Home > General Topics > Trading > A second bite at the cherry

A second bite at the cherry

  1. If you missed the first rally, this is your chance to get in.

    Logical place for stops is around 875 (close stop) or the old lows 837.
     
  2. You trying to lure longs in as the market resumes it's downtrend?
     
  3. I was debating this, but I'm not sure the low will hold. Can you share why you think it will?

    What bothers me is the volume on monday was very weak. There was no follow-through. The buyers just aren't there.
     
  4. Cherry? Or cherry bomb?
     
  5. Not enough volume on the selloff today.
     
  6. ooooh neat-o maybe we will make a wedge!
     
  7. Maybe we'll get a wedgie.
     
  8. forget dead cat bounces...unless you're dropping them out of an airplane...
     
  9. but there was more volume today than on monday.
     
  10. Not enough volume for a good washout.
     
  11. The downtrend got broken by that huge rally, and we saw clear capitulation last week. So IMO it's more likely this is a pullback which is going to form a higher low, than a resumption of the downtrend to break to new lows. I could be wrong but that's what stops/options are for.

    If the market is forming a higher low, then the upside is very large. So IMO it's worth going long some ES with a stop around 870ish, and also buying some calls (Nov probably best, maybe a bit in Oct for a punt) for a limited risk play on a large rally in the next few days/weeks.

    One possible scenario is a gap down open tomorrow. In that case, I would buy futures and calls on the gap down with a stop about 20 points below the opening gap for the futures leg. Gap downs often market the low of a short-term pullback, just like Tuesday's gap up was the high of the big fast rally from Friday evening.
     
  12. maybe all the odd lotters that refrained from selling becuase the market was up monday will finally throw in the towel tomorrow.

    I aint retiring no time soon, exhaustion bottoms are fun!
     
  13. Hello daddy, hello mom
    Im your ch ch ch ch ch cherry bomb!
    Hello world Im your wild girl
    Im your ch ch ch ch ch cherry bomb!
     
  14. Thanks for your explanation Cutter. I am also following your idea of the Platinum/Gold spread so I really value your insight.

    You mention buying options. I'm currently long ES and due to (stupidly) averaging down I'm over-leveraged. So I don't want to buy any more ES. I could, I just don't feel comfortable adding more.

    Can you explain more about buying options? I'm vaguely familiar with how they work but I've never bought one before.

    I was thinking I could buy some calls for the ES. I just took an example for ES Nov 08 930 and it's 112. I'm not sure what is the best option to get and at what strike price. Any recommendations?
     
  15. If there's a 1% gap down tomorrow, then Monday's gap will be completely filled.
     
  16. ES DEC08 Futures ESZ8
    NOV 21 '08
    950.0
    CALL
    Multiplier: 50

    The quote I'm getting on this option is 47.25, down 50%.

    From what I understand, I take the price of 47.25 and multiply by 50 to get the price of an option for 1 ES option? That's $2362. I have no idea how to calculate if this is a good deal or not.
     
  17. Market got its cherry popped by the big hedge fund dick!
     
  18. Gap up, gap quickly filled on emotional selling on the open, then a decent bounce. So far this is a nice setup for a long play.

    Can place a stop below today's lows e.g. 895. 2% downside, that's relatively small risk.

    Next signal will be a decent break above the globex highs of 931 on ES, then if a pattern of higher highs, and higher lows on pullback tests emerges, that will make things even more bullish. Break below 895 and all bets are off for today.
     
  19. Bearish figure but that's to be expected. Most important is not the knee-jerk reaction, but how the market responds once it stabilizes. If we rally above the pre-news figure 920, then that's a bullish sign.
     
  20. So until it breaks 920 or 895, just wait?

    Whats the best free site to track ES when the market is closed?
     
  21. Yeah I'd say below 895-890, get out (except calls). Above 920 and especially 932, get bullish.
     
  22. ehhhh not so sure just yet
     
  23. Thanks for the ideas Cutten, it's very helpful to me.

    I'm long from 1050 (yeah I know). I think exiting at 895 is not a bad idea.

