Friday, September 4, 2009

All eyes on data

Yesterday
We continued trading in a narrow range yesterday after we failed to take out the 992 support range. I have to admit I was a bit surprised at this action here and would have expected at least a marginal new low but that did not happen.

As the market turned around it was clear we had to brace ourselves for a bit more upside. Usually I am pretty accurate with price points and levels but yesterday was one of those one-hit-wonders.

At 12:59PM I had posted the following in the comments section:

"100.77 on SPY is as high as it can go, even if it breaks out to the upside on that triangle. Not higher. Putting my foot down !!!!! Now market you listen to me and do what I say ...."

Well I guess the market listened, high of the day right at the close was 100.77. A bit lucky I would say but also inline with my other comment around 11:47AM.

"Based on what I am seeing here, sustained rallies above 1000 are very unlikly. I would not be surprised to see one last push up to 1003-1004 and then fall very strong."

Well we got that one too, HOWEVER, this happened into the close which makes all of this a very bullish scenario. Considering that we closed above the open price this pattern looks very much like a bullish reversal pattern.

Today
Well the morning at 8:30 will decide the day. We have to accept the possibilities of a trend day today, I know any rally in the past 2 weeks had been sold into, BUT for today, if we get good job numbers I expect a minimum of 8-10 point gap with a stepping day closing at the highs or with a marginal sell off into the close above the open price.

The other scenario of course a GAP towards 998 or more with continued selling and possibly reaching 980 with a marginal breach towards 978.

Position Update
I had positioned myself last week through what I consider my max pain zone to profit from this move that happened this week. My price and time targets are still at a minimum 960 by OPEX, however, due to the premium drop in all my puts my max pain zone has dropped into the 1010 range (1019 before). Thats a whopping 9 points of additional pain I have to assume - not something I am prepared to do.

FYI I have not taken a single profit on my positions yet (hindsight is 20/20 but when it comes to options, its always tempting to close out before your time/price targets)

So it will become quite difficult for me to manage my positions here. I have to accept a rally towards the 1012 range, possibly even ranging to 1016. This is the max pain zone based on my positions, however, purely market based this is still a bearish pattern all the way until 1021.

So as a result I need to do some extra work to make my positions work. I have not yet decided how I want to play this protection. Either through a large in the money call for the intraday protection or a large futures long position via NQ to offset both the loss on ES and the puts.

More updates to come at 8:31AM lol

5:32AM: ok futures being pushed with a high of 1007 (just at my 1008 range SPX). Could be adding a nice buffer here on the upside for a potential drop on unemployment data. Combined with the option trickery (whether it was valid or not) it has all the makings to protect big money for downturn. Also interesting to note that EURUSD is not confirming this move here, it did not confirm the mid day rally yesterday (made lower highs and lower lows) and not confirming the push here on futures. If the data is positive and I were out to screw market participants I would run the long stops by dropping futures to make bears happy (and screw them with good news) and to make dip buyers chase higher and higher prices with the hope of going even higher. Ok enough of this conspiracy talk - the market does what it does and is not out to get anyone here. Whatever your position is (short for me) I can always dream up a case when the market moves against me to justify staying in the positions.

37 comments:

  1. less bad is good so it seems. Even with unemployement numbers at record highs, its incredible that we are still trading above yesterdays close. Goes to show what a little overnight pushup magic can do to pretty bad news data.

    I am glad we stopped right at 1009, I actually added anotehr small short at 1008.50 with a stop at 1010.50 as a day trade.

    Also glad to see that EURUSD is not playing with the SPX boys and going straight down - supportive of further drops on SPX. We will have to see what they make of this news in the next 30 minutes before cash hours but I would have to say that a flat open is very likely.

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  2. futures are really fluctuating...

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  3. yeah, but we are back to where we started yesterday lol, actually a tad higher still.

    This back and forth is making me feel a bit better about my short positions - I do have to admit, I was quite scared of this release here, main reason was due to my options premium drop yesterday that brought my pain zone a LOT closer to where I wanted it.

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  4. I actually got stopped out of my short by yesterday's EOD ramp job, making me 1:1 at the close. Good luck to all today!

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  5. can I say that I hate whipsaw. Hedged myself pretty close to the top as my pain zone was approaching lol

    That was a bit of money just thrown in the wind. If this is a W4 correction, can I just say I hate them lol

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  6. Chris, do you still believe "the longer we wait (flat), the harder we fall"? Taking into consideration today's jobs report and the market's reaction to it?

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  8. Unfortunately based on all this action here, the short term is more bullish then bearish. We have not been able to take out the 990 range and are seeing ourselves back above the 4 digits and unable to break back below LOD = 1001.65

    That has me very concerned with my current puts especially since my average price is just around here at 1007. Yes I know puts are tricky since I only worry about hitting a price target by opex week of 960 minimum, which will put all those puts well in the money. However time is running out and I am not seeing a big market catalyst at this point.

    Volume is still low and this could be one of the reasons why we are not "allowed" to fall. Generally holiday weeks resolve to the upside - that has not happened so its a plus for the bears.

    But still, I would say 60% chance we see higher prices next week, vs 40% for the downside to resume.

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  9. Chris, your daily calls have been very good. what do you see now for the day.

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  10. my last bear straw I am holding onto is that the market wants to retest 1009 during cash hours (the overnight high) - if we do not sell off from there I will lighten up on my puts.

    So frustrating, had really nice gains on Monday on my position and most of it evaporated again.

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  11. I am thinking the real action will start after labor day. All this BS can be taken with a grain of salt.

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  12. yeah I am kind of thinking the same, however, question is do we get another pop up before heading lower.

