S&P short term cycle swings

[SyndicateTwo]

okay, how much would you pay for a company that will guarantee you they'll make $3.85+ per share for 2009? I'm talking multiple.

20? 30? Hell, if it were a tech stock I'd say AT LEAST that.

Would you pay 8x that EPS for that stable outlook? I tell you what - how about less than 6 right now?!

Here's the trade -- AET. Right now as I type this Monday morning, the stock is at $22.40. The JUNE $25 call is at .85. 10 of the last 10 years, AET has run up between May and early June. AET currently trades at a PE of under 6 with a PE of 8 making it a $30 stocks. IF it runs to $30 by June expiration, you'll make 5x your money.

I'm not counting on that. But it should be a big winner nonetheless.


Hell, with the math the way it is, it could be a nice long term investment right here.

[MRVLReader]

S2: Are you talking about the charts below:

http://www.deepmarket.com/season/ffiv

http://www.deepmarket.com/season/brcm

http://www.deepmarket.com/season/trmb

You are right,FFIV will be almost greens during the Month of Oct. and TRMB gets her greens on May...

Just change the stock's name, you can test any stock.

Thanks!

[SyndicateTwo]

One stock that is ABSOLUTELY going to be on my list for Oct is FFIV. That thing AVERAGES over 15% each Oct.

So, don't lose all your money between now and then. Remember MRVLReader's TRMB trade I gave him. You saw what that did. $17 to $22 or so in a week purely on seasonality and it turned $2500 into $13k using the out of the money calls.

FFIV is definitely one that will do the same I think.

Actually, probably better. I'll start to list the stocks on the top board as I put the list together.

[dapro]

875 resistance has held once again. End of month means that May is here and time to go away (and take your money with you).

[SyndicateTwo]

Reversal could be here. The TNA's average 3month daily volume is about 15 mill shares and today's in just the first 4 hours is almost 13 mill on a big reversal so far.

[SyndicateTwo]

DAMN. Wish I could say the same. Didn't hold it that long. That's the problem with crazy markets like this. It makes you gun shy about holding when you should be.

I should take my own advice.

[SyndicateTwo]

Well, to add to it, this swine fly is now being talked about as a possible bio-terror 'test' gone bad in Mexico. Or, maybe not 'gone bad'. Maybe as planned.

But then again, you know how people get when things get out of hand.

That said, by all accounts, today should have been a bad day. But I think as Pisani said many funds are net short going into end of month and they are getting killed, thus covering major shorts for month-end statements.

Here's some interesting info to consider---

Look at the $NASI chart. WOW! Now, what happened today? The $NDX has led the market higher along with the $RUT. The 200 day moving average for the $NDX was 1391. Today, we hit I think 1398, then closed at 1382. The 200 day moving average is going to be declining for the next 6 months as long as it stays under 1800. A time tested technical index sell signal is when an index rises to hit a declining 200 day moving average.

Well? You add in the extreme overbought conditions and you got the setup for a selloff.

Will it happen NOW? Who the hell knows. I do agree though that much of that TARP money was NEVER intended for toxic asset buy ups. It was ALWAYS intended for liquifying market makers to make markets in stocks to assure the stability of the market. That money now is leveraging into the market to make up losses at the expense of short sellers being squeezed. TOTAL MANIPULATION! and TOTAL BS!

But it is what it is.

[MRVLReader]

S2: This is A " Thank you Notes" to You!!!
On Monday, April 13, you worte:
...
Oh, also TRMB has a big seasonal thing going this month through May. It also looks like it wants to move up. At just under $17 now, it looks like it could fill the gap to $20 and then run to $23? Possibly by the end of May. The May $20 calls are .35. If the market does a spike here to the end of May, then TRMB could easily run to the $23 area or Dec swing high. Those would jam to 3 or turn a say, $2500 investment into $37000

I spend $2,520 for 7200 TRMB May $20.00 call on the next day...
then, 2200 was sold for $1.15 each to get all $2.5K back...
I still hold 5000...
Please take a look: Today, TRMB May $20.00 call is more than $2.50...

Thank you very much, S2!
What is the next one?
Thank you again!

[pHiLtHy]

ultimate pump-n-dump?

