Monday, February 29, 2016

Feb 29 - Potential bear trap

Went long SPY a/h based on following

NY up/ down volume was close to 1 despite -.63%, SPY volume decreased from Fri, CPC also spiked on a daily basis which 'usually' leads to mean reversion in near term.  If tomorrow is another strong down day, medium term uptrend is in trouble.

HYG continuing to blast up despite today being down almost 1%

Friday, February 26, 2016

Feb 26 - Added 1-2 day short SPY

I released the SPY long entered pre for small loss after the gap up didn't hold and added a small short position for intraday and maybe for another day depending on the close.  Have a short term sell signal on the hourly and 30 min frame.  Still expecting more upside movement next week but for now might have a pullback/ consolidation.

QQQ issuing short term sell signal also

Feb 26 - Another gap up

Hopped back into longs pre and now with a thin volume profile above us until 200, it is probable now that level gets hit as it will be easier for the MM's to push us there.  Only question now is whether we stop there.

Thursday, February 25, 2016

Feb 25 - Bears continue to get squeezed

Low volume grind up and exits longs EOD looking to re-enter on consolidation/ pullback.  Still looking at 198-200 in SPY at target.

Low volume at bottom of range has generally meant some breathers the next day or two

Broke above resistance

Bear assets declined for second day so perhaps some are switching to long side now but looks like a while to go until things turn back around

Feb 25 - Still grinding up

Moving up on not so strong volume and looking to hold SPY longs from yesterday until I see signs of exhaustion.  Right now, 198 seems very possible and 200 reasonably possible.  As always, I will have one foot outside the door in case things start to look dodgy.

This is pretty self-explanatory

Feb 25 - Bearish sentiment still very elevated

This might make it hard for the market to totally tank here for the intermediate term.  I personally would prefer more bears to capitulate to take on aggressive shorts.

Seems like yesterday was the sign of trend reversal for inflows into bearish funds.  Once this dips further I would feel more comfortable to short

 Would prefer the put call ratio MA move into the lower yellow bar

Wednesday, February 24, 2016

Feb 24 - Potential for a move beyond consolidation

Strong move and re-entered SPY longs when it became evident price was going to move up beyond the opening gap.  We have a retrace back into consolidation tomorrow but might just break out.  Bears dropped the ball today.  Volume was strong today relatively speaking.

Feb 24 - Short term pullback or more downside?

Still not clear how far things will fall although we are at a good bounce zone at the current gap, beyond that another good bounce zone at next gap at 50% fib in SPY.  Volume has picked up but will wait to see how things turn out end of day.   I could easily imagine some chop for rest of week and will be treading lightly in all likelihood during that time.

Good potential bounce zone.  If we bounce how high we go I have no idea.  Wouldn't be surprised though to see a bounce to refill today's gap then back down again.

 sell signal on daily.  Will be watching this to see if this plays out.  Off of intermediate term bottoms that move up quickly I am usually wary about assigning too much value to this signal.  Works best in sideways markets.

Tuesday, February 23, 2016

Feb 23 - Finally a pullback but staying flat

Low volume pullback today and the SPY low volume signal/ NYSE extreme buying volume ratio triggered.  I didn't catch this move as I wanted to see how things played out and will stay flat overnight.  Still risk of choppiness in both directions.  Not clear whether this is a trend change or a pullback so I am happy to stay in cash.

Negative divergence finally kicked in

Potential sell signal on daily but also chance that we are starting an overbought condition.
 USO once again rejected by trendline.  I wouldn't be surprised to see chop in short term.

Monday, February 22, 2016

Feb 22 - Staying flat for now, mixed signals

Equities had a very strong day but some flies in the ointment, namely the very weak SPY volume which when it hits 100MM or less in an uptrend has almost always led to some near term weakness.  Price action was good though so as of now, slightly leaning towards a small rather than big pullback.

Weakness indicated in yellow box.  I wasn't expecting the weak volume day until we were higher up and closer to 200.  This along w the NYSE up/ down volume ratio is why I didn't reenter longs EOD.

 VIX still has room to go down but it is far enough that it could reverse at any point.
 NYSE up vs down volume ratio was very high which usually has led to small pullbacks the next day and very limited upside even when the signal fails.

Feb 22 - Bear stew

I trimmed back my longs because we are near resistance but I have a weird feeling that too many people are looking to short at this level which could cause us to jump over it.  So far, today's tape looks like a lot of trapped bears.  For now, will wait towards later in the day to see how we digest this move north of the upper hourly BB.   If today looks like it is consolidating intraday I will jump back into longs but with a smaller position.

Today was a very nice pop out of Thurs/ fri consolidation.  Today aside, it wasn't a great idea to short into this low volume sideways activity.
 A bit north of the BB and would like to see how the market reacts
 The daily looks bullish.  I still think 200 SPY isn't a long shot like most think.

Sunday, February 21, 2016

Feb 21 - Consolidation, reversal, or breakout this week?

The last 2 days were very constructive for the bulls and still seems bearish sentiment is too elevated for the market is have a retest of lows in short term future.

As of now, I am guessing that this week

40% - move through resistance SPY at 194 to test 200 in 2-3 wks where the real tests begin.  This is the 'pain trade' scenario where bears get emboldened and squeezed and bulls selling at what is 'obvious' resistance frustratedly watch the market go higher without them.
25% - an early week test of 194 SPY but then a pullback on lower volume to 188-190 then moving up following week or later this week
20% - consolidation btw 188-192 SPY then a move up later in early March
15% - a test/ non-test of 194 SPY then a deeper pullback to mid to lower 180's

So basically lots of scenarios and the 194 level will be something I will be watching for reactions.  In any event I have 65% chance of the market breaking 194 resistance in the next 1-2 weeks.  This is of course based on the info I have now and we could see a change in sentiment depending on the reaction at this level if and when we get there.

