculator.com Sir Mole III

    Actually once you truly understand how a vertical spread works and how to calculate your risk as well as the odds the rest is just a variation on the same theme.

  • Ronebadger

    This article says it takes 2.41 cents to make …. uhhh… a cent…
    https://www.thepricer.org/how-much-does-it-cost-to-make-a-penny/

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    no worries. they make it up in volume.
    πŸ˜‰

  • BKXtoZERO

    My day was 1970-75 area when I was walking to the corner store with my free change. Candy bars were .11 cents, then 16, then 21, 25 and at that point I was pissed. Dipsey Doodle Corn chips doubled overnight on me too. It was my fist lesson on inflation. I also FOOLISHLY spent some silver dollars given to me by an uncle on…. candy there. Aaarg

  • Darkthirty

    Shanghai a shopping cart from A&P, walk the roads and fill it with pop bottles… BIG money! LOL

  • Ronebadger

    …and, you wonder why we run deficits? Useless little discs…just round up or down to a nickel…who cares? Just get rid of cash … period. I’ve heard that the MAIN reason we still have pennies is because the people of Illinois love “their” Lincoln.

  • BKXtoZERO

    TVIX is right in there after heart disease…. probably causes heart disease

  • http://www.captainboom.com/ captainboom

    Mid 60’s I could get a roll of Necco Wafers. I recall my mom actually buying that shit for me in the checkout line of the grocery store. Chuckles were another favorite.

  • http://www.captainboom.com/ captainboom

    No way I want to get rid of cash. No one is tracking where I get and spend a chunk of mine. About half the customers I have in the fireworks tents pay cash, and I like it.

  • http://www.captainboom.com/ captainboom

    That’s what Bill Clinton said πŸ˜‰ I saw a bumper sticker not long after that kerfuffle that read: Inhale To The Chief!

  • Ronebadger

    I understand why people like cash and want to keep it…I’m just saying, in this day and age, it is not needed. Plastic, computers and phones can buy all you need. We write out about 10-15 checks a year these days…it used to be hundreds.

  • Darkthirty

    Can’t seem to find “hanna”, got a link?