[Cloner]

Banks got upgraded...

"After 5 years at underweight, a widely followed analyst upgraded the entire US banking space.

We're talking Fox–Pitt Kelton analyst David Trone who rather suddenly changed his outlook on the sector."


http://www.cnbc.com/id/30463033

[dapro]

I am starting to believe in the conspiracy theory that's saying that the government has leaned on the MM's when it comes to the bank stocks and had them inflated to artificially high prices. Now, when Timmy comes out and says that a few banks need to raise capital, the banks won't have to beg for more TARP money (is none left), just sell more stock at these high prices. That way it minimizes dilution and everybody is happy. Then the market can fall back to reality.

Hell, a pandemic can't make this market fall back......jeez

[SyndicateTwo]

Thanks, but that trade is now over. Check out THIS one-->

[SyndicateTwo]

Here's what I'm doing right now because I'm just confused as hell on what or how to trade. I am getting completely different ideas on what's going to happen.

If you take a step back and look at the chart of the SPX in detail this last rally eventhough feels impressive, it's actually been pretty weak. However, many stocks are up over 100% since March. It clearly feels right now that it wants to roll over. Plus you have the 'Sell in May and go Away' thing. Peter Eliades along with Hersh of the Stock Trader's Almanac are both saying we get a big selloff into the end of the year. Remeber the Jan effect? How goes Jan goes the end of year? Well, look at this last Jan. Hell, go look at the last couple Jan and how the years ended. Pretty amazing.

But the big question is, what's going to happen between now and then? Dapro is saying McClellen thinks a big summer rally. Moe Ansari seems to now be on board with that idea although I don't know what 'whopping' means. Another 25%+ from here? SPX 1000? 1100? Well, strictly fibo speaking that's about right for a 50% retracement.

And, that wouldn't even end the bear market at that level. A 38% to 50% retracement would only be a big bounce technically from the 666 low. This chart shows the larger fibo levels from high to low. I would think we should at least do a 38% retracement which we could be in the process of now to SPX 1014.





A break north of 875 means we're most likely headed that way now. I'm not sure about that XLB trade except for the fact that that sector is way way overbought and many are buying that same spread.

One thing I do know for sure though is that this Oct could be a monster trade in which I fully plan to buy many out of the money calls that I expect could 10x my money within a month in Nov or Dec.

That will kind of go against the Jan effect overall, but a sharp rally in that timeframe could still produce those gains.

Now Moe is standing by his idea that we still need to do a 5th wave move down. The idea is that new lows will be made simply for the fact that all bear markets (and bulls in reverse) always retest previous lows in order to confirm that as a low and there are no more sellers or weak longs washed out. That's the purpose of a retest. 2007 saw two SPX 1550+ hits before turning south, ie, a double top or retest to ensure there aren't anymore buyers.

That SPX 666 low will be tested again within 50 points.



So, what I'm doing personally is what I did with MRVL. Rolling a collar without the puts. I bought the TNA originally on Monday for $22.82. I then immediately sold the May $15 calls for $7.90. That's a basic covered call however with literally no spread other than a measily .08. That's not the trade. The trade is to keep the $15 calls short through expiration in the event the stock falls back there like it appears it wants to do. Will it? Who knows. But since it's so deep in the money, it's delta is nearly 1, or moves with the stock 1 for 1. When the stock runs to over the bollinger band on the daily, I sell it for a profit, let it fall back and then re-buy lower by .20 or more. I have 2000 shares and 20 short calls.

Each .20 I make $400. If the stock falls, I sell it even for a loss on the second or third or forth of whatever purchase, and then re-buy lower. So, if I buy at $22.82, then sell at $24, I make $1.18. Then I re-buy at $23.90 to protect the short call position.

To keep the trade going, I then say, sell at $23.75, then re-buy at $23.50. What just happened? I lost .15 on that trade, however I actually MADE money in that trade because I lowered my covered call basis by .25 on the buy lower. As the stock fell, so did the short calls. So eventhough it's a technical loss, it's actually a win.

Again, the idea here is to always be in the game and covered on each direction. If TNA falls to $15, that actually would be awesome because I can then cover the calls for a hugh profit, and either re-short a lower or higher strike call depending on what the Russell looks to be doing at the time.

