Wednesday Road Map

It was a fun day for the bears, especially since our 1130 Soylent Orange target was never revisited after yesterday’s u-turn. That symmetrical triangle was a bit nerve wrecking but we were rewarded by a bearish happy ending at the close. Now let’s look at tomorrow’s road map:

That last guy had a serious soprano going 🙂

Soylent Blue is not officially dead – but to quote Princess Bride: it would take a miracle! Most likely we drop a little further after which it’s decision making time. Are the grizzlies going to get their coveted Minor 3 or are we still in Minor 2 with a detour into the Big Fat Tease Before The Release? (I had to up Yelnick on that one)

Despite my earlier natural (but well applied) skepticism I was encouraged by the signal lines on the Zero this afternoon. Plus the EUR/JPY looks like it could stay embedded below the 20% mark for a little while. But, we have seen participation come in strong and then simply disappear again a day later – on both sides of the equation. So, we need to keep things in perspective and let price be the final judge. A breach of 1085 is a good step towards Soylent Orange – but only a drop through 1040.83 seals the deal.

I myself will have to make a decision pretty soon – either tomorrow or by Friday at the latest. If I feel confident that Soylent Orange is in the works then I will hold on to my December puts. However, if it looks like as if we have stagnated and that Soylent Green is what we’ll get then I may have to scale out of my December index puts and jump into March 2011 instead.

It also depends on Mr. VIX – if it pushes up hard then swapping puts may not be a wise move – premiums may be too high already and then there’s the issue of slippage due to widened spreads. In the end – you are the trader, so the final decision is with you. It also depends on how far OTM you are – spreads become a lot more reasonable ITM. On my end – those puts always were lottery tickets, and I’m sitting pretty far out at the 65 strike in the December Spiders. Yes, I’m crazy like that 😉

I for one am looking forward to either a hard rally or a fast drop. The situation we are in right now doesn’t give me the opportunities for symbol hunting I enjoy and it’s been a bit boring as of late. Nothing is as overbought as I want it (yes, I’m picky) and there’s not much on the oversold side either – everything is kind of gyrating in the middle. Not my kind of tape.

That’s pretty much all I have for you guys tonight. FWIW – I’m getting mighty sick of this 1100 region – we’ve been gyrating around it for months now. Time to say goodbye – and time for the bears to show some teeth.

UPDATE CLOSING BELL: Sorry for being quiet today but I hate FOMC days and the tape was a big snooze. I’ll do an update later today. Thus far nothing much has changed since yesterday.

Cheers,

Mole