Behold, August 24th 2015 – October.
We analyzed this fucking range til my eyes fell out. This was all I ate, drank and slept for three months. We knew a lot of things in advance about this range, and the psychology playing into it along the way. Was my most memorable market analysis ever.
The set-up that occurred on the last leg down involved two very important events that needed to happen. A bull trap, and a bear trap.
Here’s an hourly chart of the $SPX since late January meltdown.
Note the symmetry in the range after the initial drop. The break of that range to 1940, and the immediate sell back into the range. The late dip that sucked in some longs last week trapped some bulls, now we’re approaching the lows. This mornings action was elevator up, stairs down…which doesn’t happen all that often.
What’s the pain trade here?
OA
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Let go some TLT at 131.78. Sold some TZA at 70.18.
I see the possibility of DB scare bottoming Monday, Oil bottoming today.
Those bottoms are for 48 hour time period only! 2 hard to guess beyond!
You should just get a blog here. Would be easier for you, no?
He’s a smart guy, so he’s likely done the math … get thousands of eyeballs in the comments to an OA post or, alternatively, get 1% of those pageviews in a dedicated Peanut Gallery blog.
Was rejected once. Will try again later. TY for the comment.
And rejected you shall be again.
Nocturne,
When did you go long TLT? I remember you being bearish long treasuries and loading up on TBT past couple months, but looks like you are long TLT now?
I purchased TLT to Hedge my position in TBT. My cost basis in TBT factoring in call sales is 44.00 ish.
Couple that with TLT hedge recently put on at 125.00 and I’m down aboUT 12% on TBT. I have not sold any.
straight fucking down is the pain trade. lol
I’m picking up what you’re putting down, but it feels a bit to me like the pain trade for many still is down, maybe sweeping the low.
I don’t know that guys really are going to be pushing shorts right above the low (or, for what I’m looking at, the 78.6 retracement).
On the other hand, perhaps most expect a legit retrace of the low, and if we instead just scream higher for a bit, those pressing shorts will feel the pain. That’s what happened last time.
So are they going to burn those expecting a retest, like last time, or will they burn those looking at what happened last time and expecting the same?
In today’s context, the move down was pretty slow, giving everyone a easy ride to hop on the shorts.
The late day rally brought on some longs who got stopped this morning, then if they chased, got stopped again on the bleed.
Longs lack confidence here, which is why I think pain is up.
Remember in September…. http://ibankcoin.com/option_addict/2015/10/01/mood/
Very interesting — appreciate the thoughts.
OA – Late to the party these days as I am actually sitting for the CMT exam soon and have been studying mostly. But the pain trade is a Gap up tomorrow, IMO. I still feel like every time we rally there is FOMO which means we need a couple more gap ups to engage, knock people down again, rinse and repeat.
Gap up and rally to 1880 tomorrow or the next day, final answer.
we were still in a bull market back in aug to oct
we are now on the other side of the mountain…rules change in bear markets vs bull markets..problem is, it takes people a long time to adjust..and by the time they do, we’re close to the bottom
just look at the bottom pickers in oil…first it was 70..then 60…then 50…then 40..then 30 and the new bottom is 20….
If that we’re true, this price action wouldn’t bear the same resemblance…would it?
We’re only 25 points under those prices you see in September.
it takes awhile for bullish behavior to change to bearish..so far, all I see are dip buyers
and true, if 1812 doesn’t get violated (lower lows which did not happen in sep) the chart does look similiar..if its a true bear, 1812 should go bye bye fast.
I agree on behavior change, but I would argue “all I see are dip buyers.”
fair enough but I have yet to see any primary bloggers on this site go short the SPY…I may have missed it tho
Notice how many stopped picking stocks, or how the site in general has turned into a splash of Zero Hedge.
Just posted this in one of Fly’s posts, we are looking late last 2 days of Sept 2015 and grandma’s comments tomorrow could be the catalyst.
Could be. Correct me if I’m wrong, though, but I don’t think testimony to Congress is where grandma would be expected to say much about supporting the markets (in part since “goosing the markets” is one of the things legislators have attacked the Fed for), at least not directly. She could say something like that in a press conference or in a speech, but I think the probability is lower that she says something like that directly in congressional testimony. I’d expect that to be more vague bullshit where she tries to claim the Fed has been fulfilling its dual mandate.
Market had it’s chance to bust through 1850 or so and continue downward three times in recent days and the level has held. I think it jumps tomorrow and then fails again on Friday screwing shorts who covered and new longs. That said, watch it end today around 1845 just to screw with everyone’s heads.