Now you have to be a trader and understand the technicals on how to time intra-day peaks and troughs to get these trades correct. If you're wrong and you sell the stock and watch it run away from you while holding the short calls, you're totally screwed. BE CAREFULL doing this. You can try it with a much lower volitile stock like MSFT who's options trade like penny stocks. You'll have a much harder time making a lot of money with a small position, but you won't worry about getting screwed with a trade gone bad.


I'm doing this because I have no idea what the market is going to do here. If it falls next month like some are saying and falls good into say the 600s or low 700s, I'd use that as a major buy op because that could be the final leg down and McClellen could be right about a big summer rally before the 2nd wave larger pullback into Oct.

I think this Sep will be bigtime ugly as most mutual funds are going to be big dumpers of stocks. If Obama gets his budget passed with 0 Republican votes as will be the case and the economy starts to stink again, the politics will make investing impossible. If that happens the Dems are screwed in 2010.

I can't imagine much more upside here now with the $NASI and $NYSI so high.


So, sit back and wait.

[The_Net]

Congrat to all the BRCM longs!

[sungolfer]

S2 with this expected pullback,are you staying in your XLB position or selling and re-buy later.Reason i ask if we have a pullback won't it make sense to take your profit and re-entr.As a daytrader i have never played options.Like to be in and out asap.They only stock i held was MRVL because i thought everyone knew something i didn't cost me 45k.Your posts on the call's and puts are easier to understand than some of your options on the mrvl board.I must have to omit that i always thought that once you bought a call or put it had to be in the money to sell.So i stayed away and never looked into them.So when you take a position what quidlines could you offer as i plan to paper trade your positons to get my feet wet.thanks

[dapro]

McClellan is saying that;

For stocks - Choppy until May 18-22, which will be the time to enter stocks for a "whopping summer rally"
(September and October are going to be "ugly")

For the dollar - May 6-8 top and a bottom for gold and T-Bonds.

[SyndicateTwo]

look at this chart

[SyndicateTwo]

Oh yeah, look at THESE charts ---

(BTW, I don't subscribe to McClellen anymore. Can you keep us posted on his turn calls so I can correlate them with Eliades?)

[dapro]

Resistance at around 875 still holding and looking like a double top. McClellan called for a top to happen around 4/27 (Monday). Then I think that she tanks. Hell, even Cramer is telling people to take some profits so it must be time for a dump. JMHO

[SyndicateTwo]

man, today has all the feelings of a short capitulation.

[SyndicateTwo]

TRADE ALERT!!!---


I'm buying right now 50 July JNPR $20 puts for $1.35. Look at that chart!

[SyndicateTwo]

When they let LEH and BS go, they didn't realize the fallout of the market making biz. That's what they don't want anyone to know about. Smart people already do. But like I said, it's understandable why they did what they did and are doing what they are doing.

The next leg down is going to be a classic definition of a 5th wave. The psychology being that there just won't be the appetite for holding stocks if they appear to be falling out of bed again. This is when you get your true capitulation. The final, 'F' it!

There's still too much optimism out there. Just look at the PEs of AAPL, RIMM, AMZN, BRCM, etc. Why would you pay over 80x AMZN earnings in THIS environment?

Do it with your money. Shorts most likely the screwed ones. They just never learn -- don't short AMZN.

I think BRCM is a monster short here. But the market is going to go down simply because people just don't have any more money to invest big and the leverage is gone. The prop up money from the TARP as I explained is probably already used up. It did what they needed it to do. So, any future selling will appear to be just a typical normal selling cycle rather than something more ominous as was the case last Fall.

[SyndicateTwo]

Want a gamble trade? Here's one that could be a triple in a month---


RF


BUY MAY $5 PUT FOR .60 or less
SELL MAY $4 PUT for .25 or more


Net debit = $.35. $35 will get you each spread. That's your total risk. If you buy 100, it will cost you $3500. However, if RF is at $4 or less come late May, then you make a $6500 profit.

Do the math accordingly.

Why would RF fall? Well, they are square in the eye of the stress test. This could be a pretty good risk/reward.

