Turned on a Dime, Just Before I Questioned My Bear Sanity. Again.

Good morning traders and what a fucking day again, once again we have turned around on a dime just soon enough before I was once again questioning my bear sanity!

Depending on which talking head you follow in the moment, there could be a few reasons as to the why, but to be honest I care very little about the why as long as it does so within the parameters of what I’m expecting prices to do.

Experts have today confirmed the cause of the reversal. There are 11 causes, each confirmed by a different expert.

Right then, let’s get into the charts.

Market Snapshot

The continuous futures look like S&P and Naz nibbled a new all-time high, the cash markets show the reality that they didn’t, and that’s just a factor of how prices are stitched together… That said, these can sometimes offer some interesting clues, as when this situation happens prices often retreat like they have done, and the move was indeed sped up by news, but I am of the view that these things were going to happen anyway. Before the week started we were banging on the big bear drum as to this week being “THE” week should the markets tip over like a cow on freshers’ week.

The futures have announced a new all-time high. The cash market, which keeps the actual records, has declined to ratify it.

• ES (S&P 500 futures): 7,724.50, -0.62%. Nibbled a new all-time high on the continuous contract, since retreated.
• NQ (Nasdaq 100 futures): 30,435.50. The same nibble, the same retreat.
• VIX: 16.33, +7.65%. Skipped through the daily field over said cow and over the frustrating 16 level again, let’s see if this can hold again or it’s going to be another few days before the fizz fizzes out.
• RTY (Russell 2000 futures): 2,847.8, -0.42%. More below.
• Bitcoin: 83,191.70. More below.

Notable Mention – Gold

Gold setups, and just as quick we might be seeing that setup void.

Those gold bugs we saw over the last few years and the sudden rise of the internet gold bros and YouTube experts don’t seem to be anywhere in sight, which is kinda funny, this year seems to have been tough for them lol, boohoo very sad, not!

The internet gold bros have gone quiet, which is the most informative thing a gold bro has ever done.

SPX – A bull setup, and a 40 point gap waiting to void it.

Over on my usual swing charts, SPX did set up a bull but has not yet gone above its trigger line, and with the overnight gap lower currently around 40 points, it’s likely we will see this void and resume the bear moves.

Void likely, bear moves resume.

RUT – Flip flopped before I could even get a trade off.

RUT has already done the flip flop before I could even get a trade off and is resuming the bear.

Uncle Russ, back to the bear.

Bitcoin – Almost remaining sane, for a change.

Bitcoin behaved sensibly for an entire week and the newsroom has no template for the story.

BTC, surprising me by almost remaining sane for a change… Classic breakout, pullback, straight to a fast target, now retracing 50% of that move for what could be the next leg higher.

I don’t see a reason to worry about the bull move just yet despite the sell off… just yet!

No reason to worry about the bull, just yet.

Premium Poppers & Wall of Wins – What. A. Day.

Over on the Premium Poppers, what. a. day!

I saw the opportunity to place a few premarket trades based off the futures prices around 2hrs before the official open:

• Half ass B.Fly to the bull and bear side, based on the expected moves
• Big ass B.Fly based off an average day’s move
• 1st BO
• VWAP trades

…and everything on the bear side came home to papa.

The P&L curve was massively over the zero line. That final view was the result of a nervous close about 10 mins before the close, there was maybe $600 on the table to squeeze out of a bullseye pin on the big ass B.Fly, and prices were suddenly looking like they could move fast and far in a short space of time, as price was flipping on the gamma from positive to negative, so that seemed like a reality.

Grown-ups call leaving $600 on a bullseye pin risk management. Everyone else calls it $600.

The next shot is what it looked like before that profit lock in. $455 was my then min profit floor, with a huge $2.96k to pin at the 7700 short strike. The lock in guaranteed me $2,390 on the challenge account.

And of course the community keep pumping the accounts and grabbing a full bag:

• Don E.: “Closed SPX BO1 for 50%” and “Closed RUT BO1 for 50%”
• James D.: “SPX Bear PP win at 50%!”
• ehvpsd: “SPX and RUT ccs both quick winners this morning for 50%!”
• i8av6: “SPX 1.20 credit at 10:00. Closed for .20 debit at 11:30. 2 contracts. $200 profit for the day done before noon. I like it.”
• Scott K.: “Took SPX BO1, Transformed 1/2 shortly after to lock in small profit, sold the other half for ~50% profit. Leaving a profit tent around a short of 7755.”
• Zach: “Yeehaw!”

Well done all.

Everyone’s got a bag full.

Fun Fact

The cow on freshers’ week might be safer than it looks. In 2005, University of British Columbia zoologist Margo Lillie and her student Tracy Boechler ran the physics on cow tipping. A cow 1.45 metres tall pushed at the best angle needs around 2,910 newtons of force, which works out at 4.43 people, and once the cow braces herself, which she will, they reckoned 5 or 6. Cows also lie down to sleep, which rather spoils the sneaking-up part.

Tipping one, it turns out, is a group effort.

Sources: The Register, 9 Nov 2005; Popular Science