    It just hit 887 as I write this. If I was confident that 837 would hold then I'd prefer to just keep holding. But I'm afraid we'll go to 750 and I'll be wiped out..
     
  24. Well it broke down pretty convincingly there. I still like Nov calls but there's no denying the market is still acting more bearish than bullish. If we go below the 887 low, a retest of 837 from last Friday is on the cards. I'm stepping aside here on outright longs until it breaks 920/932 to the upside.

    To the last poster - don't risk a wipeout, get down to a comfortable size and if necessary get totally flat.
     
  25. 918.61 SPX was the 61.8% fib retracement.

    884.46 SPX is the .786% fib retracement.

    FYI: This most recent push down in the SPX after 9:50am was due to crude falling $2.00 and taking the energy and oil service sector with it. For example, CVX fell 5% off the first half-hour highs.

    Oil inventories out at 11am today.
     
  26. Yep Landis, however this market had the perfect opportunity to hold yesterdays lows and rally today, and it couldn't do it. In these markets I prefer to put discipline above opinion.

    The retracement is now 77% of the rally from the lows, that's too far for comfort. If anything it looks like it could be a short rather than a long here, but I'd rather just stand aside.

    If 875 breaks then it's in trouble.
     
  27. Just traded 881 SPX handle.
    Tried to bounce a bit; 7 handles to 888.

    VIX back up to 77.70
    Stay tuned.
     
  28. Didn't oil inventories come out yesterday at 10:30 EDT?
     
  29. No, they did not.
    Nat-Gas came out this morning at 10:35am. Crude will come out at 11am.

    Columbus Day was a Federal Holiday on Monday. Holidays always post-pone the release.
     
  30. OK, thanks....then my Econoday news schedule is wrong....lists it as yesterday at 10:35 ET.
     
  31. This market trades so bearish - I thought it would bounce but can't deny the price action. Oil threatening new lows too. 875 now hit. Not looking good at all so if anyone followed me here just a reminder I am totally *out*.
     
  32. Crude just broke to $71.25 on the unexpected build in oil inventories ( +5.6mm and gasoline at +6.9mm barrels ). Crude -$3.28

    That just crushed the SPX again down to 871.50
     
  33. Go short?
     
  34. Crude now $69.35

    -5.20
     
  35. Next stop on our descent: 837
     
  36. Its all over the place...back to 885.
     
  37. Last night I was thinking that due to the low volume of the decline, we could have even lower volume today and have a doji marking the bottom. I didn't think the previous lows would be touched, and I was confident that they wouldn't be broken.

    So far the nasdaq has taken out its previous low but has bounced back up. The S&P & Dow are holding above their lows going into the lunchtime break.

    It looks to me that the S&P is on track for higher volume than yesterday but short of the volume from the previous low. This is good, retesting a low on lower volume is a bullish sign. Retesting a low on lower volume and then closing above the low is even more bullish. That's what we have right now with the nasdaq.

    I'm thinking that things are not looking so bad here. I think it's normal that the markets went down today, I think people are waiting for the perfect moment to go long. Why go long early? Wait and see how low it goes.

    So far I'm optimistic. If the decline in the S&P really was due to oil, then we'd have a few stocks driving it down. As long as the majority are neutral or even bearish, that would be positive divergence and again bullish.

    I'm pretty new at this so please feel free to point out any flaws in my logic. I admit I'm biased because I'm already long. I'm waiting for a good confirmation before I add to my position. The question is what would be good? A close above open?

    Cutten - you mentioned buying calls. Le'ts say you got the confirmation you want to see.. how would you go long? Can you explain how you'd buy calls?
     
  38. 5-waves down into the volume floor, according to "Mup".

    As posted in the Technical Analysis Forum.
    See chart below.
     
  39. What's a volume floor?

    Looks good, I like it whatever it is. ;)
     
  40. VIX spiked 20% intraday then this rally broke the pattern of lower highs and lows. I've got moderately long again with stops trailing fairly close (880). *If* this can mount a rally into a green close, then we may have some upside into next week, but it's so volatile I am keeping a tight leash on positions.
     
