Zeev's Ideas

[Koikaze]

ZEEV, TECHNICALS - up to ZEEV:325007, 11/21/04

11/11: (321122) (*COMMENT*)
Zeev, I know, But never understimate the power of my market trading inabilities<g>
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Yup, it is packing now and the July high are behind. Yet, the EPC is well above .5, so any retrench should be relatively mild... if we get one (g). Because of the inability to now ahead of time if the map will be followed or not, I always keep few things on the table, and often put OB's under the market to get few things to ride on.


11/12: (321846) (*COMMENT*)
zeev, might this be a coalescing of your december and january rallies into one rally here?
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It could be, the new highs keep expanding, but we are getting close to levels that are "unsustainable" (like 500 new highs on the NYSE), so it is still possible we get a retrench, i was expecting to get a "bona fide" sell signal today, but no cigar. So I am slightly defensive with 40% cash, which I need in case they give bargains like ZBRA again....


11/14: (322049) (*COMMENT*)
my opinion on max pain is that it follows the index rather than being a predictor of future action as most believe. about the only time i look at it is times like this, where there is a significant difference between the underlying and max pain. im playing for a retrace of last weeks action to close the gap some.

i do not have a good understanding of delta hedging and would appreciate it if you or someone else could post a link to a description or if you could give me a quick overview. from what i do understand, this is a prime setup for that to occur. sure hope it doesnt as i have a big net short position
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Steve, I don't know any place where it is described, I have tried few times to explain "my take" on it (I am not big on options nor a great believer in Max pain either). In short, when Max pain is well under the market, as it is now, it means the houses are stuck with a lot of naked calls that are "in the money", and if the do not manage to narrow the gap early in the week, near expiry they are forced to rush into the market buying the underlying security (that is the "delta hedging") causing additional upward pressure on prices (often undone rapidly in the two to three days after expiry). The inverse is the case when max pain is well above the market, a lot of naked puts are outstanding and the houses sell short the underlying equities to cover their naked puts putting further downward pressure on the market. Can you "bank on it", I don't know, but you are gutsy being heavily short here trying to guess how far this thing goes, while it is in "breakout" (QQQ above the July highs, SPY a three years high, I believe) mode. Probably a little "nail biting" time (g).


11/15: (322359) (*COMMENT*)
Equity Put/Call ratio is hovering around 0.31. Don't you think Market is making a local top around 1560?
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Yup I think so, waiting a little longer for a sell signal, but already engaged in profit taking here. I still do not expect 1940 to be taken, but even if we get to "just" 1985, that will be a 100 Naz points swoon...


11/15: (322408) (*COMMENT*)
i'm impressed with the market strength...maybe we won't get a retrench?
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Always possible, but here near 2000 on the Naz, new high are not printing new recovery numbers and the EPC is really worrisome.


11/15: (322566) (*COMMENT*)
Zeev, market on perma pump, when does it end, Q4 warnings?
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When puts buying dries up. You noticed a million plus calls contracts today? Volume on the Naz, however, once more dropped under 2 B. I thin we are pretty close to short term yop and have zipped the bear suit accordingly, raised cash to the 60% level as well, it would have been higher if TBL would have printed a new high (g).


11/19: (324362) (*COMMENT*)
EPC 11/08 0.49, 11/09 0.53, 11/10 0.53, 11/11 0.56, 11/12 0.64, 11/15 0.40, 11/16 0.59, 11/17 0.51, 11/18 0.50

Is this a record for 2004, 2 weeks of EPC hugging 0.5 ?
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No, we had a similar situation in early January.


11/19: (324639) (*COMMENT*)
Looking back about 6 years, and using the QQQ's, if expiry is up, Monday is down 41% of the time. If expiry is down, Monday is up 36% of the time.

Overall, Monday moves the same way as expiry Friday 61% of the time.
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Thanks, you must have a nice program doing this search. I'll bear it in mind. So Jim might not be right and we actually get a low on Wednesday...


11/21: (324979) (*COMMENT*)
Junk bond spreads which have served as a very accurate stock market indicator this year are extremely narrow and narrowed further on Friday. No way will get a sharp or sustained stock drop until junk spreads start to widen IMHO.
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Junk spreads are maximal at bottoms, minimal at tops of markets, if the spread is already quite narrow, in the next six months, particularly, if we start and get slowing economic growth (leading to possible negative growth) such spread will expand, and equity drop. We should be watching the monthly employment figures, if they keep strong as last month, things should be fine, if they start and retrench under the 200,000 level for few months, it may foreshadow problems in equities later on, IMTO.