Friday’s Trading?
I’m not bothering to do any analysis today because who knows what kind of market we will have tomorrow. Will the inverse ETF’s even be trading? How will put options behave if market makers can’t hedge their risk by shorting? Etcetera.
I am happy to report that I was all-in and leveraged short before the Crash of ‘08, and I got out at an ideal time: Tuesday morning’s gap down. I had excellent profits, and got out before they changed the rules. Now let’s see if my profits evaporate out of the computers of the financial system.
Nice going Washington! Nice going New York! You crashed the whole thing!
Well, it could be worse. You could wake up with 10 Russian warships on your doorstep just like the Israelis.
I have noticed a lot talking heads in the media, including President Bush and Steve Leisman, using the phrases “free world” and “free capitalist world” recently. Have the geniuses in Washington who just wrecked our economy begun a subliminal program to brainwash us for a coming war with Russia?
Starting wars is a traditional method for the USA to end economic recessions and depressions after all.
I must say that this enthusiasm to fight nuclear-armed countries like Pakistan and Russia is a bit alarming.
So, lets hope that our fearless leaders have sated their appetites for destruction by destroying the economy.
Do you think Dick Fuld is deriving sick pleasure from taking the whole system down with him? There were actually fools in Korea who wanted to buy his sinking ship!
September 18th, 2008 at 11:59 pm
hmm russians all around the world, russian market opens soon or alreayd opened. I wonder how this latest reaction will be.
September 19th, 2008 at 12:09 am
I don’t know how long market shorting has been around, but I surely wouldn’t be tinkering with something that has been working for years or decades. Results may be unpredictable.
“If it ain’t broke, don’t fix it”.
September 19th, 2008 at 12:25 am
Reading up on candlesticks today apparently the Japanese invented them for rice trading in the 1700s and we know the Dutch were trading futures and going short in the 1600s. But somewhere else it turns out Sumerian merchants were using bills of exchange, letters of credit and speculation ~2500 b.c. This too will pass. If we can’t trade tomorrow (& unfortunately I didn’t get out…glad somebody was more disciplined) Jesse Eisenger has a very good dissection of AIG and how it’s not the shorts on Portfolio, I’d point you again to http://epicureandealmaker.blogspot.com/ for his K-T boundary post and then point out that none of this is law as yet; nor even regulation. And Barney Frank was sure reaming Ben a new one for saving AIG and so forth. Talk about no clue about the exposure….if the world was rocked by LEH’s CDS’s can you imagine if AIG went down ?
September 19th, 2008 at 12:26 am
Shorts put a bid under the market if anything — they want to cover
September 19th, 2008 at 12:27 am
Guys,
these new announcements and changes to the market are scary. It is no longer a free market we have. This is a highly manipulated and artificially propped up market that we are heading to. A fake rally that in the end that will suck in all of the remaining wealth in the US and destroy it.
This is truly the end of free markets, the end of the economy that we know it. The trust in the US just went out the window.
September 19th, 2008 at 12:34 am
George,
Yes, reaching into a complex system and plucking out one of its components is guaranteed to cause unpredictable behavior. Try it with your computer and see what happens! Trading strategies that worked before may no longer work now, which is why I have just been a spectator since Tuesday morning.
Matt
September 19th, 2008 at 12:37 am
To add fuel to the fire of what we could be trading on Jeff Gundlach had this to say, “In the deteriorating climate he sees unfolding, Gundlach said, the Standard & Poor’s 500 Index could fall another 30%, giant Citigroup could become an “AIG-sized debacle,” Morgan Stanley would merge with a banking company, Wachovia won’t be able to stand alone, default rates on even prime mortgages could soar, and European banks’ woes are just beginning. ”
http://tinyurl.com/4f9yvl
Our assessments exactly ? He predicts an 800 SPX. Ah joy !
September 19th, 2008 at 12:50 am
Dblwyo,
those predictions and article were printed on Thursday @ 4pm when we still had a free market. That isn’t the case anymore
So yes.. we will have a meltdown like none we’ve seen ever before, but not before everyone is sucked into the biggest bear market rally that the world has ever seen.
September 19th, 2008 at 12:58 am
BTW.. futures are up an insane amount so it has already begun.
September 19th, 2008 at 1:33 am
So would put options no longer be around too? Or have they not thought that far ahead yet…
We saw what happened when they cracked down on naked short sellers (and because it was so ham handed, it made it hard to legitimately short). This is very bullish. I think it’s idiotic and will come back to bite us in ways we can’t imagine, but for now, very bullish.
September 19th, 2008 at 1:35 am
The U.S. would be stupid to ban short selling. Money would flow to other markets where this is still possible. All major European markets except stupid Brits. I reiterate my point of view. Short selling is positive because it stabilizes markets. Most shorties will become buyers at some point in time. Naked short selling is outragous fraud and should indeed be banned.
For now let’s welcome the bollocks rally and hope we can short it in the next few weeks.
September 19th, 2008 at 1:37 am
PS - I’m fairly certain short selling was around before 1929 in the United States, as the uptick rule was enacted as a result of the crash.
September 19th, 2008 at 2:07 am
Well guys I’m gonna try and get some sleep…see you in 10 min after I dry my eyes.
September 19th, 2008 at 3:34 am
I’m losing less than feared in Europe. Not selling my short ETF’s. Good luck folks, futures just hit 1,240.
September 19th, 2008 at 6:10 am
I went long SPY yesterday and probably will sell on the opening gap this morning.
Recent developments are extremely bullish for gold longer-term, and the correction in that market this morning is a gift.
BTW banning short selling means no more short squeezes.
This will cost the bulls dearly once the current rally runs its course.
September 19th, 2008 at 6:14 am
Russia all around the world.
North Korea preparing to restart nuclear facility.
US Bans short selling.
BYE BYE WORLD
you were right Paul I the college kid will be skrewed!
September 19th, 2008 at 6:18 am
Crimson, yes we will have to change our position on gold soon. Difficult to know when all these actions becomes inflationary.
September 19th, 2008 at 6:22 am
as soon as all sellers get squeezed we will see the greatest depression coming. TAKE THAT BUSH.
September 19th, 2008 at 6:23 am
*short sellers
September 19th, 2008 at 6:27 am
i want to get this manufactured
http://www.capitalstool.com/forums/uploads/post-1339-1195706992.jpg
September 19th, 2008 at 6:32 am
oh guys i will stop spamming and head to class but this is classic.
Christopher Cox said in a statement. “The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets.”
I can’t wait to get SKF at $75 or lower and ride to $200 after short selling ban is lifted.
September 19th, 2008 at 6:39 am
matt -
do you have any idea on how the short selling bn will affect the ultrashorts operations?
the bank is on short selling bank, so skf is affected, but what about srs and twm?
September 19th, 2008 at 6:42 am
@K: You will have the opportunity maybe already today. SKF is at $101 in premarket. While I’m writing this, the futures are going into kill-all-bears mode. I think I will go 100% into cash today if the market hyperventilates and buy back cheaper next week when the bulls are more sober again.
