Wednesday Recap

Patient?  It's gone from the FED, but the term worked perfectly for call buyers this week.  It's never easy holding onto longs/calls when every pundit is telling you to sell, that the FED is going to spook the market.  Patience is exactly what we needed to profit today and it worked nearly to perfection.

Last night's bonus chart proved to be rather prescient.  It's nice to be right about where the market is headed, it's even 'nicer'when that move is even more robust than your most optimistic expectations.  Today was an almost straight up day after the FED.  No stairs, no methodical move higher.... it was a 2 hour spike-a-thon and the stock market rests just off record highs.... yet again.

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This was one of the most hyped FED meetings in recent memory.  Even my daughter wanted to know why Yellen was removing the term patient.  "But Daddy, how can she remove patient, when the term has only been used for a few months?  Isn't that being impatient?"

When the term patient was added to the FED vocabulary late last year, the markets were anything but patient.  Stocks rallied furiously.  Today the same patient term was removed, yet stocks again rallied furiously.  Is it starting to make sense now?  Great.

My concern heading into today was the US Dollar.  The FED needed to talk it down, and boy oh boy did they talk it down.  After the bell, the US Dollar was so despondent, it literally jumped off a cliff.

Thankfully at the bottom of that cliff was the same trampoline they used when stocks flashed crash in May of 2010.

The last few weeks fear has been growing about this FED meeting.  That fear is fueled by the media.  Fear sells.  But the VIX wasn't buying it.  Even last week it was acting strange.  I kept noting this is the nightly updates, morning videos, and via live audio in the chat room.

This morning with stocks falling, the VIX was also down.  It even had a fat finger slap down at the open.  Amazing....  my unconfirmed source, or a source of mine not confirmed... how does it go?   I'm just jabbing at air here but here is my unconfirmed thought:    it looks like someone was testing the VIX smackdown algorithm for use later this afternoon.

The VIX smackdown algo, in case you didn't search wikipedia for it yet (relax - I'll do it for you),  is a Camel Clutch followed by an illegal full nelson.  It looks like today's smackdown even included the rare but potent turn buckle mauler command.

The action this week has been rocky, and certainly not a market that had the feeling of one ready to spike to new record highs.  This morning the market looked on the cusp of a collapse.  Factor the continued fear mongering about the FED and the makings were there for a collapse lower in stocks.  A crash!!  Oh No the humanity!

The market was supposed to experience a rout much like the one in 1937:

Listening to the media and you wonder how anyone could be long stocks anymore.  Of course that's what we've been hearing since the lows in March 2009.  The same old comparisons, regurgitated to align with the next scare tactic.

From previous FED days, recent charts, oversold conditions, an over bought US Dollar, I was trading for a move higher post FED.  This morning's weakness shook longs, emboldened shorts, but I remained patient.  And those who remained patiently long were rewarded with a massive post FED spike to the upside.  The rally in stock futures continues now in the overnight session.

Last Friday and earlier this week I noted a similar condition that resulted in large rallies previously for $SPY and $QQQ.

http://stocktwits.com/UPB/message/34089052 … http://stocktwits.com/UPB/message/34005511 …

In preparation I entered call positions in names I thought would benefit from this rally.  Thus far the market has been very kind.

First $GPRO made the move turning $40 calls no one wanted into 300% gains....then $TWTR, now $TSLA and $CAT.

 

$CAT was a doozy!

$TSLA is a worker!

 

I think this market still has legs, still gas in the tank, and will make a run at record highs again.

Here is an excerpt from last nights recap.  I still feel the same tonight.:

 

 

Trendline resistance rests  just above former record highs.  I think the timing of when this happens is the only question.  It could come as soon as tomorrow or the end of this week, as crazy as that sounded this morning, it sounds a lot less crazy now.

I'll be looking for some individual names to trade for this continuation.

An ill timed CALL buy in $WYNN yesterday does not mean I will be wrong about the recovery rally in the name.  This is one stock I think will see a violent recovery in price.  The stock was near long term support today on an analyst downgrade and negative sentiment.  We've seen this many times recently and over  the last few years with popular momentum stocks... think $BIDU, $GOOGL, $AAPL, $FB.... just when they get written off, they come back and surprise the market to the tune of record highs.

I don't think that is going to happen for $WYNN anytime soon, but I do think the market isn't expecting a move higher, and that is precisely the time I want to be an owner of Calls.

$TSLA I am already in the $200 calls from $1.33 and think this stock continues to $210 as I stated yesterday in my mid-day market video.

I'll be in the chat room bright and early tomorrow.  Have a good night.

 

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