Gaps Galore

UPDATE 1:42pm EDT: We pushed up one more time and almost filled the gap:

I just started to grab some puts despite the fact that I believe that we may push up once more to fill the gap completely. However, one never knows and this is as good a spot as any. My line in the sand is the 835 region – if we push beyond that I expect more exuberance to take place. BTW, I’m playing it fairly small at this point as this is a trade against what I consider to be the current trend.

HA! I just finished typing this and we’re whipping higher. So f…ing predictable – I wouldn’t be surprised if we retraced all the way up. Let’s see what happens around 3:30pm EDT.

I am actually a lot more concerned with picking the next low and to settle on a strategy on how to counteract a drop in implied volatility (i.e. option vega). Reverse calendar spreads might be a way to go, but before any of this happens I’m going to start hunting for short squeezed candidates.

UPDATE 2:24pm EST: stxinon challenged the fact that the McClellan was overbought previously, so that might not mean much. The more longer term NYSE Bullish Percent Index appears to support his argument:

The way I’m reading this one however is in the context of the entire (A) push inside Primary {2} of c. I believe (and there’s an emphasis on believe – I do not know for sure) that we might find ourselves at the 60+ level once we complete Intermediate (A), and this gives us about the right amount space to complete this motive, assuming that we’ll probably drop into 2 first and then get close to the max once we finish 3 of (A).

Hope this makes sense – but as I keep saying: I don’t have a crystal ball either and this is a very fluid environment.

UPDATE 2:37pm EDT: Mr. Waffle just announced that he’ll short Gold right here:

Now, with all due respect – I think that might not be one of his best ideas (as a matter of fact we already retraced quite a bit since he posted). See how we snapped back to that fucking diagonal again? Yes, it shall be known as the ‘fucking diagonal’ henceforth – LOL. I need to see a close below this damn line and then I’ll grab GLD or whatever on a retest which we’ll most likely see. Gold is a bitch to trade – especially in the past six months. So, you’ve got to have the odds on your side, othewise it’ll whipsaw you to pieces. Sometimes you get lucky – yeah – but more often than not selling the dip is just asking for punishment, which the precious metal will be happy to administer post haste.

UPDATE 3:15pm EDT: Rats – I need to pay hosting fees – you know what that means… BTW, nice drop so far and my puts are liking it. But we’ve got 45 minutes to go and I won’t get over excited unless we see a follow through – plenty of time to get a whipsaw back up. I will hold those puts either way.

UPDATE 3:34pm EDT: Lester’s new resolution just made it as the quote of the day:

I will never trade long again! — Lester, dismayed owner of IWM calls.

Snort!! 🙂

UPDATE 3:38pm EDT: Here we go:

As expected the buyers are stepping in after 3:30pm EDT – so far it’s been feeble. Observe the first attempt to breach today’s short term channel (2min chart). I think if we clear this one we put holders might see some of today’s profits melt away.

UPDATE 3:48pm EDT: Breadth numbers:

• SPX: 2.1:1 declining
• NDX: 3.5:1 declining
• DJI: 2.3:1 declining
• Russel 2k: 4.1:1 declining

UPDATE 3:58pm EDT: SPX breadth now 4:1 declining – nice 🙂