September 19th, 2008 at 7:05 am
dressguard I agree. I will try trading on tuesday if I see reality set in.
September 19th, 2008 at 7:13 am
hi all. Can someone elaborate for me about the short selling rules changes ? When do they take effect ? What happens with existing short positions and inverse ETF’s ? What about other countries ? Could shorts migrate to other exchanges ? And there are put options, in the money put options that are an alternative…
I checked 321gold.com, gold looked to be down a bit…I thought it would be up large…
Methinks Matt has it bang on to sit this out a tad and see what unfolds.
I’m just keeping my BCE shares, crossing fingers and toes the takeover goes through…
thanks to all for your insight, contributions and hard work here.
September 19th, 2008 at 7:25 am
Here is the list of stocks banned from shorting:
http://www.sec.gov/rules/other/2008/34-58592.pdf
September 19th, 2008 at 8:04 am
Matt - actually when we step back from this a bit you’ve implied an important, perhaps critical, rule. When things are running to well too long and you don’t know why step off the train. Alternatively when things are going to well and you don’t know why get off. In some ways even more important than the “mkts irrationality > my liquidity” rule.
May not have put it well but it struck me as important. Personally if I’d gotten out on We after a great two week run and not gotten greedy for one more little taste…well..
Which also suggests that this too shall pass. Don’t know when or how this misplaced euphoria wears off - might be next week or next month but it will and hopefully we’ll go back to a rational market where our models are based on reality rather than quicksand.
September 19th, 2008 at 8:10 am
Matt-
I have to take the short opportunity I have to
“THANK YOU” for being so nice to my daughter.
I appreciate it.
My Aussie friends want to know why we Yanks
have not fired everyone in our govt. yet, and
they think the U.S. is now more communist
than China.
Larry-
I must know. Are you an Ayn Rand fan yet???
Also if you want to know where the world is
headed watch the movie “Rollerball” once
a year
September 19th, 2008 at 8:35 am
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed below. The rates are effective at the close of business on Thursday, September 18th, 2008.
MARGIN RATE FOR GOLD FUTURES (GC), COMEX miNY GOLD (QO) AND COMEX ASIAN GOLD CONTRACTS (QS)
COMEX Division Margins on Gold Futures Contracts
Member: Clearing and Non-Clearing (Hedge Margin): New: $ 5,500 Old: $ 3,750
Non-Member Customer (Speculative Margin): New: $ 7,425 Old: $ 5,063
September 19th, 2008 at 8:41 am
BTW.. here is another great Christopher Cox quote:
“The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets,”
looks like they used the most extreme weapon to manipulate the market higher IMO..
In a market like this, would you guys think that money flows into equities/financials especially and thus money flows out of commodities / gold / oil even faster? This causes big issues for the already crashing commodity market doesn’t it? Would like your thoughts on this.
September 19th, 2008 at 8:42 am
Brian,
can you elaborate your last most. I don’t really know how to translate that.
Thanks!
September 19th, 2008 at 8:46 am
towelie,
Puts are still allowed,
Paul K,
Short and ultra-shprt etfs have various methods of functioning. Some are simll indexes and the creators pay on them based on a fornula (they usually have a ultra-long partner to balnce out the losses). Other work by buying puts and derivatives. These should still function, technically speaking.
I had some more comments on this yesterday evening, but try this analogy: if you drive a car off a cliff, the brakes will still slow down the wheels, technically speaking.
September 19th, 2008 at 8:47 am
I’m glad the short selling is limited to specific financials. It expires Oct 3.
Several stock pick sites have closed out all positions until things calm down.
Charlie, I’m in your camp re: free markets. This could create a hyper-inflated stock price to companies not deserving. We won’t be able to tell the “wheat from the chaff”.
Amazing times. This must be similar to how folks felt during the ‘29 crash - major uncertainty.
September 19th, 2008 at 8:54 am
Charlie, it’s an announcement from the exchange that margin requirements for gold have increased.
September 19th, 2008 at 8:57 am
CNBC joke: “FED fixes Tom Brady’s knee so he can play today.”
They got the analogy wrong:
“FED fixes Super Bowl, so Patriots can win without Tom Brady.”
September 19th, 2008 at 8:58 am
I was just thinking - Black Monday vs. White Friday.
September 19th, 2008 at 9:03 am
SteveK,
Thanks for posting the list.
Matt
September 19th, 2008 at 9:05 am
MEB,
Glad that you could pop in. As I recall, the Aussies have a bit of real estate problem themselves.
Matt
September 19th, 2008 at 9:06 am
Fed buying Fannie and Freddie debt. (Source: Marketwatch)
That should help my Freddie shares I got at .35 cents. Hey, you never know.
Man, you guys got me reading the news. I even watched CNBC last night to catch the outcome of the Paulson/Bernake & party heads’ meeting.
September 19th, 2008 at 9:19 am
The fed will also buy commercial paper.
http://tinyurl.com/compaper
September 19th, 2008 at 9:28 am
Pretty heavy underwater now. Fun times.
September 19th, 2008 at 9:30 am
Short sellers are blamed in every bear market, including the secular bears in 1930s-40s, 1970s-80s, and in Japan (blamed on foreign speculators), and one restriction or another is invariably tried. (Jesse Livermore was one of the most famous short sellers in US history.)
But stock prices fall in secular bear markets because of overvaluation, falling earnings, investments going bad, revelations of fraud, debt-deflationary crises, demographics, liquidity preference, and so on, NOT SHORT SELLERS.
Also, the largest rallies occur in bear markets, followed by sharp reversals and subsequent stair-step declines to lower lows.
I speculated a few days ago that officials might shut down the market in the worst of the carnage; well, they have effective shut down short selling by implication, thus eliminating a critical factor in price discovery for equities and corporate bonds.
But such a desperate move, short of completely halting of trading, suggests to me that officials have become truly desperate and will resort to extreme measures ahead, including overt purchases of equities, futures, corporate bonds, etc. In effect, officials would be conceding that the system is irretrievably broken.
Thus, one must conclude that we are at or near the end of the capitalist system as we know it; although this process has been underway for 70+ years.
The most amoral, rapacious rentier-financier parasites who have succeeded in bringing the system to its knees are squealing the loudest for a corporate-statist bailout. Schumpeter was right.
What we are seeing is the culmination of Mussolini’s (and Hitler’s by extension) vision of fascism: the merging of the state and the largest corporations into an all-powerful, one-party, imperial corporate-state.
Like it or not, gentlemen, we’re all fascists now. Empires always cost too much and result in bankruptcy, decline, and collapse.
Nonetheless, SPX 1250s-60s would be the 38% retracement within the 3 wave, which would then be followed by another crash to the 900s by mid-Nov. Call be just too bearish, but I still hold out that this is the more likely outcome, frantic bailouts by the rentier parasites or not.
September 19th, 2008 at 9:33 am
ICE up $27 and I’m not in - bummer.
September 19th, 2008 at 9:36 am
I’ve almost doubled my $ in FRE though.
