A Monday hangover, higher than expected inflation, lower than expected Retail Sales, and all the other macro economic issues like Oil, Financials, and the Real Estate market are contributing to a negative open this morning.
There's no point in re-hashing the news, just suffice it to say that traders are NOT focused on earnings, other than expecting catastrophic forward guidance. It will be interesting to see if they actually take a peek at earnings season anytime soon since that's what we're in.....
The longer we go with this ooze, the more I speculate that it CAN'T end without traders going into a climactic "it's the end of the world, the universe is collapsing in on itself, the stock market will never ever go up again, every company in the solar system is going bankrupt, we're all going to die, dogs and cats are living together, mass hysteria" super nova selling. A 400 point down day on the Dow probably won't do it, we will probably have to see something between a 450 - 600 point down day on the Dow, and that might actually be the end of the slide. Earnings Season could change that, and a climactic sell-off may not happen, but the longer we go with the ooze, the more I'm looking for that climactic, emotional day from traders.
I may start a put hedge on the SPY, DIA, and perhaps IWM today. I'm going to keep everything to day swings, so it will be a day to day strategy. I'll watch to see if the opportunity shows itself this morning.
7:45 am MT: I started some puts on SPY, DIA, and IWM. I will be selling them on the next leg down, and then looking to do it again.
7:55 am MT: Here is the next leg down, I'm going to sell half the puts in a minute or two.
8:00 am MT: I sold the DIA put for an 8% gain, the SPY put for a 6% gain, and the IWM put for a 6% gain. I basically just paid off any losses that I might incur on the Iron Condors (although those trades are not over yet). Now I'm going to focus on the AAPL calls left over from the mechanical error in Papermoney on the next downswing.
8:05 am MT: I picked up the same three puts again on a half-sized position just in case this becomes a dog-pile climactic sell-off this morning. I will add to the positions on an intra-day bounce. It's possible that I'll be doing this all day long today, we shall see.....Remember that the first Dow target is 10,750 but watch the SPX here at 1,200.
8:15 am MT: I picked up puts on ACI, CNX, PXD, ECA, NE, and RDC. You can pretty much throw a dart at the Coal and Energy sectors right now, but those were the ones that I chose. I don't know if the trades will continue to sell off
8:20 am MT: I added to the DIA, SPY, and IWM puts on this little upwing.
8:30 am MT: I sold the DIA puts for a minimal gain, the SPY puts at breakeven, and the IWM puts for a 5% gain because I think I can get them cheaper on a bounce.
9:00 am MT: I just picked up the DIA, SPY, and IWM puts again at a cheaper price. I'll probably add to the position if it wiggles up a little more.
9:05 am MT: Remember that the 1,200 area on the SPX and the 10,750 area on the Dow are pretty important. I speculate that if the market does take one more leg down and cracks through this morning's lows, that it probably won't stay there long because that will put the Dow right in close to the 10,750. We didn't have a climactic move this morning, but the market may still be trying to pound out a short term bottom. Right now the Energy and Commodity stocks are continuing to sell, which is helping give the overall market a boost. I probably won't add to the half-sized positions on the DIA, SPY, and IWM puts at this point, and I may liquidate them on a pullback. The Coal and Energy puts are doing very well so far.
9:55 am MT: I sold the CNX puts for a $2.30 profit, or 22% gain in a few hours. I might get this one again before the close, but it's too red hot intra-day right now and probably due for a big bounce.
10:50 am MT: I picked the CNX puts back up much cheaper on this intra-day bounce.
11:45 am MT: I sold the ACI puts for a .60 cent gain, or 9% gain intra-day. I might pick them back up in a little while. I also added to the CNX puts. I know it looks weird, but I like the look of CNX better right now, so I was culling ACI.
12:05 pm MT: I sold the NE puts for a small .10 cent gain. I'm basically culling again like I did with ACI. I want to start paring this down as I get closer to the end of the day.
12:15 pm MT: I sold the PXD puts for a .50 cent profit or 13% gain intra-day. I also sold the ECA puts for an .80 cent profit or 17% gain intra-day. I might go back into these positions before the close, I'm still trying to decide if I want to hold anything overnight yet.....
1:30 pm MT: I picked up half-sized put positions on APA, DVN, and ECA. I'm not excited about holding anything overnight this week, but I'm going to hold the four Energy puts: APA, DVN, ECA, and RDC. I'm also planning on holding the DIA, SPY, and IWM puts because they are a hedge on the AAPL calls (and the Iron Condors). I'm still expecting volatility day to day but the signals on the Energy stocks look very good. They're all Bear Flags with what will be confirmed rollovers if they close in these areas in the next 20 minutes. I also have a very valid reason to hold the index ETF puts because of the excellent hedge they create for me overnight. The only other put I'm holding is CNX, which I may dump just before the close.
1:45 pm MT: I sold the CNX puts for a small .10 cent gain. I had a nice day with CNX (on the earlier trade), so I'm content, and I don't want to hold too much overnight. The Coal stocks could drop some more this week (along with other Commodity based stocks) but I can always play those again tomorrow.
2:00 pm MT: Market Wrap: We had another wild ride on Wall Street with huge swings intra-day. The market was hit with a dump truck load of news, so it's not even worth recapping everything that was reported. The net result was oozing, bouncing, and bruising as stocks went for a ride.....only they didn't get to ride up front in comfort and air conditioning, instead they were tied up in a sack with a pack of rabid wolverines and tossed in the trunk while traders drove them across a gravel quarry at 110 miles per hour. It wasn't pretty to watch, but the intra-day trading today was pretty decent. The SPX bounced on 1,200 and the Dow held just above 10,800 (key support is about 10,750). The market may be getting to a short-term bouncing area, but we STILL DON'T HAVE A CONFIRMED BOUNCE, so there's no point in getting to giddy about calls just yet. I will report later tonight on the INTC and CSX earnings. The INTC earnings will probably drive the whole market tomorrow morning, and the CSX earnings will drive Railroads and could create a quick earnings momentum trade tomorrow.
3:00 pm MT: Earnings Reports: INTC beat earnings and guided in-line, the initial reaction after hours is a small move up. ALTR beat earnings and guided up, the initial reaction after hours is a big move up. These reports will probably give Chips (and Tech) a bit of a boost in the morning. We still have a lot more info coming from the INTC conference call, so the final consensus is probably at least another hour or more away, but the initial response is slightly bullish for Tech.
Here are some Bullish movers on the day:
Biotechs/Healthcare:
Confirmed Bounces: DNA, BAX, ABT, GILD, BIIB
Almost Bounces: MDT, WYE
Extremish but some potential: AMGN, GENZ, SYK, CELG, STJ, MYGN, JNJ
Also note: APOL, DRYS, CCJ, GIS
Here are some Bearish movers on the day:
Energy:
Confirmed Bounces: UPL, EOG, NOV, NFX, APA, CHK, APC, ESV, HAL, NBL, WMB, MUR, NE, NBR, CNQ, OXY, WFT, DVN, SLB, BHI, SWN, OIH, XTO, ECA, CAM
I bolded a few that look excellent, but they're all confirmed bounces. Remember the Oil Inventory report tomorrow one hour after the open will probably drive Energy stocks one way or another.
Coal: MEE, CNX, ACI (I'm not as excited about Coal because of the gyrations in the sector today).
Steel: TS (but not much else in the sector)
Copper: FCX
Manufacturing/Machinery: CMI, EMR, (JOYG was an almost bearish bounce)
Note: Financials are still getting absolutely obliterated. I'm not sure how much longer they can sell before they get way, way overcooked.
