Combining GB with spread trend

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pmward
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Re: Combining GB with spread trend

Post by pmward » Fri Jun 05, 2020 8:28 am

Vil wrote:
Fri Jun 05, 2020 7:52 am
pmward wrote:
Thu Jun 04, 2020 11:07 am
I'm currently stalking a trade in this area if/when we get down there.
I do not see anything positive yet for TLT. IS04 (in Europe) opened with some -1.5% gap.. Still, it has to fall.. :)
Yeah, I'm looking for a dip buy basically around $150, on a swing trade (looking to play a couple week to couple month bounce). What makes this area attractive to me is I can have a really tight stop to GTFO with minimal losses if I'm wrong. There's so much support there that it is very likely to bounce. AKA my new strategy I'm trying of playing bounces off support instead of just breakouts, so buying weakness instead of buying strength.
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Re: Combining GB with spread trend

Post by pmward » Fri Jun 05, 2020 9:09 am

Do or die time for GLD. We are testing the bottom of the sideways consolidation pattern it's been in going back to 9 Apr. So far it is bouncing from it. If it closes below that 157.70 it would be a very bad sign and would likely fall to the bottom of the trend channel around 153. It did break the 50 day SMA though. I am also currently in a day trade for GDX today, playing the bounce off support on that chart today. That's been a nice 2% in less than an hour trade. If GDX closes the day/week below 32.50 though my entire long position is getting closed today. SLV is holding up a bit better than GLD and GDX technically speaking, so my SLV trade is not in danger of being closed today like the other two. Ugly day for metals in general. The question to ask is, is this the start of a breakdown or is it the capitulation bottom of the correction before the next leg up? We will have to wait and see.
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pmward
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Re: Combining GB with spread trend

Post by pmward » Fri Jun 05, 2020 1:35 pm

I am exiting all my metals positions today (aside from the gold in my PP of course). "Know when to fold 'em". I have a nice profit on the whole and it is time to ring the cash register. I see other opportunities for this money in the short term. Still bullish on metals long term, but I would prefer to wait for another entry that I have more confidence in. In the short term, the rotation of strength is a pretty strong wind to try to fight at the moment.
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Re: Combining GB with spread trend

Post by pmward » Thu Jun 11, 2020 11:00 am

Looks like the breakdown in TLT was a fakeout. I was really hoping to load up at $150, but it looks like all the market was willing to give was $153. We are now not only back above the level that was providing strong support prior to the breakdown (the 38.2% retracement at $162) but we are also now above the top of that pennant formation.

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This market is so incredibly difficult to read right now. Fake break downs (like TLT and GDX) and fake break outs (like small-caps, value, energy, financials, transports, etc) are everywhere. Buy the rumor, sell the news is the name of the game right now. And all the big break outs and break downs are coming in the form of massive gaps pre-market. I wish I wouldn't have closed my metals trades on Friday, as I got a bit of a pie in the face on that one. The last week or two has been the most difficult market environment to read I've ever seen. So in my speculative bucket I've basically just brought my portfolio to be more neutral at the moment. I've sold some stocks, bought some TLT, and put back on some of my metals trades. So for my portfolio as a whole including all 3 buckets (PP, quant, and trading buckets) I'm close to my "home base" of a modified GB until the dust settles and I'm able to get a clearer read of the markets. This is a great environment for a day trader, but it's hard to not get chopped up in this environment if you're an intermediate term trader. Also, my quant bucket is threatening to go risk off in the coming days if this selloff continues.
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Re: Combining GB with spread trend

Post by pmward » Thu Jun 11, 2020 3:28 pm

Ugly, ugly, ugly day out there. My quant risk off signal did trigger today. Also, see the chart of the S&P, that is what is called an island reversal. See that little island floating around in the sky? That is a powerful reversal pattern, and it's a pretty ominous sign, especially on a day that the VIX spiked 50% in a single day. The other side of the coin, the S&P did close just barely above 3000, which is support in multiple ways. What do the bears want? To gap us below and close below 3000 & the 200 day SMA. What do the bulls want? To close that gap below the "island" as quickly as possible, making this pullback like a slingshot pulling back to launch further. They don't have long though, a few days at most to close that gap, and that won't be easy now that the bears see blood in the water. There's a good potential low risk/high reward short or long trade on the table depending on how this resolves. I would say things are looking slightly more in the bears favor at the moment, but the bulls do have that very important 3000 level to hang their hat on, as long as we are above 3000 the bulls have a chance.
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Vil
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Re: Combining GB with spread trend

Post by Vil » Fri Jun 12, 2020 2:28 am

pmward wrote:
Thu Jun 11, 2020 11:00 am
The last week or two has been the most difficult market environment to read I've ever seen.
True. I moved almost all of my investments to PP till the things calm down and I find more time to dedicate (and that might be months from now..). It's the wisest thing for me. Still one can gain something in this choppy market with 5min/VWAP, but that would mean sitting in front of charts which I cannot do at the moment. I got a nice punch on not moving on time part of my portfolio to hedged instrument, and EUR/USD got a very nice spike the last 2-3 weeks. But OK, as they say its a tuition fee ;D Good luck, pm.
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Re: Combining GB with spread trend