September 19th, 2008 at 9:41 am
Well there may be more to this than met the eye at first, speaking of wild theories that may have some substance.
Terror Attack on US Financials? Details of SEC Short Ban
http://bigpicture.typepad.com/comments/2008/09/terror-attack-o.html
And there are great ironies, painful as they are for us, in that the SEC’s reduction on capital limits requirements for the BD’s led to their implosions:
Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults.
http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/
Read it and weep. Who’s got their tinfoil hats handy.
September 19th, 2008 at 9:41 am
Matt-
You’re right. But the Aussies do not have
two crime famlies running their country
like we do.
Rich-
You hit the nail on the head.
September 19th, 2008 at 9:41 am
Rich,
It has been a privilege to read your thoughts as well as everyone else here. I have made pretty good money this year, but with a heavy heart, as I watch the destruction of this country’s values and morals. My only hope is that my children will find a way to cope with what promises to be an epic and historic hangover. Good Luck everyone!
John
September 19th, 2008 at 9:46 am
Fading the gap is alive and well this morning. Now, if my data feeds would just cooperate.
September 19th, 2008 at 9:47 am
I have no idea what my account is worth. The option spreads are rediculous, and the stock prices are so volatile.
September 19th, 2008 at 9:47 am
Rich,
Great stuff.
I can’t believe how CNBC is gushing over all of this market manipulation. I guess for them it is all about saving GE’s stock and hanging onto their own jobs. I should tape the entire day on CNBC today and play it back at the end of the year when our econ system has officially been flushed down the toilet.
September 19th, 2008 at 9:48 am
td waterhouse showing skf halted
September 19th, 2008 at 9:48 am
Erin: “Is today’s trade fairly hugely distorted?”
‘Ya think?
September 19th, 2008 at 9:49 am
TDAmeritrade shows SKF at $91, -20%
September 19th, 2008 at 9:51 am
Forced logout from Ameritrade and Scottrade site giving me run time errors. Nice.
September 19th, 2008 at 9:52 am
cramer is babbling about buying the bad collateral at $0.30 on the dollar. Is he really so stupid that he doesn’t realize that much of this is worth a lot less AND a lot more! This is why the markets were frozen!
NO KNOWS WHT THIS STUFF IS WORTH!!!
September 19th, 2008 at 9:54 am
Guys, what if we still end this week down…
September 19th, 2008 at 9:54 am
Geeze, BBT gapping all over the place.
Stockcharts data is screwy or else it’s on my end. Nope, my other charts are messed up too. Must be bad data from exchange.
Be careful.
September 19th, 2008 at 9:57 am
Brian,
Actually , I show SKF frozen as well, but still getting quotes.
September 19th, 2008 at 9:59 am
I’ve got a question: why didn’t they just open the market AFTER paulson spoke.
September 19th, 2008 at 9:59 am
Appears that the datafeed system is at time overwhelmed. Sporatic updates.
My SKF hasn’t updated on any charts since the gap down on the opening on any of my charts and scottrade. I wonder if it is frozen? Last was 93.00.
September 19th, 2008 at 10:00 am
Brian:
Your comments re the PM market VERY interesting. Apparently, not only is the government moving against short-sellers, could they be in collusion with the COMEX to suppress the PM’s? Mighty interesting!
September 19th, 2008 at 10:03 am
Rich-
“Rollerball” is your movie.
September 19th, 2008 at 10:04 am
SKF is indeed frozen. Maybe it’s illegal now to trade heart attacks with a ticker symbol.
September 19th, 2008 at 10:05 am
Having trouble with TradeKing. I’m not looking to trade anyway, but it is very disconcerting. The musical chairs game is losing a few seats. What would a full scale panic look like?
September 19th, 2008 at 10:05 am
The Washington communists stopped the party. PARTY POOPER!!!
September 19th, 2008 at 10:05 am
I think trading on SKF has been suspended. That just ain’t right! I’m not in it, but I want to get in. Do they think a stock can’t be sold?
UYG the non-inverse wasn’t frozen. This is a loss of freedom.
Bumbsteads.
September 19th, 2008 at 10:08 am
Woody Allen once mused that his grandfather kept his money under the mattress because he never trusted the financial system during the Great Depression. Unfortunately, the government ordered all mattresses confiscated and he became a pauper overnight!
September 19th, 2008 at 10:10 am
I wanted to go in SKF but can’t. Am I supposed to bid for C and MS now? The Washington communists are really stupid. As I said several times, shorting is ok, but not naked shorting. Now they spoiled the whole game because a few weren’t behaving well. It’s like in kindergarden.
September 19th, 2008 at 10:10 am
SKF has a bid of .01 on Interactive Brokers!
September 19th, 2008 at 10:13 am
I want in on skf or anything that is today down for that matter. you just know things that gap up go down in a few days. many badd stocks do that. this is pump and dump scheme being done on large scale.
sad but the little guys will still get burnt.
September 19th, 2008 at 10:13 am
SKF is flying actually: $97 !!! Not bad!!! Hank, could you please shut your trap so we can go on real business? LOL
September 19th, 2008 at 10:16 am
TD Ameritrade just crashed. Can’t log on, can’t use Command Center, too bad.
always happens to the little guys
I’m adding to my WaMu position here, below 3.50
September 19th, 2008 at 10:16 am
When F&F were bailed out we had a one day rally. When AIG was bailed out we didn’t have a rally at all. Now all the crooks on WallSt are bailed out we have an overnight rally. On Monday the bully party might be completely over again.
September 19th, 2008 at 10:16 am
Note that exchange authorities tightened margins on comodity longs this summer because they wanted those prices to drop.
Now they crack down on stock shorts in attempt to inflate global equites.
What is this but not so thinly disguised PRICE CONTROLS.
September 19th, 2008 at 10:18 am
that’s it here I go guys. bout to loan a laptop and get in before the weekend bailout
September 19th, 2008 at 10:18 am
The Fidelity web site also went down this morning.
Fortunately I was able to dump my SPY at 127 just before they went down.
September 19th, 2008 at 10:24 am
If you bought MS at the open you lost 20%!!!
September 19th, 2008 at 10:25 am
Paint me silly but my VIX readings indicate that the move to final capitulation is just starting.
September 19th, 2008 at 10:32 am
Anybody here? I think everybody went to the beach. Ok, I turn off the lights. Good night!
September 19th, 2008 at 10:33 am
Faded the open with OCT 127 SPY puts. had a lot of problems with brokers and their sites.
September 19th, 2008 at 10:35 am
SDS and QID have made excellent counter moves up today per the 15 minute stochastic and MACD. Sold half on 1 minute MACD x-over. Other half following 5 minute MACD which is weakening.
September 19th, 2008 at 10:35 am
call me nuts but DUG looks great buy right now lol unless they will freeze shorting the oil companies too. hmpfff
September 19th, 2008 at 10:35 am
SPX 1182, 1197, and 1182 are Fibo support now from 1133 to 1260 print so far.
