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

1611 comments by xTrenders :

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pennybandit said...

Thanks Attila, I have been following you and just wanted to say thanks for sharing. God bless!

Zeistgist said...

I found reading your blog very logically though I didn't understand most of it. What did I make out of reading your blog is that S&P 500 will go upto 1050 in days to come.
I am very new to this business, I justed started a week ago.
I want to learn right from the basics. Do you have any recommendations regarding reading material so that I can make something out of what you are saying, if you don't mind.

Radium said...

Taking notes on your McO remarks...pricelss :) I will be studying it all weekend to see if i can see what you have just mentioned. Anyone able to post a clear chart with that info for study..much appreciated

radium

Penn said...

Atilla, with regards to your trade sizing - are you saying that you currently have a position of 11,000 E-mini contracts open??????

Atilla M. Demiray said...

where did you get 11,000 number... no i dont have that much

Atilla M. Demiray said...

ooo I see... you thought 5K means 5000

No that K means a coefficient that I do not want to disclose because I dont want to disclose the size of my position

I will change that letter with C to prevent future misunderstandings

Penn said...

What does the K signify in the equation below?

(5K*910 + 3K*937 + 2K*975 + K*991) / 11K

Atilla M. Demiray said...

ooo I see... you thought 5K means 5000

No that K means a coefficient that I do not want to disclose because I dont want to disclose the size of my position

I will change that letter with C to prevent future misunderstandings

bubb said...

Ahhh good, I was shocked there for a moment! Thanks for posting the proportions for your positioning.

Joe said...

Nice update Atilla. Is there a likelihood the move can terminate under the previous swing highs based on MCO studies? My worse case scenario allows a top tad under 1000 (probable) for this up move. The most likely scenario is top of 1060+.

rally killer said...

Atilla,

Thank you for explaining the condition/reaction of the market. Your explanations are always incredibly clear and thus clarifying. I was a professor at one time in my life and I know that it takes effort to formulate a clear explanation for the masses. Thank you very much for your sharing your knowledge.

bill108 said...

atilla

the proportions of your trades were instructive-I have found it hard to control the urge to get in too fast-am working on it- have also had a problem in using effective instruments to execute trades are any options reliable in this high vix environment??

dougs charts said...

Your a machine Atilla.
I will have to take a look at that mco thing one of these days.
Nibbled on some uyg in ah. If market goes that one should go also and percent wise it did a bit better today. Its still a bit shaky but I hate to get in late. I still think ddm is the safest bet though.

Posted the chart on my blog.
cheers and thanks for all you do!

MY BLOG

buylo said...

looking forward to next week!

Tony said...

thnx for your help Atilla this week. You and your family have a good weekend.

Radium said...

Atilla said

My average based on ES contract is 836 :

(i think you mean 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.


______________________________________

Your avgeraging down in on this position...is typical how you would avg down? I know each trade is unique but as i posted previously i have always struggled with money management.

The way you played this seems extremely well thought out and even a loosing trade will now become a very profitable one for you..

where most of us will be happy to break even or post a small gain

do you have a rule of thumb for scaling into a postion..like open with 10% of portfolio for example?

Interesting stuff..to me this side of the game and managing the scaling in and out is what makes or breaks traders.

Radium

Tony said...

Atilla, one last question. Based on your post, i assume you expect 1030-1050 to test first before 870 level? thnx

Little Piggy said...

I suppose I should change my avatar to match everyone else's famous investors.

ssny2004 said...

Atilla said...

That is a good idea SSNY... I gather designer should implement some fee processing feature.

============

Atilla, You are most welcome, glad to contribute in small way

Excellent cogent post

peakskier said...

VIX going down big next week. Market going up! Shorts beware!

http://img443.imageshack.us/img443/1728/vix1xw8.png

http://img118.imageshack.us/img118/1050/vix2es3.png

Dave

Pokerden said...

Atilla,
Good calls today. I am a long time lurker :) While the MCO points to a short term up correction. Could that happen after a very sharp downturn?
Basically SPY looks like a PERFECT bear flag right now (here is my chart):
http://social.stocktock.com/profiles/blogs/bear-flag

thanks,
pokerden

tamas said...

Atilla,

Do you know who Immanuel Velikovsky is:

http://en.wikipedia.org/wiki/Immanuel_Velikovsky

projectsen said...

Thanks for the analysis Atilla. I enjoy reading it and observing it on the charts.

I have one question -- any hints you can provide on how you estimate the time of upcoming impulses? I'm doing ohkay with knowing then "where" -- but still not a lot of ideas on when it will happen.

Thanks again.

And now, it's Friday night and time to go out. Perhaps some Raki is in order.

~sen

mxsshelby said...

Hi Attila, I've been following your blog for a couple months now. I mostly lurk because I'm a beginner. I just wanted to let you know that I really appreciate you taking the time to post your thoughts and trades. I look forward to learn as much as I can from you and some of the other posters on here. Thanx

LearningWizard said...

Zeistgist, Atilla mentioned that the only investment book he really read was "Reminiscences of a Stock Operator". He picked up his trading skills through observations and experimenting.

I'm a beginner too and some books others recommended for me are: Steve Nixon's Japanese Candlestick charting techniques, Magee's TA of stock trends 9th, Schwager's Market Wizards and Covel's The Complete turtle trader.

Stammering Hank said...

Attila,

Regarding the blog privatization, I think it is probably a good idea...or some variation of it. I thought you had mentioned whales/institutions/pigmen could use it to their advantage. I suspect the same and would agree that some form of privatization would be good in order to prevent that and other undesirables.........

I'm an observer/lurker that is still learning and I love my day job. So I don't have that much to contribute.

I still remember your (xDCox) "scorch" call in the summer of '06. Man I should have listened. You definitely got my attention with that one.

Anyway, long and strong for next week!

stw007 said...

hi, testing post. I am new to this blog. Just want to say hello to everyone.

Howard said...

Attila,

Re: This week was tough for me because I made my first bad trade over the last 4 months.
---
I hope you are ok after this week, but I think you warned us on monday or tuesday, that it was time for you to make a mistake (of a reason I don't remember).

I have been a lurker since end of october.

Thank you for the blog and sharing your thougts.

Howard

H said...

Atilla

Really appreciate your posts. Have a great weekend

writersblock said...

Really enjoyed your post, this morning. I've never posted before because I'm still learning. If you take the blog private, please include me on your list. Thanks.

Salvador said...

Hey Atilla,

On the scalinng down...

How can we calcculate C ?

if i want to use the same money managemnts techniques, how can icalculate c for my trading ?

also on the way down, how did you decide where to add new positions ?

on important pivot points ? I see you added at 972 which is an important pivot point, around 940 also extreme important... and 912 huge pivot point...

is that the way you decide or do you work it another way ?


