Amazing. 5 minutes.
108.61 bid.
Thank you.
3:49PM
Tuesday, September 30, 2008
VIX-PutCall Signals BULLISH ALL DAY
High put/call readings and falling VIX today suggested a rising price environment.
Thankfully the volatility contracted from 69 pts every 5 minutes down to 36 pts now, which is still up from its average of 15 pts.
Consequently, the market environment is still higher-than-normal risk.
Going into the close here at 3:40PM - I view the high put/call and falling VIX as still a buy environment and a potential for a short squeeze into the close.
Buy DIA here:107.63. Exit at 4PM. Risk 0.50 (just bigger than our profit from this morning)
3:43PM
Thankfully the volatility contracted from 69 pts every 5 minutes down to 36 pts now, which is still up from its average of 15 pts.
Consequently, the market environment is still higher-than-normal risk.
Going into the close here at 3:40PM - I view the high put/call and falling VIX as still a buy environment and a potential for a short squeeze into the close.
Buy DIA here:107.63. Exit at 4PM. Risk 0.50 (just bigger than our profit from this morning)
3:43PM
10:02AM - BUY SIGNAL - RISK 1.00 DIA pt
Put/call is 2.07 in the first half hour and VIX is falling to a level of 41.66, down 5.07 on the day. Falling VIX at least implies that fear is subsiding from very extreme levels. This is bullish, short term.
Risk is very high now mathematically because the average 5 minute range on the Dow futures contracts for yesterday was a whopping 69 points! Compare this to an average closer to 15 points. Consequently, the volatility is over 4 TIMES HIGHER, which means we have to cut our trading size down to adjust for that.
In the case of stop placement, it means I should place my stops that much further away from the market in order to risk an equal dollar of capital.
Hence, I have used the same 1.00 pt stop in DIA, which really means I have a VERY CLOSE stop today.
Target remains 1.00 pt. Raise stop to breakeven after 30 minutes. Raise to breakeven plus 0.30 after 1 hour.
I will decide if reversing on the stop-out makes sense. I think it does, but let's watch what happens first.
10:08AM Now
DIA entry = 10:03AM open of 1 minute bar = 105.82. Stop = 104.82, Target = 106.82. Raise stop to 105.82 at 10:33AM. Raise stop to 106.12 at 11:03AM. That's pretty specific advice.
Risk is very high now mathematically because the average 5 minute range on the Dow futures contracts for yesterday was a whopping 69 points! Compare this to an average closer to 15 points. Consequently, the volatility is over 4 TIMES HIGHER, which means we have to cut our trading size down to adjust for that.
In the case of stop placement, it means I should place my stops that much further away from the market in order to risk an equal dollar of capital.
Hence, I have used the same 1.00 pt stop in DIA, which really means I have a VERY CLOSE stop today.
Target remains 1.00 pt. Raise stop to breakeven after 30 minutes. Raise to breakeven plus 0.30 after 1 hour.
I will decide if reversing on the stop-out makes sense. I think it does, but let's watch what happens first.
10:08AM Now
DIA entry = 10:03AM open of 1 minute bar = 105.82. Stop = 104.82, Target = 106.82. Raise stop to 105.82 at 10:33AM. Raise stop to 106.12 at 11:03AM. That's pretty specific advice.
Monday, September 29, 2008
Stopped out 1/2 pt loss in DIA
I took what I saw was a somewhat low risk trade. The lowest risk trade of the day.
But gave back 0.50 pts in the DIA.
Entry 105.86, stopped 105.36.
Buy SLV (Silver etf) for a 10% gain in the next week.
3:19PM Monday
But gave back 0.50 pts in the DIA.
Entry 105.86, stopped 105.36.
Buy SLV (Silver etf) for a 10% gain in the next week.
3:19PM Monday
2:47PM DIA 105.87 -5.26 No time to be a hero:
I think I can define the risk here in the VERY SHORT TERM to 50 points for a stop loss order.... however...
Buy with 0.50 pt stop in DIA.
Raise stop to breakeven after 15 minutes.
Exit at the close or using a 1.00 trailing stop.
The futures are trading down to the big support level at 1135 on ESZ8....
VIX at 45, down from a peak at 46+ is one reason alone to take a small stab at this.
2:50PM DIA 105.86 -5.29 last....
Buy with 0.50 pt stop in DIA.
Raise stop to breakeven after 15 minutes.
Exit at the close or using a 1.00 trailing stop.
The futures are trading down to the big support level at 1135 on ESZ8....
VIX at 45, down from a peak at 46+ is one reason alone to take a small stab at this.
2:50PM DIA 105.86 -5.29 last....
Fast Market Action Today: Monday Sep 29, 2008
The first 15 minutes of trading revealed a heavy tilt towards call option trading with the put/call under 0.40. Considering VIX up at 40 and put/call low, it suggested that bulls were buying calls or perhaps just bears were hedging their shorts with calls, in either case it meant that optimism was greater than pessimism and prices headed lower sharply from that first 15-minute reading. I couldn't get a post going on this blog in time, and I myself even missed the trade.
Given the uncertainty over the Gov't bailout package, it has nerves on high tension.
Stay posted for high potential, hopefully low-risk trades.
