Market Journal - Oct 9th 2014

That was quite a reversal to the upside yesterday. I was expecting a little bounce but the strength of the rally was amazing - this is what Fedspeak can do.

So I think yesterday has changed things atleast for now. We tested the channel bottom again and bounced hard. This is one important thing. We also have made a lot of improvement in the internals as well.

Channel touch and bounce -

Next take a look at the MCO configuration on NYSE. Looks constructive - bottom above bottoms - still below the zero line though. I will be waiting for this to get above the zero line to set up a strong buy.

This could turn up as early as today. But lets wait and see. I will be looking for weakness even after we turn up so that I can get better buy prices.

Many other things are there. The put call ratio supports the bottom idea. Some other ratios I watch also does the same. Hurst view was to expect the 40 week low around this timeframe. Lastly seasonality also is supportive of a year end rally.

So all in all, I have to conclude yesterday's low may have been the low of this entire bear move. However I think we will get a pullback sometime today before we mount another rally attempt. And again maybe more pullback tomorrow before we get into gear on the upside. My stance is changing to bullish.

Gold rallied as well yesterday. It was a huge reversal day for the miners. While I still hold my NUGT puts, I will likely exit them today. I had a good profit on them - unfortunately I wasnt able to exit them in time. So I will likely just take what I have and close them and then wait and watch for the next entry either long or short.

I will try few intra trades today on ES. Mostly likely first down. Then up.

Best,
PM

Market Journal - Oct 8th 2014

Yesterday was quite a bearish day - as expected. I covered all my shorts in the last five minutes of the day. All except for NUGT puts. I wanted to roll this to lower strikes but wasnt able to in time. So I might do it today. However gold is looking to open up so I am not very sure how to time this out.

So we went lower but didnt test the bottom yet. We might do it today before setting up a bounce of maybe a few days. I am going to play this day by day for now. I think today we set a bottom and then rally for a few days. Then we see if its for real or if we are going to have a bigger breakdown below the channel that the market has been in for the past 1 year and more.

I will put up a more detailed analysis tomorrow. For now, I am just going to play the ranges. And will look for scalping opportunities on the upside today - I am not too bearish for the day. I expect we will find support somewhere today and stage a rally attempt which will likely last for few days BUT should eventually fail.

Best,
PM

Market Journal - Oct 7th 2014

Well, we are in a trading range now. I think we have tested the higher end of the range and now its time to test lower. Most likely today will be bearish and we should trade lower with a bearish bias. I will be looking for opportunities to scalp on the short side on ES.

Gold finally had a good bounce. Tough to say for sure but I dont think downside is done yet - but for more, we need to break below earlier lows of 1178.

Best,
PM

Weekly Journal - Oct 6th 2014

Market rallied strongly on Friday. To be honest, I did not expect this much strength. Now we are again at a cross-junction. I think market has to reverse back down within the next 10-12 points in SPX for atleast a retest of the lows/channel bottom.

Since I covered shorts before the rally started, I am content with being on the sidelines comparatively. I did trade the long side on Thursday and Friday and made some coin while we wait. I also entered a couple of bearish spreads toward the close on Friday. I suspect this is early and we may continue the pop upward for a little bit more. But with the internals bearish as they are it is unlikely that we are going to see sustainability to this rally.

Not too much to add on internals. The bounce has turned the MCO upward but it is still far from the zero line. As long as it remains below, I will remain bearish.

The overall AD line also looks quite bearish in spite of this current bounce.

So the plan is to continue with these bearish positions atleast for the next 1 week after which we re-evaluate.

Gold continues to be bearish and my NUGT put positions are doing quite well. Let us look for a real washout here soon.

Best,
PM

Trading Journal - Oct 3rd 2014

A pretty good day for me yesterday. I exited all bearish positions for good profits and even managed 2 good scalps on the long side on ES futures. Overall quite happy with my bear campaign and results. Only positions I hold now are NUGT puts. This is a longer term position so I will continue holding - also as I continue to be bearish on the GOLD sector.

The butterfly position on SPX was a double. The bear spread on SPX was also almost a double. IWM and QQQ puts performed well. And I already mentioned my puts on the coal sector. Overall all did really good. My positions were mentioned in earlier posts in detail.

So big bounce yesterday. This was kind of expected once we tagged this channel I show below. It has held very strong so far this year and yesterday was no exception. This was the main reason I decided to take profits on bear positions.

Tagged the channel and rebounded but what next? I dont have skin in the game at the moment but what I feel is there is going to be more weakness - we are not going to just turn around and keep rallying from here. At best, we are going to see retests of the channel bottom over the next several days. What if this channel breaks? I think then it gets very interesting. Next support should be at around 1900 where the 200 DMA is. Breaking this will be even more bearish but lets deal with that if and when we get there.

As always, my next buy decision will be based on internals. Nothing much to say about MCO. It seems to be building a base. If we can do this over the next several days and turn back above the zero line - it will be a buy for me. Right now its far away from doing that - and I think its going to take several days in order to do this. Market should be choppy and volatile until then.

Today I will scalp on both sides as opportunity presents itself. I think we have a date with 1960-1970 on ES and then we should have a date with the lower side of the range at around 1920 ES. I dont mean to say it will all happen today - It should over the next few days though. Until we get a buy on MCO, I will continue with very short term scalping.

GOLD continues to be bearish as I mentioned above. Its the only area where I have shorts on right now. And these are longer term positions in the money right now. So I continue to hold them.

It seems to have found short term support at around this level of 1200$. Break this and earlier lows of 1180 will come in a hurry. Break that and its all the way down to 1100$ which is also my longer term target. Will it get there? Only time will tell. For now, holding shorts.

I will post updates on Hurst cycles later on the general markets. This is around the time the 40 week lows are expected.

Best,
PM

Trading Journal - Oct 2nd 2014

Well absolutely no strength yesterday. Looked like fund managers were waiting to sell after end of quarter - and were holding the market till now. Let us see what the next few days will bring. I think a lot of back and forth consolidation and maybe more push lower.

The market is oversold short term but that itself is not enough to say we will not go down further. This situation is what can lead to even more serious selloffs to happen.

Today/tomorrow I think we bounce a little before resuming the bear move next week.

Internals continue to look the same. One thing though is that the MCO did not move to lower lows so this might be the beginning of constructing a bottom internally. Price however may have more to deteriorate here.

I continue to be short overall. Adjusted positions a little yesterday. Today I will look to scalp on the long side to take advantage of any rallies.

Best,
PM

Market Journal - Oct 1st 2014

Seasonally today is expected to be a strong day to the upside. However yesterday was weak. So need to see how much strength we see. Yesterdays last minute selling was heavy however it could have just been due to end of quarter. I exited some of my bearish positions in stocks yesterday for decent profits and also entered puts in IWM and QQQ. Core short position is still intact.

Considering today's strength, the plan is to scalp on the long side.

Best,
PM