Market Update & GS Follow Up

As far as closing the GS April put position, it's tied to our market expectations for early action this week first expressed Friday afternoon in Looking Forward to Next Week (as I look for the 3C signals the last 2 hours as they tend to pick up right where they left off on the next trading day, even over a weekend) and then again last night in The Week Ahead...

First the GS P/L and charts...

At a fill of $5.75 and a cost basis of $4.75 the GS April $165 Puts came in with a gain of +.21% 

Here's why I closed them, remember I (personally) always want to close them in to downside momentum and BEFORE the first hint of lateral consolidation, I can always re-open them. I'm not looking for a lotto ticket gain with options, I'm using the leverage because I think it's appropriate for the position, usually to make the profit potential more attractive in what is otherwise a good looking set of signals, but maybe not a trade with enough duration to be worth it as an equity long trade.

 You can see the 3C leading negative divegrence on the 1 min chart and this morning it moves to a relative positive.

Also look at the difference in the ROC of price, the Rate of Change increases dramatically which "seems" good, but this is often a sign that the trend is about to change and lateral/sideways is a trend and one that usually isn't good to the gains in option positions.

 GS 3 min going from negative to in line to a small leading positive divegrence, these are the 4 stages of a cycle, just on a much smaller trend basis.

 GS's  5 min chart shows the same so the divegrence is starting to gain some strength , thus it makes little sense to hold the puts and watch the premium/profits disappear.


As for the market, if you saw Friday's expectations which were summed up again last night (see the posts linked at the top of this post), then you know I'm looking for a short term speculative bounce, but only after a slightly wider base/foot print is established. I suspected a "W" type base would take shape early today and we'd likely see a head fake move below Friday's lows BEFORE we got that speculative bounce in which we opened several positions Friday, I'll look at more shortly.

 The 1 min IWM confirmed that line of thought as the divergence from Friday (positive) continued today on the open with a positive on the slight pullback.

The IWM also shows the volume indicative of a stop run, which is what I was looking for in the "W" bottom today, that creates supply that can be absorbed and typically happens shortly before a reversal and as such serves as a good timing or reversal indication.

 QQQ 2 min also confirming both the positive divegrence and ongoing widening of the small base as well as the lower low below Friday's low (head fake).

Here we see the same in the SPY, except it has not made that stop run I anticipate,  yet.

Note the leading positive 3C divegrence...

And out to 3 min as the divergence migrates to longer timeframes (building strength) we also have a positive this morning. The SPY head fake move below Friday's lows may serve as the timing signal we are looking for ,  but as mentioned Thursday and Friday as we started putting some speculative positions on, THESE ARE VERY SPECULATIVE,  BIN SOME CASES IF YOU HAVE A LOWER RISK TOLERANCE IT MAY BE BETTER JUST TO SHORT PRICE STRENGTH RATHER THAN TRY TO HITCH-HIKE ON THE WAY UP AS WELL.


Finally the Custom NYSE TICK Indicator shows the same thing, the same story unfolding...

Note my histogram of the SPY vs TICK is ascending as we start moving laterally in what I suspected would be a "W" type base, remember though it's still very small and very speculative.