SPY Put-Call Ratio Falls as New Calls Beat New Puts

SPY Put-Call Ratio Fell Today to 1.33

SPY Put-Call Ratio Fell Today to 1.33

The SPY put-call ratio fell today to 1.33 as new calls from the breakout beat out new puts from the tag on the rising wedge top.

The number of SPY puts jumped today by 77%. The number of SPY calls jumped by 94%.

The target for the SPY put-call ratio remains the lower Bollinger Band, though it can take some time to get there and zigzag a lot on the way.

The first trading day of the month has a bullish bias.

SPY’s “Ukraine Retreat” Came When SPY Hit Top of 2-Year Rising Wedge

SPY's "Ukraine Retreat" Started Precisely When SPY Reached the Top of its 2-Year Navy Blue Rising Wedge

SPY’s “Ukraine Retreat” Started Precisely When SPY Reached the Top of its 2-Year Navy Blue Rising Wedge

SPY’s Ukraine plunge occurred precisely when SPY reached the top of its 2-year rising wedge (navy blue in chart above).

A rising wedge never completes with a precise touch on the top.

SPY’s Ukraine dip took the price back to a retest of the breakout past the Feb. 19th high, where volume surged as buyers bought into the continued selling. The buyers beat back the sellers to a new closing high.

But we could still see the bears make another attempt at an H&S formation here with a neckline at the much-pounded multi-VWAP area.

Bears Could Still Set Up an H&S Here, But in a Sornette Bubble Formation You'd Expect It to Break Out Upwards

Bears Could Still Set Up an H&S Here, But in a Sornette Bubble Formation You’d Expect It to Break Out Upwards

In Sornette bubble formations, topping patterns tend to break out upwards, so the green scenario in the chart above is the more likely one. Nevertheless, if you should see the lavender scenario with a breakout through the H&S neckline, the targets are still the megaphone bottoms, where you’d be looking for a bottoming pattern from which to buy an upward breakout.

SPY’s upward target remains a breakout through the top of its 3-month megaphone (purple on chart below), which gets higher all the while SPY moves sideways here. A spike to that target would be followed by another retrace to the multi-VWAP area.

SPY's Upward Target Remains the 3-Month Purple Megaphone Top

SPY’s Upward Target Remains the 3-Month Purple Megaphone Top

Here are the possible scenarios on a longer-term chart. This chart shows how the potential H&S correction to the old VWAP would also likely be a retest of the rising-wedge bottom.

SPY Longer-Term Scenarios

SPY Longer-Term Scenarios

In megaphone 5th waves (which is what I believe SPY is in now) you frequently see false tops at roughly the level of the previous touch on the top of the formation. The false tops often lead to retraces to the megaphone VWAP (which is currently at the multi-VWAP area) or, if that VWAP has recently moved up, to an earlier important VWAP level (the silver line on the chart above).

But the false top doesn’t have to complete.

Whether we get the false top or not, megaphone 5th waves typically complete with a spike through the top.

By the way, TRIN got beaten back from a MACD crossing today.

TRIN Tried For and Failed At a MACD Crossing Today

TRIN Tried For and Failed At a MACD Crossing Today

Euro Futures Spiking to Megaphone Top

Euro Futures have Completed False Top Retrace and are Spiking to Navy Blue Megaphone Top

Euro Futures have Completed False Top Retrace and are Spiking to Navy Blue Megaphone Top

Euro futures have completed the retrace to their megaphone VWAP after their false top and are now spiking to the top of their navy blue megaphone.

Usually you would then see a retrace to at least the same megaphone VWAP before a genuine breakout through the top of the navy blue megaphone. The target after such a breakout would be the longer-term royal blue megaphone top (green scenario in chart above).

If euro futures make it downward through the navy blue megaphone VWAP on that retrace, the orange scenario is in play.

ES & SPY Have Just About Cleared the Way for a Proper Parabolic Finish

ES has Completed Every Requirement for Upward Breakout from its Silver, Orange & Red Megaphones

ES has Completed Every Requirement for Upward Breakouts from its Silver, Orange & Red Megaphones

ES seems to have survived its VWAP retests for its silver and orange megaphones. (Its most recent correction went all the way to its current 3-month megaphone VWAP.)

That means ES has completed every requirement for upward breakouts from the orange, silver and red megaphones on the chart above. On the breakout from the red megaphone, ES could just keep going, or it could form a topping pattern at or across the top of the red megaphone before another retrace to the red megaphone VWAP.

SPY’s chart is a little different. SPY may still have to complete its orange megaphone, most likely with a spike through the top followed by a topping formation at or across the top. Then SPY would usually retrace to the orange megaphone VWAP before proceeding further up. But SPY has just completed a VWAP retrace from very close to the orange megaphone top, so it’s possible that SPY, like ES, has met all requirements to keep running after it breaks out of its silver and orange megaphone tops.

