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Looking for a bounce?


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#1 arbman

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Posted 06 May 2012 - 04:41 PM

CBOE Equity P/C ratio actually declined on Friday at the close, and closed lower than Thursday! :lol: Euro is still falling... The 70 day cycle could not lift the markets up to new highs, subsequently the gap support at 1380 was lost instantly... The sentiment is not extreme for a decline toward the 35-36 week lows, it happens only once a year... Now expecting 1350-1360 major support to work for the 3rd time after the market could not manage to even take off? This is while the tech and many growth stocks are leading down? I doubt it. There was a chance to rally for another week with energy leadership, but it prematurely ended last Tuesday. The chances are the 35-36wk cycle lows will provide a nice trust upside, but there is 3-4 weeks to go at least, lots of price damage is possible... I would like to buy at least a break of the lows now to play a bounce... Safer! BTW, it seems easier to me to sell the first bounce too.

#2 CLK

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Posted 06 May 2012 - 05:23 PM

Maybe 1300, C=A+B ?

Edited by CLK, 06 May 2012 - 05:25 PM.


#3 arbman

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Posted 07 May 2012 - 04:38 AM

My guess is 1330s probably, it is the measured target many already stated, then a bounce, if it doesn't do well, perhaps as low as 1280-1300 support. We may get a bounce here a bit further, given this is the third gap down, but I doubt an up trend emerges out of it yet. The fact is the weakness showed up very early ahead of the 35-36 week cycle low due in early June and it failed miserably with the tech leadership to the downside. You do not see these (down) trends turn very quickly, yes we can get a bounce soon given that the put buying is going overboard, but this is exactly how also the down trends accelerate to the targets as well... I would not hold my breath here for an up trend before early June. Lots of damage to work out from weeks of internal damage that the turn in breadth looks like a failed hook since late April, and then the sector leadership is still too weak for a bottom yet. Watch out when AAPL, if it breaks last weeks lows...

Edited by arbman, 07 May 2012 - 04:41 AM.


#4 Geomean

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Posted 07 May 2012 - 11:26 AM

It's a battle at the necklines on the daily charts
Opportunity knocks on your door every day-answer it.

#5 arbman

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Posted 07 May 2012 - 01:27 PM

It's a battle at the necklines on the daily charts


I sold the weekly options at SPX 1400 as I was not sure whether it would bounce or go straight lower.

I will be the most surprised if this market manages to go over 1400 this week...

#6 VolPivots

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Posted 07 May 2012 - 09:46 PM

I know you follow credit growth....it's atrocious in Europe....

http://globaleconomi.....end Analysis)

#7 Rogerdodger

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Posted 07 May 2012 - 10:25 PM

I think I saw a bounce coming from the Mexican debates: LINK :wub:

#8 Geomean

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Posted 08 May 2012 - 08:49 AM

It's a battle at the necklines on the daily charts


I sold the weekly options at SPX 1400 as I was not sure whether it would bounce or go straight lower.

I will be the most surprised if this market manages to go over 1400 this week...


That's a very interesting way to play it, Arb. Thanks for sharing.
Opportunity knocks on your door every day-answer it.

#9 arbman

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Posted 08 May 2012 - 11:34 AM

It's a battle at the necklines on the daily charts


I sold the weekly options at SPX 1400 as I was not sure whether it would bounce or go straight lower.

I will be the most surprised if this market manages to go over 1400 this week...


That's a very interesting way to play it, Arb. Thanks for sharing.


You are welcome, the vertical credit spreads are usually ignored during these situations. I had traded 1000 EW2 1420/1395 credit spread for $2.00 on Friday. It is nearly worth zero right now, margin requirement was $1,225k, so;

50 x $2.00 x 1000 / 1,225k = 8% trade in 2 days while the market was trying to decide, not too shabby...

I would cash this out a bit later if we had a bounce to $1380, but then I figured everyone figured it out! :lol:

Edited by arbman, 08 May 2012 - 11:35 AM.


#10 Geomean

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Posted 08 May 2012 - 11:56 AM

It's a battle at the necklines on the daily charts


I sold the weekly options at SPX 1400 as I was not sure whether it would bounce or go straight lower.

I will be the most surprised if this market manages to go over 1400 this week...


That's a very interesting way to play it, Arb. Thanks for sharing.


You are welcome, the vertical credit spreads are usually ignored during these situations. I had traded 1000 EW2 1420/1395 credit spread for $2.00 on Friday. It is nearly worth zero right now, margin requirement was $1,225k, so;

50 x $2.00 x 1000 / 1,225k = 8% trade in 2 days while the market was trying to decide, not too shabby...

I would cash this out a bit later if we had a bounce to $1380, but then I figured everyone figured it out! :lol:


I have/read parts of Schap's book on "Spread Trading" so it is helpful to see current examples. Thx for the follow up elaboration.
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Opportunity knocks on your door every day-answer it.