Archive for March, 2010
The National Healthcare Bill Passed - I Think I’m Getting Sick!
Analysts predicted last week that the national health care bill would pass by a narrow margin and it did. The country was divided on this issue and the debates were very heated. At a time when our national debt is spiraling out of control, an additional $1 trillion will be spent on a new program. I’ve heard projections that the actual expense could be twice as high. Experience tells us that the government is very inefficient. Look Medicare/Medicaid and imagine the waste as 32 million Americans enter a national healthcare system. Resources are finite and every economist knows that when demand …
The Market Will Not Like The Healthcare Outcome - Either Way!
Nervous trading has set in ahead of the healthcare vote. Option expiration is also adding to the volatility. If the healthcare bill gets passed, budget deficits will grow quickly. that will raise credit concerns in the long run. Does anyone really believe that providing 50 million people with healthcare will save the country money? If the bill does not get passed, our country will be caught in deadlock. Democrats will lose face and it will show that DC can’t get anything done. Either way, I believe the market pulls back. This is not the big decline we are looking for. It …
Don’t Short Until SPY 115 Is Breached!
The market marched higher this week and it broke out to a new high for the year. Option expiration buy programs have “goosed” the market and resistance is minimal. Strong balance sheets, good earnings, low interest rates and gradually improving economic conditions have been the catalysts. On a valuation basis, stocks are attractive. Option implied volatilities have plummeted and the VIX has dropped to levels not seen since November 2007. Speculators and hedgers are not buying puts. This means the confidence level is high. Now that the market has clearly broken out, we have a defined pivot point. As long as …
Ride The Momentum - Exit Longs and Buy Puts If SPY $115 Is Breached!
In the absence of any big news, the market continues to push higher. We have broken out to a new high for the year and option expiration buy programs are “goosing” the market higher. Corporate earnings are solid, balance sheets are strong, interest rates are low and economic statistics show modest growth. Fear is low and the VIX has hit its lowest level since November 2007. Speculators and hedgers are not buying puts and that is why implied volatilities are dropping. Emerging markets are once again in favor and many believe that they will pull us out of this recession. Unfortunately, …
The Higher It Goes - The Better The Short!
Today, the market continues to march higher after breaking out to new highs. The volume is light and momentum is driving it higher. Option expiration buy programs are likely to kick in and there might be a little short covering. The economic news this week is fairly light and there is nothing to stand in the way of this rally. This afternoon the FOMC will release its statement and most economists believe that the comments will be unchanged. They will reference the exit strategy for quantitative easing and there is a slight chance for a negative reaction. Democrats are pressing hard …