Sunday, November 30, 2008

Jingle bells, jingle bells Jingle all the way...



Here is how this chart is interpreted ... Note the date on that post, and SPX value.

Edit:
Below is a PNF chart sent by Mosh

Friday, November 28, 2008

Growing hopes for my destruction once again...

I see ES closed at 894.75, rallied only 8 points today. I am currently down 30 handles on this trade after being up 30 handles initially.

Despite I made 145 handles from my previous trade, and 550 handles before that, since August 2008, once again I see growing hopes among my haters that they gonna get me this time :) However I don't see a lot of insanity compared to the past times... especially considering those who killed a worker at Walmart today. Are retail traders loosing interest in stock market? or out of ammo?

Due to the high probability for a large gap down on Monday, I will start shorting Sunday night... will also initiate long position in SRS, TWM and MZZ on Monday.

Back to my turkey carcasses...

Wednesday, November 26, 2008

Expecting a terminal sell off into the new year

Sell off should end around SPX 600-650 in the first half of January.

I will be building intermediate term positions early next week, on top of my current ES short from 864.

I was sort of confident about a test of 810 today, and away from the desk for the most of the day. I see that ES tested 829 early in the morning followed by a rally that lasted almost all day.

This doesn't fit the script well but this is negligible given the suckers' pre-holiday enthusiasm in the absence of whales. If we get a nice pop tomorrow or Friday in Globex session, I will start shorting there.

ES is trading at 877 at the moment. I believe we are about to enter the final leg of this cyclical bear market in the middle of the most bullish season of the year. The terminal should completely wipe out retail investor's interest in the stock market before we take off. I expect S&P to rally 60-70% towards 1000 level after the terminal capitulation.

Again, my best guess right now is a test of 600-650 range on S&P500, by the first half of January 2009 and a rally towards 1000 level (65%) by the mid summer of 2009.


Happy thanksgiving everyone.

Tuesday, November 25, 2008

Crash of 1929




interesting clips...

Part-1


Part-2


Part-3


Part-4


Part-5


George Carlin on "the American Dream"

Expecting a gap down below 845

and a test of ES = 810-790 range before the post-holiday trading begins on globex. Staying short from ES=864.

Maybe we already put the top?

Here you go... Retail traders got all bulled up, in a severe intermediate term downtrend. You know what it means.

Remember last swing high was 882... We hit 866 yesterday.

Monday, November 24, 2008

I think we put a short term top soon




and beware that I am very overbought and due for a correction ... (If I am not forming a blow off top)

one last time

short @ 864

short ES @ 849

stop 856

covered ES @ 843...

looks like it was early

Short ES @ 841

sold C @ 5.73

Liver time !

Sunday, November 23, 2008

Possible post-expiration pullback followed by further rally...

I expect little weakness early next week followed by more rally which should fail later in the week.

I think we have at least 20% or more downside from the next local high.

However there is a slight possibility we may initiate a choppy uptrend lasting for the next couple of months, upto 1050. I am going to need a lot more evidence for it.

An intermediate term move from this point will not change anything in the big picture. SPX will eventually test 650 or lower.

Friday, November 21, 2008

Sold ES @ 766

for 20 handles

I got out early due to my personal schedule...

have a nice weekend everyone.

Thursday, November 20, 2008

Reflecting on what got the markets to this point

This post might rub some of you up the wrong way, but I think now is a good time to encourage you to spare some time thinking about the bigger picture and your place in it.

How do you think the markets got into this predicament? I'm not talking about specific things, such as ABCP, SIV's, TARP, N.I.N.J.A. Loans and all that - these all played their part as the 'means' to a particular end. 

Trade in exotic financial instruments, all-too-willing property 'investors', mortgage brokers putting loan proposals to illegal immigrants - there is a common thread running through these things. They all require a certain state of mind in order to even be considered, let alone acted upon.

I don't know about you but it seems pretty clear that the following ingredients are necessary in the state of mind of participants in order for these things (that in hindsight were clearly extremely imprudent dangerous and/or ventures) to become the 'norm':
  • naive (or blind) euphoric trust in others
  • greed (for more)
  • fear (for missing out on what everyone else is apparently benefitting from)
Now turn to the flipside...

No doubt a great many trading along with Atilla today made some significant profits.

But I would implore you - and I am thinking of some more than others based on some of the comments posted earlier today - to step back and reflect on the bigger picture and how you want to fit in it.

