Wednesday’s Trading
Has the rally off of the July low been just a short-squeeze? It sure looks that way. Take a look at this animated chart by John Authers of the Financial Times.
Watch the comments for updates throughout the day.
Has the rally off of the July low been just a short-squeeze? It sure looks that way. Take a look at this animated chart by John Authers of the Financial Times.
Watch the comments for updates throughout the day.
September 3rd, 2008 at 1:53 am
Could open down tomorrow and move up.Reversal of Tuesday
September 3rd, 2008 at 1:59 am
Lets watch how Europe trades tonight
September 3rd, 2008 at 6:26 am
Europe getting whacked today
September 3rd, 2008 at 7:16 am
Don’t point your finger at Europe. US will get hammered today. Maybe
Futures are down at least. Really strange: two bid down days and futures still down! Are the bulls that weak now?
September 3rd, 2008 at 7:47 am
FTSE has been down over 2% so far today. Hardly any bounce to the upside off the lows. On a 60 min timeframe this mkt has now turned bearish.
September 3rd, 2008 at 8:13 am
does not look good
September 3rd, 2008 at 8:20 am
It’s not pretty out there. My shorts in Europe (mostly oil, shipping) have fantastic gains over the last week.
2. Car sales in India fell in August yoy. Yes you read that right. Global credit crunch. Money is tight and credit expensive.
September 3rd, 2008 at 9:19 am
Baltic Dry down 5% to 6,150. Almost down 50% from peak in May.
September 3rd, 2008 at 9:49 am
Hi Gang!!
September 3rd, 2008 at 9:55 am
I was wondering why LEH isn’t down more on the Osprie news:
“State-run Korea Development Bank has proposed to pay at least $4.4 billion for a 25% stake in U.S. investment bank Lehman Brothers Holdings Inc. (LEH)”
September 3rd, 2008 at 9:58 am
What was that bounce?
September 3rd, 2008 at 10:04 am
July Factory Orders: 1.3%, prior revised higher to 2.1% from 1.7%
was expected to be come in @ 1%.
September 3rd, 2008 at 10:09 am
hmm market does not know where it wants to go
September 3rd, 2008 at 10:19 am
On LEH
Details are sketchy. I’ve seen numbers from $4.4B to $5.5B. I’ve also seen the deal as LEH issuing new shares for the deal (as opposed to KDB buying existing shares) which would lead to share dilution.
September 3rd, 2008 at 10:34 am
The NYSE tape is creeping upward a bit, but the NASDAQ is the problem. Breadth there is positive, but the TRINQ shows a good deal of selling which isn’t showing any sign of abating.
September 3rd, 2008 at 10:36 am
Matt were do get your numbers for the trin
September 3rd, 2008 at 10:54 am
XLF not pulling back even though the SPX pulled back from 1281. Hmm.. strong financials? Is the worst already baked into the prices?
September 3rd, 2008 at 11:04 am
yawnnn what does auto numbers come out
September 3rd, 2008 at 11:06 am
Pooch,
I get them from my brokers. The symbols are usually $TICK, $TIKQ, $TRIN, and $TRINQ, though there is some variation from system to system. However, I doubt there are many systems that don’t have them since they are very popular indicators. So, you should be able to find them.
Matt
September 3rd, 2008 at 11:13 am
Pooch, here’s today’s events:
7:30: Challenger job cuts for August…more increases? This indicator, which focuses on plans to trim payrolls rather than actual cuts implemented, has shown increasing signs of deterioration in recent months. Year-to-year changes in announced job cuts accelerated from 2.4% in Q1 to almost 40% in Q2 and to 140% in July. There is no consensus forecast for this indicator, which is only loosely connected to changes in payrolls, claims, and other labor market indicators because of uncertainties about whether the cuts will eventually occur, if so when, the location of workers to be sacked (in the United States or abroad?), and seasonal adjustment issues (Challenger is not adjusted).
10:00: Factory orders for July….increase, reflecting report for durable goods and higher costs of petroleum. The new information in this is for nondurable goods, which constitute slightly less than half of the total, plus any revisions for durables from what was published about ten days ago. With the advance report for durable goods orders showing a 1.3% increase and higher petroleum prices likely to affect the nominal value of nondurable goods, we estimate a 0.9% increase in total factory orders. The consensus for this report is +1.0%, not a meaningful difference.
Late morn/early afternoon: Vehicle sales for Aug….a modest increase from a very low base? We look for an annualized selling rate of 12.9 million in total lightweight vehicles, up from 12.5 million reported for July. Consensus is close to this, at 13.0 million. Although these figures represent a sequential improvement, they are weak by any other 21st Century standard.