A Final Note: INTC is up 1% in after-hours trading. It looks like Chips will give Tech a little boost tomorrow morning. However, the INTC report doesn't appear to be earth-shattering, so I think there will need to be some other catalyst to really give the market a strong bounce - if we get one. CSX is down a little after-hours, so if there is a play on Railroads tomorrow it may be to the downside since many Railroad stocks confirmed a rollover today (CSX, BNI, and UNP).
Tuesday, July 15, 2008
Monday, July 14, 2008
Regional Banks Fade the Market
The news that the Fed and the U.S. Treasury will come to the support of FRE and FNM is giving the market a boost this morning. Shorts in Financials are probably looking to cover, and they might even be screaming on fire and jumping into the ocean before the day is out.
AAPL is getting a boost from excellent sales of the 3G iPhone over the weekend. So the combination of shorts covering, and perhaps some buying in Big Tech (I'm throwing out the latest squabbling between YHOO and MSFT because traders are used to the mud throwing by now), will probably give the market a decent bounce today.
7:55 am MT: The Market has thrown a little Gap and Fade so far on the Financials short covering and Big Tech bargain buying. The RUT finally made it above its 10dma, but the Dow and Naz went right to their 10dma's and faded a little. The SPX is lagging the other three indexes. The battle this morning will be between the fear over earnings and the economy (bulls), and the fear of oversold market conditions (bears). And the battle, initially, looks to be fought at the 10dma's of the major indexes. We shall see which side wins out.....remember, whichever side does win out doesn't mean it will hold tomorrow, we have way too many earnings releases this week to not have volatility day to day.
As it is, I just don't smell any momentum yet this morning. So far it's still a Hot Potato market with Bulls frantic to toss the stocks to Bears and Bears frantic to toss the shorts right back to the Bulls. However, I speculate that the Bears will get more frantic than the Bulls today, and that the day will probably finish in the green.
By the way, DNA is off the table for me today as a pre-earnings play. I will check it tomorrow for the post-earnings play that I outlined.
8:30 am MT: Still no real momentum one way or the other. Still a Hot Potato market. Still nothing for me to do. Gold was interesting, but I didn't catch it right at the intra-day breakout, so nothing there for me right now either.
AAPL is getting a boost from excellent sales of the 3G iPhone over the weekend. So the combination of shorts covering, and perhaps some buying in Big Tech (I'm throwing out the latest squabbling between YHOO and MSFT because traders are used to the mud throwing by now), will probably give the market a decent bounce today.
7:55 am MT: The Market has thrown a little Gap and Fade so far on the Financials short covering and Big Tech bargain buying. The RUT finally made it above its 10dma, but the Dow and Naz went right to their 10dma's and faded a little. The SPX is lagging the other three indexes. The battle this morning will be between the fear over earnings and the economy (bulls), and the fear of oversold market conditions (bears). And the battle, initially, looks to be fought at the 10dma's of the major indexes. We shall see which side wins out.....remember, whichever side does win out doesn't mean it will hold tomorrow, we have way too many earnings releases this week to not have volatility day to day.
As it is, I just don't smell any momentum yet this morning. So far it's still a Hot Potato market with Bulls frantic to toss the stocks to Bears and Bears frantic to toss the shorts right back to the Bulls. However, I speculate that the Bears will get more frantic than the Bulls today, and that the day will probably finish in the green.
By the way, DNA is off the table for me today as a pre-earnings play. I will check it tomorrow for the post-earnings play that I outlined.
8:30 am MT: Still no real momentum one way or the other. Still a Hot Potato market. Still nothing for me to do. Gold was interesting, but I didn't catch it right at the intra-day breakout, so nothing there for me right now either.
MARKET ALERT:
President Bush is lifting the Executive Ban on Offshore Oil Drilling, although new oil exploration on the Outer Continental Shelf will remain off limits until Congress takes action (Congress taking action? Isn't that phrase an Oxymoron?). This news will probably compress some of the speculation in the oil premium right now, although it might not change the supply demand equation dramatically until new areas are open to drilling. The news could give the market a little boost by possibly dropping the price of oil.
I dug a little deeper, and it turns out that the lifting of the Executive Ban won't lead to any new exploration (as I suspected above) until Congress takes action to lift its own prohibition on offshore drilling. We may only see a limited affect on the price of oil from the news, which in turn will be a muted affect on the overall market and economy.
9:20 am MT: There's a whole lotta nothing going on right now. Although we are still sitting at an intra-day tipping point. Gold has Flagged back on the 5m charts and the SPX is going tight into the apex of its 15m Triangle. If the Flag on Gold fails then the market probably goes up and the SPX intra-day Triangle plays out, if Gold bounces then the market probably goes down and the SPX intra-day Traingle fails to the downside. We shall see.....
9:55 am MT: Looks like sellers are winning the battle for now, and interestingly, even Gold is selling. Nobody wants to be long this morning.
10:45 am MT: The shorts didn't even blink in the Financial sector. Nobody wants to be long over there right now. There are no bulls in Financials this morning. I speculate that the biggest catalyst is the Regional Bank Group, which is stocks like WM, ZION, NTRS, and STT. The epicenter of the calamity is twofold: IMB had a run on assets and collapsed over the weekend, which led to a takeover by the FDIC. In addition, MTB scared investors with their earnings report this morning. MTB had a 25% drop in 2Q profit due to losses from "residential real estate," which is the same old story of over-speculation by Financial institutions on the subprime real estate assets and other areas of the real estate market. The net result is a growing fear that more Regional Banks will go under. Some of the Regional Bank stocks are just getting obliterated today, and that's after the scorched earth nuking that they have already taken in the past six months.
11:10 am MT: I nibbled on GG and AEM calls for an intra-day swing trade. I think the Regional Bank mess isn't over in traders minds, and might not be over until we see a dramatic capitulation. I'm looking for a move up to the 51.00 area on GG and a move up to the 79.00 area on AEM and then I will sell the calls.
11:45 am MT: I sold the AEM calls for a small .15 cent profit. I decided I would rather just have one Gold position, even though AEM could still move up.
12:55 pm MT: I sold half the GG calls for a .40 cent profit or 12% gain in an hour. I will probably sell the rest of the GG calls in the next 30 minutes.
1:15 pm MT: I sold a couple more of the GG contracts for a .40 cent profit.
1:40 pm MT: GG hit my target of 51.00 so I sold the last of the contracts. The total trade was a .42 cent profit or 12.3% gain for a couple of hours. The market is doing its usual late day bounce after the mid-day slide, so I had additional incentive to get out of the Gold calls.
1:50 pm MT: The biggest bullish movers today have been in Energy and Commodity stocks. I'm starting to get the shakes over buying puts on Coal and some Energy stocks. It's all I can do to restrain myself from Cherry Picking like a crazy man over there because of the Earnings Season risk the next few days. However, I've learned to be cautious during weeks like this, so I will wait, even if I'm shaking and drooling while I do.
3:30 pm MT: Market Wrap: Regional Banks were like a cast iron hippopotamus standing on the neck of the market today. Traders just couldn't wriggle out from under the sheer weight of worry in that industry, or the concerns over the Financial sector. There was a lot of interesting news today, but the net result is that the market continues to ooze down below the 10dma. It's like watching a slug crawl its way down the underside of the market's 10 day moving average and leave a slime trail in its wake. We still haven't seen anything climactic, and we still haven't seen enough of the slew of earnings reports due out this week. So there's lots of volatility to come in the next few days, we'll have to see which way it goes, up or down.....
In the meanwhile, I'm making money on the intra-day swings and getting out before the end of the day. DNA is probably off my radar for an earnings play tomorrow morning (see Saturday's post). Other than that, I'll be looking for the momentum sectors early in the day and playing Day Swings on those stocks.
