PC trade ideas
A Crowded Bear TradeOn 09/16/22 soon after the SPX made a new correction low, the Put/Call ratio hit its highest level in over a year.
This indicates a huge amount of money buying puts - a bet on more downside action.
Today on the open the SPX bottomed just above the 09/16/22 low.
This is a cowded downside bet - frequently this situation is the prelude to a change in market direction.
Mark
strategy for TOTAL PUT/CALL RATIO COMPOSITE FRIDAY 04/08/2022put/call ratio composite: it is a periodic meter that helps us to enter the market. which works the opposite, at this moment it is showing more bearish opportunity. I do not know if you can notice that the market opens bullish and then falls sharply.
one or another actions rise either by positive economic news or technical movement. when the put/call ratio is above zero, it is not showing any more upside opportunities. this is valid for swing trader, day trader..............! I hope this can help you in something especially to the newbies
I HAVE MOVED BACK TO 100 CASH TODAY 11.55 AM T10 yr is near my 1.75 target . and really no move in the put/call the vxn hit a target but no puts buying so i thing vxn could see a 41 handle . minor gain in calls ndva a 2 point gain and broke even on msft . I HAVE covid and this is so hard even to type this back to bed .
SPY to 500We received a bullish signal on SPY on 28 Dec. Looking at the structure of the SPY trend and the historical performance of the signal over the past 2 year AND considering the seasonality of where we are we believe that SPY will more than likely take out the 500 level over the next few weeks.
Key to this will be how the PC ratio plays at the 10 Day MA. With the PC ratio rising to meet the declining average – should it fail here – we will see SPY break above the 487.78 level over the next few days and this could trigger a rally potentially pushing SPY to the 500 level.
Like anything you have to trade what is in front of you and with a long squeeze signal on the 15 min chart with a history of performance with this signal one has to side with a bullish view over the next few days.
Trading Plan for the week - 16 DecYesterday we saw how important context is. The early session was horrible while traders and the market waited for the Fed meeting. At 2pm the market took off. Not because the Fed chairman said anything unexpected - he removed uncertainty. The market hates that state and will always drive towards a state of clarity. How did we know that this was going to happen? We get the breadcrumbs from the PC ratio. The PC ratio is not a holy grail of indicators, it has some flaws to it however using it in conjunction with other indicators you get a really good sense of what is happening underneath the surface.
We have seen this movie many times before. Sentiment moves in cycles and when the 10 Day MA of the PC ratio reaches extreme levels, we need to act in a counter trend manner. One element of trading that most novice traders fall victim to is recency bias, especially in volatile times. The mindset of thinking it cannot get better when you see multiple red candles, one after another is common and there is a need to develop the ability to trade counter to this. We can see that he PC ratio line is pointing down giving credence to the possibility that the Santa Claus rally will take place as the blue line heads down to the red zone. I expect that we will see a short term rally to new all time highs and then we will reverse and, unless you are careful, we will have a correction towards the end of January where a lot of gains made in this cycle will be given back.
Looking at the market overall we have a number of sectors that have repaired since last week and my favourites are XLP, XLK, XLV and XHB ( i prefer to trade ITB in this case) and SMH (i prefer to trade SOXL as a proxy).
Some individual stocks that we have positions in at the moment are (covering a variety of strategies).
AAPL
MSFT
NVDA
COST
WMT
ABBV
FWHR
Trades I have added today. I have detailed in the planning video my rationale for each of the trades and i have demonstrated how to build a strategy using the planning tool for the follow up trades which will be put spreads.
BOT +3 VERTICAL XLV 100 21 JAN 22 140/145 CALL @1.57 ISE
BOT +1 VERTICAL XLK 100 18 MAR 22 174/190 CALL @5.65
The above trades will be added to the 30 DIA portfolio.
Stocks - Lotka-Volterra Predator-PreyIdea for Stocks:
The Lotka–Volterra model makes a number of assumptions, not necessarily realizable in nature, about the environment and evolution of the predator and prey populations:
1. The prey population finds ample food at all times.
2. The food supply of the predator population depends entirely on the size of the prey population.
3. The rate of change of population is proportional to its size.
4. During the process, the environment does not change in favour of one species, and genetic adaptation is inconsequential.
5. Predators have limitless appetite.
The bottom line is that when prey population rises, predator population follows, before prey is hunted back down to the baseline and predators starve - in a continuous cycle.
- Call-Put ratio can be seen as prey (pure bullish positioning), SKEW can be seen as predators (tail risk positioning).
- VIX (death rates) rise as prey and predator populations fall together.
- Clear relationship can be seen as prey population rises > predator population rises > (VIX rises) > prey population falls > predator population falls > (VIX falls) > Repeats
- From 2008, it appears that (4) had been violated due to QE following the 2008 crash, but the environment is returning to normal around 2017.
Speculating a return to a normal predator-prey relationship. Prey population cannot continue to grow as predator population grows with it. Reset of cycle is near.
GLHF
- DPT