Let me know regarding that C thing... I only have a 3% position so far =/


wish i had added more, but thought we were going to visit 890

Vin said...

Salvador,

3% with the 100:1 leverage of a CFD is better than nothing at all. :) There will always be another trading opportunity.

Many posts ago, when another reader went all-in on a trade (see comments), Atilla posted the following advice:

----

Atilla M. Demiray said...

money management involves not only position size but position management, volatility and risk analysis

when you decide on a trade you must consider

risk/reward ratio
market volatility
adjust the size accordingly
manage your execution accordingly

position size=K*(total capital)/(vix*rr)
rr=risk reward ratio
vix=market volatility if you trade ES
K=a constant you chose based on your own postfolio risk

you have 1M
vix is at 60
you have a setup 1:2 ratio meaning you short at 900, stop 910, target 880
K=1

position size=34K for that particular trade

if your risk bracket higher, make that K=2 or 3

gah said...
This comment has been removed by the author.
gah said...
This comment has been removed by the author.
Bigelow said...

Atilla = AWESOME!

Bevets said...

A great week Attila. I appreciate your patience and sharing. All in with my "loose change".

Progress before perfection.

dhw said...

So the last 2 days of selling could have been fron citadel hedge fund selling due to margin calls.

http://www.chicagotribune.com/business/chi-081107citadel,0,7651513.story

Salvador said...

Blogger Vin said...

Salvador,

3% with the 100:1 leverage of a CFD is better than nothing at all. :) There will always be another trading opportunity.

Many posts ago, when another reader went all-in on a trade (see comments), Atilla posted the following advice:

-------------------------------

actually CFD's have leverage of 20, not 100... at least in my broker.

it's still a good paycheck dont get me wrong...

best sal

Salvador said...

gah,


yes please i'd like your spread sheet...


So for example, with the current trade:

K-1
Vix is at 55

I have for instance 100K$ total capital

RR - I dont know, but our target is 1000 pts and stop is 880 so the RR is 5 ? or we keep it 1:2 ?? if 1:2 is kept then the position should be...

1*100 000 /(55*1/2)= 3636$

correct? so if we were to fall to 880 i would add 2*3636... ?

my thing is finding the RR and the K

Salvador said...

gah,

tiers for you is the number of double downs you can get with an amount of capital right ?

What's a good tier number ? not too risky and not the most conservative.. i would say 4?

so if i also wanted to have some margin after the tier, i'd leave 50k for that margin so i'd have to calculate the tiers based on 50k as well...

50--25--12,5--6,125K , so my initial position would be 6k dollars. correct ?


thanks for the help and correct me if im wrong...

i'd like the spreadsheet if you dont mind...thanks

salvador veiga "symbol for emails" gmail.com

its everything together, where in quotes is the symbol

Greenie said...

Atilla,

Do you really recommend this Martingale style position sizing to the readers? I remember my brother trying it on roulette table and he always came back from Las Vegas with more money in his pocket than he went in with.

G.

CMaurice said...

The two days selling could have been Platinum Grove (Bloomberg) too. Thanks to Atilla for the work. Yeah, Myron Scholes blew up again.

Zeistgist said...

Could any one teach me money management with example.

Vin said...

Sal,

If the starting position in your example is 900, with a stop of 880 and target of 1000, your risk-reward ratio in Atilla's formula would be: 20:100 <==> 1:5.

The method also suggests position sizing at the various buy-in prices (991, 960, 930, etc), since RR scales appropriately.

Kristjan the bretty boy said...

Atilla.
First sorry if my english is not correct.

Looking the SPX chart i find it really bearish.
1)Daily
If u but the trendlines on you will see the rising wedge,(triangle) this is like u know bearish pattern.
2)Weekly it is looking even more bearis.All i can see there is the base formation or even a bear flag.

I really hope that im rong ,but it is a bit scary.

Salvador said...

Greenie said...

Atilla,

Do you really recommend this Martingale style position sizing to the readers? I remember my brother trying it on roulette table and he always came back from Las Vegas with more money in his pocket than he went in with.

G.
--------------------------

greenie the problem with roullettes is, from time to time there are streaks of 10 or more from the same colour...

also there is the case with the 00...

and the roulettes have a limit size of bets either a minimum and also a maximum which makes the tier really low reaaly low like 5 and a tier of 5 on a roulette is too little...

while in markets you can do this system in pivot points that are far from each other, because the more it goes down, the bigger the rebound...

markets function like elastic bands...

of course in between positions, there has to be some distance... atilla for example did it every 30 points...

991, 972, 940's and finally 910...


it makes no sense doing every 10 points or so because they are too close and doesnt provide a margin of safety....


i dont know if what i said is correct but it's the way i think...

maybe some other person can tell you more precisely

M said...

Hi Atilla.

Old lurker daily here for more than six months.
Your post today is your finest.
U are professional and professor of first degree.
I hope U continue this open forum.

Thanks again.

dougs charts said...

Do you know what to expect?
Do you know how the foreign markets
should act if bullish? Or bearish?
How can you manage money if you don't have an idea of what should be happening where?
I have added several of the foreign charts to my blog and also the bearish picture of our former leaders in the bull aapl and goog.
maybe these chart and thoughts will help you, or maybe they won't.
cheers
DOOM,GLOOM,and a thought for the BULLS

cheers

Radium said...

The roulette anology i dont think applies here or does it?

For example, playing roulette you can solely bet black or red. Payback 1:1 ratio.

The concept is You could play "follow the leader in roulette" In other words, you bet on the colour that just came up. Hoping for a streaks in the colour. For example black was just hit. so you bet $1 on black if its red next spin you double your bet to $2 and place the chips on red. if its black you then again double your bet to $4 and keep on doubling your bets until you eventually hit your colour. Then you reset back to the 1$ bet.

Now what messes things up in many casinos is the green 0 or 00. Also table limits can impact your bets.

plus the total bet amount adds up quickly

1 $1
2 $2
3 $4
4 $8
5 $16
6 $32
7 $64
8 $128
9 $256
10 $512

or $1023 invested to get your $1 back.

Those of you that have played roultte sson relaize that 10 alternating colours is not un common

Risk reward is messed up.

Now the market is a whole different game yet money mangement is similar and key. Something im studying and working on...

enjoy your weekeed

Radium

gah said...
This comment has been removed by the author.
Ajay said...

Great charts Doug!

ruli said...

Attila,

Regarding the blog privatization, to prevent institutional investor to take advantage (according to your poster Stammering Hank), I don't think that's a good idea. With half of the trading volume comes from Institutional trader, they are the ones that move the market. All the TA that have been widely studied are design to guess what large/smart traders are doing.

Regards

Foghat said...