SPX 1239-42 remains bear market weekly-close resistance, so a close below this zone is more likely than not today.
SPX 1258-63 is the 28 and 50 DEMA, which tend to be strong resistance in a bear market.
I’ve heard today that at least one broker is limiting or prohibiting margin trading long or short, which might imply that they are having trouble with cash management via their own accounts or counterparties’ accounts. Beware.
September 19th, 2008 at 10:36 am
Dguard - my free Stockcharts is updating SKF but my Yahoo intraday stopped at 9:30. Not sure what’s going on. Heart attacks and adrenaline aside the Q’s and S’ look like they’re functioning. Given what we thought might happen that’s not bad. Wonder what it’s like in the back room. Whether these things work or not depends on how they’re put together vis a’ vis the SEC ruling. Thoughts ?
September 19th, 2008 at 10:37 am
The uptick rule would be more symbolic than anything else. An uptick is easy to create: Someone would just have to put a market buy on 1 share than a market sell on 1,000,001 shares. Big deal.
Zen,
I saw that, too. Dropped at the open, then kept rising. Still above 30.
September 19th, 2008 at 10:41 am
I noticed the other day that there was a large volume of XLF Oct 24 calls being purchased. This was like 2 - 3 days ago. Now we know why. This game is rigged and the government is helping the fat cats. I officially hate the current administration for the damages they are causing.
We may not get the crash now, but I am debating about moving out of the country soon. I’ve tossed it around lightly in my head, but there are some big cycles out there running that indicate a major calamity in about 4 - 5 years. Australia anyone? Canada is too cold.
September 19th, 2008 at 10:42 am
Rich - what were those limits again 1182, 1197 AND 1182 again ?
George - thanks. That 36pd MA thingee is a great tell. How’ you at poker ?
September 19th, 2008 at 10:42 am
K,
If tax-payers get screwed, they’ll get screwed twice: the more debt the US takes on, the bigger the chances for inflation. The US governent isn’t exactly overflowing with surpluses. Inflation will drive commodities up, including oil.
September 19th, 2008 at 10:42 am
Market topped this AM watch action into the close
Any selling now without shorts buying back creates a vapor!
Very dangerous
September 19th, 2008 at 10:44 am
Actually, not as volatile as I expected so far this morning. The 1 minute bars on ICE are specks of dust. Traders got their $28 and taking the rest of the day off.
Fortunes have been made in this market the past few weeks. If it reverses today, that wokld be incredible. With such a daily gap on SDS and the MACD hasn’t moved up, that’s what I would look for.
September 19th, 2008 at 10:44 am
SDS or QID anyone? i found out i have one more day trade left hehe
September 19th, 2008 at 10:45 am
It looks like SKF was halted after 4 minutes of trading. It seems to have opened at $89 and moved up to $93 before being shut down. Some systems probably show a bid of $0.01 for stocks that are halted. If you wanted to play, maybe puts on UYG would work.
I’m not surprised that a lot of brokers are having trouble given the surge in volume.
September 19th, 2008 at 10:45 am
I meant daily gap on SSO with the MACD not moving up.
Sorry
September 19th, 2008 at 10:45 am
jayj, sounds good to me
September 19th, 2008 at 10:46 am
Rich:
“SPX 1258-63 is the 28 and 50 DEMA, which tend to be strong resistance in a bear market. ”
I have never heard of this, but thank you for sharing. Where did you pick this up?
September 19th, 2008 at 10:47 am
123.31 is R1 in terms of floor pivots today on SPY. I don’t know what that will mean on quad witching but if that breaks the 5 MA is 120.48 and the pivot is 118.55.
Just something to keep in mind.
September 19th, 2008 at 10:47 am
MATT………….thanks again…..i bought ddm at 55.10 wednesday……YESTERDAY when it dropped to 52 i felt like i was going to PUKE….i thought of you AND WHAT YOU SAID ABOUT EMOTIONS and doubled my position…..i sold all at open today….THANKS MATT !!!!!!!!!
September 19th, 2008 at 10:49 am
Bush: “The federal governement should interfere in the marketplace, only when necessary.”
I believe he meant to say “intervene.” Quite a Freudian slip.
September 19th, 2008 at 10:49 am
SDS at 67.50 waiting to be filled. holding over the weekend also maybe. let’s see
well it got queued for over 15 mins on scottrade so the heck with it i guess i won’t be holding anything over the weekend
September 19th, 2008 at 10:51 am
Spy volume on the opening gap was horrible relative to the move.
September 19th, 2008 at 10:55 am
BBT had a high of 45.31 up some $5 from yesterday. Now, it’s in the red almost a buck. Big move for that stock.
If this truly is a bear market, sellers will continue to sell and get out on these peaks? That’s really a question and not a comment. I was just wondering about the nature of a bear market.
September 19th, 2008 at 10:55 am
Matt, I understand why brokers sites WOULD have problems, but it SHOULD not be happening. It is their business to make sure they can handle days like this. This has gone on for over a decade, and is totally unacceptable.
What will happen WHEN not IF the VIX hits 55?
September 19th, 2008 at 10:55 am
I wonder how non-financial companies feel about all of these changes? They will also face higher taxes, and so far the financials haven’t shared the booty.
September 19th, 2008 at 10:59 am
David,
For brokers, I think volume was only part of the problem. The other part is that bid-ask spreads were very wide, and prices were moving rapidly.
Stadiums can handle thousands of people leaving simultaneously at the end of events. However, if someone yelled “Fire!”, then that would be different.
September 19th, 2008 at 11:00 am
Paul F;
That will make it on Letterman.
September 19th, 2008 at 11:03 am
Treasuries trading at a whopping 0.7%, a big improvement but still low.
This is analogous to going from having your arm chopped off to only needing your hand chopped off.
September 19th, 2008 at 11:07 am
phil,
You’re welcome. Nice trading!
Where have you been? Did you get your power knocked out?
Matt
September 19th, 2008 at 11:10 am
K,
Look what Phil did. When he was long and felt like barfing, he doubled down and cleaned up. When you fell panic, that is almost always a screaming buy signal, and fading yourself is almost always the right move.
Make sure to print out a chart of Apple and mark your buy and sell points. Then get it framed and put up on your wall. That’s your diploma. Your education cost you $800, so you need to keep it in mind and make sure that the investment pays off for you in the future.
Matt
September 19th, 2008 at 11:12 am
MATT…..i am in ct now on vacation …..just doing a couple of trades here and there…….38 degrees here last nite….YIKES….it is NOT florida weather..i had to wear LONG PANTS…….horrors………….hope hurricanes stay away for you and my CAT…SHE IS HOLDING THE FORT…while we are away….regards…….phil
September 19th, 2008 at 11:18 am
Sorry, all! Support levels are “1212″ (not 1182 I typed twice above), 1197, and 1182.
1250-52 is very ST resistance, which, if held, projects to the 1212 level for a C or a minor 3 of a new leg down.
Again, 1239-42 is weekly-close resistance for the bear.