Post by pmward » Fri Jun 12, 2020 8:20 am

Vil wrote:
Fri Jun 12, 2020 2:28 am
pmward wrote:
Thu Jun 11, 2020 11:00 am
The last week or two has been the most difficult market environment to read I've ever seen.
True. I moved almost all of my investments to PP till the things calm down and I find more time to dedicate (and that might be months from now..). It's the wisest thing for me. Still one can gain something in this choppy market with 5min/VWAP, but that would mean sitting in front of charts which I cannot do at the moment. I got a nice punch on not moving on time part of my portfolio to hedged instrument, and EUR/USD got a very nice spike the last 2-3 weeks. But OK, as they say its a tuition fee ;D Good luck, pm.
Yeah, this market is just crazy right now. I think the effects of all the yolo Robinhood traders are the root cause. Either way, like you I don't have the time to day trade. I have a career. I'm able to check in periodically on the markets throughout the day, but I do not have the time to truly intraday trade. Intermediate signals are not working right now. Thankfully, with my past experience I have learned that these things periodically come in waves, and that when the intermediate signals I use stop working the worst thing I can do is to continue pushing the button. The best thing I can do is to just sit on my hands a bit until intermediate signals inevitably start getting follow through again. For the last two weeks we have been in a market where every intermediate signal, long or short, fails spectacularly within a week. It's easy to get chopped up if one is not cautious, at least for those traders like me that hold overnight. The last time this happened was spring 2018. Since then, intermediate signals have worked beautifully. Just like then, it will likely clear itself up in a month or two. In the meantime, I'm ok defaulting back to a GB-ish portfolio on the whole.

Things are looking interesting pre-market. SPY is looking like it wants to test the top of the breakout candle from yesterday right out of the gate. That should provide resistance at least intraday on the first pass. If I were a day trader, that would be about where I would put on an intraday short trade. Is it going to be a gap and crap? Or are they going to be able to close above it, and start working towards closing that island reversal gap? They don't have long to close that gap. Every day that the island stays in place increases the odds of follow through to the downside. The bullish island reversal from the first week of April never even got into the gap range. The day after the pattern formed the market did a gap & crap to make it look like the break out was going to fail and they were going to go down to close the gap, but then it immediately followed through and ripped higher. Likewise, how the market behaves today and Monday are similarly important. It's not surprising to see a bounce today at the open. The bullish island reversal in April shows the power this pattern can have, I mean this whole rally came from that reversal. First step the bulls would need to do is at least close us above the breakdown candle yesterday at SPY 311.46. As long as we are below 311.46 the ball is in the bears court. The bears, their job is to close the market below 3k. Right now they have the ball, but they are only in field goal distance. The touchdown is a close sub 3k. Until one of those two things happens, a close above 311.46 or a close below 300, we are basically in a waiting pattern.
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Re: Combining GB with spread trend

Post by pmward » Wed Jun 17, 2020 11:31 am

A couple interesting looks today. We are going to take a look at the VIX and the Put/Call ratio. We obviously had that massive vol spike last thurs when the market plummeted 5%. Since then, the market has been hit with nothing but furious panic buying. There is a disconnect between the market and the VIX at the moment. You can see below that while the market has recovered most of the drop, the VIX is still very elevated. It's seen a slight dip, but not equivalent to the SPY price recovery. One would normally expect that after 4 up days in a row that volatility would go down drastically. Instead, the volatility is staying elevated. Is this a leading indication of what's to come? I will also say that strangely, even though my vol based quant strategy went risk off last week, it is still just barely risk off as we speak. I wonder how this will resolve, I'll either get lucky and the market will follow through to the downside, or I will get unlucky and lock in a small whipsaw loss likely in the next trading day or two.

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Next we will take a look at the Put/Call ratio. Last week prior to the Thurs swoon we hit the all-time bullish reading for this metric. There has been no time in history that the options markets were as excessively bullish as they were early last week. Also of note, prior to the crash in Feb we set the record as well. So we broke Feb's record last week. This is generally a contrarian bearish indication when this happens. In a normal market environment the Put/Call ratio is in bearish territory. Why? Because the big institutions use Puts to hedge their longs. Big institutions buy way more Puts than they do Calls. It's the retail investors that make up the majority of the Call volume. So, this means that retail are all in levered long. Notice how the Put/Call ratio did pull-back to 1.0 after last Thurs, but how quickly and aggressively it launched back to super bullish territory. We're right back in the territory we were in during the Jan-Feb melt-up. Retail really believes that all dips can be bought and that there is no such thing as risk in the markets anymore. This will work until it doesn't. Eventually, all these panic dip buyers will get blown up.

