Not much new to report at this hour, as all eyes are on this morning’s employment report. Another bust like last time would drive a nail into the Fed’s rate rise coffin. While, a strong report might give pause for thought.
The biggest chart development yesterday was in oil, which tumbled sharply.
continued for members…
It’s well below the rising purple channel again, but also tagged the white .786 and is inches away from its SMA200. Never count it out as an agent of ramping, especially with SPX still so close to a breakout.
The prognosis remains the same, with SPX near that channel breakout or, alternatively, putting in a decent right shoulder for an IH&S.
Comments
10 responses to “Charts I’m Watching: Jul 8, 2016”
I guess everything including Bexit is fixed by the “market” now.
SPX closed at 2128.6.
Still, the “market” makes people humble. If the job market is so strong, then a rate hike should be expected. However, the market is cheering the “strong” job market while ignoring what it implies.
That’s about the size of it. But, given that the gains came primarily from the algos and central banks – and, not real live people – don’t expect too much logic to play into it.
So is the SPX correlation to CL and USDJPY completely over now? SPX is near all time highs, while CL is at 45 and USDJPY is at 100.5… If the correlation is only good for the way up, but not for the way down, well then there seems to be no way for stocks to ever go down (and stay there), and SPX 2500 is next on the agenda by the November elections! All hail the power of central banks and “free” money, and BTFD!
No, it’s not over. But, yes, it’s mostly good when it results in a rally. More often than not, a decline in one is offset by a rally in the other. And, when neither can be pushed higher, there’s always VIX bashing and plain old spoofing of ES itself. Regarding “no way…to ever go down” that’s a great question. I’ve been following and reporting on the growing strength of the algos for years, and I don’t know what it’ll take for a real crash to occur. Brexit was the best shot, lately, and they erased in about two weeks’ time. I suspect we’ll have to see a true Lehman-type event before panic can set in again. Deutsche Bank seems like a good candidate.
Just to clarify if I bought a 1 day expiration there might be 35% upside but 100% downside which would lose 66% if two trades worked and one did not.
Not sure I understand your questions very clearly… I don’t recommend complicated positions that require the timing to be exact or a sequence of events to work out. Options move fast enough and are obviously very risky. The simpler you can keep it, the better.
Hoping you are enjoying your vacation Pebbles.
To trade your recommendations what spy strike and expiration should I use. For example you say to but when spx is 2000 and spy 200. Should I buy the 201, the 202? Should I choose 7 day expiration, 14? 30? Thanks in advance.
Personally, I’d match the expiration with the timing of the move. For intraday moves, a week or two is usually adequate. For swing trades, you might want to go a little longer. Always stick to those with plenty of volume. As far as strike prices, that’s up to you. Out of the money provides the biggest potential payoff, but at the greatest risk (and, vice versa.) A good, middle of the road approach is at or slightly in the money and 2-3 weeks out. If you’re using options as a proxy for SPY, then strike prices that are well in the money are a much safer way to go. Options are dangerous, and most put and call buyers lose money. So, consider spreads and straddles in order to limit your downside. You might not earn huge returns very quickly, but you’re less likely to lose your shirt.
hey pebble any thoughts on usdjpy I am short the yen futures thanks
Lately, about the only thing we can count on with USDJPY is that it’ll rise during the trading day, and reset overnight. And, of course, it is almost certain to rise when CL is weak, as has been the case lately. SPX push to new highs was obviously built largely on expectations of additional, as yet unannounced, easing by BoJ.