Holding On

Sorry about the GoDaddy issues this morning.  Guess I need to add changing web hosting services to my to-do list this weekend.  To make matters worse, the guy helping me get the site up again kept wasting time trying to sell me on a longer-term contract.  As if!

SPX is clinging to its channel — which had a little wiggle room in it.  But, frankly, the rising wedge formed by the channel lower bound (solid purple) and the dashed purple TL looks like the best fit right now.

And, IMO, it better fits the RSI picture.  We’ve had this really cool channel in the daily RSI that’s given us a great deal of confidence along the way to the upside.  Yesterday, it broke.

Many times, the channels can be redrawn (usually widened) to a less aggressive slope, etc.  And, sometimes, we just get an aberration that sends values up out of the channel, only to return a day later with a sheepish grin on their face and an apology.

I don’t know which to expect here, but at the very least it’s a potential crack in the dike.  We’ll need to see many more of these before the market screeches to a halt and starts down.

Oddly, the eminis RSI channel looks just fine, as I posted earlier via email.

VIX is showing a great deal of indecision this morning.  It’s currently flat, but has been up .20 and down 1.00.  At the very least, the falling wedge has been widened.  Another possibility is that it intends to open up to a channel.  But, we still haven’t exceeded the former neckline (white, dashed) which currently runs around 19.17.

Last, I want to show you what happened in the options market yesterday.  Most of you have seen these charts before. The fabulous ISE tabulates opening put and call positions intraday and EOD and formulates a ratio.  Here’s how it played out yesterday:

This shows that in the first 20 minutes of trading, the ratio of opening call positions to opening put positions was over 2:1 (that 205 on the bottom row.)  That’s a very high number, and can indicate a top.  By the end of the day, the ratio had fallen to 53 — an extreme on the other end.  In fact, it’s the lowest closing value since December 1, 2011.

This is a great way of reading sentiment among buyers of long put and call positions — who are usually wrong.  It’s not foolproof, though.

On December 1, SPX closed at 1243 (after gaining 50 points the previous day.)  In that case, the put buyers were right, as the market meandered 40 points lower over the next few weeks.  Of course, it then gained another 220 points.

In the first 20 minutes of this morning, the calls:puts ratio was 0.15.  Food for thought.

Bottom line, the market is waiting for any sign of the upside.  Maybe it’ll be the Fed notes, maybe the German constitutional court.  I don’t know.  But, I’m long here and expecting good things to the upside before TSHTF (with tight stops, of course.)

More in a couple of hours.



Nice comeback here at the end of the day, going to leave some bullish candles and a viable channel bottom — whether it’s a channel or RW.



And, for those who found the above options info interesting…here’s how we wound up today.  Despite the comeback at the end of the day, it wasn’t enough to convince call buyers — which bodes well for the upside.




Holding On — 7 Comments

  1. Fear (or lack there of)  defines bottoms and tops. No fear at this point does not look like a bottom. Cant see us going up until e see the VIX move up. 1339 close still your line in the sand? 

  2. Can’t help but notice today’s doji is nearly identical to the June 4th doji, which marked the recent 1266 low and then rallied hard from there.

    • Yeah, that would be nice.  The futures are down big as of two hours prior to the opening, so the insomniatic self-doubt is mounting.

  3. Thanks pebble, helpful update as it can be tough to tune out all the negative news and guidance revisions we keep hearing.

    Also, next time you call godaddy and they hit you with the latest special offer, just tell them you’ll consider it if he can email you some unrated content of danica patrick that they always talk about on the commercials. Its usually pretty funny reaction when they have no idea what to say to that.

  4. Hello PW, so you are long on the market but short on GoDaddy (if that is a security)?

    Today, you show us the put and call info.   That is interesting.  I thought you only concern the big option day in the 3rd week of the month.  Do you check put and call info daily?  I wonder how accurate it determines the outcome of the market.   Thanks!

    • It’s not usually one of those things I look at intraday, as the rest of the indicators are typically more clear than they are lately.  But, it can help provide some reassurance when things are murky.  Good site to have bookmarked for those occasions.