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Even I am getting surprised at just how furious the buying has been lately (which means something considering I have pretty much been the lone bull on this forum for the last couple months). All technical indications on the SPY price action are still bullishly aligned (especially since we got above that important 312 area yesterday). BUT these two indicators here keep me very cautious. Are these the two canaries in the coal mine that are trying to give us an early warning signal? I think we will find the answer to that question soon. We have quadruple witching on Friday, and when dealers roll off all that gamma it removes a large degree of protection against a market drop. Could this be just like Feb, where we stayed bullish until the very day of options expiry, and as soon as expiry was over the market started to correct? We will find out. I always find divergences like these interesting. I have no idea how this will resolve, I just know it will resolve, and until that happens be careful out there.
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Re: Combining GB with spread trend

Post by pmward » Mon Jun 22, 2020 1:46 pm

GLD finally breaking above that $165 level that has been a hard ceiling going back to mid April. It's been getting some selling pressure late in the day though. GLD hasn't even been able to poke above $165 intraday yet until today. Can it close above that all-important $165? Or is it going to get sold down into the close and have to try again another day? USD keeps getting hammered ever since it broke down from that triangle pattern, eventually if this keeps up it has to start filtering into more GLD upside. Also, that GLD:SPY ratio is starting to go up again, and RSI and momentum are both looking like they are finally starting to show life again after flatlining for weeks.
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Re: Combining GB with spread trend

Post by pmward » Mon Jun 22, 2020 4:08 pm

Ding ding, GLD $165.09 closing, for a new cycle closing high. Finished in dramatic fashion, as the sellers really came out strong and tried to pull it below that important $165 in the final hour. I thought for sure it was going to crap out, but somehow the bulls got the job done... barely. But if a runner in baseball "barely" makes it to home plate in time, he still scored the point. A scored point is a scored point. Now we see if they can get follow through tomorrow. The next BIG resistance level is $174. That one has been rejected strongly multiple times in the 2011/2012 timeframe before the real bear market began. Arguably, the bear market in GLD began when it rejected $174 that final time in 2012. After that rejection it just dropped like a rock for many months in a row. I think that $174 is going to prove difficult to get through. Especially since getting through there would put the all-time highs at $185.85 in sight.
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Re: Combining GB with spread trend

Post by Vil » Wed Nov 18, 2020 10:44 am

Hey, just came across to say 'hi'. Can see you're back, which is good (last time I was in US, was during the 2016 elections and it was the same sh*tty atmosphere as now... well, a bit less sh*tty ;D ) My day trading adventures (even though quite rare) are still well in the profit zone, so cannot complain too much. Still, I do not believe on non-horizontal support/resistance lines haha.
By the way, following your advice (but as I had the feeling I would not get too much from the other Frost' courses), I took his Morning gaps.. Well, to be honest I was a (tiny) bit disappointed, as my fears that all of it relies on pre-market data (and there is no such animal in EU markets) were realized. Not that one cannot still profit from it, but really should be quick with gap scanners, Fib tools and order placement. Anyway, it's good that I had a view from another angle, any different point of view is always welcome, so, thanks for it! I am still pretty much convinced that Fib retracement gives more reliable data when it coincides with evident (horizontal! ;D ) support/resistance .. One could argue of course that its not coincidence that those lines match sometimes..

PS. Sorry, if you you consider my post as polluting your thread.
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Re: Combining GB with spread trend

Post by pmward » Wed Nov 18, 2020 11:00 am

Vil wrote:
Wed Nov 18, 2020 10:44 am
Hey, just came across to say 'hi'. Can see you're back, which is good (last time I was in US, was during the 2016 elections and it was the same sh*tty atmosphere as now... well, a bit less sh*tty ;D ) My day trading adventures (even though quite rare) are still well in the profit zone, so cannot complain too much. Still, I do not believe on non-horizontal support/resistance lines haha.
By the way, following your advice (but as I had the feeling I would not get too much from the other Frost' courses), I took his Morning gaps.. Well, to be honest I was a (tiny) bit disappointed, as my fears that all of it relies on pre-market data (and there is no such animal in EU markets) were realized. Not that one cannot still profit from it, but really should be quick with gap scanners, Fib tools and order placement. Anyway, it's good that I had a view from another angle, any different point of view is always welcome, so, thanks for it! I am still pretty much convinced that Fib retracement gives more reliable data when it coincides with evident (horizontal! ;D ) support/resistance .. One could argue of course that its not coincidence that those lines match sometimes..

PS. Sorry, if you you consider my post as polluting your thread.
Yeah, without pre-market data gap trading is pretty difficult. Non-horizontal support/resistance lines can be really strong, but they need to be tested more than horizontal ones. Something like the trend line off the 2009 lows comes to mind as a strong non-horizontal support line that has come into play a few times in the last couple of years. But whatever works for you. Everyone has different strategies, and that's what makes a market.

I've grown fascinated in recent months (started before I left) with volatility and it's effect on the market. In many ways volatility is the tail that wags the dog. I believe I had 40% of my portfolio in the volatility based quant strategy I was playing with back then, and these days I'm up to 70% (not including ~25% leverage). The way it sidestepped the March, Sept, and Oct dips in the market has helped build my confidence in the model. I wasn't able to just look at back testing, I was able to ride along with real cash on the line and get a feel for it in 3 separate "risk off" periods. So I'm not doing as much discretionary trading these days. Really only about 10% of my total portfolio is ear marked for discretionary trades, and with those I'm focusing on more medium term than short term. The rest of my portfolio is all rules based in one shape or form.
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