Wednesday Mourning

Yes the u is intentional – this is not looking good at all! Please, please read the below post and give me feedback if you are so inclined, we are going to have to get very nimble to survive this market! Japan continues down and Europe is selling off both led by declines in oil, steel and other commodities. This is despite a very positive OPEC meeting, declining oil prices and progress with Iran… The Russian markets lost 6% today and the Middle East and even India got hit very hard. This is primarily on interest rate worries but the housing and retail numbers have not been good either and people are simply losing confidence in the markets. If we somehow survive today, we will be in amazing shape but treat your virtual portfolio like its New Orleans before Katrina or you may be standing neck deep in water waiting for FEMA to bail you out next week! We could be in the second stage of a serious rotation cycle but that could just be me clinging to my old happy theory so I’m taking it with a big grain of salt unless I am proven correct (not looking likely in the pre-markets). Today is our last chance to turn this puppy around before we enter technical hell and establish the dreaded triple top that will likely send up back to the previous ranges: Dow: 10,700-11,000 Nasdaq: 2,000-2,200 S&P: 1,175-1,250 These are, I’m sad to say, optimistic numbers as last March – April we had the following drops: Dow: 10,984-10,000 Nasdaq: 2,100-1,889 S&P: 1,229-1,136 The ides of March are certainly upon us. http://astrology.about.com/od/oddstrange/a/idesmarch.htm Don’t forget we are less than 2 weeks away from the Iranian oil exchange opening up oil trading in Euros for the first time. This could still be a destabalizing event for the Dollar of biblical proportions, no on knows for certain what will happen but I know I will be at least 75% in cash for most of this month!!! ===================================== I will not be shocked if the Iran situation is escalated in order to derail this major monetary event. Yes, I know it sound like a Grisham novel but there are actually Trillions of dollars at stake here, wars have been started for less – it’s just hard to imagine our that our own Government would manipulate the media and lie to the American people in order to start a war to serve their own interest… Yeah, that would never happen! It’s not like the President’s popularity is low and Congress is rebelling and he needs a new enemy to rally the people against so they stop questioning his leadership. It’s not like the price of oil is dropping and everybody he knows in Texas stands to make a lot less money this year. In order to prepare for a war in Iran he would have had to visit a lot of allies personally in order to be able to do something as rash as start another war, especially the ones in Muslim nations like India (I know, mainly Hindu) and Pakistan and Afghanistan. A paranoid person might even say that learning to say nuclear correctly is all part of the preparation process as you review your speeches and substitute “Iran” for “Iraq” and “nuclear weapons” for “weapons of mass destruction.” Outside of that, you can just follow the same script… ===================================== A wise man would cash out all positions and take a vacation at this juncture. I do this for fun and this is like surfing rough waves or skiing moguls, the more challenging the better – but I sure wouldn’t be risking rent money on this market! Google Gaff. Google Goof. Google Grief… Write your own headlines but I’m now seeing a possible buying opportunity as the sound and fury regarding this snippet of information truly signifies nothing. The 200 dma at $345 may be retested today but a bounce off this will be a positive signal for the stock. I wil post my trade (if any) in comments because there is no way to make a call on this in advance! C looks like it it primed for a move up, after sitting on its 200 dma all year it jumped up 2% yesterday but was held below $46.50 by heavy selling at that price. Once it breaks above that level I like the $45s for $1.55 (a .15 premium) but being careful to look for an exit if it has trouble at the 50 dma of $46.75. We can expect an FDA decision on Tysabri today and it sounds to me like it will be game on for ELN and BIIB when they resume trading. Probably too late if you are not already in this one (I have the BIIB Apr $45 calls at $2.91). DBRN had blowout earnigns and is splitting. In a perfect world I would jump on the Jun $45s for $2.35 but today I’m not so sure… NTOP is a good VIOP play for patient investors. They should break even well before they run out of money (or get bought) so for $2.04 I’d set a stop at $1.30 and go very long. When Vonage goes public, this should take off in sympathy (assuming Vonage goes well…) LU is another cheap stock I’m starting to like at $2.86. NVDA got a little ahead of itself. If it can’t fight the Nasdaq tide the $47.50 puts are a good quick trade at .95 Nobody believes WIRE will go down which makes it a good contrarian play with the $35 puts at $1.40 (.40 premium). If it goes up at all, I’m wrong. PD recovered yesterday but a world collapse is a big problem for these guys. The $135 puts are expensive at $3.81 but could do very well (keep your eye on copper prices for a reverse). BA cannot be expected to buck the Dow for another day. It’s a slow mover so the $75 puts are not a big risk at $2.05 if you set an acceptable stop. Our usual gold play will be a screaming buy if things really get out of hand in the Middle East. We will have plenty of time to get in there but NEM is usually the quickest mover and BVN the slowest. At the moment gold is dropping again so it doesn’t seem like the Europeans care about Iran as much as we do. ===================================== Trade of the day is really Google but I don’t know what to do yet. I will post in the comments as I see it but remember that this is a crap shoot and you can be totally wiped out in seconds so don’t bet more than a tiny portion of fun money on it! You would think I would be all over the oil puts today but I’m not sure what is going to happen as I already see the analysts jumping all over the tube screaming “peak oil” and “$200 a barrel by 2010” and, of course, “Iran, Iran, Iran” so it is game on in the oil manipulation market. Traders are now accepting the fundamental fact that there is too much oil on the market. Every dollar over $50 is a terror/Iran/hurricane premium and, much like your options premiums, it will evaporate over time. Without an actual event soon that causes an actual shortage in supply, current prices are unsustainable (but Dick Chenney already knows this!). Valero confirmed my trust yesterday as the king of all indicators with XOM running a close second so I think we can use the Valero rule with reasonable confidence today. Today is a fun day because oil is at $61.50 and could go either way. If it crosses against you, you need to really think about your trade because this can go bad fast! If (BIG IF) oil is heading over $62, I like the following calls: PDC at $14.23 and sell the Apr $15s for .90 (7%) PTEN Apr $27.50s for $1.25 HYDL Apr $65s for $4.10 (200 dma is $64.75, must exit if crossed) NBR $65 calls for $1.55 (only if the stock crosses above $65) UPL $50 calls for $2.10 If (way more likely) oil is heading below $61, I like the following puts: RDSA $60 puts for $1.10 THE Apr $35 puts for $2.55 (200 dma is $36, must exit if crossed) SLB Apr $110 puts for $3.50 BHI $65 puts for $1.70 RIG $75 puts for $1.70 (50 dma is $75.50, must exit if crossed) VTS $40 puts for $1.25 (earnings are tonight so watch out!) Spreads: XOM Apr $60 puts and calls for $3.35 total. XOM Apr $62.50 calls for .75 and the Apr $57.50 put for .75 COP (x) Apr $60 calls for $2.15 and the (1.5x) Apr $55 puts for .70 SUN Apr $80 calls for $2.25 and the $70 puts for $1.70 CVX Apr $55 calls and puts for $3.65 total Be careful out there! I’ll be following up in the comments when I can but this is a very busy day… – Phil