Monday, September 28, 2009

Things that make you say hmm...

I had three transactions trigger this morning before I knew it. I sold 2 call positions I had picked up on Friday and flipped into a put at 105.7. I had calculated that level the 38.2% retrace as the most likely level, and neglected to calculate C=2.618*A. That is the level we touched today, the 61.8% retrace of the recent drop. What's fascinating is that if you take a line parallel to the dashed support line and we start it at the peak, we cross the 61.8% retrace EXACTLY where we touched today. So if the count is correct then minuette (1) was 3.94 then minuette(3) should be about 6.37, which means it will end about 100.1. That is my next target to flip from short to long.
The 20ma as yet STILL has not crossed the 50ma on the BPSPX:CPC. Its getting close though. Whats interesting here is that I zoomed in and noted that the BPSPX:CPC was down today even though the market was SHARPLY up. This is an interesting divergence. If you think about it, the BPSPX is a bullish indicator and the CPC is also. When everyone is buying calls then the CPC is low (below 1 when more calls are bought than puts). Thus the CPC inflates the BPSPX during extremely bullish times, and deflates it during extremely pessimistic times. So even though the market pushed up strongly today, the indicator was down. This is bad news for the bulls.
VIX:SPX performed as expected it retreated from the 50ma. I expect it to take another shot at crossing over within the next couple of days.

Warning: This analysis is based on P2 having topped. You can pretty much throw everything out the window if we make a new high.

Again, it seems unlikely that P2 has not topped. The 108 level was a 50% retrace from the 150 high down to the 66.6 low. We had a distinct 5 wave move down from the peak. The BPSPX:CPC looks like it will be crossing soon, which would indicate an intermediate drop coming.