Thursday, June 13, 2013
AMZN was one of 7 new positions opened yesterday, all with double digit gains today except for AAPL which is at a + 4% gain. I mentioned maybe taking some profits from VXX Puts opened yesterday and I did go ahead and close the AMZN Call opened yesterday at 3:48 so there was about 1 day of market exposure. I believe yesterday was the day to set up most of these trades, but we found several today that looked good as well, in fact today's addition of the XLE call position is the top performer and for those who prefer to stick to equities, ERX (3x Energy Bull) was also in the same post (+5.37% today). Here's the reason I decided to close the AMZN position.
AMZN 1 min 3c chart, the green arrow is when the position was opened yesterday, toward the end of the day, like many stocks, the 1 min chart was going negative.
So was the 2 and 3 min as seen above.
I mentioned earlier that I suspect we get a pullback tomorrow in to a Friday Op-Ex pin (yes even the weeklies). I feel like the other positions were worth keeping open and letting them continue working next week.
AMZN's 5 min chart is still leading positive so there's more gas in the tank, my intention was to take the 1-day gain and re-open the position at a more favorable price.
Most of the other positions I felt fine with holding until next week when I think there's time for a more sustained psychological push to maintain pressure on the shorts and letting retail do the heavy lifting which is the entire reason for this set up since the SPX triangle.
At the $15.95 fillAMZN came in at +25.6% for a day.
As far as the rank, this again isn't bragging, this is a tracking portfolio, not a model portfolio. If it were a model portfolio the performance would be far better because it wouldn't be diluted by the number of longer and shorter term positions I'm tracking, but the point is sentiment.
The last sentiment update from the stream was earlier and the "Bulls" didn't want to buy, citing weak volume. I know it doesn't make sense and it's not a blanket statement, but often short squeezes are on light volume until they hit a cluster of stops that are usually at some significant price pattern, support/resistance, whole numbers, moving averages, etc.
I think since the advent of HFTs, algos can keep a low volume, steady bid in the market ramping it higher pretty easily.
As for bear markets, the hallmark of a bear market is low volume, sure you have initial breaks and capitulation events, but on average volume is pretty low and you typically have nearly as many up days as you do down days, the difference is in that during a bear market, the bulk of the gains are made in a few single days with large moves.
On to the ranking, which again just goes to show where the majority of traders were looking.
The weekly rank is actually 5 of 742, the red is the SPX's weekly percentage move.
The monthly was 18 of 1036
Most of these gains were simply from waiting until the right moment and hitting it, that was yesterday.
I'm not too concerned with tomorrow, I'm more looking toward next week, you saw those longer charts of the Index Futures, those are some insane signals. Perhaps tomorrow we'll be able to enter some positions on a pullback; it's hard to say what the move will be, an op-ex pin? Keeping the pressure on the shorts? Throwing the bears a bone in which they think there's no follow through on a day like today, giving them confidence to "sell the rip" or short it as it were?
I'm going to take a close look at the internals and some assets and I'll be back with observations.
Posted by Brandt at 7:13 PM
Wednesday, June 12, 2013
This is a rare glimpse of a daily Wrap post for Wolf on Wall Street members, in this post however I go in to some detail as to what we expect from the market as far a the next directional moves, when to some degree and what we expect after that. I also cover what is ACTUALLY moving the market and why it's doomed to fail badly. There a lot of great information here taken from months of 3C charts, looking at all kinds of assets from Treasuries to credit, equities, volatility, leading indicators, breadth indicators and more, FINALLY, ALL OF THE PEICES FIT AND WE ARE IN THE RIGHT PLACE AT THE RIGHT TIME, you can see just from our short term trades that are racking up double digit wins nearly everyday using options.
Wolf on Wall Street Market Wrap and Market Expectations: Insane Volatility
Tuesday, June 11th 2013 Posted by: Brandt
That's what I would call it and maybe it has just been so long since I've seen it like this that I don't recall, but in many ways, this seems to be one of the most volatile markets I can remember and it hasn't even really gone in to full on panic mode yet.
Much of the volatility isn't as evident in stocks as other areas, although I'd definitely say the volatility between the ups and downs and intraday moves is certainly there, it's other assets like the Japanese Yen which was up 3% today to make the biggest 1-day move since Q2 of 2010 or 3 years. For a look at the overnight Yen & USD/JPY volatility (not only after the BOJ statement, but after that around 3 a.m.), check the pre-market post appropriately titled, "Goldman Strikes Again" as you might remember their weekend call to buy Nikkei futures ahead of Tuesday's BOJ meeting...
