I think CNBC's Dylan Ratigan summed it up on Monday when he said:
“Holy Crap – take a look at BIDU!” “I might get fired but honestly, look at that chart, it’s the appropriate phrase…”
That's pretty much how we all felt about BIDU and the markets in general as they went ballistic today as "Helicopter Ben" rained his special kind of love on the markets, driving us to the best gains since Greenspan's October surprise of 2002 when he first decided low interest rates would save a faltering economy.
Various indices were all up about 3% with the best moves coming from the places we need it most like the Russell (up 30 points) and the Transports (up 112 points), both adding 4% on the day. The S&P gained 43 points (3%), the Nasdaq 70 (2.7%), NYSE 301 (3%) and the SOX put up 13 to close up 2.8% on the day.
So did we have a great day? Some of us did but those of us who were a little bearish did not have a pleasant time as Ben exceeded even Cramer's wildest expectations of largess. Personally I allowed myself to get too bearish as I simply didn't take my own advice to switch off my brain and party like it's 1999.
I did not "go with the flow." In fact, I ignored the signs THAT I LAID OUT both yesterday and today:
-
Posted September 17, 2007 at 9:59 am | Permalink
-
Markets again holding up very well at 13,400 but again we need the Nas to take 2,600 and the S&P to take 1,485 to confirm whatever it is that it’s confirming.
-
-
Posted September 17, 2007 at 11:24 am | Permalink
-
What a struggle, not looking good but I’m not dumping my upside protects just yet either. Fed tomorrow can send us anywhere from 13,600 to 13,000 easily.
-
-
Posted September 17, 2007 at 1:05 pm | Permalink
-
VIX going way overboard defending the Dow, up 2 for the day, close to 10% on a 60-point drop.
-
I never understand all this knee-jerk buying and selling. I thought the market would go down and it’s down, wake me if it goes up for more than 10 minutes but the real move isn’t for 25 hours and 13 minutes when they release the Fed minutes. You should be using this opportunity to tighten up your positions and get our of what Septembers you can as a move in the wrong way will crush you with no time to recover. Oil is at $80.33 and the energy sector is barely moving – that should tell you something.
-
-
Posted September 17, 2007 at 1:25 pm | Permalink
-
Fed (I have to get a cut an paste for this!): no cut: Cramer and pals decimate the market. .25 cut, Cramer and pals have a 100 point tantrum, others relieved (best case). .50 cut – Foreigner dump dollar, shorts get shorter and Cramer and co start to worry maybe something is actually wrong with the economy.
-
People have stopped (paused) selling. Not really buying but the selling really calmed down. I think there are a ton of shorts who are simply terrified of getting burned tomorrow but anything less than a 1/2 point cut or a 1/4 point cut with a “more to come” statement is going to really encourage them.
-
-
Posted September 17, 2007 at 1:36 pm | Permalink
-
Oh yeah, I did forget to mention that. I have October puts because even IF Bernanke puts on his Santa suit and drops .50 on the market, within 2 weeks people will realize it did nothing to change things. Meanwhile the dollar will clearly take a dive, driving up our deficit, the price of oil and the price of gold while import prices skyrocket. That will be a good time to be short too!
-
-
Posted September 17, 2007 at 2:10 pm | Permalink
-
Opt is right, it’s killing me to be neutral as I’m pretty bearish but ANYTHING can happen tomorrow and cash will be king.
-
-
Posted September 18, 2007 at 9:40 am | Permalink
-
I just can’t buy into this rally. I want to, I really do but it’s based on such a poor premise…
-
-
Posted September 18, 2007 at 12:06 pm | Permalink
-
Based on this morning’s action, I am very weary that we will go up after the Fed, regardless of the statement as the most logical reason to take the market right up to a critical level like 13,500 is to use the Fed as an excuse to rally on whatever they say, creating a frenzy of retaill buying and a short squeeze (just tested) that could take us up to 13,700. That would be a 66% retrace (Fibonacci number) of the drop from 7/20 to 8/16 (30 days) in just about 30 days and would either be a very critical breakout or a “lower high” that may be followed by a deep correction.
-
I still like my Dec QQQQ Dec 31s $50s for upside balance and I bid on some more at $2.15 (no bites yet) as I think they can go nuts if they break $50.50. They are also a little less damaging to the downside than the DIAs.
