I had to leave my normal daily routine to catch a flight to Georgia. I’m in town to meet with a hedge fund out this way, but will still make time to meet my appointments with you guys tomorrow.
In regards to the markets, if you’ve been following our discussions along the way there are a multitude of things we follow to measure pullbacks versus tops. Volatility is not something that you can necessarily predict, unless you can see certain market deterioration into higher price swings like in 2011 or 2007. This has been something we intentionally follow at all times, regardless of market direction, and something that is elevated to a level of concern as of now.
Similar to 2011, 2007 and 2000 tops volatility elevated at first into market weakness, but then continued to rise into market strength. In other words, in each of these situations, there was a bounce that reset the environment.
While I am obviously not on the right side of recent weakness, one thing you cannot ignore is that the stocks we are watching/trading are telling a not so scary story. You cannot argue this, for they are not following the market down in recent weeks. Not even close. They’ll be the ones you can’t help but notice on a day that the market finds a bid.
As of tonight, my market oversold indicator has long term and intermediate term timeframes drowned in oversold territory, and the short term signal only 8 basis points away from completing a signal that we’ve only seen at major market bottoms. Any weakness tomorrow will seal it for you, ahead of the weekend.
It’s been a difficult stretch lately, as gains from the last couple months have been swallowed up by this full blown market liquidation. Hindsight doesn’t help me much here, so I am only focused on looking ahead. If history serves as a template, we’ll have movement up ahead that will help us make important adjustments as we head into the end of the year.
Stay safe out there, and stop being such an asshole.
OA
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OA, what are your best ideas at this point? Also shouldn’t we sell vol at this point or in the near future?
If this is a top, there is still opportunity to profit on direction. What are my best ideas? Depends on time frame and how you are positioned.
Right now, time frames should be kept to a minimum, especially on the short side.
Nicely done (extra hat tip)
Thanks, Jeff. I genuinely appreciate your analysis and for putting it out there. I try to get as many perspectives as I can in these environments. Volatility as Chess aptly describes it is “violent indecision”. There is always ongoing resolution and the human element of game theory (the emotional stages chart you often refer to) is the X factor in that process.
I hope I have money left in the account when the bottom finally does happen. lol
What are you doing with a hedge fund, jeff? Consulting?
if so…Recommend they turn the buy algos back on.
We’ll see what comes of it.
Hang on to some money, you’ll need it when things get sync’d back up.
Thx, OA. Appreciate your insights.
Some of the remaining stocks aren’t showing weakness, but some of the ones from just a month ago are all but completely gone.
What are you talking about? What does that mean? Stocks are all but gone?
ARWR, GTAT, I could look up a few more.
You’d need a lot more stocks I’d think to substantiate that comment.
I could point out two stocks that have blown up in every upswing in the market too. Re-read my comments that I wrote to better understand what I was trying to say.
Your even keel through both awesome highs and lows is incredible. A pleasure to read. No homo.
I recommend shorting GRPO, it will be the CROX of this new generation. Fucking cameras on a limited number of adrenaline junkies heads worth more than $10 bil? lolz
GPRO
I’m just one guy granted but I’ve made 4 purchases of their cameras in the last 2 months as Christmas presents for my family. They’re a hot item sir.
You just compared rubber $40 shoes to $400 HD cameras in the age of tge selfie you want to short tge ultimate selfie maker, how have you not been banned you have the worst avatars you time stamp shit in hindsight in all honesty you should probably buy a nice target date fund and step the fuck away from the game and more importantly this site
I will selfie this (screenshot) and post in a month with new GPRO price.
I look forward to the pic, Bruce. It will be a welcome addition to my screenshot of Jeff’s best headlines like “Hindenturd Omen”
These perma-bulls are great, aren’t they?
Looks like we’ll get morning limpness based on futures. But can’t oversold conditions persist for a while? Can things not become more oversold?