  41. Are you trading futures or options?
     
  42. ES futures. IMO the moves are too whippy for options, and with VIX in the 70s the premium is very expensive.

    We have some momentum here so long ES with trailing stops is best IMO.
     
  43. HERE COMES THE OIH AND THE ENERGY COMPLEX!!!

    :D
     
  44. I'm going to repeat what I have been positng for the past few weeks which is that nothing has changed economically between now and June 2007 was at 14,000. Absolutely nothing. 90% of these inidicators are important because as long as unemployment remains stable (between 6-7) and wages and income, as well as consumption keep rising the recovery in the stock market WILL be 'v' shaped. Period. Stocks are already surging off the lows and this will continue to rise. There is no crisis and no recession, except one that is media generated.
     
  45. Yup. And emerging market ETFs starting to heat up too. These could go bananas to the upside if this was indeed the pullback low.
     
  46. you're out of your fking mind! do you know that? !! were you even in the market back in 2000-2002 or were you still in high school?!!
     
  47. Problem is that he doesn't know it. He just shows up here whenever there's a swing to the upside and posts the same crap.

    I'm not foolish enough to think I know what's going to happen. So please, let's just all sit back and listen to folks who are far more adept at this stuff - Cutten and Landis - for instance.
     
  48. So why is the Baltic Dry Shipping Index down 65% in the past 3 weeks?

    Why is bank loan volume the lowest since the Carter Administration?

    Why does every single EIA crude oil inventory report for the last several weeks show huge builds in inventories?

    You are in denial.
     
  49. my tks to all the people here who think this is a low, i concur through analysis of my own, though it feels really lonely when u can't find anyone else to agree /w u, so this is a great thread i thought
     
  50. 1. The Baltic dry index is one index out of hundreds of various indicators, and the decline in price doesn't always equate to a decline in demand. For example, the cost of internet bandwith has fallen per megabyte, but the demand for bandwith keeps rising

    2. Um not all loans are affected as it turns out. To say 'bank loans' is a generalization. Small business loans and personal loans have not been affected by this non crisis as long as the borrower has collateral. It has been this way even before the 'crisis'.

    3. Nothing rises in a strait line. Crude should rise atleast with inflation. 140 crude was to frothy like CSCO stock in 1999. The decline in crude prices can't be attributed to a verifyable economic slowdown.
     
  51. I need to save this.
     
  52. Agreed.
    Pretty much says it all right there.
    :D
     
  53. Huge tug of war here in the 895-910 range. There has been massive selling, but it has not yet broken the rally - certainly testing it very hard though. Whoever wins out here should determine the move into the close and the tone of the next few days.

    Because of the increased risk, I've sold out half of my longs and am going to wait for a break above 920 before buying back.
     
  54. Once it broke below 885, I went short and thought I'd set trailing stops at 10% because of the wild swings, lol all of them got hit on the little rally and I lost 10% on each position, ugh...feel like I should have just not set stops or set them even looser.
     
  55. Spooz looks to surge another 40 points
     
  56. with such strong belief you should be selling spy puts. easy money with VIX collapsing from 75
     
  57. I would consider NOV calls on XLF below 14; C below 13; JPM below 34; BAC below 19; QQQQ below 27, and possibly INCT below 13.5

    Nov option period is a longer one - Nov 1st is a Saturday, the first Friday is on 6th.
    These options will be held for about one week only, trying to sell them back with VIX still above 40
     
  58. "DOW SP500 Nasdaq 100 bottom october 2008 (second chance"

    "11:14AM october 16: with NDX at 1194, we are at the BOTTOM. "

    Source: the blog of the greatest market timer of all times (past and future).

    riskfreetrading
     
  59. when vix increase to the moon delta of puts heads to zero because delta of corresponding calls goes to 1 (This is not a typo). If vix decreases, you have the other effect. Sell puts. I like them ITM.

    more explanation in rft's blog.
     
  60. QFT


    Now is a great time to cover. Better to cover now when the dow is below 12,000.