-
-
Posted September 18, 2007 at 12:19 pm | Permalink
-
Cancelled my QQQQ order for now, internals took a nasty turn, MSFT got ugly and GM may cause huge damage if a deadline is set (not to mention I still think a .25 cut will at least cause an early head fake down).
-
-
Posted September 18, 2007 at 1:15 pm | Permalink
-
Homebuilder sentiment was markedly down (-10% since last month, lowest since 1991) and Ara Hovananinan himself said he expects the slump to last through next year.
-
Anyway, moral of the story is that after spending 4 hours looking for a reason to be bullish I’m actually more bearish than I was this morning so I’m tightening up my puts, concentrating on the DIA Oct $135 puts and I will keep my finger on the trigger of the Dec Qs as upside protection but not until the Nas breaks 2,600 along with the Dow 13,500 and the S&P 1,490 but I really think that even a 50-point cut is already fully reflected in these levels, where we were in early August and there is nothing that has happened since then that justified making a new base at 13,500, up 1,500 from August of last year.
-
I’m sorry to be bearish and I promise to go with the flow if we break those levels but right now I think the market glass isn’t half full, I think it’s all full and about to spill…
-
-
Posted September 18, 2007 at 2:18 pm | Permalink
-
50point cut! Damn!!!
-
-
Posted September 18, 2007 at 2:20 pm | Permalink
-
Bounce off 13,600, let’s watch Nas 2,625, S&P 1,500 to confirm breakout but obviously this is mega bullish until people regains their senses.
-
-
Posted September 18, 2007 at 2:41 pm | Permalink
-
Shorts have not covered! OXPS totally crapped out, it’s going to be tough to get orders in if everything is like this, cant’ get anything executed at limits and forget market orders!
-
I first began keeping a Web Log so I could analyze where I went wrong in a trade. It's easy to see WHAT I did wrong – I began to think too much like an economist and not enough like a trader… Economists make terrible traders!
My big mistake was not following my own advice, I set levels and I should have stuck with them and changed direction without prejudice when they were hit. Had I don't that, I could have turned yesterday into a huge gain! My even bigger mistake was not taking those Q calls ahead of the Fed. I KNEW I needed more upside protection but I got greedy and decided to wait. Once the announcement was made, the play was impossible to execute at a reasonable price as trading systems jammed with orders and executions were hard to make.
I always say I don't mind losing money as long as I learn something but it's a LOT easier to say it in retrospect – right now I'm still pretty pissed!
As I expected the dollar collapsed, gold soared, oil soared, it won't do a thing to stop a record number of foreclosures from occurring and I'll bet a rally like that drops a few more short-side hedge funds off the face of the earth but we can't worry about that – we're traders and we need to look for trades. This is a huge rally, we had a strong finish and I was wrong about $82 oil (up 34% for the year but "not inflationary") destroying the economy (so far).
I was wrong to worry so much about US subprime issues being so severe that they caused a bank in England to collapse and I was wrong to worry that a collapsing US Dollar would force the Fed to RAISE rates in order to get foreigners to buy our currency or (God forbid!) tame inflation.
All of those things may still happen but no one else seems to be worried about it so why should we? While it's always fun to be right, on the whole I'd rather make money so we're going to give it a couple of days, analyze the markets OBJECTIVELY and make moves accordingly.
The Fed is pursuing the policy I laid our for them on December 9th: ""Burning Dollars to Fight Gravity," and it's a very dangerous game but the game is now, indeed afoot and, as I said at the time: "Meanwhile for US investors, that ever expanding money supply has to go somewhere and we may be heading into a very, very soft landing on a very big pile of US dollars!"
Speaking of burning things – mad as I am about missing the rally today I'm not going to let the NYMEX slide without comment. After churning 270M barrels worth of contracts, NYMEX traitors traders racked up ANOTHER .94 gain on the October contracts WHILE SELLING OFF 48M BARRELS, now leaving the US with just 123M barrels to be delivered in October.
Don't worry though, the barrels were put to good use as they used them to add open interest to future months, running the price of the strip up all the way through Jan '10, after which the market fell deeper into backwardation with losses as much as 24 cents for orders all the way out to 2015. Hey – give these guys a break – you can't manipulate EVERY month!
With a 0.63% drop in the dollar, a 1.2% rise in crude is barely treading water so we can expect at least $82 at tomorrow's open. Similarly, gold should jump in foreign trading, the ultimate vote of "no confidence" in our economic policies.
It's going to be an interesting week!