If you took Goldman's call, as usual, you'd be upside down, Wall Street doesn't give out free advice, not that is useful for you.
Before we go any further, I thought we might put things in perspective, this may change how you feel about positioning, having some wider stops and sitting through a little volatility because these Leading Indicators have never been so disconnected from the SPX (in green) as far back as I can remember.
Risk assets should move together, commodities above are a risk asset, they stopped moving with the SPX because of a global economic slowdown, however stocks have been supported by QE, but that's just about to wrap up, there's some reversion to the mean and then there's actual fear and panic.
"Credit Leads, Stocks follow", then this new 2013 low, the lowest of the year in High Yield credit vs the SPX is not good at all.
FCT as a sentiment indicator is massively dislocated.
The $AUD as a leading FX asset is blown.
The Euro that use to track the market has been blown for some time.
HIO as a sentiment indicator is making a huge dislocation.
High Yield Corp[. Credit/HYG is perhaps the worst, I've never seen it this bad, we've seen some ugly moves down in the market on divergences that were 1/10th or less, of this one.
Junk Credit is doing the same.
Bottom line, this market is FRIED. If I had to allocate all my money today and not touch it for 6 months, I'd be short equities across the board and wouldn't give a second thought to any near term drawdown as these charts are so bad, it is almost silly to concentrate on anything other than getting and staying short, but the volatility can make that difficult without a good entry so we do the best we can there.
As for other assets in the Leading Indicators column...
Commodities intraday acted better than the SPX through the afternoon.
This is Commodities vs the $USD, one might say this was because of the $USD, but commodities haven't been tracking the $USD for a while, stocks either because of the USD/JPY being more important right now.
Here HT Credit, the illiquid kind shows why it is a called a leading asset, it didn't participate in the SPX rally to the left and down the market went, it made higher lows while the market was making lower lows and up the SPX went, then it made lower highs while the SPX made higher highs and down the SPX went. Right now its at an odd place because intraday it is dislocated negatively with the SPX, but it seems to have found a support area and I have to wonder whether this perhaps reflects the expectation of a quick move down (like AAPL breaking below its triangle and a quick upside reversal, that may be the message HY credit is sending us.
FCT as a Leading Indicator using sentiment as it is not correlated to the market has shown a positive move vs the SPX twice in white , the first time the SPX went up, then FCT showed a negative divergence with the SPX and the SPX topped and went down, not short term we have a somewhat positive tone today, at least it's definitely not clearly negative, again it seems to be sending a neutral message in a way that could be interpreted as a move down and reversal up-perhaps even a Key Reversal day like we saw in the SPX on May 22nd, that definitely was a Key Reversal Day as I called it that day, look at what has happened since.
Oddly the Euro has been showing some recent strength, I'm wondering if the odd strength in the AUD/JPY today was also a hint that the currencies are coming to help the market make that upside short squeeze move which is the next move I anticipate and have since the triangles formed in the major averages. The AUD, EUR and right now oddly enough, the $USD are all risk on currencies, the $USD si usually the mirror opposite, but because the USD/JPY is more important, the USD alone has taken a back seat correlation wise, that will break at some point not too far off.
The Euro at a closer look, it really looks like it's setting up as support for the market.
Here HYG (High Yield Corp. Credit) shows a negative divergence that tops the SPX in the red box. Even though HYG performed worse overall on the day, it too, like HY credit seems to have found some support and on an intraday basis in the afternoon it showed better relative performance than the SPX in to the close, HYG is an institutional risk asset so if it moves up it not only helps the market as smart money is long (for a short time), but HYG is also 1 of 3 SPY arbitrage assets the algos key off of.
The 15 min recent positive divegrence in HYG also reminds me of the SPY/ QQQ 15 min positive, note the negative before. My take on this is Institutional money has been putting together a long position in HYG at lower prices and it's of a size that would support a pretty big move to the upside, that's the move I want to load up the truck with the short positions, fill out what is already started and add some new ones. UI'll be adding a watchlist of nearly 30 candidates, I just want to see how they react in to the move up I'd expect to see, then I'll have a better idea of which ones are the highest probability, but these are all mostly from SAC capitals top 30 holdings as their biggest client, Black Rock, gave notice they are pulling all accounts and assets from SAC amidst Stevie Cohen's fall from grace as a "Market Wizard" as he's put in some sort of a defferred guilty plea to using inside information via "Professional Networks" and 19 of his associates have already been convicted. In short, he'll have to fire-sale a bunch of assets to meet Black Rock's redemption as SAC's biggest client.
HYG 3 min intraday is interesting because it looks like that support I mentioned above is actually an accumulation area/zone, the 3 min chart offers better details.