Ask yourself: are you exhibiting those very same characteristics that caused this bubble, just this time in the other direction? 

The state of mind that created this unholy bubble mess can wreak as much, if not more, havoc if employed to the downside. Such an attitude is not productive or helpful to anyone, in my honest opinion.

I am also guilty of this. I rode the fall into Oct 10 with Atilla, and on reflection some things I said at the time revealed my own self-centredness about the large profit margin I was making. 

That kind of thinking is unwise and destructive and will create more long term problems with you and the people around you than your profits will solve. I like to think I've learnt from that lapse in wisdom and balance on my part, and perhaps you can learn from my experience.

I hope this doesn't come across as 'preachy'. I mean to make a legitimate point for your thoughtful consideration. Sleep on it.

long ES @ 746

50% position

Covered everything at ES=755 level

closed all shorts

ES@755 for 125 point ,

TF@386 for 68 points ,

and

YM@7580 for 960 points profit

Another 4-Sigma move may be underway

I am seeing similar characteristics but it is extremely rare to have these type of moves in such a short period of time.

Last time I saw it coming, S&P dropped from 1000 to 830 in an hour.

I want believe that things will get better... I want to believe that we will have better economics , better employment, better social wellness but unfortunately what I am seeing right now tells me otherwise.

SPX may undercut 700 in a few hour or so. Again it is extremely rare to have such a move in a month , back to back but I have to be prepared for what I am seeing. I placed orders between SPX=580-650 to cover my positions in case it happens.

I wish everyone sanity calmness and best of luck in these tough times.

Wednesday, November 19, 2008

Into the oblivion...

Song for the plunge...

Here's the big question for the evening: 

...did John Mayer know he was channelling the future when he wrote this song about Atilla and doing the slow dance of death with Mrs Market???

This one gets my vote for the Official November 08 Plunge Theme Song



Enjoy!

John  ;-)

Holly Cow!

Yesterday was more than double the Oct 10 traffic... Are you shook up are you nervous?

I smell sharks liver again !




Tuesday, November 18, 2008

Tips and tricks regarding the new Disqus comments system

Dear all,

This is johneeboy3, one of your friendly neighbourhood moderators.

Atilla kindly offered for me to publish my thoughts and analysis on his site. It's clear from recent feedback, however, that you are all here mainly for Atilla's calls and analysis, and so please rest assured that I won't be soap-boxing on you any time soon!

But I will try to be at least a half-decent moderator, and it seems that posting a summary of how to fully exploit the new Disqus-based commenting system would be valuable to y'all. So here goes...

A note about speed

Yes, the disqus system is slower than the old blogger comments system, because it uses Java and Javascript to work it's magic. But the gain is worth the pain.

Special note for Mac users: I've found using the Disqus system under the Safari browser is much faster than under Firefox, probably due to the many optimisations Apple incorporated into it's Java subsystem.



Point Scoring System - give credit where it's due

Disqus has a point-scoring system - please make use of it because it provides a number of benefits, including:
  • helping the automated filters to block spammers and a$$holes, and
  • helps you when browsing the disqus system, as higher priority will be given to high-scoring posters in some views (as far as I can remember)

You can vote up (point-up) or vote down (point-down) a particular comment by clicking on the UP or DOWN arrows that are located just beside the commenters avatar. FYI: as your mouse is hovering over an arrow, the text under the posters ID changes to show you how many points the commenter currently has.
Here's a simple set of rules for scoring effectively:
  1. If the comment is spam, anti-social or aggressive, give it a point DOWN.
  2. If the comment is witty genius and made your day a bit lighter, give it a POINT UP
  3. If the comment is not anti-social or aggressive, but adds no real value to this blog, DON'T SCORE IT UP OR DOWN.
  4. If the comment has some great insight or technical analysis (whether it supports Atilla's calls or not) then give it a POINT UP (because all solid TA is welcome at xTrends)

Making best use of the threading mechanism

Please make use of the threading system - by that I mean if you want to reply to a specific comment, then click on the 'reply' link directly below the comment. This will cause your response to be posted as a child of the original post, rather than a new post.

New comment posts should only be made if you are commenting on something that no one else is already discussing. If it's already being discussed, post as a reply to the original commenter. This will keep everything easier to read.

Tip: You can reply via email

If someone posts a response to your comment, you should be notified of the response via email. In case you didn't notice, you can post a comment in reply simply by replying to the email notification, and your reply will be posted to xTrends. Easy!


