Friday, September 23, 2011

Friday of a Volatile Week, my charts playing out exactly

Please look back over the last week,  My theories and charts have been spot on.    However, playing these with real money has resulted in only minor gains because employing protective stops has seen many stops out.

Thursday, September 22, 2011

Buy puts AND calls

This is the H&S neckline, the H&S broke about 3%, so the bears will be salivating.   The last few times this happened a massive ramp occurred, the question is will alternation and recency theory mean that the opposite happens and we do actually drop into the 1000 zone for starters (or for QE3 justification)


This blue line is the Bernoulli 100 line (see both timeframe charts), it acted as support with a little punchthrough, which is fine, actually even "better".     Same strategy as from Monday...but puts and calls, because some bigger move is coming, however with VIX at 42, those options
are relatively expensive.

The Lower chart is the Great British Pound / USD Forex pair, aka Cable.    Cable is also on the B100 Channel line, on a well proven channel from March 2011.

Blood in the streets, time to buy long.   The cover line is extremely well defined.   Some punch through already occurred, cover S&P500 futures below 1005

Alternately, I may press the longs above the neckline if that occurs.

ANOTHER Head and Shoulders

Some famous past Head and Shoulders saw major bear losses when they broke the neckline by like 4% and then PPT rushed in to crush the bears.

That would be a good quick study to review the put call ratio at those times of ramp.

Right now, we just broke a head and shoulders that measures to around 1000, see charts

But support at ES 1111, which is the Bernoulli 100 channel (strong support) and the Big 50 Fibo from the first crisis Paulson 666 bottom (give me complete control or the world is going to hell in a hand basket! Paulson that is).

From CFC, still digesting this.

“Stages of Truth”

Remarks of Commissioner Bart Chilton before the Presidential Roundtable on Speculation in Commodity Markets, United Nations, New York, NY

September 22, 2011
Thank you and good morning. It is great to be here with my distinguished colleagues and friends on the panel. Thank you President Fernandez for your leadership on the issue of excessive speculation in commodity markets and the impact it may have on prices. Thank you, Senator Dorgan, for your leadership on this issue—and so many others—during your time in the United States Senate.
The 19th century German philosopher, Arthur Schopenhauer said, “All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” I think that rings very true in the area of market speculation. Back in 2008, when food prices were relatively high and crude oil was at record highs, the idea that excessive speculation might have had something to do with it was ridiculed. Exchanges ridiculed the idea. The banks and other very large traders ridiculed it, and, I must say, even some people at my own agency ridiculed it. Still, we know that Massive Passive traders, those with very large and fairly price-insensitive strategies, the likes of hedge funds, mutual funds, index funds and others who had not been very active in commodity markets before were pouring money into them at a blistering pace. When I say a blistering pace, I’m talking about $200 billion over a few short years—a blistering and blazing pace, indeed.
Then, fast forward to this year and we have seen even more speculation in markets than in 2008. Earlier this year, it became public that the number of speculative contracts grew by 64% in energy contracts and 20% in agriculture and metals when compared to 2008. The question is: does that affect the prices? Some researchers say no, not at all, nothing to see here. They contend price moves are a coincidence or based upon supply and demand. Other researchers quantify an absolute relationship between excessive speculation and prices. I’m talking well-respected researchers from Oxford, Princeton, Rice and many others.
I kept seeing these studies from the latter group out there at the same time that I was hearing from people in the industry that no such studies even existed. So, I compiled about fifty studies, papers and quotations and put them on our website at CFTC.Gov.
HT comment --Hey writer from CFC---why not put a link here to your 50 compiled studies after quoting the co-called ivy league authors.

I did so partly because it had seemed to me that the simple supply and demand rationale for higher energy and food prices this year and back in 2008 was very weak. There is no way anyone can explain oil prices going from $147.27 a barrel in June of 2008 to $30.28 in December of the same year based upon supply and demand. It simply can’t be done.
Last year Congress passed a law that mandates position limits in commodity markets in the United States. We are in the process of writing a rule to do just that. Still, there are many who fall into the second stage of Schopenhauer’s definition of truth:  they violently oppose position limits, even still. They dance on the head of a legal pin trying to find a way around them or they threaten lawsuits if we impose them.
From the beginning of all of this debate, I have accepted as self-evident the need for reasonable speculative position limits. We have actually had them in some agricultural markets for years. The world did not seem to end. Others have accepted as self-evident the likely impact of speculation on prices. President Fernandez has spoken out about it. I listened to President Sarkozy speak about it in Brussels a few months ago. President Obama has spoken about it repeatedly. We would not have the limits law without President Obama. The tremendous volatility we have seen in markets in recent months just can’t be justified purely as typical supply and demand fundamentals.
So, we’re working our way through those three stages of truth. I know some of you are seeing that same phenomena in other parts of the world. Some will ridicule and some violently oppose. Ultimately, there will be a large majority who accept the truth.
The next challenge is for nations to work cooperatively, as I know they already are, on financial regulatory reforms, including position limits. We need to ensure that to the extent that we can, respecting sovereignty of course, we do our best to harmonize rules and regulations. We need to learn from each other as we go through this process. Those nations that do so will reap a reward in my judgment in that they will make themselves more competitive, more efficient and effective. That will be good for markets, good for traders, but most importantly, good for consumers throughout the world.
Thank you again, especially to President Fernandez, for the opportunity to be with you today.