1:27PM Monday
108.92 DIA.
Given the uncertainty over the Gov't bailout package, it has nerves on high tension.
Stay posted for high potential, hopefully low-risk trades.
1:27PM Monday
108.92 DIA.
Friday, September 26, 2008
2.70 POINTS OF PROFIT TODAY IN DIA
9:50AM - BUY near 10,900 on the DJIA, exited 10,970, +70 pts.
11:10AM - Buy 50 pts off the high, exit 1:50PM + 100 pts.
2:10PM - Buy 50 pts off the high, exit 3:30PM +100 pts.
Nice day.
11:10AM - Buy 50 pts off the high, exit 1:50PM + 100 pts.
2:10PM - Buy 50 pts off the high, exit 3:30PM +100 pts.
Nice day.
3 Hour Rule Kicked in @ 12:30PM
I made a mis-calculation. Put buying started at 9:30AM (not 10:30AM)
So by 12:30PM the "3 Hour Rule" kicked in.
From 12:30 to now there has been a nice 1% run up in S&P futures.
Exit.
1:31PM
So by 12:30PM the "3 Hour Rule" kicked in.
From 12:30 to now there has been a nice 1% run up in S&P futures.
Exit.
1:31PM
1 MORE HOUR UNTIL PRICE RAMP UP
1 more hour and it will be the "three hour rule" where if sellers don't show up within 3 hours of buying puts, then they are likely to be orders from speculators instead of holders of shares. We are 2 hours into this very bullish "BEAR TRAP".
12:33PM
12:33PM
BUY SIGNAL IS STILL SHOWING "GREEN LIGHT"
I am surprised, but as the market has held onto these price gains AND the setup which preceded this advance are still in place. A high put/call ratio and a spike up in VIX are symptoms of strong fear and are signs that hedges are building and that investors are protected against further price declines. Every moment that the price of stocks "holds" it is a sign that a significant accumulation is taking place and that a massive price advance is coming. I'll keep making posts as this develops during the day.
Place buys 0.50 under each high in the DIA for the balance of the day. Exit on gains of 1.00 from each price decline.
I think this will work all day.
10:28AM
109.44 DIA last...
Place buys 0.50 under each high in the DIA for the balance of the day. Exit on gains of 1.00 from each price decline.
I think this will work all day.
10:28AM
109.44 DIA last...
BUY NOW: 1/2 SIZE POSITION
Since it is prior to 10AM and the put/call #'s are volatile now, trade 1/2 size.
Low risk buy signal here, risk 0.50 DIA pts. 108.68-.71 is the current bid-ask.
High put/call reading. High Vix reading. Support price cluster.
9:37AM
Target 1 DIA pt. Raise stop to breakeven after 30 minutes.
Low risk buy signal here, risk 0.50 DIA pts. 108.68-.71 is the current bid-ask.
High put/call reading. High Vix reading. Support price cluster.
9:37AM
Target 1 DIA pt. Raise stop to breakeven after 30 minutes.
Thursday, September 25, 2008
SELL SIGNAL 11:38AM DIA @ 110.35
Risk 1 pt.
VIX down 2.24 to 32.95 (low 32.82) down from peak at 36.69 yesterday.
Put/call .54 now, but was lower.
Price forming a double top at 1218 on ESZ8.
Target 1 pt in DIA.
Lower stop to breakeven after 1 hour.
11:40AM now
VIX down 2.24 to 32.95 (low 32.82) down from peak at 36.69 yesterday.
Put/call .54 now, but was lower.
Price forming a double top at 1218 on ESZ8.
Target 1 pt in DIA.
Lower stop to breakeven after 1 hour.
11:40AM now
JOURNAL ENTRY - POST-DATED from 1 hour ago
"""" PREVIOUS COMMENTS"""""
10:11AM - SELL SIGNAL SETTING UP
I took a live trade short and lost 1.00 DIA points equivalent from 10:05AM to 10:19AM.
Based on:
Call activity is strong enough to warrant caution this morning.
10:24AM now as I type this post
DIA @ 110.39 last High 110.72, low today 108.39.
"""""""""""""""""""""""""""""""""""""""
10:11AM - SELL SIGNAL SETTING UP
I took a live trade short and lost 1.00 DIA points equivalent from 10:05AM to 10:19AM.
Based on:
Call activity is strong enough to warrant caution this morning.
10:24AM now as I type this post
DIA @ 110.39 last High 110.72, low today 108.39.
"""""""""""""""""""""""""""""""""""""""
Wednesday, September 24, 2008
SELL DIA 108.92 @ 2:42PM
Another chance to sell.
1 point downside potential.
1 point risk.
Falling VIX coupled with Put volumes alerts me to "put sellers".
Lower stop to 1/2 pt after 30 minutes.
Cover by the close to avoid overnight risk.
2:42PM
1 point downside potential.
1 point risk.
Falling VIX coupled with Put volumes alerts me to "put sellers".
Lower stop to 1/2 pt after 30 minutes.
Cover by the close to avoid overnight risk.
2:42PM
TARGET nearly REACHED: 1 pt profit
2:15PM Posting.
Low 108.15
Last 108.32 bid.
