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August 13th, 2008 at 8:57 am
BDI +1.5%. The historical record now stands at 23 days in a row. I will no more bug you with a daily update of this index. Weekly updates will do.
August 13th, 2008 at 9:44 am
XLF has lost the $21 level, which I regard as bearish, so I have blown out the SPY calls that I bought yesterday afternoon at a loss and rolled into some IWM puts (IOWTV).
August 13th, 2008 at 9:46 am
-Larry, I don’t mind daily updates, but that is just me.
-Trading wise i added qid, @ 39.65, to get to a 3 % allo (equiv of 6 % short position)
-Matt, IWM puts, interesting !
August 13th, 2008 at 9:46 am
Larry,
+1.5%? So BDI finally ticked up? Where can I find the bdi chart?
August 13th, 2008 at 9:58 am
IWM puts, I added sept 74 puts just now @ 2.30
figured I’d give it a bit more time.
August 13th, 2008 at 10:05 am
The tape is holding up. The NYSE TICK has been in an uptrend since 3pm yesterday afternoon. Don’t know how long that will last…
The XLF should have some support at $20.50.
August 13th, 2008 at 10:06 am
As I mentioned in my post last night, I bought some USO puts as it approached its intra-day downtrend line this morning.
August 13th, 2008 at 10:09 am
Now that SPY has lost the $129 level, it seems likely that it will drop back to its uptrend line. That would be around $127 if it reaches that line today.
August 13th, 2008 at 10:25 am
How much room do you typically give a trade like IWM puts Matt?
Thanks.
August 13th, 2008 at 10:27 am
As a true believer in the Global Credit Crunch I was fascinated by the daily fall in BDI. Weekly updates should do for now.
http://www.dryships.com/index.cfm?get=report
2. The Russian Bear is not finished in Georgia. Be aware folks. As Churchill said: “The problem with the Russians is that you have to buy the horse twice.”
http://www.guardian.co.uk/world/2008/aug/13/georgia.russia7
August 13th, 2008 at 10:28 am
And why not play SPY puts instead given you above comments about the 127-129 range? Thanks again.
August 13th, 2008 at 10:33 am
XLF low of the day first hour may be initial support, at least on a 5 minute basis. Will watch vol going down to it to see if a break is in the cards.
So far vol is picking up. Buying is stepping in for now as well at that level.
If MER goes red, that may be a sell sign for the XLF as well, I beleive.
August 13th, 2008 at 10:33 am
Hi Hedgehog,
IWM seems to have more air under it than SPY, so I’m thinking that it might correct more, but so far I’m wrong about that.
Since I bought August puts, I can’t give the trade much room. I intended to buy September puts, but I am so used to buying the front-month, that I clicked the wrong thing.
Matt
August 13th, 2008 at 11:11 am
Want to add to my XLF short, but it just isn’t backtesting any significant levels today. Just passed last support of $20.56, possibly on way to $20. Looking to add on test back to $20.65
Vol will be even greater than yesterdays at this pace.
August 13th, 2008 at 11:26 am
Thanks Matt
I closed my IWM Aug puts on the rollover and rolling to Sept to be safe.
August 13th, 2008 at 11:43 am
Apple is struggling to stay green. If it corrects, that will be bad news for the Q’s.
August 13th, 2008 at 12:07 pm
The market is now more oversold short-term than it has been for quite a while. So, I am not pressing short bets here. I just took profits on my IWM puts. I also made a quick profit on some QQQQ puts, but I have sold those too. I will be watching for some sort of reversal pattern to appear on the charts, though I don’t see anything yet.
August 13th, 2008 at 12:08 pm
VIX up to 22.
2. The Russians are not finished in Georgia.
August 13th, 2008 at 12:24 pm
i sold my IWM puts @ 11:30, I had an order in for a small profit - as I was not able to watch the market till now.
Once again, small better than none, thanks Matt for the suggestion !
August 13th, 2008 at 12:25 pm
I have also blown out my USO puts. I violated my own rule of trading ahead of a government report and took a beating for it. That loss wiped out the gains that I made on my IWM and QQQQ puts.
August 13th, 2008 at 12:27 pm
I’m waiting and watching, with virtually no money in the market either way. I think the market is headed down by October, but I’m not sure about the next few days.
August 13th, 2008 at 12:29 pm
The NYSE TICK count just clawed its way above zero on the 5-minute chart for the first time since 11am.
August 13th, 2008 at 12:30 pm
Paul,
I agree. Once the “collapsing oil” excitement is over, the market should make new lows.