President Bush is lifting the Executive Ban on Offshore Oil Drilling, although new oil exploration on the Outer Continental Shelf will remain off limits until Congress takes action (Congress taking action? Isn't that phrase an Oxymoron?). This news will probably compress some of the speculation in the oil premium right now, although it might not change the supply demand equation dramatically until new areas are open to drilling. The news could give the market a little boost by possibly dropping the price of oil.
I dug a little deeper, and it turns out that the lifting of the Executive Ban won't lead to any new exploration (as I suspected above) until Congress takes action to lift its own prohibition on offshore drilling. We may only see a limited affect on the price of oil from the news, which in turn will be a muted affect on the overall market and economy.
9:20 am MT: There's a whole lotta nothing going on right now. Although we are still sitting at an intra-day tipping point. Gold has Flagged back on the 5m charts and the SPX is going tight into the apex of its 15m Triangle. If the Flag on Gold fails then the market probably goes up and the SPX intra-day Triangle plays out, if Gold bounces then the market probably goes down and the SPX intra-day Traingle fails to the downside. We shall see.....
9:55 am MT: Looks like sellers are winning the battle for now, and interestingly, even Gold is selling. Nobody wants to be long this morning.
10:45 am MT: The shorts didn't even blink in the Financial sector. Nobody wants to be long over there right now. There are no bulls in Financials this morning. I speculate that the biggest catalyst is the Regional Bank Group, which is stocks like WM, ZION, NTRS, and STT. The epicenter of the calamity is twofold: IMB had a run on assets and collapsed over the weekend, which led to a takeover by the FDIC. In addition, MTB scared investors with their earnings report this morning. MTB had a 25% drop in 2Q profit due to losses from "residential real estate," which is the same old story of over-speculation by Financial institutions on the subprime real estate assets and other areas of the real estate market. The net result is a growing fear that more Regional Banks will go under. Some of the Regional Bank stocks are just getting obliterated today, and that's after the scorched earth nuking that they have already taken in the past six months.
11:10 am MT: I nibbled on GG and AEM calls for an intra-day swing trade. I think the Regional Bank mess isn't over in traders minds, and might not be over until we see a dramatic capitulation. I'm looking for a move up to the 51.00 area on GG and a move up to the 79.00 area on AEM and then I will sell the calls.
11:45 am MT: I sold the AEM calls for a small .15 cent profit. I decided I would rather just have one Gold position, even though AEM could still move up.
12:55 pm MT: I sold half the GG calls for a .40 cent profit or 12% gain in an hour. I will probably sell the rest of the GG calls in the next 30 minutes.
1:15 pm MT: I sold a couple more of the GG contracts for a .40 cent profit.
1:40 pm MT: GG hit my target of 51.00 so I sold the last of the contracts. The total trade was a .42 cent profit or 12.3% gain for a couple of hours. The market is doing its usual late day bounce after the mid-day slide, so I had additional incentive to get out of the Gold calls.
1:50 pm MT: The biggest bullish movers today have been in Energy and Commodity stocks. I'm starting to get the shakes over buying puts on Coal and some Energy stocks. It's all I can do to restrain myself from Cherry Picking like a crazy man over there because of the Earnings Season risk the next few days. However, I've learned to be cautious during weeks like this, so I will wait, even if I'm shaking and drooling while I do.
3:30 pm MT: Market Wrap: Regional Banks were like a cast iron hippopotamus standing on the neck of the market today. Traders just couldn't wriggle out from under the sheer weight of worry in that industry, or the concerns over the Financial sector. There was a lot of interesting news today, but the net result is that the market continues to ooze down below the 10dma. It's like watching a slug crawl its way down the underside of the market's 10 day moving average and leave a slime trail in its wake. We still haven't seen anything climactic, and we still haven't seen enough of the slew of earnings reports due out this week. So there's lots of volatility to come in the next few days, we'll have to see which way it goes, up or down.....
In the meanwhile, I'm making money on the intra-day swings and getting out before the end of the day. DNA is probably off my radar for an earnings play tomorrow morning (see Saturday's post). Other than that, I'll be looking for the momentum sectors early in the day and playing Day Swings on those stocks.
Saturday, July 12, 2008
Watchlist Saturday
MARKET ALERT: The Fed and the Treasury announced steps to shore up mortgage giants FRE and FNM. Read the excerpt at the bottom of the post for more information and analysis.
Dow: IT Bearish and ST Neutral. The Dow briefly tested my projected support at 11,000 (it hit 10,977 on Friday) and bounced back intra-day. The next critical support below is 10,750, which is the 50% retracement of the 5-year Bull Market. If the Dow bounces, look for resistance at 11,400 and if it gets through that level than 11,600 - 11,650. The Dow continues to slide a little, but the selling has slowed down considerably in the past nine trading days.
SPX: IT Bearish and ST Neutral. The SPX made new yearly lows this past week, but like the Dow, each day of selling was also met with a little buying and short-covering. So like the Dow, the SPX has slowed down its selling pressure in the past nine days, although the SPX has continued to slide down a little more than the Dow. The index has lost a lot of its strong downward momentum, and is sort of oozing down rather than swinging down hard. The SPX tested the support zone from 2006 in the 1,220 - 1,230 area. If the SPX crashes down through this area, it may eventually dump down to the 1,175 area, which is the 50% retracement of the Bull Market. Resistance is 1,270 - 1,275, and if the SPX gets through that then the next resistance is the 1,295 - 1,300 area.
Naz: IT Bearish and ST Neutral. The Naz is crunching and grinding along for the past nine days just like the Dow and the SPX. The index did drop to the top end of my support zone that I projected from last week at 2,200. If the Naz doesn't hold 2,200 than it may dump down to 2,155 - 2,170. Resistance is 2,295 - 2,300. If the Naz gets through that area then look for the 2,340 - 2,350 area as the next potential resistance.
I just don't see any catalyst for the market to go IT bullish anytime for the rest of the summer other than a major government announcement to drill for more oil. However, with earnings season coming in full tilt this week, there could be a lot of volatility and perhaps even a ST bounce. Earnings for the "bad sectors" will have to come in less than catastrophic in order for the market to bounce, probably mostly on short-covering. Now, if the earnings from the "bad sectors" come in worse than catastrophic, it would not surprise me to see the Dow head immediately for 10,750. I don't want to even bother with a Watchlist for this week because it's going to change every single day. But I will put up some interesting areas to watch, and some stocks to watch after their earnings releases.
Remember that this upcoming week is the first heavy week of Earnings Season. Expect volatility, with peak volatility probably happening on Wednesday and Thursday. It's also possible that we may see some type of big move before the Wednesday/Thursday time frame if the Banks report less than catastrophic earnings on Monday and Tuesday. If we see a ton of short-covering in Financials on Monday then expect the market to go to the first areas of resistance that I posted above.
Also, I'm not planning on holding any new swing trade overnight from Monday through Thursday. If I see a nice move, I will play the 30m or 60m swing intra-day and then be out of most or all the position by the end of the day. I will also watch for earnings movers to catch some intra-day momentum swings. The first batters up is DNA, which has earnings tomorrow after the close, and could be a quick earnings play on Tuesday.
Here is the chart:
(click on image to enlarge)
(click on image to enlarge)
If DNA has positive earnings and gaps above 78.50, I will take a half-sized call position on an intra-day swing trade. If it clears 79.50 I will add the other half and look for a quick move into the 81.00 area. I would sell 3/4 of the position in the 81.00 area and then keep 1/4 of the position (possibly overnight) for a move to 82.00 at which point I would liquidate the last part of the trade. I would stop out on any move below 77.00 after the initial gap, if the play even presents itself.
Here is the 2hr chart so you can see the intra-day swing potential. The stock has already confirmed a Hammer with a Bullish Engulfing on the 2hr chart, so it may even be playable tomorrow with a small call position for a quick run ahead of earnings tomorrow after the close. If you do decide to play it tomorrow, remember to be OUT of the trade before the close on Monday afternoon.
