16 replies to this topic

[blustar]

A Delta Hedge Meltdown occurs when when put sellers (put writers) sell more puts than they have shorted stocks to balance the position with and I believe we have that situation with the Jan option positions right here. Very few now believe the market will go down and when that happens the market becomes out of balance with too many net long positions vs. short, and hence you have the meltdown (currently puts are cheaper than calls, if that isn't a contrarian indicator, I don't know what is!!!).

Along with all the proof I have provided yesterday, the next chart shows the current channel, Sept top support [fib 50% retrace of the -c- wave A], bisecting the rising trend line on Jan 21, the irregular megaphone pattern, which always breaks just below the first touch point (SPX 1740) of the rising green line and a rising wedge that when broken causes waterfall action.

Also, we have the double top reversal, which tends to do the same: that is waterfall action in third of a third C or Z Wave. WE also have a second OBV daily failure, which in the past has sent the market reeling.

I believe we break that rising purple wedge line in earnest on OPEX (Friday) if not today. Support today on that line is near 1817 SPX. Yesterday, I outlined why I believe we see SPX 1746/47 on OPEX and 1729/30 next Tuesday.

Good Trading!

Oh, and thanks for NAV providing the Delta Hedge Meltdown info on the board back in late 2007.

blu

Charts

[opinionated]

Not yet

[andr99]

A Delta Hedge Meltdown occurs when when put sellers (put writers) sell more puts than they have shorted stocks to balance the position with and I believe we have that situation with the Jan option positions right here. Very few now believe the market will go down and when that happens the market becomes out of balance with too many net long positions vs. short, and hence you have the meltdown (currently puts are cheaper than calls, if that isn't a contrarian indicator, I don't know what is!!!).

Along with all the proof I have provided yesterday, the next chart shows the current channel, Sept top support [fib 50% retrace of the -c- wave A], bisecting the rising trend line on Jan 21, the irregular megaphone pattern, which always breaks just below the first touch point (SPX 1740) of the rising green line and a rising wedge that when broken causes waterfall action.

Also, we have the double top reversal, which tends to do the same: that is waterfall action in third of a third C or Z Wave. WE also have a second OBV daily failure, which in the past has sent the market reeling.

I believe we break that rising purple wedge line in earnest on OPEX (Friday) if not today. Support today on that line is near 1817 SPX. Yesterday, I outlined why I believe we see SPX 1746/47 on OPEX and 1729/30 next Tuesday.

Good Trading!

Oh, and thanks for NAV providing the Delta Hedge Meltdown info on the board back in late 2007.

blu

Charts

great call I think because the ftsemib here is already -0.76% on a day that should have seen continuation upwards. Besides that I hope you are right because your downside target which is actually as mine if and only if the spx hopefully accepts to go down and correct a little, would set up the last leg upwards which here should be strong

Edited by andr99, 16 January 2014 - 10:29 AM.

[pisces]

if I am not wrong,i believe NAV also told the story about the kid who said : but daddy its going up ,

[andr99]

...forgot...I agree with the downside target of the spx if the recent ST rally proves to be a bull trap, but I disagree with the crash call.....it will take much more time to get there if it decides to correct which so far isn' t yet evident......we are at an indecision point imo where there are two possibilities : 1) down to 1730 spx and then last leg up of the bull or 2) up directly to THE TOP without any sort of ST and IT correction. In case 2) the top should come in feb instead in case 1) it should come later, possibly end of march

[opinionated]

Not yet.. timing looks like next week thus far. And don't swing for the fence. Take the sell when it comes and let the market tell you where its going. these calls the sky is falling gets crazy...

[blustar]

I've added a SPY Bi-sector low for Jan 21. The last low it called was Jan 13. Hmmm.. crazy? I've seen these types of tops before and I don't think I'm crazy and neither is the full moon...

[opinionated]

You have a 21st call becaused you moved it. At first it was this coming monday as mine was. Cycles dont change traders do... as far as moon... your kidding me right? Sometimes they line up but for the last 4-6 months they have been wrong. Bottom line is if ya get a valid st sell take it. I promise your not going to get a 120pt es correction with out one.

[Mr Dev]

Not yet.. timing looks like next week thus far. And don't swing for the fence. Take the sell when it comes and let the market tell you where its going.

these calls the sky is falling gets crazy...

if i may add one thought..for most trading purposes i think opinionated is correct in saying wait for it and take it when it comes.. however
depending on money management as well as what type of positioning one is taking in advance of the expected move, like in options, ..
...waiting could easily cost you money.

trade well my friends

Edited by Mr Dev, 16 January 2014 - 11:47 AM.

[blustar]

Today's behavior reminds me of the 1980's when these types of tops occurred often and the next day it made a candle star within the body of the previous candle just like today. The next day, the market cracked hard and followed through into the next day's bottom. It was like a-b-c, with today being 'b'. Then you get c of c of c or the third of the third of the third so to speak and all the energy pent up to go to the downside happens all at once. We have already had a False Break of the Rising Wedge on the SPY. This is sign of extreme weakness when it approaches the rising wedge again (as it will do tomorrow).