Regarding that roulette Martingale thing, it can work, but I've found it can also leave you overly (stubbornly) focused on turning around the original trade. It's a strategy that is only taken (by definition) when you were wrong originally, and also wrong at each tier. When the trade eventually goes right, if you don't clear fast, you can get stuck with much more of a wrong-sided position than you would like to have when things turn against you again. And if you're 8 or 16x the size you originally wanted at the original trade, it can utterly destroy you. I usually take at least HALF down as soon as we get back to the second last tier. I've also learned over the years to spread my entry tiers at longer intervals to prevent overexposure. Patience is a virtue. Note I think this style of trading is fubar and has almost broken me on a few occasions. That's really what stops are there for.

Fader007 said...

All due respect to Atilla...an excellent trader. But I think this Martingale strategy is a poor strategy, one that ultimately will bury you.

For instance, in this particular trade, Atilla ended up with 11 investment units. What this means is that when he undertook the original trade at 991, he only had 1 unit, the other 10 units sitting on the sidelines. Had the trade worked out, he would have been profitable on less than 10% of his potential trading money. Put another way, when the market does as expected, you have the least amount of your money working for you.

Likewise, when the market moves against you, you have the maximum amount of money working against you, because you're adding to your position. Remember, initially Atilla expected the market to move lower. But as it moved lower without having first traded higher, he started buying. In other words, it looks as if the trade was not planned.

My opinion is that this Martingale strategy is a weak strategy. I think most of the really good trades that I've seen Atilla make (and there have been lots of them), the market did not move much against him right from the beginning.

I believe that if you backtest your trading results, it will prove that the best results come from buying the entire position at once, and exiting at once.

This assumes that you exit your position when it proves you wrongm even if temporarily.

In this particular case, Atilla could have exited the position, and then put the whole thing on lower, obviously with the benefit of hindsight.

Aalwayslearning said...

Everybody concentrated on Martingale strategy losing the main point. Atilla averaged down ONLY because he was absolutely sure that the market will go up.
His action based on his huge experience and unbelievable "feel" of the market. I am not sure that his strategy is useful
for the average trader unless you copy his action entirely.

Ajay said...

So if we do hit new swing highs in the next week or so, we would have completed an inverse head n shoulders pattern on all the major indexes. Then the final target would be around 1200 on the S&P. Thoughts?

ARAK said...

Market hasn't priced in this yet for Monday?

AIG asking for more?

The Black Hole Gets Bigger: AIG Back for Yet Another Bailout

Sprinkles said...
This comment has been removed by the author.
Sprinkles said...
This comment has been removed by the author.
Sprinkles said...

The whole MCO trading thesis pretty your own egotistical validation of a wrong position. On Nov 4th, the MCO printed 316, within liu of a significant bear market rally. The only historical point of significance that I could find that references similar MCO values is 8/22/2002, being close to the bear market bottom. If you take the 8/22/2002 reading of the MCO, which is a print of 241 and the low on 7/24/2002 which is a MCO of -222 and extrapolate the price action following 8/22/2002 to 10 trading days (2 weeks) - we see neither new swing highs, and we see a precipitous sell off. Specifically, the SPX moved from 962 on the 241 print of the MCO, to 870 on 9/05/2002 in about two week).

If you're basing your MCO readings on historical precipits - within bear markets (which we can all assume is apparent at the moment) - then the conclusion that we should make new swing highs is erronious. In stead, the peak of the MCO on 8/22/2002 at SPX 962 lead to a new low of SPX 770 on 10/10/2002 and concluded the bear market.

The time, the situation that is compelling this significant bear market are of no comparison in contrast to foretelling the low based on the MCO and oscillation within it. What precipitates from here may be a major downturn.

http://i37.tinypic.com/j5dt37.jpg

Atilla M. Demiray said...

I am sure you didn't work too hard to find the only occurrence in the past 30 years that an MCO over 250+ didn't produce the new swing highs before testing the lows.... because that was the previous bear market low. Congrats.

Unfortunately John made a little research and let people all know about that fact already if you ever bothered to read. So in short you are wrong statistically.

Atilla M. Demiray said...

ARAK said...

Market hasn't priced in this yet for Monday?

AIG asking for more?

The Black Hole Gets Bigger: AIG Back for Yet Another Bailout

Saturday, November 8, 2008 6:28:00 PM EST

---------------

GM's collapse + horrific unemployment + investment bank rumors = we rallied

Atilla M. Demiray said...

Aalwayslearning said...

Everybody concentrated on Martingale strategy losing the main point. Atilla averaged down ONLY because he was absolutely sure that the market will go up.

Saturday, November 8, 2008 6:05:00 PM EST

----------------

Exactly... Like I said that was the only reason for sticking the plan. Statistics.

ARAK said...

Atilla M. Demiray said...

I am sure you didn't work too hard to find the only occurrence in the past 30 years that an MCO over 250+ didn't produce the new swing highs before testing the lows.... because that was the previous bear market low. Congrats.

Unfortunately John made a little research and let people all know about that fact already if you ever bothered to read. So in short you are wrong statistically.

---------------------

Sprinkles is using Prophet within TOS. It doesn't go past 1994. So it would be hard for Sprinkles to analyze what Johnboy put up

Atilla M. Demiray said...

there is a methodology to average down.... most of the countertrend rallies come to 38.2% fib at least. If you scale in accordingly, even you are wrong about the big trend you get out when corrective move occurs... without loosing a dime

notice SPX closed around my average? That is because it is 38.2% fib
2n+1 incremental positioning gives you approximate 38.2% fib average always it is because center of the mass of the series of 2n+1 is always around 38.2 fib

Aalwayslearning said...

Atilla M. Demiray said...

there is a methodology to average down.... most of the countertrend rallies come to 38.2% fib at least. If you scale in accordingly, even you are wrong about the big trend you get out when corrective move occurs...

May I assume that you think that IT trend is up? I have a few forecasts for the next 3-5 month.
1. We are going up till the end of the year north of 1200
and then sell of to let's say 6-7 hundred.
2. We sell of hard before the end of november (between 7 and 8 hundred) then rally for a few month and then sell of hard.

May I ask your opinion.

Thanks

M.

Atilla M. Demiray said...

Aalwayslearning said...

Atilla M. Demiray said...

there is a methodology to average down.... most of the countertrend rallies come to 38.2% fib at least. If you scale in accordingly, even you are wrong about the big trend you get out when corrective move occurs...

May I assume that you think that IT trend is up? I have a few forecasts for the next 3-5 month.
1. We are going up till the end of the year north of 1200
and then sell of to let's say 6-7 hundred.
2. We sell of hard before the end of november (between 7 and 8 hundred) then rally for a few month and then sell of hard.

May I ask your opinion.

Thanks

M.

------------

No I dont think IT trend up, it may be turning up but we dont know yet.... but we are in a short term up trend and those 2 days of sell off was a correction... we should make new highs

that is the plan

trading said...

hi attila, great site, new here...

quick question, would highly appreciate your response...

i am stuck with QQQQ 35/36 calls Nov OEX, do you think I should hold on and will see rally and will get chance to unload or just get out now?

once again, thanks in advance.