(click on image to enlarge)
Here is the 2hr chart so you can see the intra-day swing potential. The stock has already confirmed a Hammer with a Bullish Engulfing on the 2hr chart, so it may even be playable tomorrow with a small call position for a quick run ahead of earnings tomorrow after the close. If you do decide to play it tomorrow, remember to be OUT of the trade before the close on Monday afternoon.
(click on image to enlarge)
I'm going to do more charts and setups like this for the next month or so as I enter Phase II of this Family Trading Page. That's all I'm going to say about that for now.
Also note the Pennant on the 2hr chart on GG, and the Flag on the 60m charts on AEM. If the market sells off tomorrow, I might do a quick, intra-day swing on the 60m charts on GG and AEM. ABX is also interesting, but the stock is pretty red hot, even on the intra-day charts, and may need to pull back. Gold is a maybe trade, but it's worth keeping an eye on in case of a market sell-off on Monday.
Also note the Pennant on the 2hr chart on GG, and the Flag on the 60m charts on AEM. If the market sells off tomorrow, I might do a quick, intra-day swing on the 60m charts on GG and AEM. ABX is also interesting, but the stock is pretty red hot, even on the intra-day charts, and may need to pull back. Gold is a maybe trade, but it's worth keeping an eye on in case of a market sell-off on Monday.
ALERT:
The Federal Reserve and the Treasury announced steps Sunday to shore up mortgage giants Fannie Mae and Freddie Mac, whose shares have plunged as losses from their mortgage holdings threatened their financial survival.
This announcement from Sunday will INCREASE THE LIKELIHOOD of short-covering (and bargain buying) in Financial stocks on Monday morning. If the Banks that are scheduled to announce earnings tomorrow morning and Tuesday morning do a less than catastrophic job with their reports, then the short-covering alone could carry us to the second level of resistance areas that I posted above. I speculate that the probability of the major indexes bouncing back to their 20dma's just went up quite a bit. It doesn't mean that it will happen, but the odds just went up.
The steps are also intended to send a signal to nervous investors worldwide that the government is prepared to take all necessary steps to prevent the credit market troubles that started last year from engulfing financial markets and further weakening the economy and housing markets.
The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies "should such lending prove necessary." They would pay 2.25 percent for any borrowed funds -- the same rate given to commercial banks and big Wall Street firms.
The Fed said this should help the companies' ability to "promote the availability of home mortgage credit during a period of stress in financial markets."
Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current $2.25 billion line of credit to each company should they need to tap it and to make an equity investment in the companies -- if needed.
"Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies," Paulson said Sunday. "Their support for the housing market is particularly important as we work through the current housing correction."
The Treasury's plan also seeks a "consultative role" for the Fed in any new regulatory framework eventually decided by Congress for Fannie and Freddie. The Fed's role would be to weigh in on setting capital requirements for the companies.
This announcement from Sunday will INCREASE THE LIKELIHOOD of short-covering (and bargain buying) in Financial stocks on Monday morning. If the Banks that are scheduled to announce earnings tomorrow morning and Tuesday morning do a less than catastrophic job with their reports, then the short-covering alone could carry us to the second level of resistance areas that I posted above. I speculate that the probability of the major indexes bouncing back to their 20dma's just went up quite a bit. It doesn't mean that it will happen, but the odds just went up.
Friday, July 11, 2008
Drop and Pop Part IV
Financials and Oil, the negative theme continues.....Speculation is rising that FRE and FNM may have to be bailed out by the government. Pre-market futures are down considerably on the news. Don't be surprised by some kind of announcement or comment out of the White House or from the Fed today concerning the two biggest providers of financing for home loans in the U.S. In addition, Oil futures rose over $5 per barrel to new record highs above $146 as speculators piled on more "war premium" due to the Photoshop-enhanced Iranian missile test. The concern is that Israel may launch some type of preemptive defensive attack. GE's earnings were in-line with expectations, but the company is being largely ignored this morning.....
The market looks like it will gap down significantly at the open. It will be important to give the gap a little time, perhaps even an hour or two for traders to focus on GE's earnings, in order to make sure we don't get another Drop and Pop. It may take a little while this morning for traders to decide how they want to handle the news, and see if anyone in the building wants to focus on the GE earnings and whether or not they are good or bad. Also, we are at risk for a White House or Fed news bogey at any time today. So if you play puts and you see a "news flash" about some pending announcement from the government, you will probably want to exit half your puts immediately and then see how the market reacts to whatever the news is.
7:31 am MT: the Naz gapped down the most of the major indexes. The Naz is still above yesterday's lows, so I'm not going to play a put hedge yet, and I'm mindful of another headfake. I don't think the bulls will step in, if they do at all, until we have gone to new short-term lows.
I sold the CHK calls right at the open on the huge gap up. I made a $2.10 profit, or 39% gain for the trade from one minute before the close yesterday to the first minute of the open today.
7:40 am MT: right on cue the market indexes went through the short term supports and within a couple of minutes bounced. Now the question becomes whether it's a pause in an ugly sell-off day, or a headfake that leads to another bounce back.....toss a coin because that's what the odds are to me. I will let this shake and bake and kick and scream for awhile before I decide whether or not I'm going to trade it or not.
I don't want to get sucked in too deep inside of the chop and slop by watching every tick of the charts this morning, I'm going to give it some time to gyrate around or sell. My suggestion for those of you playing directional puts is to be somewhat nimble. There are some good plays out there, so lock a little as the day goes on. If things continue to sell off into a "Black Friday" then ride with it. I speculate that as we get closer to the end of trading today that many bulls and bears will want to clean up positions ahead of the weekend.
11:15 am MT: The market continues to fade away, but every new low is met with some buying/short covering. However, the general move is down. We did get a government comment like I expected, and the comment was that the government is not expecting to take over FRE and FNM. Oil prices also continued upward into the 147's for a little while. All the negative news is throwing a damper on a decent earnings report from GE.
1:00 pm MT: Well.....I said watch for the pop.....We all know the drill by now.....
By the way, this time the comment didn't come from the White House Cabinet, it came from Benny and the Feds. So what I said this morning about getting the comments, well, we got comments from both places. Anyway, Benny said that the Fed discount window would be open for FRE and FNM.
You know, I really need to become a CEO of a major Financial institution.....I don't even have to be competent and I'm almost guaranteed a soft-landing.....Once again, the Fed is doing the right thing in the big picture to stabilize the overall Financial sector, but wow, how nice for those Financial companies.....
1:15 pm MT: I commented yesterday about how the bears won't want to be short and the bulls won't want to be long ahead of the weekend. So the market is continuing to slosh back and forth in wild gyrations, but the general move late in the day is a bounce back. The bulls and bears are tossing stocks back and forth at each other like their playing with a hot potato....."here, you take it! No, you take it! No, you take it! I don't want it, you take it! AAHHHHhhhhh, you're killin' me, you take it! I can't stand it anymore, you take it! - No, you take it, oooohhhh, I'm dyin' here, oooohhhhhh!".....
It's like watching Flaming Dodgeball in the Pit of Despair with acid-filled balls.....
2:25 pm MT: Market Wrap: It looks like the dust is finally settling.....The market finished well off it's lows again and the Naz is churning sideways short term. I really do wonder if the shorts will eventually wear out with all these Drop and Pops. We have a big week of earnings ahead of us next week. Traders have priced in a view of earnings for most non-Energy and Commodity based stocks that ranges between horrible and catastrophic. So if we start seeing a lot of earnings in the "bad sectors" next week that are less than catastrophic, and maybe even slightly less than horrible, then those screams you hear will probably be the shorts running on fire to jump into the ocean. It won't change the IT trend, but it could set off some serious short-term short covering.
