Let’s recap the week.
Monday set the tone for the week, with epic reversals across the board. I picked up three new LT positions, beaten down in the dirt and studied the market action all day, before suggesting that the pain trade into Tuesday was a gap up.
We gapped up 4%. Off the open I mentioned:
We had a pretty gridlocked open, but the $NQ_F is leading out here. What sucks about this is that all the buyers remorse crowd is going to be forced to participate up. In other words, this market rallies from here, each day until you decide to chase it.
Market stayed up long enough to suck in some buyers. We then sold off into the close. I bought one more LT position at Tuesday’s close, and was even more confident we’d gap up Wednesday morning. So confident I stayed up all night trading it. In After Hours with Option Addict we had an 81% bearish poll result, which gave me 100% confidence we’d gap up, start to sell off (because we saw late day fades Monday and Tuesday) but then rally into the close like a madman.
http://ibankcoin.com/option_addict/2015/08/26/same-pattern-as-yesterday-only-different-outcome/
My call yesterday is that we’d continue a “trend day” outside of the week’s range. We got that here today.
All of this had dick to do with charts or technical analysis. In volatility like this, prices are purely a reflection of emotion/psychology. When we identified patterns, we bet against them. When we found a popular mood or emotion, we went the other way.
I’m now feeling a little anxious to do anything more to the long side for the time being. Today is the first day people are feeling like the “V” is in, and that was all she wrote. Said people are also buying with an S&P up 6-7% off the low.
$VIX moves like that don’t normally just go away. S&P drops 10% in 3 days and we’re done?
Use a little history, and keep betting against the dominant mood out there for the next couple weeks. I remain skeptic here.
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Of course we’re not done, that’s why the fed announces QE today to reflate commodities.
The whole house of cards comes crashing down in a few weeks though.
My fault, I should have just let you write that instead.
LMAO
cracking me up with this response
Loaded up on next weeks NFLX TWTR and QQQ puts. Out of MDBX.
Overbought on the IWM hourly matched up to that volume shelf. Not a bad idea to chill… http://i.imgur.com/7ZkxoPv.jpg
I look at IWM and sentiment and think to myself this could be that slight choppy pause before we hit panic.
Check out the $VIX on the 30m tf – similar set up that we’ve been trading for months…
Great call out.
Count me in the chasing camp. I bought TNA this morning, sold it around $68, then felt compelled to buy it back at $68.7. I believe I’m getting too emotional, due to missing out on the bottom primarily because my broker wouldn’t let me order anything on the open on Monday. That really fucked with my emotions.
I just look at it from the bullish side in general, though. I see a strengthening US economy and US dollar, not weakening. And in this scenario I would suspect that small caps outperform large caps. At their peaks for the year, here are the returns:
Dow: +3.15%
S&P: +3.89%
Nasdaq: +10.6%
Russell: +7.58%
Now YTD:
Dow: -6.65%
S&P: -3.46%
Nasdaq: +1.70%
Russell: -4.16%
I think there’s a ketchup rally in the Small Caps, assuming the US economy stays strong which I think will happen.
I totally agree OA and have learned a lot watching you think through this and blog about it. This week has been a study in sociology if you ask me.
Starting to feel greedy here, which is why I’ve liquidated for the most part. I’m and off for a long weekend. Peace out y’all
I sense that a bit from the crowd too. Rationalizing the chase. Good idea to take action…even if you skip betting against the market here.
nuts. nailed every turning point over the last few days. mad respect OA.
OA – great job – wish I would have stayed put (or rather call-ed) yesterday….
The great thing about options is you only need one of them to go right to make up for 3 or 4 mistakes…
I think I missed my opportunity to sell as i was in a meeting
OA – surprised didn’t get a leg down in Gold to the 1100 support level today with this huge market rally and huge beat on the GDP #s in the morning. Would you say time to sit out the /GC short trade for a bit here? or staying the course?
skeptical is def right. Been thinking that all morning.
I thought we would pull back this morning,good work on the continued strength call.
Chop fest for the next week, IMO to discourage both bulls and bears before we pick a direction.
EMBRACE IT.
Lots of cash and trading the ranges. Can’t own anything for more than a day (or 2 hours)
i dunno if we call this a chopfest when the market swings 200 pts a day is a slow day
you missed “next week”
I closed out my $TNA at $68.82, for about 13%. Though I am starting to think the fade tomorrow is the obvious move … oh crap, just got to the office and loaded my screen to find we’ve done a lot of fading already. Maybe short has become the less obvious move.
Flipped to $TZA @ $12.02
Good thing I didn’t try to get long the miners again.
Wow. Luckily, I got a good price. Gonna hold for now.
nice little bounce off the LOD. big fade but considering gold is flat for the day, still gotta be pleased here
a little happier now??
I’m not too worried here. We’ll see if it gaps lower tomorrow though
haha. gap lower? look at the strength into close. it’s pretty insane.
Who knows anymore. JNUG was down 50% in a week. Nothing would surprise me anymore.
I wonder if that surge was from the shorts getting margin called….
Buyers are just coming out of everywhere now….this isn’t a normal market
No need to go for 6 flags. Just watch .. Damn ..what a ride ..
Pick a side .. Bulls make money Bears make money .. Pigs Do get slaughtered
TOMORROW EXPIRY QQQ PUTS HERE AT THE CLOSE
goddam. the premium got sucked out of these so fast.
I had to fire the alert early to let my members get in before the bell. Had to fall on the knife so as to not Let them miss the opp. I’m holding a TF_F long so it won’t hurt me.
haha. guess it pays to be a member. you get the full trade.
