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Thread: Playable bounce coming, or a trap?

  1. #13

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    Default Re: Playable bounce coming, or a trap?

    Quote Originally Posted by tsptalk View Post
    Nice chart - I had to post it...

    ... Tom, I find it troublesome that the volume is just 28.6 million at 3:30 pm EST... SPX is the only main index showing more volume on today's candle vs yesterday's -- and it's waffling at unchanged. If the big boys don't show up in big volume by the close or by mon/tuesday... maybe it is different this time!

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  3. #14

    Default Re: Playable bounce coming, or a trap?

    They say it was quiet on the floor today, but I think it is tough to judge volume vs. S&P on expiration day. We'll have to see what the closing volume is like.
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Please do your own due diligence.

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  5. #15

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    Default Re: Playable bounce coming, or a trap?

    Quote Originally Posted by tsptalk View Post
    They say it was quiet on the floor today, but I think it is tough to judge volume vs. S&P on expiration day. We'll have to see what the closing volume is like.
    Institutional buyers must be reading TSPTalk... as if on queue.

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  7. #16

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    Default Re: Playable bounce coming, or a trap?

    Well, thanks to Tom and this site spurring me to investigate market activity, I now know what happens on option Friday- http://www.cboe.com/data/IntraDayVol.aspx
    unbelievable. The market rose and fell exactly inline with options volume. Thanks are also in order to the random poster on yahoo that called it from the get-go this am.
    Waiting for the final minutes dump...


    The highest volume periods corresponded exactly when the Dow peaked during the day. At the end of the day, VIX went back over 44 before settling at 42 +/-.
    Of course the folks a CNBC are spouting their usual about a great buying opportunity. I'm sure Cramer will be gungho too.
    http://www.cnbc.com/id/37276310

    What can you tell by the final put to call ratio of 1.33?

    3rd Friday of the month- I won't forget! Amazing!

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  9. #17

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    Default Re: Playable bounce coming, or a trap?

    Quote Originally Posted by crws View Post
    Well, thanks to Tom and this site spurring me to investigate market activity, I now know what happens on option Friday- http://www.cboe.com/data/IntraDayVol.aspx
    unbelievable. The market rose and fell exactly inline with options volume. Thanks are also in order to the random poster on yahoo that called it from the get-go this am.
    Waiting for the final minutes dump...The highest volume periods corresponded exactly when the Dow peaked during the day. At the end of the day, VIX went back over 44 before settling at 42 +/-.
    Of course the folks a CNBC are spouting their usual bull about a great buying opportunity.
    http://m.cnbc.com/us_news/37276310

    What can you tell by the final put to call ratio of 1.33?

    3rd Friday of the month- I won't forget! Amazing!
    crws, am I misreading you? put/call ratio is a contrarian indicator, when there are that many puts, it usually signals a bottom.

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  11. #18

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    Default Re: Playable bounce coming, or a trap?

    CRWS- Don't worry about PC ratios on options expiration.

    Volume was good today on all majors but I suspect most was just the selling of bullish calls that blew up and selling of puts for tonight's beer money. Up volume to down on NYSE was about 8 to 1. What else can you expect on an options expiration day during a crisis?

    ISEE came in at 64, lots of retail investors buying puts today. Wow. That's a very low number.

    I rebalanced today as my allocations were off by 2-3% after the drop. Sold winners (F) to buy losers (CSI).


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  13. #19

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    Default Re: Playable bounce coming, or a trap?

    on a speed learning tear... thanks for the info, still watching, reading, and learning.
    No matter the fundamentals, good though they may be, I am still concerned that the Euro issue was brought to the abrupt forefront on May 1 by this New York Times blatantly obvious graphic- and after a flash May 6 it took 2 weeks to come to this... What does that say for the entire Gulf of Mexico economy and the havoc it will wreak when the oil really hits? It's obvious right?? Like Greece....right?
    I remain highly suspect that ill winds have only shifted and not to our backs. We'll see what pans out this weekend. I'm not giving up my post 12/2008 gains lightly.

    Quote Originally Posted by fedgolfer View Post
    crws, am I misreading you? put/call ratio is a contrarian indicator, when there are that many puts, it usually signals a bottom.

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  15. #20

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    Default Re: Playable bounce coming, or a trap?

