OA Buy: GS

Last attempt, trying to salvage the week.

Jun 165’s 1.40.

Godspeed.

This is the marker today. Above or below. $NYMO -100 intra-day.

Keep an eye on AAPL, it has held up incredibly well here.

More later.

aversion
A strong dislike or disinclination: “an aversion to risk”.
Someone or something that arouses such feelings.

I think this sums up the state of the market this week.

If you recall, I posted a chart a few weeks ago that helps me road map changes in market conditions, and changes in a markets appetite for risk. We’re going to use this to draw some comparisons to recent market movement.

There are some compelling changes going on in the markets. Increased volatility being the most important to what I do, but other subtle signals have now become flat out warnings.

If you are in the game of calling tops, you know that they are a process, not an event. Rather than argue that, I am simply going to draw some comparisons to recent market structure and the sentiment cycle, to help you see what I called for in my videos and presentations last week. Here is a look at the sentiment chart:

Now, let’s compare that against the lower time frame of the S&P. 

On the higher time frame, its obvious that we’re still well within the returning confidence phase. However, recent cracks in the markets foundation can be pointing to warning signs and/or disbelief by the bulls. Either way, the markets have reached a point of confusion, as seen on the lower time frame.

I’ve used this same template to navigate each pullback and correction in stocks. It’s been an amazing tool.

When markets reach confusion, use this as an indicator to reduce overall risk and position size. I’ve spent the last few weeks working down my overall holdings considerably. I have raised cash and am waiting for further signs that confirm what I am watching for and called out last week. On Friday, I mentioned looking for the SPX to hit 1620-25. That happened today, and the market found buyers there. That now becomes an important reference point on the week.

I’ve started off the week in the hole. I’ve chipped into last weeks gains. I’m upset about that, but more importantly, I’m trying to stay objective about the market moving forward.

Bottom line: Today’s low is my line in the sand. SPX above 1650 is bullish.

A breakout in this stock sends prices into a very thin volume zone over head.

Small risk, big reward.

On Friday last week I mentioned a particular set-up I was looking for in stocks this week. A retracement back down to 1620-1625 in the S&P.

Breadth is slowly improving off this V reversal at the open. I am using the days lows as a reference point for a long bias.

Trades forthcoming.

OA

Today’s tape will set the tone for the week. The Russell is our primary indicator today, and 990 is the level. Thus far we’ve been slightly above it, and at the moment trading slightly below it. Acceptance above is key to further upside.

Rejection from this price confirms the set-up we discussed in the video analysis over the last two trading days. If you are looking at trading options here, you prefer this set-up for long entries…aka lower prices.

Over the next few days I will be trading several low priced stocks to keep me occupied. Specifically, stocks that offer no correlation to the market, and stocks that will generate explosive moves if traded properly.

I’ve got a handful of positions working well today that I might opt to book gains on. Keep an eye on the comments here for updates.

OA