Saturday, August 29, 2015

Aug 29 - Strong possibility of retest of lows

Although we have seen a strong rebound, I am leaning heavily towards a retest of lows in the next week or two.  On these sudden drops in the past several years, it has been typical that a bottom is carved out with very volatile activity between the bottom and roughly a 50% retrace.  The only exception was last fall's V-shaped bottom.  While it is possible it will repeat, I am less inclined to think we are capable of seeing such a bounce because of the severity of this recent drop which makes last fall's drop pale in comparison.  I picked up some at the money SPY put spreads expiring in a couple weeks at close Friday.

In 2010, both temporary bottoms retraced 50% before testing or breaking to new lows.
In 2011, we had multiple retests with most being rejected swiftly by the 50% level

 Right now, we are at 50% in SPY and leaning towards seeing a drop this week and possibly more than 1 retest.

Thursday, August 27, 2015

Aug 27 - Short term trade - short SPY

Sold VXX short on open, made a big mistake not noticing the backwardation in VIX/ VXX and not just going long equities.  Just went small SPY short based on sell signal on the 30min/ 1hr cycle.  In case this doesn't trigger immediately, I will get out of the way.

Wednesday, August 26, 2015

Aug 26 - Short VXX

Bought Sept 11 VXX puts 25 strike.  Very possible today's rally is faded tomorrow but so far looks like selling could be on hold for short term

Aug 26 - Rinse and repeat. Sold longs on open and went short SPY

Not sure what is going to happen today but once again sold longs on open and now fading the gap with a very small SPY short which if it hits gap support will be closed.

As always, will wait for the close to make decisions on larger positions.  As ugly as things look, we 'may' be trashing around and making a temporary bottom.  Perhaps we will bounce around ala 2011 before things stabilize.

Tuesday, August 25, 2015

Aug 25 - Long SSO, XIV again

Sold longs 30 min after open and stayed flat until close where I just reloaded longs.  Volume diminished which is a positive but not an end all in SPY and VXX.  Another plus is that VIX dropped while equities slid too.  That gives more possibility to an up day tomorrow.  Looking for a short term bounce here which I might sell again on the open.  The bottoming process won't be easy.

Monday, August 24, 2015

Aug 24 - Long SSO, XIV

Took a small position at close based on the candles and capitulative volume.  Down volume ratio was over 40, something we haven't seen since 2011.  Even if we bounce here, I would anticipate retest of lows not too far away.

Aug 24 - Not long yet

If VXX prints a reversal candle along with all the other indexes, I will take a take at longs at close.  The recent pattern has been to see equities slide down so unless we see a reversal, it might not be still safe to go long.  So far the promising midday setup is evaporating.  Is the plunge protection team going to arrive?

Friday, August 21, 2015

Aug 21 - Not biting on longs yet

As interesting and oversold things are, I am not biting yet and waiting for some signs of stabilization, namely a decrease in SPY daily volume.  At most, will take a small long near close.

VIX near a point where we have seen reversals the past 2 years but we could be starting something new.

Thursday, August 20, 2015

Aug 20 - Intermediate term trend turning bearish

Today equities broke some critical levels.  DIA is leading the way down and it is clear now that the consolidation triangle has broke to the downside.

We may have a bounce based on buy signals on the 1 hr frame and overbought VIX, but the safer trade going ahead will probably shorting into bounces.

NYA has broken an important level of support.  If we bounce, I may be looking into shorting resistance.

Wednesday, August 19, 2015

Aug 19 - Inside candle bullish set up fails

Yesterday's potential set up totally failed but looks like we have an hourly buy signal on SPY.  As things are whipsawing like crazy I wouldn't trust the signal for more than a quick bounce if it materializes.

VIX is dropping and may have hit a short term peak since we are heading into OPEX.

Tuesday, August 18, 2015

Aug 18 - Potential bear trap

This is only for tomorrow, I am less excited about this move off last week's lows but today the bears might be getting roped in for a spike up tomorrow, especially considering there is usually some OPEX shenanigans.

SPY backtesting upper trendline for what it's worth.
 SPY has always moved up (yellow box) except once (green shaded box) when it prints an inside day on lower volume.  Something for bears to be aware of.  This is only a 1 day edge.  After that, it's anyone's game.

Monday, August 17, 2015

Aug 17 - First stage of potential bullish breakout

Price looks good, very good breaking out of the triangle.  VIX being up and very weak volume not so good.  I remain long but will be wary if we hit any resistance like upper Bollingers, overbought conditions on the hourly.  Looking ahead looking to short when VIX hits 12.

