If GE can break 25.20 to the upside then I will begin to suspect that Avi's model of "S+P to ~ 2300" will be playing out while commodities catch a breath of air. Below is what that might look like. In short, the S+P 500 could be tracing out a W3. This is not currently my primary model but I have to say that it has the right look for a rising wedge. That wedge could also be WC and so if it plays out as shown below, traders should get their bear on as soon as the top rail is broken and and then subsequently broken back down. Again, that is a lot of forward looking speculation but it will become my top model if S+P 500 breaks 2094.
I also want to point out that too many bearish sounding articles are in the news for my taste right now.
Still, smart guy Gartman, who bailed out on commodity shorts at a very opportune time, is telling people to watch out for volatility and to buy insurance against volatility Gartman is out again telling investors to be careful. note that Gartman is also saying that the bounce in commodities is short term and that they will eventually go lower. I think he is right about that but that a lot of money can be made on the bounce. CJES is up 6.5% today, WTI is up 8.82%, JNUG up 5.73%.
Cap'n,
ReplyDeleteDid you sell your Jan 2016 $13 GE puts?
I'm still holding mine.
Steven B.
Good question but no, I still own them, average cost of $0.15. There is still a pretty wide spread on these, .12 at the bid and .19 at the ask. I'm thinking about the charts and let's go with my most bullish case right now, we could be working on the tail end of 1 of 5 of 5. Let's just say that this kisses the top rail of the HT and cannot break down. If you were going to consider bailing, that would be the time. But then what? The bullish case for stocks is that we get a rapid rise to 18800 or so sometime in Feb. But after that, the odds of a major pullback go up dramatically and with plenty of time on those GE puts. The minimum DJIA pullback in that case would be to 15600 and a much higher pullback is very possible. And that is if the current DJIA wave is a massive 3rd. Conventional wisdom says that it is a C which means it would be the start of a move below the 2009 low.
ReplyDeleteGiven that I only have a small fraction of my portfolio in these puts I think I'll just stand pat on them. The DJIA has gone up since I bought them but they still trade for about what I paid. I see that as a divergence that is bullish for the puts...