一个笨蛋的股指交易记录-------地狱级炒手

hefeiddd · 发表于 2009-3-30 08:44

January 18th, 2009 5:56 pm Market Forecasts 151 Comments

It still feels like summertime over here on the West Coast and I feel fortunate not having to deal with the freezing weather conditions the rest of the country has to put up with right now. But if it’s any consolation to you Mid West or East Coast rats - today’s financial weather report indicates that arctic conditions are soon to return to equity markets as well. And that means hunting season for us bears - after all, nothing warms the heart like a rapidly growing portfolio.
Remember back in November when I talked about intermediate wave (4) and all the whipsaw ugliness we would have to endure in the coming months?

Boy, we sure have come a long way since then and we have waited patiently for our moment to strike. Fortunately the market has been kind enough to stick to the evil plan I hatched in the murky depths of my demented brain - thus far at least. The past two weeks have been very profitable, but as I’ve said before - this is only the beginning. Stick with the script and you shall be amply rewarded.
Looking at the chart above you can see three possible scenarios - let’s cover all of them one by one:
Orange: The triangle scenario - probability 40%. Based on that count we are now tracing out the final E wave which is expected to conclude around 900 - 920. This scenario would accommodate a little Obama rally before we decent into the abyss.
Blue: The flat scenario - probability now 20%. This count leads us to the maximum retracement I would give the bearish case, which is around 1040 on the SPX. It’s still a possibility as the market always has a knack for hurting the most people and this would surely surprise a lot of the bears - not us of course. But based on the swiftness of the past two weeks I have decided to lower this probability.
Green: The intermediate (5) scenario - probability 40%. The sheer momentum and strongly bearish breadth levels of the past week points towards a scenario Berk suggested early this month. Which was that intermediate wave (4) had concluded and that we were already in minor 1 of intermediate (5) of cycle wave c. My position then was that I would have to see supporting evidence to that effect. Well, evidence is what we got. The tape of the past week suggests that this possibility is very real and at this point equal to the triangle scenario. I also like the fact that last week’s push down ended right at the 61.8% fib line of the counter wave starting at the November 21st low (marked as the green arrow above). The turning point for this scenario is coming up soon at around 880.
The good news here is that all three scenarios lead us higher for a bit longer - the only difference being the turning points. I have taken the liberty to add action items for each scenario on this chart: when to reload/add and also when to un-hedge (i.e. leg out of those puts you sold). Many of us chose to hold on to the puts we bought at relatively low volatility by turning them into spreads and these appear to be the safest moments in time and space to expose ourselves back to the downside.

Curiously, supporting the orange and green scenarios is my trusted weekly semi-fast stochastic indicator. We touched the 75% line and the K line has already swung below the D line - a clear sign that trend is to the downside. As I’ve mentioned in the past - this chart has rarely let me down, which is complementing indicator in favor of a continued trend to the downside.

One of my favorite market timing tools is the NYSE bullish percentage index, Stockcharts.com symbol $BPNYA. This indicator shows the percentage of stocks in the NYSE Composite Index (NYA). It is an objective market barometer and traditionally interpretation is simple: If the index is above 50%, we are in an uptrend; if it is below 50% we are in a downtrend. If it is above 70% the market is overbought and unlikely to go much higher. If it is below 30% the market is oversold and it is feeding time for the bulls.
Of course as all indicators they need to be observed in context and even a cursory glance at the chart above reveals that the scales have shifted dramatically in the recent past. The new 30 seems to be the 7.5 mark and the new 60 is approaching the 70 mark. But even if we read this chart in its traditional context there is still plenty of downside potential ahead of us, and remember that we’ll probably see a bounce to the upside in the coming days. My personal take is that we’ll see this indicator push back below the 20 region before the end of February.

If you read my Saturday post then you might understand the fundamentals behind the continued rise of the Dollar. From a purely technical perspective we seem to continue wave 3 of 3 to the upside and I don’t expect any significant corrective moves until about 88. The line in the sand here is around 77.5 - if we somehow drop below that I would have to re-evaluate the short term bullish scenario.

Gold has decided to test our patience yet once more and is back for a re-test of that diagonal. I think this is actually a great place to reload on puts as this line should not be breached. Thus it’s a very defensible position - a chance we rarely get with our favorite precious metal. A good stop here would be 850 - use a GLD correlation chart to pick your exit if you prefer trading the ETF.

Gold’s little brother, silver, is actually in a very similar position but a stop would be even easier to manage at around 11.7, which was the recent top. FYI - my target for silver is around 6.5 - 7, so this could turn into a nice ride to the downside. When it comes to silver I have been doing well with PAAS in the past. I also like DBS, which is a silver based ETF.

Some of you might remember my little excerpt on the crack spread last week. Again, the crack spread is a term used in the oil industry and futures trading for the differential between the price of crude oil and petroleum products extracted from it (i.e. gasoline) - that is, the profit margin that an oil refinery can expect to make by “cracking” crude oil. Now, I’m the first one to admit that I know very little when it comes to the fundamentals of oil and other energy markets. But as a technician I do recognize an exponential curve when I see one - and this one has turned almost vertical. What goes up has to come down eventually - but I suggest to not step in front of a moving train. Let’s wait for some weakness here and once we see a little roll-over it may be time to short some of those refiners.
Looking at the poll I am happy to see that many of you stuck with the script and covered those puts around 820. The ones who decided to sell will soon have to buy them back at much higher volatility, which means higher premiums. There’s no chance in hell that the VIX will touch 37 anytime soon again - exception being perhaps the blue scenario described above.
Let’s keep it clean going forward. This has been an excellent start for 2009 - we almost peeled some rubber here - and I intend to continue our winning streak. Let’s keep collaborating and most of all, let’s not get complacent. The vigilant and nimble rat is the one that gets the cheese.
I leave you with this - courtesy of the

Cheers!

hefeiddd · 发表于 2009-3-30 08:45

January 16th, 2009 1:09 pm Market Forecasts 175 Comments

UPDATE 1:04pm EST: We broke out of the channel I have been pimping all day. Got out of my Zero position with small profits but am not liking it. Thus I decided to ignore further signals for the remainder of the day as it’s expiration Friday and I don’t want to start blowing profits on whipsaws and slippage.
Anyway, I was looking at RTH and am liking what I see:

10 day ATR is around 2.5, but due to the trendline I’d set a top at 73.2.

Also like Toyota if it hits 67 again - would settle for 66.5. Yes, I’m talking puts.
UPDATE 1:39pm EST: Okay, here’s my long candidates roll call:
AA
ACL
AG
AMZN
AZO
BIDU
BUCY
CAT
CCJ
CF
CHK
CMG
CNQ
DE
EXPE
FAST
FSLR
GNK
HAL
ISRG
JOYG
LNN
MOS
NOV
POT
RGLD
RS
SHLD
TXT
XLU
I stole a few of those from Tim Knight - sue me

Here’s the URL for the CSV file - you can import that as a watch list into Prophet charts:
http://www.screencast.com/t/BlbEIdaf
UPDATE 2:18pm EST: V for Whipsaw

Having fun?
UPDATE CLOSING BELL: So, I post 30 long symbols and get what - like one response? Jeeeezzz…
One more comment - sorry I can’t resist: Does anyone remember me posting that Yen/ES futures correlation chart early this morning and saying that this is probably one big bear trap?

Anyway, I’m outta here - don’t expect to hear from me until Monday late afternoon.

hefeiddd · 发表于 2009-3-30 08:46

January 16th, 2009 10:14 am Market Forecasts 123 Comments

UPDATE 10:12am EST: I was just catching up with the latest thread of comments and one in particular by standard_and_poor stood out:

After reading today’s posts it seems many of us are trying to toy and fine tune an already perfect scenerio. We’ve been waiting for an impulse wave for many frustrating weeks, let’s not let our reptilian brain screw this up. Wait for the 2nd fib retracement or even 3rd if we get there to add to shorts. Most of us should be somewhat hedged anyway. Don’t get scared out of your shorts by not having your exit and re-entry strategies prepared before market open; otherwise you’re trading on emotion and adrenalin (seeking pleasure, avoiding pain at all costs even if at the core we are aware of our errors). Odds are favorable that we’re amidst [intermediate] wave 5 eventually awaiting at least 739 spx. I know it’s a tough call for us but look at the bank stocks (new lows seem imminent), $cpc, etc., etc. I’ll be lightly nibbling around pivot zones at most. Sure the brain is terrilbe thing to waste but so is an impulse wave!

I have to say, I couldn’t agree more with his sentiment - not sure if we’re in (5) or still in (4) but I frankly don’t care because I’m just sitting and watching at this point. Now, I’m not saying I’m not doing anything or plan to head for the beach (nice warm weather over here in L.A.) - I’m browsing through tons of charts to pick victims for the invariable trip to the downside. But that may be a week or more away, so let’s be patient folks - in trading timing is everything.
Besides, today is expiration Friday - my least favorite trading day of the month. I completely despise this day as market makers are out in force with high voltage cattle prods inflicting maximum pain on hapless rats hoping to make an easy buck. Trust me - those guys will have your breakfast - spit you out - and then roast you on stick for the main course. Just stay away.
Zero was triggering a long ETA but that disappeared quickly - I have put my criteria on the chart and unless all three are fulfilled I’ll stay out of taking trades in that account as well. No sense to blow profits on slippage and whipsaw tape.
UPDATE 10:30am EST: We’re slowly drifting downward - take a look at this:

Nice channel we got ourselves here - we basically keep bouncing against a dropping VWAP. Keep an eye on that channel - perfect for day/swing traders I might add.
UPDATE 10:36am EST: GREAT - I post the damn chart and we break through the channel - LOL. Let’s see if it holds - retest coming.
UPDATE 11:11am EST: Somewhere deep in the murky depths of currency markets something strange is happening today:

Yen is pushing to the upside right now, which is bearish for equities. But see how ES futures were previously dropping along with the Yen - that’s a bit irregular IMHO. If you’re getting all excited here whilst loading up on puts be very very careful - this smells like a major bear trap to me. I also see 4 indecision candles on the Zero, also indicating that the current drop has no underlying momentum. Watch your six - expiration Friday can be treacherous.
Okay, I’ll grab breakfast - will be back in about 30 minutes.
UPDATE 12:18pm EST: Wonderful, I step away for some morning nourishment and come back to see an ETA and a VTA. Was only 8 minutes late on the VTA, so I grabbed it. Judging by the comments you guys are aware that WFC and other banks just fell off the plate. RKH has some nice candles on it. Yup, reality finally catching up with those boys…
UPDATE 19:26pm EST: I have to be honest - I did NOT expect such a large move today. This actually strengthens the case for intermediate (5). As a matter of fact, the force of the past 10 days has contributed to that scenario becoming more plausible every day. But for now it doesn’t matter as no critical points have been breached. I’m watching that channel I posted earlier this morning:

hefeiddd · 发表于 2009-3-30 08:46

January 15th, 2009 10:44 pm Market Forecasts 67 Comments

Can you say reversal? Things had been rolling pretty nicely to the downside for about seven days now. This is the first bounce that has had any juice, and I think we will get a couple of days worth of followthrough. Most of the indexes and choice stocks put in some gorgeous reversal candles. Check out this doji in the $SPX.

