A Macro View

Well the final assault on Everest has begun.  2065 is the base camp, 2081 is the final sleeping area, and since we are at month end, and all earnings disappointments are being ignored, it is a safe bet we hit new highs within the week,

Then what?  The Fed is calling for rate hikes (won't happen), revenues and earnings will get worse for the fourth quarter, stock buy backs are reaching saturation, the Vix has one more good push down left in it, and the dollar's strength will continue to hurt U.S based multinationals.

Here are a couple of charts that suggest 2016 is in for a rough ride.  We simply are running out of oxygen.  I am asked if not stocks, where?  Well bonds, especially long bonds will make you money as the rush for safety gets going in earnest, cash is an option, as well.  Then when the Fed panics, gold and the miners.

For today, I am expecting a test down to support at 2081, and break the Globex lows, then a grind  higher into the close.I would be impressed if it broke the high though.  I remain short Volatility and Miners, and will buy 2081 on ES if I can get it.

For NADEX, I will grind out 6-7 trades again.  Yesterday we were perfect.  Enjoy

Back To Our Regular Programming

OK, Fed day is over, and for the next two weeks they get to pretend they are Monetary hawks.  Of course they will not raise rates in December, or ever.  But that is beside the point for trading in the moment.

As I said yesterday, stronger dollar, means stronger money flows into the country, and cheaper commodities.  The money flows will overwhelm the new risk models for buying equities for now, and stocks and bonds will remain bid.  Commodities on the other hand are in trouble.

For today, I expect an inside day and will look for one or two ES trades (watching the 64 High volume area) and trade NADEX two hour expiration s.

GLD, VXX and GDX are on my sell signal again, and am neutral on SPY, IBB, AAPL, and IWM Will post out any changes to that.

Melt up, The Dollar That is

Unless Yellen eases, the dollar keeps on rising.  This will support bonds, and be negative on commodities.  But I think it will be very bullish for SPX/ES.

The wild cards are how IWM and IBB play.  I am afraid I am getting the answer I don't want in IBB, and will have to concede defeat on any strength by the end of today.  The Russell however may have run its course, I will let the signal take me out.

For trading though.  I am keeping it simple.  If my view is right and confirmed by my signal I am long ES into Friday, and short UVXY with puts.

I am staying away from NADEX for now (EOD).

Same ole, Same ole

We are in the tight range waiting for our drug dealer to come out her meeting to see if there is any more crack available, or off to rehab.  Afterwards, things heat up though.

The dollar is firming, gold, the miners, natural gas, and oil are falling again.  Biotech can't participate in the rally, and in my view is very bearish.  Energy and commodities drove this bear rally, with the help of ever smaller Tech titans.  This up move has no dance partners left.

For today, I think we test the bottom of the range and end up at the pivot again.  So focusing on one good ES trade, and playing spreads on NADEX.

My signals are short GLD, GDX, and IBB.  IWM will join them today.  TVIX is still a long.

Good trading all.

Morning Update

ES hit a new high overnight.  Interestingly it hit before Europe opened, and failed on a retest of that high.  I set a short on NADEX at 2038 for the day.  If you can get more the 20 on another attempt at Globex highs this morning, that looks like a nice spot.

Gold and NUGT look ready to break down again.  Watching for the signal.

IBB is once again sitting its massive up trend line.  I am short with BIS, so watching to see if they squeeze me again here.

IWM and AAPL are showing buy signals for this morning.  Will see if they break out.  Also XIV is saying the same thing.  Watching.  This means TVIX long is not in the cards for now.

Weather Report

Ever since the Fed quit QE, the market has been oscillating based on OPEX.  Many sites have been remarking on this as of late (so probably will not work this month) but technical patterns, seasonal s, and trend-lines suggest we take the trade short.  Also, it looks likely that the market has readjusted back to levels prior to the we are going to raise rates meeting.  Now what, back into the old rectangle, or as I think we are now in this new lower rectangle.

I am short ES and Biotech, but there are many ways to play this whether you are a conservative or aggressive trader.

1. Short ES at the R1 tomorrow if we get there, or wait for Stoch/RSI drops below 80.
2. Buy November Week one puts, or spreads (consider buying the 80 delta, and selling the 40)
3. Inversely, sell a credit spread same strike, same deltas (selling 80, buying 40)
4. Buy TVIX
5. Buy BIS
6. Sell gold
7. Sell oil
8. Sell miners

You get my point.  Here are my charts

Gap Fill is Upon Us

I am likely to buy October week 4 puts on IWM and/or  Spy.  We are also very overbought, and we are going into the most negative seasonal period over the next seven days.

I will also close my VXX Calendar put spread today.

Patience

The Week ahead

OK, October is here, and this year will prove very interesting.  For me, I am getting defensive. Friday's ramp has given me the opportunity to move my Ultimate portfolio to 30% XIV and 70% SDS with the wind at my back, as I posted last week.

The seasonality tells us the early this week is positive, and then the next 10 trading days there is opportunity for a big selloff.

I think it is prudent to buy some puts next week for week 4 Expiry, and then get ready to short vol into Christmas.

Biotech is kissing the underside of its very large channel.  I will buy some BIS on a reversal.

Also, it is about time to short NUGT, and gold.  Then we can short DUST into Christmas.  Waiting for reversal signals

This will be a wild rocket ride this month.  Enjoy.