The collapse in Oil has been stunning and relentless. When prices move this fast firms are caught offsides. The speed in the VIX’s rise I believe is reflective of something that we are not seeing yet. This oil price move is causing dislocation that is having second derivative effects. Who is it? I don’t know and I don’t care. All I know is that we have a dangerous sell set up and after todays move in the VIX and market reversal my Spidey Senses are tingling. Someone is holding the Oil Old Maid and the VIX is warning that it is potentially systemic in nature. The previous spikes in the VIX this year occurred after more price erosion and clear bottoming signals. We are not that far from the top and yet the speed of this move is alarming and I don’t have any bottoming signals yet. I may be wrong but I urge extreme caution…this could get out of hand fast.
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Primary Wave IV … the big one … 20% or more correction!
Besteinmoney,
I sense this as well. How fast do you think it occurs?
Blue,
I had been frustrated last couple of time anticipating sharp falls, but doesn’t seem to work. Do u think dec is right time for it to happen. may be touch 200 day spy -195 and bounce again..what do u think. Vix = 20 is action time market has to move now it can sit there. Puts are still cheap.
Bill,
I agree longs have been frustrated as well as shorts. I use Puts to leg into a move because I can quantify my loss. I currently own march IWM puts. this gives me time but not as much bang. given what I saw today I may take a flyer on a shorter dated put. I will size it right. Also a central bank could come in and screw this up for us. keep it small.
Something very wrong with market. Divergences are getting wild, whether you look at high yield debt, oil, etc. vs. stocks. This plays out to the downside I think.
Blue
my model has been out of whack for the second year in a row. This year being the worst. Which means either the model plays catch up, or mkt reverts back. I am going with the latter esp since the commod complex train wreck. However always keep in mind the old axiom that the mkt can stay irrtational longer than you can stay solvent. Your position sizing is they way to play this.
there’s an oil volatility index OVX … now at 44.95 .. in Dec/08 it hit nearly 104, in 2011 it hit 70 … the tops coincided with primo entry points for oil stocks as well as crude of course
Blue, last Thursday I bought January puts on thw spy, iwm,and qqq. Added to iwm yesterday at the lows. This has been a loosing strategy for me because of the intense snap back rallies. I too feel something is off. I cant articulate “it”. When should i add to my puts? Is a longer duration put advisable. These positions are my only greenies. I have been getting killed this year. Once a get up 50-75% i generally sell. Making money has been intensely difficult. Thank you in advance for your thoughts.
I think $XLE still has some catching down to do regarding the price of oil. Oil is definitely dragging equities down, and as a $ERY $UVXY holder Im just adjusting stops and waiting to see. Oil is going to be a real value play at some point, like the miners. XLE is the new GDX
In my neck of the woods the fuckers
always run off with the young maid never
the old maid.
Congrats Blue. Only took 5 days to complete the cup and handle! Whew!
Hello All,
Beware we could see a mini crash next week of 5-10%. More over the weekend.
Crash!? No way! Barrons even said so! 😉
https://twitter.com/hmeisler/status/541221344075984899
If everyone is expecting a Christmas rally, there would be nothing more nefarious than a trend day for Monday followed by a down week. I still don’t trust this marker and closed out my UVXY position for a 9% gain.
Bought me some aawwlll today. I know it’s a falling knife, but I can add later if lower. Even so, my cost basis is less 1/3 Frank Giustra’s, so hopefully it works in the next few yrs.
I’m not a trader; I’m a speculator. I’m hoping for 2 or 3 out of 10, 10x to 20x positions over 1 – 5 years.
http://www.moneynews.com/MKTNews/Market-Collapse-Finance-Stocks/2013/03/01/id/492699/
Crash looms
Dr. Cloverdale,
That is an ad that has been predicting a crash for about 5 years. Epic fail. They make it look like it was just published. total scam.
Juice,
Absolutely hysterical cover.
nocturne,
the speed of that pattern formation surprised even me. It does not bode well for equities.
gorby,
there has been a disturbance in the force. I sense many margin accounts being liquidated next week.
delaughterc,
I have my eye on SN if it can make it to the other side alive.
todd powers,
the chop on this market is unbelievable. adds are tough. i will post when I add. however do what feels right for you and size the risk appropriately. i have been going longer lately.
dtagun,
QE has completely messed up lots of models. it is straight up manipulation that renders many signals useless.
Blue:
I approached a black hole where
the dark side resides and I heard something awful. It was laughter, but not happy laughter. It was evil, vengeful even. That sound that beings make when after being wrong for so long that the universe finally if only briefly, gives
them hope, respite even.
I pulled back from this place and looked
around and saw that most of my friends
had abandoned me .all except $PGH.
So to show my gratitude I bought more
and ran as far as I could from the black
hole where Jesse Livermore resides.
Blue –
Thank you for your post. I had already put hedges on my long positions that had any energy exposure at all. Sounds like I need to go sharpen up my pencil again and get delta neutral even on the longs that have been working. Could be a scary time for the holidays…like the Grinch is coming out with his minions in full force.
Blue,
Got any opinion in today’s tape?
Gorby,
I became a bear in January. I have not been a zero hedge acolyte. I am here to help not gloat. Good Luck.
CatM,
we should get a bounce soon. if we don’t then my thoughts from Friday are coming true.
Quality control,
We should get a bounce but I think we need to find out who is off sides first before we bounce.
Russia selling gold?
I suspect, rumor only.
http://www.caseyresearch.com/cdd/russian-bear-or-gold-bull
ps reading – the colder war
i like it so far
Right on Blue. If I’m not mistaken we closed oversold on the McClellan. I’m looking for a bounce tomorrow and possibly for a few days depending on the Fed.
“QE has completely messed up lots of models. it is straight up manipulation that renders many signals useless.” Man, that is truth.
quality,
bounce we got. lets see what happens. This also happened on October 8th which was also a fed day. we rolled and them some after.