SPX 1179-86 is lower weekly support.
Good luck!
September 19th, 2008 at 11:19 am
SKF has been added to the ban on shorts list, according to CNBC. I started filling out my application to the Communist Party while they gave the reasons, so can’t pass that on:)
September 19th, 2008 at 11:19 am
George,
I see what you mean about SSO. Is that a signal that you have used in the past? I’m thinking that since MACD is based upon moving averages that a sudden reversal on a daily chart doesn’t allow enough time for the MACD to reflect the move. On the 60-minute chart, the MACD is positive.
Matt
September 19th, 2008 at 11:21 am
The VIX is still moving up slightly.
eli, could you elaborate?
September 19th, 2008 at 11:24 am
I honestly see that this is the government admitting that it has lost control of the situation. This attempted “fix” to a problem they allowed to be created could end up worse than the problem itself. This could get out of control very quickly.
September 19th, 2008 at 11:27 am
Zen
This is what I have picked up.
CNBC reported that SKF uses swaps and conducts these transactions with counterparties. The cost of swaps has increased, thats part of the problem. The other problem may be the issuer of the swap probably needs to short the financials to hedge. Can’t do that now.
SRS is still buyable, as an ultra short for commercial real estate.
September 19th, 2008 at 11:28 am
George - SSO is slow stochastic or the ETF ?
September 19th, 2008 at 11:28 am
ProShares no longer accepting orders until further notice
Due to the emergency action announced by the Securities and Exchange Commission on September 18, 2008, temporarily prohibiting short sales of shares of certain financial companies, Short Financials ProShares (SEF) and UltraShort Financials ProShares (SKF) are not expected to accept orders from Authorized Participants to create shares until further notice. Unless notified otherwise, shares will be available for redemption by Authorized Participants as normal. The shares of these ProShares are expected to trade in the financial markets today, but may trade at prices that are not in line with their intraday indicative values. :theflyonthewall
September 19th, 2008 at 11:29 am
Matt;
That’s correct. The MACD is always the “Boss” unless the stochastic within it is cycling up or down.
I noticed on the 1 minute SSO there was a good stochastic divergence I took advantage of.
September 19th, 2008 at 11:34 am
Setting up a corrective 3 or C wave here: target 1211-17.
Watch 5m and 15m charts.
September 19th, 2008 at 11:39 am
Next new Etrade baby commercial: “I can’t sell stocks. You just saw me not being able to sell stocks. If I can’t do it, neither can you.” Puke
September 19th, 2008 at 11:42 am
the last two day’s accumulation on SPX is not bottoming quality. today is worse than yesterday
September 19th, 2008 at 11:42 am
SKF seems to be trading again.
September 19th, 2008 at 11:47 am
still no reversal confimation on new lows MACD. also no white candle on SPX weekly. every single bottom except Aug made a white candle. so unless we close over 1250.92 it won’t happen.
September 19th, 2008 at 11:48 am
The MACD histogram is moved by the stochastic within the MACD trendlines. Until such time the MACD histogram changes direction via the stochastic, I follow the stochastic within it.
The trick is to drop down to the 5 minute and see where the MACD is at. I’m in the SDS 5 minute because the MACD trendlines are moving up and the histogram is positive. However, since the MACD trendlines are below the zero line, I know that time frame is trending down while the 1 minute is moving it up. So, along with my 5 minute core, I swing the one minute and see if it goes anywhere. If no trend develops, I’ve made 3 or 4 profitable trades while waiting.
On the flip side, I’m waiting to see if the 5 minute MACD on the SSO is going to turn back up since it is above its trendline which means it is trending up but moving down. There again, I will swing the 1 minute.
A trending (MACD trendlines above the zero and still “open”) MACD 15 minute has to be respected until the pincers close and it prints a negative histogram along with the stochastic in sync. So many times it looks like tankage and price takes off to the upside.
Right now, SSO definately has the advantage since all time frames are trending up.
Kinda convoluted, but it allows me to always be correct. If and when a big move comes, I’ll be there already.
September 19th, 2008 at 12:02 pm
Just a short squeeze. Now who is left to squeeze? Institutions did not back the rally yesterday.
http://www.stocktiming.com/Friday-DailyMarketUpdate.htm
and my chart shows accumulation even weaker today, so far.
the market retraced 80% of this correction based on interference on the free market not on fundamental outlook or earnings growth.
September 19th, 2008 at 12:04 pm
I used to trade only 1 time frame. That’s a great way to learn. Then I discovered the “waves within waves” among the time frames and started trading several of them.
Like SSO 5 minute MACD is going down while the 1 minute just made a good move from 57.40 to 58.40. During this time, the 5 minute stochastic is up at a double top, the MACD is starting or trying to go positive while in its uptrend.
I wait until the 1 minute stochastic crosses its 80, if it does, and get out. Flip to SDS and wait for another setup on it which should be soon because SSO just had its move.
Yep, I’m as busy as a long tailed cat in a room full of rocking chairs.
September 19th, 2008 at 12:04 pm
matt
no need to wast more money to print a diploma.
it is forever imprinted in my memory..
September 19th, 2008 at 12:04 pm
David,
Money appears to be flowing back into stocks from bonds. SHY, TLH, and TLT all seem to have made high-volume blow-off peaks yesterday. What do you think?
Matt
September 19th, 2008 at 12:08 pm
I know one thing… any kind thoughts I had about the current administration and congress (which were admittedly very few) are now completely gone.
September 19th, 2008 at 12:10 pm
My SDS 5 minute is still holding. I will wait until the MACD goes negative before getting out. Still with a profit because I got in early enough. The only thing that could spoil that is a spike down.
On days I am lazy, I just play the 1 and 5 minute and don’t go through all of this. Sometimes just the 1 minute. At first I thought the 1 minute would be too active and whipsaw me all over the place. Then I found a way to prevent that and really, the 1 minute timeframe is all that’s needed. I just use more because the profit potential is greater and I like the activity - so does my broker.
September 19th, 2008 at 12:15 pm
Rich your target may be forming. Is this intraday flag done? Hard to say with quad witching.
September 19th, 2008 at 12:22 pm
They should have just closed the market for a week. Everybody buying and selling today is speculating, because the fundamental are unknown until the new rules are known.
September 19th, 2008 at 12:25 pm
Paul F,
you think the rule change frenzy is going to change soon? That is a very effective way of redistributing wealth between in- and outsiders. under the guise of the public benefit.
September 19th, 2008 at 12:29 pm
George,
What do you do when prices just go straight up. For example, between 11:45 and 12:10 on the SSO chart, the stochastic was pinned in the stratosphere. Do you just have to wait until it dips like at 12:15?
Matt
September 19th, 2008 at 12:40 pm
Matt;
I’m in that now waiting for the stochastic to cross the 80 line WITH the MACD confirming by crossing or printing a MACD histogram below the zero line.
September 19th, 2008 at 12:41 pm
Is anyone tempted to initiate the short position right now ? The market has moved up more than 1000 points in a single day in a bear market. There is a very strong resistance around these levels.
September 19th, 2008 at 12:43 pm
Matt;
During this time, I’m looking at the 5 minute stochastic and MACD. If the MACD turns up (it’s already in a uptrend on that time frame), then I stay in. If it doesn’t, I’m out.
Meanwhile, my 5 minute SDS MACD is still okay on the 5 minute. Still in that one unless it prints below zero.
September 19th, 2008 at 12:45 pm
George,
OK, but if you just walked up to your computer and you saw SSO being so strong, would you jump in? I’m guessing that you would wait for it to come down and then re-evaluate things
Matt
September 19th, 2008 at 12:46 pm
Okay, I’m out of SSO 1 minute (I actually missed it a little cause I was typing). Then switch over to SDS 1 minute which is showing some luv on the 5 minute.
SDS has 1 minute has peaked to the 36 MA, will see what happens there. 5 minute stochastic turned up but not confirmed yet above 20 line or 9 MA.
September 19th, 2008 at 12:48 pm
Now, same thing with SDS 1 minute if it turns down on same conditions, I’m out.
September 19th, 2008 at 12:51 pm
If it keeps doing this cycling up on SDS, it will eventually begin turning the higher time frame stochastics up. That’s how to detect a bottom.
Doesn’t mean it’s this time. But that’s what happens. I just ditty bop through the time frames and see what’s going on. All the while, waiting for it to take me out. I only expect a scalp. A trend is icing.
September 19th, 2008 at 12:54 pm
Yerk,
You steal $100, you’re a thug. Steal a $1,000,000,000 - and then lose it - and the government bails you out.
Disclosure: Unlike a few smart but unlucky investors, I avoided the government screwing me this time: my bottom line has ticked up slightly since Wednesday morning. These changes will likely not harm me personally in the long run, just affect my strategies. So my I am not writing from a position of personal loss, but of social outrage. Despite my posts yesterday evening, I am an optimist. But everytime the little guy gets raped at the expense of the big guys who caused the problems, I get pissed and disappointed.
I’ll wait for the plan before fully judging it…
September 19th, 2008 at 12:55 pm
Even if SDS takes us out here, we’ve made some good change and wait on the next one.
Note:
This same procedure can be done with using higher time frame pairs like the 5/15, 15/60 - whatever, just that the wait time is longer and trading activity is farther between.
Oh, this is how I do BBT and other stocks also.
September 19th, 2008 at 12:56 pm
So the uptick rule was eliminated in order to allow the wall street white house cronies to score some bucks. Then when the movement went wild and the government had to start buying stocks and taking over companies, they changed the rules.
Why don’t they change the rules when stocks go up? Hell, at this point, half of all proceeds should go immediately to the poor and SPCA.
September 19th, 2008 at 12:57 pm
OK, Now, the 1 minute wants to cycle.
Decision time.
We either let the 1 minute take us out or look at the 5 minute to see if it looks good with stochastic and MACD moving up. If so, we may wait until the 5 minute takes us out. If not, exit and go to SSO.
September 19th, 2008 at 12:57 pm
The Call of the Day award for Thursday goes to Dressguard who was warning the shorts that the fix was in all day. Here is an example:
Dressguard Says:
September 18th, 2008 at 1:35 pm
This is a fight the bears can’t win. I am very bullish.
September 19th, 2008 at 1:00 pm
And funny how easy it was to sell XLF back down when it got out of control this morning. Gotta be sure those options expire worthless… max pain baby.
September 19th, 2008 at 1:00 pm
…or, stay in SDS and swing the 1 minute on SSO. I would do that because the 5 minute SDS MACD is still positive. I still have my original entry in SDS via the 5 minute MACD keeping me in.
BTW, these trades are bad examples due to the small and lazy moves.
September 19th, 2008 at 1:02 pm
WTG Dressguard!
I should have bought last night too.
September 19th, 2008 at 1:06 pm
The 1 minute stochastic on SDS turned over but did not make the MACD go negative while the 5 minute MACD is still moving up.
We could have either gotten out of the trade on the 1 minute but not likely because the 5 minute was confirming the move was okay at that time.
At any point we can get out and get back in, if needed.
It’s okay to take profits and repeat.
September 19th, 2008 at 1:11 pm
One last thing - SSO 5 minute MACD is still moving down while trending up. At the same time, the SDS 15 minute is about to go positive. A reversal of some type should be expected.
This is where trendlines are hit and counter moves are made. Just follow the exit rules and a profit will be made. Don’t let it shake us out of a trade if all looks good, but get out if we can’t tell.
We’ve gone up over a dollar on that last SDS move. That’s several dollars in the past hour between SSO and SDS.
Now just watch the SDS 15 minute and 5 minute.
Have fun!
September 19th, 2008 at 1:16 pm
Hi Everyone,
was out this morning and missed all the action!
So qq.. if our government suddenly turns into a communist party, does that make us communists too?
September 19th, 2008 at 1:29 pm
Matt,
thanks for the “Call of the Day Award”. Sold this morning. And although I made some profit I’m not happy because I don’t know how to position myself now. I am 100% in cash. Yesterday’s action was obvious. Today’s action is in my view actually pretty bearish. This is only option expiration action. I wished your job bombs would drop very soon so this massaging from the government and the FED would finally stop. How can I evaluate the market when my lovely SKFs are are put in a straight jacket?
September 19th, 2008 at 1:30 pm
My charts are not consistant between the pairs. They’ve been off all morning.
September 19th, 2008 at 1:35 pm
Matt-
I’m off to a reunion. My daughter rode
the big one all the way up. She’s a
great trader. LBR is her idol.
Take care.
MEB
September 19th, 2008 at 1:35 pm
SSO and SDS getting ready to hit the 36 MA for support / resistance respectively.
Expect a break out or break down.
September 19th, 2008 at 1:39 pm
Dressguard,
You’re welcome. Curiously, the short-selling ban is scheduled to end the night before the next jobs report is released on October 3rd.
Matt
September 19th, 2008 at 1:44 pm
If you’re in SDS, there was an additional swing on the 1 minute of almost a dollar. And a small one on the SSO 1 minute of about .50 cents.
Double-dipping is allowed and encouraged.
September 19th, 2008 at 1:45 pm
MEB,
Don’t be a stranger.
I’m still studying my LBR book. For those of you who don’t know, LBR is Linda Bradford Raschke, and the book is “Street Smarts”. You can get it from Amazon. That is where I learned about the TRIN indicator. I had to modify it to a 3-day average from the 5-day average used in the book because the market seems to have changed character since the book was published. But the book is filled with great things like that.
Matt
September 19th, 2008 at 1:48 pm
George,
The SSO/SDS breakdown/breakout occurred exactly when you said it would. Nice!
Matt
September 19th, 2008 at 1:49 pm
There comes a time when the 5 minute stochastic has to recycle as well as the 5 minute MACD. The same rules apply among the time frames. See what the 15 minute is doing or which ever next-higher time frame being worked.
I find it best that after I move up into time frames to get out of the latest good one when stochastic and MACD turn over. Or, and I keep forgetting, using MA crossovers, trendlines, whatever.
Agan, re-entry is easy.
You may want to do it differently.
September 19th, 2008 at 1:54 pm
When this settles out, and gold gets back to a 20MA, I will become a gold bug forever, as the financial system will take years to recover from this debacle.
Also, anyone notice the horrible performance of MSFT the last 2 days. It could form a very negative candlestick doji today. COuld set up as a great short (if it doesn’t make the list:)
September 19th, 2008 at 1:58 pm
Got out of my SPY puts from yesterday early this morning at a huge loss. As soon as I saw that they were considering banning short sales..but it could have been even worse…I was able to sell them for slightly less than the closing value from yesterday. 100% cash now, took a beating, but I’m still alive. Tough to play the game with the rules keep changing.
Why do this for only two weeks? I would like to know the thinking behind the time frame. Any ideas? Sadly, my gut tells me it was just so it could buy them two more weeks and not part of some master plan.
September 19th, 2008 at 2:01 pm
Matt;
They are fairly reliable although at times they will over- or under-shoot the MA. It may be due to traders using them as entry/exit.
So far so good with the 15 minute SDS MACD. If it clears, that will make a good move up, however, that MACD trendlines are still under the zero line so the probability is lessened somewhat. It will be sensitive to the 5 minute.
At this time, I exit with any 5 minute cross. At times, it will dip down then turn back up. Then get back in on the 1 minute if it reverses.
September 19th, 2008 at 2:03 pm
Wow, looks like the SDS 30 minute is trying to confirm.
September 19th, 2008 at 2:08 pm
The candles on my charts are really small. Anyone else have that problem? Stockcharts and Askresearch both doing that.
September 19th, 2008 at 2:11 pm
Okay so there is a report that this will add $1 trillion dollars to the U.S. debt.
If this is true, who is going to step up to the plate? Umm…
September 19th, 2008 at 2:15 pm
George,
See if there are any axis scaling options. Both of my trading programs are showing normal candles, but the big gap up in the morning might be stretching your axes.
Matt
September 19th, 2008 at 2:16 pm
Matt;
I hadn’t thought of that, thanks.
September 19th, 2008 at 2:21 pm
SPY is now overbought on the 60-minute chart. After the July low, SPY got overbought and worked off the condition by going sideways for three days.
September 19th, 2008 at 2:22 pm
I’m putting a stop on my trade at a profit because I have to step out for a while.
September 19th, 2008 at 2:36 pm
I read somwhere that the cumulation of these purchases by the gov’t is putting us over our debt limit, which is unconstitutional
September 19th, 2008 at 2:44 pm
The XLF is pinned at $22. That’s the strike price of that gigantic slug of options that we were talking about a couple of weeks ago when it seemed impossible that XLF could get to $22. Funny how that happens…
September 19th, 2008 at 2:48 pm
Matt,
Even funnier, the maximum pain for the QQQQ was $44. It hit $43.83 today at the high.
September 19th, 2008 at 2:50 pm
Volume has really dried up on the SPY, less than 20M share over the last 30 minutes. I guess everyone is on hold til next week.
September 19th, 2008 at 2:50 pm
Towelie
y 2 weeks , imho
powers that be r trying to maintain an orderly decline
believing the decline in assets will offset the inflation
created by world demand…i hope they keep control
September 19th, 2008 at 2:56 pm
Matt like I said earlier there was a decent trade of XLF $24 options the other day for Oct when the market was in the toilet.
September 19th, 2008 at 2:57 pm
Of course the government doesn’t care about that kind of manipulation. It’s only the EBILLL!!!!!1!1!! shorts
September 19th, 2008 at 3:06 pm
they went after the shorts during the
“The Crash of 1907″ , fwiw
September 19th, 2008 at 3:16 pm
Is anyone holding any positions going into the weekend?
September 19th, 2008 at 3:26 pm
And why/why not ? Or better yet if things keep rolling over a tad do we get a gap down on Mon ?
September 19th, 2008 at 3:37 pm
Why did everyone go quiet? Usually this board is bristling with activity at this time of the day.
September 19th, 2008 at 3:39 pm
My fault ? Witching hour ? Bar time ?
September 19th, 2008 at 3:40 pm
SEC to consider revising short sale ban in options market-Bloomberg
September 19th, 2008 at 3:48 pm
Who knows Dblwyo .. I guess I’m out of the market right now until I can get a feel for what happens next week. I want to have a good weekend and any position I take is going to make me go nuts and lose sleep.
September 19th, 2008 at 3:52 pm
eli,
If this week doesn’t prove that the big options-trading hedge funds are the most powerful force in the market, I don’t know what would.
Matt
September 19th, 2008 at 3:54 pm
Wow.. check out ABK stock. Who says stocks can’t tank without short selling.
September 19th, 2008 at 3:56 pm
Matt,
You better believe it.
So what’s the call around here then? Will this ignite a rally, or will the markets call the gov’t on the carpet on this one?
September 19th, 2008 at 3:57 pm
And that short selling exemption applies exactly to those people - the people who can manipulate the stock for the options expiration.
But of course that’s legal, right? Other manipulation, like short selling EBIL jerks, are evil.
September 19th, 2008 at 3:58 pm
Charlie - point and point. Nothing like a further downgrade along w/it’s brethern.
Matt - would you care to expand ?
September 19th, 2008 at 3:59 pm
SPY finished the week with a giant bull-pennant pattern on its 60-minute chart that began yesterday afternoon. Being overbought short-term, I wouldn’t expect this pattern to complete with another huge leg up. If the rally is to continue, SPY should consolidate its gains by going sideways for a couple of days before pushing higher. If the pennant falls apart on Monday, then things will get exciting again.
September 19th, 2008 at 4:03 pm
Dblwyo,
It’s a large topic, but options are very leveraged. Suppose that you had enough capital to launch a massive bear raid, drive the market down, and then at the bottom, you sold tons of puts. Then you turn around and start buying again to squeeze all the shorts that built up on the way down. All those puts that you sold at the bottom yesterday as people bought them in a panic go out worthless today and you make a stupendously huge profit.
Matt
September 19th, 2008 at 4:06 pm
Just bought some puts - too many stocks gone up too fast, too far.
The short squeeze in July was over in two days, this time everything moves faster. We are back at the July levels - economy still in the same shape?
September 19th, 2008 at 4:14 pm
Whoever sold XLF $22 calls and $22 puts (or at least who owns them) is really slugging it out in these final minutes.
September 19th, 2008 at 4:22 pm
Every big rally off extremely oversold conditions during this bear was quickly followed by a test or near test of the lows before a more sustainable advance got underway.
I doubt a retest of the lows this time. but about half the huge gains posted the last few days may be erased next week before the rally resumes.
