I don’t have much time to write tonight, but I think that Thursday morning we will find out what the big funds think of the “stress test” news that came out after the bell on Wednesday.
So, I will be watching XLF very closely. On the chart in Wednesday’s game plan, I showed XLF with a 100% extension off of its low. On Wednesday, XLF was able to extend up to the next Fibonacci level (127%) at $8.37. That is also the lower bound of its Gap of Doom, and it immediately fell back.
If XLF can power up into the G.O.D, then we have a hint that the big funds might like what the Obama administration is doing with the banks. And if that’s the case, then SPY may be able to complete its head-and-shoulders bottom.
The futures were rallying a few points after hours, but have fallen back as I write this. So maybe the rallying was just some knee-jerk short covering after the “stress test” news came out.
Also, since we are in the traditional month-end-markup period, you would think that the gremlins would be levitating the futures to drum up some phony bullishness for the open. But they are not, so far anyway. So, maybe that is a hint that the big funds are not enamored of the latest banking rescue.
George,
Sounds like several others have a core position that they trade around. If i recall, it sounds like you’re handling #’s…..size. If you are, that’s not something that can be taught.
Many locals trade one contract; they can’t handle #’s
Dave-
Sorry. Didn’t hear how much money…
only what I posted.
put call .67…still no worries here….need more panic ….or at least some panic …who is buying these calls matt????
Time to spank the bottom?
Seems like as good a time as any…
Hi Sherry/JG/Dave/phil,
Just got in..running a lot of last minute errands today through Sunday before i get back to the rat race on Monday..i think new lows are coming before the end of March…i have not been trading too much..hold a modest energy position in oil and UGA and for now, hoping to pick some assets if/when Sp breaks into 600′s.
Good thing i rarely eat hot dogs…good thing i am here as I have not heard the dog recall on the news…if most people knew how regular hot dogs were made, they would never eat them..really bad stuff..
I’ll catch up later.
JO
Sorry folks…my login name is still JO..my real name is Julio…JO for short as it easier to type !
JO
phil,
It was probably traders betting on the head-and-shoulders bottom. But you can’t bet on such a pattern until you get the high-volume breakout.
Also, the put/call ratio is an excellent indicator, but sometimes it will fail you. The last time it did that was during the Santa Claus rally. There was an excessive amount of call buying, but the market rallied anyway.
Matt
ndx qqqq within a hair of monday low
phil,
i like that it’s in the lead even if it has to catch up level wise
Dave-
Mini-Madoff news was on Fox.
Phil-
SPX two day double top…and it broke
yesterday’s low.
Sherry,
Thank you
Dave
I have an old fart question, and you have struck me as someone that is at least semi-brilliant. If you could give your input I would appreciate it. All I have right now is an outline of a plan and not specifics of when I would enter a position or execute the options. If the basic premise is bad, there is no use working on details.
The premise is to capture the dividend of a stock with as little risk to capital depreciation as possible. I know dividends are not set in concrete, but just for discussion let’s talk about T. If one were to buy the stock, purchase a slightly OTM LEAP put as insurance, and then write OTM call options. I figure you would write the call when the Hourly chart was maybe way oversold on Stoch or something. I would say the Daily but you might not get that in this downtrend on a monthly basis.
It looks like you could sell OTM calls on monthly basis that would end up covering the cost of the LEAP put, and pocket the Divvy. If you were in jeopardy of getting the stock called you could roll the call option up.
What is wrong with the outline here, I know I am all wet, just because I always am.
String
dave……junglegirl …… looks like we are going to have to go down more than i thought….put call shows accepance of rally before it even starts .. lol….if this wave 4 is over now ….not sure it is yet….it prob is 4 of 3……of 5….i know you are more bearish than that but i will need to see more info…regards phil
GDP & puchasing mgrs tomorrow mrning
great idea..I will feed those tainted hot dogs to the bulls…that will help them want to sell and tada..they become bears just like us..bears would eat those things and everything would be just fine..we have stomachs of steel..
did anyone see the Prechter bloomberg interview ?? ..it was good..his shorter term wave counts seem to finally have come fback to reality so far….i follow him for the sentiment and economic analysis but i did like the interview..
JO
Stringm,
know a little bit; it’s not my thing (i’m mainly a mkt timer), but will address after 4:15 eastern
Regards
Jo-
I heard about the recall on the station I
love…740 AM…a Canadian station. Did
not think you had those problems.
not crazy about the drop so far; there are some mid-early to mid-month cycles, but don’t know how we get there at this crappy rate
my main wish is to see some confirmations on daily charts
I’m adding to my shorts here.
Notice the head and shoulders on the 5-minute from yesterday to today
sherry, we have had our fair share of serious food scares…not sure about how our food guys compare to the US but i do not expect perfection …but the thought of dying after eating a hot dog is freaky ! I usually listen to 680 news a couple of times a day..after that i put on one of my many CD s and escape the bad news i keep hearing these days..
are you adding to short positions today or any bounces ?
JO
for once I beat matt on going short 3hrs in advance
once I saw skf fill 2 gaps. one on 17th and one today. that felt good enough (it also bounced off a fib at 145 or so. times are crazy.