I’m not going to flood this with replies but people kept neglecting that like a bagrillion indexes violated multiyear trends all at once. Google how much money is in stocks. It’s not retail investors. It’s everyone. I wonder what the numbers are on foreign money in US equities? I should google that.
Here’s all the money NOT in stocks or any other investment vehicle http://m.research.stlouisfed.org/fred/series.php?sid=M2
Ari,
Look at some charts and find out. If that were the case, guys like me wouldn’t bother using those metrics.
I just reviewed your Hindenturd Omen post and noted the sharp rallies on the chart. Looks promising. Here’s to a gap down and a bear impaled on a unicorn horn.
This correction is about to jump the shark. I’ve heard more than a few people calling for a crash, including some on this site. Someone tell me which crash in history was predictable? Don’t give me any bullshit about 1 guy in 1987. I’m talking about widespread crash predictions. It doesn’t happen. I’ll stick by my prediction that they gap the bears up one of these mornings into oblivion. Bears, prepare thy anus (no homo).
I agree to a certain extent. My main concern is ebola. Cabin crew cleaners striking is a real issue as it mirrors the concern the public has about this illness.
People are acting like we are in a full blown ebola pandemic, 2/3 of the world’s population is going to die, yada yada yada. It’s quite ridiculous actually. Once people realize that one dude in Dallas does not a pandemic make, they will feel quite stupid I’m sure. Are we really going to crash the market because of ebola? I mean wow.
I agree but don’t dismiss the perception of the public. If they don’t want to fly they won’t, no matter how silly it may seem.
I will just go out on a limb and say that we aren’t even at a 10% correction. No need for crash talk and likelihood that it happens is close to nil.
A lot of people saw 2008 coming.
In all honesty I’m not ready to call anything. I’m just simply stunned and confused how lower oil prices would be the culprit this time. Global systemic credit crisis and fantasyland tech and home prices just fit the bill better.
Don’t dismiss how many people bought into the permanently high oil prices theme. From the oil and gas plays all the way down to the solar / electric car plays. Not saying it’s gonna bring down the markets but there was a lot of money pumped in at historically elevated prices under the assumption prices would stay high forever. Looking at a long term chart of oil prices suggests much more cyclicality than maybe we all thought:
http://www.tradersnarrative.com/wp-content/uploads/2009/06/inflation%20adjusted%20price%20of%20crude%20oil%20long%20term%20chart.png
try this:
http://static.safehaven.com/authors/saville/19338_a.png
I don’t understand this environment as well. The drop in oil as a catalyst for this sell off in equities seems like an ad hoc explanation and not something that is based on fundamentals. I think we seeing reflexivity at work, where selling begets more selling.
In macroeconomics my professor always said that oil shocks, i.e., higher prices, corresponded to or caused recessions, not lower prices. Maybe I’m misremembering.
I doubt the magnitude of 2008 was widely predicted, although I’m no historian. If that were the case Lehman Brothers would still be in business.
I mean you’ve got people on tv, people on blogs, etc. actively predicting a crash. Why? Ebola? Lower oil prices?
We heard some of these same cries in 2011 and the market did not crash. I mean I’m talking 60-70% declines. Want to predict a 20% correction, fine. But to actively be predicting a 1929 or 2008 style crash is absurd.
Keep buying people, it will reverse at some point.
Wow. Are you still buying $LEH ?
Of course not, but OA probably is.
Has anyone thought this could just simply be a natural 10% correction and we are hitting the panic button for nothing. I mean the SP hasn’t did a 200 day test in 36 months isn’t that a little insane?
Danny – Agree.
Love the last sentence. Keep up the good work OA.
Well if we weren’t oversold yesterday we damn sure are going to be OS today. Futures puking again; Chang Gonna Come
For the record, I highly down this is “the crash” either, probably a nicely needed correction. Would this be the bottom so soon though or might we be in for a rough few months?
Like I could easily see a rough Q4 for the market and then the Fed QE4’n it for the last year or so before the big one. Might be that simple, lol.
