Insane In The Membrane

2:42pm EDT: I feel like I just dropped the soap in a federal penitentiary. I know this bad and extremely frustrating – I basically just gave up all of yesterday’s gains in my index puts.

I know you are frustrated. Now take the plastic bag off your head – put down the gun – and keep that razor blade firmly lodged in your artery until the ambulance arrives.

Here’s my attempt to bring some order into the chaos we are experiencing. It ‘seems’ like we pained some Wild West Buffallo Bill Rope-A-Dope (a)-(b)-(c) correction. Not sure it’s done yet and I added a short term fib scale to suggest possible targets. 100% means (a)-(c) equality – we could push further than that of course by EOD. As I said – I’m holding my puts – no matter how much postulating we’ll see.

However, if we breach yesterday’s highs then the jig is up and I will have to admit defeat. Which will probably keep me mostly in cash for the remainder of Intermediate {2}. The name of the game at this point should be capital preservation – the more cash we burn on shorting this bear market correction the less fuel we’ll have to really stick it to the bulltarts late this summer.

2:08pm EDT: Take a quick look at these SPX breadth charts:

2nd half:

Is this coincidence or are the Goldman boys trading the alphabet these days? Never seen anything like this… insane… Today’s menu: J through X 🙂

2:33pm EDT: Wow wow wow – can you say ‘impending bond market dislocation’?

This is a very important line for Curly – believe me. If we breach above this the proverbial excrement is going to hit the fan.

3:30pm EDT: I just traded that monster divergence in the Zero Lite for a quick ES futures scalp. Not much – exited at 905 as the tape is extremely whippy. As I’m typing this we’re getting some monster green candles again. Three steps forward – two steps back – painful. This was a great example on how to play those hourly retracement levels in combination with the Zero. I knew what the line in the sand was in terms of probability and watched the Zero Lite signal degrade. It took a while for it to break but when it did it was a nice quick ride to the downside.

Anyway – breadth is looking pretty bearish at this point and I think we have a chance for this to resolve in our favor. If you’ve held out this long – don’t do anything stupid now. Let them show you their hand in the next 30 minutes.

3:33pm EDT: Quote Of The Day:

Which part of record foreclosures does the market not understand? — Ropey

Well, three minutes later and we took three steps back again. Listen guys – I have had enough. My line in the sand is yesterday’s high and until then the bulltarts can kiss my shiny metal ass.

3:46pm EDT: Oh shit – this is not good: