Mythbusters

Mythbusters

Mythbusters h/t The Discovery Channel

This past week, an article in Vanity Fair went viral.  It claimed that some futures traders made billions of dollars using inside information about Trump’s chaotic tweets.

One paragraph in particular caught my eye:

“There is no way for another trader, let alone an outsider such as me, to know who is making these trades. But regulators know or can find out. One longtime CME trader who has been watching with disgust says he’s never seen anything quite like these trades, not at least since al-Qaida cashed in before initiating the September 11 attacks. ‘There is definite hanky-panky going on, to the world’s financial markets’ detriment,’ he says. ‘This is abysmal.'”

First,  Business Insider points out there is much in the Vanity Fair article’s claim that is simply false and reveals how desperate people are for the news they want to hear.

Second, seeing a trader perpetuate the myth of terrorists profiting from the 9/11 attacks gives me pause.  You see, I’m in the 9/11 Commission Report’s “Pre-September 11, 2001 Trading Review,” because so much of the options activity in American Airlines puts at that time was based on my Options Hotline recommendation from Sunday, September 9, 2001. “In every instance where we noticed unusual trading before the attack, we were able to determine, either through speaking directly with those responsible for the trading, or by reviewing trading records, that the trading was consistent with a legitimate trading strategy.

Terrorists aren’t that smart, and Trumpians, well….it seems a mythbuster’s work is never done.

Finally, as with all news these days, think critically about what you hear.

Consider the source.

And find out for yourself.

Enjoy your weekend!

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

The Stock Trader's Almanac

From the archives: First edition of The Stock Trader’s Almanac, with a note from my dad.

“Perhaps it’s Talmudic wisdom but, selling stocks before the eight-day span of the high holidays has avoided many declines, especially during uncertain times.”
— Jeff Hirsch, The Stock Trader’s Almanac

We shall see if last week’s sharp decline is completely retraced, or if Thursday-Friday’s strong rebound is rebuffed, heading into Yom Kippur.

The important thing to remember with such indicators is, as Richard Russell would say, “It’s the little exceptions that get you.”

Best regards,

Steve

 

Island in the SPY

As you can see on my candlestick chart below, Wednesday’s gap down negative black candle line left all of September’s price action as an island reversal pattern.

S&P 500 chart

Chart by Steven Sarnoff h/t stockcharts.com

This price picture implies the likelihood, but not the certainty of a trend change.  The key going forward will be to see how the venerable index behaves on a rebound attempt to fill the gap.  The aged bull market may be tired and we are in a distinct time period of risk.

I see overhead resistance (supply) waiting at $291.50-$295.49, basis the close.

Underlying support (demand) from today’s positive session is at $284.82-$289.12.

Subscribe to Options Hotline today to see how our readers position for fun and profit.

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

grizzly bear snacking on berries

Grizzly Bear snacking on berries, h/t Drew Rush / NatGeo

After an early bounce, tired bulls are on the back foot. Hungry bears are selling. When asked why the market moved up or down on a given day, my dad would answer in his Brooklynese, “Sometimes the bulls gotta get fed and sometimes the bears gotta get fed.”

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

Point drops in any index, be it the DJIA or the S&P 500, are meaningless.  All these ‘3rd largest (point) drop in history’ stories are meant to mislead and scare you.  Don’t let them.  The only thing that matters is by what percentage did an index or stock decline or advance.”
— Jim O’Shaughnessy, @jposhaughnessy

 

Your Daily Bit of Wall Street Wit & Wisdom

stock market sentiment chart

h/t SentimenTrader, @sentimentrader

“Nothing like price to change sentiment.”
— Helene Meisler, @hmeisler

Measures of investor anxiety/fear and complacency/greed can provide valuable information in your analysis of the current market condition.  View them as a technical tool to add to your weighing of evidence.

The chart above shows pre-market fear reaching levels seen at bottoms in 2002 and 2008.

This morning, Wall Street bulls are set to try for a market bounce before they bounce out to the Hamptons for their annual holiday weekend.

Enjoy yours!

Best regards,

Steve

Anticipating a Turning Sign

U-Turn sign

U-Turn sign

A week ago, I posted my Analysis and Outlook for the S&P 500 (SPY).  The venerable index was rallying off its Christmastime low and I was anticipating where and when the balance of power was likely to shift.  At the time, I was on lookout for a turn.  That watch is now heightened.  Here’s my update.

As you can see on my daily candlestick chart below, SPY is reaching technical resistance.  Bulls could be slowing their roll.

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On the Lookout to SPY a Turn

Owls looking out

Owls on the lookout, h/t NatGeo

This morning, SPY (S&P 500 ETF) continues its rebound on light trading volume. Buyers are following through from Friday’s strength, extending their immediate-term edge.  But until proven otherwise by price, this may be considered a countertrend rally.  Sellers are laying in wait.

Volume indicates the force behind a price move.  Low volume questions the staying power of this action.  Where can we expect sellers to be enticed?

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