To me this looks just like the Russell. Exact Pattern
http://thepatternsite.com/ButterflyBull.html
It could be the curse of the fly .Jeff says he has had monster returns year after year after year . And then he hooks up with the fly , turns into an internet tout and blows up accounts in a matter of months .
Oh well , at least you’re getting a couple of watered down drinks and some photo ops in L.V. hhmmm…..maybe it would be wise to cancel and get your money returned….I think fly said you could cancel at any time and get your money back .
That’s not fair. I’ve helped people make a lot of money here over the last year.
Yeah not fair at all. I haven’t been here long (early July). In that time I have traded almost exactly as OA said we would with this system of low win probability but big gains. 1000% in X? I doubled my IRA with that trade without making any contributions. I’ve had some big drawdowns lately but I have no doubt we will come back around. Thanks Jeff for taking your time to help those of us who don’t yet know it all and are opening to learning.
Stop being such a cock goblin.
The major averages are down about 5%. We have gone 2 years w/o a 10% correction. That would be fairly normal and even healthy. Some of you sound ridiculous fixating on a couple of issues and being on the verge of panic. The snipers and trolls pop out to enjoy the pullback to poke people with pitchforks without putting anything constructive out there.
My opinion: With commodities pulling back, growth tepid and weakness overseas, the Fed will not be moving to raise rates at least until late next year. If earnings growth remains solid this quarter, multiple contraction will be off the table for a while. The consumer just got stimulus in the form of lower energy costs just in time for the holidays. The ECB is picking up where taper left off. It is currency imbalances caused by belated overseas QE that is driving the market dynamics right now. The retail investor is fairly negative watching Fox News as their investing guide. This is a correction and not the top. Oil is setting the table for a huge buying opportunity. Too many ego political factors can reverse the pullback.
Jeff, reign them in and let’s get moving.
Seriously , you really believe that ?? Well , I apologize and congratulate all those whom have benefitted .
jeezus , where do they come from ?????
Yeah man I was up over 100% last year and still holding onto some gains from this year… I’ve given most of this years gains yet and only time will tell if I hang onto them but it has been a rough year for everyone… Especially those so who are so insecure about their own ability to generate gains that they have to come here and hate on those that do during every rough patch just to feel better about themselves.
I joined in DEC and in that time, my account is up 25%. It was up 40% but draw downs occur.
OA will be fine in a matter of days, unfortunately, not too many accounts will live that long. election is up, printing never stops, and i think the bull market will be in full swing very soon.
MBLY set to gap down at 51. Wtf happened?
Probably disappointment the Tesla D doesn’t drive itself.
You’re welcome, asshole
Some of you fellows are just gems. I am sure your ex-wives and estranged kids just don’t appreciate all the joy and wisdom you impart to the rest of us.
LOL +1
I don’t have enough experience in the market to give advice, but if you’re so sure the market is gonna crash then the common sense thing is to sell now and buy back lower. But remember none of what’s happening is OA’s or Fly’s fault. They are just here to guide us through it.
Looking at this weeks APPL 100 puts for a yolo – looks like it could test 98.6 today if no Icahn follow through and continued market weakness
upper 101’s look like your ideal entry spot
did you grab them for a nickle?
I got in for more than a handful at .07 – enjoying them so far.
Out at 200%..will look to get back i
really glad I got back out – geez…will probably look at getting 101s next depending on how the market behaves – am still aware of a snapback rally here.
buy yourself some time….they might trigger stops north of 102 like they did yesterday
bot 200 CIT Nov 42 Puts
Technology getting slaughtered
wow, this is not real:
BOT FB OCT 10 ’14 75 Put Option 0.08 USD CBOE 09:45:00
BOT FB OCT 10 ’14 75 Put Option 0.07 USD AMEX 09:45:55
nice trade.
nice trade
I’m a little disappointed that this group is basically taking a full on 5-10% market correction right in the face with no planning for a hedge.