Atilla M. Demiray said...

trading said...

hi attila, great site, new here...

quick question, would highly appreciate your response...

i am stuck with QQQQ 35/36 calls Nov OEX, do you think I should hold on and will see rally and will get chance to unload or just get out now?

once again, thanks in advance.

Saturday, November 8, 2008 8:43:00 PM EST

----------------

Qs may not see 35-36 so I would get rid of themwhen we get a bounce and while vix is high

Lawrence Chiu said...

You wrote: "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."

Can you tell us how to see this?

The CBOE website shows the put/call ratio but how to tell that big blocks of out-of-money puts were sold by large traders? If a put is sold, someone else is a buyer. Thank you for your guidance.

aymon said...

attila, will you looking to go short big time sometime this week once your target of s&p 1000+ is met?
thanks

Atilla M. Demiray said...

who else would sell 1000 contract blocks in a few minutes... large traders
transactions are visible on the terminal ...

Lawrence Chiu said...

On my blog, 'BxCapricorn' mentioned the following which sounds like it can help make the bullish case.

===
The International Swaps and Derivatives Association is much more interesting than they sound. In fact, if you watched their "ISDA Protocols" PDF, located on the left-hand side of their website

http://isda.org/

you'll notice that something wonderful has occurred. Their docket is empty. There are no further liquidations of large financial organizations scheduled.

My prediction? Dollar gets weaker. Market rallies and commodities make a substantial recovery.
===

Atilla M. Demiray said...

aymon said...

attila, will you looking to go short big time sometime this week once your target of s&p 1000+ is met?
thanks

Saturday, November 8, 2008 8:49:00 PM EST

------------------

People will keep shorting this upleg... gonna be painful for trained crowd

Lawrence Chiu said...

Atilla M. Demiray said...

who else would sell 1000 contract blocks in a few minutes... large traders
transactions are visible on the terminal ...

Saturday, November 8, 2008 8:50:00 PM EST

Do I need a Bloomberg to see this? I am new at this so sorry if this is a dumb question. All I can see at cboe is volume, but not actual transactions. A free website to see this would be great. Thank you.

Atilla M. Demiray said...

Lawrence Chiu said...

Atilla M. Demiray said...

who else would sell 1000 contract blocks in a few minutes... large traders
transactions are visible on the terminal ...

Saturday, November 8, 2008 8:50:00 PM EST

Do I need a Bloomberg to see this? I am new at this so sorry if this is a dumb question. All I can see at cboe is volume, but not actual transactions. A free website to see this would be great. Thank you.

Saturday, November 8, 2008 8:51:00 PM EST

-----------

you should be able to see the block on charts too... open 1 day 1 minute chart of the contract

Atilla M. Demiray said...

try OEX 400 strike

Atilla M. Demiray said...

puts

LearningWizard said...

Atilla, I have quite a few SPY 105 Nov calls. The time value decay has been a bitch (For some reason, it's more than theta, is that the norm?). When would be the best time and price for me to sell these?

Just thought of an idea for your new website while browsing other forums:
Have a storage where we can upload pictures of charts and post them in the discussion without linking to an external website.

Thanks again.

Atilla M. Demiray said...

LearningWizard said...

Atilla, I have quite a few SPY 105 Nov calls. The time value decay has been a bitch (For some reason, it's more than theta, is that the norm?). When would be the best time and price for me to sell these?

Just thought of an idea for your new website while browsing other forums:
Have a storage where we can upload pictures of charts and post them in the discussion without linking to an external website.

Thanks again.

Saturday, November 8, 2008 8:55:00 PM EST


------------

I am really not the one to ask about options... 105 is pretty far strike. i would get rid of them quick

LearningWizard said...

Do you see SPY going to >106 before Nov 21 in this move?

I got these dirt cheap, if they have a IV of $1, it's already big profit.

Atilla M. Demiray said...

LearningWizard said...

Do you see SPY going to >106 before Nov 21 in this move?

I got these dirt cheap, if they have a IV of $1, it's already big profit.

Saturday, November 8, 2008 9:01:00 PM EST
-----------------

You are asking me time and price.... we are going higher but how long it will take

I can not say anything about it

we may or we may not. options are gambling

Vin said...

LearningWizard,

Declining IV was killing the far OTM SPYs last week. (VIX didn't hit extreme highs during the 2-day fall.) I wouldn't get too greedy on a ramp, unless they're purely speculative quantities.

Lawrence Chiu said...

Thanks Atilla, I see the volume spike on OEX strike 400 puts (.OXBWT) on 1-min chart, but how to tell from chart if such a large block was bought or sold? Is it because it's a black candle on the chart?

jay said...
This comment has been removed by the author.
coption said...
This comment has been removed by the author.
LearningWizard said...

Gotcha, I'll let these go on Mon when SPY hits 975 :D. Thanks alot Atilla and Vin.

coption said...

don't be a fool. with this vix, option is only for day trading. otherwise, time-decay always eats you alive.

if u r really buy-side addictive, try some weekly. of course, u know u are gambling, and when u bought for overnight, u should be prepared to lose 100%. Therefore, there is no reason to sell 105c since it doesn't worth much. With two 40+ days, it should move.

if i am not wrong, some of SPY OTM calls still lost money even though market up 30 pts friday.

angus said...

LearningWizard said...
Atilla, I have quite a few SPY 105 Nov calls. The time value decay has been a bitch (For some reason, it's more than theta, is that the norm?). When would be the best time and price for me to sell these?

----------------------------------

learningwizard

Theta is sensitive to implied volatility and in the front month is also very sensitive to time to expiration and how OTM is the option.

So, volatility affected both your premium (vega) and your time decay (theta). Because you have OTM options expiring in a few days, theta also goes up exponentially every day.

You should use option pricing software to chart the various scenarios to understand when it should be best to unload these (based on whatever view you have on the market for the next days).

As a suggestion, don't trade front month contracts, as time decay shoots up exponentially in the last month. These should be used only as day trades.

angus said...

Lawrence Chiu said...
Thanks Atilla, I see the volume spike on OEX strike 400 puts (.OXBWT) on 1-min chart, but how to tell from chart if such a large block was bought or sold? Is it because it's a black candle on the chart?

-------------------------------

Hi lawrence,

Atilla said previously that you infer whether puts are bought or sold from the VIX

if VIX very high, then pros tend to sell these rather than buy them, so you can assume that since these blocks came in near the bottom when VIX was high, smart money were sellers not buyers

so, these ended up in small, piecemeal buyers' hands

Homer said...

With high VIX, sell options instead of buying. Even I was wrong with the direction, was able to get out fine.

Homer said...
This comment has been removed by the author.
Coyot01 said...

