Replies to post #89858 on SPDR S&P 500 (SPY)

[Two-timer]

Hey, Fox. Ty Durden at ZH has an interesting piece on the SPY rally. Two

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SPY Hits 3-Sigma Divergence From VWAP
Submitted by Tyler Durden on 10/27/2009 09:21 -0500


All those who have had a fishy feeling about this whole volumeless rally may be curious to take a look at the following graphic which indicates that unprecedented divergence between the VWAP on the SPY, which since the beginning of the rally in March has hit just over 91, and the actual SPY which as of last night was at 107. The difference between the two data series is now roughly 15 points, or about 150 on the S&P, or just under 1,500 DJIA points. This differential is entirely due to the low volume aggregation on the way up, in essence the entire run up has been a lite version of a 6 months long gap move up. What the chart also explains is the propensity by the market to see every potential sell off have a dramatically broader volume participation than the computer driven trickle higher, as all market participants realize there is insufficient accumulation interest to justify this 3 Sigma divergence.

[Fox13]

What happened to my TBT trade, started this morning (click above)? Well, it did not go as planned, but it might be interesting to have a look at it, since we can learn more from our unsuccessful moves. Briefly, I was kicked out of it when the TBT price fell out of the ascending channel previously constructed and the trailing stop was hit. But here comes the mistake: I DID NOT WANT TO ADMIT THAT I HAD BEEN COUGHT IN A BULL TRAP. I could have entered a SHORT trade in the opposite direction with another tight stop, and if I had done that, I could have gone all the way, through waves 3 to 5. One might notice: long wave 3 was a perfect example of Fib price extension. Now after a 1 to 5 trip, one might expect tomorrow an a-b-c move in the opposite direction…