Pabst's Blue Ribbon Trades

Quote from Optionpro007:

Thanks for sharing Pabst.

Good trading to ya! :)
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You're welcome! I luv reading your thoughts also!

While I'm at it this is to-morrows strat. I'm short a couple of Gold that's turning into some ok "found money." Just the same I don't want to get caught in a big reversal. The market thinks the new world is going to be Gold vs. worthless script. I'm not going to accept anything other than a trending deflation trade in metals. I can always trade them later. When I figure out a stop I'll try to post it.

Stocks; Agh. The only good thing is I'm short a MASSIVE 3 lot in NQ that I never got around to covering Friday. Small traders should be aware that a measly short 3 NQ and 2 GC was a 5k (I mean 8 total!)day today. Easily could go the other way. A shallow victory. It was my intention to buy 10 1300 puts below Friday's lows. Alas last night there was no ES options market. Looked to be open but no bid/offers. I'm beyond bummed. I can buy 20k in premium and sleep like a baby-more than 1 futures and I'm up pacing all night .
 
I was surprised by the big action on a US holiday - I thought if there would be a big selloff, it would happen Friday or Tuesday. In any case, it looks probable that we'll see that long-awaited capitulation on Tuesday. If it is a big panic/sell-off day (and not another damp squib like friday, or even a rally), and the VIX gets up to 40ish, I would say that will be the ideal time to cover any shorts, exit any puts, and switch to the long side for an anticipated market bottom. I am loathe to make any price predictions, since momentum is king in these situations, but we could maybe hit the summer 2006 lows at 1219 in the S&P. If a panic bottom does occur, I could then see us rallying back to the August 2007 lows around 1375ish within 1-2 weeks.

In these situations, most markets become strongly correlated to the S&P. Any market that has been driven by the S&P/risk-aversion in the last week or so, should simply do the opposite of what it did last week. I.e. bonds should selloff since they rallied on the stock weakness, gold/euro/carry trade should bounce back, vol should collapse, growth stocks & financials should rally hardest whilst defensive underperform etc. Bear this in mind if you have nice winners in any of these correlated positions, or if you exited to weather the storm. For example, I'm going to be looking to buy some gold tomorrow on any crash spillover.
 
Im looking for some strength in the dollar for a little bit just like august and then the dollar decline becomes disorderly.

Bonds are going to be in trouble
 
I too must add my thanks for your sharing this.



Quote from Pa(b)st Prime:

An email exchange that Cutten and me had over the weekend. (I'm sure he won't mind)

Author Message
Pa(b)st Prime
01-19-08 01:42 PM

Registered: Oct 2006
Posts: 2036
Re: Your current thoughts on the S&P

I'll post in my journal but I'll discuss privately some of my work. The reason I sold the rally in December was there were two measurements in SPX off the Nov low that were the same size as moves leading to the last stages of both the 1987 and 1998 pre crash bull swings. I had 100% confidence the market would stop at 1511ish and get creamed in January. Like you I pay VERY close attention to sentiment (I check p/c's hourly) and while I said a week ago that "fading the fade was the fade" even I was surprised by the lack of bounce.

Here's the deal. If Friday's lows break we're going to 1247 SPX immediately. Perhaps even Tuesday. These lows Friday are so frickin' important to my charts that a penetration will be devastating. For example this break from Oct is now the same distance as 1998 Jul-Oct. Big stuff. There's several other counts just like this. A key one is from 2000. The stops below these levels are MASSIVE. I won't buy the market (although like an a-hole I was caught long Thursday in the 1440's) until SPX trades 1219. Sentiment, vix, cash on sidelines, low p/e's are MEANINGLESS when the market's in crash mode. Whether Friday's lows provide anything more than the bounce they caused intra day, I don't know. I suspect we're plunging. I detect little "crash" sentiment and a lot of "buying right here" type shit on various boards. I'm sure the thinking is "what's my risk buying a 200pt pullback?'" Cutten I won't even guarantee that after we trade 1220 that the mega bounce is able bring us back any higher than these levels. IMO, it's over.






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Cutten wrote on 01-19-08 12:52 PM:
Just thought I'd get your opinions on this. Right now my gut says we are very close to a bottom and a big subsequent rally. One thing I was waiting for was a big panic down day, as in August. However, after Friday's performance I am not sure if we will actually get one. If ever there was going to be a big puke down, yesterday should have been ideal conditions for it - the market sold off despite the Bush plan (down 45 pts from the open), it was an expiration day, VIX had been low recently, long holiday weekend etc. I had contingency planned for a *rally* more than I had for a damp squib of a 1% down day I'm starting to think maybe the reason it didn't sell off was simply because there are too many bears & people on the sidelines, and the market is just plain sold out.

Apart from the lack of "panic"/high VIX signal, everything else here seems bullish - lots of worries around, market is down a lot from the highs, S&P is way below the 200 day MA, cash is being pumped into the system and further rate cuts likely, the financials are starting to pick up a bid and some corporate activity.

Was wondering if you had any thoughts on this? I made a post to your thread on similar lines:

http://elitetrader.com/vb/showthrea...551#post1755551

Let me know what you think!

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sounds great....lets get ready to rock and rolla'''''...whatever i do either way it's going to be big....but this might change tomm morning...keep u posted
 
Quote from OldTrader:

Geezuz....sounds like everybody and their brother "nailed" it. LOL! I love being in the company of the smart money.

OldTrader
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You couldn't get nailed in woodshop.
You couldn't get nailed at the bunny ranch holding a fistful of 100's.
 
Quote from Bob Rowshan:

You couldn't get nailed in woodshop.
You couldn't get nailed at the bunny ranch holding a fistful of 100's.
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I do trust you as a woodshop and bunny ranch expert, dumbass.

OldTrader
 
On sunday Jan 13th, 2008 (with the S&P over 1400), I emailed Pabst the following:

"I see the S&P falling to 1300 w blood on the street this month. The pattern thats setting up here looks like 2 failures at 1425, and now lower ahead. The 2 sticks at 1425 usually makes for a good top pattern."

Pabst, you have my blessing to corroborate this. In the subsequent week, I've added +10% and more to my already large account. A sequence of events on ET forced me to take my opinions private. So good luck everyone, and don't say I didn't warn everyone, over and over, that the S&P was putting in a major long term top at the old 2000 highs. I believe I started 3-4 threads in trading warning of this massive S&P double top. I nailed it, and will now humbly take my thoughts elsewhere. Bye bye.
 
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