If, however, the earnings from the "bad sectors" come in catastrophic, then the market will continue to chop and gyrate, and the Dow might actually sell off down to the 50% retracement of the 5-year bull market, which is at 10,750.
The market looks like it will gap down significantly at the open. It will be important to give the gap a little time, perhaps even an hour or two for traders to focus on GE's earnings, in order to make sure we don't get another Drop and Pop. It may take a little while this morning for traders to decide how they want to handle the news, and see if anyone in the building wants to focus on the GE earnings and whether or not they are good or bad. Also, we are at risk for a White House or Fed news bogey at any time today. So if you play puts and you see a "news flash" about some pending announcement from the government, you will probably want to exit half your puts immediately and then see how the market reacts to whatever the news is.
7:31 am MT: the Naz gapped down the most of the major indexes. The Naz is still above yesterday's lows, so I'm not going to play a put hedge yet, and I'm mindful of another headfake. I don't think the bulls will step in, if they do at all, until we have gone to new short-term lows.
I sold the CHK calls right at the open on the huge gap up. I made a $2.10 profit, or 39% gain for the trade from one minute before the close yesterday to the first minute of the open today.
7:40 am MT: right on cue the market indexes went through the short term supports and within a couple of minutes bounced. Now the question becomes whether it's a pause in an ugly sell-off day, or a headfake that leads to another bounce back.....toss a coin because that's what the odds are to me. I will let this shake and bake and kick and scream for awhile before I decide whether or not I'm going to trade it or not.
I don't want to get sucked in too deep inside of the chop and slop by watching every tick of the charts this morning, I'm going to give it some time to gyrate around or sell. My suggestion for those of you playing directional puts is to be somewhat nimble. There are some good plays out there, so lock a little as the day goes on. If things continue to sell off into a "Black Friday" then ride with it. I speculate that as we get closer to the end of trading today that many bulls and bears will want to clean up positions ahead of the weekend.
11:15 am MT: The market continues to fade away, but every new low is met with some buying/short covering. However, the general move is down. We did get a government comment like I expected, and the comment was that the government is not expecting to take over FRE and FNM. Oil prices also continued upward into the 147's for a little while. All the negative news is throwing a damper on a decent earnings report from GE.
1:00 pm MT: Well.....I said watch for the pop.....We all know the drill by now.....
By the way, this time the comment didn't come from the White House Cabinet, it came from Benny and the Feds. So what I said this morning about getting the comments, well, we got comments from both places. Anyway, Benny said that the Fed discount window would be open for FRE and FNM.
You know, I really need to become a CEO of a major Financial institution.....I don't even have to be competent and I'm almost guaranteed a soft-landing.....Once again, the Fed is doing the right thing in the big picture to stabilize the overall Financial sector, but wow, how nice for those Financial companies.....
1:15 pm MT: I commented yesterday about how the bears won't want to be short and the bulls won't want to be long ahead of the weekend. So the market is continuing to slosh back and forth in wild gyrations, but the general move late in the day is a bounce back. The bulls and bears are tossing stocks back and forth at each other like their playing with a hot potato....."here, you take it! No, you take it! No, you take it! I don't want it, you take it! AAHHHHhhhhh, you're killin' me, you take it! I can't stand it anymore, you take it! - No, you take it, oooohhhh, I'm dyin' here, oooohhhhhh!".....
It's like watching Flaming Dodgeball in the Pit of Despair with acid-filled balls.....
2:25 pm MT: Market Wrap: It looks like the dust is finally settling.....The market finished well off it's lows again and the Naz is churning sideways short term. I really do wonder if the shorts will eventually wear out with all these Drop and Pops. We have a big week of earnings ahead of us next week. Traders have priced in a view of earnings for most non-Energy and Commodity based stocks that ranges between horrible and catastrophic. So if we start seeing a lot of earnings in the "bad sectors" next week that are less than catastrophic, and maybe even slightly less than horrible, then those screams you hear will probably be the shorts running on fire to jump into the ocean. It won't change the IT trend, but it could set off some serious short-term short covering.
If, however, the earnings from the "bad sectors" come in catastrophic, then the market will continue to chop and gyrate, and the Dow might actually sell off down to the 50% retracement of the 5-year bull market, which is at 10,750.
Thursday, July 10, 2008
Another Day, Another Drop and Pop
Futures are up before the open on the news that Dow Chemical has agreed to buy Rohm & Haas for about 18.8b. In addition, Wal-Mart and Costco said that they experienced better than expected sales results in June because consumers were looking for discounted items in the face of $4 a gallon gas prices.
The stock market continues to gyrate back and forth in this price area and it still remains to be seen whether the major indexes can hold support and bounce again without a headfake.
11:00 am MT: Here we go again with the Drop and Pop. The SPX dropped through support for all of 15 minutes (of course.....since the previous quickest Drop and Pop on July 3rd was 20 minutes). So the market is popping now and trying to put in another Hammer. Eventually you would think the Bears would simply wear out on this short term "attempted bottoming."
Earlier in the day I sold some of my GILD calls to close one of the two trades on the stock. The first trade finished with a .40 cent profit, or 11.5% gain. I also sold part of the other GILD trade for a 4% gain so far. I also sold the AEM calls at breakeven, the stock looks pretty good, but it's just too gappy for my taste right now. I also sold the MOS calls for a 1.55 profit, or 14% gain. In addition, I sold the CLF calls for a .42 cent loss on a 1/5th size position, so only an $84.00 loss. CLF is the same story as AEM, it's too wild for my taste right now. I also culled WYE at a small .20 cent loss on a half-sized position.
I am watching TRA for another test of the 48 area, if I get it I will sell those calls.
11:40 am MT: I sold the last of the second GILD trade and finished the position with a 5% profit. GILD, like CELG and some other Biotechs behaved normally, which is like a breath of fresh air in a choppy, sloppy market. It's nice to have a normal swing once in a while.....
I'm only sitting on the AAPL and TRA calls. I will look around here and there, but the GE earnings risk tomorrow is keeping me from doing much, including a put hedge. If I play a put hedge on my last two positions, it will probably be after GE reports earnings, and if the market looks like it will sell off again tomorrow. Remember, the market keeps popping back quickly intra-day on any breaches of the short term support, so be nimble if you do puts.
1:20 pm MT: I've been up and down my watchlist and I can't see anything that inspires me. There are a number of potential put setups, which might come in to play tomorrow if GE blows their earnings. But I am also fairly leery of another Drop and Pop, and there are a lot of earnings reports coming early next week. I would imagine that there are a whole bunch of traders out there who will want to go flat the market before the end of the day Friday. So selling will probably be met with short covering and buying will probably be met with selling.
The market continues to gyrate wildly intra-day today with just that action, buying met with selling and selling met with short-covering. Energy is trying to bounce across the board, but I'm not inspired to play calls over there just yet. I'm just sitting here twiddling my thumbs.....
1:50 pm MT: I sold the TRA calls for a small .10 cent profit. I'm down to just one trade. At least I still have both thumbs to twiddle.....
1:59 pm MT: I untwiddled a thumb long enough to buy a 1/5th sized call position (a little nibbler) on CHK. I like the fact that Energy may be ready to bounce. I don't like that most Energy stocks are probably headed for lower highs. I do like the big volume on the CHK bounce today (confirmed bounce and confirmed Inverted Hammer with almost an Engulfing today). Prophet charts has the volume wrong today, it's actually over 30m shares. I had to verify the volume on five other chart services to make sure, so I wasn't able to get the post up before the close. The TOS charts have the volume data accurate. Sooooo, the net net is that I have a little nibbler in Energy.
