For the visual people just wanted to update the most broken chart of this year. We are still finding ourselves in what we should call the death zone for bears. Many have capitulated (me included) - many are just at awe with what this market has done. I have kept the proper trendlines from yesterday to outline the megaphone pattern I had been talking about. Someone at bostonwealth picked up on that too but a pattern of a different nature that I seem to like quite a bit (butter fly). Keep in mind that those type of patterns are extremely rare especially on such a long time frame. They develop very often during intraday ranges before a 3+ day trend is established but not often on such a scale.
The butterfly indicates continuation (and is MUCH larger in time then this pattern - try 3 months and you can see the same but in reverse). The mega phone indicates reversal to the downside.
NOW - you all remember my insane love with monthly spinners - meaning a month where open a close is the same. I will go back and do something a chartist should never do - massage a chart - well here it goes.
For the month of may we are going to use the close price of the first day which is 907 and not the open (which is 880). I know that this is a violation of technicals and you can spank me all you want but I am going to do it anyways. Where we are now - we had a 10 point open/close range for the month of May, less then 10 points for the month of June and our current price levels for july is a mere 10 points as well.
The reason I am manipulating this a little bit here is to show the extreme levels of indecision we are seeing. Incredible formation from a longer term perspective we are seeing here. Of course my gut feeling is the downside but who knows anymore. And if that is not enough - 5 months up in a row. Please tell me the last time a bear market has done that?
I am holding on to my august spy/sds puts unless we see 918-915. I am 95 % cash anyway.
ReplyDeleteshould be topping out at 938.25 SPX for the high of the day - not shorting it.
ReplyDeleteNO bears left. even x-trend is calling for 1050.
ReplyDeleteI think we drop from here about 10-15 points and more tomorrow. but then go long
ReplyDeletecharts get broken more and more every minute that goes on. THANK GOD I closed out my shorts yesterday at the open. I would be in serious pain now if I had waited for all my stops to be hit.
ReplyDeleteTS gives you a nice sound "order filled" - this would have been going on all day yesterday and today.
All bears are gone, bulls are coming in. Never seen such high tick on such low volume here. Not sure what to make of all of this to be quite honest. One would say you can short here and hope for a retracement ... but 3 months of chop - whatever comes next is just going STRAIGHT into the direction of the breakout. Without any stop, without any retracement, without a chance to get out.
There are MANY traders that in the past 3 months had the luxury to get into positions and close out when the market went against them without much of a loss as those ranges were revisited. You want to be careful here going forward not to be stuck holding onto a position with the hopes of getting out.
Also Ryan, if you reading this, good move on UNG =)
ReplyDeleteHi Chris, I've always around reading :) I bought more UNG today for a quick scalp but I'm still holding onto my core shares so I hope there's more upside left. I am in pain with SDS unfortunately. I'm willing to hold on JUST a little longer but it's really not looking good at this point.
ReplyDeleteRyan your not alone in the pain.
ReplyDeleteStill holding my shorts, but 943 was my number to get out... still had it stuck in my head this would run to 942 and then drop back down.
-Kat
Whow...just...WHOW... I'm sure NOBODY, bulls/bears even dared dream of this... just a sight to behold...
ReplyDeleteI have to be honest ... and I know I have said this MANY MANY Times before .... probably 5 times during this rally. But this smells here - I really do believe that we may have made a top here - not for the day, not for the week, not for the month, but for this rally.
ReplyDeleteYes - you cannot call the top multiple times, and eventually you will be right after the 5th time. Lucky guess one can say? I will post up a little story shortly after the close. Takes some time to write it but its been going through my head the past few days.
FYI I will retract this statement next week once we print 964 haha =)
Can't believe I was just in the process of selling when everything went crazy and now I'm still holding them.
ReplyDeleteWe'll see, probably just a last minute trick to get me to hold my shorts overnight and get pummelled again.
-Kat
I was right there with you Kat! I was about to let go of my SDS then saw the sell on the last 5 minutes and now I'm holding still. I was worried about the earnings with google but looks like there won't be a rally from it tommorrow (HOPEFULLY)
ReplyDeleteKat, I know its painful. And I am not quite sure what the right decision is here to be quite honest. I re-added quite a few shorts here at the close so I am the wrong person to talk to =) I also believe that this total disallocation of price this week especially combined with a strong stop sweep in the beginning of the week is an amazing move of MM's to screw with ones mind.
ReplyDeleteI mean look how many bears are still there? They all capitulated and we did not even make a new high yet? Its not easy being on the market and making money - otherwise everyone would be doing it.
Every time I try to position myself as a bear I loose - though I have done my best the past few weeks or I want to say 3 months to minimize those losses. Of course at this point I would need quite a strong move into my direction to be able to recover my account back to an acceptable level - but I have to admit while I am hurting just as everyone else - we still have sizable accounts that we can use to make money. Thats all that matters.
The second you think back to "well if I still had X dollars and would short/long now or would have shorted/longed there I would be at this number" - thats wrong. Every day your account starts fresh and you have to make the best of the situation to get the gains you want. Risk and money management are an important role and for me at least - I have improved dramatically. I am sure everyone else has done the same.
I agree with Chris here. I am down about 8% of investment capital over the 9 months and I cam colse to brewak even three times and got out of the position beacuse of fear learned from past events. When you hold it goes against your firm determination and when you sell you end wishing you had enough courage to hold. I would rather be in second category. I had SPX calla of 885 at 13 now in 40s and I got out at 23.
ReplyDeleteNow I am holding puts hope we get major retracement tomorrow but then when get out tomoorw of your shorts then like Chrs said market may keep moving south all the way to 800.
This is my scenario though, down tomorrow, rally mon to wed to 956-965-975 big down to 800 by August 20 and then a super rally to 1100. Whatever this is worth.
I'm just annoyed at myself as these last 3 days have been emotional trading, rather than planned.
ReplyDeleteI've always had an exit strategy before I entered, and this time I blew it off.
The reality is I'm up for the year and I see any money lost in the market at this point as just the price of learning to do something I should have a long time ago. After 10 years of buy and hold and getting nowhere(well actually I could have paid for my house outright with what I lost last year), I'm more than happy to lose a little and learn from it.
-Kat