Following xTrends comments - there's now many ways to skin that cat...

Here are some of the most useful ways to keep up-to-date with comments posted on xTrends:

Option A - Surf the comments as usual in your favourite browser. Here's some tips for surfing:
  • If you hover your mouse over the avatar of a commenter, it will bring up a summary of the most recent comments posted by this person. Note that this includes comments on other sites that use disqus also.
Option B - Monitor comments via your favourite feed/blog reader. Disqus makes all kinds of permutations and combinations of comments available as a standard RSS/blog feed. For example:
  • If you never want to miss another comment again, you can subscribe to a feed of all xTrends site comments, which can be found here: http://disqus.com/forums/xtrends/comments.rss
  • If you want to subscribe to all comments posted by Atilla, you can subscribe to the feed of all his comments, which can be found here: http://disqus.com/people/xtrends/comments.rss
  • If you want to track the comments of another commenter on xTrends, you can find the link to the feed of their comments by going to their "Profile Page" (hover mouse over their avatar, and click on "View Profile" link. On the profile page on the RHS will be a item labelled 'Feeds'. Click on this and some links will appear below it. The 'comments only' link is a link to an RSS-compatible feed of all comments by that person)
  • If you only want to subscribe to all comments for the current main post, you can find that link at the top of the list of comments in the link entitled 'Comments feed'.
Which blog reader should you use? One that seems to be popular for Windoze users is Tristana (Google it). One of the benefits of Tristana is that if can update the feed as quickly as once a minute, for those that want to stay right on top of the action. For those with some programming skills, try rss2email (that's what I use).

Got any other tips?

If anyone else has any speed-improvement tips or other tips and tricks that I've overlooked, please post them in the comments section.

Edit: Comments for this post are closed until I find out how to override the blogger comments system (seems like it has to be done for each post). LOL. Stay tuned.


Roundy roundy it goes...

shorted TF above 454

Testing DISQUIS

No more trolls on xTrends...

Monday, November 17, 2008

I expect SP500 to undercut 800 this week

I dont have a target yet but this could be a climactic week, closing near the lows unlike what I previously thought

I am fully short (intended position) S&P and Dow

50% ES, 50% YM

Short 50% YM @ 8540

Short 50% @ ES 880

Sold all longs at 878

The Silence of Camels

Back in August 2008, I had posted inflation adjusted charts, and predicted a sell off in commodities and commodity stocks before they got cut in half or more.

Here is a follow up.



Friday, November 14, 2008

Who would you want to see on xTrends ?

Please give me your suggestions , I will invite those who you wanna see here. Just name it, even Cramer ...

Your VIX was up again



And as seen from Equity P/C ratio, retail traders don't still believe that was the bottom... suggesting we may get a gap up and rally from the get go.

Thursday, November 13, 2008

Now there is one less shark in the killing zone...

Before


After:



Calling all shy whales to the action.

long SP @ 890-893

Will be buying TF and EMD on any pullback

Sold at 876

will buy back later today

Wednesday, November 12, 2008

This one seeks out his own speciality food....

The following is what some of you call "flux capacitor". Funny name isn't it? I didn't name it. After using it successfully for years, people began to call it "time machine" or "flux capacitor" metaphorically.

I use it to spot intermediate term bottoms, or those that produce minimum 100 S&P points rally. In normal times it worked flawlessly but it had never been tested in a crash like move when I designed it. If you consider the October sell off as a crash , then it worked there too because it helped me to spot Oct 10 and 28 bottoms successfully.

Well, as you can see, we have another signal in place, the most strongest I have ever seen. However there is a method to use this indicator in your trading.

When you have a signal like this, there are two possible scenarios for the next day (tomorrow):

1- If we gap down, we may sell off further in a scary way and market reverses massively to close in positive.

2- If we gap up, we rally little further in the morning then sell off severely until we test some important trend line from which we reverse and close in positive.

Both scenario ends with a reversal that is followed by more upside in near future. The minimum S&P point this setup produces from bottom to top is about 100 ES points.

In short, in both scenario, there will be more pain tomorrow followed by a massive reversal that will take us 100 or more S&P points from the low to top, the move lasts minimum 3 days.

Given the current amplitude of the indicator we have to gap up like 20-30 ES points... But we had too many bad news in AH... I still think we may gap up.