    Quote Originally Posted by Bullitt View Post
    CRWS- Don't worry about PC ratios on options expiration.
    yea, I was more thinking that the price trend cycle seemed to follow the options volume throughout the day, and that I have never known about options Friday. Heh. Well, given the VIX ended at 40 after bumping to 44 late in the day, I decided to turn to my trusted google to dig up some insight.
    http://www.reuters.com/article/idUST...balMarketsNews

    says in part:
    As of Thursday's close, the number of call options across the board that were worthless jumped to 53.7 percent compared with 47.1 percent at Wednesday's close, said Scott Fullman, director of derivatives investment strategy at broker-dealer WJB Capital Group.
    By contrast, put options that were worthless fell to 35.5 percent from 36.8 percent during the same period, he said.
    "A look in trading in overseas markets and today's expiration leaves us to believe that increased volatility is possible with the potential to exceed yesterday's levels in stocks and options," Fullman said.
    A total of 12.8 million calls and 17.4 million puts traded on Thursday, the second highest volume day ever, according to the Options Clearing Corp. Thursday's put activity might have been the single largest put volume traded daily in option history, Fullman said.
    "This shows that investors and traders have been actively seeking hedges for portfolios as the market has declined," Fullman said. "We believe that investors are more proactive in managing risk than they were in 2008 during the financial crisis."
    The strong volume comes two weeks after the dramatic "flash crash" badly rattled markets on May 6 and sent U.S. option volume to a record 30.8 million options traded, which included 17 million puts, OCC data show.


    That would mean most institutional puts would have been bought Thursday? to expire in June?

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  17. #21

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    Default Re: Playable bounce coming, or a trap?

    This article seems to address my thoughts and concerns going forward

    http://www.usnews.com/money/blogs/fl...an-the-economy

    (excerpt)
    The stock market is supposed to lead the economy out of recession, according to the old adage. But what if the economy doesn't want to follow?
    Gloom has settled over Wall Street, as the huge rally that ran from March 2009 to April 2010 has turned the other way. From bottom to top, stocks rose by about 83 percent, giving hope to battered investors and repairing some of the damage from the brutal recession we all know about. But now the markets are in decline again, crossing the 10 percent threshold that signals a correction. Manic traders now worry about global contagion spreading out from Greece, the demise of the eurozone and the dreaded double-dip recession.
    [See what's going right and wrong with the economy.]
    Okay, maybe. But it's also possible that the markets simply got too far ahead of the actual recovery and are now adjusting to more realistic expectations.
    First, it's worth pointing out that stock market indexes like the Dow, NASDAQ, and S&P 500 may not be as oracular as they once were. Markets these days are dominated by hedge funds and high-volume traders that account for the majority of all trades. These are not long-term investors who buy because they're encouraged about the future prospects of certain companies or the overall economy. These in-and-outers trade on short-term advantages that are often minuscule, but significant if multiplied by millions of shares or leveraged to magnify their value (and risk). Computers make many of the decisions, looking for price differentials in the decimal points. What matters to these traders is the price of something now, compared with the price a few seconds ago or the price a few seconds in the future. The stock indexes don't really tell us what investors think of the overall economy anymore. They tell us what frantic traders think is going up or down in the chaotic present.

    (addendum from one of the links inside the article comparing US to Greece)
    Washington's inaction also creates a chorus of disgust among opinion leaders able to influence global investors. "What worries me most is that a $10 trillion debt is unsustainable and the two parties are completely divided," says economist Nouriel Roubini of New York University's Stern School of Business. "It's not like the problems is unresolvable. There are solutions. The problem is political. There's no willingness in Washington to do anything." Business leaders in particular are appalled by elected officials who face a clearly defined problem, and basically stick their fingers in their ears and run away.
    Last edited by crws; 05-22-2010 at 11:55 AM.

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  19. #22

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    Default Re: Playable bounce coming, or a trap?

    My vote: Trap.

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  21. #23

    Default Re: Playable bounce coming, or a trap?

    Quote Originally Posted by Bullitt View Post
    My vote: Trap.
    I guess it depends on the definition of playable bounce. Are you thinking we are going to go straight down with no tests of the new resistance?
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Please do your own due diligence.

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  23. #24

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    Default Re: Playable bounce coming, or a trap?

    TSP wise- Trap.

    Regular account, possible, but they're probably going to follow through on Monday with a big gap up so unless you're in already, it's not feasible. The way shorts got annihilated in the last 15 minutes on Friday shows how people fear the weekend news and Sunday night gassing of the futures.

    Here's my thing. I believe it's over, the cyclical bull. 4% up day rallies don't happen in bull markets as we had how many during the crash phase of 2008; each one luring in more and more hopeful bulls. I see may 2-3% up days in the months ahead as interventions by the apparatchiks force more shorts to cover.

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