Monday, August 10, 2009

Important 2 weeks

Ok everyone. Lets take a step back and try to identify the next 2 weeks. We have reached an important level on the markets here with the 1014, a number I have been talking about over and over again in the past. At the same time we also hit an important level on the DOW of 9400.

From here on out we have a great way to identify what this market holds for us for the next 3 months. My perfect scenario would play out as follows here.

Move 1 = this move would be corrective of nature and bring us back to the 965-980 levels on SPX. This should resolve itself by the end of this week and possibly range into early next week.
Move 2 (OPEX week) = this move here should reattempt the upper ranges we have printed on the market. Due to open interest it is my feel that we may see the 4 digits again.

So taking this into account, we have a great way to identify if we are going to move into a longer down leg or continuing on the up side. It is my feel that we will give the 998 a test again - here is where the market will make a longer term decision - either continue higher to reach the 1050 or 1100 levels or move lower to retest the 880 and possibly fail to move lower.

I will be trying to play both sides but of course start with a short basis that I had initiated last week. After the move lower I will most likly change to a long bias of 3 long : 2 short by keeping my core short positions but offsetting them with a larger long bias for the 4 digit test next week.

This is my current trade plan and the reasoning for my new short positions initiated on Friday. If I play it correctly I will have a very neutral bias by the end of this week and have a good way to let the market show me where it may head. Either the short will be stopped out and the long takes over and the shorts continue to work in my favor with the longs being taken out.

As you know I have been burned quite a bit shorting this market and my account can vouch for that. As a result I have minimized my capital risk by quite a large amount until the market finally shows me the signs we need.

Good luck all =)


  1. I guess I did not put it in the summary as a recommendation. If you want to be short, wait, if you want to be long, wait.

    Being in cash at this point for the next 2 weeks is a great move unless you are positioned on the edge of either side (short friday), long (hopefully this friday or next week monday). One of those 2 will win and give you another nice move.

  2. well the plan sounded nice - however market decided that it really has no reason to go down from here. We got a correction of a mere 5 pts and are now ready to go higher.

    [throwing up my arms in the air]

    Cover all, go long all in, seems to be the ticket here.

    Sigh .....

  3. Chris I read your post on Nadu's blog. If you expect a bounce with the NQ, do you think it'll be a good idea to take a small profit on my QID or just wait it out?

  4. Depends on your time plan. The NQ long is very short term and most likely will be closed by tomorrow morning before 11:30AM. Its a very short term play just because I like seeing open profits on my accounts =)

    Ratio is 3:2 (3 short to 2 long) so it will give me a bit of an edge here in case we go higher overnight (as expected).

    Keeping SPY AUG/SEP puts. Plan for the aug put is this week around 970-980 where I will enter in the money aug calls for a short term play.

    I have to see how it plays out around this range (if we get there) to decide how I want to play this next move. I am also looking for sep in the money calls as well but only as a hedge against my ES short.

    Yeah its quite difficult to play this especially with OPEX as I do expect opex week to be higher but NOT break the current pivot high.

  5. I took the win, I can't complain, at least it'll give me a little joy with my huge UNG sting lol.

  6. good move. I am seeing my profits evaporate yet again. As to be expected ... sigh.

  7. hugging VWAP for 45 minutes without a breach. That can only mean 2 things. It rains or its dry lol

    Never seen the market flatline in the last hour here. One would expect a push through VWAP like every other day, but then where is the selling? Its not there either.

    Crazy market. Because this market is so unpredictable I have taken profits on the Aug puts and holding the sep puts and the ES short still.

    I am even considering closing out everything at the close and waiting until after OPEX.