Dow 2009

[Slapshot]

Ok,end of the session and some interesting observations:

Chart 1. Daily chart of the YM (MiniDow June Futures)

Trand Channel in effect created from two highs and supporting low, was established from 4/11/08 + 21/11/08 + 6/11/08. This support was respected on 6/3/09 and todays action as hit the trendline and closed just above it, the cash shows a close just under but I don't have complete eod data yet.

Chart 2 - Zoom in of chart 1 +: I've highlighted a previous trading rangedating from the 14/01 - 17/02 which price is currently smack bang in the middle of.

Earlier I had concerns over decreasing volume whilst price was increasing but now we have an interesting situation. 2 days ago was a down day on volume less than any of the previous 20 days. Yesterday prices were marked down to 7824 and rallied to close on their highs with an increase in volume but not excessive volume. Today prices were driven down at the open and have closed slightly off their highs indicating supply has possibly entered the market. This is expected given that price ha now entered a previous area of supply (7850-8350). In addition price has now hit the upper trendline and closed on it.

In my opinion market direction is not clear at the moment, we do appear to have some strength over the past few days but whether that is enough to take us through the previous area to theleft remains to be seen.

 

[Atilla]

Going to be an interesting Friday... /QUOTE]

Options expiry too ? As well as a couple of big earnings reports.
Think I'll hit the beach......

What effect is options expiry likely to have?

Is it a case of them being closed or new options being opened? I'm basically trying to understand the effect / relationship on price?

 

[solentsurfer]

What effect is options expiry likely to have?

Is it a case of them being closed or new options being opened? I'm basically trying to understand the effect / relationship on price?

Following explanation from Tyler Durden at Zero Hedge Zero Hedge: Late Day Trading Summary (Attempt) is one way of looking at it.

A different way to look at the late market rally is that it is options related ahead of tomorrow's option expiration... Since index options expire on the opening print, any trading has to be completed today, explaining the trading spike late in the day. Thus, dealers who are short SPX calls have to keep buying futures or SPX cash baskets to keep their hedge on, resulting in purely technical fluctuations in the market.

Couple this with the rumored tremors in quant land and the entire rally, again, is likely not related to individual equities.

 

[Atilla]

Following explanation from Tyler Durden at Zero Hedge Zero Hedge: Late Day Trading Summary (Attempt) is one way of looking at it.

A different way to look at the late market rally is that it is options related ahead of tomorrow's option expiration... Since index options expire on the opening print, any trading has to be completed today, explaining the trading spike late in the day. Thus, dealers who are short SPX calls have to keep buying futures or SPX cash baskets to keep their hedge on, resulting in purely technical fluctuations in the market.

Couple this with the rumored tremors in quant land and the entire rally, again, is likely not related to individual equities.

Does this mean as one set of calls or puts closes another new set opens and the predominance of one over another indicates future direction of Index?

Otherwise isn't this effectively buyers and sellers taking perhaps a longer time frame bets?


Or is it simply an indication that any movement in price is likely to be more down to expiration of options rather than key buyers and sellers moving market?

I'm sorry but I'm still not clear with respect to cause and effect...

 

[N Rothschild]

the main effect is big institutions will try and move the market to suck the premium out of options before they expire, i.e make them worthless..it why u get so much chops on options expiry

 

[rathcoole_exile]

the entire rally, again, is likely not related to individual equities.[/I]

try telling that to the Talking Heads on Bloomberg & CNBC !

 

[rathcoole_exile]

FWIW, for Fri17th, I'm looking to trade breakouts and breakdowns @ 8180 & 7945 respectively

plus flip the channel between 8120 & 8005. Could see a bit of action if the options-inspired Volatility is as expected

 

[solentsurfer]

Does this mean as one set of calls or puts closes another new set opens and the predominance of one over another indicates future direction of Index?

Otherwise isn't this effectively buyers and sellers taking perhaps a longer time frame bets?


Or is it simply an indication that any movement in price is likely to be more down to expiration of options rather than key buyers and sellers moving market?

I'm sorry but I'm still not clear with respect to cause and effect...

I think the writer is suggesting the latter, the rise seems to be weak to say the least in respect of volume and due to lack of liqidity rather than genuine demand.

The other answer is that it is all a fix, smoke and mirrors to make us all feel everything is OK. If you have 10 mins this is a must read Bankrupt Banks to be Hit by New Wave of Losses :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

 

[rathcoole_exile]

to sum up the commentary from Solent's link:
"Signals from the corporate bond spreads suggest strongly that the US Economy will falter worse"

and

"The Wall Street maestros sold the investment community a bill of phony goods that will be evident by summer."


"They engineered a bank sector rally based on falsified earnings reports / movement pervaded Lower Manhattan offices to formally call in all Citigroup shorted shares on loan. ... it helped cause a big bank stock rally"

 

[solentsurfer]

to sum up the commentary from Solent's link:
"Signals from the corporate bond spreads suggest strongly that the US Economy will falter worse"

and

"The Wall Street maestros sold the investment community a bill of phony goods that will be evident by summer."


