SPY Put-Call Ratio Crashes to 1.51

The SPY Put-Call Ratio Crashed to 1.51 on Friday

The SPY Put-Call Ratio Crashed to 1.51 on Friday

The SPY put-call ratio crashed to 1.51 today, well below its 20 dma, on a strong rise in open interest.

SPY put volume fell by 18%.  SPY call volume rose by 92%.

The CPCE joined the SPY put-call ratio in a sizable drop.  Meanwhile, the CPCI (smart money) surged to 1.54 at its top Bollinger Band.  Recent dates when the CPCI reached this level and its top Bollinger Band include August 4 (before three days’ lower lows) and July 24, the high before the correction into the August 7 low.

All of this together would usually be short-term bearish.  It’s supportive of a downward breakout from the purple megaphone to the bottom of the red megaphone.  The price must then retrace to at least the red megaphone VWAP at SPY 196.45ish, but one more new all-time high before a correction to at least ES 1924/SPY 192.90ish still has higher odds.

 

Possible Rising Megaphone Top

Possible Rising Wedge (Megaphone) Across Purple Megaphone VWAP

Possible Rising Wedge (Blue Rising Megaphone) Across Purple Megaphone VWAP

ES has put in a rising megaphone (blue) across its purple megaphone VWAP. Note how this short squeeze after the dip has stopped precisely on the retest of the rising wedge bottom.

ES is now legal for a downward breakout through its purple megaphone bottom.  But it’s best to short on the actual breakout, as ES could still go for the purple megaphone top.  (Not likely, but could.)

First stop after a downward breakout from the purple megaphone would be the red megaphone bottom. (The current bottom as shown is a guide.  ES will definitely not make it that far.  It must take out the previous red megaphone low.  After that, wherever it stops you redraw the bottom.)

Then ES must retrace to at least the red megaphone VWAP, and will likely go for the red megaphone top. (It would likely redraw that top by taking out the current high but not traveling much farther than that.)

Trading Notes

This wave down will need a retrace to at least the orange megaphone VWAP at roughly ES 1996.25/SPY 200ish, and it could go past the ES overnight high to the ES 2005-2007 area/SPY 201-201.20ish.

Most likely it will form another interior megaphone at that VWAP and put off further decisions to next week.

Short-Term Liquidity Crunch vs. Crazy SPY Put-Call Ratio

ES is Still Working on Orange Interior Megaphone

ES is Still Working on Orange Interior Megaphone

Just let it work until something becomes clear.

The purple scenario would probably actually look more like a head and shoulders with a neckline at the purple megaphone VWAP. The green scenario would retrace to the middle of the orange megaphone before breaking out downwards from the purple megaphone. (It’s early here.)

I wouldn’t be surprised to see the orange megaphone start spinning an interior megaphone at VWAP.

SPY Put-Call Ratio Goes Berserk with Solid Rise in CPCI

The SPY Put-Call Ratio Zoomed to 3.53 Today

The SPY Put-Call Ratio Zoomed to 3.53 Today

The SPY put-call ratio soared to 3.53 today, a major stab through the ratio’s upper Bollinger Band.

SPY put volume went up by 60% on a modest rise in open interest. SPY call volume declined by 5%.

This would normally be extremely bullish, even outside of opex week. However, the CPCI, which tends to move opposite to the SPY put-call ratio, also put in a significant move up today to 1.21, well above its 20 dma.  That would normally be solidly bearish.

The CPCI Rose Today

The CPCI Rose Today

Continue reading

T-Note Fake Head and Shoulders

The 10-Year T-Note Broke the Bottom of its Price Channel - That Means It's Headed into the Middle Wave of a Short-Term Top

The 10-Year T-Note Broke the Bottom of its Price Channel – That Means It’s Headed into the Middle Wave of a Short-Term Topping Formation

The 10-year broke the bottom of its new steeper price channel today. That means it’s heading into the middle wave of a short-term topping pattern before a wave to the bottom of its short-term red megaphone.

The 10-Year T-Note has Formed a Fake Head and Shoulders - the Tell is the Megaphone Right Shoulder

The 10-Year T-Note has Formed a Fake Head and Shoulders – the Tell is the Megaphone Right Shoulder

This megaphone has formed in the right shoulder location of a potential head and shoulders.  The megaphone right shoulder means the H&S is fake.  The right shoulder megaphone will almost certainly take out the August 15th high. Continue reading

ES End of Day

ES Could Have Surged Through Purple Megaphone VWAP - Instead it Got Bogged Down in Orange Megaphone

ES Could Have Surged Through Purple Megaphone VWAP – Instead it Got Bogged Down in Orange Megaphone

ES could have surged through its purple megaphone VWAP for another trip to the megaphone top. But it didn’t. Instead it got bogged down in a megaphone (orange) across VWAP of the purple megaphone.

Usually this would mean the price is going to reverse here for a breakout through the purple megaphone bottom to the bottom of the red topping megaphone.  But you have to actually wait for the breakout to short, because it’s possible the market bogged down here because of the holiday.

The orange megaphone will likely retest 2000 before a retrace to its VWAP.  If the orange megaphone ends up breaking out upwards, I’ll stay long for the trip to the purple megaphone top.  If it breaks out downwards, I’ll reverse to short with a target of the red megaphone bottom, then get long again for a trip to at least the red megaphone VWAP and probably another trip to its top.

To avoid a lot of hassle and just play the bigger swings, wait for the downward breakout from the red megaphone, which will also be a downward breakout through ES 1963/SPY 196.80.

ES Forming a Megaphone at VWAP

ES is Forming a Megaphone at VWAP of its Purple Megaphone

ES is Forming a Megaphone at VWAP of its Purple Megaphone

ES is forming a megaphone across VWAP of its purple interior megaphone.

A reversal here would break ES out of the purple megaphone and take it to the bottom of its larger red topping megaphone at roughly 1964-1975.  From there it would need a retrace to at least the megaphone VWAP at 1987.50 to make it legal for a downward breakout to at least ES 1924, and possibly as far as 1875ish.