Friday, October 28, 2016

SPX Update: Choppin' Broccoli for Halloween

"There is a fifth dimension, beyond that which is known to man.  It is a dimension as vast as Ben Bernanke's money supply, and as timeless as Hillary Clinton's pantsuits.  It is the middle ground between July and November, between hopelessness and frustration, and it lies between the pit of roughly 2114 SPX and the summit of 2193.  This is the dimension of lost time premium, of random stop grabs, and of traders screaming at computers.  It is an area which we call:  The Chop Zone."

(insert "dee dee dee dee, dee dee dee dee..." music here)

That intro is, of course, stolen verbatim directly from Rod Serling's prophetic TV series:  The Chop Zone.  In order to appeal to a larger audience, that show was later reworked into the more widely-recognized Twilight Zone, which made its debut 57 years ago (in 1959), during the month of (you ready?) October ("dee dee dee dee...").  It's too bad that the original version was never made public, because the intro alone could have saved today's traders a LOT of grief.

From a "traders almanac" standpoint, today should be significant, since this weekend is Halloween, at least for those traders who are missing a day on their calendars (me; some guy named "Sal" (Manilla?) in Brooklyn) -- and we all know what Halloween means to the market!  Wait, I've just been handed a note by our research department... you mean we DON'T know what Halloween means to the market???  You say it has no real market significance AND it's not a major holiday?  Oh sheesh.  Try telling my wife!

Despite the Negative Nellie attitude of my research department, a quick Google search using the terms "market patterns on Halloween" revealed the following disturbing Halloween patterns, so we should keep an eye out in case these show up in the next couple trading sessions:

On a more serious note, we're still in the chop zone (been trying my best to at least keep these updates interesting!), and the market has managed to eliminate exactly zero of the short-term options, although the diagonal is looking less probable:

For the larger view, nothing has changed yet (obviously!):

It's interesting to note that BKX has not been playing along with SPX's chop zone tendencies, and has now slightly exceeded my July target zone:

In conclusion, there's really nothing to add down here that I haven't already said two or three hundred times already -- so I'll simply end with my usual sign off:  Trade safe.

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