Freaky Final Friday

Options expiration day!!! Anything can happen so I’m not even going to begin to guess. Google was bought up to $351 for 2 full minutes in the pre-market before being sold off back to $341, usually it ends and expiration day at a $5 level rather than a $0 to wipe out as many contracts as possible but I wouldn’t go out on a limb with $345 as $335 and $355 are still very possible. Asian markets were happy and European markets were mixed but the Mid-East markets were so bad recently (see previous posts) that Prince Alwaleed had to step in and promise to buy $2.6Bn in stocks, causing the market to reverse from 723 points down to close at 706 points up (out of 15,000). This is market manipulation at its finest! No SEC investigation for that guy but a lot of traders owe him their lives as they were about to jump out a window as the market dove 21% for the week. Why did they go down? Because they were bid up in anticipation of the IOB giving the region a shot in the arm. Thanks to Mike for this article which further supports my theory: http://www.thestreet.com/_tsccom/markets/marketfeatures/10274148_3.html I’ve been getting criticized a bit for being a conspiracy theorist. I hope people realize that this is tongue in cheek but it is more fun to point at invisible men behind the curtain than to lay everything down on Adam Smith’s “Invisible Hand,” which somehow doesn’t qualify as a conspiracy (maybe because it’s just the one hand and you can’t see it anyway!). It will be a great sign if we can just hold the line today but believe me when I say to you that the chance of a Black Monday next week infinitely outweighs the chance of a Boom Monday or some other name no one has coined yet because it almost never happens!!! So let’s be careful traders out there and not get too full of ourselves. ===================================== GM is in trouble again and just when I thought I was going to stop shorting it! 50 dma is $21.50 but below that may be a clean run to $19 but the puts are outrageously priced so I’m not interested other than in a watching an accident in progress kind of way… Can Google be manipulated all the way up to a retest of the 200 dma of $345? Sure it can! In the pre-market shenanigans someone spent $1.8M to buy 5,400 shares at $351 when the ask was just $339. That’s a $60K loss just to goose the stock for 2 minutes! Betting on Google at option expiration is like being a 5 year old at an adult poker game, any winnings are pure luck and nothing else! Speaking of my Iran/US backdoor conspiracy theory, you must read this: http://online.wsj.com/article/SB114250761669399961.html?mod=home_whats_news_us Yes, I do plan on having lunch with the President again this weekend! Forget click fraud – “Visa USA Inc. is warning that two versions of popular software installed at cash registers could be used to steal information from credit and debit cards.” Ouch! IF GOOG tanks today you can play the panic by grabbing the CME $430 puts for $3.30 (.60 premium) as the 100 point difference is bound to make CME investors uncomfortable. A very easy way to lose $3.30 though!!! I’m not buying anything but if you are a believer, today is a great day to get CY if you missed it yesterday. Also PD, AAPL and PLAY but, like I said, I have no faith at the moment for new issues. Especially AAPL as it went down because BSC reduced their price target from $100 to $106. The stock is at $64 people!!! Builders continue up while housing prices remain firm. Transactions are slowing dramatically mainly because buyers have so far refused to drop prices. The issue will be how long the buyers are willing to wait but, historically, turnover is still very quick compared to normal cycles where 3-6 months used to be a normal amount of time to be on the market. I would not buy a home at this time as the upside (5% at best) is wiped out by the downside (20%+) potential. I also would not sell any home I intend to stay in for 5 years as prices will likely be back by then because you can’t get around the population growth. AIG had a mindblowing 72% drop in profits but, on the bright side, seem to have used that money to pay off all their fines. We should wait on this one but someone remind me I expect a big beat for the next quarter! On 3/12 I said “CHA down $1 still looks like a nice China play after a great test at $34.50.” http://stockcharts.com/gallery/?cha ********** Trade of the Day – SHLD ********** SHLD $135 puts are .25 and the stock is up $20 in 2 days on an option expiration day after not being over $127 for 3 months. 100 x .25 = $25 Don’t forget you must liquidate 1 hr before close or risk being in the money and owning a lot of Sears shorts on Monday!!! EOM Good trading, – Phil