You should all have noticed that we have been here a few times before.  Check out the massive reversals that have accompanied this level for the past few months.
I think we should be looking towards at least 875 in $SPX, with the 900 range being a more likely target.  1225 looks nice for the $NDX, while an open gap remains up to 1275, but that seems pretty optimistic.
For those of you who have gotten into the ICE trade I recommended a few days back, now would be a good time to take profits, or close out partial positions.  We have gotten close to prior resistance, MACD has flattened out on the histogram, and we have increasing volume on large-wicked candles.  All of these  things paint a very nice picture of a reversal if you consider we have fallen (as of today’s close) 20% from the reco price.

Keep eye on this rally as we head back towards the above-mentioned levels, as our puts should be cheaper there, moreso should the $VIX stop its march higher.

Finally, I had mentioned to keep an eye on the XLF, or your financial sector tracking ETF of choice. The XLF today was within one and a half ATRs of being at new lows. Yes, we got some reversal here too today, but we still closed down nearly 5%. Keep an eye on the puppy as the financials typically lead the market. New lows in the XLF should be important to the markets too.
Skål!

hefeiddd · 发表于 2009-3-30 08:47

January 15th, 2009 11:33 am Intraday Update 206 Comments

UPDATE 11:17am EST: Wow, what a ride - and we find ourselves at the coveted 920 region. Now, the pace of the recent decline indicates that we might actually be already deep in intermediate wave (5) and in that scenario we’d probably bounce around here a little but then keep dropping. So, the question now for me is whether or not to turn my puts into spreads to hedge myself for some expected upside. After all - we’ve dropped 120 points without a real rally - it’s possible we keep dropping but the $NYMO was a bit oversold already yesterday at -34 and it’ll probably push towards -50 at the end of today.
After some consideration I have decided that it’s time to ‘virtually’ lock in some profits - thus I’ll be spreading as suggested in my Summertime post last Sunday. IF we breach below 800 I will leg out of the short puts side, thus turning back delta negative. 800 is a good level to watch - it’s a psychological level first of all and it would also confirm that the triangle/flat scenarios I’ve been pimping have been breached.
UPDATE 12:41pm EST: I’m starting to post a few thoughts about our usual suspects as I’m not sure if Berk will have time to post tonight. Let’s take a look at our favorite shiny metal, shall we?

So, that diagonal is officially a resistance line now - so far so good. Gold has been extremely stubborn and this is the point where I feel comfortable saying that the recent trend of higher highs and higher lows has been broken. Another important psychological level is now in sight, which is 800. My evil plan for Gold is to grab some short positions when we breach that level, then sit out the obligatory bear shake out up to about 820, add even more positions, and then cruise it down as it crashes to 650.

TLT (inverse to 10-year Treasury Note $TNX) has been rallying and is approaching levels where I expect a turning point very soon. I’d give to about 118 (61.8% fib) but that would be already pushing it. My stochastic/MACD indicators claim that there might be more upside, so I’m a bit cautious to leg into puts right here. Oh yeah - people keep asking me why I’m not going long TBT. Sure whatever works - maybe I just LOVE to go short

UPDATE 1:50pm EST: We’re now at the ES VWAP which is significant - this where the fake outs separate from the real rallies. If we hold and push higher here I expect some large buyers to step in.
UPDATE 11:53pm EST: LOL - a minute after I posted this the buyers stepped in - 828 now, which is an EST pivot. Glad I hedged myself earlier this morning.
UPDATE 2:04pm EST: 832 - next ES pivot. I think we’ll whipsaw around here for a little - we’ve pushed up quite nicely. So, what did we learn today? Never get too greedy!
UPDATE 2:11pm EST: 836 now - next ES pivot. Do you guys see a trend here?

Actually I was expecting a big of a pullback but the Zero signaled a long ETA, so let’s trust that unless it goes flat.
UPDATE 2:47pm EST: If you guys think this rally was wild, wait until the bots kick in. A bird told me that they are waiting for the PREM (difference between front month ES [a.k.a. 'spoos'] and SPX) to be above Fair Value, which today is -3.62. Buy orders won’t kick in until maybe -2. If that happens THEN you’ll see fireworks. This is nothing yet.
And now for something completely different (courtesy of grednfer
):

AMZingJanuary 14th, 2009 7:35 pm Market Forecasts 152 Comments

Just a little comment cleaner for you guys.

Was looking at AMZN this evening and it looks like this would be a nice play if it breaches 48. Probably good for 4-5 points.
Alright, I’m off - have some NinjaScript coding to get into. Good stuff to come on the Zero front

I’m back with XLU - check it out.

What’s the chance this sucker pulls back into that ascending triangle? FYI: an ascending triangle is usually a bullish formation that usually forms during an uptrend as a continuation pattern. There are instances when ascending triangles form as reversal patterns at the end of a downtrend, but they are typically continuation patterns. I think we might have ourselves the rare case of the latter here - an ascending triangle breakout to the bottom finalizing its downtrend. BTW, I also love that ominous candle there… what you guys think?
Cheers!

[ 本帖最后由 hefeiddd 于 2009-3-30 11:41 编辑 ]

hefeiddd · 发表于 2009-3-30 08:48

January 14th, 2009 10:08 am Market Forecasts 208 Comments

UPDATE 10:00am EST:
Message to all perma-bulls: Reality - don’t you hate it when it keeps catching up with you?
Those retail numbers were simply horrid - as you should have expected if your IQ ranges above room temperature. Who in their right mind thought those would be below estimates? Busted us through some congestion on the RL front - nice. Anyway, while I’m writing this the Yen is testing the 1.1250 R1 pivot - if that one breaks Kansas is going bye bye. Keep your eyes on it.
In other news - the TNX keeps dropping back towards 2.2. LOVING IT! Will load up on TLT once we hit 820 on the SPX. Mr. VIX is back at base camp around 4,810 feet - I’m sure your March/June puts are enjoying the alpine air. Oh, before I forget it - CCJ is finally producing - was about time this one put out. Three dates usually is my limit

I’m kicking myself for being so tepid around that 820 RL yesterday despite the Zero pointing downward. Yeah, we rallied up after the signal but that’s the cost of doing business. I think the Zero/RL correlation needs further thought as the Zero indicator is more long term IMO. Thoughts on the matter would be appreciated. Maybe just trading the Zero pure is the way to go (no offense to 2sweeties of course - we love those RLs - just not sure how both systems combine).
Go out there and find yourself some long candidates - you might also start thinking about your hedging strategy for when we approach 820ish.
UPDATE 10:41am EST: The trend is down for today: 18:1 declining issues right now. Don’t be a hero and step in front of a falling sword. Let ‘er ride….
UPDATE 12:08pm EST: I thought I’d share this little observation with you rats:

If the Yen starts pushing to the upside again I expect more downside in equities.
UPDATE 1:12pm EST: Hope you guys are holding up during the mind numbing whipsaw. This seems to become a daily routine at this point. Did I mention that I hate expiration weeks?
I’m going to start looking for oversold candidates for when we hit an interim low in a day or two. Would appreciate if you rats chime in.
UPDATE 2:00pm EST: This whipsaw is making my brain hurt. But check out this nice short term triangle on the NQ futures:

Which way will she break? Downward seems to be the trend, but I would get more excited around 1162.
UPDATE 2:22pm EST: In case you wonder where those long white spikes are coming from. A birdy just told me that the pits got an order for 7000 ES contracts around 2:10pm. There’s a heavy buyer lurking. My guess would be it’s the primary dealers working in concert with the Feds. Hey, how did this wrinkle get into my tinfoil hat?
UPDATE 3:13pm EST: Never underestimate the MM’s skills to drive the market up and down during expiration week. I’m accepting bets starting now of where we’ll close today.
UPDATE 3:47pm EST: Just an observation:

BTW, I just flipped FDX to puts and grabbed some Feb TGT puts.
UPDATE Closing Bell: Well, today was a fun day…. NOT! Can’t complain though - ended up 8% in my account - I call that a peachy day. I’m holding those short positions in the Zero account. As you can imagine getting stopped out by a temporary exit signal really ticked me off and took out a lot of profits. I jumped back in though as the Zero signal keeps pointing down.
No forecast tonight as it’s Wednesday - that’s our lazy day. See you tomorrow, ladies and gentle-leeches.
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hefeiddd · 发表于 2009-3-31 11:31

January 15th, 2009 10:44 pm Market Forecasts 67 Comments

Can you say reversal? Things had been rolling pretty nicely to the downside for about seven days now. This is the first bounce that has had any juice, and I think we will get a couple of days worth of followthrough. Most of the indexes and choice stocks put in some gorgeous reversal candles. Check out this doji in the $SPX.