12:30: Boston Fed President Eric Rosengren speaks on the economy. Rosengren is one of the more moderate regional bank presidents, having focused many of his initial speeches since taking over as head of the Boston Fed about a year ago on the housing crisis in that part of the country. In his last meeting as a voting member of the FOMC in 2007, he dissented in favor of an even larger rate cut than the 25bp implemented at that meeting. His next rotation is 2010.
14:00: Federal Reserve beige book….further signs of weakness? The last report started out noting that “the pace of economic activity slowed somewhat since the last report,” and went on to comment on sluggishness in consumer activity in all districts with some acknowledgment that tax rebates had “boosted sales for some items.” The tone of commentary remained mixed to sluggish for most sectors. Companies reported higher input costs but generally found it difficult to pass those costs on into retail prices, while the labor market was weak. Although some data in recent weeks have been to the firmer side of expectations (notably the revision to second-quarter GDP, the trade balance, and home sales), consumer spending and the labor market remain areas of concern. The Minneapolis Fed is overdue for the duty of preparing the summary.
Source: Goldman Sachs
September 3rd, 2008 at 11:15 am
This seems to be the original source for the LEH news (seems to be one stage above rumors):
http://english.chosun.com/w21data/html/news/200809/200809030008.html
CEO of HD says that the housing bottom is within sight (2009), yet after no action when his stock was hammered (May, June, July), he decided its time to sell in August. Actions speak louder than words…
http://biz.yahoo.com/t/61/5918.html
September 3rd, 2008 at 11:18 am
Thanks guys appreciated it
September 3rd, 2008 at 11:34 am
Q’s are getting whacked again
September 3rd, 2008 at 11:36 am
Are we reaching an oversold condition in the Qs?
September 3rd, 2008 at 11:40 am
i don’t know but they are ready to break $45.Whats with the surge of selling??
September 3rd, 2008 at 11:43 am
Pooch,
Yup, AAPL went red as well.
Retail (XRT) trying to hold up the S&P, without much support from other sectors. I guess the thinking is that oil’s drop will help the consumer. If we ever see $3 gas, I’ll buy that theory.
September 3rd, 2008 at 11:44 am
I’m having the best day of the year today. Wow.
2. Selling? Maybe that hedge fund or others.
Quiet in here.
September 3rd, 2008 at 11:46 am
Q’s just weakly bounced off of $45.01Gots to see what goog is doing
September 3rd, 2008 at 11:50 am
Goog also red if goog breaks 461.90 there is nothing but under utill 421,there were up around $5 today
September 3rd, 2008 at 11:58 am
44.97currently, the low for the Q’s in July was 44.81
September 3rd, 2008 at 12:12 pm
Something is going on today. No panic, but selling. How’s volume?
September 3rd, 2008 at 12:22 pm
Q’s 84,354,516 (Above Avg)
September 3rd, 2008 at 12:22 pm
dressguard
The Q’s are in short-term oversold territory, but the TRINQ won’t quit. And that means that there is still quite a lot of selling pressure on the NASDAQ. You should track the TRINQ as closely as you do the QQQQ. Until the TRINQ turns down, it is probably too early to go long for a bounce.
Matt
September 3rd, 2008 at 12:26 pm
Larry,
SPY and QQQQ volume are about the same as yesterday. Both the VIX and VXN are up again, so there is a bit of panic.
Congratulations on your day so far.
Matt
September 3rd, 2008 at 12:29 pm
feels like the mkt is due for a stupid reversal….just to mess around with people.
September 3rd, 2008 at 12:50 pm
Ford Aug 07 -> Aug 08: -26% sales
“We expect the second half of 2008 will be more challenging than the first half, as weak economic conditions and the consumer credit crunch continues,”
http://biz.yahoo.com/prnews/080903/clw087.html?.v=101
——————
Larry,
Glad you are doing well. It looks like we are entering deflation (commodities falling in union with other sectors), which is confusing the heck out of CNBC.
Seems like the beige book will be big. SPY volume seems to mathcing yesterday at midday, and I expect it to increase after the Beige Book is released. After the crushing turn-around yesterday, bad news from the FED will finish this rally, breaking the 1260 mark. On the other hand, good news could get us past 1300.
September 3rd, 2008 at 12:53 pm
With the TICK improving, but the TRIN worsening, I would say that the small-fry are buying, and the big dogs are using the opportunity to sell.
