/ES - Inverse Head and shoulders pattern

Current market update here

Chart below with notation, click to enlarge. Keep an eye open for this pattern; we might trade different ideas though.

Market update

Previous update here

What did we say in the previous update?

At SPX ~ 1978 on Sept 15th, we said "The odds of the market becoming bearish again have increased as our guage indicates below and primed for the market to move south. "

Here we are today at SPX 1923 after a low of SPX 1871 2 days back. I hope you made the best of the market going down.

What did we do after the previous update?

At the time of previous update, we were positioned all bearish in all time frames. The market spiked up in FOMC's bullishness to > SPX 2000 and then went down for the last 2 weeks. We covered the ST short positions on the downturn. Not at the bottom but on the rebound at SPX 1890. 

I hope you got the summary of my post and traded the same way! When in doubt, ask questions. Simple. 

Why was this blog quiet for 15 days?

When there is no change in the update, no posts are done. 

Traders are often frenzy aiming for 100% in 10 days or 1000% returns in 90 days. Come on, people. Be modest in your expectations. And then trade calmly. You don't have to flipflop your positions every single minute to score big annually. 

You get the outlook correct. You get in the positions. If you are wrong, get stopped out. Otherwise you have a chance to score 2 - 3% on the ST. Few scores like this will take your account to 20 - 30% up annually. Trading every minute takes your account to zero in no time, Believe me.

Current market update

As the chart below indicates, the market is primed for ST (short term) neutral to bullish. We use other guages as well to position ourselves, which currently indicate for a bounce short term.

ST - Buy

IT/ LT - Sell

Our positions

This is a counter trend ST move against IT/ LT bearish outlook. Usually we position 50% of our account in ST, 20% in IT, 30% in LT. Since this is a counter trend move, we position only 30% of our account in ST.

Always remember, we are mostly right. We are not always right. When we are wrong, that is when stops are useful for us, stops are useful for you as well.  

Good luck trading to all! 

What happens next - part 1

Yesterday we tried something foolish  , more on that foolishness in the next blog post. But, let's try to understand where we stand in this market "crash" and what is next. 

Ivanoff suggests this is a market bottom like Oct. 2014. Technical trader says puts haven't been this high since March 2007, hence this is THE BOTTOM. Is it? May be both are right. What if they aren't right? Are we trying to playing a guessing game on who is right or wrong? Are we gambling with our money on guessing?

I am going to post tomorrow what our game plan is. Hence, watch out!

1st let's look the current situation from my perspective. Last market update was this. Our market guage suggested a decline. We got a 3% decline. So, what is the next scenario? Chart below.

1) Market bottom like Ivanoff suggests and bear crushing rally!

2) What if market declines further for 1-2 days and then rally for few days and further decline?

3) Who knows what happens? And why exactly are we trying to guess!

This post is about perspective, so let's just do that. Chart below. 

More puts have been bought in several instances before. And does more puts bought = harder the market crash? I don't think there is a linear relationship between extent of market decline vs puts. It is not wise to guess based on "VIX hasn't risen more ever" or "puts are high" this time. 

So, what do we do? That is for tomorrow. Thanks...........

Market update

Previous update here

We had to post the previous update to guide ST longs on when to close the position and what levels are important. The /ES futures market was down 15 handles, hence defining levels was important. As posted yesterday, market closed below /ES 2060 and /ES 2035 as well. 

ST - changed from buy to sell

IT - had been a sell signal since July 26

LT - changed to sell from buy

Our options machine is in the "sell" zone, so exercise caution. Chart below. Could this sell move be a headfake? Well, may be, but let the market tell us that point. We are confident to read the charts when that happens.

I am a contrarian but I do follow the charts to identify the trend. I do not play counter trend moves though. Being a contrarian and a counter trend trader are quite different. 

We will post an update when the ST trend changes.

GLTA!

Market update

Previous market update here

We do not have a change in the market update as of now

VST/ ST - Sell

IT - Sell

LT - Buy

We mentioned that we will take a short position should the market close below SPX 2095. The index did close below 2095 on 08/04 and we did open a short position. However, we closed the position the next day as the market closed above it. 

In short, we do not hold a ST position now. The above update holds good until the next signal comes in. But, we did enter the warning (for the bears) territory already (see chart below). The confirmation would be a turn below the blue line that the turn (to buy) is in place. As long as the indicator is above the blue line, then the bears don't need to worry. I don't rue a missed chance to be short now, sometimes it happens. This stance is for the ST position only. We do hold a IT short position though.

If I were holding short positions now, I would not close the position. Coz we only gained like ~ 1% + with this sell signal , but I would have stops above SPX 2105.

We will keep you posted, GLTA!

Market update

Previous market update here

ST - changed to sell from buy as of close on 07/24

IT - changed to sell from buy as of close on 07/24

LT - buy

ST position: In our previous market update, we posted that we are taking 50% of our position off at 2.5% profit and 25% stopped at 2100. There are times when scaling off seems dumb, for example when the swing trade results in 10% or so. But, that's the reason why we have some left on the table. If the market conntinues in the same direction of our trade, so be it, we will have our chips there. Also, we were not scaling off for no reason. We had this warning sign (chart below) on 07/21. 

IT: IT changed to sell from buy. Previous signal was on 07/17 at SPX 2126. Which is a ~ 2.2% loss of our position. IT loss eats away our ST profits. Ah, humbug!

Anyway, good luck to all! 

Market update

Previous market update here

My ST signals have been on a sell since 3 weeks. No change yet and we didn't get a buy signal yet. Since something "greek" is going on, let us look at one simple chart. The support for the $SPX lies in the ~ 2065 - 2070 area. A flush below this strong level, there is thin support at the ~ 2040 level. Below that, at the ~ 1980 level. The US market futures are down about 1.5% at this time but remember that it is only the daily close on the actual indices that matter.

We were on a "sell" signal since 3 weeks based on our indicators (one of them below in the chart). You might be wondering what we did in the last 3 weeks. We don't trade only the buy and sell signals. In addition to the flipping of positions during these signals, we take advantage of the dips and rips by scaling in and out. In other words, if the market moves in the direction of our trade, we do take some chips off the table. That ensures that we book our profits. Please read our trading methodology. The market has indeed come to the ~ 2070 level twice in the last 3 weeks. Some of the positions were partially closed when that happened. This is the 3rd time we are about that level. 

What happens tomorrow? I have no idea. Be careful out there. Use stops, and do not over trade on days like this.  I am not necessarily saying we will crash tomorrow but some caution should be exerted. There is always another tomorrow!

GLTA!

Market update

ST/ VST turned to sell

IT/ LT/ VLT - Buy

 

Previous update here 

Market update

VST/ ST - On a buy