AN UNCOMFORTABLE MOVE

As implied yesterday, I thought the play coming into today was a gap up. However, the first attempt at S&P 1880 held like a champ. As the bears have been in control, this is their point of defense. Anything north of this causes additional covering.

The spike and fade in oil has me speechless, and I’m watching the 30yr inch up, while the 10yr bases for a move.

The only breadth extremes I saw this morning were immediately off the open, and at the session highs. We’ve seen no downside extreme as of yet. Should it surface, it’s safe to say 1850-55 as a downside target here today.

UPDATE: As I post this, $TICK hit its first sell extreme. $SPX headed back to unch. What a shit show.

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

As you all know, I’m big on behavioral finance. I feel in many aspects that it provides an incredible edge, when applied to investment decisions. I also like to look for signs close to home to participate in trade ideas. Things like a co-worker publishing a book on how to invest in Gold back in the summer of 2011, or my brother-in-law asking for a list of bullish stocks to buy in the summer of 2015…

Don’t miss the date that he fired off that text, especially in relation to the $RUT (he likes to play cheap small cap stocks).

I started blogging about sentiment in Gold back in 2013 when I started blogging here, and my reasons behind a bearish bias on Gold. Aside from the book publishing I referenced, I had pee-wee football coaches asking me about investing, and watched my in-laws partake in the rush to buy Gold at some fairly awful prices. This is how sentiment works. I also mentioned that I wouldn’t really get interested in this idea, until the public started to lose interest. Or capitulate.

On Christmas eve, my family and I went up to the in-laws for dinner and a family gift exchange. The kids all get some fun toys and such, and the in-laws normally hand out a nice gift for the couples. This year upon opening our couple gifts, I was surprised to see the following gift inside:

There are 6 couples that received the same gift. My response to this was “wow, great timing!” I received a puzzled look in response, but now having sat back and watched this recent rally unfold, I think this trade, at least in my perception has come full circle.

Sentiment, FTW.

OA

I spent a lot of time last year incorporating this chart into my analysis here last year, and how it pertained to equities keeping their trend in tact. Over the last week, there’s been a swift leg lower in the USD/JPY, and it makes sense to zoom out to see it’s implications.

Here’s a look at the trend going back to the 2012 breakout. As you can see, the trend has started to fail:

A closer look shows that this 117 level has been a key level of support, as the trend started to level off. You can see a clearly defined head and shoulders pattern that formed throughout 2015.

The last time we saw a multi year trend this steep was 4/95 – 8/98, which I’ve used as a comparison on many occasions over the last year.

Here’s one quick look at the dollar via $UUP. The near term downside target on this is $24.75, or in /DX terms near $94.

This was so bad. I paused the game and had to explain to my son what it means to give up and quit before the game is over. This was the worst part of Cam Newton’s season by a long shot, and hard to watch as a fan I’m sure.

That’s the play that secured their fate. He would have recovered that ball, had he offered up the effort.

Shares have been halted multiple times, and have reversed most of a double digit percentage drop this morning.