Current thoughts

Still no positions at this point although I am trying to leg into an November iron condor on the long bond with 126/123 strikes for the puts and 142/145 strikes for the calls. I've been trying to leg into the put side first with the view that bonds are likely to move a bit higher. Alas I may have missed the boat because bonds found a floor at 132 and have not looked back since.

Interesting that the SPX and the VIX both moved higher yesterday. Normally this is a short term bearish signal. Cumulative tick action was mixed last night finishing at minus -6000. Recent action has been fairly bullish with the 70,000 mark hit when the Dow finished up 175 points last Friday.

The current market action to me suggests that the market is pretty much anticipating another round of quantitative easing from the Fed as a floor under the market. We've seen risk appetite go through the roof with small caps and tech leading the equity rally whilst, yield currencies like the AUD hit multiyear highs against the greenback. Gold is also up sharply. Meanwhile bonds have not fallen sharply like you would expect when risk taking is up so that's saying something.

Stay tuned for more.......

I'm still here!!

It's been a bit quiet on the blog lately as I've really nothing to report as the market keeps grinding it's way higher. Look for the 1150 on the SPX as a possible swing high. I only have the one position on right now and that is a short put spread on the long bond which I'm trying to close. Overall the iron condor has returned around 45% on the margin held which is pretty good. I'll update this trade later in the week.

Thinking out aloud

I think the market is just setting itself to be disappointed if the Fed does not announce any new quantitative easing measures on the 21st of September. I think that's why we've had the rally and why the USD has been slaughtered of late and gold is rallying. Methinks that the current swing high in this rally is not too far off. Now what would be the best trade to profit from this if I was right??

Big divergence this morning

I'm seeing big divergence between the ticks and the other internals. Cumulative and adjusted ticks are trending straight down but breadth and A/D lines are coming in very strong. I always use the ticks as an leading indicator as it foretells that institutions remain the better sellers today. Perhaps a reversal is not too far off as the market has been amazingly strong (eg. 6 upside gaps in a row that have not filled now - this has not happened before). I think what we have witnessed was short covering rally that has fuelled this market. For us to remain bullish in the longer term, I'd have to see if it can take out 1150 on the ES.

Morning update

Cumulative ticks are levelling off here and bottoming after trending straight down for the first 30 mins today. Other internals also bottoming out. Volume is very weak today. I'm expecting some kind of afternoon rally here but the market is very overbought so I wouldn't be surprised if we just go sideways and chop it up for the rest of the day.

On the trade front, all is well with the long bond iron condor and the NDX iron condor. I'm not seeing any other opportunities at this point so it's a matter of waiting for something more substantial to happen. With the pop in volatility today, I don't think selling some is such a bad idea.

Uber bullish

Everything is green today! Under the hood the internals are flying. It's like someone put a rocket under this market. Ticks are just trending straight up and volume is on par with yesterday ie very strong and well above the 30 day median average. I'm not sure why the market would be rallying so hard but could it have been to do with China's PMI today which came in slightly above expectations?? Futures opened with quite a large gap up and well above yesterday's highs and this normally forces a lot of the shorts to cover. It is also the first day of the month, which is normally when a lot of new money coming into the market gets invested. I'm expecting a strong close near the end of the day as well from the dumbo's that tried to fade today's gap ie as they have to cover their positions (first day of the month and large gaps are statistically very poor winners for fading gaps - learnt that from masterthegap.com)

Are we going to make a run at 1120 from here??