Atilla,
Look at this bullish triangle that expires in 10 days.

http://www.freeimagehosting.net/uploads/d059727c31.jpg

saahil said...

We broke below the 200 *month* moving average in October. We retested it from below and failed a few days ago. This is a tremendous resistance and it is surprising how many bulls are calling for higher prices in the face of this incredibly bearish development.
I have been scanning a lot of history to find what happens to stocks when they break the 200 month moving average. In every case I could find, they lose a minimum of 50% (usually more) after this happens. e.g., Citigroup broke its 200 mma at $28 and lost 67%. Same story with DELL ($21 to $12). For an index like SPX to break below its 200mma is a historical event. I expect the SPX to trade below 700 shortly, and that would be the bullish perspective. SPX 500 would be more in line with historical norms.

KC said...

FWIW I am seeing two scenarios for a run to 1050 or better.

I am currently playing SPY $5-$7 in the money front month options because of the current extreme premiums so I will use the SPY not the SPX.

I mostly play patterns observed in past moves. That means the following expected market action is based on past events that have the same form as the current activity.

The higher probability is for a gap up on Monday and a hard run to SPY 107.5 topping about Wednesday/Thursday of next week to be followed by about 2 weeks of soft down back to the 93-94 area bottoming after OPEX week and then hard up again to higher highs.

The below lower odds option also gets the SPY to 105 but it will be a wild ride getting there. On Monday there would be gap down and a sell off to about 88, a snap reversal to the 93-94 area by Tuesday, another drop to the 88 area on Wednesday, and then a strong rally to the 105 area completing before the end of OPEX week.

I saw this Friday and went flat at the close. Maybe the markets will do neither of the anticipated moves but assuming one of the two moves developes it will be very obvious within 30 minutes of Monday's open since the first option is looking for strong up and the second strong down.

KC

catherine said...

You can get leverage of 100:1 with spreadbetting and CFD's in London.
cmcmarkets.co.uk or igindex.co.uk for example.
No commissions and tight spreads 24 hours a day.

catherine said...

I have an account for spreadbetting with cmc markets so I know the up to date margins.
Spx 100:1 based on a spx of 1000.
Will be a bit less at a spx of 900

Greenie said...

Why would you want to go 100:1 leverage (i.e. 1% move in the wrong direction and you are out)? Please tell me, because I have no experience in CFD. I understand that in options the risk is limited and you can get high leverage.

jmz said...

Atilla,

Do you have an opinion on Crude Oil for this week and next few weeks?

Ronald said...

greenie CFDs with cmc is like betting with a bookie, you are dealing with OTC derivative with ur dealer at 100:1 leverage

suffice to say, when you bet with a bookie if you win too much...

also many stories of stop running... (legally in the contract last i saw from cmc aus cmc's numbers can vary compared to whats on the exchange)...

stay with exchange traded products

Dimastock said...

Huge Stimulus package in China announced. Here's the gapper most likely.

DMA said...

NOVEMBER 9, 2008, 8:48 A.M. ET
China Announces $586 Billion Stimulus Package

Lubes said...

TAIPEI, Nov 9 (Reuters) - Taiwan's central bank unexpectedly cut interest rates by 25 basis points on Sunday

Steve said...

Atilla,

Thank you for sharing your thoughts and technique about the market.

Cheers...

Gogal said...

Hi Atilla,
I have been following your blog for about past few weeks and learning a lot from you and the rest of the community. I really appreciate you taking time to provide insite into the market dynamics.

Gallo said...

The market has a funny way of constantly introducing you to yourself. Going back to the so called missed call, stochastics were way over bought which to me at the time told me this thing can't go much if any further without some consolidation. I ignored the major red flag in favor of wanting to be with the crowd. That's my issue. After the decline and reason took over, selling made no sense. So I have kept my position and even added at lower levels admittingly holding my breath when I did so. What matters is being comfortable with the trend even if it's short term. Reason always trumps emotion.

Mr. L said...

everyone ready for monday???

Eurobear said...

All set here, was a wild week. Looking and hoping for a gap up and a snappy rally. I'm in Nov $98 Calls so am likely to get killed by IV drop on next up day plus time erosion. I'm hoping next 2 days have enough to get them back in the money. Otherwise I'll be swallowing a loss.

Carrying a small position in SSO calls as well at $35 but its nothing to the SPY's.

katzo7 said...

eurobear,
Are you based in Europe? Do you play any of those stocks or concentrate in America.

dougs charts said...

Dumb question, what is iv drop?

Asian markets should explode tonight and will be fun to watch.
spx straight up to 970 tomorrow!

OMG word verification is
ROUTSPI
WHEW,COULD IT BE MORE OMINOUS???

katzo7 said...

Doug Charts
IV=implied volatility. When VIX is dropping it dramatically affects the price of options, do not ask how I know.

Ajay said...

iv is implied volatility for options.

katzo7 said...

From Investopia
n general, implied volatility increases when the market is bearish and decreases when the market is bullish. This is due to the common belief that bearish markets are more risky than bullish markets.

In addition to known factors such as market price, interest rate, expiration date, and strike price, implied volatility is used in calculating an option's premium. IV can be derived from a model such as the Black-Scholes Model.

katzo7 said...

ajay,
How long have you played the market? You seem very knowledgeable.

dougs charts said...

Oh, I get it. premiums are higher with risk, makes sense..
thanks

OMG word verification is
CHINASPLODES

just kidding, gotta have some fun..

Mr. L said...

china putting up close to 600 billion dollars in a stimulus plan, congrats Atilla, looks like major rally is coming just like we thought

katzo7 said...

And Doug, how long have you been doing this?
I want to spend some time on your site today.
Where are you based?

Eurobear said...

Based in Europe but only trade in the US.

Doug,
As was said IV is a factor of the VIX(or vice versa), its essentially a measurement of fear/risk. This is a factor in the price of any option. As the market rallies the fear subsides and so the impact of the IV on the price of the option drops.In my case once the SPYS go above $98 then the impact starts to lessen as teh options go in the money and every $1 in change in SPY will be $1 change in the option and there your profit or loss really starts to multiply and so the IV and time premium becomes less important.

angus said...

doug charts

your charts are very helpful as a criteria to assess any gap ups in Asia tonight, thanks!

on IV:

it reflects supply / demand for options, not true volatility

intuitively IV rises in the direction of fear

large and medium cap stocks fear is in the direction of declining prices (fear of shortage of demand for shares) => IV rises more as prices decline

small caps (thinly traded) stocks, commodities, and commodity stocks fear is in the direction of rising prices (fear of shortage of supply of shares for thinly traded stocks, fear of shortage of supply for commodities) => IV rises more as prices rise

e.g. dot com stock iv's were exploding as prices were exploding

iv of options on oil futures higher as oil pushed higher

katzo7 said...

