Weekly Journal - Nov 3rd 2014

Well, November is finally here and what a month last month was. It was historic in terms of the plunge and the equally exceptional rise back up. It looks like I have to tone down my bearish expectations at the moment. This definitely looks like bull trend continuation.

I think we can see a pullback from around where we are right now - It is the extent and character of this pullback that I will be watching. We are in a seasonally favorable period but everything is over extended right now. Internals are very strong but is also at an area where a little back and fill is possible.

Sentiment is neutral at the moment so it doesnt look like we are going to do much for the next few weeks. Expect a sidewise market with a little downside ahead of us.

Gold and miners did well last week on the downside and my puts on NUGT exploded in value. I took a lot of profit but still net short. Gold could stage a decent bounce this week.

Best,
PM

Market Journal - Oct 30th 2014

So the Fed is now out of the way. And QE has officially ended. So what next? As I think I mentioned in one of the earlier posts, I was expecting a little more upside and then a top mid week. I think we are there. Yesterday might have been the top for this upmove. If this is correct, most likely we will see a good move down over the next week or so and then again another good bounce. Then all hell breaks loose. But lets take it one step at a time.

For now, it looks like we are going to head down for the next few days in the equity markets. A bounce will happen from some level. For now I am thinking 1920-1900 area in SPX as the most likely target area maybe by end of next week. Then lets evaluate again.

Now above is just a prediction. I dont trade on predictions alone. Its just an idea. Trading is more about controlling risk and capital protection. This is the reason why I have diversified into more ideas. Gold for example is heading down in earnest. I have puts on NUGT - which are doing exceptionally well. Then I have shorts on OIH/oil. And I think I already mentioned the GPRO put spread which is also doing very well. I also have a few bearish positions on the index which at the moment are not doing great but I expect them to come back soon.

The next few weeks are going to be very interesting I believe. While I am bearish, the seasonality effect is important to watch as well. For this reason I will be watching the internals very carefully to see if the outline I have above is going to work or the market has something else in mind.

Best,
PM

Weekly Journal - Oct 27th 2014

That was quite a strong week. The big question is still - are we starting on a new uptrend to new highs and beyond? Or is this just a bounce back - a very strong one at that - before things resume to the downside.

Very tough call. But I dont see this yet as a possible move to new highs. At the same time, I dont really have much confidence right now that we are going to new lows in the SPX and other US markets.

What I think is this - Market will likely pullback a little in beginning of the week, then rally into mid week - not much - and then pull back sharply again. We should be a range for next 1-2 weeks before the selloff starts. As you can see the whole thing is quite confusing and so due to this, I am moving my focus from the SPX to other markets for now.

Oil looks very bearish - I will be building shorts there. I am already short the Gold miners - I will continue to build shorts there. Emerging markets look bad - There too having some puts looks prudent. Stock side, I have puts on GPRO, BTU, AMZN etc.

As you can see, I am shifting over from the indices to sectors. At the moment I feel this is the most prudent thing to do.

Best,
PM

Market Journal - Oct 24th 2014

The rally continued, hit a high and started a pullback. I think the uptrend might just be over and we have started a smaller term downtrend. If we exceed yesterdays highs again, then something else might be going on. Best guess here from my side is we decline into next week into the 1900 SPX support. Not sure if we will get more than that. And we should start the next leg of the upmove from there up into 1970/80 area with an outside chance at retesting the highs. This should complete an ABC corrective from the lows.

Now this all will take time and I will reevaluate as time goes on - just wanted to lay out the bigger picture idea I have in mind.

For now - the plan is to play for a short term downtrend...may only be a few days worth.
Today's action will be critical to this plan and idea. Internals are still up and positive but look to be in topping area/overbrought.

I got an idea about shorting GPRO from a forum. Looks like a good one to try out. There is something known as a lockout period ending in December. This should bring some pressure on the stock. I am going to try to short it via a diagonal put spread with the longer leg in April of next year.

Gold is again looking tough to read. Yesterdays ebola new managed to give a little boost to it. I need more time to see where it will go.

Apart from that, I will look to open some bearish spreads today and ofcourse do the usual intraday trading. For today intraday my bias will be on the short side.

Best,
PM

Market Journal - Oct 23rd 2014

Well we got the down day and today seems to be setting up a gap up open. Its tough to say what exactly is going on now in terms of wave count but I would say we are most likely topping an A wave over here and a pullback should ensure in the next few days.

First however it looks like we are going a little higher - maybe retest of yesterdays highs and even exceed it by a few points.

I am still trading intraday ES. Gold is once again looking bad. I re-entered my NUGT puts yesterday and today looks like another big gap down. Need to watch how it holds around here. If it breaks the lows from 2 weeks back we are going much lower. Just holding the puts for now but will evaluate action throughout the day.

Internals on the broad market look quite strong at the moment and this is the reason I am not favoring positional shorts but just looking at hits and runs. Maybe todays action will offer more clarity as to where we are in the bigger picture.

Best,
PM

Market Journal - Oct 22nd 2014

Very strong rally. Its hard to believe that just a few days back we were plunging so quickly. That is the irrationality of markets for you :)

Anyhow, I think it looks clear now that this rally is here to stay. I am expecting a pullback right about here and then after that the market should continue higher for now. We look to be in an ABC corrective upmove of which A is going on right now. Correctives are always difficult to read so my trading will be hit and run only for now. We need to wait for more evidence before taking any longer term position. I think we pull back a bit here, then try higher. Then we should see a bigger move lower. This might happen sometime week only.

Best,
PM

Weekly Journal - Oct 20th 2014

Last week was a very volatile one but it was great for daytrading. Market made its lows and had a great rebound from there. Big question is - what next?

Some sort of temporary bottom has been formed but we should get atleast a retest of that bottom soon. How this will happen is the question. We can go a little higher from here. Or we can go a little lower, try higher and then bigger down to retest the lows. As of now we are in a corrective upmove so its tough to call the waves. But one thing I am pretty confident on is a retest of the lows so I am positioned for that at the moment - not aggressively - but using butterfly spreads.

Internals rebounded last week and the MCO turned above 0. So some sort of short term uptrend is underway. I would give the market a couple of weeks to do a back and forth and stabilize before attempting to read more into the moves. For now I will focus on intraday trading. The positions I have will most likely be left untouched for now.

Gold - this one looks like its going to move a little more higher and then top. I will be playing the miners accordingly.

Best,
PM