Just do 10. $350 to make $650. Not bad.

[robanson]

S2--Interesting tale, makes a lot of sense. So, it's got me thinking, to think through what it means for the near future. The next trip down in the market is likely to be a very nasty one, so the fallout should drive oil much lower thus screwing several nations that the new Pres is trying to gain political leverage over. Consumer pain will cause all the average Joe's out there to clamp thier wallets shut even more tightly then they are now, screwing China. The public is already pissed about gov't bailouts...my point is our govt's willingness (and ability) to articifically prop up the market may be reduced. What's that do to the dollar? What's that do to basically everything Russia produces?

Point is maybe Uncle Sugar let's the public see a bit more of the dark side and feel some more pain in order to put the screws to China, Russia, Iran, our new pal Chavez. What do you think?

If you think about it, we're already now weilding our max military capability. That's one instrument of national power maxed out. Maybe "they" let the fallout occur to show the world who's boss?

Also, what do you think of Cramer's call for a housing bottom this June?

BTW the system worked like a champ today, did your ES prediction work out?

Thanks

[SyndicateTwo]

Both always go up this time of the year. But remember, the biggy this year will be Oct 28th!

Now, I am buying tomorrow the June $26 Puts on the XRT for $2.10 or less (hopefully). I'm also buying the June XLY $23 puts POSSIBLY. Not for sure just yet. The $NYSI and $NASI are both WAY TOPPY, almost records. The MACD on both are starting to roll over. I'm torn though on the possibly last leg higher to 900 to 950 on the SPX. If that happens, it should be quick and over with next month.

So, just half positions in these.

Also, the XLU is turning and I'm looking for a put on FPL.

[TycoonSoon]

Wish I saw your post earlier...both PDC, TRMB chugging up nicely.
Good call.

[SyndicateTwo]

Who wants a great conspiracy theory? I got one!


Okay, what the hell is going on out there in the market? One day it's falling off the cliff, the next it's rallying and everything is great. Actually, lately, any pullback and a clear warning sign of another leg down has been met with an unusual buy spree. For those who've traded for years and hang on the market's every tick of the day, much of the trading lately has been very strange. What 'should' happen suddenly turns into a smack across the head if you're trading the wrong way because your experience of what 'should' happen actually ends up being something that 'shouldn't do that'.

So, what gives?

First off, it could be as simple as a reversion to the mean on a larger scale. Sure, pull up a chart of the DOW or SPX and you can clearly see a monster selloff and extension of the mean average price over a couple of years on a weekly chart. That's pretty obvious.

But, is there more to it? Take a step back to last year when the freefall began to pick up steam around late summer. Now remember that the then treasury secratary was Hank Paulson who used to run Goldman Sachs was all over the place telling anyone who'd listen that they needed money and fast. That money had to come from Congress and at first, died, sending the DOW down 700 points. Remember? Then a week later the Congress passed the $700 bill in two separate packages with each having to be approved before spending it. But that money was SUPPOSED to go to buying off the bad loan portfolios of the problem banks. Remember? A month later, we found out that none of that happened. Instead, they used the money for something else that to this day is still a mystery. Or is it?

Remember how I told you how the market works? Market makers and specialist companies are just your ordinary large investment firms. However, in order to have the priveledge of being a market maker, you have to agree to be the buyer or seller of last resort. That means when everyone is selling, you gotta be buying it from them creating that liquid market.

But what happens if the company you work for has no more money because another division of that company is bankrupting the rest of it? Can you say, LEH, or BS?

Yes, both of them were market makers. Now imagine you wake up one morning ready to trade and you see that there are no bids for your stocks? Can you imagine what the hell that would do to the market psychology? NO BIDS????

Apparently, much of that first $350bill went to these firms in order for them to 'make a market' in the stock market. Also, a ton of it went to pay off CDS insurance policies that European banks bought which they threatened to pull their investments in the US markets if they weren't made whole. Remember the big deal last month about them getting 100% of their money back from AIG when US banks were only getting (or told to get) only 30%? That dies a quick death, didn't it? Why? Because if the public ever realized how bad it was about to get - ie, the entire market having all bids pulled because none of the large firms had the ability to be buying all that panic selling, you literrally could have seen the DOW open up at under 1000 one day in Sep or Oct. Yep! Imagine that.