In the bulls favor is excess pessimism by investment in bearish ETF's and a lack of fear in VIX/ VXO.  In the bears favor is that on the daily chart stochs/ CCI are close to signaling a sell signal but these have often failed in trending markets whether a bullish or bearish move off of major reversals.  This time may be no different.

If we hit 194 early this week, the question will be whether we close above it which would be very bullish and invite late to the party bulls.
 This pullback has come on weak volume and weak selling power

 Bearish funds have sometimes peaked in interest after respective lows by late to the party bears.  Bulls would like to see a reversal here soon to feel more comfortable.
 HYG despite a down day for the markets was positive which is a plus.  We are close to breaking a long time trendline.  If this happens equities could start moving up with more confidence.
 NYSE has seen major buying power courtesy of Rob Hanna.  The edge is evident in short and intermediate term.

 VXO still has room to move down indicating lack of fear

Friday, February 19, 2016

Feb 19 - More consolidation SPY

Still time for last hour sheninagans but does appear today will be largely a sideways day which could be construed as more consolidation.  VIX dropping even more today yet again despite a red day in SPY.  So either more complacency before a drop or just winding up to move equities higher.  I'm still holding SPY longs from yesterday and will probably hold over weekend.  Assuming we move up early next week, a key thing will be to monitor the strength of the move.  If it fails we could end up slipping back down but lack of fear so far paints a supportive picture for bulls.  It could all change next week but for now it is how it is.

Maybe another 1-2 weeks until VIX hits a harder bottom
 SPY other than gap down isn't doing much today
 IWM broke north of its channel.

Thursday, February 18, 2016

Feb 18 - Consolidation or trend change?

So far selling seems orderly but tomorrow we should know more.  VIX is down which indicates complacency on this sell off.  Just grabbed SPY longs against my better judgement.

Wednesday, February 17, 2016

Feb 17 - 200 SPY here we come

Still expecting a slight pullback (thought we would get one today) tomorrow and/ or Friday then back up.  Very short term I am neutral/ bearish but very bullish intermediate term.  Buying pressure is extremely strong.  200 level in SPY is a pretty feasible target now in the upcoming month.

Looking to go long on retrace to bottom of opening gap (if we get there).

Potential final target of 203 in SPY based on RSI 50 cross of previous major bottoms

Feb 17 - Still rocketing higher

Another impressive day.  We are at 3 up unfilled consecutive gaps.  I can't remember the last time I saw this.  I quickly unloaded my small SPY short pre per system rules even though now it seems even more likely some pullback is coming.  But today's gap up only strengthens the intermediate term time frame which makes me think that 195 is high probability and 198 not unreasonable at all.  Problem is trying to find a seat on this long side train.  If we pull back 1/3 to 188, I will take it.

Tuesday, February 16, 2016

Feb 16 - Potential pullback target SPY

If we get some backfill, ideally would be looking at a 1/3 retrace to retrace Tuesday's move.  I am guessing btw 1-2%.  We also have some seasonality headwinds per Sentimentrader

A 1/3 retrace would be ideal and coincide with today's move

 A wild guess on how we might move up (assuming this is a new uptrend).

Feb 16 - Another big gap up but will it hold?

Caught a tiny bit of the up move today but very little and flipped to a very small short at close.  I am not expecting a big pullback as the intermediate term looks pretty bullish to me.  Again volume pretty weak (which is not an indicator in itself, more of a slight warning/ confirmation signal) but price only pays.  Definitely not an ideal place to go long although it looks like the trend has changed.

Basically a short term sell signal on the hourly.  There's a good chance this is a 1-2 day event before going back up.  On a gap fill, looking definitely to go long.
 30 min pretty overcooked but expect that this will recover pretty quickly.
 Two large unfilled consecutive gaps which make things a bit stretched in very short term

Monday, February 15, 2016

Feb 15 - I got a bad case of FOMO

FOMO is hitting me like a nasty flu.  Looks like I made a trading mistake by pulling longs off the table on Friday that were entered Thursday.  Everything was a go except SPY volume.  In retrospect, the optimal play would've been maybe a 1/4-1/2 position given that I was fairly confident we had a floor but also as I wasn't sure whether a retest was coming.   Right now, futures are up huge at 1.75% and set for SPY to gap up around 190 which is well north of the BB on the 30 min and 60 min frames.  So buying into the open is off the table and maybe even shorting the open.

I have two main targets for this potential up move at 195 and 198-199 in SPY.  I feel very confident 195 will be hit within a few weeks and pretty confident that 198 isn't an unrealistic target.

In a best case scenario we would see a gap fill at some point but might be difficult.  Probably the highest I will buy into a long is around 188 which would give good risk to the reward of 2:7 assuming a 186 stop.

So the play Tuesday for me is to sit tight on the open and pretty much wait it out unless we see a retrace to 188.  It is possible this train doesn't make any stops for me to hop on, i.e. continuing up after 2 consecutive unfilled up gaps.  If this happens would be unfortunate but my system doesn't allow me to stick my neck out into what will be very overbought short term conditions bc of this potential big opening gap.  Tentatively I am looking for a buy signal on the 30 min frame to entertain longs and/or a pullback to 187-188.

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...