This is not a broad rally yet – let’s not forget the Hang Seng opened very high and dropped 300 by lunch. I’m not rushing to reposition, painful though this is. Look at CFC this morning – just silly buying…
XOM and SU I covered by selling Sept puts, I wasn’t as worried about COP or XTO. Oil is DOWN .40 so I wouldn’t panic, especailly in October positions. This is a very low volume day and it can all be reversed in minutes.
Look at the people going down: DRYS, CAL, POT, QCOM, COH, CROX, DD, SOX, INTC, TXN, AMD, QQQQs – is this a major bull rally you should capitulate to or is this an excellent opportunity to roll your puts higher or DD on existing positions? You need to stand behind your trades otherwise you will always be forced out by moves like this. XXX
Breaking 13,400 is hyper-critical here if they want a real rally.
Internals are strenghtening though so I wouldn’t bet against it but let’s watch for a rejection as even a seller on holiday sets stops somewhere!
Rolling DIA $133 puts to $134 puts for .35 XXX
HOG 52-week low (consumer)
YRCW 52-week low (transport)
MCO 52-week low (mortgages)
NT 52-week low (telco)
Pharmas are dropping off (consumer)
Bought back my oil putters.
Yes Happy New Year/Ramadan!
MA/AXP taking a dive.
DIS/HOT failing
On the plus side:
UPS making a move
JOSB coming back
TIE moving (I still like them)
SHLD coming to life
CCJ cranking
Brokers having a good day…
DIA – that’s a roll of my Sept $133 puts to Sept $134 puts for .35 debit.
Now we have a strong rally building (incredible!)
On the whole I still do not like this rally and have made very few moves in reaction to it, painful though that may be. I did just buy the Sept $135 puts for $2.10, another interim top call leading to a huge squeeze play on the Fed.
VLO – huge gasoline rally but not a smart buy with oil so high.
The dollar stopped falling, better than nothing.
Advance decline ratio falling off a bit but new lows outpacing new highs 61/49 today.
XTO – still weak in a strong group, as my puts are on the money I’m more inclined to DD at $1 if I can than sell for $1.10.
I have no calls for over 13,400, I simply don’t see us holding this unless the Fed does something amazing and I’d rather have cash available for a neutral stance into that meeting.
Much like the Shanghai, sometimes not gaining 300 points is a failure…
FWLT/WYNN – I think if they can’t break up today (like RIMM) then this is going to be pretty strong upside resistance.
Transports are picking up, let’s watch the 2,800 line on the TRANQ but it simply amazies me that they can shrug off these oil prices (although diesel is mysteriously lagging). No matter what we think of the rally, we can’t ignore overwhelming upside evidence.
GM – kind of dicey with the contract up for grabs but hard to go wrong knocking off 40% of your purchse price on the first sale. GM up over the 5% rule for the day, if they hold $32, still very bullish.
GSK is up, not down… I’d wait for the Fed, you’re still going to get your premium and you don’t want to give up the $2 insurance you currently have on the downside.
RIMM – I sold the $86.62s yesterday for $2.35. At $3.30 I still consider it a good sell as it doesn’t seem very likely they will break $90 anytime soon.
X is finally moving, this rally could get real!
Well said JE – I don’t think anyone here didn’t get killed at least two or three times early on.
AAPL – I think that $180 target for them was a fair price for 12 months.
I’m watching GOOG here as a lead indicator, if it can get over the $527 mark, it’s time to put on a rally cap. Apple needs to hold $138 and Goldman needs to hold $187 with the Nas in general holding 2,600 but now the RUS is positive.
If the brokers have good earnings and the market is at 13,400 – what exactly is the premise for emergency Fed tightening? Oh well, I need to turn that part of my brain off!
I keep wanting to flip my positions but every time I take a close look at one I simply can’t give up on the short side…
VLO rule, yes if you want to try calling a top here (I’ve been pressing my bets).
UPL with a sharp turn down, XTO weaker, NMX still falling and that is just ODD…. Perhaps they see this trading frenzy as a last hurrah?
CC coming off the mats.
SHLD – will sell on a pullback but they have a lot of room to fly. No way do I go into the weekend without selling, even if I have to buy back on Monday. Right now, the $135s are $2.35 and I would love to get $4 for them. It was there about a week ago so it’s very possible.
AMGN – yes, all of the above! If they are current calls, of course take them off the table. You can roll them at $4.50 to the Oct $57.50s at $1.70 AND sell the Sept $57.50s for .62 leaving you in for just $1.10 with a nice profit off the table.