This is a great lotto play Jeff. Pain Trade tomorrow is definitely a gap down. I am uncertain about what happens next except that the next dip is the one you buy.
So you’re calling for sizable drop in QQQ’s tomorrow?
Sounds like this is a hedge.
The identifiable pattern here is gaps up. They rushed back in towards the close. Perfect time for a gap down.
Sizeable? No idea, just think a gap down is a decent probability.
“$FCX under $10 is something I will tell my kids about one day” – Option Addict
Yes! Ended up buying FCX in the single digits. Turns out Icahn wanted in on the action too.
He’ll tell the story for years…
“Ha, remember that time I got fucking Freeport McMoran for under $10? Stock was worth at least $40!”
I had a decent size order in for Jan2017 $8 calls yesterday. Yanked it for reasons I cannot recall. I will be telling my kids about it … when they ask for a new pair of $200 sneakers and I tell them they can buy the shoes themselves.
Loading up on PUTs on tomorrow’s gap up if any. Holding overnight positions seems a bit of a gamble. Slowly accumulating oil-related names.
I am getting so much more bearish watching this price action. I loaded up on some put today. more to go.
Bluestar – what looks the most put-able to you right now? (serious, no hate)
Last weekend was terrible. Every night brought worse news. I’m curious about people’s comfort holding bags into the weekend.
Thank-you Tim Cook, market mover.
I sold MSFT and EXK for a quick profit. May the fuckery continue.
OA – short gold?
Why here?
Looks like a lot of resistance at 1136-39 area. You don’t agree?
No. It was 1170 last week. How could resistance be here if we were just higher only days ago>?
I guess I’m looking at the weekly chart
It’s buy at gap down today. Seems ppl chasing the V rally.
I think I fucked myself yesterday – and the one chance I had to sell out at break even I ended up being in a meeting. So goes my trading experience.
dayjob blows i got fucked the day before the crash on my puts cause i had back to back meetings.
Super duper chop going on….this is the most frustrating day if the market makes no move either way…
The similarities of the weather channel to CNBS are amazing, smiling blue sky days or overhypeded tropical storm panics
OMG I’m in “THE CONE OF UNCERTAINTY”!!!!
Trying for GDX and GLD again. this time about 15%. Wish me luck.
Wait, really? Chasing up was the issue last time. You want to do it again?
It’s in the timing band for a cycle low and gold made a swing low. From the cycle perspective this should work although it hasn’t lately. However, this time I won’t give it much rope. if it doesn’t work before the days over, I plan to cut it.
No…I’m saying it has worked fine, but your entries are making it very hard on you.
So where would you have entered?
Buy dips man. Why buy multi-day rallies?
I cut most of it after realizing that I technically didn’t have a swing low like I thought I did. Fridays’s candle would have had to have made a high of 1146. Man how did I miss that.
So would you short the miners here then?
No. Why here?
12% rally over last 2 days. seems overdone?
Can’t shoot from the hip like that. Pure emotion. Find a level. Be methodical.
staying long the Russell here into the weekend OA?
No, I’m out. No futures over a weekend./
I’ve also got IWM Sept. calls at 118. What do you think of that?
Yes, I agree that what I would normally do but this particular method requires a swing and in gold. Today was the first day that I got that. However, this has not worked well since 2011. So maybe I need to give it up until we get a trend.
The obsession with gold in the comment class is unbelievable. Twitter and angi distant seconds. Its unhealthy to obsess over one thing i believe.
On alighter note somebody should publish a syudy of best careers choices for good liars….politician, fedhead,….
I think the obsession has to do with the potential for the asset class once the bear in metals is over.
I agree with that but its hard to game up front. My comment wasn’t directed at you by the way….lol
No offense taken.
also, I think the obession has to do with everyone looking for the target flush to the 1000 mark. good money can be made on directional trades on this asset
Yawn trying to pick up pennies after big move
Just want to offer a huge thank you OA for the insights and spot on roadmapping the entire week. Really helped me preserve capital and pick off some winners to boot. Have a great weekend!
Out of puts. Bot FIT Sept 40 calls….back in the MDBX
why is VIX is up so much?
Weekend insurance
Thx, How do you gauge the popular market sentiment on a daily basis?
You can use chat rooms, twitter, stocktwits, blog comments….or just try to think through the obvious…”What did most traders do with the days price action?” This helps you determine how the market hurts them.
Buying insurance on the $SPY into this weekend is like trying to buy earthquake insurance on the san andreas fault line.. Shrug your shoulders, don’t pay up, and say YOLO.
When I think back about 1998-1999 the one thing that stands out in my mind is the persistent / extreme optimism. Individuals and institutions were flush with cash and bankable ideas could be taken public even if there was a lack of operating history.
Fast forward to today where pessimism and dissent reign supreme. Individuals are cash starved and selling out of mutual funds / ETFs / etc. at unprecedented levels. Companies are waiting until much later in their lifecycle to come public at a time when our financial system is able to withstand external shocks and liquidity events (even though the majority of brokerage houses that cater to individuals failed miserably this week).
My takeaway is that last week was the inflection point that marks the beginning of a multi-year, uninterrupted period of prosperity now that all of the scared money has retreated to the sidelines. Ownership of the continually declining supply of equities is back in the hands of the institutions. The distrust of our market and continued handwringing about oil / Iran / Greece are rearview events leaving those with the foresight and risk tolerance to look across the chasm with the opportunity to earn above average market returns in the coming years. Better times ahead.
Bought DIS Oct 90 puts — betting NFL gets shot down in court and ESPN becomes a major liability to the network due to erroneous reporting. Goodell is out.