Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
DJIA new high?
We just might with strategic broker updates
http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060509...
"U.S. blue-chip stocks rose on Tuesday as a broker's upgrade lifted shares of Dow component General Motors Corp (GM.N: Quote, Profile, Research) and optimism grew that the Federal Reserve would signal a pause in interest-rate increases.
..."
OOC does not report price data
It's done by Opra or The Options Price Reporting Authority:
http://www.opradata.com/
Faqs:
http://www.opradata.com/faqs/faqs.jsp
Foreign holdings of US treasuries and equities - plenty to move the markets if they start selling
http://sg.biz.yahoo.com/060428/3/40g1a.html
"foreign portfolio holdings showed total foreign holdings rising to US$6.863 trillion at June 30, 2005 "
Long term debt holdings had grown to $4.118 trillion
Equity investments increased to $2.143 trillion
I guess that means that
Short term debt holdings by foreigners was $0.607 trillion.
Candles
On a daily chart SPX candle is down right scary. INDU is even scarier. Those scream break out except volume is not there. COMPX candle is curious, too.
Bear wish is a gap down and sell off. Perfect island reversals, but it is too much to hope for..
And then this came out...
http://biz.yahoo.com/ap/060505/toll_brothers_outlook.html?.v=11
Real estate and stock markets
I doubt that there can be significant flows of money from real estate to stock markets in general. First of all, stock market daily turn over is way larger than real estate. Real estate cash moves at glacial speeds compared to equity markets. Also, a large cashing in on the real estate markets (which would be requireed to generate enough cash to have any impact on equity markets) would collapse the US real estate markets and take the stock market down, too, because the whole house of cards is build on equity withdrawal, consumer wealth effect and acceptance of debt and feel good factor.
I agree with GLENOs guru: the fed is playing happy and loose with the liquidity. Also, the behaviour of USD and gold/silver support this.
I've been looking to enter short dollar for the past week and I just never feel good about it. Meanwhile, both Euro and GBP keep running up, gold has hardly any real pullbacks. Note also that gold is doing better than the miners, even the unhedged ones.
Some kind of disaster is waiting to happen. Expects huge volatility in everything when the fed statement is published as everyone reads whatever they want to at first, then start having second oppinions about their positions when the fed actually will not say anything meaningful at all.
NDX and COMPX are the drag. At best they can rally as "having" fallen so far already, but they already have had a good bounce.
I expect a huge downdraft sometime soon and then the explanation will be, oops, all the sudden, earnings expectations going forward.
Anyone seen any data on foreign investment flows in the recent months? Given the USD behaviour over the last month or so, this might give a big excuse to sell...
Open interest
All option exchanges always report the same open interest as there is no per exchange open interest. It is reported centrally by the OCC or options clearing corporation:
http://www.optionsclearing.com/
Anyone checked the USD dollar cash and futures contracts against e.g. GBP and Euro...
And I have been scared for shorting dollar and going long gold earlier in the week....
Monday is a holiday here in the UK. And the month is over, so I'd say unless Asia recovers, the US will catch up with the rest of the markets in the world and fall flat on its face and finally significantly breach the support levels.
Negative divergencies
Don't limit youself to looking at the last 3 months, easier to see if you look at at least a year of data. Both SPX and NDX bullish percentage indices seem to be making a series of lower highs and are not yet at extreme low levels.
Yes, you have it correct.
Thanks for, was it Manti, pointing out pattern day trader rules or reg T. You never fall within reg T if you do not open and close a trade more than twice within any five day period. I.e. e.g. you can execute a day trade on Monday, Wednesday, and then again Monday, ... Or you can do two day trades on Monday and you cannot do another one until the following Monday. Once you execute three day trades within five TRADING DAY period you are classed as a pattern day trader.
Note that pattern day trader rules do not apply to futures.
MSFT probably determines the market direction for tomorrow
Iran hangs big over the markets, USD might start causing real problems soonish, the fed didn't say that the end of raises has arrived. It was just away to signal what their next decision will be.
Neither course of action is positive for market in the LONG term. Interest rates go up because inflation or they don't go up because slowing economy.
All of this is short term games. I guess the specialists and investment banks haven't yet been able to offload their inventory...
The question is how many days it takes to erase today's gains.
Correct kind of....