OIH is still the gift that keeps on giving by shorting the $185 calls when the stock hits $185, now it’s $4 at the top of the range…
SHLD – much as I love them, it’s not even a bounce until they break $145 (which is why I was comfortable buying them down here). TGT – must break $66. KSS – like SHLD, miles to go, $60 at least to stir real interest. This is why I’m not worried about missing a rally. If the markets are really going back to 14,000, there are a ton of fairly safe plays that should double.
Big Guns – if you catch stocks that are running up suddenly having big volume reversals that take back 1/3 of the gains – that’s pretty much the sign.
Oops – Goldman Alpha fund dropped 22.5% last month (kind of old news but here’s the official figure).
DNDN with another nice move today.
RMBS flying.
Dow and S&P are going up but Nas is really dragging on the day:
http://finance.yahoo.com/charts#chart92:symbol=^dji;range=5d;compare=^ ixic+^gspc;indicator=volumema+rsi+macd;charttype=candlestick;crosshair =on;logscale=off;source=undefined
I’ll be very concerned if they break below 2,600 again, otherwise enjoy the rally.
Really if I can say nothing else about the market I will say this – don’t go overboard buying here. 13,400 is a very critical market juncture – right between our 12,800 low of just 30 days ago and our 14,000 high of 60 days ago. While getting over it would be great, doing so for one day or even two is meaningless on a longer chart. This is a Fed rally and the conditions under which Fed action seemed necessary don’t even exist now (according to this week’s market action). This is a very low volume day, DIAs have traded 2.5M today vs an average of 18M – that should tell you something.
If I wanted to fake out a bunch of retail buyers and get them to rush into the market, today would certainly be the day because once Tuesday rolls around, the facts will be hard to avoid, whatever they are but if you think that for the past 5 days, the market has been selling off in normal volume but, now on a very low volume day all the “smart” people are buying, then there is nothing I can do to stop you but, from experience, when you see shorts screaming at how bad they are hurt and see people capitulating or leaving the market entirely, then that is exactly when the smart money does set up the contrarian play.
Here are the European markets, which bounced 1% today. Look how far they need to go:
http://finance.yahoo.com/charts#chart102:symbol=^ftse;range=3m;compare =^cac+^gdaxi;indicator=volumema+rsi+macd;charttype=candlestick;crossha ir=on;logscale=off;source=undefined
We are off MILDLY by comparison:
http://finance.yahoo.com/charts#chart107:symbol=^dji;range=3m;compare= ^ixic+^gspc;indicator=volumema+rsi+macd;charttype=candlestick;crosshai r=on;logscale=off;source=undefined
The Nikkei is no great shakes either:
http://finance.yahoo.com/charts#chart110:symbol=^n225;range=3m;indicat or=volumema+rsi+macd;charttype=candlestick;crosshair=on;logscale=off;s ource=undefined
And even the HSI may be near a short-term top:
http://finance.yahoo.com/charts#chart111:symbol=^hsi;range=3m;indicato r=volumema+rsi+macd;charttype=candlestick;crosshair=on;logscale=off;so urce=undefined
There’s nothing wrong with buying but do try to stick to cash, keep some balance and take those gains when you can – the VIX doesn’t look too sure about this and neither am I.
T – I was very bullish on them a couple of months ago but they broke my heart. Still I do like them long-term.
HW – hmmm, but down on a good day… have to wait and see.
GES – as I just said, the numbers you are looking at already assume not only a .5% cut by the Fed but that it will be univerally accepted as a brilliant move with perfect timing that will fix everything. I’m just worried it might not happpen that way. For GES, $45 is probably a good spot so there’s nothing wrong with initiating the March $50s for 5 and giving it a week or two to see how things go. XXX
CROX – that’s a tough call as I’m up on 100 myself so it’s a nice chunk of change and we know how dangerous CROX can be to short sellers. They still have a tremendous premium with just 6 sessions to go but we have nothing to gain from a run-up and everything to lose so unless we get a stiff drop-off, I’ll be in doubt and will sell half.
WYNN – no, I’d sell the $135 puts for $2.50.
VOLV – very disappointing and not much to sell but if they break out here ($17.25) they could really take off, probably under $17.50 through expiration.
DNDN – well they were looking good coming off of $8 to $8.20 but lost it pretty quick.
Selling Financial calls – too risky if you don’t have a longer call with earnings coming up.
DIA Oct puts – it doesn’t pay to save money there, the $136 puts are $3.90 with $1.44 intrinsic value while the $134 puts are $2.77 with no intrinsic value. I wouldn’t go higher but I’d keep that level and roll up every 100-point gain.
SU – if oil holds here it’s all profit for SU. I just don’t really believe it will hold here but very wrong so far – Tuesday will make or break a lot of things. If the dollar bounces on a stronger than expected Fed, then all hell will break loose.
