Phantasmix Stock Blog

A bear flag on S&P index. Frankly I expected something like a June bottom, but it doesn’t look like that so far. Maybe it will move up after a quick retest?

I haven’t sold anything yet, still holding March SPY puts, April SPY calls and some now-penny-stockish t*rds BEE and LYG.

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3 months of advances on SPX was erased in 13 sessions, or 3 weeks.
They say it’s a sign of a bull market – small steady advances and quick vicious sell-offs.

There hasn’t been a whole lot of institutional buying so far.

As predicted, I’m tempted to hold SPY puts over the weekend, but last 12 Mondays in a row were UP days. What to do, what to do…

1,050 on $SPX or thereabouts is a very logical support zone – 34ema and 50ema on the weekly are around there, and stochastics are getting close to oversold finally… Curiously, the top box stochastics – long-term – haven’t moved much.

Around that level, or $105 on SPY, I will sell my SPY puts and will add to the calls. Once it gets to $105, it’ll be tempting to hold to $103, but that’s just greedy.

Ah, finally – buying on weakness showed up. Approximately $400MM on SPY alone today. Bounce time! (imvho, dyodd blah blah)
Within 1-3 days.

SPX, S&P 500, looks oversold and the stochastics are where most of the previous bounces happened over the past year, except once. During the first correction there was still lingering fear, March wasn’t a very distant memory in people’s minds. I think these days most are inclined to buy on the dip after many months of steady advances.

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I watch the WallStJ. buying on strength and selling on weakness lists daily (literally, even when not trading). While it’s not a very reliable short-term predictor of anything (I’m sorta lying, I’ve actually made some good day trades based on large selling or buying volume, but I don’t think it’s necessarily a good predictor for the next day, let’s put it that way), longer term it’s been shown to mean something.

Over the past 5-6 weeks there’s been significant selling on strength on the indices and some big individual stocks, almost every single UP day with only a few exceptions. The total selling on SPY is somewhere between $1.5-2B. There was one big buying day on weakness day and it was close to $400MM, maybe $350MM, I forgot. The net is still a large amount of selling. Over this last little sell-off there hasn’t been any meaningful buying on weakness, none at all really.

$TRIN, the Arms index has been running over 1.0 quite a bit lately as well, meaning in the overall market there have been more shares on the ask than on the bid.

In conclusion, this sell-off may catch everyone off guard, but it’s not based on much more than “more selling than buying”. I don’t have very sophisticated tools for tracking that.

I do have March puts and April calls, so yeah, I want to get rid of them profitably in that order however, I didn’t make up all of the above. And I admit, the daily chart IS OVERSOLD. The weekly is still overbought, in fact, has barely budged.

In the future, very near future, I will be studying arbitrage trading closer, as I’m now much more interested in making money than getting the direction right. I may still try and guess the direction, purely out of interest, but don’t want the $$$ to depend on my opinion which from March to July was way off.