You guys see the explanation by cnbs
08 on why the chop in the markets? It is in the third post on Slope of Hope.

Eurobear said...

Angus,
Did you get the royalties mattress stitched back up :) I'm sure you like me are breathing a little better over the weekend :)

Ajay said...

Katzo,
I used to be a buy and hold investor, but when my aapl stock went from 80 to 200 to 120 to 190, I started to do some research. By reading xTrends, SlopeofHope, evilspeculator, and a couple of textbooks, I now realize how little I know.

katzo7 said...

Yeah Angus. I for one really value your posts here.
It is much easier to be a part of this community (in my case) than to try to go it alone. From a multitude of opinions about the market, one can determine his/her own opinion.

katzo7 said...

ajay, where are you located?
I used to buy and hold also, but the market has changed dramatically with internet, etc. and this present market is crazy, no more buying and holding. My stops were being taken out left and right. But I would like to do that (buy and hold) at some point if there ever will be a long term trending market. Actually there may be now, trending down. I use eSignal also as a tool.
And Angus, how do you do your research?

katzo7 said...

I am located in southeastern Taxachusetts (MA)

Salvador said...

i'm located in Europe, and I trade European stuff as well...

Someone asked, just to let you know...

Best to you all

LearningWizard said...

Thank you China!!!

Angus, I'm playing with ivolatility.com to project my option prices. Volatility is an input variable. If I want to calculate my option's price when SPY is at 98, I need to input a corresponding volatility. How can I get that number? Thanks.

xvidivx said...

Thanks my government for stimulus package. LOL

Big asian rally will push gap up to 940 like atilla call

LearningWizard said...

$586B can do a world of good in the rural areas of China. I just hope that half of it doesn't go into the pockets of corrupted officials.

xvidivx, are you in China now?

dougs charts said...

Thanks for explanations guyz.



And Doug, how long have you been doing this?
I want to spend some time on your site today.
Where are you based?


10+ yrs, living in northerm MN where its good to do charts on cold snowy blowy days...
cheers

ARAK said...

katzo,

that is Taxachushitts populated by Massholes. good lord, the short term capital gains tax wants me to move back to Texas asap.

ARAK said...

For those of you doing options, there is a free options analysis tool called Options Oracle available at Samoasky.com

SamoaSky Options Oracle, Stock Options Analysis Tool

xvidivx said...

LearningWizard said...

$586B can do a world of good in the rural areas of China. I just hope that half of it doesn't go into the pockets of corrupted officials.

xvidivx, are you in China now?
------------------------------

yes, I am in China.

In my opinion about corruption in china was improve much more. Many corrupted officers were investigated and others have escape to overseas.

Plz remember Government is very young, Every country has corrupted problem when it's beginning development.

xvidivx said...

90% Chinese people believe our government and They has shown their ability in Sichuan earthquake May 2008.

Gallo said...

Agreed. This is a market to trade not invest in.

DMA said...

xvidivx

Are you from China ?

how is the market doing there

I only know the indeces.
have relly come down from high leveles.

I was looking for a site that present most of the bluechips.

maybe you know one in english.

thanks

katzo7 said...

Arak, you in Mass also?

ARAK said...

katzo,

I became a Masshole 2 yrs ago ... North of Boston here. How about yourself?

katzo7 said...

Been here forever. WE should get to together and trade some day.

ARAK said...

yep. where in Mass are you?

katzo7 said...

South coast, near Fall River. Hope you don't work for FIdelity. They are laying off 1300. Hey, how are these mutual funds going to advertise after this, Our fund is down 30%, invest with us.
lol

ARAK said...

katzo,

am a techie. survived the latest round of layoffs that hit on friday. who knows whether I survive the next round after jan. After 2000 and this year, I've survived 17 rounds of layoffs. sooner of later, the statistical probabilities have to catch up with me. these days, every day at work is keep your fingers crossed day

xvidivx said...

xvidivx

Are you from China ?

how is the market doing there

I only know the indeces.
have relly come down from high leveles.

I was looking for a site that present most of the bluechips.

maybe you know one in english.

thanks

--------------------
Hi

China market dropped more than 67% from 61240 to 1700.

Do u need chinese blue chips List or quote tools?

If u only wanna quote, Finance.yahoo.com and finance.google.com will be good

xvidivx said...

http://q.stock.sohu.com/cn/bk_20.shtml

here is chinese blue chips stock list(in chinese, U can translate vis google) with Symbol(six number) then U can quote them in GOogle and yahoo

LearningWizard said...

xvidivx, which brokerage do you use to trade US stocks in China?

LearningWizard said...

xvidivx, do you need to pay tax on your investment incomes? A friend from HK told me he doens't have to pay any tax on his investment gains.

angus said...

learningwizard

The implied term in implied volatility means that you cannot know its true value with certainty, you have to imply it from the Black-Scholes formula assuming you know the price of the option.

In fact, even assuming you know the price of the option, the mathematics of the calculation of IV is very complex since there is no closed end solution (no exact answer) except for approximation.

However, from practical standpoint, we can assume that implied volatility in today’s option prices reflect option market makers’ expectation of future volatility. O

n average, traders do price expectations in option premiums (i.e. with the exception of panicky situations or lack of volume, i.e. when supply and demand are distorted).

So, the way traders think about it is this:

Volatility in the B/S formula is the monthly percentage stock price fluctuation annualized.

So, let’s say the VIX is currently 75, this means that the market expects the S&P 500 to be up or down by 75% in a year from now.

Thus, if the S&P is worth $1 today, the market expects it to be worth $1.75 a year from now (let’s assume it goes up, same concept applies if it goes down).

Use the compounded monthly annualized return formula to find the daily movement that is priced in:

Trading days in 1 month = 250 / 12 = 20.83

(1.75 / 1) ^ (20.83 / 250) – 1 = 1.0477 – 1 = 4.77%

Hence, implied volatility (VIX) of 75 means market makers are pricing daily movements of 4.77% in the S&P.

You can use the above logic to find the volatility based on whatever you think the daily movements might be in your time frame (the only thing that changes is the 75 number).

Important thing is this:

For day trading, if you’ve paid 4.77% for daily movement, the stock goes your way, you’re making profit, and daily the stock moves 4.77%, get out because if volatility goes below what you paid, then you’re losing money.

Generally, not a good idea to buy calls in a bear market because you’ll be buying calls when stock is falling, which means you’ll be paying up for IV.

Pros who want to be bullish in a down market buy the stock and sell OTM calls (which are bought by retailers). This way you pocket the premium and the worst that can happen if you own the stock is that someone will buy it from you at a higher price ….

xvidivx said...

Blogger LearningWizard said...

xvidivx, which brokerage do you use to trade US stocks in China?

--------------------

Yes. I don't need pay tax

My broker account is Etrade

xvidivx said...

