Archive for February, 2010
The Market Is Tired After A Big Week - Resistance At SPY 112 Is Holding!
Last week, the market staged an impressive rally and it broke through horizontal resistance. The SPY is back above 108 and it is within striking distance of 112. Bears had a chance to defuse the upward momentum last Friday. The Fed raised its discount rate by .25% and the news sparked a negative reaction. The S&P 500 was down 10 points in early trading. Throughout the course of the day, the market was able to regain its footing and it finished on the plus side. Traders rationalized that banks no longer need hand outs from the Fed and that is a …
The Market Is Very Resilient - Sell Credit Spreads and Be Patient!
Yesterday, the market staged a nice rally and it finished near its high of the day. The credit crisis in Europe is not imminent and traders are focusing on solid earnings. Overnight, the Fed raised its Fed Funds rate by .25%. It will now cost banks more to borrow money from the Fed. This move was largely anticipated, rates can’t stay at zero forever. The market is interpreting this as positive news. Banks have improved their balance sheets enough to attract private equity and they aren’t as dependent on the Fed. This year, there will be monetary tightening. We have never …
Generate Income And Keep Your Size Small While You Wait For The Next Big Decline
The current situation reminds me of a period from the middle of 2007 to the middle of 2008. Many analysts were forecasting a credit crisis, but there weren’t any “dead bodies” and no one knew when the storm might hit. During that time, the market was in a general decline, but there were many decent rallies. Earnings were good, employment was solid and the economic news was stable. On the surface, everything was fine and nerves were easily calmed when bullish news hit the market. Once Countrywide and IndyMac failed, the tone changed and sustained selling began. We are currently at …
The Next Big Move Is Down - But We Need Casualties - That Might Take Time!
Yesterday, the market staged an impressive light volume rally. It closed near the high the day and it is well above SPY 108. Once the early momentum was established, sellers pulled their offers. This morning, the rally is continuing. Housing starts and industrial production were better than expected and that has provided a small bid to the market. Earnings from John Deere and strength in Europe also provided support. Spain held a 15-year bond auction and the bid to cover was just over 2. That is a good showing for a longer term maturity in a country that has 20% unemployment. …
CBOE TO LAUNCH S&P 500 DIVIDEND INDEX OPTIONS MARCH 5
CBOE TO LAUNCH S&P 500 DIVIDEND INDEX OPTIONS MARCH 5