You should all have noticed that we have been here a few times before.  Check out the massive reversals that have accompanied this level for the past few months.
I think we should be looking towards at least 875 in $SPX, with the 900 range being a more likely target.  1225 looks nice for the $NDX, while an open gap remains up to 1275, but that seems pretty optimistic.
For those of you who have gotten into the ICE trade I recommended a few days back, now would be a good time to take profits, or close out partial positions.  We have gotten close to prior resistance, MACD has flattened out on the histogram, and we have increasing volume on large-wicked candles.  All of these  things paint a very nice picture of a reversal if you consider we have fallen (as of today’s close) 20% from the reco price.

Keep eye on this rally as we head back towards the above-mentioned levels, as our puts should be cheaper there, moreso should the $VIX stop its march higher.

Finally, I had mentioned to keep an eye on the XLF, or your financial sector tracking ETF of choice. The XLF today was within one and a half ATRs of being at new lows. Yes, we got some reversal here too today, but we still closed down nearly 5%. Keep an eye on the puppy as the financials typically lead the market. New lows in the XLF should be important to the markets too.
Skål!
Spread Them Baby!January 15th, 2009 11:33 am Intraday Update 206 Comments

UPDATE 11:17am EST: Wow, what a ride - and we find ourselves at the coveted 920 region. Now, the pace of the recent decline indicates that we might actually be already deep in intermediate wave (5) and in that scenario we’d probably bounce around here a little but then keep dropping. So, the question now for me is whether or not to turn my puts into spreads to hedge myself for some expected upside. After all - we’ve dropped 120 points without a real rally - it’s possible we keep dropping but the $NYMO was a bit oversold already yesterday at -34 and it’ll probably push towards -50 at the end of today.
After some consideration I have decided that it’s time to ‘virtually’ lock in some profits - thus I’ll be spreading as suggested in my Summertime post last Sunday. IF we breach below 800 I will leg out of the short puts side, thus turning back delta negative. 800 is a good level to watch - it’s a psychological level first of all and it would also confirm that the triangle/flat scenarios I’ve been pimping have been breached.
UPDATE 12:41pm EST: I’m starting to post a few thoughts about our usual suspects as I’m not sure if Berk will have time to post tonight. Let’s take a look at our favorite shiny metal, shall we?

So, that diagonal is officially a resistance line now - so far so good. Gold has been extremely stubborn and this is the point where I feel comfortable saying that the recent trend of higher highs and higher lows has been broken. Another important psychological level is now in sight, which is 800. My evil plan for Gold is to grab some short positions when we breach that level, then sit out the obligatory bear shake out up to about 820, add even more positions, and then cruise it down as it crashes to 650.

TLT (inverse to 10-year Treasury Note $TNX) has been rallying and is approaching levels where I expect a turning point very soon. I’d give to about 118 (61.8% fib) but that would be already pushing it. My stochastic/MACD indicators claim that there might be more upside, so I’m a bit cautious to leg into puts right here. Oh yeah - people keep asking me why I’m not going long TBT. Sure whatever works - maybe I just LOVE to go short

UPDATE 1:50pm EST: We’re now at the ES VWAP which is significant - this where the fake outs separate from the real rallies. If we hold and push higher here I expect some large buyers to step in.
UPDATE 11:53pm EST: LOL - a minute after I posted this the buyers stepped in - 828 now, which is an EST pivot. Glad I hedged myself earlier this morning.

hefeiddd · 发表于 2009-3-31 11:32

January 14th, 2009 7:35 pm Market Forecasts 152 Comments

Just a little comment cleaner for you guys.

Was looking at AMZN this evening and it looks like this would be a nice play if it breaches 48. Probably good for 4-5 points.
Alright, I’m off - have some NinjaScript coding to get into. Good stuff to come on the Zero front

I’m back with XLU - check it out.

What’s the chance this sucker pulls back into that ascending triangle? FYI: an ascending triangle is usually a bullish formation that usually forms during an uptrend as a continuation pattern. There are instances when ascending triangles form as reversal patterns at the end of a downtrend, but they are typically continuation patterns. I think we might have ourselves the rare case of the latter here - an ascending triangle breakout to the bottom finalizing its downtrend. BTW, I also love that ominous candle there… what you guys think?
Cheers!
Reality…January 14th, 2009 10:08 am Market Forecasts 208 Comments

UPDATE 10:00am EST:
Message to all perma-bulls: Reality - don’t you hate it when it keeps catching up with you?
Those retail numbers were simply horrid - as you should have expected if your IQ ranges above room temperature. Who in their right mind thought those would be below estimates? Busted us through some congestion on the RL front - nice. Anyway, while I’m writing this the Yen is testing the 1.1250 R1 pivot - if that one breaks Kansas is going bye bye. Keep your eyes on it.
In other news - the TNX keeps dropping back towards 2.2. LOVING IT! Will load up on TLT once we hit 820 on the SPX. Mr. VIX is back at base camp around 4,810 feet - I’m sure your March/June puts are enjoying the alpine air. Oh, before I forget it - CCJ is finally producing - was about time this one put out. Three dates usually is my limit

I’m kicking myself for being so tepid around that 820 RL yesterday despite the Zero pointing downward. Yeah, we rallied up after the signal but that’s the cost of doing business. I think the Zero/RL correlation needs further thought as the Zero indicator is more long term IMO. Thoughts on the matter would be appreciated. Maybe just trading the Zero pure is the way to go (no offense to 2sweeties of course - we love those RLs - just not sure how both systems combine).
Go out there and find yourself some long candidates - you might also start thinking about your hedging strategy for when we approach 820ish.
UPDATE 10:41am EST: The trend is down for today: 18:1 declining issues right now. Don’t be a hero and step in front of a falling sword. Let ‘er ride….
UPDATE 12:08pm EST: I thought I’d share this little observation with you rats:

If the Yen starts pushing to the upside again I expect more downside in equities.
UPDATE 1:12pm EST: Hope you guys are holding up during the mind numbing whipsaw. This seems to become a daily routine at this point. Did I mention that I hate expiration weeks?
I’m going to start looking for oversold candidates for when we hit an interim low in a day or two. Would appreciate if you rats chime in.
UPDATE 2:00pm EST: This whipsaw is making my brain hurt. But check out this nice short term triangle on the NQ futures:

Which way will she break? Downward seems to be the trend, but I would get more excited around 1162.
UPDATE 2:22pm EST: In case you wonder where those long white spikes are coming from. A birdy just told me that the pits got an order for 7000 ES contracts around 2:10pm. There’s a heavy buyer lurking. My guess would be it’s the primary dealers working in concert with the Feds. Hey, how did this wrinkle get into my tinfoil hat?
UPDATE 3:13pm EST: Never underestimate the MM’s skills to drive the market up and down during expiration week. I’m accepting bets starting now of where we’ll close today.
UPDATE 3:47pm EST: Just an observation:

BTW, I just flipped FDX to puts and grabbed some Feb TGT puts.
UPDATE Closing Bell: Well, today was a fun day…. NOT! Can’t complain though - ended up 8% in my account - I call that a peachy day. I’m holding those short positions in the Zero account. As you can imagine getting stopped out by a temporary exit signal really ticked me off and took out a lot of profits. I jumped back in though as the Zero signal keeps pointing down.
No forecast tonight as it’s Wednesday - that’s our lazy day. See you tomorrow, ladies and gentle-leeches.

hefeiddd · 发表于 2009-3-31 11:33

January 13th, 2009 4:55 pm Market Forecasts 73 Comments

Boy, I’m really worn out after today’s tape - can you say Whipsaw Central? So, I’m mustering up the little ounce of focus I have left to get you guys up to speed. Please forgive me if this one is going to be very brief - I’m exhausted. Let’s get right to it:

Well, the good news is that everything remains on track. We expected some sort of consolidation right around 860 and that’s what we got. However, as strange as this might sound - I would have felt better if we kept on rallying a little bit. Bullish momentum today was not strong enough to take out the 878 short RL which has a very low probability I might add. Advancing/Declining issues were about 50/50 in the SPX - and that’s really how the day felt - completely indecisive. Both bears and bulls were swapping punches all day and we didn’t go anywhere fast.

However, loooking at the NYSE as a whole via the $NYUD indicates today was actually a bearish day with declining volume outpacing advancing. We are not at extremes yet by any measure as you can tell by the 5/10/21 MAs (which are a traditional measure). Plenty of downside to go here, which hopefully will get us to our intermediate 820 target.

For the little we moved and also based on the adv/decl issues the CBOE put/call ratio however dropped quite nicely, which is IMHO good news for the bears. This is the type of sentiment discrepancy I expect during bear market consolidations. The bulls try to bang the market higher and sentiment flips back in favor of loading up on calls. As a contrarian this type of discrepancy is what I want to see.
In that context Erik mentioned this today:

Short term traders have started building long positions expecting market to bounce short term,
option expiration is 3 days away. Market will whip down and then back up by Friday burning out front month options this week.

This scenario would actually fit in quite well, but we would need to start dropping tomorrow. If we wank around the current ‘nasty whipsaw zone’ marked on the chart for more than a day then I would get a bit nervous and maybe hedge myself a bit earlier than I hoped for. For more info on various hedging strategies when long puts see my Sunday post.
I think we might see more upside tomorrow - good possibility we’ll touch 884 before we drop again, that would line up nicely with the 23.6% fib line you can see on the chart. The 892 RL would be the maximum I can would want to see for tomorrow - again lining up with the 38.2% fib line. By Thursday I expect the current trend to continue to the downside, after the market had a chance to relieve some of the pent up buying pressure. Again, our intermediate target is around 820.