Junk Credit which is also HY traded exactly like the SPX today which is strange a it usually trades like HYG, but it also didn't lead negative so that's a slight positive.
TLT (20+ year treasuries) saw a much hotter bid today than the correlation with the SPX would suggest, as I said last week, I'm looking for a long term long position with options in TLT as I think there's something big going on there, but TLT alone doesn't have enough beta without leverage for my taste. I'd like to see the market pop, TLT drop and look for an entry there, you may recall I had an entry and I let go of it ver a week ago as it looked like short term downside was coming.
TLT longer term, A head fake move below support? You've seen the charts, it looks like Treasuries have been under accumulation all of 2013, this may be a great area to buy on a dip.
You probably recall when I posted that TLT was seeing distribution and it was coming down in the red box, at the time in my view, it was to help the SPX and the Dow make all time new highs and the QQQ make a multi-year new high, however since I think this may indeed be a head fake move, look at the 60 min positive divergence, that's a big divergence on a chart that long. So TLT will be on the buy list if/when the market moves up and TLT pulls back a bit.
OK, I mentioned already the volatility in the Ye with the biggest 1-day move in 3 years today, you may recall my articles, Currency Crisis in April where I argued that 1) the BOJ lost control when they announced a QE program that would double their monetary base in 2 years and 2) the Yen would sky rocket (taking down the USD/JPY and the stock market) and in doing so, would be one of the major catalysts in a final market break down. I think it might be interesting to go back and read both articles, I wrote them in April and it took me 10 hours, they are linked at the top of the site, but here they are, Currency Crisis 1 and Currency Crisis 2, I really think this is a key to the market, if anything just see what has happened since then on my BOJ analysis and if the market is in fact led by the Yen as I wrote, then I'll have not only called this market about 2 months ago, but called the exact reason why as well (we already know I've been saying the F_E_D was looking for a way out of QE, an argument I've been making since September 13th 2012).
As for the chart above, it's a 4 hour Yen futures with the large bottom I thought would develop and the heavy accumulation (positive divergence) that would develop and ultimately send the Yen higher and the market lower.
This is the current correlation between the SPX and the Yen, it was close on a daily basis, about 3 weeks ago I noted it's nearly a 1.0 correlation intraday, how many traders are aware the Yen is what is largely moving the market?
I don't think I need to comment, can you think of one asset other than the mirror opposites like VIX and TLT that have this kind of intraday correlation with the Yen driving risk or driving fear?
This is the 4 hour chart of the USD/JPY, for the pair ( a former carry trade pair-if anyone is still caught in the carry trade here they are getting annihilated day by day) to fall, the Yen has to rise, you saw the 4 hour positive Yen divergence 2 charts above, both charts confirm each other, the Yen, as I wrote in April, will rise like a rocket, the USD/JPY and market will tank and Japan's grand experiment with the largest QE to date will have truly failed once and for all in the world's 3rd largest economy.
More on the Yen...
This is a 60 min chart of the Yen, note the leading negative divergence, if you look at the 4 hour chart of the Yen (positive divergence) 4 charts above, you'll see an inverse H&S-type pattern, that pattern looks like it needs a pullback, that's where & when the Yen is accumulated,interestingly this 60 min chart seems to suggest that pullback will come, with that the USD/JPY should rise short term and the market with it as we have been expecting. When the pullback in the Yen is done and the 4 hour chart takes over again, the Yen should be ready to take off and with it the USD/JPY break down badly and with that, the market, THIS IS PRECISELY THE CONCLUSION OR THEORY I HAD BEFORE I PUT TOGETHER THE YEN CHARTS, NOW THEY JUST ADD MORE CREDIBILITY.
Again, does CNBC tell you what really drives the market? No, they tell you the market went up or down because "insert 2 sentence explanation here" IT'E NEVER THAT SIMPLE AND TRY EXPLAINING THIS TO THE MASSES, BUT THIS IS WHAT COUNTS.
This is the 5 min Yen chart, it too has a negative divergence forming, I believe it has enough time to make a run higher sending the market briefly lower, then make it's pullback sending the market sharply higher creating the last bull trap before the break down-don't forget the long term Leading Indicator divergences, THIS IS SERIOUS, LIKE 1929.
We see a positive 3C divergence at the lows on the chart accumulated and a run up, the market has moved down at the same time, look at the Yen/SPX correlation above.
This is the Yen tonight, right now it has a 1 min positive divergence, wouldn't it be interesting if indeed the Yen moved higher overnight, we got that market move lower and then switched positions for a sharp move higher. That's just some wishful thinking, but entirely possible.