Every retirement account destroyed. No capital for anything. Depression? No, no, no. Implosion.

The reason why you're not hearing all this from the Congressmen who were pounding the table about getting to the bottom of where all this money went is because they have been enlightened as to the seriousness of what the deal was back then and to let it go because if the public becomes aware of where things truly are even to this day, that scenario could still happen.

Not for 10 or 20 years will this story be told. But what about now? Well, word on the trading desks is going around that much of the money that's juiced the market to this level is also from this TARP fund passed around via the treasury because higher stock prices act to function as not only a calming mechanism, but also allows various companies to sell stock to raise their own money without needing handouts even when possibly much of that money that pushed the stocks up was handout money. It just looks better.

However, much of that stuff has been done now. That stock that got sold off in the initial legs down has been and still is being sold back into the market to investors who are jumping in now. (fools). It's a trick to pass off phony assets to dumb investors.

The market isn't trading on anything fundamental - it's trading on mechanics. No one cares about fundamentals now. They care about stability. The next leg down could be a bad one because those that got caught in the last 6 months without selling aren't going to be fooled again.

The UK today just raised taxes on top earners to 50%. Do they not see history for what it is? With Obama and this congress about to triple the debt to north of $15tril, taxes here are going to get ugly. Baby boomers are going to need their money out of the market to live on. Who's gonna be buying up all that inventory of stock? Especially in this market? Huh?

Don't listen to hypsters. If the SPX hits 1000 this year, it will only be a mechanical thing such as short squeezing, etc. Just watch your wallets.

[SyndicateTwo]

Interesting short term cycle E-mini setup---


Okay, how about this -- tomorrow, Thursday, if the ES June E-mini is below 835 by 8:45 PST, then it's most likely that it will trade down to 810 to 820.

Don't even ask how I know that.


Just see if it works out.

[MRVLReader]

Now, May TZA $20 calls is $12.50, just wait?

[MRVLReader]

So, are you ready to play TZA again? What is the entry price this time?

[SyndicateTwo]

Look close at the SPX chart and you'll notice a smaller inverse H&S setup with the right inverse shoulder low possibly setting up at 800ish. Being that that is the area of the 50 day and a possible shoulder low, that could spark the next final leg up rather than a fall to 750. So, watch for SPX 800 to be a possible entry point with the target then 200 points off the 875 high rather than the 750 low.

I just can't believe though that the SPX would justify a level over 900 fundamentally. That's why the wave counts here are so important. They are all calling for a next leg down to new lows. But this H&S has everyone talking. If the SPX comes in at an EPS of $60 or less, SPX 950 or more will be extremely overvalued. So, it would be just a technical short squeeze setting up another monster short.

We'll see. Possibly the market is setting up foolish longs in that H&S pattern. Bull trap?

[SyndicateTwo]

XLB TRADE???

[SyndicateTwo]

May 14th to 17th seems to be a possible cycle top date. The price target for the SPX would be around 950, so a quick pullback to 790 to 800 (50 day) would be a perfect
b
wave pullback. Personally, I'm probably not going to be buying into this rally. My goal will be to set up short position targets using out of the money puts on various stocks/etfs I'll mention later when we get into May.

Why?


Well, the idea here is that there are three wave counts all working together. You have a 'grand cycle' on top of a weekly wave cycle on top of a daily one. The monthly grand wave count is saying this entire decline was a wave 1. Only a wave 1 from the 2007 high to the 666 low! Yikes!

The weekly count says we just completed a wave 3 down (666 low) which is pushing us into a wave 4 up now. That wave 4 being a corrective wave is also made up a waves in which case is an ABC with the rally off the 666 low to the 875 high being the 'A' wave. The 'b' wave pullback we're in now should fall to 790 to 800 or the lower 50 to 61% retrace levels which then sets up the 150 to 200 point final C wave to that 950 to 1000 target.

All this should happen between now and May sometime. If the grand cycle is correct, then this is a wave 2 correction up off the wave 1 fall.

Bottom line, just expect a top in May and then go short.