The U.S. buck is on track tracing out its 3 of 3 wave, as expected. I anticpate we’ll see further upside here until it pulls back - my rough estimate would be around 86 minimum.

Gold however remains to be stubborn and has yet to breach that diagonal, which is my line in the sand. I would caution everyone to refrain from going short here until we see this happen. FYI - there’s a reason why I’m drawing this line with a thick crayon.

Boy, I have come this far, I might as well throw in a little goody for you leeches. What you are looking at is the famed ‘crack spread’ - the difference between the Gasoline and Oil fund on the NYSE. No, it’s got nothing to do with the stuff in your crack pipes. This chart is the sole reason why refiners have had such a merry time as of late. Just check out some pertinent symbols:
ADM, ALJ, CVI, DK, FTO, HOC, SUN, TSO, VLO, WNR
See that? It’s been one big bullish kumbaya as of late. On a short term basis (this week to 10 days) those guys probably have some more upside in them, but many start looking pretty toppy to me on my daily chart indicators. But the key to trading those refiners is the crack spread - that’s basically their profit margin. So, keep your eyes peeled for a retracement in the crack spread, which might predicate a pullback in those refiners. Don’t even think about shorting those puppies until you see that happen.
Wow, I actually did it - a respectable post after all. There you have it - I just don’t know my strength

See you tomorrow steel rats - I hope it’ll be swift and short before we continue our journey to the downside.
Cheers!

hefeiddd · 发表于 2009-3-31 11:33

January 13th, 2009 11:25 am Market Forecasts 118 Comments

UPDATE 11:18am EST: Seems the permabulls didn’t enjoy my little taunt last night

I bought back my short positions (the futures) in the Zero account once we got that exit signal - fortunately early enough to exit with profits. Since then it’s been one wild pony ride - some very violent tape we got ourselves here. I knew that we’d get a rally today but I didn’t expect futures to first rally last night, then drop, then rally like wild, and then drop again. It’s been fun (not!) but thus far my account has taken it in stride.
I think we’re going to drop a bit more but there’ll be another rally attempt. There’s a big buyer lurking in the futures at least. Trick is going to be to pick the best spot for a hedge - breaching 857 today is probably not in the cards unless some trigger event happens. Watch the Yen folks - as any its weakness is being exploited in equities. Also watch the VWAP - we’re currently below in the index futures - if we rise above again it might get wild.
UPDATE 12:04pm EST: Some people were wondering if I cut my long term puts today: HELL NO! I said I’ll hold them throughout the plunge. Today is only a little correction….
Long term thinking people - long term thinking - that’s the key. Now sit back and take the punishment like a big boy (girl). You didn’t think this trip was a one way ticket, did you?
UPDATE 1:48pm EST: BIG Yen buyer just showed up - should have seen these candles. I think we’re going to see 860 after all - nice. Anyone’s guess what happens there. At minimum we won’t take it out easily - expect the bulls to make a stand there.
UPDATE 1:58pm EST: I reckon many of you are curious what will happen at 860. Well, take a look at this Yen/Dow futures correlation chart:

What are the probabilities that the Yen is going to keep pushing up? A few months ago I would have said - slim. But I have seen days in the past where the Yen’s stoch keeps doing the ‘dragon tail wiggle’ around the 80 line and just keeps going up. That big buyer scared the shit out of a lot of bulls just half an hour ago. So, my answer is: I don’t know! Based on today’s tape I think anything’s possible.
Either way - I like my account a lot better now than 2 hours ago

If nothing else hedging right here can lock in existing gains. If we really breach 860 with confidence then it’s easy to jump out. Expect some fireworks before the close.
UPDATE 2:40pm EST: I guess that buyer just showed up again. The bulls made their stand. 860 shall hold for now.
UPDATE Closing Bell: Today was painful to watch - we basically were going nowhere fast. Typical bear market consolidation day - they can be painful to bulls and bears alike. I’m not sure if I’m doing a forecast tonight - feeling a bit worn out and I need to atch up with some personal business. So, if I post one it’ll be in the evening and it’ll be brief. So, I’ll do a quick one right now.

Seeing some signs!January 12th, 2009 9:02 pm Market Forecasts 82 Comments

Another day of drop leaves us off another 2 and 1/4 percent lower in the $SPX, but only 1.8% in the $NDX. This residual strength is a good sign for the bearish case, whether it be triangle or completed 4th. We should be looking for a decent bounce in the near future as we have fallen nearly 80 points in $SPX from the 1/6 high to today’s low. If we do not get any bounce, that would be a good indication that wave 5 is indeed underway. If we do get a bounce, it would be a good place to add to shorts before the $VIX gets carried away again.

A good indication that we are in a phase of serious decline is the major sectors taking a beating. Check out the Ag stocks today… POT down almost 12%, CF down 13%, AGU down 10%, BG down 7%, MOS down 11%, TRA down 16%. There are some pretty big names in there, and these guys usually take off a little before the rest of the market.

The $VIX has turned up nicely from one of the long tested support levels at 37.50. Up 30% from there, we can take this as another indication that a major bear phase is underway, or very nearly so.
I will throw a few names out for the bearish case that are starting to look good. PCP, CCJ, CE, BIDU, GRMN (possibly some chop before the next drop), MA, GS, CMI, X, and CLF. Also, be sure to watch the banks, they are a tell tale sign.

That is it for tonight. Forecast tomorrow is for a bounce of some sort (possibly for 2 - 3 days) followed by more decline. Good night!
Skål!

hefeiddd · 发表于 2009-3-31 11:34

January 12th, 2009 1:15 pm Market Forecasts 109 Comments

UPDATE 1:14pm EST: We’re back at the YM VWAP and thus far computer still says no. I just dumped a little NQ hedge in my daytrading account (not the Zero trading account). Unless we breach this level equities won’t go anywhere fast….
BTW, the Yen is approaching its own VWAP from above - I think this could become VERY interesting if it bounces to the upside.
UPDATE 1:22pm EST: That’s what I thought. Yen bounced back up from the VWAP and equities made a U-turn. As I’ve said - I’m on fire today…
FYI: the more longer term Zero is pointing up now - so I do expect a rally here at some point unless it turns out to be a false positive signal.
UPDATE 1:26pm EST: Alright, let’s take a step back now;

Looking at the action of the last 90 minutes it’s clear that there’s a buyer in this current region. So, although I’ve been trading the swings quite nicely I am prepared for a sustained counter rally here at some point. We have stopped making lower lows and lower lows. Zero is already pointing up - let’s see if it’s calling the shots today.
UPDATE 1:37pm EST: Crank it up, steel rats!

UPDATE 1:57pm EST: Make or break time for the bulls. YM back at VWAP and so is the Yen. So far I don’t see sufficient momentum yet to believe in a rally.
UPDATE 2:00pm EST: VWAP to YM: Computer says no!

UPDATE 2:09pm EST: We’re near the 867 S2 pivot and the 1193 NQ pivot. Expecting a little bounce here…
UPDATE 2:15pm EST: Yen looks like it might bust out of the gate here which would supress any rally attempts off of those pivots. Watch the Yen people - it’s driving the action today.
UPDATE 2:23pm EST: FYI - if/when we drop through those pivots - next destination is 860 on the SPX. There’s definitely a buyer there - first attempt failed as expected.
UPDATE 2:39pm EST: We are now below the ES and NQ S2 pivots. If those hold - well, you know….

UPDATE 3:12pm EST: And now for something completely different:

Courtesy of Eric_SFL: long FedEx.
UPDATE CLOSING BELL: Well, today was a great day for me - glad you have you rats along for the ride. Even tagged on some NQ day trades which produced additional $$. The Zero trades are producing like they should as well. I expect to see a rally here anytime soon, so I remain humble & nimble.
Berk will post an update tonight - looking forward to that one.

hefeiddd · 发表于 2009-3-31 11:35

January 12th, 2009 11:31 am Market Forecasts 38 Comments

UPDATE 11:24am EST: So much going on this morning, can hardly keep up. We just bounced off of the YM 8473 S1 pivot but averages look very sickly today - thus far we remain below the VWAP. My puts are loving it.

Gold is getting closer to breaching that coveted diagonal support line. If you need some background on that story check out the weekend forecast.

Berk and I really like FSLR around 150.

SPR is one we already grabbed - we think this one is ready to roll over… I also love BEAV - check it out.
Watch the NQ today - it’s clearly leading the ES and YM lower today.
UPDATE 12:04pm EST: Now, this is starting to be fun - all my indicators are in red territory - we are a mile away from the VWAP in all futures - constant drop so far with only obligatory pauses. We might just drop all the way to 860 today.
How are you rats doing? Banking any coin?

UPDATE 12:12pm EST: I think we might get a little counter rally now. Might not be a bad idea to hedge a little - have seen nice profits today.
UPDATE 12:22pm EST: I dropped my NQ hedge, this might have been it.
UPDATE 12:33pm EST: Full disclosure - I just grabbed that NQ again - seeing some strength now and thought it best to hedge on my end. We need to consolidate a little - way overdue. Let’s hope this is it.
UPDATE 12:42pm EST: I dropped that NQ as we touched the VWAP on the YM and my other indicators showed me that we were overbought very short term. I’m watching that YM VWAP like a hawk as it’s what keeps the YM hugging the 8473 S1 pivot.
UPDATE 12:47pm EST: VWAP to YM: Computer says no!

