Condor Options

Hilarious chart via EliteTrader (h/t Barry) of the dreaded Black Swan discussed in Nassim Nicholas Taleb’s book of the same name.

Why are Elliot Wave dudes so humorless? A commenter at The Big Picture chides:

While you may be joking around, an Elliot Wave Technician will tell you that what you’re observing is actually a very ominous pattern.

The five wave move down that completed in March may have only been an initial first wave down….we’ve recently completed the wave 2 last week….and now we’re descending in what may be a wave 3….

If we’re in the beginning of Wave 3 down….then hide the swans and every other animal, man, woman and child you can find…because it means there’s some bad news coming…..

Our biggest objection to Wave Theorists is their syntax.  A piece of analysis by a wave theorist is usually some giant conditional statement packed with inchoate and unverifiable jargon, followed by a major prediction of death and destruction (or of eternal profits and sunshine, if we’re in an obvious bull market).  Cf. the example above.  So on the one hand, they’re never actually wrong, since a conditional statement with a false antecedent always comes out true.  But then what’s the point of the analysis in the first place?

Anyway, we have our own little voodoo tool that we’re continuing to tweak - it’s a mix of quantitative metrics, chart-driven signals, and sugar and spice and everything nice - and we call it the Squishy Weekly Sentiment Index (SQWI) (the silly name keeps us honest).  The SQWI gave a very neutral (just slightly negative) reading for this week, which isn’t anything to hang your hat on, but might prove true if markets can hold up here and avoid a retest of last week’s swing lows.