Feels like it has made a great decline from that rally high.
VIX and put/call have barely budged from where they were.
Cover - close enough - 108.25 last.
2:19PM ( I realized it hadn't quite made it the full 1 pt from the posting, sorry)
Low 108.15
Last 108.32 bid.
Feels like it has made a great decline from that rally high.
VIX and put/call have barely budged from where they were.
Cover - close enough - 108.25 last.
2:19PM ( I realized it hadn't quite made it the full 1 pt from the posting, sorry)
SELL SIGNAL: 1:28PM DIA 109.01
Put/call has shifted from calls (.30 reading) all the way to puts (1.2 reading).
Meanwhile VIX, which was UP earlier, is now DOWN to 35.
This action implies there are players "SELLING PUTS" to capture volatility premium. This, of course, is BEARISH. In fact it is extremely bearish.
There could be an issue whereby options expiration last Friday may have had an impact on this week's action, so I wont go out on a limb and declare a massive decline is coming... but I will alert you to this extremely negative situation that is setting up.
I attempted to sell 1198 in ESZ8, but it backed away to 1195 right away.
The DIA is now 108.85, so it has backed off a little after being 109.11 bid as I began typing.
Short DIA, 1 pt stop. 108.94 bid now.
Target, cover at end of the day or 1 pt profit, whichever comes first.
1:34PM
Meanwhile VIX, which was UP earlier, is now DOWN to 35.
This action implies there are players "SELLING PUTS" to capture volatility premium. This, of course, is BEARISH. In fact it is extremely bearish.
There could be an issue whereby options expiration last Friday may have had an impact on this week's action, so I wont go out on a limb and declare a massive decline is coming... but I will alert you to this extremely negative situation that is setting up.
I attempted to sell 1198 in ESZ8, but it backed away to 1195 right away.
The DIA is now 108.85, so it has backed off a little after being 109.11 bid as I began typing.
Short DIA, 1 pt stop. 108.94 bid now.
Target, cover at end of the day or 1 pt profit, whichever comes first.
1:34PM
COVER ALL SHORTS 108.14-108.24 now 11:23AM
I need to leave for an appt and don't want to leave this position open.
Covering for that reason alone.
Be back soon.
11:24AM now
Covering for that reason alone.
Be back soon.
11:24AM now
10:17AM - Put/Call Readings are now coming in
at dangerously low levels, indicating "call buying".
Exit long. Go short. Risk 1 pt.
10:18AM DIA 108.45 now.
Exit long. Go short. Risk 1 pt.
10:18AM DIA 108.45 now.
10:06AM - DIA @ 108.65 - Looking for a bottom
Essentially - Buffett coming to the rescue to drive a private market solution to the financial market mess is a far better answer than whatever the US Gov't will propose and hash out.
So we have retraced the advance overnight on the news of Buffett's purchase, so this is a low-risk buy just based on that observation.
Put/call isn't giving us much insight @ .87 here.
VIX is 36, which is very high and at a level to generate a sizable advance at any time.
Risk 1 pt. Go long DIA. 108.48 NOW.
Reverse if stopped out and risk 1 pt. Reduce stop at that point to breakeven after 1 hour.
10:09AM
So we have retraced the advance overnight on the news of Buffett's purchase, so this is a low-risk buy just based on that observation.
Put/call isn't giving us much insight @ .87 here.
VIX is 36, which is very high and at a level to generate a sizable advance at any time.
Risk 1 pt. Go long DIA. 108.48 NOW.
Reverse if stopped out and risk 1 pt. Reduce stop at that point to breakeven after 1 hour.
10:09AM
Great Comment From Warren Buffett:
May this apply to all of your financial decisions, business decisions and life decisions:
From CBS Radio just now:
Buffett commenting on his $5 Billion buy of a 10% piece of Goldman Sachs:
"The terms were right, the price was right, the people are right, so I wrote the check" (9 zeros in a check that big)
9:39AM
From CBS Radio just now:
Buffett commenting on his $5 Billion buy of a 10% piece of Goldman Sachs:
"The terms were right, the price was right, the people are right, so I wrote the check" (9 zeros in a check that big)
9:39AM
Tuesday, September 23, 2008
CLOSE OUT SHORT SALE: Nice profit.
3:49PM DIA @ 108.55
Nice drop this afternoon off of a very low put/call ratio.
We'll be using a 1 pt stop from now on, as usual.
Nice drop this afternoon off of a very low put/call ratio.
We'll be using a 1 pt stop from now on, as usual.
Short Signal is NOT panning out:
Usual 0.50 stop is not hit yet, but it is close.
VIX is at levels indicative of a MAJOR MARKET BOTTOM with the spike over 42 last week and today's retest of that on the rally to 37. VIX had fallen as low as 28.
The DIA is coming back up in price to a price level where there are 5 hours of trading so far today and it should be a stopping area at least. We shall see.
Put/Call shows there is activity on the call side of the market, which is bearish, of course, especially when VIX is rising like it is today. It shows people are getting aggressive to buy this break in price. I'd prefer to see activity in puts to show people are putting on hedges and driving up the price of those hedges, but that is not the case. This is bearish activity here, despite the high overall level of VIX.
