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You spoke too early probably
NYSE TRIN finally made above 1.1, now 112. NYSE TICK -681. Nasdaq trin up to 0.54 from about 0.46, Nasdaq TICK -312.
Who's blocking the drain? Someone, pour the draino in!
At least TRIN is trying to move up, hovering between 1.08 and 1.09.
Possible bounce or stop clearing?
NYSE TICK is not to my liking, above 800. NYSE TRIN has been a bit aimless. I had hopes when it moved from 1.02 to 1.09, but now it is back to 1.05.
Boring market....
I think $TRAN says we go down:
Sorry, just could not help myself
"My kids are 3 and 7 months and on different sleep schedules though, so it was hard to get out freely."
What scientific breakthrough has shortened human gestation period to four months?
Entering position too early
and checking whether the paint is try. A few ticks that might help a bit:
Be aware of the general market conditions: are you planning to trade in the direction of existing trend? Are you trying to take advantage of a countertrend move? Is the market in a trading range? Is the market near resistance/support?
Then:
1) Know your trading style: are you entering an intraday position for a very short term trade that you will exit immediatly if the market goes against you? If so, you risk less if you mistime the entry. But you lose. Accept that sometimes you lose. If you cannot accept occational loss, you probably will miss some good entries on account of being afraid to enter at the right time, particularly, if you have a string of two or more losses behind you.
2) If it is a longer term trade, particularly, multiday trade, consider what are the risk vs. rewawrd. Are you trying to catch the exact top/bottom for few cents while risking that the change of the trend has not taken place yet? What is your reason to enter right now? What could happen (good/bad) if you wait for a bit longer?
And when trying to play trend changes which are the most dangerous: sit on your hands! When you first want to enter, ignore the feeling. Ignore it until you cannot any more be out of the markets, then walk away for a short while, and check your reasons why you want to enter now. What reason do you have for the trend to finish and reverse now? Write them down, so you can go back and analyse afterwards, particularly, if you turned out to be wrong.
It's all about getting better at this...
I think it means one of two things,
unfortunately my answer is not very helpful:
1) either we are actually reversing the down trend
2) this was just a few day wonder caused by short covering, options expiry week that always has higher volatility and the unexpected PPI numbers; fundamentally nothing has changed and technically it is the same but we are very close to changing some daily technical indicators to the upside.
If I was a betting man, I think we will just turn most TA indicators to call for a change of the trend to bull trend and very soon afterwards sell off hard. Or this is the start of the summer rally which has failed to materialise so far.
We are coming to seasonally extermely weak period. The classic question is: is it different this time?
I'm in the same boat with you Gleno, I even added some Apple puts yesterday with the expectations of selling the position down on the pullback but I did not have the chance. The reality will hit the markets eventually, but it can take a long time. Try not to make assumptions about the exact time frame unless you can nurse your postion every second and you have well defined rules about getting out.
That said, if we have an up day tomorrow, I am getting very tempted to start selling calls on some way rich stocks that have high volatility priced into the options...
Shorts need to be covered never as long as
1) you have the margin to cover the position
2) your broker allows you to pay the in-lieu dividend. Some brokers force you to cover when some number of days before the record date as they do not have facilities to deal with in-lieu dividend payments (you owe the owner of the shares whose shares were borrowed to cover your short sell the dividend amount because they are still entitled to the all and full ownership rights even though your broker sold their shares for you)
3) proxy fights as these force real accounting of who owns what
Just taking a lok at Yahoo statistics, the short ratio is 2.3 (11 July) which is not excessive so you cannnot hope for short covering rally.
PokerSam,
Congratulations, I've been away most of the day. Saw the first hour after open and the last 10 minutes. I think I was really lucky as I avoided trying second guess when to go short Or micro manage my positions. At open I still thought that we might repeat the day before.
Lots of catching up to do. Looks like we had a quite a lift off.
Definitely did not expect this. I fully expected a down day. And I most definitely didn't expect the PPI numbers to look like they did.
INDU is back to resistance for fourth time. I really would not want to see it to break above that. SPX the same thing. NDX performance was stellar, and back to resistance and above 50 day MA. COMPX is in a resistance zone that is about 30 points wide. RUT had also brilliant day. I do wish I had been long at least a bit. The saving grace is my EUR and GBP positions that did well.
