OMG – Did You Hear About Greece!

Sorry, I (volar) dont care about news – especially a country that is 0.01% of Global GDP. Don’t get me wrong, the Euro is a POS, but the news is OLD. Or what I am saying is… be ahead of the news, not behind it.

First, I am on the road this week – so wont be able to comment much.

Second, my apologies for the miss-math on the TOMO. Since I did that (no excuses for ill-math), the leeches will get a freebie (if Molecool is cool). Although I did end up finding some relevant stuff, which I will post later, we have to trade the tape. And to that end, lets see what money is flowing around.

I am a statistical person, and I remind you of statistical fallacies. First, most statistics are conditional (a.k.a. if condition A, distribution A; if B, not A, but possibly distribution B). Or September is a bad month… when the market is in “extreme” positive momentum… not the opposite. I am not saying it is going to be a good month, which would be an inductive fallacy. I am saying, dont look straight down, when the odds are not suggesting that…

So first let’s look at seasonal momentum.

Clearly as we get closer to October, the more I am interested in a seasonal rally. [Mole strongly agrees]

Now lets look at seasonal call/put sentiment.

Why fight this?

And why fight this?

This year looks much like 2004 and 2006 from a sentiment standpoint. IF AND ONLY if she would have had a BIG summer rally and a LATE fall sell-off (say 97/07) I would be more convinced of a seasonal, robust, bear market. That is me listening to the data, not just a random guess.

Now one more sentiment seasonality- the swamp.

So you see my point. The flush was big, and we are entering October… which can be an extremely bullish month. It is only bearish in the late stages of a bear market (trust me). Now I say “I don’t like bear markets,” which means I don’t just buy dips. That means I am very very careful how I play them. I tend to have tighter stops, and shorter exits (both duration and value).

Now anything can happen, but lets look at how big of a short squeeze we could see…

Really? I did not expect that many shorts, but it is what it is….. bullish.

Now since the VIX is >30, and we had record large put volume (actually total option volume), we must look at Max Pain.

This week is 123, and next week is 125. Or the boyz have some skin in this game- and I doubt they will lose given the evidence above.

Trade the tape you have, not the tape you want.

Best of luck disciplined, unbiased trading.

-Volar