I expect the following price structure to form based on the above scenario. Intraday low is hard to pinpoint but we may as well make a new marginal low before reversing.



Ever tasted shark liver?

Comments enabled

Sorry for the inconvenience today, I had to activate moderation function during the trading hours to prevent trolls and charlatans littering the communication.

I removed the moderation, you can shoot freely now. (Hopefully we get lots of trolling in after hours for a nice gap up)

long TF @ 468

long ES @ 880

Accumulated large position around 880 for a swing trade (target 1050+)

We should print the low today

As I said yesterday, I expect S&P to print the swing low today (Nov, 12 Wednesday) which was the reason I got out of the longs yesterday.

There should be a sharp intraday reversal that should push the indices near the high of the session before the close.

There are two possible reversal areas depending on where we open. If we gap up, I expect 870-875 to be the low. If gap down, then 860 area could be it.

Once we print the low today, I expect a rally till option expiration next week.

Tuesday, November 11, 2008

The setup is intact.

The opening was a small breakdown that produced some sell off into the afternoon, but RUT performed much better as expected. The index bottomed out quickly in the morning and led the afternoon rally later.

The rally was a high probability event, so I positioned in RUT accordingly... we tested the breakdown , I closed all my positions near the high of the day. We then sold off into the close which was also obvious from the trend structures.

The bigger setup which supports higher prices over 1050+ on SPX is still intact. I will be looking to initiate longs in YM (Dow emini futures) and TF (Russell 2K emini futures) going forward.

Sold ES and TF at 913 and 495 respectively

for 23 point loss and 14 point gain

Friday, November 7, 2008

Looking good...

We have formed a compression-day today, as we expected yesterday.

Moreover, all major indices, namely, DJI, COMPQ, NDX and SPX formed inside-day pattern with proper volume readings. In other words, these indices saw higher volume yesterday implying yesterday was the low.

Yesterday was also closed with Equity Put/Call reading over 1 indicating that retail traders who I consider fadeable under certain conditions were leaning too hard to the downside.

Another interesting option event happened today around 10:00 AM. OEX put/call reading unusually surged. From what I saw, big blocks of out-of-money put options were sold by large traders who I consider smart money. These transactions also coincided with upside surge across the market. When volatility and premiums are this high, whales prefer to sell options against the market direction instead of purchasing in the direction of the market. So they sold puts instead of buying calls.

From COT data however, I am seeing bearish configuration among different groups of traders. But you should note that COT is reported at the close of every Tuesday. We were near SPX=1000 level on Tuesday and since then we dropped about 100 SPX points. This means this bearish COT configuration may already have played out. In other words, we do not know what the current positions of the traders are after the sell off.

Lastly and most importantly is the internal setup we have had earlier. McClellan Oscillator indicated that an internal initiation occurred early this week. This kind of power spikes on McO usually followed by a price correction which we already had and the correction leads to new price highs. In other words, S&P will likely make new swing highs over 1010 level in coming days/weeks. In this context, we should have looked for a short term low after the sell off.

Considering all these factors, I tent to ignore lagging COT data and I keep my bullish stand going forward.

This week was tough for me because I made my first bad trade over the last 4 months. Relying on the fact that the market would eventually print new swing highs in a few days (McO setup), I added to my positions on the downside instead of getting out of the trade. My average based on ES contract is 936 :
(5c*910 + 3c*937 + 2c*975 + c*991) / 11c = 936, turned out to be fairly large position. I expect S&P500 to test 1020-1050 range in a few days.

I am a student of the market and I got an important lesson from this experience. Overbought McO readings produce sharper and deeper sell offs in intermediate term downtrends unlike those overbought McO readings in intermediate term uptrend.

If the intermediate term trend was up, overbought McO would led to a consolidation or shallow pullback. I thought this was the case but we were in an intermediate term downtrend as evident from weekly MACDs and the pullback came stronger than I expected. Nevertheless, I expect this trade to work out just beautifully in a few days.

Atilla Demiray

Thursday, November 6, 2008

Expecting new swing highs on S&P in a week or two

I believe ES 910 level is an important low that should eventually lead to new swing highs on S&P500

As you can see in my previous post, overbought McClellan Oscillator was expected to gave a way to price correction which already happened and that new historical high on McClellan will likely lead to new price highs on S&P

Sunday, November 2, 2008

Internal initiation ?

I think this is a small internal initiation that will be followed by shallow price correction which should eventually lead to new swing highs in prices.