Keep in mind these trades have a short term life, only 1-3 hours, just due to the volatility in the ratios that come across my screen.
Be well. DIA @ 109.96 as I type. It had gone as high as 110.30.
Stop is 110.45
VIX is at levels indicative of a MAJOR MARKET BOTTOM with the spike over 42 last week and today's retest of that on the rally to 37. VIX had fallen as low as 28.
The DIA is coming back up in price to a price level where there are 5 hours of trading so far today and it should be a stopping area at least. We shall see.
Put/Call shows there is activity on the call side of the market, which is bearish, of course, especially when VIX is rising like it is today. It shows people are getting aggressive to buy this break in price. I'd prefer to see activity in puts to show people are putting on hedges and driving up the price of those hedges, but that is not the case. This is bearish activity here, despite the high overall level of VIX.
Keep in mind these trades have a short term life, only 1-3 hours, just due to the volatility in the ratios that come across my screen.
Be well. DIA @ 109.96 as I type. It had gone as high as 110.30.
Stop is 110.45
BUY: DIA 109.26 @ 2:25PM Tuesday
Details to follow:
Stop 0.50 pts....
Would you believe me that I had typed this in... and got hammered on a phone call ... and didn't hit the "PUBLISH BUTTON"?
Argh.
Tim
Stop 0.50 pts....
Would you believe me that I had typed this in... and got hammered on a phone call ... and didn't hit the "PUBLISH BUTTON"?
Argh.
Tim
Monday, September 22, 2008
DIA 111.30, down 2.27
The dollar is tumbling today vs the EuroCurrency and the Yen.
Gold and silver are moving up strongly.
Bond prices hit 8 pts below their peak last WEEK!
Now that is a "bear market in a week" for bonds (technically a 10% drop is a bear market for bonds), but it is close.
The EuroCurrency is, in fact, just bouncing so far from its decline from 160 down to 138. It surpassed the 1/3 retracement level and the popular .382 retracement used by many traders, but is holding below a 1/2 retracement.
Crude Oil is bouncing up near $110, way up from its low near $90 on the Nov contract last week.
That is a 20% rally in crude oil in just a week. Amazing too.
These are volatile times.
I hope you are finding that these "intraday" entries and exits are of interest.
Best regards.
Gold and silver are moving up strongly.
Bond prices hit 8 pts below their peak last WEEK!
Now that is a "bear market in a week" for bonds (technically a 10% drop is a bear market for bonds), but it is close.
The EuroCurrency is, in fact, just bouncing so far from its decline from 160 down to 138. It surpassed the 1/3 retracement level and the popular .382 retracement used by many traders, but is holding below a 1/2 retracement.
Crude Oil is bouncing up near $110, way up from its low near $90 on the Nov contract last week.
That is a 20% rally in crude oil in just a week. Amazing too.
These are volatile times.
I hope you are finding that these "intraday" entries and exits are of interest.
Best regards.
1:05 UPDATE ON SHORT POSITION
DIA short from 111.88.
Now 111.78 ask.
It has been nearly an hour and there hasn't been the kind of action to indicate that we should hold this position.
VIX is back down 0.65 on the day. Put/call is a lowly .48.
Close this trade here for a small profit.
This offsets the small loss from earlier.
111.66 bid now.
1:09PM
Now 111.78 ask.
It has been nearly an hour and there hasn't been the kind of action to indicate that we should hold this position.
VIX is back down 0.65 on the day. Put/call is a lowly .48.
Close this trade here for a small profit.
This offsets the small loss from earlier.
111.66 bid now.
1:09PM
SELL SHORT: 111.88 DIA
Put/call is now at its lowest on the day @ .47 while VIX has lifted back up from -.7 on the day to only -.13.
This is bearish.
It implies "call buying" is bringing option prices back up, which implies people are bullish on this dip in prices.
Lower stop to breakeven after 1 hour. Do not reverse and go long though, if stopped out like we have before. Target 1 pt for 1/2 position, 2 pts for 1/2 position.
ES is at 1230.00 as I type (Dec).
DIA is 111.78 last.
12:12PM (Next update at 1:15PM)
This is bearish.
It implies "call buying" is bringing option prices back up, which implies people are bullish on this dip in prices.
Lower stop to breakeven after 1 hour. Do not reverse and go long though, if stopped out like we have before. Target 1 pt for 1/2 position, 2 pts for 1/2 position.
ES is at 1230.00 as I type (Dec).
DIA is 111.78 last.
12:12PM (Next update at 1:15PM)
Review of Long Position 1 Hour Later:
After 1 hour long from 112.40, DIA has fallen to 112.11 low and lifted to 112.67 high (-.29 to +.27) so this has been a muted response from this "call selling" setup.
We can look for a another entry. Exit at market.
112.22 bid last.
Small loss.
11:04AM
We can look for a another entry. Exit at market.
112.22 bid last.
Small loss.
11:04AM
Higher Risk Buy Signal 10:15AM Monday
DIA 112.50 last -1.14
VIX is down 1.23 to 30.84 now while there is a level of activity in call options (.60 put/call).
This setup implies to me that investors are selling call options to collect premium, which is a short term positive structure for the next few hours.