I think there are many who are crossing their fingers and hoping for Yellen to save the day with hints of QE. If she doesn’t come through the pain trade is sharply down I would guess.
No one is scared, that’s the difference.
Wait, are you just quoting the $VIX, or are you literally referring to people in general?
Think many people have gone from scared to resigned.
Yep, unfortunately that’s part of the process. Never fails.
people i talk to on the street, everyone is scared.
Drug dealers and male prostitutes? One would think they don’t follow stocks.
Don’t forget the trannys…
Not the Vix. I don’t see that people in general are scared yet. Then again, is anyone in the market anymore? I guess its all just bots and traders.
People have no stock exposure anymore, and are structurally short the commodity that’s imploding here.
<<<This comment – it amazes me that NO ONE retail even talks about the market – and if they do it is only a place where people go to lose money and they are afraid of it. I know more people who would go to a casino rather than put money in the markets, and that has been a condition for many years
FB is a buy down here. So are a lot of other names.
I bid $1 for UWTI.
Anyone else notice the head and shoulders on SPY 15 min time frame? It broke through 187 yesterday with a gap down. It just came within .06 of filling that gap. Bulls needing a close over 187 soon or we revisit 1800 range. My Spy puts and UVXY are sure hoping for the latter.
The 1880 neckline H&S? Didn’t that suggest a 60 point move? If so, the ES tagged 1820 yesterday.
All these wild swings mean the big boys are shuffling things around in advance of Yellen tomorrow. Crazy to get in the middle of that action.
Even crazier to have to chase it tomorrow.
I was showing head @ 1947 and neckline @ 1873 which suggests a 74 point move which is 1800.
Perhaps. Always comes down to risk tolerance. You betting Yellen says what the market wants to hear?
Sold some DGAZ at 15.06. I am now neutral natgas.
With the recent SCO sale, UWTI buy, I am slightly short oil. About a 1/8 position.
Is there not another H&S on the daily time frame with the left shoulder starting on 8/24 and the right shoulder finishing out around 1800? Still new to trading and definitely keeping my day job too.
The neckline would have to be higher to be a neckline. I assume Oct 14 and Aug 15 is the neck? That would imply you are beneath the neckline.
Bot GDX 16.76 right at the close. I’ve been long GDX since before I starting commenting here. Cost basis low 13s.
I sold 15 & 17 calls against them too early so I plan to buy some back as I expect to get called away. Next buy, if it gets there will be 15.75.
I will fund it by selling the DUST I accumulated recently with a cost basis of 9.62 over time as it spikes.
Being that you are normally in offsetting positions like this often (TZA/TNA, TLT/TBT, GDX/DUST) why not sell calls against both simultaneously? This way, you can at least pay for the commissions of a neutralized position.
Yeah it’s definitely not perfect and I’m probably just seeing what I want to be there. One big difference from the August/October lows is that in the retest of the lows we didn’t make lower lows. This time on a closing basis we have closed lower for 2 days now. I made some good money on the October retest. I was wondering if you were the one moving the market back then. Called it perfectly.
Based on the last 2 weeks, the API inventory numbers should be good for a squeeze higher tomorrow.
The negative standout: nearly 3/4 million barrel build at Cushing.
Jeez this market is weak as shit.
I was in full agreement last Sept (and went long largely thanks to your pain trade concept) but the daily stochs haven’t hit below 20 yet. We hit that level at the Aug bottom and the Sept bottom. Actually they are only at 50 which is pretty weird considering how oversold price looks. I haven’t seen a significant bottom going back 10+ yrs without the oscillators getting oversold.
I have an offer of 216.18 for SCO. Playing for oil to break 27.54 then quickly reverse.
Based on OVX, expect 8 – 10 percent move from high r low of the day.
Algo chomped my offer. This makes me neutral on oil.
Grabbed some $6 FCX calls expiring next week
So I was wrong about NFLX going to 70 before it got back to 90
Sold more SCO at 203.50. I am long 1/8 position in oil.
Nice move in $SPX so far. Ran up to that 1880 mark and reversed. Let’s give it another go later
Sold more SCO at 210.05. Rest will be held as a hedge against my now 1/4 position long oil .
If “they” decide to crash oil to say 25.00, I do not believe stocks will care. Bonds might at first.
Why I made this move:
O/A inventory: down, yes down! (Only fractionally, but it’s psychological)
Gasoline : up less than last week
Distillates : same as gas
Lwr 48 production : down! Same as O/A inv.
Imports: down a million
Cushing: up 1/2 million. It’s a negative.
Expecting a move to 31.50 by Friday. Will evaluate then.
Bot starter position YCS, 79.05.