September 3rd, 2008 at 12:56 pm
Another excellent day of trading. Racked up some big gains buying 2000 shares of sds and 2000 shares of xlf at support. i am very tempted to take profits since the s&p is hovering near the support level of 127, however, it feels like this may be the week that we actually break through support, as even good news can’t give the mkt a boost. thoughts?
September 3rd, 2008 at 1:00 pm
TRIN and TRINQ have leveled off over the past half hour, so maybe we have seen the peak of the selling. The short-term model that I use just hit a deep oversold reading, so if the market wants to break 1260, it might do so after a bounce that fails to reach 1300 over the next couple of days.
September 3rd, 2008 at 1:03 pm
Tony G,
Congratulations on your day so far. I made a big chunk of money with some POT puts myself.
Matt
September 3rd, 2008 at 1:13 pm
I’m long for a trade with a few SPY calls. If SPY falls below $127, I’ll barf them up.
September 3rd, 2008 at 1:48 pm
The market jumped a bit when GM announced that sales were only down 20% rather than the expected -29%.
September 3rd, 2008 at 1:49 pm
Matt, nice work on the POT puts. did you see Gartman on Fast Money last night talking about commodities and the $? I had a limit to buy some SPY at 127 but it ran away from me and i chose not to chase it. what’s your game plan if the mkt rallies on the beige book? i’m thinking of just buying some SPY to hedge out my short exposure. i really want to keep my SDS as a core position as i think Friday will be good for the shorts.
September 3rd, 2008 at 1:58 pm
Noticing positive divergence on the 30 min SKF on the MACD. Wondering (hoping) something becomes of it. Frustrating that financials seem to be strong. They are the source of all these problems.. but I guess the reason this market is going down is because of a global downturn.. not financials (at least not the reason right now).
September 3rd, 2008 at 2:05 pm
You still in with POT. Great. My gains ytd was almost wiped out when GS came with that 149 oil forecast. Got it back plus plus. But it was a humiliating experience.
2. GS will stick to their forecast, but will it have any effect next time they scream?
September 3rd, 2008 at 2:13 pm
Beige books out. Nothing new.. Economy remains very weak. Firms pulling back from hiring.
Market doesn’t seem impressed, but then again.. too soon to tell.
September 3rd, 2008 at 2:20 pm
Matt,
TRINQ 3DMA shows extreme oversold at 2.45. It has happenned only twice in the last 12mos. Time for a bounce.
September 3rd, 2008 at 2:23 pm
The beige book didn’t seem to have anything new. It basically confirmed that the credit crisis is not over, with every district tightening credit for the first time. Most areas were weakening overall, but mfg was improving for non-housing related items, mainly due to exports.
Rick Santelli nailed it: the FED is trying to soften the fall, but will just succeed in elongating it.
September 3rd, 2008 at 2:33 pm
Matt, are we oversold right here? what are your thoughts?
September 3rd, 2008 at 2:36 pm
looking back at a chart from July 14, the maximum number of consecutive down days has been 3. this will be our third down day if the mkt closes lower.
September 3rd, 2008 at 2:37 pm
Yes, we are oversold. The market should be able to bounce. I am long for a trade as long as SPY holds 127.
September 3rd, 2008 at 2:39 pm
Larry,
You may have felt humiliated, but in reality you are probably outperforming a good number of legendary investors like Bill Miller.
Matt
September 3rd, 2008 at 2:40 pm
Has XLF bottomed? I mean I heard about insolvency risks and some kind of news on bad mortgages, or maybe I was dreaming?
September 3rd, 2008 at 2:49 pm
Zen,
I haven’t heard anything concerning insolvency or bad mortgages (good or bad). I very much doubt that XLF has bottomed, but I am less certain about when it will occur, especially with the election coming up. My gut says October.
September 3rd, 2008 at 2:59 pm
Thanks Paul. Actually my references to insolvency risks and mortgages were sarcastic. I’m just amazed that financials can hold so strongly.
September 3rd, 2008 at 2:59 pm
the buyers can’t keep the mkt up here. i think we break 127 on s&p and go lower today.
September 3rd, 2008 at 3:02 pm
Tony G,
I could see a bounce, particularly the Qs. However, before the two down days, we had 6 up days in a 7-day trading period. Also, the last bear leg down started with 4 down days in a row.
September 3rd, 2008 at 3:13 pm
Paul, thanks, I’m just thining about risk mgmt here…..don’t want to lose gains. i sold half my shorts for the day but will add opportunistically.
September 3rd, 2008 at 3:15 pm
Where did the Volume go? I don’t expect that to last.