Finally this is a 5 min chart of the AUID/JPY, a former carry trade with the USD/JPY and EUR/JPY, the AUD and EUR carry trades dies as I followed them for months showing they were falling apart, however the point is, this short term 5 min positive divergence in the AUD/JPY is a risk on divergence and if the pair moves higher, it will support a risk on move up in the market.
Like I said above, recently it seems the Euro and $AUD have come in to play just to help the market effect a short squeeze, they should fade back in to a downtrend, but not before a sharp, powerful move higher sways emotions one last time and we see a Japanese style drop in the US markets.
I could not live with myself if I didn't have short exposure in equities right now, in fact with many of them at partial positions and room to add at better prices, I believe this is the perfect strategic move.
See you in the a.m.
Friday, June 07, 2013
The AAPL trade that lasted less than a day netted a gain of +18.9%
June IWM $98 Calls opened Wednesday
Today's closed IWM Calls netted a gain of +50% for 2-days of market exposure.
XLF June $19 Calls also opened Wednesday
Friday, May 24, 2013
I expect a short term bounce in GOOG as it will draft the rest of the market, might as well take the Put profits, open the funds up to other positions and re-establish the Puts at a better cost basis when the bounce is ending. You'll see why I leave the equity short, which will suffer very little draw down, open.
At the $22.50 fill, the GOOG puts made +15%.
The short term 3 min chart has a positive divergence and the tell-tale flat range we see with accumulation/distribution.
The longer term 60 min GOOG chart shows a large head fake move, which usually is scaled to the expected reversal as well as the preceding trend, so this break above resistance was a head fake move as you can see solid distribution throughout, it was purposefully planned as you can see the accumulation needed to send GOOG higher. Smart money sells those accumulated shares in to higher prices and exits any remaining risk then enters short positions.
The bounce in the context of this chart is irrelevant, this is why the GOOG core equity short stays open and maybe is added to if the bounce is decent enough.
First lets go back and look at yesterday's Yen/SPX correlation, a lot of people didn't believe this was a valid correlation or made any difference, it's amazing how people need immediate intraday gratification and miss the big picture, the big opportunities, it's what I called, "Getting Lost in the Lines", missing the forest for the trees essentially.
Yesterday's correlation, perfect...
Yen in orange/SPX in green on a 1 min chart of yesterday to 4 p.m., that's a nearly perfect 1.0 correlation.
Fast forward through this morning...
You can split hairs, but no other currency correlation is so high, this in part has to do with the "Carry trade" that is Yen based through multiple pairs going south and getting more expensive or even causing losses at leverage that can be 200:1. This is how institutional money ramps up leverage of their AUM to try to outperform, but leverage cuts both ways.
Now the reason I say the SPX/market could get near term intraday support and the bigger picture-this doesn't mean the "Far off picture", it's here, it's just the big picture we have been following, it's the real opportunity in this market that may be once in a lifetime.
Yen 1 min intraday is starting to show an intraday negative signal after moving up on Nikkei weakness all night.
This would suggest intraday support/strength for the market.
Yen 5 min also shows the same signal, not big, but enough for intraday support.
Remember the Yen and SPX move opposite.
Yen 15 min, showing the right side of the rounding bottom, remember last week I said the rounding bottom was more than halfway complete? This is the right side as it moves up and punishes the carry traders.
****Yen 60 min is a perfect example of several of our concepts 1) A reversal is not an event, it's a process, note the positive divergence through the base. 2) Head fake moves occur in 80+% of all reversals on every timeframe. 3) Head fake moves are some of the best timing indicators we have for a reversal if we know the base is real from 3C accumulation. Remember right after I said the base was more than halfway finished, the very next day the Yen broke support for a day under the yellow trendline with 3C accumulation, that was the head fake move confirmed by 3C, right after that, they Yen started to move up on the right side of the rounding base.
Yen 4 hour large leading positive divergence, we already knew from this chart that the Yen would head higher, this is why I wrote Currency Crisis Part 1 and 2 back in the middle of April, it was apparent way back then that we'd see a big change in the market and the Yen and $?USD would be at the center of that change. I wrote this LONG before the Yen correlation became as obvious as it is now, because I knew the Yen was the central currency in the Carry Trade.
The $USD, also addressed in the articles has broken out of a major base since then and made new highs!
This is the 1 min intraday $USD/JPY which was slammed overnight with the Nikkei, the index followed the $USD/JPY wiggle for wiggle.
Now the pair look to head higher intraday ONLY, confirming the Yen intraday signals and suggesting market support.
We'll keep an eye out for opportunities here.
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