Very quick notes today as I'm still behind and we have a lot of decisions to make.
The Hang Seng dropped 1,091 points this morning and Japan fell 375 points, erasing all of October's gains for the Nikkei and taking us back to the September levels we feared would lead to a global market collapse.
Nothing bad happened in Asia, this is all about us but when the global economy has a blowout in one if its tires, you can certainly expect them to pull the whole care over and check for damages so we're about to have an introspective week where funamentals will finally be examined and risks truly assessed. If we get through this week I may get a lot more optimistic but, it's only Monday so let's wait and see how it goes for the first couple of days before declaring the patient either dead OR fully recovered.
Europe is down more than a point in our pre-markets and the futures do not look bright over here but I reserve judgment until I see what people are buying today. Europe is having their own little credit crisis as well as inflation issues as commodity prices begin to slip into their "core" numbers.
We really need to see the Nasdaq hold 2,700 and it would be nice if the Dow can hold 13,500 but I very much doubt that will happen.
If we do start to recover I want to remind people that mattress plays work both ways and our upside targets are to play the DIA $136 calls, hopefully at $2 and the QQQQ $53 calls, which are currently $1.25. We want to see leadership from Apple and Google as well as the SOX breaking over 480 to get on board with the Qs while BA should signal a Dow turnaround. I'm certainly not saying I expect it but we've left ourselves pretty bearish and we need to guard against a bounce putting all our callers into the money.
On the downside, we simply continue doing what we were doing on Friday and let's continue to move to cash whenever we are uncertain of a position. There will be tons of bullish and bearish plays to make later in the week, let's not make the mistake of trying to force them.
Speculators are betting on an "emergency" Fed response and recent history does suggest this may happen but look out below if the message is "you're on your own."