Buy 112.50 last with 0.50 risk. Target 0.75 to 1.00 upside potential.
112.40 bid now, keep the same stop, but you have a better entry.
10:17AM
VIX is down 1.23 to 30.84 now while there is a level of activity in call options (.60 put/call).
This setup implies to me that investors are selling call options to collect premium, which is a short term positive structure for the next few hours.
Buy 112.50 last with 0.50 risk. Target 0.75 to 1.00 upside potential.
112.40 bid now, keep the same stop, but you have a better entry.
10:17AM
Friday, September 19, 2008
VIX dropped too far, Call Activity too high
After this dramatic advance the bullishness is extreme and likely there isn't much protection against a downside move from this level. The downside support from put purchases this week and last week are at much LOWER levels. So, expect a dizzying test of these NEW BUYERS up here at DIA 113-116. In other words, I'd expect a drop.
VIX has fallen from 42 down to 31 now, which is a dramatic drop in VIX in such a short time. VIX had even extended down to 28 from its peak at 42, which is even more extreme.
Low risk trade here, in my opinion, to go short.
DIA is peeling off a little, but expect to take a little heat towards the mid-point of that stop. In other words, I would expect the market to rally a little to test us, perhaps 0.50 DIA points, but each new high is like a mountain climber searching for oxygen. It will get harder and harder to maintain this altitude. Oxygen levels are low and as any experienced climber will tell you - go down if you can't breath.
12:55PM, DIA @ 114.27 bid.
VIX has fallen from 42 down to 31 now, which is a dramatic drop in VIX in such a short time. VIX had even extended down to 28 from its peak at 42, which is even more extreme.
Low risk trade here, in my opinion, to go short.
DIA is peeling off a little, but expect to take a little heat towards the mid-point of that stop. In other words, I would expect the market to rally a little to test us, perhaps 0.50 DIA points, but each new high is like a mountain climber searching for oxygen. It will get harder and harder to maintain this altitude. Oxygen levels are low and as any experienced climber will tell you - go down if you can't breath.
12:55PM, DIA @ 114.27 bid.
DIA @ 114.39 - SELL SHORT - 1 PT STOP
12:47PM EST, Friday, Sep 19, 2008
Target 1 pt on 1/2
2 pts on 1/2
Lower stop to BE after 1 hr
Target 1 pt on 1/2
2 pts on 1/2
Lower stop to BE after 1 hr
Thursday, September 18, 2008
EXIT LONG - 1 PT PROFIT IN less than 10 Minutes
108.50 bid last.
Up from 107.30 entry.
EXIT - GO FLAT
3:05PM NOW
Up from 107.30 entry.
EXIT - GO FLAT
3:05PM NOW
DIA 107.29 @ 2:57PM
Put-Call 2.26, VIX 38.4
VIX peaked at 42 and with it the DIA reversed up 3 pts from the low, which is equal to a move of 300 Dow points.
Time to buy:
Since VIX has peaked on the day, buy the DIA with a 1 pt stop.
Exit on a gap up of more than 1.00 pts tomorrow.
Hold overnight.
107.29-.30 now
VIX peaked at 42 and with it the DIA reversed up 3 pts from the low, which is equal to a move of 300 Dow points.
Time to buy:
Since VIX has peaked on the day, buy the DIA with a 1 pt stop.
Exit on a gap up of more than 1.00 pts tomorrow.
Hold overnight.
107.29-.30 now
VIX hit over 42 today! Up from 20 last month
VIX rising in an hour from 37 to 40 is extreme - it means something EXTREME is going on - in this case - lack of liquidity.
Markets bottom in these situations and they also can accelerate.
Be extremely careful.
These are huge opportunities, as you can see the DIA rallied sharply from that 42 VIX reading.
Bonds are extremely vulnerable since they didn't RALLY when stocks were dropping off sharply.
Tim
1:23PM
Markets bottom in these situations and they also can accelerate.
Be extremely careful.
These are huge opportunities, as you can see the DIA rallied sharply from that 42 VIX reading.
Bonds are extremely vulnerable since they didn't RALLY when stocks were dropping off sharply.
Tim
1:23PM
Commentary from 12 Noon: High VIX, High Put/Call
VIX is now over 37 (37.40 last) and put/call is again high with spikes over 2.5-3.0, suggesting rampant put-buying. When markets fall on put buying, it means that Portfolio Managers are BUYING PUTS ahead of their stock sales to help them achieve a better average price. The rule on that is 3 hours though. What we always saw was that pattern when I was an institutional block-equity trader at a major NY firm. What we want to see is when they stop selling (for 3 hours) or when they exercise those puts (which is hard to find out, other than expiration).
I am aware that we, at any time, could get a crazy advance.
The Bloomberg alerted me to the fact that "Lehman's Hedge Fund accounts" (Called Prime Broker accounts) were frozen. Not exactly sure when they will release those accounts or what, but it sure is scary. Recall when Refco closed and many accounts were frozen.
Other note: I pushed our Westport Traders Meeting back to Oct 1st. It was supposed to be last night. http://westporttradersnetwork.blogspot.com
Tim
12:00NOON
I am aware that we, at any time, could get a crazy advance.