UPDATE 12:56pm EST: I’m on fire today - come on rats - throw something my way! Anyway, look at this:

I find it interesting that the YM (and the other index futures) have been unable to exploit the drop in the Yen. Not a good omen at all for our mouth breathing friends….
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hefeiddd · 发表于 2009-3-31 11:36

January 11th, 2009 7:24 pm Market Forecasts 110 Comments

I call this a perfect weekend: Yesterday was my birthday and the weather here in L.A. has been close to 80 degrees Fahrenheit (ca. 24 Celcius) - not a single cloud in the sky. This why this Teutonic Rat loves to live in Schwarzifornia - as the rest of you guys are freezing your butts off while scraping ice off of your windshields we’re busy organizing spontaneous grill parties under clear blue skies. Mix in some short skirts and a few bottles of Jägermeister and the thrill of writing market forecasts suddenly loses its luster.
So, we better get started - it would be a sacrilege to spend the day in front of a monitor:

The weather map for equities has been resembling the U.S. East Coast (cold and snowy) and it seems that it’s about to get a lot more uncomfortable for the bulls. Thus far we remain right on track - don’t you love it when an evil scheme plays out as planned? We didn’t get 950 but fortunately we had the prescience to load up at 944, which thus far has been very profitable. My June/March puts are already producing about 40% in profits, which isn’t too shabby at all as they are pretty far OTM. It’ll get only better going forward.
On a more short term basis on the SPX we have in sight now a diagonal support line which we will need to breach in order to continue our trajectory towards the first turning point at about 820. So, I would expect some turbulence around 880 Monday or Tuesday (to continue with the weather theme) as I don’t expect the bulls to give this one up laying down. Breadth has been distinctly bearish on Friday but not as much as during the Wednesday drop, so I believe that there is plenty of downside potential. But momentum has been pretty flat and choppy since January 2nd, so I remain a bit on guard for potential surges to the upside.
Marked on the chart you also see an area I labeled as ‘cover’. What does that mean? Once we reach 830 I plan to sell some puts against the March/June puts I’m holding. Basically what I’m going to be doing is to protect my current profits by turning my puts into a delta neutral vertical put spread - not to be confused with a bull put spread.
Grfner explained it best and I’m going to re-post a slightly edited version of his comment:

What I did (and this is the way I hedge) is buy the SPY Jun 700s puts & sell the SPY Jun 690 puts ……this can be done as a combo or spread. This a called a delta neutral vertical put spread. Neutral is selling about 10% more. This can be modeled in TOS under the Analyze tab.
As the SPY price rises, the puts that you’ve sold MAKE dinero. [When we touch the 'uncover' area'] you buy back the sold puts and let the downward momentum explode into humongous profits.
While the SPY price is rising the net effect of the trade will be zero but profit will grow on the “sold side” of the spread.

I don’t know about you guys but I’m a visual person, so let’s take a look how this would play out on the trusted TOS simulator - let’s strap in for some financial VR Jaron Lanier style.

I think that this explains it nicely. Here you see what would happen if I would have sold June 69s against my June 70s last Friday. There is some loss if we drop lower but the in monetary terms it’s actually not so bad compared with the profits I already banked. What’s mostly important is what would happen if we suddenly reversed into wave E of the triangle right here (again, which I don’t expect that until 820) - basically nothing - the profit curve is flat as a flounder. Please note that for this strategy you would have to sell about 10% more than you bought, otherwise you won’t be fully hedged.

Now let’s compare that with the more commonly known bull put spread, which is also known as a vertical credit spread. You basically would sell the same amount of June 75 puts (or any strike above 70) against the 70 puts you bought last week, thus turning your long puts into a bull put spread. So, if you bought 20 puts on Monday you’d be selling 20 puts when you’re ready to hedge. The graph above shows what would happen had I sold those puts last Friday - we would lose comparatively little money if we continue to drop but actually bank profits should we push to the upside.
Bear in mind that credit spreads however have a margin requirement. Here’s how you calculate your margin on a bull put spread:

((Sold put strike - bought put strike) - credit) x 100

I bought my 70s for 2.09 (they are now 3.25) and the 75s ran about 4.25 on Friday. So, the equation would be:
Strikes: 75 - 70 = 5
Credit Spread: 4.25 - 2.09 = 2.16
5 - 2.16 = 2.84
2.84 x 100 = $284
I’m not really a very frequent spread trader - mostly use them for hedging purposes, but it seems that in this particular instance the margin requirement would be around $284. So, if you bought 20 of those 70Ps it would have required you a $5,684 margin to cover those on Friday.
But it could have been worse: Would I have bought those 70 puts at 3.25 concurrently whilst selling the 75 puts at 4.25 last Friday (a traditional bull put spread) the equation would have changed as follows:
Strikes: 75 - 70 = 5
Credit Spread: 4.25 - 3.25 = 1
5 - 1 = 4
4 x 100 = $400
So, the margin requirements for each option would even have been higher by $116.

But wait - there is more! Here’s a slight variation of the bull put spread which I hereby name Mole’s Crazy Bull Put Spread. Again, this assumes that you bought those puts last Monday/Tuesday right at the top. What you do as soon as you are ready to hedge is to sell 75% worth of the amount of the puts you’d sell in a regular bull put spread. So, if you bought 20 x SPY June 70P last week you would sell approximately 15 x SPY 75Ps against them. Now, you can use any strike above 70 of course, as this is your choice - this will affect the graph, so do your own analysis to make sure you get the results you are looking for.
What I like about this strategy is that you stay perfectly hedged but actually make money if you didn’t pick the turning point and we continue to drop. Or, if the whole triangle scenario or even the blue scenario (a bullish expanded flat) turns out to be a no-show and we continue to drop into intermediate wave (5) then we would be able to buy back our SPY 75Ps after breaching important support zones.
Another added advantage of this one is that you are selling fewer puts and thus your margin requirement shrinks by about 25%.
Again, to make sure there is not confusion - I’m not advocating to sell these puts right now. My personal strategy is to start doing that once we reach 820 on the SPX. Finally, please note that the above does not account for changes in volatility (VIX and/or IV), thus your mileage may vary.

Now, it’s time again take a look at the Call/Put ratio. Since last week we actually pushed down a little, which indicates that a good number of our mouth breathing colleagues expect to see an Obama inauguration rally this week. I have also market previous occurrences of the current levels for orientation. Usually we dropped, then rallied, and the dropped into the abyss. Just what we are expecting to happen going forward.

The MA chart is a bit more revealing IMHO - we definitely have been retracing from those year end extremes but there’s plenty of upside remaining. In addition - we will probably see a drop here once we reach the bottom of the current D wave.

Not much to add to last week’s Dollar forecast - it seems we’re putting in a series of 1,2s to the upside. Friday’s push might have been a first step towards a 3 of 3 rally which would mean we should now see some significant gains in the coming days. If we drop more than a few points from here I would have to question my wave count but thus far we seem to be on track.

I have to be honest - Gold has been bugging me lately. It’s remained very stubborn despite the recent Dollar drop. Now, if you grabbed puts at the top as I’ve recommended then you’re still in good shape. But taking a step backward and looking at the six month chart I don’t see a break of the recent uptrend yet. We need to finally breach that diagonal I’ve drawn on the chart above, which would confirm our assumption of a drop towards the 650 zone. Until that happens I would keep my exposure limited. On the upside - once we breach that diagonal it should pose strong resistance and shorting Gold slightly below that line should be a very defensible position.
Remember - I’ve said this numerous times before: Gold drives everyone nuts for weeks on end and then suddenly whips in one direction or the other. There’s no perfect entry and it always comes down to lesser of many evils. If you’re a gold bull this diagonal should also be your line in the sand.
That’s pretty much all I’ve got for now - I already burned much of today’s California sunshine. See the sacrifices I make for my trusted leeches? I give and I give and I give

Cheers!

hefeiddd · 发表于 2009-3-31 11:36

January 9th, 2009 10:42 am Market Forecasts 155 Comments

UPDATE 10:35am EST: Wow, that was a nice ride down. The Yen is on fire right now but I expect a re-test of the 1.106 R2 pivot. I think we’ll chop around here for a little before any large reversals (or drops). We have moved quite a bit this morning. Interestingly the NTX has stayed right at the open and the VIX has barely moved. I’m not quite sure what’s going on there just yet. Got to think about this.
UPDATE 11:08am EST: Well, it’s not for a lack of trying but equities are not getting out of the gate this morning. We’re back to chop chop chop - hopefully until we drop. I’m just sitting and watching right now as I was actually hoping for a rally so I can sell the rip.
UPDATE 12:33pm EST: I got kicked out of 2 sell ETAs now and will probably wait for a VTA before I grab another contract. I know it’s frustrating sometimes but we’ve seen this before. You try your luck during the chop and then give up - and it’s right then when the market decides to drive up like nuts. Patience and perserverance (and perspiration) is key.
UPDATE 12:41pm EST: Let’s take a quick step backwards. The way it’s looking the bulls might muster a little rally by the end of today, but frankly I’m more concerned about the bigger picture.

There you have it - the magic number is about 880 on the SPX, which is also a retracement level (879 to be exact). That sucker will be tough and it might take us some more ‘good news’ to breach it

UPDATE 1:11pm EST: You can add a VTA to those two failed ETAs. It’s easy to get frustrated and not take the next one but you know what usually happens then. Those whipsaw markets are not fun. Trick is to exhale and look forward - as long as you stick with your system you didn’t do anything wrong. You can get a bit more conservative but even that bites you in the butt sometimes. Consistency is key - I’ll keep taking the signals as they present themselves.
UPDATE 2:55pm EST: Frankly, I can’t wait for the closing bell at this point. It’s been one horridly choppy day with an obvious trend to the upside. Painful to watch and not fun to trade. After 98 tries we finally made it through that 898 pivot - let’s see if it holds.
UPDATE 3:53pm EST: That’s right - SELL SELL SELL mofos!! Today was a pain but this sell of is a bit of a take back. Loving it. The Yen is on fire now and might just breach its high - it’s been above its VWAP for about an hour - a good sign for a late day sell off.

$SPX - 911January 8th, 2009 10:14 pm Market Forecasts, Update 75 Comments

It was an interesting 2 days, and not just because yesterday was my 25th B-Day. I was treated with a nice decline with good volume, but only modest breadth. Today there was some morning followthrough, but the afternoon faded back with it’s standard rally.
On to the charts… The $SPX has been chilling around 911 for the past few months, and we can add two more hourly closes to that support line, and now we remain below it. What is GREAT to me (beside the $VIX, I’ll get to that) is the MACD. Standard settings show a NEGATIVE MACD histogram value at the last high (either the spike, or the lower high). That is a sign that bullish momentum is dying off.