You trade still setttles T+3, but on margin accounts you don't have to wait physically to receive the cash to reuse it since the new transaction also settle also in three day's time and the cash from the sell is available for use the meet the cost of the buy transaction.
Note that even with margin accounts you still need to have either cash or cash producing settlements to meet the net out goings each day.
In other words, even with margin accounts you cannot sell, e.g., shares worth $1000 today and buy $1000 worth of options since options settle T+1 but your cash will not be available until two days later.
Margin accounts allow do not require waiting for settlement
But the feds can cook the figures...
for awhile at least until no one believes them. Already core excludes most products that people actually need to buy every day: energy, food and health care...
Thank you for whoever found the plug
Now, let's make sure the drain does not get blocked again.
Gleno,
You used the tails to draw the trend line. I think more traditional candle stick chart trend line would use the bodies which would move the trend line a bit higher and show a break of it already.
People do do both, but I think ignoring the tails is more common.
I cut the grass...
I guess I can now start watching it grow. What a boringday.If we could just get below 1700 on NDX and 1300 on SPX...
Elliot wave....
I don't really believe in them as the logic it is based makes no sense to me. To me, it amounts to seeing what you want, with reasonable consideration of other technical indicators. And ignoring the times things do not work.
The counts just make no sense to me at all. Over the last 6 years I have followed (not traded but followed becuase their predictions looked good) several people who where making predictions based on elliot waves and for extended periods they looked good.
I receive zillions of advertising mails from Elliot wave Internation since I signed up their free week. It is all selling about things post-facto.
Traditional TA makes sense to a degree as the indicators are based on what actually took place. Elliot waves assume that the price movements follow a certain pattern and if they don't you have to go back and rewrite the history to arrive to a count that fixes the problem that made the earlier count wrong.
Don't take me wrong. There is a value in it: most of the time things have gone this way and so they are likely to follow the same pattern. What I dislike is the quasi religion around the thing.
Is there anyone on the board who pays for any of the services of the Elliot wave international? Could we actually track their calls?
It sounds like they do the normal newletter selling trick: they make zillions of calls, highlight the ones that most were opposed to the common sentiment (look everybody else said that but we said this and we were right!), from time to time they admit making a mistake (look learn from us and we are not just claiming to be right) and most of the calls just fall off the propaganda.
At the end, only thing that matters is whether you make money or not. And how you control the risk.
As usual, I agree with PokerSam...
The real down turn starts when the short term traders fail to get the expected bounce. Remember that in all real bear markets we have had runs of five to 8 days of down one after another. That does not mean that you cannot make money on the long side if you timing is right, but it is hard work.
I increased index shorts earlier and reduced them 5 minutes before close. I, too, expect a bounce that will be sold.
The bear case is pretty much confirmed: just look at the daily charts for NDX, COMPX, SPX, OEX, INDU, TRAN, RUT. And please look at all of them. The bears have the power and now on at best we get short bounces.
It is not clear yet, but we are very close to the point that increased liquidity will actually hurt US markets.
But I will no longer go long: I will reduce short positions at exterme positions but never to neutral as I do not want to miss the big down day. I think we are finally in the area where it is safe always to sell, say, 60-minute chart extremes.
Note that ten year treasure yields went up a lot, but dollar actually hardly gained at all. And gold is again up. I have been trying to find a place to buy gold futures but it just keeps running.
Inflation will be the big problem for US unless all investors are wrong about their bets. Ignore the government statistics that do not take into account anything that people actually need to use every day: energy, groceries, health insurance etc. The smart money is clearly betting on increasing inflation.
A imaginary scenario for the next few days: tomorrow bounce, manic buying at one point, sell off to close slightly positive. Thursday sell off to close all indices below supports and technical damage made clear. Friday free fall to recover, say, 1/3 off the lows in expectations of a Monday bounce. Monday now bounce and selling starts for real. Tuesday the circut breakers used for the first time....
The above is unlikely, but without question a possibility. The interesting thing is that the security council meeting about Iran takes place on Friday and they are putting more and more aggressive statements out. If US demands action on Iran and somehow gets a decision against Iran or does not get a decision and makes noises that they will go alone for another military campaing, all bets are off.
Remember that Iran controls over 5% of the daily crude oil production.