The Bloomberg alerted me to the fact that "Lehman's Hedge Fund accounts" (Called Prime Broker accounts) were frozen. Not exactly sure when they will release those accounts or what, but it sure is scary. Recall when Refco closed and many accounts were frozen.
Other note: I pushed our Westport Traders Meeting back to Oct 1st. It was supposed to be last night. http://westporttradersnetwork.blogspot.com
Tim
12:00NOON
Short from 10:30AM at 107.70
Following the guidelines established on the post just after the 9:30AM buy signal, the stop on the long position was raised to break-even after 1 hour and a sell was placed in order to "reverse" the position to go short.
We are now managing that short position.
11:38AM
We are now managing that short position.
11:38AM
Lower Stop on Short to Breakeven
Markets are moving quickly.
50 points every 5 minutes, in the futures contract for the DJIA.
11:35AM
50 points every 5 minutes, in the futures contract for the DJIA.
11:35AM
Explanation of Buy Signal
VIX is up to 36, near panic levels.
Put/Call closed yesterday over 2, indicating heavy put volume activity.
Since VIX rose from 30 to 36, we can presume that these are new put options that were purchased. We will see what happens to open interest to see if they were people buying back puts sold.
After reading that PRIME BROKERAGE accounts at Lehman are frozen, it struck me that this was an extremely dangerous situation as that would exacerbate liquidity in the markets, preventing hedge funds (which are the owners of Prime Brokerage accounts mostly) from trading in the markets.
This means we have to have wider than normal stops as the market will move to more of an extreme before exhausting orders.
After 1 hour, raise stop to breakeven and reverse on that stop from the Long position mentioned at 9:30AM today.
9:36AM now, Eastern Std Time
Put/Call closed yesterday over 2, indicating heavy put volume activity.
Since VIX rose from 30 to 36, we can presume that these are new put options that were purchased. We will see what happens to open interest to see if they were people buying back puts sold.
After reading that PRIME BROKERAGE accounts at Lehman are frozen, it struck me that this was an extremely dangerous situation as that would exacerbate liquidity in the markets, preventing hedge funds (which are the owners of Prime Brokerage accounts mostly) from trading in the markets.
This means we have to have wider than normal stops as the market will move to more of an extreme before exhausting orders.
After 1 hour, raise stop to breakeven and reverse on that stop from the Long position mentioned at 9:30AM today.
9:36AM now, Eastern Std Time
Wednesday, September 17, 2008
BUY DIA NOW. 1 PT RISK.
10:53AM
Put/call is a high reading of 2.59
VIX is a high 33.16 reading and at the previous high made yesterday.
Reverse and go short if stopped out and risk 1 pt on that position as well.
10:54AM
DIA now 108.50
TARGET = 1.5 pts.
Put/call is a high reading of 2.59
VIX is a high 33.16 reading and at the previous high made yesterday.
Reverse and go short if stopped out and risk 1 pt on that position as well.
10:54AM
DIA now 108.50
TARGET = 1.5 pts.
Tuesday, September 16, 2008
STAY TUNED! But I Stood Aside Tuesday, Sep 16, 2008
No trading today due to high volatility and expected FOMC news which hit at 2:15 on Tuesday.
The stock market is poised for several trades which will be low risk (1.00 pt in DIA etf), so stay tuned.
The stock market is poised for several trades which will be low risk (1.00 pt in DIA etf), so stay tuned.
Monday, September 15, 2008
Re-Entry LONG - DIA 111.56 12:07PM ET
VIX back up to 28.02. Put/Call a hefty 2.59.
Retesting earlier price lows in DIA.
Buy with 1.00 pt stop.
Raise stop by 0.50 pt each hour.
Exit with 1.00 pt gain.
Retesting earlier price lows in DIA.
Buy with 1.00 pt stop.
Raise stop by 0.50 pt each hour.
Exit with 1.00 pt gain.
Exit Long - 112.00 DIA
VIX dropped to under 28 (from peak near 31) and
Put/Call down to 1.72 from over 2.00.
Exit.
10:36AM
Put/Call down to 1.72 from over 2.00.
Exit.
10:36AM
VIX Near 30, PutCall Near 2, DIA near July-Aug Lows
Long Entry 111.45 on DIA.
Risk 2.00 pts for 1 hour, 1.00 after 2 hrs, 0.00 after 3 hrs.
Will review for a sell signal later in the day.
Exit +2.00 on DIA.
10:16AM ET
Risk 2.00 pts for 1 hour, 1.00 after 2 hrs, 0.00 after 3 hrs.
Will review for a sell signal later in the day.
Exit +2.00 on DIA.
10:16AM ET
Friday, September 12, 2008
DIA 113.87 Friday 1:52PM ET
VIX is up over 26 today, up 2 pts from yesterday's low and now up 7 from the low in mid-August. Put/call activity is in puts, indicating hedging and fear building a base under stocks here.
As I type the DIA is up to 114.13. It doesn't take much time to move these days.
I see upside of 1-2 pts in DIA with 0.75 pts risk.
114.07 Last @ 1:55PM ET
Tim
As I type the DIA is up to 114.13. It doesn't take much time to move these days.
I see upside of 1-2 pts in DIA with 0.75 pts risk.