No one need pay tax in china, If they trade stock or other self incomes, Chinese Tax system only assess upon from corporation, Not individual.

catherine said...

Tax laws are usually dependent on where you live, not on the source.
Spreadbetting is tax free in the Uk for Uk residents but illegal or not available for US residents. There are a miriad of tax laws , witholding taxes .

I use 100:1 leverage at times for a number of reasons.
1. I need to post less with the firm so lessen my risk if they actuallly go bankrupt (which is not insignificant).
2. If I am margin called, I have to constantly make a decision to add to my account and it is a positve proactive thing. it keeps sharp money management.
3 It's useful occasionally when you are convinced on the direction.

I keep non trading money in other currencies and accounts.

xvidivx said...

catherine said...

Tax laws are usually dependent on where you live, not on the source.
Spreadbetting is tax free in the Uk for Uk residents but illegal or not available for US residents. There are a miriad of tax laws , witholding taxes .

I use 100:1 leverage at times for a number of reasons.
1. I need to post less with the firm so lessen my risk if they actuallly go bankrupt (which is not insignificant).
2. If I am margin called, I have to constantly make a decision to add to my account and it is a positve proactive thing. it keeps sharp money management.
3 It's useful occasionally when you are convinced on the direction.

I keep non trading money in other currencies and accounts.

-----------------

Correct

I submit W8 tax from instead W9 of urs, So I also don't need pay tax to usa

catherine said...

Ronald
I have traded consisently with cmc markets and igindex in sizes up to 4 m gbp and I have never had a problem. There are other firms as well.
I actually believe people in the US are not allowed to have spreadbet accounts for tax reasons.
Where else can you trade a position of £100 face value on a spread of 0.5 of a point on the spx?

katzo7 said...

God Angus, that was an excellent discussion of IV and options. Wow. Hey, there must be effective ways of playing options during high Volatility. How about In the money options.

catherine said...

Angus
An implied volatility of 75% does not mean the market expects the spx to move 75% in a year.
Vol = square root of 250 trading days. = 15% approx
So 75% vol means that it expects the market to move 5% a day on a closing basis. It does not say anything about up, down or size of annual move. 5% cam be up one day and down the next and could be unch in a year.

catherine said...

katzo
An in the money put has exactly the same implied vol as an out of the money call and vice versa.
Market markers price strikes only and are indifferent to whether it is a put or a call, only the strike price .
This is the basics of put/ call parity theory.
Long put + long cash = call and vice versa.

DMA said...

xvidivx

Thanks, much help

katzo7 said...

Thanks Catherine,
So in a highly volatile market, there is no workable strategy in using options, other than maybe day trading them?

catherine said...

Katzo = there are lots of strategies for the big picture but can be difficult to structure if not a lot of experience. Do you know basic strategies ie butterflies, strangles etc

katzo7 said...

Catherine, No I do not.

Chris said...
This comment has been removed by the author.
Chris said...
This comment has been removed by the author.
LearningWizard said...

Katzo,

It's buying/selling a combination of calls and/or puts at same/different strikes to get the desired payoff. Draw the payoff graphs of the positions and add them together (options oracle can graph this for you.)

http://en.wikipedia.org/wiki/Options_strategies

LearningWizard said...

Assuming SPY will hit 100 with high probability of going to 103 some time next week, the best strategy for me right now is to sell my 105 calls and buy some closer strikes like 98 calls so I don't get eaten by IV drop. Is that correct?

Thanks for all the help.

Marco said...

Long time reader, first time poster. Just wanted to say: Atilla, thank-you for sharing your helpful insights. I really hope you keep this blog open despite the disrespectful posters that undermine the spirit of this thread. Disagreement is often valuable(it's constructive to hear the other side of the trade)but disrespect is never useful.

johnboy - Moderator said...

Happy new week, all.

Had to fold my 'puter up for the weekend to take a breather. Just caught up on all the comments.

If I get time today I will repost my additional comments regarding Atilla's MCO play that is currently in the works, just so everybody is duly informed.

There's been some interesting comments posted over the weekend and I'd like to throw my two cents in if I get time.

It's gonna be an interesting week!

Eurobear said...

IV impact is still there with $98 Calls, you need to go further into the money to reduce down the percentage impact of volatility and time decay(since you only have 10 days left) on the investment.

If the theory is right then your gains will be quicker as they change on the option will be 100% of any upside on the SPY shares if they are in the money. However you'll need to reduce down your leverage and increase the money at risk as a result.

There may be a smarter and more comlex approach but moving form 105 to 98 doesn't IMHO fix the issue for you.

Not adding to a losing position is also an option here. Vix won't collapse completely in a day but its going to be a big big drag

Salvador said...

xvdix said:

Correct

I submit W8 tax from instead W9 of urs, So I also don't need pay tax to usa


------------------------

but you have to pay dividends right ?

dividends are witheld...unfortunately we get double taxed on dividends, on long term portfolios...

even with tthe W8 form...I get dividends withold in USA at 15%, and then ttaxed for dividends here in Portugal...but capital gains i dont get taxed

johnboy - Moderator said...

My hot question of the day for Atilla:

Atilla, did you decrease your position size at the end of the day on friday?

The closing price on ES got you back just a hair above breakeven, so if you didn't reduce your longs back to your original size I'd be intrigued to know why (for example, are you even more convinced about the outcome now and therefore comfortable to have such a relatively large position open)?

V interested to know.

Cheers

Johnboy

Eurobear said...

If he sold he would have said. I doubt he did as his thesis is still in play. Why bail now when its about to pay off. He's taken the risk, so now wait for the reward.

Marco said...

Don't think he sold...he was pretty sure we would have a gap up Monday.

Radium said...

@ Johnboy....



Atilla M. Demiray said...

yes holdin

Friday, November 7, 2008 3:51:00 PM EST
Blogger Atilla M. Demiray said...

unless we test 945 before 4:15

___________________________________

I look for ward to your MCO post if you have time. Thanks man!!!

johnboy - Moderator said...

Gents,

I wasn't asking if he closed ALL his longs, just if he reduced his exposure, b/c it seems to me that after exponentially increasing his longs as the market moved against him, he was then committed to many orders of magnitude bigger than has initial position.

If he was always totally comfortable going in as hard as he did at his last buy, then of course there is no reason to ease back, but from his comments it seems as though he got in deeper than he was totally comfortable with, at least at some stage.

My trading rules would have told me to ease back on my positions once the price gave me the opportunity to do so - such as at fridays lows with no loss.

But my trading rules aren't Atilla's, and I don't have any special religous connection to my rules and will gladly drop them in favour of something that makes more sense.

I hope you can see where I'm coming from.

Thus the question. But Atilla's probably enjoying his weekend now, so it's prolly the wrong time to ask.

johnboy - Moderator said...

