Archive for January, 2010
Look For A Bounce This Week And More Selling Next Week!
Last week, the market finally cracked. A possible rate hike in China, uncertainty about Ben Bernanke’s reappointment, new banking restrictions and a weak initial jobless claims number were to blame. The SPY fell below important support at $113.50 and it quickly took out $112. As the selling accelerated last Friday, we were within striking distance of SPY $108. The long-term trend line from last March has been broken and the market sits right above the 100-day moving average. If SPY $108 fails, we will see another down leg. This morning, prices have stabilized and the market is trying to work its …
Stay Short As Long As the SPY Closes Below $112. Buy More Puts Below SPY $108.
A number of cross-currents hit the market this week and there are “cracks in the dam”. Current conditions would support a market rally, but it’s the future traders are worried about. Earnings have been good and they are beating expectations. Unfortunately, that is already priced into the market and traders aren’t thrilled about the guidance for Q1. Bank stocks are out of the way and they did not rally as I expected. Huge write-downs and new bank regulations weighed heavily on shares. Since the closing bell yesterday, American Express, CapitalOne, Google, Advanced Micro Devices, Western Digital, McDonald’s, and General Electric all …
We Have A Breakdown! Don’t Add To Put Positions Unless We Close Below $112!
I have put trades getting triggered left and right today so I need to keep comments brief. For the last two weeks I’ve told you that my approach is to line up weak stocks and to place orders to purchase puts when they break technical support. It is critical to have these orders working in advance of a decline because you don’t have time to react when the @#$% hits the fan. I have been taking positions at excellent prices because premiums had not spiked. Once the market hit an air pocket this morning, bid/ask spreads widened and implied volatilities shot …
Volatility Creeps Back Into the Market As Traders “Sell The News”. Watch SPY $113.50
Yesterday, the market rallied sharply on the first trading day of the week and it erased all of the damage that was done last Friday. By the end of the day, the S&P 500 was near a new relative high. On the political front, Republican Scott Brown was elected in Massachusetts. Democrats no longer have the 60 seats needed to avoid filibustering. More importantly, Americans have voiced their displeasure with the way the country is being run. This should send a clear message to Democrats and we will see how this impacts their actions ahead of November’s elections. The economic news …
Reaction To CSX, IBM and Banks Will Be Very Telling. We’ll See If There Is Room To Run.
Last Friday, the market showed some weakness when it sold off on decent news. Intel beat earnings estimates and it was a little light on revenue. J.P. Morgan Chase also beat estimates, but loan write-downs were greater than expected. The CPI was benign and inflation only rose by .1%. The numbers were good, but once the selling momentum gained traction, the market declined steadily throughout the day. This morning, overseas weakness pushed prices lower on the opening bell. They quickly recovered and we now have 12 consecutive rallies on the first trading day of the week. News that Kraft is buying …