The market lives to fight another day. I hope it has a good cut man.
Nicely done K!
CNBC says Dell’s earnings report is “ugly”.
matt………are you talking your book?????? lol
the mkt doesn’t seem to care about DELL #’s
Friday could be hairy, at least on opening if GDP is far worse than estimates, which methinks is exactly what is going to happen. can anyone say -6 or 7 % GDP …
JO
Cramer was a primary catalyst in knocking the market down today. The market was teetering when Cramer came on CNBC around 2:30pm and said that Obama was going to turn the health-care companies into non-profit organizations. The XLV, along with the rest of the market nose-dived immediately, and the XLV was the worst sector today, down -4.84%.
I was watching the market teeter and had my finger on the short button, and as soon as Cramer said that, I pulled the trigger. I got filled just before the waterfall. That was fun. Thanks Cramer!
JO,
Yes, a big gap down would be the market’s way of making sure the maximum number of shorts are denied entry into the next leg down. That’s why I piled on at the close with short ETF’s and options.
Matt
Jo-
I use buy/sell stops. Am currently short.
I usually trade 2 S&P 500 futures contracts…
more under special cases. I’ve been working
on improving my buy/sell window. I use
time fractal…and am talking to other traders
on adjusting time to market conditions. When
I go long, I buy 4 contracts…closing my shorts
and am long 2 contracts. When I go short, I
sell 4 contracts…closing my longs and going
short 2 contracts.
Tomorrow if the S&P 500 futures break today’s
low by 3 ticks, I will short 1 more contract for
a quick ride.
afterhours i know it is no big indication but skf is making me mad HAHA for the fact that i was going to sell at $162 for $100gain today.
Stringm,
One problem is slippage because you’re dealing with simultaneously moving targets. Normally, if i want to buy/sell/credit/debit, i just care about the differential. For instance, let’s say i want to buy abc for 90 & sell xyz for 93, i just care about capturing a credit of 3. I don’t really care about whether that’s done by buying abc for 1 & selling xyz for 4 OR buying abc for 101 & selling xyz for 104. What i want to avoid is doing it at a difference less than a certain desired credit.
When that’s done with certain option or futures strategies one can tell the broker the credit or debit that one wants & then it’s up to the broker to get it done at that credit or debit. The details are their responsibility.
When you are doing it, you are dealing with shifting #’s. The more variables the greater chance of slippage.
Secondly, there is the potential problem of margin requirements. Proper spread trading minimizes margin so that credits offset debits as much as possible.
Third, there is a problem of liquidity spreads. Most thinly traded derivatives almost require one to hit the offer to buy or hit the bid to sell. And the spread betw the bid & ask is often prohibitively wide. The longer one goes out timewise the greater chances that this problem is exasperated.
Other than that it’s simple
Not to discourage you, but your general idea is doable with certain considerations.
http://www.optionstrategist.com/ is one of the best books on option strategies. Larry use to be with my old firm Thomson, McKinnon, Auchincloss, & Kohlmeyer. Auchincloss was Jackie Kennedy’s step-father. http://en.wikipedia.org/wiki/Hugh_D._Auchincloss
dave… thank you for the sir. Nobel geht die Welt zugrunde. (which roughly equals “there’s nothing like going out in style”)
Stringm,
the stuff in http://www.optionstrategist.com/ just fries my brain. I’m smart enough to buy the book & give it to a truly smart person like Yerk, phil, or JG & then ask them everytime i have a question.
K, if you get $100 gain in SKF, take me out to dinner.
dave, don’t hide your light under a bushel. You’d have to correct me too often, better give it to Matt. Or K, who actually will read the book as he is a student.
$100 in 10 shares george
if you are in Boston sure George let me know.
yerk i mist have missed something. which book is mentioned?
yea yea yea I am a student but everyone should find time to read more
good one Matt, that is as close to a crystal ball as you can get. Sherry, sounds like you have a good plan..i have not traded futures but maybe i should look into it..they seem like a better fun trade than options..has anyone had experience with CFDs ? I hear they are like mini futures on stocks, etc..but they strike me as a product/strategy that bad traders eventually gravitate to..i’m sure 1 in 10 people who trade them make money but just didn;t get a good feel for them..i think the main company offering them is cmc markets..
JO
Dave
Thanks for the input. I have Larry’s book McMillian on Options. The different strategies Butterflies, Iron Butterflies, Collars, Strangles, etc. fry my brain as well. I will work up a sketch of T, with the idea I am looking at and post tomorrow. You can shoot it down then
String
K, dave is giving away books on options for others to read and answer Stringm’s questions. I thought you as a dilligent student would be the best recipient.
Larry is writing books? Didn’t know that
ohh now I see that post sorry and thanks for clarifying
Looks like the hunnic hordes are gathering to storm over Eastern Europe again… Will the Catalaunian Fields be in Brussels this time?
we’ll find out in japan reports in 5mins LOL
well looks like life is good in Japan.
Phil, on dollar, thanks.
Nikkei and Kospi up. It won’t last long.