Here is the 2 hour line chart of the $NDX. Notice that all of this action has done nothing more than retested the previously broken trendline. Granted, it is at higher levels, but the rally has yet to regain the explosive upside momentum of the early stages. 1244 is acting like 911 on the $SPX, but notice the higher beta $NDX is above this line. This ($NDX strength) is to be expected in the beginning phases of a bear decline, and we will likely see a deep retracement in this index.

On the hourly, it is also sporting the similarly massive MACD divergence, as well as the negative delta on the histogram. I couldn’t get a capture because prophet wouldn’t hold the value once the cursor left the “active” part of the screen… Oh, well, I assume you get the picture.

What is more intriguing however, is the double sided gap. There is a bullish gap (likely an exhaustion gap) open between 1262.52 and 1265.54. On the other hand, the bearish move yesterday gapped below this gap (only strengthening the importance of this level), creating a gap that is still open to 1274.49, hence the speculative deep retracement.
At this point it is possible that we would get another high, more likely in the $NDX, but we will take that as it comes.
On to the $VIX. When I finally got my ToS account fixed last year, I hadn’t copied over my $VIX chart from that prophet set-up, but it was exciting doing it earlier this week. Aside from being below 40, which in current market conditions was perceived as a buy signal to me, the $VIX bounce right from previous spike resistances.

What this means to me is that if we were gonna break it, it would have been done there. Notice the previous spike were to the upside, bearish reversals, and are a very precise moment (don’t we know it!!). However, when complacency sets in, we see more of a rounded effect because we are taking longer to play out. Unfortunately, I didn’t get my $VIX sell signal, but I think I can live without it.
Hopefully those of you who missed ICE are watching it set-up nicely for re-entry. I was also tipped off by DMS of some nice looking short plays. PCP is a nice triangle, stretched to the breaking point. Yes, it has throw-over, so you non-Elliotticians may be a little confused. If that is the case, accept that it is also a BB reversal.

COL is another representative, also stretched to the 2.0BB point of breaking. As soon as that channel goes, it will be a nice short.

There are a few more that I am watching, but at the moment, I am waiting to make sure, beyond all of my doubts, that we are going lower. When I know, or even am more sure, I will tip my hand. Until then, make sure you know what you are holding.
That is it for tonight. I am moving the short term trend to up-down, expecting topping tomorrow or Monday. Medium trend will be the same up-down, leaning on the evidence that this sideways wave 4 chop is finally complete (or at least VERY near so). Long term trend can remain down, unless we make a new high, IMO, until we are making new lows.
Skål!

hefeiddd · 发表于 2009-3-31 11:37

January 8th, 2009 10:15 am Market Forecasts 101 Comments

UPDATE 10:05am EST: Good morning rats - Wal-Mart decided to finally give back to the community - ours that is of course as the earnings warning was sufficient to drop us through 907. I have a feeling we’re going to see that sucker again though soon - so stay on your guard.

Just a general observation about why you need to be extra careful picking your entries with Gold. Look at that chop and as you can tell from the rest of the chart, this is not an isolated ocurrance. I have learned this the hard way - the only way to trade Gold is to either daytrade it or take positions based on a long term perspective. Which is why I often wait weeks for just the right spot - the most defensible position - anything in between is pure razorblade chop.
UPDATE 10:54am EST: Guess I was right about us seeing our ‘old friend’, the 907 RL, again very soon. FYI - the NQ is near a its 1242 pivot, so let’s see what happens here.
UPDATE 12:08pm EST: Ugly tape today - chop chop chop. I don’t sense any direction. Would prefer if the bulls would step in and get that consolidation rally over with already, but so far no dice. It’s another swing trading day.

If we finally consolidate to the upside I expect to hit some serious resistance around 916 or 922. Also note how nicely our fibs line up with those retracement levels. Coincidence? I think not!
UPDATE 12:39pm EST: It’s like watching grass growing today. I still think we’re in for a late day rally - this consolidation is looming and I have seen this ‘chop before you pop’ before.

Here’s my favorite Yen/Dow futures correlation chart. Both are swapping punches right now and the stochastics is stuck around 50%. Something’s gotta give but unless it does just wait - let the market come to you.
UPDATE 12:45pm EST: I’m watching my quotetracker futures chart and just saw the index futures move up along with the Yen futures. Very very strange stuff happening right now…
Anyway, unless we breach that 8655 pivot on the YM futures I don’t think we’re going anywhere today. This is my line in the sand right now and I would probably dip into an ES or NQ futures contract if/once we bust through this one.
UPDATE 1:11pm EST: Dow pivot to bulls: ACCESS DENIED! We are now touching the ES 896 S1 pivot. Let’s see if we get a bounce here. Finally we’re moving!
That Was Fun!January 7th, 2009 4:20 pm Market Forecasts 148 Comments

Boy, I had a lot of fun today. We seem however be stuck at the 907 RL - not surprising since this one has a 90% probability. Which is why Mr. Zero didn’t want you to go short today. The first signal was blocked (shown blue) because of the 918 but we made it past that - which has happened quite a bit during the holidays. It seems to happen when there is very little momentum, and based on what I’m seeing out there we’ve got less momentum than during the Christmas week - I’m not kidding.
So, I didn’t want to optimize for that and I won’t until the momentum indicators I use tell me that this is the new standard. You never want to optimize for thin markets, bad idea. Anyway, similar thing happened at 907 but this time it was a good thing. We’ll need a strong signal to pass this one (or we sneak by overnight like in today’s open) and I also think we’re due for a little consolidation before we do.

Some people are confused that the blue lines often disappear the next day. Well, I have a technical problem there - thinkscript does not allow me to ‘keep state’. So, when I change the RLs to the next day and they move then all is forgotten and VTAs that once were blue turn green. There is no way for me to fix this as thinkscript is limited in that respect - it’s not a programming language really, more of a scripting language. Only thing I can do is to log it and remember. That’s why I also think that a trading log/account will be the best way to keep track going forward. Unless of course you guys want to skip considering the RLs and just trade the signals - blue or not. Actually in the past two weeks that would have been the most profitable thing to do, but I’m torn on recommending that because I believe in the RLs. I would actually like to hear your suggestions in that regards.
No forecast tonight as it’s Wednesday - Berk will do an update tomorrow.
UPDATE 7:00pm EST: Wow, judging by the comments it seems that most people prefer the Zero on its own merit. Just to make sure I have put up a poll….
Thanks guys! I really appreciate you taking the time to chime in.

hefeiddd · 发表于 2009-3-31 11:38

January 7th, 2009 9:46 am Market Forecasts 213 Comments

UPDATE 9:44am EST: Good morning rats! So far so good I say - those payroll numbers helped us bust through several RLs but I have an inkling some upside might be developing. The 918 has a 93% chance of holding - not the kind of odds I want to tinker with. I’m going to buy an ES contract right here - very nice spot and if we somehow but through 907/100 I’d happily drop it again.
UPDATE 11:15am EST: Nothing much to report right now. We are stuck between 907 and 918 for now - I frankly have doubts that we’ll move below this zone today. Prepare yourself for one healthy serving of whipsaw.
UPDATE 11:56am EST: As I thought - we’re above 918 again. I think this sucker is going to be nasty and it’ll take a strong sell signal to overcome it - at least today. TNX is flat, nothing to report on that front.

Yen is a bit overbought on a short term basis - see the YM/Yen correlation chart above. This could be bullish for equities in the coming hour.
UPDATE 12:17pm EST: Yen swung up over the 80 again - it’s doing the snake wiggle here. So, until further notice bearish pressure on equities will probably be upon us. If we see the Yen drop hard it might precede higher prices in equities. I say might because correlations are kind of loose right now.
UPDATE 12:56pm EST: Berk dug out a few nice short setups: GOOG, WYNN, MA, BIDU. I’m not crazy about BIDU but love the others - and they are all part of our favorite list (which I posted back when and which you should have already in your Prophet charts as a watch list).
UPDATE 1:10pm EST: Yen just fell off the plate - this the chance for the bulls to grab some points in equities. Let’s see what happens - we are about to bust through the VWAP on the NQ - YM is still below 8803 pivot (VWAP at 8812) - ES just dropped again - pivot at 914 (VWAP at 914 again). That’s some monster resistance for equities and if they cannot cease the moment right now I don’t see much upside.
UPDATE 2:43pm EST: Something that caugh my attention today was that Gold dropped along with the Dollar today - that’s a bit strange and does not bode well for the shiny metal:

Very nice - so, Gold now drops along with equities and the Dollar. I keep telling you guys - 650 before we see 1000.
UPDATE 2:53pm EST: Equities are weak today - even unable to exploit a drop in the Yen:

