So my first thought is, I'm glad that the head fake concept that was just posted less than 24 hours ago re: FSLR was proved to be an effective concept, even more than the move today as FSLR is up +5.15% on the close and our call options appreciate the move as well.
I also addressed MCP which was in a triangle, that's a bit more complicated so you might want to read last night's post. Because of the market posture and the "head fake" concepts around popular technical patterns, MCP needs to be watched, even though it gained nearly 2% today on a breakout from that triangle, it's the triangle that is the weak link in the chain, MCP itself looks like its still a good longer term candidate on the long side and we may get an opportunity to add to it or start new positions for those who are interested.
I talked about transports, they should rally with the market as proof for the skeptical, but they need to pullback first and they look like they are on their way to doing that.
It's very difficult to call out positions in a market like this, my view of risk is different than most, I view your money to be at risk ANYTIME it is in the market; I don't differentiate between stocks like MSFT or BPCLN being more or less risky because I have seen some of the "least risky" assets turn the market upside down. Take Mortgage Backed Securities, they theoretically shouldn't be that volatile as we are talking about houses/property and they are backed by real tangible assets (the home as collateral), at the time, they must have sounded like one of the safest investments out there, look what happened to our economy since 2007 and a lot of that started with MBS. In fact few people know this, but CDs/Money Markets that people assume are almost risk free because their return is so low and all of the FDIC non-sense that people attribute to them as they are generally sold to you in banks; is an asset class that was merely days away from collapsing back in 2008. If the general population knew how close their "risk free" assets were from total wipeout, I doubt we'd have much of a banking sector. The point being, risk is risk if you are in the market and it has to be worthwhile.
One other thought from yesterday (which has been repeated here several times and hundreds of times in emails) is, "Whatever seems reasonable as far as a price target or amount of time in the market, double or triple that" and that's probably being conservative". Even in flat and dull looking trade, the market can be extreme in duration, this is simply because a lot of the market and making money is about pushing emotions as well as patience, to breaking points. If anyone tells you the market isn't an emotional creature, they've never been in it very long, it's like the emotional "Collective"
One other thing that struck me as interesting today was our Options Tracking Portfolio for the second day, it's not so much of a boast of how great our trades are doing, but an interesting comparison to the rest of the retail market and where and how they've positioned, how they are doing (and choppy markets as we've seen over the last 2 weeks or so are difficult to trade".
Our Options Portfolio saw a lot of repositioning Friday, some earlier in the week and yet ti has gone from a weekly rank of 31 of 604 at a +7.36% return on the week and a monthly rank of 30 of 550 again at +7/36% gain for the new month.
Today the weekly and monthly rank were 19 of 730 weekly and 19 of 667 monthly, both with a return of 15.65% vs the SPX's +1.35%. Other than our retail sentiment updates, this also tells us something about the way we are positioned ahead of time vs. retail's chasing.
I'm pretty sure you know what the shorter term 3C charts look like, they were posted numerous times today, the timeframes needed for the move over the next couple of days have been in place, the 1 min chart today was acting as a timing signal and it was in line most of the day before finally freeing itself up, the IWM is the best example, but you can see by the Q's and IWM that this started around 2 p.m., which is also about the same time as the triangles saw a failure to break to the upside as most technical traders would expect.
Otherwise there were a few trades we entered today, not too many and of course these are pretty speculative because of the expected duration.
Tomorrow is an op-ex Friday as is every now with weeklies and the action is usually dull, but last week it was the busiest day in quite a while and all of the positions we closed and opened were right on come Tuesday's open. I wonder about tomorrow with the NFP, I almost kind of wander if the max pain pin is lower and that's part of the reason we've been in suspension in this area the last day and a half.
As far as any significant changes today from last night's update, there weren't many with the exception of Treasuries moving a bit lower than what was posted about Treasuries, "T's Time to Rally?"
The $AUD also lost strength just after last night's post as it looked like it would. The $USD gained a little ground.
As far as Leading Indicators, Credit in the form of HYG remained around the same range where it had been under accumulation after gapping lower Tuesday on the open with the market gapping higher, this was a prime example of credit leading. HYG never got any legs under it today, although it was still largely in the range, but it did weaken in to the late afternoon which I suspect was part of the equity weakness and the break on that 3C in line lock on 1 min charts most of the day. Junk Credit had an even more acute sell-off so it seems clear to me that credit expects the market to head lower in the coming days as do we, in fact it seems to be leading it. Even the skitttish High Yield credit that has been holding up so well, broke lower today, but did not make the kind of break that makes me worry about losing the larger move to the upside expected after a pullback here, it pulled back enough to move markets a bit, but didn't panic as if the market was changing character dramatically. In any case, HYG continues to build a positive 3C divergence so it's fine with me, that's one of the biggest reasons I'd like to see the market head to the lower end of the range, as far as timing and entering more longs in bigger size, a head fake move under the range would be great and I'd say it's probable, the most important thing is to make sure we see accumulation in to any downside, as long as we have that, we're still on track.
One other point of interest was that our sentiment indicators were either weak today unlike previous days or turned outright to the downside and sharply just before 2 p.m., not so bad that the sub-intermediate upside move is threatened, really perfectly in scale for the kind of move to the downside we would like to see, a "Constructive pullback".
Other than that, you saw the weakness in PM's, I didn't like Silver today, I liked gold a bit more, but we'll see if a position pops up there.
Other than that, for the moment there isn't much more to say.
Tomorrow we have the NFP (Non-Farm Payrolls) at 8:30 and the F_E_D's Esther George speaking at 1:30, a pretty light day except the NFP is a big macro fundamental event, I'm guessing it comes in stronger than expected or in line and the market doesn't take it well, that's just going by today's late day action.
Well it's still early so I'll check futures later tonight and let you know if anything significant happens.
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