I'll start at the beginning of Feb. 2012
Originally Posted by mpr
Although the short term price action looks good, I find it hard to ignore the levels we have yet to successfully test and make support at. When I measure the move from the highs in May to the lows in October, I can see that we broke into support around 1300. Like in Big bears chart, the massive resistance line has began to hold the markets back from pushing higher. In the immediate term we have held support, but have also yet to really break out. That puts the markets in a vulnerable place because of the great run so far in January. We still had yet to have a major pullback, and sitting at the 78.6% fib and that top resistance trendline, may pull the the pants off some of these longs. Not being too bearish, we just are in need of some healthy selling, and that 61.8 level around 1260 could be used to set up some base for a much larger move higher. Just something to think about before getting over-positioned long. We very well could see some overextended buying here before the pullback. I think everyone needs to be aware of the current levels, and not get caught in a big shake the market may have coming.
2-This is the action i was looking to spot with the pullback scenario.
3-Quote: Originally Posted by mpr Possible bagger: SODA 47.5 CALLS Make that 600%
4-Goog's got more in the tank for next week btw. Accumulation play.
There's plenty of options that go over 1000% or more EVERY Friday. All you need is the right set up, which isn't impossible to find either.
Let's take a gander at Amazon after earnings...
Typical gap down/accumulation scenario. If you care to learn more about these kind of plays, I'd suggest checking Rock Sexton's thread.
I play these a little differently then what's considered the "proper" method. I like to buy on the break of the 23.6 fib, instead of waiting on the creek like standard method.
Looking at the chart, you can immediately see the stop volume that occurred AH, and the day after earnings were released.
Notice AMZN spent most of Wed and Thurs. working up in price below the creek. On Thursday we started tight consolidation between VWAP and the 23.6% fib retracement...
That's a good sign that momentum is beginning to build, and it provides the best signal of all, a good Risk vs. Reward. The 23.6% fib lies at about $179, So 180 calls may be one of the safer plays going into option expiry, but when the creek is broken there's generally raw accumulation that follows, so big moves in price are almost always expected.
Knowing that makes grabbing the expiring 185 calls not seem as crazy as most would view.
We did get a gift with the market gapping up, but if I showed you some ES studies, that move wasn't far fetched either.
You can see here that AMZN gapped up and consolidated right on the 38.2% fib, before blasting off VWAP to the first real target of the 50% fib at $186.
Pretty simple play right? Yes, the gap up was a gift, but with so many "stars aligned", it's hard to deny that any sort of bad trade would surface regardless of the gap up.
The AMZN weekly 185 calls were chilling at 10 cents for most of Thursday, and they hit a high of $2.76 on Friday.
You could've even grabbed them in the morning for under 20 cents!
Technical set ups can be found like this every week, but the key for the HUGE gains would be consolidation within price, to burn the price away before expiry.
HEAVILY shorted with a rising wedge.
Everybody don't forget SODA is in play.
AMZN found support at the 61.8% fib retracement level. Ascending triangle bullish formation. Looks like it wants the gap fill. Playing the call options.
I'll find out if it rallies tomorrow.
8-Vehicles I plan on playing calls with: GOOG AMZN SODA
9-Most the stocks I see are still bullish. Hard for me to switch directions until I see anything in the price action that shows otherwise.
We have a lot of previous highs to get through in ES. We're following the regression channel to the upside in the middle trendline. We have some sort of ascending triangle wedged up against a previous high right now going on in the futures. If we don't gap through these three walls, we will have a lot of chop tomorrow while attempting to break through these walls.
This TVIX pop is just temporary, nothing to get overly excited over. The TVIX has been down-trending down pretty consistently along the middle regression line. These little pops in volatility will come with common pull backs in a up-trending market.
I measured the move from the last time TVIX popped to the recent bottom. And you can see the last time TVIX bounced, it was off the regression channel, and it was about a $9 pop.
This current bounce is also off of the regression line, and the first level of resistance is about $9 off the low again at 21.57.
IFFFFFFF we pullback, I just don't see it lasting more than a few days.
REMEMBER, DO NOT FALL IN LOVE WITH THE DIPS!
The VIX is getting a spike because after a long uptrend, there's suddenly a large presence of put contracts being put in the market because of the possible double top scenario.
It's NOTHING more than that. the VIX will die off again next week and the market will continue higher. It is interesting to see everyone get all hyped up and bearish.
Nothing looks bearish to me. Pullbacks are expected, nothing goes straight up forever. Just like gold, right mjoke?
Only thing that is spooky is the double top scenario from the highs mid year 2011. And that's what I blame all these put contracts that have been coming in boosting
Originally Posted by mjoke
lol i recall someone wanted 2000 again before 1600 which was a nice buy at 1600 and below, but its running now with a bull market, seems disconnected no... eh.
The double top possibility is something i pointed out also, as we did in july 2011 then rolled tested, bounced slightly and then rolled again a mth later.. where does that line up too? March, and can even say might be a week before the 20th or on the 20th. whatever your perception is, maybe even sooner. We are in a pretty big channel and retesting the bottom of said unit is not out of the question, even larger the farther you go.
its not a true bearish yet.. hence why we stuck around 1330 and then covered at the end of the day and settled right below 1343. Its the question if this has changed the tone and is it going to be a repeat occurrence.
I see what you're saying, and we both know that I can't rule the repeat scenario out just yet. But I mean damn, just gauging how the small pullback scared the crap out of investors all over and changed there perceptions on a dime scares me a bit. But then again that's exactly what enforces my original opinion of going higher. Retail is almost always wrong, and in a bull market you can expect to see retail getting overly excited and falling in love with each and every dip on the way up. I'm still bullish going into next week, and my post on the VIX last night shows that this dip was expected, but holy shit man... the way retail is ready to jump ship on an obvious uptrend seems to always surprise me. I honestly wouldn't be surprised if we don't pullback at all on Monday.
Definition of 'VIX - CBOE Volatility Index'
The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge".
Read more: http://www.investopedia.com/terms/v/vix.asp#ixzz1m1ehFG1c
The pop in the VIX today was overextended on retail. But nothing to be considered out of the ordinary. When the market is at an area where the current trend is being threatened, put contracts will be put on whether the intent be from a hedge or a bet on some downside. We have been in a long up trend, and just hit a potential topping area at last years highs. That explains why put contracts have began to be purchased the past few days. Look back on the vix chart and these pops are common at potential danger zones.
I agree with you that much of these current levels have yet to be tested. When we were at 1300, I really didn't see how a move above would be justified without testing that 1260 level below. But if I kept out of the market because of that, or decided to start getting short, I would've had big losses and wouldn't of had the gains I had since then. Currently I'm not fighting the price action because that never pays me out. We may have some volatility ahead in the face of daily and even weekly highs, but I don't believe we've came this far to get bounced around and knocked out of the ring. I have no idea why we're in a "bull market" on the verge of cracking highs from years ago, but I'm a technician and I only follow price. I believe we will it make past the highs in the 1370's and push into the 1400s. I can see how you can think otherwise, and i do think that you will be right in the long run... months and months down the line.