Sold SHLD covers.
CROX – sitting tight on spread.
Still heavy on the put side.
RMBS – very strong, very heavily traded, even today. If they hold $17.50, I’ll keep with them if there is a deal, it would be Monday (or some Monday) most likely but, meanwhile, I will quickly sell 1/2 the Sept $17.50s, now .85 if it starts looking weak.
Another fun way to play these (if you already have the Oct $17.50s) is to take the Oct $20s for .80 and sell the current $17.50s for .80. If there is no announcement but still a rumor next week its a home run and if it drops, they lose .80 and you lose .40 and you can still dump the Oct $17.50s with a stop at $1.40 to lock in profits.
D – you missed nothing. Lots of noise but I still say we turn down. AAPL just went negative and the XLE was anemic despite strong showings from XOM and CVX. If GOOG turns down it will only take some profit taking in the brokers to send some very negative signals. The NYMEX crew couldnt hold $80 (still 10 mins left) so we’d better hold 2,600 on the Nasdaq and 1,485 on the S&P (oops just lost it) or we may see at least 50 points of profit taking into the close.
10 bagger put (not recommended) – FWLT Oct $100 puts at $1. SU Oct $85 puts at .55. GOOG Sept $510 puts at $1.83, AAPL $125 puts at .38, GM $30 puts at .23, PTR $140 puts at $1, SHLD $125 puts at .50, MA Oct $125 puts at $2.30 (actually that’s not a 10-bagger but a 3-bagger I would play).
I just really don’t see the point right now in protecting myself against an upside to 13,500. I like the Qs up better than the DIAs right now, probably the Dec $50s at $2.29 as it gives me more outs (able to roll, sell calls against…) XXX
NYX – sadly no. Their chart is terrible and other exchanges (ICE, NMX) are weak too so we’d want to see at least one or two turn up before diving in. This is another major fear factor I have as the traders who trade the exchanges know one thing that trumps all others – when the market tanks volume dies and exchanges make far less money. What does a wide sell-off of exchanges tell us about what traders are anticipating?
CROX – took it all off, that was plenty of profits. XXX
MOO mooving – that’s the agriculture ETF
I haven’t taken the Qs yet but selling the Sept $50s for no less than .40 is a must if you already have it! XXX
CCJ – the question is what the hell was everyone thinking at $37.50 – I even wrote up a whole article on them I felt so strongly about it.
LOL RIMM!
BMY – that one got away from me so I’m stuck waiting for the roll, too much insurance to give up.
GS – their earnings are a total wildcard. I’ll come up with a strangle on them, bearish side could be a major home run if they miss.
PCLN, WYNN – just waiting for pretty much what’s happening now…
That’s the Q calls as upside protection against my current DIAs but I’m not so bullish that I think we’re breaking $50 by next Friday so I may as wll sell the current $50s against them and get a .40 discount.
GM up 10%, someone had a Dow calculator but I bet that was good for 30 points. That probably won’t happen twice in a row but the 10% rule (2 5% rules) says that this is a very bullish close for them. UTX and MMM have joined the red team – 5 components down now.
Does it occur to anyone that GM’s “victory” is a loss for 250,000 laborers? Let’s say it costs them each just $200 a month in concessions (LOL), that’s another $600m off the consumer spending rolls…
SOX heading south at the close.
FCX – if you have the margin for it, sure but the $95s jumped to $3.15 today (were $1.50 yesterday) and the ‘09 $100s are $15.50 (were $13.75 yesterday) so you have lost nothing by waiting and actually picked up a much bigger premium ($2) than you could have sold the entire call for yesterday. That’s why I usually wait for a leap to start going up from my bottom call before I buy in, there is very little harm in waiting. This is the most important application of patience that we have: Find a stock, want the stock, wait for it to crash, wait for it to recover, buy a little, wait more, buy more, wait for the right time to sell – it’s a long process. You guys are spoiled because I only mention things within 2 days of making a move but I have 2 years worth of stocks I’m watching on a regular basis… 
I have a bearish bias until AFTER the Fed meeting! I said yesterday, I think it’s a no-win situation at this point – if they don’t give the market a half point, Cramer and pals will have a temper tantrum – if they do give us a half-point cut, they are going to have to do some very fancy footwork to convince people there’s no crisis and there is NO way Europe will be happy with a large cut. Right now they must cut .25 and say that they are being cautiously proactive but they feel the economy is strong and the situation is not so dire that it merits further cuts and inflation is their #1 priorty bar none. That’s the best case I can see but it will still disappoint the markets to some extent.
The markets are having a love fest but it seems to me like a beer-goggle love fest and we are like the guys sitting on the couch saying “oh boy is he going to regret that when he sobers up.”
