Monday, September 19, 2016

Second Mouse Gets the Cheese on GE and More....09.19.16

I've made a number of posts on my GE bracket trade and here's the current status.  The green/red arrows indicate when the trade was entered and the yellow lines point to a recurring pattern that occurs across the entire spectrum of stocks and ETFs....the second mouse gets the cheese principle.
The idea is simple....traders test the bracket support and resistance and initially appear to make a break (in this case ...breakdown) But then the market makers, prop shops and HFTs drive price back into the channel leaving short positions with a loss.  Now the breakdown happens again...this time on a huge engulfing bar and the tone is set for further decline as the usual price manipulation suspects can't recovery price above the lower bracket.   The parabolics indicator also did a great job of keeping us on the right side of this trade.  Keep in mind these are 130 minute bars.
 Watch for this pattern...its very reliable.
All eyes, ears and trigger fingers are poised for Wednesday's FED pronouncement.  Current options skews are bullish as is the FED Fund rate probability but we've seen crazy reactions to past FED announcements so stay tuned.  By the way.. don't neglect cash an as option until the smoke clears.
And, for the risk adverse...the delta neutral DN model update is available here.
130 minute chart courtesy of Schwab SS Edge