Matt
August 13th, 2008 at 12:39 pm
Matt………still watching……..vix of 22 after 2 down days spells COMPLACENCY………….. i would not be suprised to see the bottom drop out of this market…………what say you?????????????????
August 13th, 2008 at 12:43 pm
MATT………bought some gold DGP earlier this am……….it may need one lower low but we are close to the end of ABC correction……..look for lower low inside daily boll band for final low……then up up up……..how do you see it?????
August 13th, 2008 at 12:46 pm
phil,
I don’t have an opinion on gold at the moment.
If you look at a stochastic on a 60-minute SPY chart, you will see that SPY is very oversold. It’s very unlikely that the market would crash here, though it is not impossible.
Matt
August 13th, 2008 at 12:47 pm
As USO has stabilized, both SPY and XLF have broken above their intra-day downtrend lines. The bounce is dependent upon oil, so who knows if it will last.
August 13th, 2008 at 12:47 pm
DONT CRASHES OCCUR FROM OVERSOLD CONDITIONS IN A BEAR MARKET MATT??????????
August 13th, 2008 at 12:49 pm
sorry about caps
August 13th, 2008 at 12:59 pm
phil,
I am not predicting a crash here.
Matt
August 13th, 2008 at 1:00 pm
As USO has moved up, SPY has held steady. We may get a rally soon, though there is another unemployment-claims bomb likely to go off tomorrow morning.
August 13th, 2008 at 1:06 pm
Phil, careful with Gold. We have a global credit crunch and contraction of money. Gold does not go up in recessions.
This crunch is much worse than people think. Much worse. Check out the July 2008 Senior Loan Officer Opinion Survey. Google News it.
August 13th, 2008 at 1:08 pm
phil,
A crash needs a catalyst. If Russia topples the Georgia gov’t, that could provide one. I don’t see today being more than a 2% down day.
The VIX may be on the low side, but it has been creeping upwards. Every bear market will have rallies, so 22 isn’t too bad during a rally. Below 21 is low, 20 is a buy, and 18 and down is ridiculously optimistic. I don’t doubt that the VIX will be above 25 again before October, but it also could be below 21 by next week. If you buy Oct 10 VIX calls, you’ll make money, but their may be better opportunities the next two months.
August 13th, 2008 at 1:12 pm
USO should hit resistance around $95.
August 13th, 2008 at 1:14 pm
I can’t believe how well stocks are holding up in the face of this USO surge. Quite amazing. Maybe nobody believes that the oil bounce will last.
August 13th, 2008 at 1:30 pm
WTF just happened? just bought 1000 IWM and 10 calls on it. not sure if i should take profits…..don’t see any news flow. is this due to oil falling?
August 13th, 2008 at 1:49 pm
Tony G.
Not sure, but I saw a headline stating Syria and Lebanon had resumed diplomatic relations (1st time in 60 yrs) -> oil goes down -> IWM goes up.
August 13th, 2008 at 1:53 pm
mkt holding on to recent gains despite oils pop back up.
August 13th, 2008 at 1:54 pm
SPY was able to tag $129 on this bounce. That could be a back-test of the breakdown. On the other hand, SPY is in a bull-flag pattern and may break back above $129 after some consolidation.
August 13th, 2008 at 1:55 pm
I see USO very close to day’s highs. How much did oil pop back up ?
August 13th, 2008 at 1:57 pm
Larry,
Agree about the credit crunch, which will offset the dollar strenght bonus for small caps. Small caps are more likely to go bankrupt in any economy (than large caps), so long IWM isn’t an “easy money” trade that the market seems to think.
August 13th, 2008 at 2:03 pm
GOLD
On a tech basis, the price of gold has remained above the weely 65 MA for at least the last 3 years, and many are watching this level. It stands at 822 as of today.
It may once again provide support, remember though, this is a weekly MA so it could drop down and then up to finish above 822 by COB Friday.
I am in the GLD, starting position at $81.40
August 13th, 2008 at 2:20 pm
SPY is eating away at the resistance at $129. If USO continues to fall, SPY should run higher.
August 13th, 2008 at 2:41 pm
Matt, I did the same thing with USO puts, not realizing there is a govt report on inventories today. pretty much wiped out my other profits.
August 13th, 2008 at 3:12 pm
The spin on the oil/gasoline invetory report is total BS. The market does what it wants.