Only The Paranoid SurviveJanuary 6th, 2009 9:09 pm Market Forecasts 81 Comments

Andy Grove, the founder of Intel and one of the people I most admire, once wrote a book titled ‘Only the Paranoid Survive’. The basic message can be paraphrased as: Just because you’re paranoid it doesn’t mean they’re not out to get you. If you are interested in Andy’s take on his quote point your browser here.
Tonight, something’s not sitting well with me - it’s been too simple - too easy. Something that triggers alarm bells ringing in my head is when too many traders agree on something. It seems almost everyone I’ve talked to in the past few days expects the market to drop. People are even picking dates as if they need to hire a limo for the occasion. After all - we all want to enjoy the crash in style, right?
“Nelson! Put a bottle of Cristal on ice, will ya? I’m expecting some guests today - we’ll watch the crash on the large Cinema display…”
A friend of mine who’s been a professional trader for years tells me that a bunch of people in the pits are really scared. Nobody wants to make a move and they’re taking profits quickly. The tape today reflects just that. On top of that my wave analysis has been spot on so far, I got the puts I wanted, and now I guess I just hold those suckers into April as we must be fairly close to the top, right?
Wrong!
If there’s something I have learned as a trader is that overconfidence is the silent killer. It always looms out there, silently waiting, lurking in the shadows, waiting for that one day when you think you know something. When you put it all on the line, hoping you got the market by the balls.
“I know where the market is going to go. My wave count has been right and we are overbought to the max. Why would we rally from here? Possible but not probable, right?”
Wrong!
Let me tell you something. The market always has you by the balls - you’re only along for the ride, so stay humble as hell and never ever get too over confident.
Now that I’ve freaked you out a bit and probably have your attention, let’s get to what I want to convey tonight. Let’s look at the world with different eyes. As some of you know Berk and I have been trend traders and have been successful in trading the turtle system in the past. If you don’t know what the turtle system is - no worries - we’ll get to it in time, but for now all you need to know is that it’s a trend trading system.
Now, let’s take a completely different look at the SPX before I get to our wave count:

What you’re looking at is the SPY chart with two price channels (since the SPX chart has my wave count, but it’s basically the same). They are also known as ‘Donchian Channels’ and happen to be a key indicator for the Turtles. The idea is pretty simple actually - the Turtles had two systems:

Take positions on a 20-day breakout and exit on a 10 day breakout in the opposite direction.
If you snoozed through 1 then take positions on a 60-day (or 55-day depending on who you ask) breakout and exit on a 20 day breakout in the opposite direction.

The system has a few filters and there are stops and pyramid rules which we won’t focus on tonight - we’ll keep that for another day.
The point I’m trying to make is that a Turtle might have looked at Friday’s close and been completely comfortable taking a long position right there as it satisfied the system 1 rule. It even complied with the entry filter in that the previous touch was unsuccessful - again more about that at some other time. And so far that Turtle trader actually would have been profitable!

hefeiddd · 发表于 2009-3-31 11:38

There are however times when the two approaches stand in conflict and tonight is such a situation. If nothing else I wanted to show you that, no matter what, there’s always somebody out there who’s got a system that claims that the truth is the the opposite of what you think it is.
So had it not been for a message I received from 2sweeties I might have just faded my paranoia and stuck with the wave count. However, this is what he said:

We have a situation with very compressed levels and support is very
close from where we closed.
Not much hope for big drops from the point of view of the odds.
Most frequent reversal longs are @ 928.25.
Below 917.81 the Frequency of Long reversal drops dramatically.
So, if tonight ES goes down, the odds are saying that it may reverse
around 917.

This is what he’s talking about:

As you can see we have a situation here. After tonight’s close we are faced with a congestion zone of long retracement levels. Not good - it’s possible that we’ll run into some heavy resistance tomorrow morning.
So, what do we do?
As good traders and stainless steel rats we adapt of course! Now, let’s get to my usual SPX chart and talk strategy:

Here’s our trusted wave count in its usual glory. At this point I assume that you have incurred at least some short exposure - either in form of long term puts or perhaps you actually shorted some stock or your favorite ETFs. Bottom line is that you drunk Mole’s cool-aid and expect the market to drop. This is what I suggest for tomorrow only (and maybe Thursday if conditions do not change):
Hedge yourself with an ES contract (or several based on your exposure) and hold it until we breach 907. It’s the perfect way to protect you against explosive rallies that might develop. The advantage of using a futures contract is that all of you, even accounts below $25k, are able to trade it and won’t be flagged as PDTs (pattern day traders - sounds almost kinky…). The day trading margin for one ES contract is around $6,200 last time I checked. If you have very small exposure you can also hedge yourself with an NQ contract - the day trading margin for that is around $4,000 - so you need that much cash in your account (plus a little more probably). At the end of the day you can sell it - what’s convenient is that those futures almost trade 24×7, but I would not recommend to hold it beyond NYSE hours.
If we breach through this RL congestion zone it’ll be safe to dump the contract and yes, you lost some profits but it’s comparatively little when considering the alternative of an explosive move to the upside. You just know the market makers will punish you on those spreads, especially if you’re tempted to drop your options and wait it out.
Of course other hedging strategies exist and I leave it up to as a trader to pick what suits your particular trading style and risk exposure. But I think that this is a very reasonable strategy and I can guarantee you that you get much better fills in the futures and that the market makers won’t screw you on bid/ask prices.
Here’s another approach Grednfer posted in the previous thread:

What I did (and this is the way I hedge) is buy the SPY Jun 700s puts & sell the SPY Jun 690 puts ……this can be done as a combo or spread. This a called a delta neutral vertical put spread. Neutral is selling about 10% more. This can be modeled in TOS under the Analyze tab.
As the SPY price rises, the puts that you’ve sold MAKE dinero. When Zero gives you the “GO” you buy back the sold puts and let the downward momentum explode into humongous profits. (thats the part I like)
While the SPY price is rising the net $$ effect of the trade will be zero but profit will grow on the “sold side” of the spread. There are various forms of the spreads for different purposes, but when I’m close to the top, but not quite there, this is what I do. You make money both ways, Which is sooooo cool.

In respect to the wave count really nothing has changed. We are on track and if we make it past that newly developed hurdle then we should be scot free and ready to bust lower.

One chart you need to see is the NYMO. Look how we’ve gone from one extreme to another - sure signs of a secular bear market - just as a side note. 120 is way way overbought - nothing new. But a trend trader looks at this and says - great, it might go higher! Remember there were folks that said that we would never touch -120 on the NYO as -60 is traditionally considered oversold. Well, we hit -130, so we might just hit 130 tomorrow. Nothing is impossible and only the paranoid survive.
That’s it for tonight - for the record: I am very comfortable with my trades and intend to hold them. But that does not mean I ever get complacent

By the way, I’m switching the long term indicator back to down again as it’s supposed to reflect long term trading strategies.
Cheers!
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hefeiddd · 发表于 2009-3-31 15:47

January 6th, 2009 9:51 am Market Forecasts 210 Comments

UPDATE 10:00am EST: I think the title is pretty clear. We’ve got ourselves a nice open and your mission, should you choose to accept it, is to sell into strength - in terms of options that of course means buying long term options. You know the drill - use this rally.
UPDATE 10:20am EST: So here I am at 944 shopping for puts - while Berk and I were arguing about which month to pick we drop to 937 - grrr. Anyway, I was filled with SPY June 70 Puts and I intend to grab March 85s if we somehow manage to reach 954 (the new 957). In case you want to know - I will hold the Junes if we rally up to 954 or higher. This is a long term investment - you buy and forget - unless of course it reaches a treshold which is price/time related. If this statement confuses you please go back and read my Sunday post and look at the chart.
UPDATE 11:00am EST: Berk and I just grabbed Feb CCJ Puts:

UPDATE 12:21pm EST: I just had an Internet outage which has been resolved. My apologies for any Zero watchers for the inconvenience. I actually have a wireless backup but for some reason it wasn’t able to make it work from the system I serving the feed from. I can however serve it from a different system if an outage persists, so no worries.
UPDATE 1:53pm EST: Site was down for like 10 minutes - not my day today I guess. My apologies but I’m on a shared server - don’t want to plunk down the monthly fee for a co-hosted box.
UPDATE 2:35pm EST: I’m happy to see the SPX back at 937 - since most of you leeches froze like a deer in headlights - here is your 2nd chance. Maybe we’ll even see 944 or 954 - I’ll just keep adding puts going forward.
UPDATE 3:00pm EST: Mr. VIX now at 37.8 - are you kidding me? Loving it and I just added some March puts to my Junes.
UPDATE 3:28pm EST: So, I could call you guys a bunch of girls for not grabbing puts the first time (or even 2nd time?? ;-)) around, but I know how it feels to freeze in the headlights and not make a move:

While I debated with myself on whether or not TLT would bust just a little bit higher it peeled its tires and left me with dust in my face. Not sure what I was thinking - maybe it was a mixture of greed and fear. It all gets us - the ones who survive in this business are the ones who learn their lesson and make a move the next time an opportunity represents itself. We might see 117 or so in the coming days - if we’re lucky - especially if equities start descending as we are anticipating. That’s when I plan to scale into some nice short positions.
The tape in the past two days has been extremely flat, which tells me that a big move is developing. The odds increasingly point to the downside, although I do hope we see 954 before it happens. I gladly take a bit of a loss and load up on even more as the triangle would look best at that level.
Cough, sniffle, sneeze!January 5th, 2009 9:40 pm Market Forecasts 56 Comments

Cough, cough… Sneeze… Sniffle… Sneeze… Yes, folks, I am crawling out of bed to do a VERY brief update. As we all know, after Friday’s big move, we got little follow through. I may be wasting my time by saying what we all know to be the case. We are finishing up our bullish rally. Maybe just this leg, maybe the whole thing, but either way we are poised for a healthy decline after another modest push higher. That would give us seven moves waves higher from the 12/29 low which is commonplace for counter trend moves.

HUGE divergence brewing on the MACD on several time frames, indicating the coming decline is likely to be “the real thing.” Also a nice BB reversal set-up on the hourly (1/2 hour as well). The time is drawing near and complacency is starting to set in, so stay on your toes… A pertinent top could be near.
On another note, and definitely worth mentioning, ICE!! What a break-down today. This thing is monster. Since I missed a trend of any length for a couple of months now, I am delighted to see this. Previous lows are under 50, which is about a 30% drop from here. This monster drop also occured with volume (thank you), MACD divergence, and a turn up in a steadily down-trending ATR(10). Choose some nice options for this puppy as it will be big. One of the best looking trades of the new year IMHO… Enjoy.

