Markets – Macro – Technicals

Surprise! I’m Long….the Market

SurpriseWell whaddya know? Big old bear went long the market. Actually the second time now in a week. We went long into the lows last week, then short Monday, but then bought the carnage this morning & last night based on the trade plan we had outlined.

Why the change of heart after so many scary short charts? Not really a change of heart, but the short term risk/reward was shifting and one has to respect the data. I could cite all kinds of sentiment examples including renowned bulls getting bearish on twitter, but that’s just theater.

Rather it’s a few factoids that grabbed our attention. One is the weekly $NYSI chart that simply makes it very much prohibitive to be a seller of this market at this particular moment in time:


When has it ever paid to short a market with the combination of the $NYSI dropping below 300 with its stochastic being at -700? The answer in the past 5 years: Never, or at least be mindful of a sizable bounce first.

Yet Monday’s trade plan had us anticipate a retest of last week’s lows and the question was simply: Would sellers force a new low or not:

SPX daily

In a way it was semantics as the $NYSI chart already told us we wanted to be buyers here.

Yesterday we also saw the participation index drop to -69 another signal that we were getting close a short term bottoming process:

SPX weekly

But most importantly I always pay great attention to my partner here at NorthmanTrader, resident bull chick Mella_TA and queen of the big $VIX calls who had already advised us as to the $VIX sell zone which was confirmed today:


VIX home

And promptly we longed it all and shorted volatility:

Trades 2

Now the crowded trade tells us another low may be in store for the Thursday before monthly OPEX. Maybe. A lot will depend on whether this double bottom holds or not. If it does it could lead to a very bullish OPEX next week. The flip side is a break of the double bottom which brings us likely into an 1870-1903 $SPX risk zone.

But ask yourself: Is this really the best place on the chart to push the short side?


A better time may have been when I was shouting from the rooftops back in July that the $RUT was looking ready to drop hard:

Russell Unraveling?

Now how will it play out? Big bounce from here or further big drop? Can’t tell, but we got nice entries with stops in place and are riding a very nice bounce today and we like the risk/reward. For a trade. 😉

For more information about our trade philosophy please visit the About and Trading Process pages.


Tagged as: , , , , ,

1 Response »


  1. Weekend Charts: Rock Your SOXX OFF | NorthmanTrader

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

The material on this website is provided for informational purposes only, as of the date hereof, and is subject to change without notice and does not constitute investment advice.
Home | About | Disclaimer | Contact
Copyright © 2013-2017 NorthmanTrader
The materials on this website may not be suitable for all investors and are not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.