....if Fridays action put some more evidence on the table in support of the validity of his MCO play, then I can fully understand why he might elect to keep his current position size. If so, what was that evidence?

I suspect that the answer may be (as he indicated yesterday) that something has tipped him off to a breakaway gap up tomorrow, at which point he could decide if he wants to reduce his positions then (with a tidy profit thrown in). But it's only a suspicion.

Mr_Lahey said...

Look at that beautiful gap up in ES futures! :)

floyd20 said...

What's a good site to get live futures quotes? Bloomberg.com seems to be delayed.

ARAK said...

floyd20 said...

What's a good site to get live futures quotes? Bloomberg.com seems to be delayed.

-----------------

Realtime link for Dec 08 SPX futures (ES)

johnboy - Moderator said...

ARAK,

Yes, I saw the upmove in ES. What can I say, Atilla strikes again!

Spot gold seems to be forming a triangle on the hourly chart.

Aum Namoh Shivay said...

John Boy can you paste the chart for Gold

Greenie said...

"My trading rules would have told me to ease back on my positions once the price gave me the opportunity to do so - such as at fridays lows with no loss."

You are too rigid and are working under the assumption that this trade by Atilla was a mistake, and so it needs to be fixed as soon as one gets a chance. However, bulk of the position was taken at prices below Friday's close. So, you need to look at where the market is going and not get biased by what it did in the past that made the initial positioning wrong (sharp 10% drop in two days).

However, I do acknowledge that rigidity helps in keeping the losses low, but profits stay low as well.

floyd20 said...

ARAK said...
floyd20 said...

What's a good site to get live futures quotes? Bloomberg.com seems to be delayed.

-----------------

Realtime link for Dec 08 SPX futures (ES)

--------------------

Grazie!

Shawn said...

Atilla,

China just announce USD$585 Billion Stimulus today.

Has china bottomed? I know your initial target was ShangHai 2000. I have been thinking 1500. But with this stimulus plan, I am not so sure now.

After reading about the details, it seems like this is something in their budget plan all along -- infrastructure investment all through year 2010 with $585 B.

Really appreciate if you can comment a few words on this. Thanks.

China USD$585 Billion Stimulus

chris said...

BGU - 3x New leveraged ETF

johnboy - Moderator said...

Greenie,

I hear what you're saying, and respect it too - from observing it seems you're a seasoned trader from whom I could learn a lot.

However, I'm not disputing the correctness of his forecast (ES > 1000+), but my interpretation of Atilla's recent posts is that he admits he mistimed his original entry (and we've all done that before).

Even according to my more 'rigid' trading rules, I would keep my much-larger-than-originally-planned positions open if I new data that gave more support to the original forecast. But absent of any new data, I would have a hard time justifying holding my much-larger-than-originally-planned longs if I had the opportunity to reduce them at a good price mid-way through the play.

But, as I said, my rules are not my religion. Would love to hear Atilla's take on why he's comfortable with his current position size.

johnboy - Moderator said...

Blogger Aum Namoh Shivay said...

John Boy can you paste the chart for Gold

----

Sorry - it's running on a different terminal at the moment and I don't have an easy way to post a screenshot right at the moment

katzo7 said...

Anyone venture a guess on what type of indicators he uses to predict gap ups, etc.? Or is it instinct?
Uncanny.
There are many calling for a pop in this market. Makes me scared as this market moves in non-linear ways.
Hope you had a great weekend Johnboy.
SInce you are n Australia, you must trade at night right? When do you sleep? On the job?
lol

Atilla M. Demiray said...

johnboy,
I stayed fully long. At my breakeven level which is usually 38% fib based on my scale-in technique, if the rally was corrective unlike what I expected, market would reverse to the downside into the close of friday. But opposite happened , we sharply rallied towards the pivot indicated we should clear 941 with a gap up.

coption said...

johnboy, if you follow atilla all friday, you know he was getting more and more comfortable with his trade as time went by. He increased his target from 930 to 945, and said he is expecting 1050 now(of course this can change any minute). I was so heavy and lightened some AH Friday, but he refused sell a single contract.

Atilla is just amazing.

coption said...

sorry, didn't see u coming, atilla.

johnboy - Moderator said...

Katzo...

Yeah, I trade at night. It's a killer. I'm in Australia.

I stayed up all night on Friday, and my account went basically nowhere - unfortunately. But I managed to piss off my wife by being out on the couch all night. So I guess that means it was a net loss ;-)

But it was fascinating action.

I nearly choked on my hot chocolate when Atilla made the dildo comment.

Atilla M. Demiray said...

BTW, there is a chance we may fill this gap fully

That is, we may test ES 930 in the morning, that will give more power to the bulls.

Atilla M. Demiray said...

unless spy opens above 95.75

which will mean we wont fill the gap,

Radium said...

johnboy - Moderator said...



I stayed up all night on Friday, and my account went basically nowhere - unfortunately. But I managed to piss off my wife by being out on the couch all night. So I guess that means it was a net loss ;-)
____________________________________

Well we live parallels lives LOL eventhough you are on the other side of the planet.

Im not allowed back into the bedroom until i make some money back LOL!!!

trading said...

johnboy,

what is your opinion on gold, does it go down more, and what would be the good entry price for physical gold?

Atilla M. Demiray said...

where do you guys need SPX to be allowed into bedroom again

ROLLER said...

weekly pivot point again is at 925 ... we're up over 17 points in an hour, at this rate there will be nothing left to buy!

coption said...

atilla, any comments on commodities, especially, oil, ag, and metals...

Radium said...

Atilla M. Demiray said...

where do you guys need SPX to be allowed into bedroom again

____________________________________

LOL

1500 would be nice ;)

No seriously ive been kicked a bit here but still in the game. And able to put some money to work so i should be back in soon :)

johnboy - Moderator said...

trading,

My opinion on physical gold is that is has further to go down. That view is boosted by the fact that Atilla is also bearish gold in the near term

There are some LT trendlines which I think Gold has to test before it has a chance of getting bullish again.

There's some around 650, but others around as low as $450 (believe it or not).

That being said, I'm a major d*ck for not buying gold back when it was $600 or so, knowing what I new would happen to the AUD. For an Aussie, buying gold back then would still be safe trade in AUD terms. I'm concerned that AUD will deteriorate so badly that when XAU/USD bottoms I'll still be paying more than when XAU was $600ish and AUD/USD was 90+

Atilla M. Demiray said...

coption said...

atilla, any comments on commodities, especially, oil, ag, and metals...

Sunday, November 9, 2008 7:09:00 PM EST

----------------------

I think they may test Oct 10 lows in coming months

katzo7 said...

Radium,
looks like you will have to do well or start cruising some bars. lol
But, sometimes the couch is better. I am in Mass. and get up at 5 am every morning to check out what is going on and who has posted what. Love it.
BTW, Atilla never has to deal with this couch thing as he always does well.

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