Sunday, July 26, 2015

July 26 - GLD potential bottom

Equities still falling but seems like most of the easy money on the short side is gone.  There is a solid chance of stabilization this week, if not, we might be opening ourselves to that long awaiting correction that many were expecting in September.  I have spent quite of a bit time backtesting to see what kind of adjustments I need to make to ensure I don't miss these potentially big moves.  For the last few months, I have been doing mainly hit and run trades focusing on capital preservation and jumping out if things looked mixed.  I have decided to split my positions now into short term and longer term ones 50/50 roughly depending on the setup meaning the longer term positions will have much wider stops and I will probably let them run a bit more aggressively.  It is also possible I will pick up deep in the money puts that are reasonably far out in lieu of the long term positions.

Equities aside, I am still sitting on my DUST puts from last week.  They took quite the hit and were down about 35% at one point at miners continuing dipping for 2 days after my entry.  We have a potential reversal at hand but I am willing to let this one bounce around.

Fat Pitch has a very good review of gold's situation and presents a promising case for a bounce here.

Here are a couple charts that I found notable that shows the contrarian angle to speculators has picked bottoms quite well.

After looking at this, I wondering if there could be some kind of algorithm to scan financial news to see how bearish people are as a contrarian indicator.  For sure seeing CNBC with a big report on gold miners crashing gave me comfort, albeit limited, going into my gold miners long.

After some froth DUST finally made a solid down move Friday.  Whether we make a sustained bounce in GLD is unclear but so far this looks promising.  If this was a top, I am targeting a fairly large retrace around the low 20's in DUST.
GLD first area of resistance around 110 I will be watching carefully.  It is possible we have a snap back rally that cracks through resistance.  Also possible is for the bounce to just form another consolidation zone that is met with another move down to stronger support around 100.

Long wick candle on the weekly south of the lower BB.  It is a very strong signal and could lead to a decent bounce this week.  What happens, if we get a bounce, by the second or third week is uncertain.

Friday, July 24, 2015

July 24 - Equities correcting hard, GLD spiking

Equities are dropping like a rock today and once again on not impressive volume but the old adage is only price pays and those who got in short at the top of the cycle are seeing some nice gains today.
Unfortunately my system triggered an exit a few days ago and I had to adhere to it.  I am contemplating tweaking things when the daily and shorter say 1 hr timeframes conflict as the downward moves are getting stronger and stronger.

GLD breaking out now.  Too early to say whether this is the real deal but so far promising and my DUST puts should get moving at some point.

July 24 - SPY continued weakness, GDX/ GLD may be forming bottom

Unfortunately I missed out on yesterday's and today's dip in the equity indexes as I closed out my shorts too early due to the lack of participation on Weds.  It still remains possible for continued downside but I am staying clear for now as we are now oversold on the 30/60 frames.

On an intermediate term basis, I am looking to tilt more towards bearish setups as there are lots of things looking off like how the market is being held up by a handful of leaders - exhibiting strong negative divergence between small caps/ equal weighted ETF's vs SPY/ QQQ.  We are also seeing an unusually high number of 52 week lows despite having bounced significantly from the Greek debt crisis low.  I am hoping the market can bounce higher for a better short opportunity.

SPY hit the first downside target I had sketched out earlier in the week.
Becoming more oversold so risk of a short squeeze is increasing but it is possible we retrace to 50-66%.

One thing that made me a bit more cautious was the weak daily volume.  Stochs and CCI still in a solid sell signal though.

GLD seems to be bottoming, a bit late as I entered the DUST short too early but price/ volume action is becoming promising.  From the bullish percent data over the past year, having hit 0% bullish, we are at most 1-5 days from a bottom.

Selling volume diminishing although we are still moving downwards.
Now in territory similar to where significant bounces have occurred in the past 2 years.

Dollar weakness may provide some tailwinds for a potential move up in commodities such as PM's.  As of now however, while the dollar is overbought, it isn't a strong signal that it will see a dip going forward.

Wednesday, July 22, 2015

July 22 - Potential DUST short

Indexes are printing reversal candles as of now so unless we get a late hour selloff, risk/ reward for SPY shorts and for other indexes is becoming less desirable.  I entered DUST 33 Aug 21 puts based on the reversal candle and weakening selling volume over the last 3 days in GLD.  It is a risky trade but we could see a fairly major reversal within a week.

Closing update:  Looks like we have a decent chance of a bounce in the indexes tomorrow based on the reversal candles, black VIX, and weak volume.  Only problem is that we had a strong sell signal triggered yesterday so the bounce may only be temporary.