September 3rd, 2008 at 3:21 pm
The TRIN may be rolling over, but the TRINQ is not. So, tech is still the boat anchor.
September 3rd, 2008 at 3:29 pm
WTF! caused that rally? i noticed it was led by financials. was there some stupid cnbc announcement?
September 3rd, 2008 at 3:30 pm
Last 1/2 hr of the day is usually when the big boys come out to play.
September 3rd, 2008 at 3:41 pm
Tony G,
When the market it oversold, it can rally for no reason at all.
Matt
September 3rd, 2008 at 3:43 pm
The TRINQ is finally releasing its death grip a bit. Should be a strong close.
The XLF has been freakishly strong over the past few days. George liked it last week, and he was dead on. Great call George.
September 3rd, 2008 at 3:44 pm
Been trying to sell my Sept q puts now for 45 minutes.Sells not going thru. Ameritrade has had me on hold for 10 mintues unbelievable frickin market better gap down tomorrow …ya right
September 3rd, 2008 at 3:46 pm
Yeah.. I can’t believe that the XLF has been so strong too. If not for financials, this market would be really in the tanker now with crashing techs.
Matt.. what do you see in store for the market tomorrow? Up/Down or are you neutral? Did you unload most of your short position?
September 3rd, 2008 at 3:47 pm
Freakishly strong as in 6 consecutive up days for XLF. I don’t remember that ever happening. As Zen said, I guess the troubles must be over…
September 3rd, 2008 at 3:50 pm
Wow.. did you guys see the current Treasuries rate?
under $37 on the $TNX. Still looking like people are fleeing from equities to safer things.. Not sure if this is a pause before the storm to come or if it is a base that is being built for a rally to 1320 to take place.
Anyone have any thoughts?
September 3rd, 2008 at 3:51 pm
Let’s not forget XLF’s partner in crime: 5 straight up-days for XHB
September 3rd, 2008 at 3:53 pm
You said it Paul. I have no idea what is going on right now. Maybe best to just sit out on my SKF position for now.
September 3rd, 2008 at 3:53 pm
Well naturally it will shoot up because I couldn’t unload my puts
September 3rd, 2008 at 4:06 pm
Pooch,
Sorry to hear about your problem with AmeriTrade. I know exactly how that feels. One great thing about trading futures is that you can make trades around the clock. I like to trade options, but sometimes not being able to trade after hours is a real killer.
Matt
September 3rd, 2008 at 4:11 pm
Matt;
I’ve not been able to trade much today. But did get into BBT, QID and XLF (thanks for that one!) with small positions (quickie day-trades). I have construction going on here at home and needed to give some direction off and on all day. I can’t trade with ANY distraction. I don’t even answer the phone . I multi-task well but not with trading.
I’ve been looking at the blog but no time to type.
Hope all is well.
George
September 3rd, 2008 at 4:26 pm
Gee lucky me I get comission free trades for options for the rest of Sept
September 3rd, 2008 at 4:28 pm
George,
I know how it is with phones. I keep my ringers turned off while I’m trading. I’ve been tracking your BBT - another great pick.
Matt
September 3rd, 2008 at 4:29 pm
Thanks Matt
September 3rd, 2008 at 4:32 pm
Pooch,
When TradeStation’s system crashed and I couldn’t take profits on a short trade, they didn’t do anything at all for me. At least AmeriTrade is doing something for you.
Maybe you will catch a break from the unemployment-claims number tomorrow, or any of the other 9 reports/announcements.
Matt
September 3rd, 2008 at 4:35 pm
Charlie,
What is the $TNX? I can’t find that symbol. I’d like to track treasuries as there does indeed seem to be a flight to safety going on.
Paul, how do you track them? I’d like to have a symbol that I can use in my charting programs.
Matt
September 3rd, 2008 at 4:37 pm
yeah maybe …Hey Rich you still out there you still looking for 1230-1240 S&P
September 3rd, 2008 at 4:38 pm
Charlie,
I took profits on all my shorts yesterday except for my POT puts, and I took profits on those today. I made a good daytrade with some SPY calls today, and took profits at the close. So, I’m 100% in cash now.
If the unemployment-claims number is not a disaster tomorrow morning, I will probably go long in the futures. I will have my mouse hovering over the buy button when the report comes out. The tape is strong, so the market should be able to move up more without any disastrous news.
Matt
September 3rd, 2008 at 4:38 pm
Paul F,
XLF was up even 7 days from Sept 27 until Oct 5 last year. You should have shorted it on the last day…
September 3rd, 2008 at 4:40 pm
^TNX?
