Daily Archives: December 4, 2012

Use Probabilities Now!

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Some people will try
to take a simple concept and sprinkle it with some mumbo jumbo to make it seem
complicated and then claim only they can explain it to you! Don't listen or
don't buy into any such load of bunk!

Take options. Yes, a
lot of people, maybe even your stockbroker, will tell you options are too
complicated and confusing. What they may really be telling you is options are
something they don't want to spend the time to understand, so they don't want
you to trade them either!

It was only ten
years ago, that a privileged few investors who could take advantage of things
like streaming quotes and real-time options chains. Options were shrouded in
mystery and deemed too complex for the average Joe – to be traded only by the
so-called "sophisticated" professional investors.

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Cliffhanger (by Springheel Jack)

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My musings on the possibility of reversal yesterday morning were obviously well founded, and SPX reversed hard after the morning push up to put in a bearish engulfing candlestick for the day. That doesn't mean we see a down day today but we will most likely see more downside over the next few days. We are now at the point where we will see either the bull or bear scenarios for the next few weeks start to play out, and with congress in recess in a week the trigger for which one will play out may well be the outcome of the fiscal cliff negotiations by that point. 

On the weekly SPX chart SPX is finding resistance at the middle bollinger band, which is the obvious reversal level if we are to see further declines into Xmas. Support there is at the 50 WMA at 1375, but if we see a move that far on a daily closing basis we'll most likely see a move to the lower weekly bollinger band in the 1363 area:

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