Wednesday, September 17, 2014

SPY option bets and the case for SPX 2050

There is an interesting stand-off in the October SPY options.  On one side, we can see some very large and very bearish bets (put options).

SPY October 2014 options

On the other, we see a surprisingly large number of SPY 205 calls.  So who is right?

The October 8th turn window -- Bradley turn, full moon -- looms large for some kind of turn.  Up until now I've been thinking of it mainly as a low, like it was in 2008.

What makes it interesting as a top is that 10/8 lands precisely on this 2050 SPX level.  There are E-W wave considerations as well, for the larger move up from SPX 1737.

It also works with the dual-nested 3PDH patterns, which eventually wants to bring us back to SPX 1074.  See the thick orange line on the chart:

SPX 2050 October 8th turn and 3PDH

There are big options bets in place for October.  One of the two camps is probably right.

27 comments:

Bicycle said...

I wonder, if you could chart time as a helix moving through a 3-dimensional rotation of an index, would major bubble events be coincident in the same plane???

Bicycle said...

Just enough fuel to break us gradually north of the ascending triangle... but not so much so as to validate it... and instead gradually build a rising wedge...

This is perfect so far...

Permabear Doomster said...

sp'2050.... somewhere around there... would make for a fine inter'3 top.
--

Regardless...shorting the market remains highly risky.

Christian Gustafson said...

We have several scenarios, all still viable, yeah.

And don't forget the New Moon next week after September opex.

I'll be very interested in where SPX, VIX, and the volatility ETFs are with respect to their upper daily and weekly Bollingers early next week.

Permabear Doomster said...

Well.. .new historic high for the Dow, Trans... and sp'500 (imminent as I type).

I still gotta wonder....

Until the STYLE of price action changes, equity bears have nothing to tout.

The next wave lower - whether from 2030.. 40... or 50/60...

MUST retrace ALL the way to the 1900 threshold...otherwise, we'll just keep on pushing to the 2100s.
-

For now... only a maniac would try to short this.

Christian Gustafson said...

Keep an eye on the jerky tape since today's FOMC minutes.

We are bumping up against the upper daily Bollinger on the SPX, and the lower one on UVXY.

This can go on for a couple of days. If SPX has started to form an ending-diagonal pattern, say, back to the 2020 target area, then we may get our answer late this week.

Hey Scotland. The banking system is all wired to blow, it just needs a trigger.

Permabear Doomster said...

As for Scotland, I hope they vote yes.

They deserve self-government..away from the southern UK.
-

It would bode for Catalonia to split from Spain.. and that is where things would really get....fierce.

Christian Gustafson said...

Scotland has true black-swan value in that the debt load of the UK sans-North Sea petro becomes unsustainable overnight. *BOOM*

Maybe they'll take the Trident nuke subs, too. We have a base of those here in WA state, which I hope we can keep after the $USD implodes.

Bicycle said...

In 1348 the Black Death arrived in England

2014 - 1348 = 666

In 2014 the United Kingdom dies.

There is a big bull pennant on UK CPI, I posted the chart recently, the loss of the St. Fergus terminal alone is a death blow for the south of the island as 25% of the island's gas passes thru there.

Vlad will freeze them to death to keep them from meddling in his empire building. If I were Putin I would have my KGB guys working overtime on the Scottish Twitters posting Braveheart vids. And probably send a few guys from the bureau over to place some votes as well...

T.Berry said...

like your 2050 cg,,,only 17% from next years 2400. yellen no slouch to bernanke,,snp up 15% in her 1st 6 months, still nothing to see it stop anytime in the foreseeable future. caution on the short side, overdue for strong year-end rally 2,150??

Christian Gustafson said...

RUT me worry?

Bicycle said...

If we are forming another rising wedge on the DJIA we're only forming 3 up of 5, and probably target somewhere around Dow 17500 - 17600 around late October.... ugh... it feels like it will never end...

Oddly, however, on a percentage basis that would put us right at about SPX 2050.

The stars are aligning.

Christian Gustafson said...

Hey, Bicycle --

Drop me a line if you can, please.

T.Berry said...

http://finance.yahoo.com/news/stock-gains-lift-us-household-161308228.html


Fed got it right this time. Record household wealth in 6 years.

Christian Gustafson said...

Uh-huh. Right.

Austrians know better.

T.Berry said...

aren't they the ones earning .2% in mm's? : )

T.Berry said...

bicycle, watch 20k dow next year. aligns with snp 2400 & nasdaq 5,300. zirp continues, when its time to raise , raising will be considered bullish imo. amazed at what the fed has been able to accomplish

Christian Gustafson said...

Hmm. No email from Mr. Bicycle.

He's prudent to avoid compromising his identity. He may be a Fed governor or similar player.

Well, Bicycle, let me just tell you, you know that newsletter I read, the guy who offers a free 30-day trial subscription?

If you have never used your free sub, let me just suggest that tonight may be a good night to do so.

We clear? Wink wink nudge nudge.

Bicycle said...

Ha ha, I'll drop you a line, I'm a nobody and nothing to hide :-)

T.Berry said...

futures on tear tonight, is it scot's no vote or baba ipo tomorrow? either way look like we finish week with a bang. not bad so far given sept is historical worst month. thought mabye a pullback into october which begins best time to own stocks till april. still see no reason to sell

Bicycle said...

The Dow is moving too high too quickly for us to be forming another rising wedge, this either validates the previously discussed ascending triangle... OR we have a nice bear flag forming that would resolve in October...

Christian Gustafson said...

I'm scratching my head now re whether the next window for a top is the 10/8 turn window ... or this Tuesday.

Permabear Doomster said...

Short term top, Mon/Tue...2020/25 or so...

Maybe a brief 1% drop to 2000...but not much below that.

We're still headed higher... 2035/40.. likely... if not 2050/60s.
-

T.Berry said...

Pdoomster, this market is looking for any reason to go higher, it is. feel good about 2,150 whether year end ot early '15, it's going there no doubt. 2,400 is in the cards in '15. 1900 absolute floor but won't even come close

Phat Repat said...

Good stuff; thought I saw commercials were leaning short in last COT. Though they are early to the party, as usual, I tend to lean that way as well, for now.

Odd day today given the BABA IPO; expected much more strength.

pb said...

keep buying this Market T. berry

IMF sounds the alarm on stock prices with two charts
Who's worried about stretchy valuations now? Try the International Monetary Fund.

MarketWatch @MarketWatch

Bicycle said...

I find this almost unbelievable, but California may be about to emerge from its 15-year long drought... only to resume an already 120-year long downtrend in rainfall.

However if that last bit isn't a bull flag, and it continues on down through the floor of that channel... yikes.

California Statewide Precipitation, 1895 - 2014, Bullish Falling Wedge followed by Bull Pennant followed by Bull Flag inside downtrend channel.