Wednesday, September 30, 2015

Sept 30 - Potential bottom in equities

I have been thinking that it was likely we were going to get a retest of lows and I couldn't help getting that nagging feeling that too many people were including myself.  In addition, today we got potential bottoming set ups on a few indexes, the NYA, IWM, and the hated biotechs IBB.

Towards close I very reluctantly pulled off my short positions and went flat.  By end of the day, there were way too many buy signals on the daily for some indexes/ sectors to go short.  Who knows many we do get that big retest of lows but I would be violating my own system (one of the best long setups I have used over the years has been a low volume retest with positive divergence + stoch/ CCI cross) to stay short.

So on to the indexes that were starting to spook me out.

$NYA has a convincing set up and I often cross reference SPY/ SPX with this index as a bellweather for the market in general.  Stochs/ CCI leading out of oversold territory, positive divergence, and lower volume on retest all check.
 Small caps with the same setup although price action wasn't explosive.  But it looks like enough and if it isn't doesn't look set to fall much further.
 IBB sold off on lighter volume yesterday and has huge positive divergence.

Sept 30 - Setting up for the final flush out

There is a lot of background noise here because of end of quarter and the big portfolios might be doing a lot of reshuffling that could make reading today less than a clear picture.  That said, I was unimpressed by the bounce (volume, IWM barely moving, VIX stubbornly not dropping as much as it would on such a big gap up) and reloaded the QQQ puts expiring end of next week when it hit the upper trendline on the 10 min chart.

I am guessing we are heading into the last flush out in the next few days, maybe into early next week.  We already have buy signals and very clear positive divergences developing on multiple daily charts so if and when this flush happens the reaction will be fierce.  If the market makes a strong dip, I will start scaling into some intermediate term long positions.

Still working under the assumption this downward channel is intact.

Oversold conditions worked off on hourly

We have a buy signal but going to wait for positive divergence btw price and the indicators to go long.  I think we are very close.

This was a bit of a surprise.  VIX is really hanging in there and printing a reversal candle.

IWM barely moving so it casts more doubt on the strength of today's move.

Tuesday, September 29, 2015

Sept 29 - Potential short squeeze

Well looks like that short squeeze I was looking for is materializing, at least based on futures and the hourly which is showing pretty solid positive divergence.  Assuming this futures spike holds through the night, I am probably going to bail on my QQQ puts at open and rebuy them at end of day if tomorrow is a big up day.  If futures somehow take a dive and I get that gap down I was looking for great, but looks less likely now.

Still think the lows need to be retested but it may be we need more momentum to reach them and to shake out some bears and pull in longs.  If the spike occurs tomorrow, it could be a powerful one.

A potential scenario in mind is a strong 1-2 day bounce to work off oversold conditions and then back down again, but this time with more range and volume.  Volume has been lacking here so it's hard to believe this would be an intermediate term bottom but it feels extremely close.

Looking for a 3%+ bounce in QQQ before reshorting if indeed the bounce arrives.

Sept 29 - Consolidation

This is probably consolidation before another move down.  Considering we are oversold could also be stalling for a short squeeze but considering how soggy things look I am guessing continuation.

Monday, September 28, 2015

Sept 28 - Bearish close

We closed at lows and near term looks more likely we will undercut the daily candles in SPY/ SPX.  How far we go is uncertain but if we continue at the current rate, we might be at a spike low within 2-3 days.  If we gap down huge and rebound to print a hollow candle it might only take 1 day but based on that there is a bit of room on the indicators to max out I am guessing it will take more than a day.

!PMOBUYALL has at least a couple of days before a bottom
 SPY is just started to get moving.  Stochs could be oversold within a day but RSI and CCI has some space to move down.  I will be looking for positive divergence to go long.

VIX very close to the upper band and the first stab at it rarely indicates a top, there is usually a bit of froth before turning back down.

CPC ratio extremely elevated so when this thing turns around it could spike hard.  On the intermediate term lows a lot of the time there was a 1-2 day from the upward spike and the low in equities prices.
 If we compare CPC to the last big dip last fall, there was a 3 day lag until the market bottomed.
So if one averages out the spaces in the indicators looks like 2-4 days until a bottom assuming no big upward spikes that would work off oversold conditions in the meantime.

Sept 28 - Retest of lows coming

Went short SPY premarket and now expecting retest of lows in the near future.  Still there's a chance of a temporary bounce but now that we have breaching intermediate support at 191 SPY, 186 isn't far away.  Question is whether we overshoot 186 and test the spike low at 181.5.  Things I will be looking for is divergence on the 1 hr, daily frames, reduction in daily selling volume, and hopefully a reversal candle below the lower bollinger.

Getting close to the retest.  Volume should surpass Friday's volume which should give more credence to this move.  On a side note, the fact that volume is still relatively low could argue that we has a long way to go to hit capitulation.

Oversold here but no signs of positive divergence.  For me that will be almost obligatory to go long.

Friday, September 25, 2015

Sept 25 - Flat for the weekend

Got stopped out midday from SSO and now flat.  Small caps and techs leading the way down.  Still hoping to see some upside to set up a better short but will have to be patient and see what happens.  If we end up in the red again on less volume than yesterday, definitely going flat into the weekend.  A red close with lower volume generally means a positive edge but the potential big downside risk pushes things to a clear no position stance.