Saturday, August 15, 2015

Aug 15 - Potential for bullish breakout

Price is tightening within a triangle in SPY.  given that the market is holding here, I am leaning toards all time new highs.

Friday, August 14, 2015

Aug 14 - Mixed bag

I have set my stops fairly tight in SPY/ XIV and will let them do their work for today.  The bounce is less than what I was thinking.  If we get a sideways day on low volume, I will construe that as bullish going into next week since we have had multiple chances for the bears.

We continue to churn inside this expanding wedge.  A break out above it might mean ATH.

Thursday, August 13, 2015

Aug 13 - Potential bear trap - long SPY, XIV

Today looked like low volume consolidation.  Went long XIV SPY at close.  We could easily drop back down but this looks very similar to right off the bottom situations where shorts jumped back in after the first sign of weakness, leading to a big gap up.

Yellow areas indicate where this has happened before, often with big gaps up.

$VXO confirmed its sell signal today but longs are not out of the woods until the indexes break up and out of its descending wedge/ channel.

Aug 13 - Short SPY

Unloaded VXX puts right on the open and went short SPY with stop a bit below the open.  Looks like we are rattling within a descending broadening wedge that should break to the upside but given how stretched yesterday's move was to the upside, we may need to stabilize before going up.  Ideally we would have maybe a half retrace of yesterday's down move on weaker volume.  Obviously I am not planning on making this a long term hold, probably only today.

1045am update:  Stopped out of SPY short.  Volume is quite weak which makes me think even if a pullback arrives, it won't be too menacing.  Staying flat until there is more information towards close.

1145am update:  Looks like consolidation so far.  Will wait until EOD but if we print a low volume inside candle, it may look bullish

Ideally, SPY would trash around in the middle of this zone and stabilize before putting longs on the table.

Wednesday, August 12, 2015

Aug 12 - VIX/ VXO major reversal

After being well north of the upper BB, VIX staged an impressive reversal to issue a black exhaustion candle.  Remains to be seen whether it is the real deal, but combined with positive divergences on the 1/2 hr frames, it looks more than likely we will get follow through up in equities.

Positive divergence on the hourly.

 Bullish candle resting on lower BB.  If this fails tomorrow we might see downside to test this year's support.

 2 hr frame has positive divergence along two time frames which is setting up for a big move up if it triggers.
 $VXO printing a black reversal candle north of the BB generally marks inflection points but in the past 2 years there have been a few occasions where it has failed.

Aug 12 - short VXX

Need to see if things hold, but with 2 unfilled gaps down and VIX/ VXO reversal signals appearing, picked up VXX Aug 28 puts.  If things don't hold by end of day, I will let these go.

Getting a strong spike in SPY and we might be set up for a reversal.

 Same with VXO/ VIX but we need to see hold things hold up by EOD.

Aug 12 - Continued weakness, long set ups brewing but not quite ripe

Today we have had our second unfilled gap in a row and 'may' be setting up for a long position.  The case against is that volume is strong, a clear sign of institutional distribution, and we have fell out of the consolidation zone that was offering a bullish setup.  Depending on how things close, I may take a look at a long SPY or XIV but not right now as things are still fragile.

VIX hit the first resistance zone and is far north of the upper BB.  Assuming we aren't entering a correction, things might stall out here and reverse.

 $VXO painting a more promising reversal picture
 QQQ slipped out of its consolidation zone and setting up with positive divergence but we could easily continue to fall.
 SOXX handing in there on the lower trendline
 SPY is setting up nicely for a spike up but it is too early to make a move yet.
 GLD and miners have blasted off.  NUGT is up 50% for the last week.  If GLD hits the yellow resistance zone, I will probably look at shorting miners or GLD itself.

Tuesday, August 11, 2015

Aug 11 - No man's land

Things are pretty unsettled now neither to the downside or upside although since we have been going down recently with lower highs and lows, there wasn't enough to take a position after closing the short position in the morning.  Currently flat and looking for the next entry, probably long.

There are some interesting long set ups brewing, which if they fail, would present a good amount more of downside.  In most, looking for indicators to max out and to touch the lower trendline, ideally at the same time and on not so intense volume.

July 11 - GLD sucks

stopped out of GLD yesterday for -25%.  Holding off on reentry and maybe will enter if we drop another level. SPY on the other hand is crus...