The collision of global markets and social mood

Tuesday, August 25, 2015

Tuesday -- China Is The New Fed, TVIX Tactics

S&P E-mini Futures:
Up as much as 77.25 points overnight. Not a typo.

China is the new Fed. It cut interest rates and deposit reserves ratios overnight as their markets were crashing again. Candy for everyone. Adds to the ABC/Triangle thesis.

Giant flip-flop from yesterday. AUD & CAD stronger in the face of a stronger DXY. JPY weaker. EUR & CHF weaker. Continuing to eyeball USDJPY as damage was done (especially with ominous comments coming from BOJ and Abe's minions).

Lower prices, higher yields across the curve.

WTI crude catching a bid. Needs above 40.50. NG bid as well.

Gold & silver down marginally. Copper bid.

S&P Outlook:
Social media is a goldmine for real-time sentiment. Here's my favorite *poof* dude in action again, yesterday and today:


With futures up huge, the ABC or triangle idea gains importance. There are gaps as high as 2119.21. There is a juicy volume shelf at 2000, 2053, and 2081.

But first price will have to clear yesterday's high's 1954.09 and sustain the move.

Otherwise today is likely just a fourth wave before a final fifth to new lows near 1800 and then perhaps another longer, larger bounce.

Been using TVIX (Velocity Shares 2X daily Inverse Volatility ETN) as a put without an expiration when its price is in the single digits.

With a rising 50dma it can be partially hedged with long e-mini contracts at a 30% ratio (3 ES per 1000 TVIX) to help pay for decay as well as to accumulate a larger TVIX position by using e-mini profits to buy more.

With a falling 50 dma cheap weekly SPY calls can be used as protection against profits in TVIX until an extreme move happens.

Cheap-as-hell SPY weeklies kept me in a full TVIX position Thursday & Friday until Monday morning's washout. The calls were a total loss (ave. price ~.35). Could have cared less.

TVIX was between $5 & $6 for about a month and skyrocketed to $15.99. I got out at $13.08. Feeding out a leveraged VIX position into a market panic is probably the best fun you can have with your clothes on.

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