Was stopped out on the 10 min chart when the expansion move up failed
 30 min + 1 hr frame issuing sell signals

Sept 24 - Bear stew

Looks like we finally got that spike up after seeing the market almost methodically marched down on increasingly lower volume.  These scenarios can rope in a lot of shorts who get enticed by the idea of 'retesting lows'.  This weekend I am going to do some research of some of these messy lows and see if I can come up with some scenarios as potential guides.

Right now, one idea is that we chop like crazy to only frustrate both bulls and bears to bottom in Oct.  When exactly, I have no idea.  Might be early, mid, or late Oct.  If that continues to be the case, will look to play small ball initiating overbought/ oversold conditions near the bollingers.  The only thing that I do feel somewhat confident of is that the market is highly likely to thrash around for the next month.

Some other indexes showing signs of short term bottom and when I say that it could be few days to a week before going back down.

Out of all of them, the DAX appears the most promising to make a week long bounce.

Thursday, September 24, 2015

Sept 24 - Long SSO

I jumped the gun yesterday with the XIV position and quickly got out pre-market.  Around midday we started seeing positive divergence and built up a decent sized long position in SSO.  Looks like we might have a very short term bottom.  That said, over intermediate term, what I am aiming for is a better position to short to retest lows, but for now, just taking it one step at a time and not trying to enforce my wants on the market.

 Reversal candle on diminishing volume on SPY.  Didn't quite getting oversold on CCI/ stochs but did tap the lower BB
 VXO printed exhaustion candle, more visible than the VIX doji

Wednesday, September 23, 2015

Sept 23 - Selling pressure still weak

Update:  Took 1/3 position XIV a/h.

Even less volume today and VIX is down but we can still go lower.  I'm still flat hopeful for a bounce to reload shorts.  Very mixed data across the board.

The 10 min shows clear consolidation which generally means another leg down.

 But we are oversold on the 1 hr frame and with potential to move up.

Volume has decreased for 3rd time which means that selling pressure is diminishing although we can continue to drift down.
In sum, I'm still thinking retest of lows will happen, just waiting for a better price to go short.  This aimless drifting may continue for a while.

Sept 22 - Potential temporary bounce

Today was another weird day like Monday, very tight range and not much conviction either way.  When there is low volume and most of the movement is generated by gaps, I get a bit nervous there might be an opposite move.

We broke the rising wedge/ flag on the daily that everyone and their pet hamster were pointing to as the beginning of the next leg down, with most thinking a moderate overshoot of previous lows.  It was almost as if the bears were expecting a violent whirlpool and the panicked sellers to get flushed into the netherworld.  My gut tells me that would be too easy.

But instead we got this...Who knows maybe tomorrow the clog will suddenly disappear and we will wake up to hear a big woosh as the markets hurtle down.

The bears can point to this as a decent indicator that lows will be retested.
 We have a potential buy signal on the 60 min frame.  If we were to go up to the underside of the rising diagonal, it probably would bring stochs/ CCI to overbought, making things more attractive for shorting.
 On the 30 min frame, we also have a buy signal with maybe 1.5-2 days of bounce before becoming overbought and also more favorable short setup.
 SPY still showing a sell signal but printed a hammer and even less volume than the previous 2 down days.  Usually a warning sign.
 VIX printing another black reversal candle.
In short, looking to watch the strength of this potential bounce and reinitiate shorts Thurs/ Fri.

Tuesday, September 22, 2015

Sept 22 - Closed SPY short...for the moment

Selling power was very weak here and will look to reshort on potential bounces.  I could be overmanaging this position but I don't like the reversal candles popping up and lack of participation.
If we bounce, could just be a one day thing.  I'm still bearish for the intermediate and long term.

We are getting positive divergence on the CCI on the hourly

Sell signal still in play but still possible to get a bounce tomorrow.

Monday, September 21, 2015

Sept 21 - Pause day

Very low participation today unless the last hour suddenly wakes up.  Still short SPY and not planning on making additional moves.  I have to admit though seeing the blogosphere with so many calls to a retest of lows does not make me terribly comfortable and I've set my stop at 199.3 a bit above the overhead gap.

Could be in a bear flag.  We should know by tomorrow/ Weds latest what this is.  One positive for the bears is CCI/ stochs bottomed out but we haven't seen a sustained bounce just a small one on weak volume.

Very weak volume and an exhaustion candle.  Stochs/ CCI confirming so far.

Sunday, September 20, 2015

Sept 20 - Retest of lows?

Thurs a big FOMC reversal and Friday solid selling follow through.  Next week's seasonally strongly bearish headwinds will provide more of a push for the market to fall further.  Not to talk my own book, but looks like a strong case of a retest of lows within the next 2 weeks.  If that does happen, it will set up a great long opportunity but for now going to wait and see what happens.

 $PMOBUYALL indicator pointing to a top that has triggered before.
 Stochs and CCI sounding sell signal on daily.  Volume was impressive but much of it due to OPEX.
 At a potential buy signal in SPY for the hourly frame but leaning towards it failing bc of FOMC's failure

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...