September 19th, 2008 at 4:28 pm
I will watch next Monday and Tuesday very closely. If the market can keep it’s gains or at least most of it, I would see that as a bullish sign. If the market fizzles, it would be rather a very bearish sign and I will buy the next heart attack with a ticker symbol - FXP. Maybe the financials won’t do too bad after they are being bailed out by the American taxpayer. But the world economy is going down nevertheless and Asia will suffer a lot.
September 19th, 2008 at 4:31 pm
Sorry just forgot something. I expected the VIX to go much lower today. Normally when the VIX peaks, it drops like a stone. Not today. Still way above 30. My finger was actually pretty itchy at the end of the trading session to go into FXP/SKF but I kept my discipline.
September 19th, 2008 at 5:28 pm
Dguard - an interesting point indeed. And Rich called the 1260 resistance on the SPX dead on. Did you notice that the SPY close below the open and dropped right at the end of the day ? Doesn’t look like much conviction in this to me; a relief from catastrophe rally. AFter all yesterday until divine intervention time was shaping up as a bad (good) one as well.
Meanwhile in the real world 3Mo Treasures and 3Mo Corporates are still spread wide, credit is tighter than ever and none of the real problems have gone away. And now everybody knows it.
Whaddyayathink ?
September 19th, 2008 at 5:37 pm
If the RFC is the rescue, they should better set it up this time - oh, politics and bureaucrats involved again… Excerpt from Wikipedia:
“The RFC was bogged down in bureaucracy and failed to disburse much of its funds. It failed to reverse the growth of mass unemployment before 1933. Butkiewicz (1995) shows that the RFC initially succeeded in reducing bank failures, but the publication of the names of the recipients of loans beginning in August 1932 (at the demand of Congress) significantly reduced the effectiveness of its loans to banks because it appeared that political considerations had motivated certain loans. Partisan politics thwarted the RFC’s efforts, though in 1932 monetary conditions improved because the RFC slowed the decline in the money supply.”
September 19th, 2008 at 5:55 pm
Dressguard,
It will indeed be interesting to see how much of this gain will hold. I do expect to see a triple digit futures move for the 4th weekend in a row.
In regards to the VIX, it will remain high until the market know Paulson’s/Congress’s solution. Don’t forget that while people call it the “fear meter,” it is actually measuring implied volatility of options, which is one measure of option demand. With so many unknowns, it is natural that it remains high.
Yerk, I wouldn’t worry. I’m sure that political considerations will have nothing to do with decisions made 2 months before a Presidential election.
September 19th, 2008 at 6:12 pm
what did you miss if you took this week off?
http://bigpicture.typepad.com/comments/2008/09/what-did-you-mi.html
September 19th, 2008 at 6:59 pm
Dressgaurd, I think the VIX is now “broken”…at the least it will behave differently than before now that shorting is banned on so many stocks. We just saw implied volatility shoot up now that people can’t short. We also saw stocks shoot up - way up. Perhaps we just shifted our panic numbers higher (e.g. VIX at 50-60 is now panic territory). I suspect it is far more complex than that…I think by the time we figure out the new behaviors of our favorite indicators, this ban will be over.
Just imagine if you had purchased September SPY calls yesterday or this morning, you could have made a fortune.
The bottom line is this ban changes nothing. If anything, liquidity in the market is now lower. Banks are still insolvent. Housing prices are still falling.
September 19th, 2008 at 10:13 pm
Check out item#5 on this website. It is very interesting when put into context with this weeks events.
http://socialistparty-usa.org/platform/economics.html
September 19th, 2008 at 11:17 pm
what will happen when short selling comes back oct 3rd?
they will be anxious and really take the bottom off the market.? or am I wrong hehe maybe wishful thinking
September 19th, 2008 at 11:37 pm
and whoa
Emini Dow 11628.63 +646.63 +6.0 ? are we actually going to test 12000?
September 19th, 2008 at 11:38 pm
I’m wondering if we will get a Feb. like rally over the next few weeks.
September 19th, 2008 at 11:38 pm
Regulators shut down a 102-year-old West Virginia bank on Friday and sold all deposits to Pioneer Community Bank Inc. of Iaeger, W.V. and The Citizens Savings Bank of Martins Ferry, Ohio.
The closure of Northfork, W.V.-based Ameribank Inc. was the 12th U.S. bank failure this year, making it the latest victim of the nation’s worst banking crisis in at least …
i will really change my name to Spammer K hehe
September 20th, 2008 at 12:25 am
Actually Aug may have been like Feb. Maybe this rally will go for a while.
September 20th, 2008 at 7:49 am
As far as I know on an option expiration day the VIX should go down in most cases. Options are settled so implied volatility should go down. VIX is of course distorted by the new shorting rules. But actually it should have gone even more down. Maybe I’m wrong here. I think Matt has better insight into that than me. But I’m very sceptical and the whole stock market - not only the VIX - is distorted and if you want “broken”. There won’t be a buying frenzy. Maybe the markets go up. But this would be another opportunity to go short. Btw, Germany followed the the U.S. and U.K. with a shorting ban, too. Concerted action across the world. I’m getting scared shitless now. Maybe it’s time to go in gold again, though I told myself never to do that again. DOW higher than 11000 is a joke in that kind of market environment. That biyatch should be between 8000 and 9000 points. As I told before - February feeling is back again. It’s really strange. Although I made some money this week I am feeling depressed. How would I feel if I had been in SKF, seeing it going up to $150, hoping it would go to $200 and seeing that thing dropping below $100? I think the bears had enough this week and the bulls don’t feel like partying either. I am very worried of the next little crisis in the stock markets. What will the government and the FED do then? The next crisis will be the panicking big drop and we will see the DOW and other indexed where they belong. At least a 20% drop from here.
September 20th, 2008 at 10:09 am
Dguard - actually think there’s some good sense in your assessment. Not sure it’s Armageddon but were, almost literally, dancing on the edge of the precipice. Go chart IRX YtD, especially on a log scale. Tu the markets went deeper into cardiac arrest worldwide than just before the BSC rescue. Whatever the ideological merits or objections one might have to RTCII the equity markets were about to nose-dive, as we know, big time again and the world credit markets weren’t responding to the de-fillibrator. I’m happy to debate the philosophical pros and cons but much happier to be around to do so. Thu up until 2:59 it wasn’t clear that opportunity was on the table. Fri we could, and can continue, to criticize the dancing bear for being a bad dancer.
September 20th, 2008 at 10:43 am
Dressguard,
From what David Merkel says, it looks like the VIX should be distorted by the short-selling ban:
“Put option implied volatility goes way up. (A lot depends on whether specialists/market-makers can still short…) Because of put-call parity, call implied volatility goes up as well.”
Matt
September 20th, 2008 at 10:57 am
$700 billion huh? gosh maybe i finish school make some money and invest from another country. taxes will be bad. $700 nillion + a great depression yet to come. why can’t we just let the 2nd happen ASAP and not waster trillions like we have?
September 20th, 2008 at 11:07 am
also take a look at this
http://www.ft.com/cms/bfba2c48-5588-11dc-b971-0000779fd2ac.html?_i_referralObject=861117442&fromSearch=n