    The economy is driven by consumption, rising income, and consumer debt. None of those are affected by the non crisis. Credit card spending for example not affected. All the BRIC countries are also not seeing a slowdown in consumption.

    The next 12 months are going to be huge. Google will surge, too.
     
  61. I'm glad I hung on. Looks like we did a retest of the low and things should be good from here.

    What's a safe entry to go long?
     
  62. A "measured-move" objective in the SPY was just reached at 94.60

    The first move up was 5.40

    Add that to the intra-day afternoon "pullback" low at 89.20 and you get:

    94.60

    Bingo!
    :cool:
     
  63. 950 is minor resistance from yesterday, so I would either wait for a pullback to near the opening range high of today (920), or buy on a breakout above 950 (e.g. 955-960+).

    A safe stop is around 885-890, next reasonable stop is about 908. So you have about 35 points downside here.

    I would also point out the outperformance of the nasdaq - that may be a better long here and I have about half my longs in NQ futures. Energy and commodities by comparison were a bit disappointing. I would stick with ES/NQ.

    Is it just me, or was it damn tough to stay long today after those early lows? That mid-session pullback almost got me out, it got quite close to my stop.
     
  64. We were discussing setting stops at what 885 I forget and I looked over at the chart and ES had blown right through that. I figured we were so close to 837 that I may as well say in.

    I agree with NQ being stronger. I'm also in ES so I think you're right adding some NQ would be better.

    I'll study the chart and look for the same S/R points that you pointed out for ES.

    Thanks for sharing, I learn a lot from your posts.
     
  65. If you mean by pull back, the bottom of around 11:30AM, that was god sent for me.

    I got in with FOUR times the normal size. Today I made 250 NDX points (100+ on one normal size, and 150=3*50 taken early on trim size back to normal).

    My best day (or close to best) in recent memory!

    PS: + nailing of exact bottom which is PRICELESS!

    I should start charging those free loaders on my blog. :p
     
  66. Don't give your Academy Awards speech just yet unless you are retiring from trading... today! After so many years it never ceases to amaze me how guys still have their egos in the game. There is no doubt that posts like this are always precursors to blowing out one's account(s)! That feeling of bullet-proof is always (not just sometimes) but ALWAYS the kiss of death!
     
  67. Update. Today we are down quite a bit on globex, and Europe went back to unchanged, filling the opening gap, and then bounced hard off that gap fill.

    This gives a potentially interesting setup. If today is going to be a big down day, Europe would need to move *below* the unchanged level. If you get a big gap up overnight, then it fills the gap, bounces hard, then trades to new lows and moves to decently negative (e.g. 0.5% down or more), that is a very bearish pattern. However, a gap fill and large rebound is typically a bullish pattern, *especially* if the market then moves beyond the opening highs.

    So far this looks like a classic downside test in an uptrend. ES overnight is quite a bit below the close yesterday. You could enter now and place a stop below the globex lows 908. If the uptrend from yesterday stays intact, the market should at least retest yesterday's close and/or highs, and quite possibly break above them. So there is a nice daytrade, in addition to a longer-term trade with small downside and a target of at least 1025-1075 (107-157 points upside). With such a close stop you could be faked out, however the reward looks attractive enough to be worth a punt.
     
  68. Options expiration today. Could make for a wild ride.
     
  69. Crude now +$4.00 and providing a very "supportive" bid to the SPX.

    XOI and OIH powering higher.

    :)
     
  70. Just pulled back about 50% of the rally from the opening lows. This is another chance to buy, a stop for this add can be placed at today's lows.
     
  71. Problem is with today forming a doji, I'm not sure it's going up on Monday. We could be headed back down for another retest of the lows.

    Pretty disappointing day. started out great and retraced to the 62% fib line. :(
     

  72. I would have to agree, partly because yesterday's last hour RUSH into big bap names and today's rally after the opening ( only to fall flat on its face late in the afternoon ) smells of a whole lot of OPTION EXPIRATION unwinding going on.

    Next week we get a TON of earnings starting to flow through.... that will be the real "test" to see how the market reacts to the news.

    Until then, this last hour really "smells" to me.

    :(