Tuesday, November 17, 2009

OK some time now

Well we are seeing a nice sideways day today - after having reached a new high some distribution is needed to go even higher. Based on what we can see today, bears are gone and we still have some buyers left. Daily range is pretty much the narrowest we have seen in a while and technically we should not breach the upside for more then we already have. Its 1:15 now and we have had a 7 point SPX range while they are burning off the puts a bit more.

Now lets look very carefully at the below chart.

MACD is on the edge of breaking out on the upside which will invalidate the bearish case. However we need to get 3 daily closes above this range to be 100% confident its not a fake breakout and this being OPEX - well who knows. Also take a close look at the MACD divergence. The only time it has been higher was during our July head/shoulder frenzy - so far it has exceeded our previous two peaks in terms of divergence so there is not a lot of room left on the upside. Being long at this point definitely has more risk.

IF we are do see a repeat here take a look at the sep run and oct run. In september it took a total of 15 days before market finally turned lower (counting from first green day), in October it took 14 days (or 16 if you could the last gap up day close to previous high).

Right now our count is 12 (or 11 depending on how you want to count it). That means we are nearing the possible end here. However if we are able to rally higher which at this point is pretty much assumed by most everyone we will take MACD with us and could have a potential to extend this pattern in a July like run up.

At the same time, the rare three drives topping pattern is the last hope for any bear out there. Bears could have a field day here with bearish patterns left and right, megaphone, bearish rising wedge, divergences left and right, EURUSD not able to make new highs. I could go on - yet it seems we keep on busting higher as more and more bearish divergences build up. Since we have not see any proper bearish resolution for any of those patterns even all of those could get invalidated after the fact.

Yes I think we can all agree that the more likely scenario is a move lower to finally even out those divergences and give another chance to the bulls in a few months time at lower ranges. BUT, as we have seen over the last few months - bears continue to get the shaft. I for one am really looking forward to see how this market will resolve itself towards year end and into the first quarter of 2010.


  1. aapl looks like a good candidate here for a protected short position. May enter a 195/190 put spread on this one (smaller position though).

  2. short for a scalp. Looking for 3 points.

  3. out lol (made back my losses from the eurusd hah)

  4. lol just in time on aapl spread =) at least something works.

  5. also shorted some pot as well. Too good of a risk reward here.