Hi PokerSam,
No one likes their errors publicly thrown at their face. It's pointless. When you feel like wondering on the "other side", do so, but try to post something about the market instead of personalities involved.
Gold and silver were supposed to fall apart but they didn't. Oil, whether crude, heating or gasoline is hitting all time highs. 10-year treasury yields hitting new highs. Geopolitical tensions are reaching breaking points. Dollar seems to be finally moribound.
But... equity indices can still be saved with loose fed money that we no longer get told about. I'm picking puts on three
different fronts cheaply:
- consumer spending related companies and indicies (RTH)
- real estate
- anything that gets hurt with interest rate raises
I think US is about to face the perfect storm of:
- expectations of corporate profit growth is trending down!
- consumers are finally reaching the limit of their ability to borrow for spending and a lot of their debt is at floating rates.
- We are coming to months with rates on the first variable mortgages resetting to reflect the current interest rates environment
- real estate bubble is ready to burst
- companies still have difficulty in passing increasing costs on
- federal government has no ability control the current account deficit
In other words, we are at the top of the cycle and the down turn is just around the corner.
It's nice on paper that core inflation that excludes about everyting that actually eats the salary of the normal person is not alarming, but at the end the Joe and Jane averages make the majority of the economy and they are getting hit with increasing fuel, food and energy costs. They've been able to live off unsecured credit, but that tap is turning off.
Note that if you look at US indices relative to either gold, oil, yen, gbp, euro, the bear market rally hardly exists. It was just asset price inflation.....
Only up about $10 after hours now
(It was up 3.86 or so at the close.) The conference call will probably determine if there is any positive sentiment left for tomorrow. GOOG has been priced to perfection, some of the rubbish that has reacted positively to earnings bounced from significantly lower levels.
We live in interesting times....
'Wasn't there a movie called "Flatliners"?'
Yep, it is actually rather good considering time limitations of the period when it was made.
Whatever GOOG did they up some $20 after hours....
It will be interesting to see what happens next.......
Agree,
The temptation to act is increasing... Probably a short close of business will be profitable tomorrow on account of expiry but whether the trend will reverse remains to be seen. On the other hand, dollar has not exactly partied, gold and silver made new record highs before correcting. The advise is to wait for a couple of months before buying into metals, so that means the investment banks want to load before breaking into new highs...
Feds announcements historically should only affect things for a couple of days...
H&S shoulder on QQQQ 5min?
I think you has to be really hopeful to see it as such. I agree with you that the volume pattern matches, but the neckline is quite titled (it is allowed, though). And then what is the left shoulder? The bump nearest to the head (tilted neckline)? Two two bumps or even three (flat neckline, but then the pattern looks less like H&S?
I'm planning to take a small position in August/September puts at close, but I would not yet start fishing for a top. Tomorrow is probably down and the next week will be interesting.
I'm tempted to buy some far out calls in gold related stocks, too. Real temptation is the future, but I am not sure whether the correction is over yet.
Sell off,
I hope so, but TICK is persistently positive, we need that to turn solidly negative for the real fall to start. It is difficult to reada at the moment, but I tend to agree with you that nothing has changed. Hey, less support since they burned all the stops below...
I wonder if all the stops have been burned?
If we reverse now solidly, the real problems for the markets starts. I am seriously underwater because of the fed notes run up, but it really should be non-event. In fact negative: inflation forcasts have not changed, but worries about the economy are increasing... OOOPS...
But it's option expiry week, so....
OK, who's taking it down now?
PokerSam, can you please pull the plug now as I am short as of a minute ago... NYSE tick is still stong but Nasdaq has been weaker all day long compared to INDU or SPX. It's also option expiry games, so today's action could be MMs "resetting" the base
Trading options
The most important thing you need to know when trading options is what does your broker do with your order: make sure that you understand what your broker does with it and if they cannot answer your questions it probably means that they are no good expect for the buying at ask and selling at bid. There are many option brokers that only direct your order to "main" market center for the option (usually CBOE, Philly, Amex) but do not consider BOX, ISE or others. The most important thing is to know whether your quote will be shown the the whole world if you give a better bid or ask price that is nationally available at the time of giving the order.
If your order is shown to the market and the limit price was somewhere between current best bid and ask, you should get a fill in a liquid options within a few minutes at most. But some brokers do not actually route the offer to a market place that will publicly display the order. Instead it hangs in their systems or the exchanges systems until it becomes marketable.