    I have to be honest, at these prices, really do not want to be holding my puts over the long weekend =)

    Of course that was one of my hestiations last week when I loaded up a bit stronger on the short side - but I have to admit, its been a while since I have seen a decay on puts that drops me over 10 SPX in one week. If my average had been the original 1018 no problem ... now ... not so sure =)

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  13. alos, not seeing any real negative ticks here. We have been holding this range fairly well thus far which will invite more dip buyers.

    Could all be the light holiday trading volume of course but still something to consider if your average prices are around this range.

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  14. It seems that we are rolling over. Sol at xtrend has short at ES 1007.25 and stop at 1008.75. he has been making good calls. Mortie also has the top at ES 1008-1009.

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  15. yeah it should all be coming together. But with the lack of volume - it will be difficult to get a push lower.

    I am still sticking with it but will lighten up on puts if we close above 1004 today.

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  16. Hi Chris; hows it going? I'm off today so I can read comments and get a bit more involved..finding this work thing really interferes with trading....but so far it pays much better...so I'll quit my bitching.

    Just watched a nice drop and hoping for more...but the bulls seem to be fighting back.

    Steve

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  17. Steve, yeap a job pays for the bills a bit better then being bearish in a 5 month rally lol

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  18. How about actively trading while at work? Hehe... Shhh...!

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  19. does not work. I mean I am quite active as you can see from comments, but trading while distracted and in the middle of other things is a recipe for disaster.

    I generally prepare my daily ranges before hand and set alerts if it crosses certain ranges. Its funny how I keep on moving my 2 horizontal lines within 2 points around the market to see where it will break lol

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  20. I'd be very happy for a close below 1000 today, but I doubt it will happen.

    FYI, as I am in the UK, it makes trading so much easier as I have a full afternoon US market time to actually focus on charts, patterns and momentum.

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  21. You don't suppose UNG has bottomed...?
    Steve

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  22. based on what I have been reading, even at current price levels its overvalued and due to the roll over to the contracts you get screwed either way.

    I have tried UNG many times, and always played it with very tight stops, do not think I had a single success trade with that one, so I just let it go and looked for other opportunities.

    It keeps on making new 52-week lows, one after another, at this point you would be playing a bounce counter trend play so it seems. Every strong reversal off the bottom with a retest of a breakout range ended up with new lows.

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  23. so what is the next level here Chris? 1013 already hit. 1021?

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  24. market being put to the test here. 1012-1014 was our previous breakout range before we embarked into new highs. This is also the important FIB level I have been talking about.

    At this point I am micromanaging my positions and adding more shorts but will close out what I added and probably some more today as I cannot see us closing below 1003.

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  25. not looking like any selling will happen here. Will put quite a few stops on my positions at HOD here. I think this here can run a bit higher since no one trading today and MM's can run stops easily. Its quite unfortunate

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  26. I finaly found out at TOS stop limit is not the same as STOP. Stop limit does not execute the order. I do not know, what does it do? But from here on I will use STOP for stop loss. In at 1008.50 ( short) It is only one contract so I am not going to sweat and will hold it over the holidays.

    http://danericselliottwaves.blogspot.com/2009/09/e-mini.html#disqus_thread

    One of the comment in Daneric blog calls for doulble top or new high before the crash.

    no i was talking about this short term bottom a few days ago 11 minutes ago · E-mini · Daneric's Elliott Waves

    at this time actually stock bottom preceeds cyclical oil bottom in about a day:) 14 minutes ago · E-mini · Daneric's Elliott Waves

    DJ why disaster and why tomorrow

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  27. well, if this was a stop run, they took a lot of mine with it.

    Stopped out of quite a few positions here. Of course worst possible prices. But based on this there are chances we could get back to the 1021 range here.

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  28. ...is there such a thing as a "daily head and shoulders"....cause it sure looks like one is developing today?

    Steve

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  29. yeah it can be applied on any time frame ...

    however, this is looking like a stepping day. Holding here on support of the previous step.

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  30. iF ANY SHAPE LOOKS LIKE h&s THIS IT FOR THE DAILY BASIS. AND IT BROKE TOO. LET US SEE WHAT HAPPENS.

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  31. Closed 50% of my puts, rolled the remaining sept into oct/dec.

    Yes I am very confident we will see lower prices here very soon, but cannot stomach more losses. Its an emotional exit here I admit thanks to a bad week. I am actually down more here then I was last week :(

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  32. Look forward (month or two), and seeing today's 9.7% unemployment, I really don't see any catalyst to push this higher. The up action here may just be dip buyers, quants, covering. Over the course of the just-finished earnings season, "less-bad" news was interpreted positively and people bought into it. Now it seems "less-bad" news is not good enough anymore. Market looks toppy, smart and big money are probably exiting now. Not to mention, looking ahead it's difficult to see how the figures can possibly improve in the near term (within 2009).

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  33. oh yeah I definitly agree, I mean holiday week, low volume, really should have taken my profits on monday and run for the hills. But who could have known, I think many were expecting lower prices even with the holidays.

    Keep in mind I would not have closed some of those positions here if it weren;t for the premium drop that is very unusual this week. I rolled what I had left in sept into nov, so at least I am getting a good deal on the nov ones =)

    I will still look to re-enter next week, but will remain super cautious still until we have taken out the 980 range.

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  34. I agree 980 is the key. But there too we have to be careful as we know what happened after 875. My H$S thoery is kapoot now. I think we see 980 next week.

    If on Tuesday if mkt gap down I will join the party and let go earlier points. Otherwise wait and see.

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  35. yeah I have minimized a LOT or risk today and will come back in eventually. Just want to see it play out first.

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  36. Shorters are not going to hold short into the long weekend. Besides they (we the bears) make up so little of the market. The majority, the big money is dormant right now on vacation. The only way this market goes down is if those guys sell.

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  37. Wait and see what THEY do after the long weekend. Follow the leader :)

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