Wednesday, September 21, 2011

Fed day charts

Bucky looking like a serious breakout to the upside, but Euro is also "on edge" of bouncing up or breaking down.   I guess the logical thing is for the Euro to breakdown.

Bucky to run up.

And  everyone to scream for QE3.   Big Ben using some reverse pyschology methinking

End of the Beginning of the Mid Game

Opening Game, Middle Game, End Game....whats your favorite ...‎?

Opening game was QE1, QE2

Mid Game was QE2.5, and the so called Jobs Bill that might take a while to pass, so we are just in the beginning of the Mid-Game.

They have already put alot at risk, without noticeable positive results, well except that we didn't fall into a GD1 style malaise of zero business, zero jobs.   Ben's playbook must support Obama, so to fill the gap until jobs Bill is passed and working, Ben needs to to do than "twist" and shout.

How about this one?   They have kept "buying debt", but how about just retiring the debt, paying it off and not refinancing it?    This would reduce their balance sheet, convinve Joe Q public that things are on the right track.   (Con)findence is neeeded.   

This would also serve to ramp up equities, since adding money to the system will support higher prices as people try to buy "hard assets" i.e. pieces of companies, stock.   This will support the retirement systems that are heaviliy invested in the market and still behind.

BRING IN THE HELICOPTER.    Seriously, instead of rolling over debt, refinancing it, just print 500,000,000 and hand it to people as their various debt instrucments mature.   They can do this, physically.   I have heard it 100 times that they can't just print money, and the answer is...sure they can.     

Inflationary?   sure.   
Good for Gold?   Maybe, I am not sure how much fear is baked into price of gold.  
Bad for savers? Of course, your money becomes more and more worthless. 

Good for Equities (stocks), sure, why not expand the multiples of P/E.

Tuesday, September 20, 2011

Apathy in Blogosphere

The incredible apathy in the blogophere in the past has indicated an intermediate top.   Along with big Ben tick tocking to tomorrow, and the fall equinox.   This should be an interesting week.   

What would be wrong with buying puts and calls tomorrow morning and plan on one tripling and one going to zero?   The wrong part would be not doing it last week, but that all depends on the Vix, Theta, and all that Greek stuff.  

Why not be-long

Likely to be big moves tomorrow with Big Ben. 

Why not have a position, went long at 1209 ES (S&P 500 futures) on a breakout above KEE resistance.

Stop around 1206 to prevent a double bottom stop out.

Will move stop up later after hours.

And then ride the bull train if it shall be. 

Sunday, September 18, 2011

Market Internals Screen (X-ray)

Set up on TOS.   Unable to find put/call for CBOE, any of them (Total, Equities, Indices) on TOS, but each ticker symbol does has a put call ratio, which is a bit tricky to find, but not bad.    You wouldn't likely stumble across it though.

Another X-Ray shot on the Market Internals

My best interpretation of this one is that the market (US indices) goes up through the end of the FOMC and Equinox shenanigans, and then starts a wave down.

Look closely, this is a before and after shot of the New York Summation Index

Called Euro short on Aug 28th, since then it fell 8%

This was a near perfect call.  8% is a major move for a major currency.

Here was the call

Asset Class Totals and Dr Copper Priced in Real Money Gold

Drop a comment, klik some adz, sign up as a member, write your congressperson, whatever, DO something.

Dr Copper priced in gold is the red and blue lines in the first two charts.  

Xray of Market Internals

Hey, if you at all appreciate this stuff, consider going to some adz, as these help support some of the ancillary costs of being in the market.   Comment volume has also dropped to near zero, some bloggers are throwing in the towel completely, and others are pondering switching to pay sites.   Change is in the air, and the equinox is coming up also, to mesh with Fed Meeting.

Here is the first market internal X-ray, taken with less than 1 mSievert exposure, and 5 seconds to digest.

Clearly, volatility has formed a bull flag, that means volatility likely to continue going up.   However, I wouldn't be the farm on this Xray alone.

At the bottom is Hawaii  Trading's custom Vix, we call it VOS (Volatility on Steroids).    It is a volatility ratio, which we think is harder to "game", in other words, more likely to nail the truth.

And here is a link to all those above$VIX,$VXV,$VXN,$VXB,$VXO,$RVX,$VXD,TVIX,VXX,XIV|C

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