Market Wrap: remember that tomorrow morning is all about GE. That's about all I have to say. We'll see if the market bounces or not. Traders will need to see a pretty positive report out of GE to get them to want to hold new positions into the weekend, and to get the shorts covering all the way into the close.
The stock market continues to gyrate back and forth in this price area and it still remains to be seen whether the major indexes can hold support and bounce again without a headfake.
11:00 am MT: Here we go again with the Drop and Pop. The SPX dropped through support for all of 15 minutes (of course.....since the previous quickest Drop and Pop on July 3rd was 20 minutes). So the market is popping now and trying to put in another Hammer. Eventually you would think the Bears would simply wear out on this short term "attempted bottoming."
Earlier in the day I sold some of my GILD calls to close one of the two trades on the stock. The first trade finished with a .40 cent profit, or 11.5% gain. I also sold part of the other GILD trade for a 4% gain so far. I also sold the AEM calls at breakeven, the stock looks pretty good, but it's just too gappy for my taste right now. I also sold the MOS calls for a 1.55 profit, or 14% gain. In addition, I sold the CLF calls for a .42 cent loss on a 1/5th size position, so only an $84.00 loss. CLF is the same story as AEM, it's too wild for my taste right now. I also culled WYE at a small .20 cent loss on a half-sized position.
I am watching TRA for another test of the 48 area, if I get it I will sell those calls.
11:40 am MT: I sold the last of the second GILD trade and finished the position with a 5% profit. GILD, like CELG and some other Biotechs behaved normally, which is like a breath of fresh air in a choppy, sloppy market. It's nice to have a normal swing once in a while.....
I'm only sitting on the AAPL and TRA calls. I will look around here and there, but the GE earnings risk tomorrow is keeping me from doing much, including a put hedge. If I play a put hedge on my last two positions, it will probably be after GE reports earnings, and if the market looks like it will sell off again tomorrow. Remember, the market keeps popping back quickly intra-day on any breaches of the short term support, so be nimble if you do puts.
1:20 pm MT: I've been up and down my watchlist and I can't see anything that inspires me. There are a number of potential put setups, which might come in to play tomorrow if GE blows their earnings. But I am also fairly leery of another Drop and Pop, and there are a lot of earnings reports coming early next week. I would imagine that there are a whole bunch of traders out there who will want to go flat the market before the end of the day Friday. So selling will probably be met with short covering and buying will probably be met with selling.
The market continues to gyrate wildly intra-day today with just that action, buying met with selling and selling met with short-covering. Energy is trying to bounce across the board, but I'm not inspired to play calls over there just yet. I'm just sitting here twiddling my thumbs.....
1:50 pm MT: I sold the TRA calls for a small .10 cent profit. I'm down to just one trade. At least I still have both thumbs to twiddle.....
1:59 pm MT: I untwiddled a thumb long enough to buy a 1/5th sized call position (a little nibbler) on CHK. I like the fact that Energy may be ready to bounce. I don't like that most Energy stocks are probably headed for lower highs. I do like the big volume on the CHK bounce today (confirmed bounce and confirmed Inverted Hammer with almost an Engulfing today). Prophet charts has the volume wrong today, it's actually over 30m shares. I had to verify the volume on five other chart services to make sure, so I wasn't able to get the post up before the close. The TOS charts have the volume data accurate. Sooooo, the net net is that I have a little nibbler in Energy.
Market Wrap: remember that tomorrow morning is all about GE. That's about all I have to say. We'll see if the market bounces or not. Traders will need to see a pretty positive report out of GE to get them to want to hold new positions into the weekend, and to get the shorts covering all the way into the close.
Wednesday, July 9, 2008
The Market Has Indigestion
Earnings are starting to trickle in with AA yesterday. The company beat expectations, which should be expected with most Commodity and Energy stocks this earnings season. NUE received an upgrade. So the AA and NUE news, although not extremely significant, will probably give Metals a boost this morning. The rest of the market will probably carry through with the bounce that started yesterday, although the catalyst is more of an oversold market than it is a positive expectation for earnings across all sectors.
7:33 am MT: I stopped out of HIG, ALL, and X. I lost .49 cents on ALL and 1.28 on HIG. I lost 2.83 on X but it was a very small position so the total loss was $566. I started some AAPL and MOS calls. The MOS position is very small.
7:40 am MT: I added a little to the AAPL calls. I think the market could kick back and forth for a little while this morning before it decides what it wants to do next. I am staying with the CNX and ACI puts because I'm cherry picking and the positions are so small that I am planning on adding to the puts in 1-3 days. I'm anticipating a lower high on those two stocks. I'm also anticipating lower highs on Steel stocks, but I am more interested in STLD and NUE (despite the upgrade) and I am going to wait out the current bounce. With earnings coming up soon on many stocks, I don't want to get any new puts until I see a little more of what's happening in the market.
8:00 am MT: I started some GILD calls. I took a larger position because I like the setup.
8:15 am MT: MOS is pretty extreme on the intra-day charts, and the stock made it to it's 10dma in a blink, so I sold the calls for a profit. I will buy them back on a pullback intra-day. I made $513 on the trade. Also, GILD is pretty extreme on the intra-day charts, so I may sell part of the position and then buy it back on an intra-day pullback.
8:26: am MT: I sold half the GILD calls for a .40 cent profit or 11.5% gain. I will buy them back on an intra-day pullback to 54.50 - 54.75 if it happens. I also picked up a little more AAPL.
8:30 am MT: The major indexes are all fighting with their 10dma's, that's why we have the morning pause. If the Naz, Dow, and SPX can break through the 10dma, then I speculate that the market will most likely rally pretty sharply for several hours on short-covering. We shall see.....
11:25 am MT: Here is what I have done the past couple of hours: I culled ELN for a .15 cent profit. I like WYE and GILD better right now, so I'm playing them. I nibbled small call positions on TRA and CLF. I also picked up a call position on AEM.
1:30 pm MT: The wild ride continues with the market selling off mid-day. Traders continue to slosh around, some bargain buying, some panicking, some day trading, and a whole lot of uncertainty. The past two weeks traders have treated open positions like hot potatoes, bulls don't want to be long, bears don't want to be short, and the market continues to grind and churn through the turmoil. Overall, the major indexes are holding the recent lows, so for now I will just sit tight and watch.
1:55 pm MT: I took advantage of the downdraft to stop out of the ACI and CNX puts rather than play around with them any further. They were a $388 and $389 loss respectively. I'm holding everything else.
Market Wrap: There have been four headfakes on the SPX the past six days, so it's back to that fun stuff. We have seen about five of these types of weeks this year, which makes for some tough trading. I may try something a little different tomorrow to handle a possible fifth headfake in seven days. I may take a large put position on the DIA, SPY, and QQQQ to hedge my calls and then just see which way things go. The market continues to be oversold, and it continues to headfake, so I may try hedging rather than trying to get too inside the chop and slop.
I don't have a lot to say in the market wrap because traders didn't do anything different than they have been for awhile, which is to chop, lump, grind, and gyrate. There's been a lot of that this year. Fortunately, we have seen a little trending here and there in order to make some money in the long run. Once again, there is no reason to get loaded up on trades. That's been the toughest thing about this year, there have been very few periods of time that I could really dive in deep and grab a lot of trades and just ride them. That was last year, this is this year.....
As it is, if the market indexes start breaking to new lows tomorrow then I will hedge my calls with put positions on the DIA, SPY, and QQQQ. We'll see what tomorrow brings, more chop and slop or some kind of resolution to the current indigestion.
7:33 am MT: I stopped out of HIG, ALL, and X. I lost .49 cents on ALL and 1.28 on HIG. I lost 2.83 on X but it was a very small position so the total loss was $566. I started some AAPL and MOS calls. The MOS position is very small.
