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.


tellzhang said...

Thank you, I agree that we will see even lower low on ES.

keep the great job!

Greenlander said...

Thanks Tell,

I would be very surprised if we don't see some trashing around to try and carve out a bottom or as you said a lower low.

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...