Tuesday, July 21, 2009

Still Sick - small update

Ok, still a bit sick but wanted to give you guys a small update. While the market is going higher here (again) we should get profit taking soon. Keep in mind the 965 range will not be exceeded on the first try - no matter how many bulls we have, no matter how good news and everything else is. This range will NOT get exceeded on the first try and requires everyone bear and bull alike (and maybe converted bears cough cough me?) to regroup for a takeout of this important range.

If you are short now - its painful, yes, but we will get ourselves back to 920-930 to have a chance to cover and exit shorts. I will be looking for a short entry here soon most likly in the first 30 minutes of trading.


  1. again look at IYR and XLF ... they are not playing here. Same as before. XLF has not made a new high in 4 days. How is that possible?

    Reversal will come soon. Most likely in the first 30 minutes of trading. But lets see first =)

  2. all ( majority) bears are looking for 920-935 to go long and get out of shorts.

    All bulls are looking for 1050 and buying dips.
    How can both be proven wrong is what I am thinking about. Is it possible that we may have seen the top and any pullback will lure in both the bulls and bears around 930 but MM will continue to take it down all the way to 875-850 whne beras gets cocky and bulls are looking for exit only to see MM take it to 1050.
    Some services now has or about to turn long based on many long term TA work.
    Fun scenario.

  3. =) did you read my LONG post 2 days ago (I am sure most did not read because its a bit too long). But it goes into this emotional aspect. All are turned into bulls now - no matter how far we will drop down.

  4. Chris, to your experience eyes what does it look. On 5 min chart a bullish falling wedge or a narrowing triangle? What does it mean?

  5. unfortunately I am not quite sure how we are going to progress here. For the past 3 days its been shorting the close - seeing nice profits overnight, starting the morning in the reds, double down on short an exit.

    Today is the third time for me - shorted the close again, doubled down on position, closed out half at break even. This time I am keeping the rest, whereas the other times I closed all at break even (which turned out to be the right move).

    The stop run this morning before open, plus the stronger seller off leads me to believe that the market may want to regroup before taking on the oh so important 965. The 956-965 range is such a long term level that no matter how many new bulls are out there it cannot be taken out on the first attempt. Especially with such extreme overbought conditions.

    I am currently playing the short side down to hopefully 928SPX by Friday. After that I will decide to either close out, hedge or switch long.

    If it all works out the way I anticipate, my most likely scenario is a 3:2 hedge (short:long) at 928spx. I am a bear, so I am trading like a bear. If 965 gets taken out I may change my views - until then I will continue to assume that we are in the process of building a top.

  6. Thanks for your work. I bought spx puts for this w4 decline. hope it pans out. You are right 965 may not be broken this time around even from 930 as the time cycle folks are talking about maor correction starting this Friday into august 1. and major botom around august 20 after whihch one can expect 1050 -1140 scenario to fall harder in september october.

  7. I am seeing something quite interesting here - of course its more inline with my obsession with HFT systems but I never noticed something quite this odd. One of my indicators is time and sales with a filter for 3000 shares of SPY. I use this heavily during sell off or buying events to see how desperate people are.

    Whats really interesting to see is that while we are moving sideways or moving down. I see 90% green on this screen - meaning a very high amount of larger buys (all similar sizes) and almost no large block selling.

    To interpret what I am seeing - its a very large amount of small chunk selling but the market being held up by injected liquidity so it goes 100% unnoticed to the novice eyes.

  8. What does injected liquidity imply Chris? Does this mean many retail buyers here?

  9. it means retail and small guys selling, while big firms inject capital (provide liquidity for others to sell).

    So lets say you have 10 guys that want to sell 300 shares each. You have HFT come in and provide 4000K shares (meaning you have a surplus). Meaning market goes up while in reality a larger chunk of "real" shares was just sold.

    HFTs have many ways to get their shares back. They will get them back in small amounts while other bulls are convinced everything is great and it keeps going up.

    Keep in mind I have been close to obsessed with this stuff as of recently so take it with a grain of salt whenever you hear me talk about quants and HFT.