I can feel the hurt of the people who are in August puts. I have some September ones in various stocks, but my main positions thankfully are in October to January period. Now I want a very fast trip to that 39.20 so I won't lose on my September puts
Sold some RUT futures short at close for a short-term trade, just a pullback game. Unless CPI numbers contradict and kill this completely, I expect us to have a up to flat day. Thursday afternoon is possible start of down, otherwise, next Tuesday.
No question, the buying was strong. Only thing you could take an issue with is that the volume was not that exceptional, but that's splitting hairs. I plant to stand aside mostly until option expiry is over.
And now I can believe that we might reach your target of 39.20. And damn it, you are good if we get within +/-.10 of it
As for your question about what would make the market sell off, at this point I don't know when but when it finally start doing it, I can forecast with a pretty high confidence that the following reasons (that everyone already knows) will be quoted with vigour in the media:
- Slowing growth in China, decreased demand of commodities (anyone got ideas when it is safe to go long gold? At this point, I would not touch it yet because temporarily the inflation expectations within US do not seem to be a worry; gold is an inflation hedge plus commodities have been overbought big time, so some correction is to be expected)
- Profit growth: saw some starling reports on this today, expectations of the profit growth for 2007 and 2008 are not pretty. But it does not matter right now because we are taking a relief from the fear of the fed.
- Consumer spending (saw another new figure in the last two days on Bloomberg: US consumer spending is 70% of US GDP instead of 60% as it has been quoted as long as I can remember)
- Inflation
The PPI numbers are a real mystery. It would not surprise me that by tomorrow someone has digest the full release and figured out that the reason they came so low is decreased demand --> slow down.
I wish all the best for you and your trading...
I am not saying that what you are doing is wrong. I am saying is that I do not understand it and I do not see how the near term projections it seems to require can become true. We agree on the medium to long term projections.
Why can we not try to talk about the aspects of the market and try to both benefit? As I have said before, I am not excluding that what you forcast will happen, but I see decreasing probability for it.
There are a lot of undercurrents. The market, without any question, tries to screw the majority most of the time. But at the end, the price action cannot be hidden. What we do with it, is up to each and every one of us.
One of the things I have no explanation is the action in QQQQ Aug 38 calls last week. I can give several meaningless explanations for it but none of them really make sense. It was without any question a high volume event and decreased the OI. But I cannot really see why either someone expecting the markets move up or down would have done it. It is just plain mystery to me. Probably not an important one, but it is a plain mystery. If the OI would have gone up, then I could make reasonable explanation for both up/down view of the market, but I do not understand why someone would just close that amount of open positions at that point.
PokerSam,
Your big long/medium term guide is ewaves which I have repeatedly said that I do not believe because rationally it makes no sense to me. But we can just agree to disagree. I've seem enough people to do brilliantly for extended periods using ewaves and then they believe their own counts when markets are screaming that they are wrong and they keep at least publicly holding into their position and compounding their mistake. I do not pretend to know where markets go, but I see no technical or fundamental or seasonal justification for trying to reach much higher. In fact, technically the situation keeps getting worse.
I am sorry that I referred to
the ewaves as rubbish which you took a strong and dogmatic exception including sending me a private message that was less than reasonable. If you go back and read the message that you responded to, you will find that I didn't actually call the whole ewaves rubbish as I am not in a position to judge it. I called rubbish what the Ewaves internationl promotes: they try to promote the mechanism as not only something combines the market action and psycology of the participants into something that predicts how masses behave. They are making vague claims about using ewaves to forcast social actions i.e. political and social actions. I guess really what they pretend to sell is equivalent to psycohistory of Asimov's books. For non-scifi fans this is a good summary:
http://en.wikipedia.org/wiki/Psychohistory_(fictional)
It's interesting fiction but it is fiction.
There is no question, you are a good trader, but as I have said before, please, have some levels which tell you that it is time to abandon the current count because I cannot see it happenning. Don't lose your shirt on dogma. As someone else said, the price is only thing that matter and breath indicators are good addition to it: you cannot go much further up if majority of stocks are actaually breaking down which they are.
Last year you were convinced that we'd fall apart but it didn't take place, we were going into seasonally strong period. Don't go chasing the phantom bounce to 39+ when the market is falling apart around you. Trade the price not what you think will happen.
Everyhing tells me as you agree we are at the edge of a cliff, but I unlike you, I do not expect us to be able to make much more head way. We disagree on the time scale. Not in substance. And we disagree n the method of reaching the conclusion at least in part.
