Friday, January 15, 2016

Jan 15 - Inflection point

Today's gap down confirmed my suspicions about the strength of yesterday's move.  In a normal market that would have marked a bottom but that's not what is happening now.  Just scalped a bit by buying the open and am flat waiting for further information.  If we by some miracle close the gap, it might bring a good intraday short.

We could be basing for an intermediate bottom or ready to break support and into the abyss.  Given how volatility is increasing and equities are snapping wildly, swing trading for now is a limited proposition at best.  Until a floor gets better carved out or support is definitively broken (and there is also risk of a bear trap), it might be best to play small ball or just sit things out.

I think the hourly buy signal has failed several times with some triggers but with quick flameouts like yesterday.  Mounting divergence though which adds to the risk of being short for a swing trade.

Near support

QQQ is no man's land

VIX if this black reversal candle gets bigger, this might bode well for equities
 Unfortunately $VXO tells a different story


Doug said...

There's a chance that we may see a repeat of the 1987 event. We're having day after day of declines. I remember the run-up to that crash very well and it's starting to feel similar. I think we're headed for an 2008 crisis/recession and it's starting to become clear that it's happening -- thus the big decline this week.

If that happens, obviously is a buying opportunity. The question is the magnitude of the crescendo/selling climax.

I picked up additional bonds (TLT, Long term Munis) yesterday because I was chicken to get short again. So, I'm up today -- which I consider a victory since I still have 15% in utilities/REITs.

Greenlander said...

Yeh this decline has been very strange. Just a very sustained drip down without much speed but the volume is slowly increasing. I am hoping we can bounce to find a better place to short but I don't like going long or short here as it is too ambiguous. I agree the market is telling us something and that recession is around the corner.

Nice play with bonds. I am telling that to friends who are overweight equities.

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...