SPX - VXO Options

[SilentOne]

hi mss,

Well after today 1355/60 is starting to look in play, and I'm paying attetion this time.

Yeah, that is about where I am coming from. An abc move down to $SPX 1370 -1375 looks likely. Then what? I still think a hard bottom comes in here this week. Beyond that things don't look as clear.

cheers,

john

[SilentOne]

hi mss,

$SPX bottoms today. I added my last tranche of Oct. 149 calls.

Well, I was one day too early on the SPX bottom, and when it comes to options, it can make a world of difference. I didn't even bother to look at the SPY calls I was holding on Thursday, nor did I have the cash or nerve to add to the position. I traded out of most of that position on Friday, and I am very glad to see that my options account is still intact. An 80 point $SPX rally (unreal) is a 43% retrace of the 185 point decline we've seen since the July high. I assume we will grind higher soon to the 50% retracement level.

I will hold a small position in this contract and will look to add on a retest of the lows. The bull case still has to be made with a successful retest at some point, so I will be looking forward to your update of those charts of yours. I hope the technicals improve soon, otherwise the bears are going to be all over this market in September.

Thanks for posting those charts.

cheers,

john

PS. I'm off golfing for the next 4 days. I hope you can keep things levitated.

[mss]

Main chart at the top of this thread has had a couple TLs added.
mss

[underabigw]

MSS,

Thanks for updating your chart. Still nothing to confirm a bottom just yet?

Thanks again.

BW

[mss]

And today does not prove anything - suggests we test another low - lower or higher - TWT
mss

[hiker]

today marked the day "the LINE" was broken to the upside on a closing basis.

and I am now short a small SPY near 148.23 to 148.40 entered near the close and after

I must need my head examined....149.40 to 60 could be easily seen next week on intraday basis.

http://www.traders-talk.com/mb2/index.php?...;blogid=26&

[SilentOne]

hi hiker,

Given Friday's $SPX performance, I suspect the low is in. But I'd still still like to see confirmation on some kind of retest, so I am not really interested in the short plays, but looking and waiting to add longs again. I did add to some long term positions last week in US equity and Japanese equity funds, but the major trading position is in cash.

I have always preferred the wave count where the March correction was an "A" wave and the decline we just saw this summer was the "C" wave to finish it. Can we see new highs by October? Very possible IMO.



Here is some great EW analysis by Dsquare.

Dsquare

cheers,

john

This post has been edited by SilentOne: Aug 25 2007, 03:23 AM

[SilentOne]

hi mss,

You'd have thought we would have made more progress for building the bull case. Apparently more time is needed. I'm not that surprised. $SPX 1485 still looks like it is going to be major resistance in the coming week. The negative divergence seen in the $SPX:$VXO against Friday's high is not encouraging.



cheers,

john

This post has been edited by SilentOne: Sep 2 2007, 05:57 PM

[mss]

There are a couple of things that bother me. I have spent years studying the VXO and one thing stands out, the actual number is useful ONLY in the short term and its relationship to price. On the other hand divergence and conformation with price sometimes is a very predictable tool. There are doubters so up front, nothing is perfect.
The actual VXO number is still very high relative to past history and price action. The chart below has %BB (yellow lines) and a 8 ema of the ratio of VXO inverted. ($one:$vxo = inverted, views better)
I have marked some CONFORMATION points of price relative to VXO. RED price decline period, GREEN price rise period. I have marked the crossing of the center line with significant movement as conformation of direction change. Note May-July '06 and compare with June-now, which has no conformation UP cross of price yet. A longer term chart is also displayed with more points marked.
History of the VXO has indicated that price and VXO move somewhat together direction wise and we do not have that at the present.
Not sure I explained it clear enough, so ask questions.
First chart will up date.



This is a longer term chart of the one above.



Questions welcomed.
mss

This post has been edited by mss: Sep 3 2007, 07:28 PM

[mss]

Here is another view indicating the same thing. VXO has not reached a "bullish" mode yet, based on price. We ccan and may have price bounces, but a complete bottom is not yet in IMO.



Comments welcome,
mss