114.07 Last @ 1:55PM ET
Tim
Thursday, September 11, 2008
Stopped & Reversed! Long from 114
For those of you quick on the trigger and watching news, you would have jumped on board a lot sooner than my advice to cover all the way up at 114, but at this time we lost 0.90 on the short sale and are up 0.76 on the long right here.
With a Lehman buyout (takeover or take-under) potentially reducing the worry on Wall Street, this may create a blowoff peak here on this rally. Therefore, I advise exiting any longs in the following fashion.
1. Exit half at the opening on Friday.
2. Exit remaining half at 114.25 (114.76 last) on a stop.
This way we have a chance to participate on a further rally in the event that the reading of VIX as high as 26 has led to a decent medium-term bottom (fear induces long term bottoms, of course). I would assume that 112 would not be touched for at least a week or two if indeed this 26 reading of VIX has indeed put in a bottom.
What is most interesting to me here now is that the ratio of hard assets to paper asssets is down 50% in the past 28 trading days. I look at the ratio of Silver (SLV) to TBonds (TLT, 20 year bonds). The ratio has fallen from over 0.19 down to nearly 0.10 in literally 28 days. That's a CRASH, in my opinion. Oddly enough, from January this year to March, the ratio surged nearly 50% in exactly 28 days and put in its peak at 0.225. Perhaps there is something magical about 28 days, but I think this is an oddity. The drop is a result of many hedge funds and mutual funds liquidating positions en masse. The long-only ETF's that investors have crowded into have plunged in value this quarter to the tune of 25% or more. If you look at CGMFX, CGM Focus Fund run by Ken Heebner, one of the top performing mutual fund managers of all time, his fund peaked at the end of June and has fallen nearly 25%. His fund mirrors the action of most of the metals and mining shares, particularly FCX. See for yourselves. Even the best can get caught in the worst market conditions.
Stay tuned. Be well. Even though my timing on the last call was terrible, the strategy led to at least only a small loss at the moment.
Be well.
With a Lehman buyout (takeover or take-under) potentially reducing the worry on Wall Street, this may create a blowoff peak here on this rally. Therefore, I advise exiting any longs in the following fashion.
1. Exit half at the opening on Friday.
2. Exit remaining half at 114.25 (114.76 last) on a stop.
This way we have a chance to participate on a further rally in the event that the reading of VIX as high as 26 has led to a decent medium-term bottom (fear induces long term bottoms, of course). I would assume that 112 would not be touched for at least a week or two if indeed this 26 reading of VIX has indeed put in a bottom.
What is most interesting to me here now is that the ratio of hard assets to paper asssets is down 50% in the past 28 trading days. I look at the ratio of Silver (SLV) to TBonds (TLT, 20 year bonds). The ratio has fallen from over 0.19 down to nearly 0.10 in literally 28 days. That's a CRASH, in my opinion. Oddly enough, from January this year to March, the ratio surged nearly 50% in exactly 28 days and put in its peak at 0.225. Perhaps there is something magical about 28 days, but I think this is an oddity. The drop is a result of many hedge funds and mutual funds liquidating positions en masse. The long-only ETF's that investors have crowded into have plunged in value this quarter to the tune of 25% or more. If you look at CGMFX, CGM Focus Fund run by Ken Heebner, one of the top performing mutual fund managers of all time, his fund peaked at the end of June and has fallen nearly 25%. His fund mirrors the action of most of the metals and mining shares, particularly FCX. See for yourselves. Even the best can get caught in the worst market conditions.
Stay tuned. Be well. Even though my timing on the last call was terrible, the strategy led to at least only a small loss at the moment.
Be well.
SELL SIGNAL NOW! DIA @ 113.09
I've been watching VIX & Put/Call for a few days now without much comment -
BUT
Today... with the Lehman news swirling around, an odd event has happened.
VIX went up to 26 today (25.04 as I type)
AND
the put/call is a lowly .67 right now at 3:21PM
Considering the possibilities, this action is indicative of "BULLS IN THE HOUSE" and not a low risk signal for longs. The only way I can see that this could be bullish is if the call activity is from new SHORTS who are using the calls to hedge their short positions. So, what we'd need to see in that case would be upward price movement to be bullish (insightful, right!).
Without hedging, I'll say that this is outright bearish, and here is how to trade it.
SHORT HERE: DIA @ 113.09 LAST
STOP & REVERSE @ 114.00
Risk = 1 DIA pt, potential = 2 pts.
Best to you,
Tim
3:25PM
BUT
Today... with the Lehman news swirling around, an odd event has happened.
VIX went up to 26 today (25.04 as I type)
AND
the put/call is a lowly .67 right now at 3:21PM
Considering the possibilities, this action is indicative of "BULLS IN THE HOUSE" and not a low risk signal for longs. The only way I can see that this could be bullish is if the call activity is from new SHORTS who are using the calls to hedge their short positions. So, what we'd need to see in that case would be upward price movement to be bullish (insightful, right!).
Without hedging, I'll say that this is outright bearish, and here is how to trade it.
SHORT HERE: DIA @ 113.09 LAST
STOP & REVERSE @ 114.00
Risk = 1 DIA pt, potential = 2 pts.