September 3rd, 2008 at 4:48 pm
Pooch, i had the same problem trying to sell SKF yesterday. my orders were labeled pending while the stock was gapping lower. that was unf#$%ingbelievable.
Matt, nice job today. i also closed out of my SDS and XLF trades. i bought some SPY when it looked like there was resistance around 129.4 but i set a 129.19 stop and got shut out. this mkt is so volatile that its hard to execute trades like that. i should have waited until it was closer to the more important resistance level of 129.
September 3rd, 2008 at 4:53 pm
Hey guys,
here:
http://stockcharts.com/h-sc/ui?s=TNX&p=W&b=5&g=0&id=p98062758023
it tracks the 10 year treasury note yield. Usually falling yield = demand or a flight to safety which is typically bad for equities.
September 3rd, 2008 at 4:54 pm
Matt,
Here are the treasury indexes in Yahoo:
^IRX 13-WEEK TREASURY BILL
^FVX 5-YEAR TREASURY NOTE
^TNX 10-YEAR TREASURY NOTE
^TYX 30-YEAR TREASURY BOND
Your broker may have different symbols - mine does.
Yerk,
I see down days on Sep 28 and Oct 3 (yahoo finance). I still have my SKF. I expected $21, not too surprised with $22, but $23 or $24 is a stretch.
September 3rd, 2008 at 4:57 pm
BTW.. SKF is below the 200 MA. Historically, it has bounced back shortly after piercing it in the past.
Will see if this holds true this time or not.
September 3rd, 2008 at 5:00 pm
SKF/XLF: i think the financials will remain well bid until Lehman’s recap is announced. the financials wont fall until they have to raise money again. if the deals receive a lot of interest, xlf will hold up. if the major banks have trouble raising money, skf will rocket higher again.
September 3rd, 2008 at 5:32 pm
Paul F
you’re right… But why do they point candlesticks green when the price went down?
With regard to refinancing, it’s not only the US banks looking for some spare cash:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/09/03/cnsls103.xml
September 3rd, 2008 at 5:38 pm
noticing huge after hours volume on XLF. Huge block of 6 million and 3 million shares traded.
I wonder if that is just a program resolving the trades for the day as the price didn’t move much given those trades.
September 3rd, 2008 at 6:22 pm
Yerk,
Ameritrade (and maybe others) colors the candles based solely on opening and closing price.
1) close higher than open and previous close: solid green
2) close higher than open and lower than previous close: solid green
3) close lower than open and previous close: hollow red
4) close lower than open and higher than previous close: hollow red
Kind of annoying. Should be:
1) close higher than open and previous close: solid green
2) close higher than open and lower than previous close: solid red
3) close lower than open and previous close: hollow red
4) close lower than open and higher than previous close: hollow green
Just my opinion
September 3rd, 2008 at 6:49 pm
The September NASDAQ 100 closed lower on Wednesday as it extended last week’s decline. A short covering rally tempered
early losses and the mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are oversold but
remain bearish signaling that sideways to lower prices are possible near-term. If September extends this week’s decline, the
reaction low crossing at 1801.75 is the next downside target. Closes above the 20-day moving average crossing near 1911.92
are needed to confirm that a short-term low has been posted
September 3rd, 2008 at 11:53 pm
Folks, the sheeple hedge funds that follow GS are falling apart on falling commodities. Financials will soon report more losses. More liquidations and fire sale of assets to meet capital requirements. On next leg up, maybe it’s time to consider to sit short for a month with a small part of your portfolio.
My target is VIX above 35 intra-day in October.
Repeat disclosure: I’m a terrible trader and therefore make only 3-4 trades a year.
September 4th, 2008 at 12:06 am
Paul, Charlie,
Thanks for the treasury stuff.
Matt
September 4th, 2008 at 1:49 am
NP Matt,
hopefully you can make more sense of it than me and thus help me out in return
All I know is that when rates decrease, it is caused by demand in the treasuries, which basically means that a flight to safety going on.
Perhaps you can elaborate on the significance for me as I am still trying to find the best way to correlate the direction of the market vs. the expected yields on treasury notes.
September 4th, 2008 at 2:43 am
Larry,
or to put it that way: Give your shorts enough time until expiration.
I’m not sure whether this already is a result of the credit crunch. They speed of the downward reaction in commodities seems more like an unwinding of speculative long-positions. Credit crunch will eat its way through the economy more slowly (and far more painfully). Hedge funds will not be the only ones getting bitten by this move downward. When are the financial gamblers reporting next time?