Not Sure if SPY Needs a Retrace to VWAP After Reaching Orange Megaphone Top

Not Sure if SPY Needs This Retrace to VWAP After Reaching Orange Megaphone Top

So, we could see new highs followed by a retrace to the multi-VWAP area, or we could just be about to start on a major melt-up with no significant retraces, which would be a proper finish to a multi-year Sornette bubble formation.

If we do get the retrace to the multi-VWAP area, and SPY and ES get through that area, the next target becomes the megaphone bottoms.

The price could still bog down again at or near the late February high, but after clearing that area the move to the megaphone tops ought to be fast. Note that the top Bollinger Band has lifted up to clear the way.

SPY's Top Bollinger Band has Cleared the Way for a Sharp Move Up

SPY’s Top Bollinger Band has Cleared the Way for a Sharp Move Up

There’s still an inverse H&S on the SPY and ES charts, with a target right about where the price ought to reach the top of the purple 3+-month megaphone on the chart above.

SPY’s put-call ratio fell back to normal levels today (1.46). Almost no bears closed out their SPY puts today (we know where those stops are, and so do the market makers), but bulls added a lot of calls.

The ratio target remains the bottom Bollinger Band, but it can take some time to get there.

Gold Head and Shoulders End to Megaphone 5th Wave

Gold Likely H&S Forming with Rising Wedge at Head

Gold Likely H&S Forming with Rising Wedge at Head

Gold is likely forming the same H&S top it formed in August and October 2013.

It looked like it might be putting in a triangle, as it did in both those cases, then it broke out upwards before the triangle could form and completed a rising wedge higher high before reversing to complete the head of the formation.

The context is that gold has just completed the 5th wave of a megaphone (red on chart below).

Gold 3-Month Megaphone

Gold 3-Month Megaphone

Megaphone 5th waves typically spike out of the formation and form a topping or bottoming formation at or across the formation edge.

In this case, gold has to retrace to at least the red megaphone VWAP (now at roughly 1263) before a genuine breakout through the megaphone top. But it’s more likely to head all the way to the megaphone bottom, where it would finally reach VWAP of its long-term rising megaphone formation and complete the correction from the 2011 high.

Gold Long-Term VWAP is at Roughly 1000

Gold Long-Term VWAP is at Roughly 1000

 

 

SPY Put-Call Ratio Rises to 2:1

SPY Put-Call Ratio Rises to 2.02

SPY Put-Call Ratio Rises to 2.02

The SPY put-call ratio went up further today to 2.02, roughly a week after a spike through the top of its Bollinger Bands and going into the most bullish time of the month.

The number of SPY puts went down today by 9%. The number of calls went down by 13.5%.

A SPY put-call ratio this high, in this context, would generally lead to higher prices within a short time. The next target for the ratio is the bottom Bollinger Band.

 

Stops at SPY Multi-VWAP Area

Multiple SPY Megaphone VWAPS are in the 183.90-184.20 Area

Multiple SPY Megaphone VWAPS are in the 183.90-184.20 Area

Almost all of SPY’s megaphone VWAPs have now consolidated in the 183.90-184.20 area. This includes the 3-month megaphone VWAP down to the short-term interior megaphone VWAPs.

If SPY gets through that area without immediately starting to crisscross it (forming a megaphone across it), we’re likely back in the buy-the-bigger-dip scenario, with a dip target of SPY’s old VWAP at roughly 179.

The wave down would typically go to the bottom of the silver megaphone, then back to the multi-VWAP area, then to the orange megaphone bottom at roughly the target area. SPY would probably form a megaphone across the target area, and you would get long again, if you’re playing the dip, at an upward breakout from that megaphone.

Not saying it’s going to happen (right now this looks to me like SPY needed more of a basing pattern at the multi-VWAP area), but in case.

SPY Put-Call Ratio Soars Today

The SPY Put-Call Ratio Soared to 1.93 Today

The SPY Put-Call Ratio Soared to 1.93 Today

A spike through the top Bollinger Band of the SPY put-call ratio is frequently followed by a big dip and then another try at the top Bollinger Band. The second try typically fails, and then the SPY put-call ratio works its way to the bottom Bollinger Band as prices go up.

Today we got the second try after last Wednesday’s spike, with the SPY put-call ratio soaring to 1.93 from 1.54.

The surge in the ratio was due to bulls losing heart (why?) rather than bears getting suddenly emboldened. Bears actually closed out 24% of their SPY puts, but bulls closed out 40% of their calls.