False attempt to break down or up
It really looked like we broke down and now it looks like we just might break up. NYSE tick 800 and Nasdaq tick 600. In the recent days, big falls have been preceded by a false break out up, but maybe this is the real thing or maybe not.
For now, I will stay short but I am moving from small profit to zero.
NDX 5min looks like it is walking nicely down along the lower BB
But it is very aimless, but feels weak. TNX yield (ten year treasury) is up a good bit, currently in a slim jim, so that supports the case for a down day. How much is anyone's guess.
The results after market close might bring volatility to the close.
Good Friday all markets closed
BOX
Boston option exchange offers price improvements and offers price increments in cents. You broker might not have access to them or they might not route orders there unless you explicitly instruct to do so.
Even if you broker does not have access to BOX, option trade feeds come centrally from Opra (option price reporting authority? forgotten the exact name) and so the last trade will show data from all exchanges that the option trades. Thus, you will see prices in cents even if you might not be able to enter orders in cents through your broker.
http://www.bostonoptions.com/
You can usually get a cent or two off better price than the current best bid or ask if you submit price improvement orders to them at the national best bid or ask on liquid options.
cad92648,
That strategy has some disadvantages:
- the capital required is much higher than straight forward spreads
- you need to factor the cost of commissions which will hurt the returns unless you use an ultra cheap broker like Interactive Brokers
- there is an inherent bias in assuming that the underlying stock will not fall, say, by 30%. If this happens, you have lot of work to do to regain capital loss through option commissions. What if a long term downtrend sets in?
I'm not saying that it is not workable but it is not as risk free or simple as you state. The underlying probably should not pay dividends in order to avoid getting called in situations where you are short calls in the money.
Options after hours - no
Different exchanges have slightly different exact closing times, you can usually get fills still a minute after the cash market closes on some liquid options as long as you are willing to trade at ask or bid.
This is to allow closing positions mostly I guess.
The problem is that it would be impossible to have any idea of fair value of the options without liquid cash market so the option prices would be just pure guesses. Also, market makers (if any where) would not be able to offset the delta of their positions in the cash market. So in effect, an option market after hours would be hopelessly illiquid and probably the trade volumes would not justify the cost of running it.
Posting without replying
You can do that from the view of all posts. There is a button which says something like "Post New Message". It does not exists on the pages used to view messages.
Beerworld, you talking about QQQQs?
I was following the futures and the volume of buys was enought to scare me. I think NDX futures do one of the two things: either they will bounce a reasonable amount or they will completely melt down.
NDX mini has traded in a five point range for the past four hours (1715 to 1720). SPX and DOW minis look like they are much readier to break down. NDX mini gets buyers on the ask whenever things look like we should collapse i.e. Nyse and Nasdaq TICKS are below -500 and INDU and SPX futures are selling off. NDX makes a small move (a point or so) and all the sudden you start seeing ask being hit with 30 to 70 lot orders.
Another break down attempt in progress right now. I've a load of puts anyway, so I don't mind not taking the max in the futures. I'm more worried about getting greedy and ending in a losing trade. Done it enough....
I'm out so it probably will do the second big leg down now
It did look good for a fall for awhile after GLENO wrote that we are probably done for this burn. But the NDX futures are refusing the fall even though the Nasdaq TICK has been solidly negative for ages.
INDU and SPX futures are seem more responsive, but NYSE tick is trying to move and stay positive so I'm out. A lot of work for measly $400.
Options
Since it is a short term trade and countertrend (at least I hope we are setting down trend here finally!), May makes sense. When it comes time to buy, I would buy the closest strike price. So if QQQQ is at 41.60, I would buy the 42 calls. But if QQQQ is at 41.40, I would buy 41 calls. The idea is to have the option delta as close to 1 as possible so the price change in the underlying is reflected similarly in the option price.
If you go further out, you pay more for the time value. If you are further out in the strike price, the options prices move slower.
But this type of trade, you need to get a good entry and be correct about the direction of the market. And when you have profits, don't get greedy: time value, volatility changes can work against you.
Glad you cancelled that order
MAY 43 Calls have a very small delta as they are out of money. Unless you expect us to recover solidly, it could be hard to make money in those.