And now I am crawling back to bed…
Skål!

hefeiddd · 发表于 2009-3-31 15:48

puts right here and eat those damn 30 points should this turn out to be a little trap and we rally to 957. I see the momentum shift upwards right now and thus I remain patient. Anyone of you guys making a move?UPDATE 1:22pm EST: HuckFinn is asking what charts I’m looking at to get the VWAP.

I’m using QuoteTracker with OptionExpress feeds - it’s a free charting app that works with tons of streaming feeds (and no, it doesn’t support TOS).
UPDATE 1:36pm EST: Okay, I just uploaded a new overbought-victims-list - download it and import the file into Prophet charts via the ‘Watch Lists’ menu. Some of them are not just ready yet but should be on your radar. Almost all of them are heavily overbought according to shortsqueeze.com (I have an account) - if they break they’ll bound to move a lot.
UPDATE 11:22am EST: For crying out loud - are we going anywhere today?
Let’s Get Ready To Rumble!January 4th, 2009 8:01 pm Market Forecasts 106 Comments

Ladies and Leeches ….
… from the murky depths of Evil Central …
… for the heavy weight championship in bulltart smackdown …
… let’s get rrreeeeadyyy to rrrrrummbleeeeeeee!!!
Welcome to the jungle, rats - I hope you’re pumped and ready to roll because starting at 9:30am Eastern tomorrow morning it’ll get messy and we won’t be taking prisoners. Now, fasten your seat belts and put your stewardess in an upright position - we’re ready for take off.

Before we get to our latest SPX forecast let’s once more take a quick stroll down memory lane. This is the chart I posted on November 30th. We had just completed a major slingshot rally from the November 20th lows and I was preparing you rats for the ‘house of whipsaw’ that was ahead of us.

Boy, I wasn’t kidding - whipsaw galore would be an understatement but most of all the road map I painted back then has been spot on (thus far). I have to admit that I was sweating bullets when we were 1 point away from breaking the wave pattern on the 29th, but those intrepid black boxes kicked in and drove the SPX 74 points to the upside. I was practically in tears watching the tape all last week - Santa finally came to town with a sled full of presents. Better late than never I say!
I think the chart above is quite clear in respect to our evil plan. The wave count would look the best if we rally a bit more on Monday. My hope is that we get near that 957 short retracement level, which at last count had a 100% probability. Now, 2sweeties tells me that you can’t expect things to bounce right on the spot - maybe we’ll get a bit of throwover. But in any case - either there or on any sign of weakness I will be backing up the truck and load up on far OTM June SPY puts. The market is extremely overbought and, although further upside is not impossible, on a long term perspective a few more points to the upside really do not matter.

In that context - something you rats should however take a very serious look at is Mr. VIX. Several very interesting observations on this chart. What you are looking at is actually a comparison between the SPX and the VIX. First up observe the beautiful motive wave up followed by an a/b/c correction to the downside which appears to be almost done. Secondly take a look at where we are! Mr. VIX is back at basecamp at around 40 (was stretching its legs at 37 briefly on Friday) while the SPX was trading at about 932.
So, let’s be generous and assume that we most likely push up to 950 on Monday (we better!) and that Mr. VIX won’t even move. Where was the VIX last time we were trading around 950 in the SPX? The answer is at about 57! And that crossover point on the chart (marked in cyan) is actually our max target for the blue scenario - the SPX was at around 1040 and the VIX at that time was around 46. BTW, in case you wonder when the VIX was at 40 the last time - 9/19/08 and the SPX was at around 1,150.
Now, assuming where we’ve been in the past few months seeing a VIX at 40 right now is like seeing manna fall from heaven. When it comes to free SWAG from the market makers this is like X-Mas, your birthday, the first time you got laid, and the day you graduated all put together. Trust me when I say this leeches, it will be quite a while before you see the VIX that low again - mark my words. We might push lower in the coming week or two, but nothing in life is guaranteed. After that better get used to high flying IV again and a screwed up options market.
Fact is that the VIX is low now and if you know anything about options then you know that vega = volatility and increase in vega can make your options explode without a movement in price. This can of course backfire: Some of you learned that lesson the hard way trying to play the market up after November 20th. Vega kept dropping from high extremes, curbing profits on calls despite large moves to the upside.
Now, looking the 2nd chart again - I have also marked an exit point for taking profits on front month options. The timing here is wonderful as I expect the expiration of January puts to coincide with the bottom of wave {c} to the downside.

The Dollar so far has behaved nicely and unless I see a close below 78.5 I expect to see a continuous rally to the upside as the a/b/c correction appears to be complete.

In that context let’s look at a comparison chart between the buck and our favorite precious metal - Gold. It’s quite obvious that Gold is closely correlated to the movements of the ole’ Dollar and in my mind the rally we’ve seen wasn’t due to strength in Gold but due to a weakness in the Dollar.

Which supports my current outlook on Gold touching 650 before we see 1000 again. If you were around last week you might have noticed that, despite its recent direct correlation, Gold did not partipate in our equity rally, given further credence that resistance overhead will be significant. Of course - if we breach the 920 level in Gold then my wave count goes down the toilet. But I think such a move might be accompanied by a major drop in the old buck as well.
Again, for your noobs who haven’t followed my Gold analysis in the past months: Long term I’m very bullish on Gold and I see plenty of upside for the shiny stuff in 2009. But near term I’m equally bearish as the wave count seems incomplete - I’m still counting only six waves. Remember what I said on December 14th:

Whenever an internal count is becoming unclear I always take a step back and try to reach a conclusion by merely counting waves. A count of 9, 13, or 17 with few overlaps (motive + extensions), for instance is likely motive, while a count of 7, 11 or 15 is likely corrective. Right now I am counting 6 major waves in Gold and they are overlapping heavily, leading me to believe that we get 3 more counts to the downside.

Nothing has changed since and the probabilities according to the wave count, the overhead resistance plus the expected action in the Dollar points towards a final large move to the downside. Unless I see 920 breached I consider this current rally nothing but another trap for those intrepid gold bugs.
Not much has changed in respect to our ancillary momentum indicators:

McClellan Oscillator (medium term): Heavily overbought - we went from one extreme to another.

NYSE Bullish Percent Index (long term): Heavily overbought - 60 is about the top but of course we’ve been at 2, so it’s possible that we see another push up. But trust me - this rally is about to break - as traders this is a level we cannot ignore and in terms of risk management this is probably as sweet as it gets.
Alright, I think this should get you leeches who just returned from vacation up to speed and ready for Monday. I will dig around for overbought victims later this evening and probably start dropping them into your laps throughout tomorrow.
Cheers!

hefeiddd · 发表于 2009-3-31 15:49

January 2nd, 2009 9:17 pm Market Forecasts 201 Comments

I had a chance to fine tune and debug the Zero while you guys were all off skiing in Aspen, Gstaat, or wherever you spent your ill-gotten gains. Much progress has been made in your absence and I think this week’s performance seems to indicate that all those laborious hours in the evil lair are starting to pay off. But the proof is in the pudding as I always say, and thus going forward I will post a weekly Zero wrap up on Fridays for you all - this is numero uno:

This week was pretty linear - I have added squares at each prospective entry and I even moved one entry up to ‘keep it real’ as we would have entered late due to the Zero warning us about RL resistance lurking above. The tape today managed to push through a 923/97% short RL on a 1.2 signal which is highly irregular - under normal circumstances it takes a 6+ signal to accomplish that (at least based on prior data collected before the holidays). I will continue to monitor the situation but expect that we see things normalize going forward - these things happen during holiday conditions and I think optimizing for them would be a mistake.
All in all we have been almost continously long since about 2:30pm on Monday as our first long ETA was triggered. We got kicked out on Tuesday after nice profits but then jumped right back in on another long ETA. This one was followed by several other alerts - the only interruption was another exit signal this morning, which was fortunately followed by yet another ETA. I am counting 9 alerts since Monday afternoon and there was maximum of four concurrent positions. We are ending the week with three concurrent positions in the running.
I must say that I’m quite pleased with this week’s performance - as I’ve kept saying lately - give this thing a trend and it’ll point you in the right direction.
Enjoy your weekend my steel rats - I have an inkling that this is only the beginning of a very profitable year. I’m all pumped and read to roll - let’s hit the ground running on Monday. Expect my weekend forecast sometimes Sunday once inspiration (or desperation) kicks in.
Cheers!
Beam Me Up, Scotty!January 2nd, 2009 2:14 pm Market Forecasts 93 Comments

UPDATE 2:12pm EST: I’m torn right now - do we turn right here at 923 or will we see 957 before Monday. Have put up a poll - just curious what you rats think. Personally, I am very tempted to grab long term puts right here and double up at 957. But I don’t want to rush it either - we’re two hours away from the closing bell and I have an inkling we’re in a for a fast one before the weekend.
UPDATE 3:02pm EST: Okay, I have a Zero related question for you rats - if you bear with me. During the holiday season I added a feature called ‘restrictive mode’ to the Zero, which simply cancels all VTAs and PTAs which occur on a lower signal than the prior one. Let me show you:

Unrestricted
This is the unrestricted version - see how we would have compounded quite a bit today. But also look at the past history here in that it’s generally pretty quick to start compounding.

Restrictive
Now, this is the same chart in restrictive mode, which is actually what I have running on the feed right now. It only gives you a VTA or PTA if the signal keeps expanding, so it’s more conservative. However, I’m not sure that this is necessary the right thing to do and I would like to gather some input. Take a look at these two charts and then please vote in the poll on your right which one you think would have performed better for you today and also during the holiday tape. Thanks!!!
UPDATE 3:30pm EST: The Yen is not having a good day - it seems the Japanese are busy selling their own currency:

Apparently the inverse correlation is back in full swing - glad to see it. Watch for a breach of the 20 line which could signal a short term top for equities. BTW, in case you guys don’t remember or are new - it doesn’t matter what the Yen does overnight it seems - only how it moves during NYSE hours.
UPDATE 3:43pm EST: VIX below 37, people - this is so awesome!

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