7:40 am MT: I added a little to the AAPL calls. I think the market could kick back and forth for a little while this morning before it decides what it wants to do next. I am staying with the CNX and ACI puts because I'm cherry picking and the positions are so small that I am planning on adding to the puts in 1-3 days. I'm anticipating a lower high on those two stocks. I'm also anticipating lower highs on Steel stocks, but I am more interested in STLD and NUE (despite the upgrade) and I am going to wait out the current bounce. With earnings coming up soon on many stocks, I don't want to get any new puts until I see a little more of what's happening in the market.
8:00 am MT: I started some GILD calls. I took a larger position because I like the setup.
8:15 am MT: MOS is pretty extreme on the intra-day charts, and the stock made it to it's 10dma in a blink, so I sold the calls for a profit. I will buy them back on a pullback intra-day. I made $513 on the trade. Also, GILD is pretty extreme on the intra-day charts, so I may sell part of the position and then buy it back on an intra-day pullback.
8:26: am MT: I sold half the GILD calls for a .40 cent profit or 11.5% gain. I will buy them back on an intra-day pullback to 54.50 - 54.75 if it happens. I also picked up a little more AAPL.
8:30 am MT: The major indexes are all fighting with their 10dma's, that's why we have the morning pause. If the Naz, Dow, and SPX can break through the 10dma, then I speculate that the market will most likely rally pretty sharply for several hours on short-covering. We shall see.....
11:25 am MT: Here is what I have done the past couple of hours: I culled ELN for a .15 cent profit. I like WYE and GILD better right now, so I'm playing them. I nibbled small call positions on TRA and CLF. I also picked up a call position on AEM.
1:30 pm MT: The wild ride continues with the market selling off mid-day. Traders continue to slosh around, some bargain buying, some panicking, some day trading, and a whole lot of uncertainty. The past two weeks traders have treated open positions like hot potatoes, bulls don't want to be long, bears don't want to be short, and the market continues to grind and churn through the turmoil. Overall, the major indexes are holding the recent lows, so for now I will just sit tight and watch.
1:55 pm MT: I took advantage of the downdraft to stop out of the ACI and CNX puts rather than play around with them any further. They were a $388 and $389 loss respectively. I'm holding everything else.
Market Wrap: There have been four headfakes on the SPX the past six days, so it's back to that fun stuff. We have seen about five of these types of weeks this year, which makes for some tough trading. I may try something a little different tomorrow to handle a possible fifth headfake in seven days. I may take a large put position on the DIA, SPY, and QQQQ to hedge my calls and then just see which way things go. The market continues to be oversold, and it continues to headfake, so I may try hedging rather than trying to get too inside the chop and slop.
I don't have a lot to say in the market wrap because traders didn't do anything different than they have been for awhile, which is to chop, lump, grind, and gyrate. There's been a lot of that this year. Fortunately, we have seen a little trending here and there in order to make some money in the long run. Once again, there is no reason to get loaded up on trades. That's been the toughest thing about this year, there have been very few periods of time that I could really dive in deep and grab a lot of trades and just ride them. That was last year, this is this year.....
As it is, if the market indexes start breaking to new lows tomorrow then I will hedge my calls with put positions on the DIA, SPY, and QQQQ. We'll see what tomorrow brings, more chop and slop or some kind of resolution to the current indigestion.
Tuesday, July 8, 2008
Market Finally Bounces
Benny is trying to rescue the Financials again after the meltdown yesterday at FRE and FNM. The Fed stated that it may continue lending to Wall Street Firms (Financials) through 2009. The Fed announcement is probably the right thing to do in order to stabilize the Financial sector. The market also liked the early drop in oil futures into the $139 area. Traders may attempt to bounce the market early in the day again just like yesterday.
7:50 am MT: I have two full positions on CELG which I am starting to scale out of. One trade is from yesterday which I locked down this morning for a .75 cent profit or 12% gain. The other trade is my original trade, which I started last week. My max target on CELG was 71-72 and the stock made it to the 70.30 area this morning, so I sold 40% of the original trade for a 1.27 profit or 22% gain. If CELG makes it to 71 I will be out of 70% of the position.
8:15 am MT: CELG is trying to get it done right now, so I took a little more profit with the stock at 70.70 and I'm looking to take a little more if it reaches 71.
8:25 am MT: Steel, Coal, Chemicals and other Commodity based stocks are dumping again. Energy stocks are dumping as well. I really wanted a couple of Steel puts (X, NUE, or SCHN) and a couple of Coal puts (MEE, CNX, or ACI), but now I'm going to wait for an intra-day bounce. They sold off about one day earlier than I thought they would, but that's how it goes with trading, you don't always catch every train perfectly.
8:40 am MT: I picked up some nibbler puts on X, CNX, and ACI. I really don't like that I had to chase these, so if I see another quick, sharp drop in the next hour, I'll probably look to sell and then wait for another bounce to buy again. If we get a big intra-day bounce on the stock then I will look to add to the positions in about 2-3 hours.
9:30 am MT: I added a little bit to the X, ACI, and CNX puts. I have 1/4 sized positions on all three, so they are pretty small. I'm also looking to take out of the HIG puts, and maybe the TRV puts in the next 2 hours or so. I don't like the Benny Bogey this morning, and he seems to have a habit of yapping right when I'm playing puts on Financials. I still think it was the right thing for him to do, I just wish he would have waited until tomorrow afternoon before he swooped in to "save the day." I still like the ALL puts a lot, that's a nice looking setup. Now to see if it works.
10:00 am MT: I stopped out of the TRV puts. I made .22 cents on a put trade on TRV yesterday, and I lost .42 cents on the put trade today. The net was a minimal loss of 9%. I want to keep the HIG puts for now and see where it goes. I probably won't let go of the ALL puts because I really like the price action on the stock.
1:35 pm MT: I sold the last of the CELG calls as the stock moved into the area of my resistance zone of 71-72. The total trade was a 1.76 profit, or 31% gain on a full-sized position.
1:50 pm MT: I bought calls on ELN and WYE. Since the Steel and Coal puts are 1/4 sized positions, I will add to the puts on those trades in 1-3 days when the stocks finish rolling up. The Insurance puts are a little testier, but ALL still looks good. HIG is the only trade I don't like, but it is a small enough position that I will add to it on a 1-3 day bounce or take it out on any wiggle down tomorrow.
The market confirmed a bounce today, but only two of the four major indexes confirmed, the Naz and the RUT.
2:30 pm MT: Market Wrap: the market got the double-whammy of falling oil prices and a Benny Bogey to start the short-term bounce that I was expecting yesterday. Only the Naz and the RUT officially bounced, but the Dow and the SPX will probably follow. I am still expecting a move on the Naz to 2,300 and perhaps as much as 2,315 - 2,325. The SPX could run up to 1,300 (especially if the Naz can make it to 2,320). And the Dow could make it to 11,650, and perhaps as far as 11,750. If we do get the bounces ahead of Earnings Season (GE will be the first major company to announce this Friday, although traders are gyrating over the AA earnings going on right now), then I expect GE to be the next formal catalyst on Friday for the possible current upswing. By that I mean that the market might bounce from now through Friday. Next Monday we get all the Banks starting their earnings and then we get INTC next Tuesday to really kick things into high gear. Peak volatility should be next Tuesday through Thursday. If we do bounce for 2-3 days, then I will use that as an opportunity to unwind the lower legs (Bull Puts) on my Iron Condors for the DIA, SPY, and IWM. I want to unwind the Bull Put spreads for as little as possible so I have a good chance of making nice money on all three Iron Condors.
As for the Insurance puts, I will look for any type of pullback tomorrow to exit as gracefully as possible. The other 1/4 sized put positions on X, ACI, and CNX are true Cherry picks, so I have a lot of room I can give those stocks before I add to the positions.