The gasoline inventory is down - for 1 week. Big deal. It is the same as it was 1 year ago, but US gas demand is dropping like a rock. Refinery capacity is DOWN 5% from 1 year ago. The supply is down because the refiners are responding to reduced demand. Regardless of whether you think GLOBAL gas demand will rise or fall, US demand is clearly falling.
This is why I stopped trading the USO: it has become a trading vehicle like Gold, and not a real measurement of supply and demand macroeconomics.
http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html
August 13th, 2008 at 3:20 pm
SPY did indeed get the oversold bounce that I was looking for. I was able to catch most of the intra-day rally with some calls, but it wasn’t enough to make up for the loss on the calls that I bought yesterday afternoon.
However, I have learned an important lesson: once you have an oversold or overbought condition, you have to wait until you actually see a reversal pattern develop on the charts before you trade. I expect this will help me greatly in the future.
August 13th, 2008 at 3:23 pm
SPY may hold above $129 and go even higher, however, I am back to 100% cash. The last two Thursdays were not pleasant. The unemployment-claims data series is volatile, so the number tomorrow morning could be anything. But given the tightening credit conditions, there’s no way I will hold any long positions in front of the report - even if the market is still short-term oversold.
The market was able to recover from the last two claims-bombs and keep on rallying. I’m not so sure that it can continue to do that.
August 13th, 2008 at 3:30 pm
Normally, to be certain of a valid breakout from an ascending-triangle pattern, you want to see prices advance at least 3% beyond the breakout level. QQQQ and IWM have done that, but SPY has not. To go 3% beyond $129, SPY would have to hit about $132.87 and it hasn’t gotten anywhere near that.
So, this rally is still officially suspect from a technical perspective. And I think there is a good chance that SPY’s breakout will prove to be false in the final analysis unless XLF can get itself turned around - and there is no sign of that happening. In fact, XLF just keeps deteriorating.
August 13th, 2008 at 3:51 pm
matt……as i said before………i would not be surprised to see the bottom fall out………..i have no skin in this game at present…..just an observation
August 13th, 2008 at 3:52 pm
I’m with you, Matt. No telling what the report will show, and more important, how the market will interpret it and react.
August 13th, 2008 at 3:59 pm
Given the extreme short-term oversold condition, SPY should have been able to manage more than a three-hour intra-day rally. So, the bounce off of the $128 area this afternoon has a “last hurrah” feeling to it.
Also, the market rallied the last two Wednesdays - not fearing the unemployment-claims report on the following Thursday. By losing the $129 level in the final minutes of trading, SPY is telling us that those animal spirits are gone.
I may be reading too much into today’s action, and the weakness may just be a consequence of the bounce in commodities, however, the DBC is almost exactly where it was last Wednesday, and the same is true for oil. Today’s selling also picked up volume over yesterday.
So, the market is going to need some good economic news soon to keep this rally going. And I think such news is going to be hard to come by.
August 13th, 2008 at 4:01 pm
Two more notes:
1) Goldman got another downgrade today, but you guys may have noticed that before. Hopefully, the news will be “good” tomorrow and a nice shorting opportunity will arise.
2) relating to what phil has said today (and what I mentioned on previous days), a plunge is much more likely when the VIX is low because the catalyst (the big bad news) is unexpected and not close to priced in. Of course, I also said not to expect big upward moves with low VIX but we’ve had two the last week, so what do I know…
August 13th, 2008 at 4:07 pm
phil,
If you look back at the time stamps of your comments, you will see that you turned negative just as the market bottomed around 12:15. If you had gone short there, you would have been in instant pain. Also, a couple of days ago, you felt that the Q’s were going to the moon just as they were topping out.
Do you see how that works? They way the market “feels” is almost always the opposite of what it will do next. That’s why I spend more time looking at oscillators than I do at prices. Watching prices only will make you crazy.
Matt
August 13th, 2008 at 4:15 pm
Paul,
That GS chart is a mess. It’s almost certain to test its July low. Thanks for reminding me to keep an eye on it.
And yes, I think a bounce off of a “good” claims report tomorrow may be a good shorting opportunity. I need to study it some more, but I think that this rally may have peaked.
Matt
August 13th, 2008 at 10:36 pm
Matt - Excellent insight price vs oscillators …..which oscillators do you typically utilize in your trading…
So far the discourse on here has been useful…..hopefully the flamers won’t infiltrate.
JJ
August 13th, 2008 at 10:54 pm
Hi jayJ,
I use the STEM-MR model at SentimenTrader.com, and keep a slow stochastic on all of my charts.
I’m glad that you like my blog,
Matt