"They engineered a bank sector rally based on falsified earnings reports / movement pervaded Lower Manhattan offices to formally call in all Citigroup shorted shares on loan. ... it helped cause a big bank stock rally"

Excellent summary - I've always had admiration for journalists' ability to use so many words around a few salient points, probably stems from my panic in English lessons if asked to come up with 500 words on what I did during the holidays when all I could think of was 'played football, went fishing and went to Grandma's'

 

[rathcoole_exile]

thanks for the link to that very interesting website, some great reading there !

 

[N Rothschild]

sorry did someone say you could enter my thread rath?

 

[rathcoole_exile]

oops sorry, i'll never darken your door again :-(

 

[SSINGH]

I want to short the FTSE 100 (JUNE)....looking for a higher entry...somewhere around 4080

 

[VANTERHEYDEN]

This market is nothing but over bought - manipulated and bought up by the naive that believe things are rosey! Nothing could be further from the truth - increasing Unemployment and a global economy saving more than their spending can only make things worse. This Monumental Rally we have seen is going to seem like heaven when things start to turn down and drop like a stone.

My only surprise the market hasn't sold off yet! Was expecting a Friday afternoon sell off - it could happen - but with so many dumb buyers out there being suckered in who really knows

 

[francisfinley]

This market is nothing but over bought - manipulated and bought up by the naive that believe things are rosey! Nothing could be further from the truth - increasing Unemployment and a global economy saving more than their spending can only make things worse. This Monumental Rally we have seen is going to seem like heaven when things start to turn down and drop like a stone.

My only surprise the market hasn't sold off yet! Was expecting a Friday afternoon sell off - it could happen - but with so many dumb buyers out there being suckered in who really knows

vanhyperlating or whatever it is.

you said this a month ago remember?

who is dumb to buy at what could be steal of the century buys of stocks? yes fundamentals say look the economy is in shizer.

try the technicals. they are saying buy buy buy the monster trendlines have all been crossed the NQ is as high as the new president rally.

the down leg will come but dont try to catch tops and in my opinion you have already ranted acorss all the indices boards previously that it simply must fall a month ago. remember people buy lows and sell highs. this will come down maybe today maybe next week and institutional smart money is still waiting to see if this is real.

people wont think much of you coming on and saying it must go down each time without reasoning. provide charts and technical arguments. remember it can only go up or down!

but dont tar buyers as naive. i think it would be wise to start base building for long term plays. I wouldnt call it monumental. look at the downside we have had. that is epic.

go with the flow. dont fight it.

 

[VANTERHEYDEN]

I stated it a while back - the market then dipped - however it didn't sell off - I haven't said anything of the sort on other boards.

The Trend has gone too far - Why do I need to post charts when we all have the same charts in front of us. Every single signal is suggesting this market has over stretched itself. The Trend being your friend won't last for long unless you adopt the next trend which will be down down down.

Build a base on selective stocks but realise there is a lot of rubbish out there on inflated P/E's that can only go one way once people realise earnings aren't really that good anymore

 

[Atilla]

I stated it a while back - the market then dipped - however it didn't sell off - I haven't said anything of the sort on other boards.

The Trend has gone too far - Why do I need to post charts when we all have the same charts in front of us. Every single signal is suggesting this market has over stretched itself. The Trend being your friend won't last for long unless you adopt the next trend which will be down down down.

Build a base on selective stocks but realise there is a lot of rubbish out there on inflated P/E's that can only go one way once people realise earnings aren't really that good anymore

If you keep wishing the same wish your wish one day will come true. Have you guys seen the film AI??? Great stuff.

Well I've been expecting more highs and it's like getting blood out of a stone. Either way this is very critical area. 8200 hasn't been cracked and I have a thing about the number 2wo's.

I'm now thinking blow off or blow up is imminant. Still not very clear but we have got to test these levels now. So bears have to show up. It could be that they are like rest of us waiting for labour May day or something who knows. One week in April left so according to my radar the big sell off is near.

I can't see 8400s being reached now. 8200 maybe. Anything 8220 is a buy and anthing below 8180 is a sell imo.

On 4hour charts there is MACD negative divergence taking place so when the bars start falling and indicators & MAs switch direction I hope to be shorting.

 

[francisfinley]

I stated it a while back - the market then dipped - however it didn't sell off - I haven't said anything of the sort on other boards.

The Trend has gone too far - Why do I need to post charts when we all have the same charts in front of us. Every single signal is suggesting this market has over stretched itself. The Trend being your friend won't last for long unless you adopt the next trend which will be down down down.

Build a base on selective stocks but realise there is a lot of rubbish out there on inflated P/E's that can only go one way once people realise earnings aren't really that good anymore

well mr VTHDN

the market will do what it has to. just be careful. id be a buyer of pullbacks until something nasty rolls into town. notice no one cares anymore about bad news. its in the charts. whilst everyone is screaming death to the rally it rolled on past those major trendlines. we all know until banks are forced to declared their toxic assets it will roll on. most of the recent move has been on declining volume. last nite gave us a real insight. the H&S inverse i thought like you would come down. it didnt. dont trade what you think or expect or hope. just trade what you see and mid term it is to buy this sheet up at all costs.

 

[rathcoole_exile]

I have a thing about the number 2wo's.

embarrassing childhood accident ?