6:30 pm MT: Here are a couple of evening notes after I had a chance to run up and down my watchlist: I really like AAPL for calls, with the channel breakout today coinciding with the big bounces on the Naz and NDX. AAPL has a very good probability of getting to 182 - 182.50 and perhaps even running as much as 5 - 10 points. On this channel breakout I would normally be targeting 210 - 220 but I have three reasons to keep the trade short. One is the Naz is in a downtrend. Two is that the AAPL breakout came on below average volume. And three is that AAPL has earnings next week. However, the earnings report could be the catalyst for this move, so I think this is a call trade that I will add to the Papermoney demo account tomorrow.
For call trades: In Tech land I'm also keeping an eye on IBM, WDC, and QCOM. In Biotechs/Healthcare I played CELG and I got into ELN and WYE, plus I'm watching GILD and MYGN and to a lesser extent, DNA and MDT. In Retail I'm watching WMT, KSS, and COST. In Chemicals I'm watching POT, MOS, and TRA.
I'm going to be stopping out of the Insurance puts in the morning. I think the Benny Bogey will set off way too much short-covering for my taste. I'm not bullish at all on Financials, but I don't feel like going on Benny's wild clown ride at Wall Street World. I will also be selling X if I have a profit, and deciding if I want to hold the small ACI and CNX positions or not. I think we could see a 2-3 day bounce, although I'm still bearish on the Steel, Coal, and some other Commodity related stocks. Energy stocks threw a lot of Hammers today, but I think we are going to see a bunch of lower highs, and I don't want to go on that ride right now either.
AA beat earnings a bit and is trading up modestly after-hours, which might give Metal and Commodity related stocks a little boost in the morning. But just like with Energy stocks, I think there are a lot of these types of stocks headed for lower highs. We shall see.....
7:50 am MT: I have two full positions on CELG which I am starting to scale out of. One trade is from yesterday which I locked down this morning for a .75 cent profit or 12% gain. The other trade is my original trade, which I started last week. My max target on CELG was 71-72 and the stock made it to the 70.30 area this morning, so I sold 40% of the original trade for a 1.27 profit or 22% gain. If CELG makes it to 71 I will be out of 70% of the position.
8:15 am MT: CELG is trying to get it done right now, so I took a little more profit with the stock at 70.70 and I'm looking to take a little more if it reaches 71.
8:25 am MT: Steel, Coal, Chemicals and other Commodity based stocks are dumping again. Energy stocks are dumping as well. I really wanted a couple of Steel puts (X, NUE, or SCHN) and a couple of Coal puts (MEE, CNX, or ACI), but now I'm going to wait for an intra-day bounce. They sold off about one day earlier than I thought they would, but that's how it goes with trading, you don't always catch every train perfectly.
8:40 am MT: I picked up some nibbler puts on X, CNX, and ACI. I really don't like that I had to chase these, so if I see another quick, sharp drop in the next hour, I'll probably look to sell and then wait for another bounce to buy again. If we get a big intra-day bounce on the stock then I will look to add to the positions in about 2-3 hours.
9:30 am MT: I added a little bit to the X, ACI, and CNX puts. I have 1/4 sized positions on all three, so they are pretty small. I'm also looking to take out of the HIG puts, and maybe the TRV puts in the next 2 hours or so. I don't like the Benny Bogey this morning, and he seems to have a habit of yapping right when I'm playing puts on Financials. I still think it was the right thing for him to do, I just wish he would have waited until tomorrow afternoon before he swooped in to "save the day." I still like the ALL puts a lot, that's a nice looking setup. Now to see if it works.
10:00 am MT: I stopped out of the TRV puts. I made .22 cents on a put trade on TRV yesterday, and I lost .42 cents on the put trade today. The net was a minimal loss of 9%. I want to keep the HIG puts for now and see where it goes. I probably won't let go of the ALL puts because I really like the price action on the stock.
1:35 pm MT: I sold the last of the CELG calls as the stock moved into the area of my resistance zone of 71-72. The total trade was a 1.76 profit, or 31% gain on a full-sized position.
1:50 pm MT: I bought calls on ELN and WYE. Since the Steel and Coal puts are 1/4 sized positions, I will add to the puts on those trades in 1-3 days when the stocks finish rolling up. The Insurance puts are a little testier, but ALL still looks good. HIG is the only trade I don't like, but it is a small enough position that I will add to it on a 1-3 day bounce or take it out on any wiggle down tomorrow.
The market confirmed a bounce today, but only two of the four major indexes confirmed, the Naz and the RUT.
2:30 pm MT: Market Wrap: the market got the double-whammy of falling oil prices and a Benny Bogey to start the short-term bounce that I was expecting yesterday. Only the Naz and the RUT officially bounced, but the Dow and the SPX will probably follow. I am still expecting a move on the Naz to 2,300 and perhaps as much as 2,315 - 2,325. The SPX could run up to 1,300 (especially if the Naz can make it to 2,320). And the Dow could make it to 11,650, and perhaps as far as 11,750. If we do get the bounces ahead of Earnings Season (GE will be the first major company to announce this Friday, although traders are gyrating over the AA earnings going on right now), then I expect GE to be the next formal catalyst on Friday for the possible current upswing. By that I mean that the market might bounce from now through Friday. Next Monday we get all the Banks starting their earnings and then we get INTC next Tuesday to really kick things into high gear. Peak volatility should be next Tuesday through Thursday. If we do bounce for 2-3 days, then I will use that as an opportunity to unwind the lower legs (Bull Puts) on my Iron Condors for the DIA, SPY, and IWM. I want to unwind the Bull Put spreads for as little as possible so I have a good chance of making nice money on all three Iron Condors.
As for the Insurance puts, I will look for any type of pullback tomorrow to exit as gracefully as possible. The other 1/4 sized put positions on X, ACI, and CNX are true Cherry picks, so I have a lot of room I can give those stocks before I add to the positions.
6:30 pm MT: Here are a couple of evening notes after I had a chance to run up and down my watchlist: I really like AAPL for calls, with the channel breakout today coinciding with the big bounces on the Naz and NDX. AAPL has a very good probability of getting to 182 - 182.50 and perhaps even running as much as 5 - 10 points. On this channel breakout I would normally be targeting 210 - 220 but I have three reasons to keep the trade short. One is the Naz is in a downtrend. Two is that the AAPL breakout came on below average volume. And three is that AAPL has earnings next week. However, the earnings report could be the catalyst for this move, so I think this is a call trade that I will add to the Papermoney demo account tomorrow.
For call trades: In Tech land I'm also keeping an eye on IBM, WDC, and QCOM. In Biotechs/Healthcare I played CELG and I got into ELN and WYE, plus I'm watching GILD and MYGN and to a lesser extent, DNA and MDT. In Retail I'm watching WMT, KSS, and COST. In Chemicals I'm watching POT, MOS, and TRA.
I'm going to be stopping out of the Insurance puts in the morning. I think the Benny Bogey will set off way too much short-covering for my taste. I'm not bullish at all on Financials, but I don't feel like going on Benny's wild clown ride at Wall Street World. I will also be selling X if I have a profit, and deciding if I want to hold the small ACI and CNX positions or not. I think we could see a 2-3 day bounce, although I'm still bearish on the Steel, Coal, and some other Commodity related stocks. Energy stocks threw a lot of Hammers today, but I think we are going to see a bunch of lower highs, and I don't want to go on that ride right now either.
AA beat earnings a bit and is trading up modestly after-hours, which might give Metal and Commodity related stocks a little boost in the morning. But just like with Energy stocks, I think there are a lot of these types of stocks headed for lower highs. We shall see.....
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