In all of the mistakes that I have made, this time around what have allowed me to make tons of money is simple: being less greedy and more aware of money and risk management. I use futures for short term trading and option for longer. Futures allow efficient actions whether intraday or swings of a few days. Options allows me to make most of the spikes against my long term view. I'm trading anyting between October and January. September is a month that I view like trading futures: you have to be reasonably correct in you short term forcast.
I am not saying that we cannot reach your targets, but I just see diminishing probabilities. Be careful. How on earth are we going to climb up when everything is breaking down: just look at DOW and two stocks that are most often used to support it: CAT and MMM.
Or IBM. Does that look like it is going to launch higher? Today was nothing but sucking more fools into the downwards spiral. You do know that mutual fund cash balances are at all time lows which means that they will be forced sellers if people start redeeming their holdings? And we are approaching seasonally extremely weak period. In fact, seasonally we only have until Thursday to make any headway and then it is down.
Still don't believe that we can reach the projected highs
I expect this week to be bad and for it to continue next. There will be bounces but they are sold. I was lucky as I reduced my positions on Friday and reshorted today.
I recommend everyone taking a look at the post:
http://www.investorshub.com/boards/read_msg.asp?message_id=12589609
The charts updated, the commentary not but it is actually still very much valid. The breath is falling apart and as I reminded PokerSam 3 weeks ago or so, breath indicators are no wear near real bear market bottom levels. They are at levels where a bounce can be sustained in non-trending market, but not in a bear market. Look at the increasing number of stocks falling below 200-MA. Look at NYA. Oh and are Transports in a bear flag? SPX behaviour today is most significant.
Bear market one day wonder....
PokerSam, it is a statistical difference of 16.5 basis points or
0.00165% so you will not see it without going through lots and lots of data and actually counting it.... The paper is worth a read if one is interested in technical aspects of the option markets. The important thing in the paper is that it does not say WHICH strike price the underlying prices will move to i.e. it does not say anything at all whether the prices move towards or away from the max pain, just that there is a small but statistically quantitfiable bias to settle on exact strike price which means both calls and puts at that particular strike price expire worthless.
I agree with you that maxpain is over hyped. Yes, there is increased volatility, but I have not seen any consistently tradable movement towards max pain that could not be attributed to other reasons such as nornmal counter trend correction or just normal volatility. People attribute movements to whatever theory they want to believe.
On the contrary....
"making quantitative calculations on technical market data increasingly difficult"
You misunderstand what quantitative trading is. It is all about making money about market mispricing one instrument w.r.t. to another and buying the too cheap one and selling the too expensive and making money of the quantitative price difference without having any market exposure. (According to whatever model you are trading the short and long positions should leave you with no market exposure; since you have no market exposure, you can pour tons and tons of cash into the position without worrying about exposure. It is quite common for these strategies involve several instruments.) The problem is that market determines the prices of instruments, not the theoretical models and when panic takes place, the mispricing not only can be sustained but can accelerate, i.e. LTCM collapse.
But it is all about NOT having any market exposure in any way. It makes no difference whether the markets move up or down. And volatility without a trend offers more opportunities for quant funds. In trending markets, straightforward short or long funds do best.
No volatility and no trend makes money to no one... Just churn and commissions and even then people start losing interest....
It's a good paper to read but read it before using it to show anyting about prices moving towards max pain
because that is not what it in any way says...
The main point is that on the day of expiry the prices tend to settle exactly at some strike price instead of in between of strike prices. It says nothing about how prices behave either the days before the expiry or even the last trading day. It purely studies about the closing prices.
Looks good for further down - but who/what's holding NDX up?
OOOps, no one is any more The mini NQ futures just didn't want to fall the same way as the rest of the minis....
Anyway, cash indices are below the levels that will cause further falls according to this:
http://biz.yahoo.com/tm/060810/14614.html?.v=1
"A break...and selling will pick up. Dow 11,080...S&P 1262 and NASDAQ 2052.
Longer term, we alert you to these vital levels...that if taken out, you may stick the fork in the market as another leg down...and possibly a nasty leg...will ensue. Start with the Dow at approximately 10,680...a place that has held for quite a while...S&P 1219...NASDAQ 2012...and add in the Russell 2000 at 670."