July 22 - Closed SPY shorts for now

Not sure what to make of the morning's action but it seems a bit too orderly and we are seeing VIX fade and some positive divergences develop.  I might re-enter a position later today but I decided to close shorts and see how things pan out.  There is potential for a big spike up today.

Tuesday, July 21, 2015

July 21 - Looking for more downside SPY

Not a terribly exciting day except for DIA which took a solid hit although it did confirm the SPY sell signal on the daily and the 2 hr frames.  Looking for additional downside which makes tomorrow quite important if we don't bounce.  I will be watching volume and the 1 hr frame to look for oversold conditions.

On a side note, gold miners might be an interesting play if they do capitulate.  Fear in the sector is incredibly high and there is potential for a massive short squeeze.  To make things more interesting, I may be looking at DUST puts or GDX calls.

My only complaint about today was the weak volume.  I would have liked to see a bit more but price action is doing what I want it do.  If we dipped too much out of the gate, it might bring in too many sellers and crowd the trade, leading to a bounce.
A weak buy signal on the 30 min frame which I am ignoring as the daily signal has triggered.

Also a very weak buy signal on the hourly.

HYG started slipping fairly strongly 2 days ago.  It often leads out of tops and bottoms and is worth noting divergences.

Watching this one very carefully as the selling is very overdone and if we continue to move up on diminishing volume far north of the upper BB, I will probably look into shorting this.

July 21 - SPY sell signal confirmed

We still need to see how we close here but so far we have crossed the 50% line on RSI/ CCI on the 60 min frame which is a pretty good confirmation.  We are also getting confirmation on the 2 hr + daily which is making this signal more convincing.  I am short SPY as of yesterday's close but not looking for any home runs here only a 1/3-1/2 retrace to about 209-210.   If we go lower great, but I will be watching the 60 min for oversold readings to consider pulling potential profit off the table.

Currently SPY is confirming the sell signal with a reversal from the black reversal candle printed yesterday on very low volume.  We are also seeing a stoch/ CCI cross.

CCI/ stochs crossed 50% line which is promising for shorts

2 hr timeframe also very close to confirming

10 min chart show there is significant room to go down

Monday, July 20, 2015

july 20- Short signal SPY

Finally got a stronger short signal on the daily in SPY.  Looking for a pullback to start tomorrow.

Thursday, July 16, 2015

July 16 - Inflection point in SPY

Still holding the puts from yesterday and waiting to see how we close.  We are right at resistance in SPY.   QQQ has broken out but DIA is printing a reversal candle and VIX is retesting a low where it has always bounced back up.  Potential sell signal on the daily coming close to appearing.

SPY 2 hr hitting the upper end of RSI which has triggered sell offs without fail in the past 4 months.

Wednesday, July 15, 2015

July 15 - Sell signal materializing on 1 hr frame - SPY

Things look very stretched here and getting very close to sell signals on 30 min, 1 hr, and 2 hr frames.  Other indicators also presenting very close to shorting signals.  Picked up some SPY 215 Aug 14 puts and may add depending on the close.

No negative divergence yet but stochs, CCI, RSI setting up for a pullback.
Advance-declining volume showing negative divergence last couple days.

Also close to a sell signal here based on the last 5 signals.

The wide yellow bar triggered the last 2 sell signals.

Tuesday, July 7, 2015

July 7 - Buy signal SPY on 30/ 60 min frames

We are getting a massive spike, for whatever news reason I don't know, I am trying not to get too excited about  the news now now that a lot of the Greek crisis is fairly visible to all.

Seeing fairly good positive divergence setup on the 30/60 min frames.  Given the size of the decline, a bounce could be a very large and fast one.

Sitting on VXX puts from yesterday and will continue to hold.

Monday, July 6, 2015

July 6 - 'No' vote being shrugged off by US equities markets

I can't post charts since Stockcharts is down, which is extremely untimely.  Right now, we are seeing a extremely strong recovery from futures being down -1.5% to about even in SP500.  VIX is also printing a black reversal candle.  Despite what was thought to be a worst case scenario for Greece the equity indexes in US are holding up extremely well, much stronger than I would have thought.  I was contemplating going short today for an intraday trade but clearly I was looking for the wrong trade.  I am flat and am inclined to think that we are in a bottoming phase here and if we hold roughly around here I will go long EOD via shorting VXX with deep in the money puts.

May 15 - Closed out IWM puts for +120% and picked up DAL and HD Jun calls

I'm going to let the market do its thing this week and probably stay away from new positions until Friday unless something very good pop...