Matt – Your criticism definitely applies to me. Problem is, the time to hedge is when the slow oscillator is in the red. Really late, now. This is a wonderful tool. I kick myself for not implementing it more often. http://i.imgur.com/T9TzAZU.jpg
Agreed Matt – I never anticipated the correction so soon so was not properly hedged. Had a good size cash position at the start but blew my load to early.
RC posted a plethora of charts on 9/22 (BABA was Friday 9/19) of possible shorts..Have to give him credit for keeping me hedged. I found Z and LNG there, been short Z from 126 and LNG from 79
let’s see if this bounce has any legs or gets chopped off
AMGN has held up nicely
BIIB nice recovery, REGN lagging
i really think we need to break 200MA decisively to see the bottom. well, i can be wrong.
Any sector green today? Everything i own is red. Wish i kept my spy puts
Short Strangle/Iron Condor EXEL $1.50 strikes….for the win! $$$$$$$$$
any way we can ban this guy?
Jesus christ. Every small rally gets smack down real quick
I have an order for AAPL 101 puts at .11 – let’s see
in at .20
Got out at .25 – not horrible – diid add a few more at ,15
nice
XONE, short squeeze play is green
I’m mobile atm. Can anyone tell me if the RUT printed the official oversold signal w/ OA’s oscillator yet?
short term indicator still not there.
Thanks ncsu.
Worst case scenario long term is that cheap oil eventually bankrupts a lot of energy companies which negatively impacts the issuers of credit and deflation takes firm hold… It is easy to underestimate the ability for destruction in one sector to impact the economy.
But in the meantime cheaper oil increases the margin of china products using petroleum, makes for cheaper gas and oil which is a boost to lots of businesses and cheaper gas prices provide the consumer with more spending capital. Lending standards are strict, but it is still hard to imagine that cheap credit and cheap oil would be a bad thing for economy. And how does cheap oil last if it limits the credit and growth and worst case scenario bankrupts companies that produce if when global demand is still there?
How? How my friends? How indeud!
first post and agree with previous poster – OA has not handled this mini correction well at all.
Cain Thaler favorite, HCLP, ripping today. Revenue on 5 year contracts
buy NQ 3913
what’s ur stop?
giving this a longer leash than normal. It might sting if I’m wrong but I’ve got a feeling about this. Probably the lows but we’ll see.
i see some fear, but market too slow now. maybe you have your way out.
If Chiefton is getting long, it’s a good sign a bounce is coming.
There is always a tendency to over extrapolate data and a move. That is why the emotional chart OA uses is a good template.
CL/1 turning up. Some green popping up on my board. Looking for some covering going into the weekend
Shareholders screaming bloody fucking murder on nearly 100 large cap or megacap names. RSI under 20. Even Ford motors.
http://finviz.com/screener.ashx?v=212&f=cap_midover,ta_rsi_os20&ft=4&o=rsi
Oops Mid cap or larger
nice divergence in the RUT and crude catching a bid. looking to put some cash to work here. $EBIX chart looks ripe
Jeff, don’t want to catch falling knives, but there are some fundamentally sound companies sporting deeply oversold RSIs. Some great bounce candidates here for trades should crude bounce.
Your list had DVN, BHI, APA for intermediate buy watch list. Do you have any quick rip play candidates?
CL/1 about to go green. Watch the buyers come in this afternoon. Fly just may be dead on with his indicator.
Jeff, did your short text indicator light up in sync with the other time frames? I sense a good close coming.
Shorting GPRO is fine, tried it but the options gains suck because it is not a very liquid issue, high premiums and implied volatility takes away from profit
Bot NQ with Chiefton. More than usual guessing we are going to rip higher over the next week.
Sold my GOMO for +10%
Raising cash
bought calls in EBIX, TRIP, SPLK and SLB
Out 1/2 NQ +25. Holding the rest, this could be epic.
Hold on to your tits boys don’t sell nothing
Me too Chief. I’m holding all
All Indices up with the exception of the Qs