[SyndicateTwo]

BTW -- the fibo time cycle is for this wave b or 2 pullback to last down to May 6 - 13, or 38% to 50% time projecting forward.

[SyndicateTwo]

TNA chart

[SyndicateTwo]

I don't know, it was breaking out but now has reversed back down. The thing about SOLF and LDK is that they are both profitable and now subsidised by the Chineese government.

So, they should get a big run once the selling subsides.

[SyndicateTwo]

Yeah, this system as basically two ways to trade -- either you do what you're doing, which many times will get you in a tad too early, but right in the turn eventually, or you wait for the pullback to the SMA as a more refined entry, but less signals.


Today though was the worst trading day of the year. There was no bounce! It just kept going down with basically any long entry never allowing you to make even a point! I had money burning a hole in my pocket and had to make a few trades and al 3 were LOSERS! But the 'system' never was allowed to perform because it never had a bounce in either direction -- it just went down.

What a sucky day. I sold my TZA calls for $3k and lost it all on these f-ing ES trades.

I know this stuff happens, but it doesn't make it any better.

Stupid me.


As for your other question, yes "Sell in May and go away" is probably going to be more true this year than most. However, the Oct cycle this year is WAY more important because it literally could be the lifetime low. With just about every professional trader/investor looking at the same wave counts, a move at or below SPX 666 could mean that all those guys will feel extremely comfortable going 'all in' this time because they will all be counting a 5th weekly wave low which basically means they don't have to fear another leg down to wipe their new longs out.

You think 200 points on the SPX the last time was big? Wait until you see this next rally this Fall/Christmas!

That is, if all things play out as they are appearing to.

[SyndicateTwo]

S&P update --

[Cloner]

Is SOLF still worth a swing trade if we see 3.50 ?

[robanson]

S2--I have been using your system w/ some success...thanks for that! If you could "dumb it down" a little I would appreciate it to make sure it hasn't just been luck carrying me.

When the EMA crosses below the SMA I've been using that as a short enrty, right away, and cashing out after 5 points on down the DOW (YM). For long entry I look for the EMA to cross above the SMA and use my "gut" to a larger extent but mostly scale in right away and scale out after approx 5 points. I was a little confused about your advice to wait for a pullback to the SMA? 'Cause I don't do that, in fact it seems to run counter to what the moving averages are telling you to do. I use a 5 min time period.

Is that basically the jist of it? Anything I should be doing to refine my trading? Phenominal results for a purely mechanical system but it often just dosen't "feel" right, so I tend to get in and out quick (5 points,like I said). Any advice?

Also, how do you fell about sell in May and go away? Is that in full effect or will it be somewhat muted this May because of all that's going on? For ES/YM trading should we focus on shorting?

BTW--you seem to be on top of your game lately. I enjoy this board and your posts, please keep it up!

[dapro]

That's pretty much it according to what the "experts" (including Moe) are saying/implying. McClellan has been calling for a "top" to occur around 4/27 but he's also been known to be off. Monday will (hopefully) give us a clue. The markets are at that point where the SPX (and possibly the markets in general) will either crater or breakout. JMHO

[SyndicateTwo]

This chart says it all I think

[SyndicateTwo]

http://www.cnbc.com/id/30264383

[dapro]

Any opinions on this chart?



http://stockcharts.com/c-sc/sc?s=$SPX&p=60&yr=0&mn=0&dy=21&i=p99086017164&a=126622510&r=692

[dapro]

Personally I don't see the SPX going much above 875 right now.

[randygee]

i am long dow till 9190 ish, short gold and long apple from $83

[SyndicateTwo]

just bot 5 May TZA $20 calls @ $14.40 each

[SyndicateTwo]

A lot of people buying May BRCM $20 puts


http://finance.yahoo.com/q/op?s=BRCM&m=2009-05


Look at the open interest. 27k of them with 2700 bought yesterday.

Now, those could be for protection, or at least many of them. But it's getting very interesting.

[SyndicateTwo]

Market about to reverse?


http://www.decisionpoint.com/TAC/ORD.html

[SyndicateTwo]

Did you buy the $20s? I bought the $15s. If you bought them at $.35, I'd say, yes start selling them.