Tuesday, October 6, 2015

Oct 6 - Pain trade might be up, oil breaks out

Seems like that the vast majority are expecting a pullback from overbought conditions.  I had entered a small short yesterday and closed for minimal gain today.  I wasn't convinced by the selling pressure and noticed that VIX was down despite the market being down and the NYSE up volume was higher than the down volume despite it being a very slighly down day.  These in themselves are not reasons to take positions but to be suspicious of what the majority might think.  We might just be consolidating for another leg up.

We are at a natural location for a pullback and although had very good setups for shorts on the 1 + 2 hr frames not much happened.  Some overbought conditions were burned off and the market drifted lower on lower volume.

If a lot of people went short at what appears to be a 'logical' place to go short, any push to the upside might trigger another melt up wave of short covering, this time probably on a slower, gentler fuse but a driver of a sustained move up nonetheless.  Each time we see a red day it could invite a new round of shorts that are met with a move up the next day.

I bought a small batch of VXX put spreads expiring next week for the 20.5/21.5 strike for .26 and picked up SSO again but a smaller position as there is still threat for downside as we are at resistance.  If we clear resistance I will probably add to the position.  Current holdings are small SSO, VXX spreads, and positions entered in Thurs of EWG, GS

Right at resistance and the daily stochs and CCI have room to go up.

USO doing very well in which I have a small swing position from this morning.  Broke cleanly out and with volume.  Couple easily go up another couple points.
 Energy sector strong already near Aug levels.


tellzhang said...

shall we have some pull back tomorrow? I think it is time to have at least sone sort of pull back.

Greenlander said...

Not sure Tell but I feel like 204-205 in SPY is a sure thing now. No resistance until then. I wouldn't be surprised to see a gap up as more shorts probably came in today.

Greenlander said...

I'm still holding VXX puts, GS, EWG, SSO

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...