A.M. Update

This morning is almost too surreal to believe after yesterday's Market Update with this excerpt and chart of what we might see moving forward....

 This trendline drawn on the SPY 5 min chart of the last several days gains could be a tricky spot, perhaps even while I'm writing this as it's an obvious technical level and we know that obvious areas that draw attention of technical traders often get gamed.

This is why I mentioned the possibility of a move above the rounding top today which would set up a nice Options/Put play in to the price strength.

After that I posted the Put Option Contingency yesterday which referenced the linked Market Update comments and "Igloo/Chimney" chart above as a way to enter puts.

This morning on stronger than expected headline Euro-area PMI, futures jumped...

 ES/SPX Futures jump around 3:30 a.m. EDT just after the European open as headline Euroarea composite PMI readings come in stronger than expected along with Chinese overnight sending ES higher right at 3:30 in to a negative divergence in ES intraday right now.

 So far the averages haven't confirmed the gap up either, this is the SPY 1 min chart that should see 3C where price is to confirm the gap up.

So what does price look like this morning? Exactly as we said it might with the Put Option Contingency from yesterday, the EXACT set-up we'd need to see for a put options set-up as seen below...

 5 min SPY shows yesterday's rounding top and now the chimney on the right side of the igloo, exactly as drawn yesterday...


I'm going to let volatile A.M. trade burn-off and make sure the signals stay negative giving us a nice PPut option position entry with this gap up so long as it continues to show the distribution from yesterday. It's almost as if Markit's PMI reports which do have some strange circumstances surrounding the strength when so many sub-indicies are so weak my Market's own admission, were purposeful in creating this second chance shorting opportunity or the "Put Contingency" as posted yesterday, nearly a perfect forecast of events a day before hand.

Also as mentioned when covering oil in last night's Daily Wrap, I mentioned oil was down, but...

"The $USD saw its second day closing higher, now up +.55% on the week on Euro weakness, this in turn sent commodities lower including oil which suffered after the EIA report this morning, closing at an 18 month low, still there are some near term signals for a bounce."

And Saudi Arabia gave us that when admitting they cut supply in September and some think October as well just this morning, sending USO and our USO calls higher.

USO 1 min this morning gapping up.

Also our GLD Put is up on the day as well as Gold gapped lower on the open...

GLD's negative divegrence and gap lower this morning (1 min chart).

So far our USO calls that were just added to this week are moving up, our GLD puts are gaining as GLD moves down and the market  has done EXACTLY as forecast yesterday creating a put option entry that is favorable...

I'll keep you up to date on the signals, but I'll be setting up several tickers to be ready to enter puts....