Update January 7th, 2016 4:15PM EST:
SPX 1951 gap filled and then some. The hourly score has actually risen slightly to -85% but that's still pretty extreme. Given the -95% score as SPX dropped this morning around SPX 1955, it would be uncommon for SPX to drop more than 20-30pts and 1-2 days below that, so 1920s and 1930s are probably worst case short-term. That tidbit plus OPEX max pain next Friday and the typical reversal seen from the Tuesday SOS/BOW signal lead me to believe we will get a strong rally, but I suspect the strike peg may drop to SPX 2040 or even slightly lower. Having said that, until we see a bullish daily swing (currently above 1990 but will be much lower if SPX makes a small move tomorrow), all timeframes are in downtrends and counter-trend trades are very risky. Personally, I actually reloaded from 20% to 60% short on the bounce from SPX 1955 to 1977, but then I exited 100% a little conservatively on the gap fill at 1951. Good fortune.
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Update January 7th, 2016 9:40AM EST:
SPX 1951 gap not quite filled at the open at 1954. I am out of 80% of my position and plan to get out of the rest on a lower low or bullish reversal. The hourly score is -95% but not confirmed until the hour ends at 10AM. A bottom should be imminent. I would not be surprised if SPX rallies hard now or after a revisit of 1951, but maybe 20% of these oversold setups will fall another 1-2% for a day or so and of course maybe once every year or two you get a real flush so playing bullish hero would be a dangerous game with all trends aligned down. Still, I think max option pain at Jan 15 OPEX is a real possibility and max pain may fall a little from SPX 2050 with the unfilled gap at SPX 2045. Good fortune.
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If ES futures stick at -33, that would probably carry SPX to the 1950s and a potential date with the 1951 gap +/-. That's a target I've had for a while in addition to the SPX 1900s and 1750, but I thought the 1970s would hold for a couple weeks. However it plays out, the hourly score is now -75% and likely to get more oversold after the open. A score at -85-100% is usually within hours and 1% of a bottom. I will sell almost all of my short positions shortly after the open and wait for the next bounce to see if the next setup is for more damage or a rally to the 2040s near Jan 15 OPEX. Good fortune.
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