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Plunge-Protection-Team rides in to rescue the Crashing Bull!


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#1 dTraderB

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Posted 29 October 2018 - 03:04 PM

Of course, it was the PPT!  YES, there is PPT!

 

Now, the PPT today is vastly different from the PPT in my youthful days. 

 

One can imagine Larry literally begging and cajoling the PPT to step in..... but that's just imagination.

 

SPX bounced off the lows two trading days ago, over the 2690 level and then challenged the next target, SPX 2710, but was rejected 

 

After that, the markets sold off in a fairly steady manner until there was more tariff threat talk that led to a full-blown collapse. 

 

But, as the markets threatened to crash during the final 15 minutes, the PPP rode to the rescue and cut the daily SPX losses by about 50%  in a matter of minutes. 

 

I had a great NQ trading day and closed my 6 QQQ puts with a good profit, am now left holding 6 JAN 160/162 QQQ calls (4/2), with maximum possible loss of about 20% of the premium. 

 

Got to rest after this


Edited by dTraderB, 29 October 2018 - 03:05 PM.


#2 dTraderB

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Posted 29 October 2018 - 07:04 PM

I am bearish BUT.....the PPT has shown us where they will draw the line in the sand and I have been around too long to 

be in denial about their power. 

 

If there wasn't an election a few days away I would short this market with everything but the market is not in isolation, it is affected by more than just TA, and there are powerful forces ready to step in.

 

SPX 2660 remains my line in the sand but with the hard reversal during the final 15 minutes I am goint to adopt a neutral to bullish stance. 

 

I had a very profitable day but am still disappointed that I did not follow the markets and catch more of than 150-point NQ move off the low. All I got was 56 points on 2-lot trade because I went in too late and exited too early. 

 

Anyway, I want to be in a wait-and-see mode, let the market make its move and then follow it, trade conservatively but add to positions on big moves. 

 

I see a market hanging on desperately and ready to crash lower but I also have seen very heavy seeling and wonder how much is left. 



#3 dTraderB

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Posted 29 October 2018 - 07:24 PM

This is a daiy SPX chart. Today's candle is really special: a big range day, a 2% rally from Friday's close, a reversal off the high near 2710 all the way to 2603, that's 4% off the high, and then to cap off a wild day, a 1.5 % rally off the low to close a mere 3/4 % down from Friday's low. Many are marveling at the reversal but I conider 10-minute flash rally near the close to be more important. 

The blue line is the VIX; high today was 27.81 but it fell sharply from that high to close at 24.70, only 0.54 above Friday's close.

 

Note both 50 and 200ma lines are sloping down. As is the case with supertankers, these averages don't suddenlty change direction, takes a bit of time. 

 

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#4 dTraderB

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Posted 29 October 2018 - 07:39 PM

The table illustrates that the this year's two S&P 10 percent corrections have coincided with a rise in the 10-year  Treasury yield.   This is very rare and has happened only once in the last 20 years, and that was a special case due a massive flight to quality and complications around the Russian Debt Default and LTCM crisis.

Flight To Quality

In general, when stocks fall by 10 percent, there is a flight to quality and yields fall on Treasury securities.

Yes,  the 10-year is down from its peak of 3.25 percent but higher than when the S&P500 peaked in September.  One can fiddle with the data and use intraday highs and lows, but you get out point.

The Gathering Storm In The Treasury Market  

If you haven't read our beast of a post on the structural changes in the Treasury market, we suggest you run to it now!   Click right here:  The Gathering Storm In The Treasury Market 2.0

We also recommend our most recent piece,  Where The Next Financial Crisis Begins.

Keep this on your radar folks,  we think it signaling structural changes taking place in the global capital markets.

gm1j.jpg



#5 dTraderB

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Posted 29 October 2018 - 07:46 PM

Previous SPX lows & highs in 2018

gm2j.jpg

https://macromon.wor...0-key-levels-2/



#6 dTraderB

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Posted 29 October 2018 - 07:53 PM

Dow stages biggest intraday reversal in more than 8 months; Nasdaq sees biggest U-turn in 3 years

 

https://www.marketwa...ears-2018-10-29

 



#7 dTraderB

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Posted 29 October 2018 - 07:54 PM

Monday’s nasty reversal is evidence that the worst is far from over for Wall Street

https://www.marketwa...reet-2018-10-29



#8 dTraderB

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Posted 29 October 2018 - 07:57 PM

Morgan Stanley breaks with rest of Street, thinks October sell-off is 'morphing' into a bear market
  • "The rolling bear market continues to make progress and there is growing evidence that it is morphing into a proper cyclical bear market," Morgan Stanley writes.
  • Morgan Stanley's top stock strategist is concerned that actions by the Federal Reserve are drying up liquidity more than most investors predicted.
  • The S&P 500 is off more than 8.5 percent from its all-time high in September, while the Dow Jones Industrial Average is off by more than 7.6 percent.

https://www.cnbc.com...ear-market.html

 



#9 dTraderB

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Posted 29 October 2018 - 07:59 PM

Then there is Jim Cramer who fears the worst will happen unless...

 

"Right now, the stock market is signaling that the economy's in for pretty rapid deterioration, just like 2008. We have a Fed that's lamentably unaware of the danger," he warned. "Fortunately, there's no systemic risk here — we're looking at a normal cyclical downturn, though, linked with some 1987-style overvaluations."

But "the Fed is making the same mistakes as in 2007. They are. They're totally misjudging how weak some major parts of the economy are," he warned. "If the Fed doesn't reverse course like it did in '98, then we could continue along ... a 1987 road, especially if the president keeps slapping tariffs on the Chinese."

And despite the pressure President Donald Trump is putting on the traditionally independent Fed to slow their interest rate hikes, Cramer said the burden of preventing economic pain is on the central bank and its leaders.

"My main fear is that we could have a mini version of 2008 if the Fed doesn't change course," the "Mad Money" host said. "Our one hope? If Fed chief Jerome Powell actually starts listening to the stock market and wakes up to the damage that tariffs can do to the economy, then maybe he'll shift gears, just like Greenspan did in '98. Then we can bottom and even roar higher. But as long as Powell stays committed to the December hike and three more next year, ... and the president stays committed to expanding his tariffs, then history says we've got more downside no matter what."

https://www.cnbc.com...s-ive-seen.html



#10 RagingSpartan

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Posted 29 October 2018 - 08:15 PM

Wednesday is a massive quant tapering day for the fed. If the market doesn't fall apart tomorrow then Wednesday will be the day.