SILVER WATCH

BIDU

AAPL: Double Bottom Reversal or Target Gap Fill?

Signs of Seeking Safety - A Confluence of Confirmations?

Almost all of the charts below were inspired by mo and look to be on the verge of confirming each other - for downside pricing action. The bullish percent charts are the ones that have crossed from above to below their respective ema's but the indexes themselves still need a smidgen more to complete their crosses. It goes without saying there is the possibility of emas touching each other and curling back up, however multiple confirmations across charts will set the environment for making safer trades going SHORT. We are not there yet, however selected stock leaders are showing either profit taking or the beginnings of a greater correction and a recent header post on cumulative $TICK diverging from what seems like an exasperating multi-month rally. Time to think out of the "box" and ask "Is this where I want to be a buyer of stocks?"

Within 30 days, a surprising number of sectors have suddenly spiked - a rare event - for defensive sectors that are usually very tame. Take a look how Consumer Staples, Healthcare and Utilities have done relative to the SPX :

AAPL Targets: $438 upside or $419 downside

AAPL: Cup & Handle in Play

Regression Line of Cumulative $TICK Does Not Support Rally

AAPL: Bullish Clues Emerge For A Profitable Opportunity

Deconstructing AAPL Weekly Option Trading On 1min Chart

A Fat-Tail In The Distribution Of Wealth?

Lines In The Sand

Here below are the horizontal lines of interest for me on /ES. 

For the short term and in simple terms, support at these lines will have me bullish and rejection will have me bearish.

As we are near the highs I would expect the price behavior to be very choppy.

Bye Bye BIDU

Disqus Not Retaining Comments

Just want to see if a new post will get us going again...

Bobbing For AAPLs on Wednesdays

A Slow Volatile Transfer of Demand to Supply

/ES Price Change Distributions & Their Extremes

USD - Head & Shoulders + Price Change Distributions on Watch

Refresh the Fear?

Andrew's Apple Pitchforked Gap Fill

The "Icahn" of the Day

Mr. Icahn bought 10% of NFLX at about $58

By measuring your risk exactly, in other words - matching what you otherwise would choose to accept as a loss in dollar terms as your total money at risk, one may become very wealthy with just a few well placed trades. In the past month or so, I have taken on the study and execution of trading weekly options. By analyzing the front weekly option prices for NFLX, both on the call and put side, I could see the market was "expecting" a sizable move - over $120 or perhaps under $80. Additionally, call traffic was significantly higher. A quick study of past recent earnings reports shows that moves greater than 20% are frequent. Finally, the demand for calls can be measured in an absolute sense by looking at the ratio between open volume and OI (open interest). Collectively, these observations expose the potential of "smart-money" activities, and by looking at options as literally indicators, it is possible to create heuristics that enable one to identify profitable opportunities. I'll write more on this as I develop a trading plan that addresses specifically these ideas into a cohesive plan. 

This comment is true, but only if NFLX were not subsequently "in-the-money" - a trade I took and is yielding about 26 times the committed capital on the call side of the trade.

Sectors Relative to S&P 500

Earnings Season: Week #2 & XLF

The below Weekly & Daily charts for XLF are perhaps showing a confluence of indicators of a "top" forming going forward for this sector. Remember, "tops" are a process and not an event. 

Given: Friday closed above the Weekly Bollinger Bands

Friday's Daily XLF Chart shows a Doji Candlestick. It remains to be seen what follows. A conservative approach would be to wait for the next 2 candles to print for confirmation of direction. We are a bit overstretched on the VWAP lines; +3 std dev on the Daily and +2 Std Dev on the Weekly.

Daily Chart:

Weekly Chart:

Golden Probabilities?

Precious metals were hit quite hard after Thursday's FED minutes and followed through today as members hinted that QE may taper off sometime this year. However, right now we are in an area where probabilistic opportunity may exist despite the trend being down. Any further downside under $158 would break support, but a bounce up to $164 looks possible and certainly would be resistance and anything above that would indicate the bull is still very much alive for the intermediate term.

Happy 2013

Merry Christmas To You and Yours...

VIX FUTURES: The Harbinger of Plan B Failure

By the end of yesterday's trading session, the SKEW index revealed that risk of a sharp decline had doubled. Subsequently, Republican leaders announced the postponement of their so called "Plan B" for a House vote last evening. I've mentioned the SKEW index before, but as a quick reminder, here is the CBOE's definition:

CBOE SKEW Index ("SKEW")

The crash of October 1987 sensitized investors to the potential for stock market crashes and forever changed their view of S&P 500® returns. Investors now realize that S&P 500 tail risk - the risk of outlier returns two or more standard deviations below the mean - is significantly greater than under a lognormal distribution. The CBOE SKEW Index ("SKEW") is an index derived from the price of S&P 500 tail risk. Similar to VIX®, the price of S&P 500 tail risk is calculated from the prices of S&P 500 out-of-the-money options. SKEW typically ranges from 100 to 150. A SKEW value of 100 means that the perceived distribution of S&P 500 log-returns is normal, and the probability of outlier returns is therefore negligible. As SKEW rises above 100, the left tail of the S&P 500 distribution acquires more weight, and the probabilities of outlier returns become more significant. One can estimate these probabilities from the value of SKEW. Since an increase in perceived tail risk increases the relative demand for low strike puts, increases in SKEW also correspond to an overall steepening of the curve of implied volatilities, familiar to option traders as the "skew".

Could not help myself from borrowing  from Tim Knight's characterization of the event ... 

Lines of Interest ...

Understanding the Roots of the Flash Crash Better

Netflix Gap Fill in Progress Today

Better, But Not Out Of The Woods