Best to you,
Tim
3:25PM
Friday, September 5, 2008
Stopped out yesterday! Reviewing now for a new buy signal
The VIX has barely budged in the first hour of trading today. 10:50AM VIX is 24.36, up from 24 yesterday.
The put/call is running high, of course, with the move down in the market on the employment number.
The spike in put/call from 3:30pm to 4:00pm yesterday was, in hindsight, put buying to hedge against future sales of stock. But what we are looking for is a sign that potential sellers are hedged with put options.
We have to use tight stop parameters because the market is falling and the news is grim in the headlines. Typically these provide windows of tremendous opportunity AND risk at the same time.
The DJIA is moving 100 pts every hour or so, so that is concerning and makes risk-management more difficult.
Stay tuned.
10:57AM 110.95 DIA (DJIA etf - "Diamonds")
The put/call is running high, of course, with the move down in the market on the employment number.
The spike in put/call from 3:30pm to 4:00pm yesterday was, in hindsight, put buying to hedge against future sales of stock. But what we are looking for is a sign that potential sellers are hedged with put options.
We have to use tight stop parameters because the market is falling and the news is grim in the headlines. Typically these provide windows of tremendous opportunity AND risk at the same time.
The DJIA is moving 100 pts every hour or so, so that is concerning and makes risk-management more difficult.
Stay tuned.
10:57AM 110.95 DIA (DJIA etf - "Diamonds")
Thursday, September 4, 2008
Buy Is More Logical Now:
In just a few short minutes, again, the put-call reading has jumped to 1.28 from under 1.00. This indicates to me that put volumes, coupled with VIX readings of nearly 24, up from 22, show that hedgers have hedged against downside risk and that there is now more upside potential than downside risk.
I have more confidence in this trade now, and we are "in" now that 11,216 has been hit on the way down.
11,220 last @ 3:47PM
I have more confidence in this trade now, and we are "in" now that 11,216 has been hit on the way down.
11,220 last @ 3:47PM
Market is Poised to Rally: Reverse Strategy
11,252 last. From the last post, the put buying led to a further 90 pts down in the YMu8 contract to hit a low of 11,190. The bounce from there of 60 points should have taken you out had you not followed the "cover shorts" at 11,272.
The put/call backed off from 1.00 and dropped back down to 0.74 right after 1pm until 2:10PM. This means that put/call is moving around too much to pin it down for a 3 hour time frame. Based on that, it will require very tight stops and quick fingers on the trigger to exit according to plan.
Vix was just back at 1.00 indicating to me that it is safe to attempt a buy. Now I would look for 50 pts off of a recent high 11,266 (11,266-50 = 11,216) to enter long, and use only a 40 pt stop.
Exit at the close or 60 pts, whichever happens first.
11,224 last. 3:24PM
Exit
The put/call backed off from 1.00 and dropped back down to 0.74 right after 1pm until 2:10PM. This means that put/call is moving around too much to pin it down for a 3 hour time frame. Based on that, it will require very tight stops and quick fingers on the trigger to exit according to plan.
Vix was just back at 1.00 indicating to me that it is safe to attempt a buy. Now I would look for 50 pts off of a recent high 11,266 (11,266-50 = 11,216) to enter long, and use only a 40 pt stop.
Exit at the close or 60 pts, whichever happens first.
11,224 last. 3:24PM
Exit
Market is Now Neutral: Cover Shorts at profits.
As of 1:05 PM with YMu8 @ 11284 (and a recent low of 11270)
The put/call has moved up to 1.00 indicating a more neutral, less bearish environment.
Cover shorts from 11262 earlier low + 50 pts, shorted at 11,312 for a modest profit of 30 pts.
I am tempted to go long, but will wait 1 hour to see how the market absorbs this put volume.
11,274 last.
Tim
The put/call has moved up to 1.00 indicating a more neutral, less bearish environment.
Cover shorts from 11262 earlier low + 50 pts, shorted at 11,312 for a modest profit of 30 pts.
I am tempted to go long, but will wait 1 hour to see how the market absorbs this put volume.
11,274 last.
Tim
Market Timing Using VIPer (VixPutcall) Strategy
11:03AM Thursday, Sep 4, 2008
YMU8 11315 last.
Strategy: Market is bearish. SELL RALLIES of 50 pts.
Call buyers are active and VIX is moving up sharply (now 22.88) today.
50 pt rallies should be sold, use a 40 pt stop. Calculate the 50 pt rally from the lowest low of today's decline.
Cover after 3 hours from the time you fill, or at the close, or trail with a 60 pt trailing stop from the lowest low after you fill.
11299 is the low for YMu8 today. Sell at 11349, stop 11389.
YMU8 11315 last.
Strategy: Market is bearish. SELL RALLIES of 50 pts.
Call buyers are active and VIX is moving up sharply (now 22.88) today.
50 pt rallies should be sold, use a 40 pt stop. Calculate the 50 pt rally from the lowest low of today's decline.
Cover after 3 hours from the time you fill, or at the close, or trail with a 60 pt trailing stop from the lowest low after you fill.
11299 is the low for YMu8 today. Sell at 11349, stop 11389.
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