Which Way From The Grindhouse

Futures have firmed up after yesterday's grindhouse down. The move was strong, yet there were again multiple overlaps. I try not to get sucked in by these, as they can easily morph into waterfall declines just as it feels safe to go in the water.

For example, things looked good around 1636. I added some more SSO against the SPXU that I've been carrying since June and last added to in July (then was forced to hedge with SSO as the market exploded in my face.) Obviously the S&P didn't care what I thought, and kept chopping away down to 1629.05.

I think we're close to a turn or a bounce or a pause. The 61.8% Fib extension target is close by at 1626.10. The 61.8% Fib retracement (support) is just below at 1617. And there is a volume shelf on the weekly chart at 1617 as well. Below that is a 1:1 Fib extension at 1600.

In that there is usually a seasonal end-of-month and holiday upward bias that could come into play at any time, I'm trying to focus on managing my overall risk. Yesterday took me out of the last of the VIX 18 calls I was holding for mediocre profits. The SPY 100 puts are kicking in as a cushion now to hedge against to the upside which I'm doing by slowly adding SSO and even UPRO in spots to square up the delta against SPXU. It's quite sloppy, but this is how I have had to manage a bad trade. It happens.

Forex looks much more calm today as does Asia (still down but not the bloodbath of the last few session in Indonesia, for example). Sentiment regarding Syria is swinging to Taper Is Off if we invade. Bonds are more calm, as are metals. Whether this is the calm before the storm remains to be seen.

Should a rally ignite, 1670 could become the immediate target. The market appears to have formed a textbook Elliott wave 5-wave impulse down. When 5th waves end, the correction targets the previous 4th wave: 1669.51.

Here's my favorite tune from Tarantino's Grindhouse double feature, plus the "hair" scene that made it famous in my world. I searched for the bar everywhere when I was living in Austin (and "Jungle Julia" too). No dice, but had some fun looking.