Saturday, October 1, 2016
The first hit is always on the house.
Joined Aug 2, 2009
1,620 Blog Posts

WAIT, I SHOULDN’T HAVE BOUGHT $DB?

www-usnews-com

If you followed me on this trade, tell me you didn’t feel like this yesterday…assuming you didn’t let the noise get to you, and get out of a great trade:

Alone in a crowd ... image was intentionally softened and colors muted to all but the alone person.

This is precisely why I chose this stock on this week. You knew it would be actively discussed, and I felt that this week was that inflection point in sentiment. I was right. My analysis was confirmed when I saw this:

2016-09-30_8-07-03I’ve watched this stock trade now for many months without taking a trade. In some circles, it’s become a market indicator at times. That right there automatically perks my interest. I was validated when I saw the push back in the comments.

My mind is conditioned to find patterns. At the beginning of the week, $DB triggered the most bearish pattern I’ve ever seen. Or at least, it triggered what the crowd has told me, was the most bearish price action they’ve ever seen.

We started the week with a big gap down under a known level of support and sold off into the close. Very bearish. Tuesday, we saw prices open slightly lower and rally a bit at the open. After pushing higher for the first half hour, prices sold off. That’s the move I bought.

2016-09-30_8-29-51In the context of an important gap down, any failed strength the following day is as bearish as is gets in the minds of most traders. Reminded me of Grey Monday, August 24th 2015. Same sequence. The failed rally on the 25th triggered the most bearish poll result I have ever seen. That was something I won’t ever forget, and still reference it often.

Yesterday, $DB was painted across the news, twitter, blogs, chat rooms…everywhere. They expressed their point. They were bearish! And as a result, they got interested, DOWN HERE,  as seen below.

laughingmyfuckingassoffPerfect! This means that I was right in the fact that everyone would be engaged in this stock.

At yesterday’s close, the put/call ratio in $DB was 4.3. In other words, everyone ran to one side of the boat.

Not declaring victory yet, but as you’ve seen me work…I try hard to find these inflection points in sentiment. Why “roll the dice” on $DB? Only because it was at the forefront of sentiment this week.

My calls absorbed yesterday’s decline well and was never down in this position. Despite the push back from some readers, I felt there was something very intelligent about this trade that wasn’t respected.

Hence my write up.

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OA BUY: $FIT

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Hard to ignore this chart here. Even if you aren’t a believer, or prefer not to trade what some consider to be dogshit, I’d rather bet against the guys hiding out in this as a short.

2016-09-29_9-35-20The spot is amazing, the space above is worth exploring over time. 34% of the float is held short.

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I BOUGHT SOME STUFF

PileOfMoney-936x360

Last night in After Hours with Option Addict, we discussed a market setup coming into the day. Open up, ramp, sell-off.

That seems to have been what’s happened here today, and this dip, I bought.

Crude is breaking out here, breadth is awesome, and that ramp in the Russell out the open negated yesterday’s divergence. If that reads like stereo instructions to you, know that in this market action, I am well pleased.

Bought some more $COP, $AMBA, and $MBLY. Wanting to buy more $CMCM and $FTNT.

Booked gains in $BAH and about to book $TWTR.

Life is good.

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OA BUY: $DB

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I am buying this stock down here, where so many eyeballs have been bestowed upon it.

Long Nov 11 calls.

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INITIATE PAIN SEQUENCE

xbxndngf

Last weeks poll was a great tell about the environment out there. Even if you are/were bullish, many were heavy cash going into the Fed. The reaction you saw was fast, which provoked you to chase the market up into the weekend.

We start off the week with a gap. I love when this happens, because that is usually what activates a pain trade sequence.

My thoughts here are that those that chased the market up late last week are probably not feeling as great about this, and are potentially being stopped out or taking things off into this move lower. More importantly, this is forcing shorts to initiate lower…just like the last few times we did this.

This gap down happens to be a retest of last weeks balance in the indices, which is the retest one should buy. With as quiet as it is out there, not sure if this read is most accurate, but that’s what I am thinking. I don’t see bulls out there cheer leading this dip. In fact, those that are shopping seem cautious. Bears are most vocal here from what I can tell, and that’s always a layup.

Stalking $ADRO, $GME, $SOHU and $VMW today.

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TOUGH YEAR…”POOR” MR.BILL

mr-billack

Pershing Square YTD returns as of 9/20/16. In a year where you can throw a dart and win, it’s unfortunate to see such under performance.

happydaypoorbillHedge funds in general haven’t trailed the market this bad since…

1998.

Maybe I’m right about this overall pain trade. T.I.N.A. Buy the stocks you sold last year for +20% higher prices and get it over with already.

 

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