PokerSam,
I am not calling for straight down. I was long from the bottom for a period and got out with a good profit but early. But there is nothing right now that would make me long (that is long when I am not sitting and nursing the position every second of it; I do go long intraday when we are at extremes and the downtrend stalls, but only if I am at the screen until I close the position). I short and cover a bit of my positions in extremes like what was offered today in London. But surely what we have had since the lows of the year count for some kind of correction. Only worry I have is that the path down looks so obvious that I am starting to doubt myself.
I am with Gleno and I cannot see much upside. And to be honest, even if we reach 39+, it will not hurt me too much with my current positions. It's just that I really, really want to jump in on the short side with everything....
General market
Worth reading:
http://biz.yahoo.com/tm/060810/14614.html
and check the charts of those companies mentioned. Basically, I am expecting a huge down day soon to start the next leg of bear market and I simply do not believe in a signicant rally before next leg down any more.
Let's look at the indices.
Let's start with NYSE, the broadest indicator of market health:
Does that look like it is about to launch or at least fall to the support below somewhere around 8100 to 8050, about 100 points below current levels? And look at the MACD which is in the process of crossing. The histogram tells a story. Note that 8200 area where we are is dividing line, breach that significantly and bear case is made. On the other hand if we can make above 8300 I would start worrying.
The problem is that if NYA falls to support, I doubt we stop there because the damage to other indices is going to too much and we will just start seeking support below.
What about the internals:
Is that a double top? Notice we closed marginally higher, but bullish percentage index fell. You would expect the largest market breadth health indicator to at least improve marginally if we are about to have a significant rally.
This actually supports the bull case a bit more. Notice the upward trend line of lows since June 12.
NYSE stocks above 50-day MA:
That looks distinctly bearish. Falling below 50-day MA is considered a sell signal for a stock. And being below 200-day MA is indication of being in down trend:
In other words, the number of stocks in established downtrend is increasing.
SPX:
OOPS, it closed up and bullish precentage closed down:
NO McCellan for SPX, but
Opps.. sell signals increase on a up day. And this is scary:
COMPX next:
That chart does not really tell me anything. You could call the actions since Jul 17 a big bear flag, Today's candle could be view as retrachment. Notice how the top of the body is about half way yesterday's candle. MACD? All I can say is that look at the MACD at the beginning of July where it was going up but the histogram bars where not increasing. The actuall cross took place about 12 days and about half of the fall later.
OOPS........
That's a bit better, but I cannot really see any support in it for the bear or bull. It's closer to the behaviour I would have expected from the other indices. But this does not look healthy at all:
NDX:
This is actually improving:
If the bear case can be trusted, it better turn down soon. On the other hand the real question is will it make a lower high or double top?
That's less problematic for the bears.
Bear with me for two more indices. First, the semiconductors:
I wish I could get the other indicators for this but I didn't find them at stockcharts.
Lastly, and I think this at the end determines the market because the members have just a heavy weight in the indices:
In short, I am worried because the bear case is so obvious and easy. It cannot be that easy, can it? The market will screw you over?
I am extremely tempted to take large short position on the market. I am short already, but in a conservative way. But I am getting very, very tempted to plunge.
General market
Worth reading:
http://biz.yahoo.com/tm/060810/14614.html
and check the charts of those companies mentioned. Basically, I am expecting a huge down day soon to start the next leg of bear market and I simply do not believe in a signicant rally before next leg down any more.
Let's look at the indices.
Let's start with NYSE, the broadest indicator of market health:
Does that look like it is about to launch or at least fall to the support below somewhere around 8100 to 8050, about 100 points below current levels? And look at the MACD which is in the process of crossing. The histogram tells a story. Note that 8200 area where we are is dividing line, breach that significantly and bear case is made. On the other hand if we can make above 8300 I would start worrying.
The problem is that if NYA falls to support, I doubt we stop there because the damage to other indices is going to too much and we will just start seeking support below.
What about the internals:
Is that a double top? Notice we closed marginally higher, but bullish percentage index fell. You would expect the largest market breadth health indicator to at least improve marginally if we are about to have a significant rally.
This actually supports the bull case a bit more. Notice the upward trend line of lows since June 12.
NYSE stocks above 50-day MA:
That looks distinctly bearish. Falling below 50-day MA is considered a sell signal for a stock. And being below 200-day MA is indication of being in down trend:
In other words, the number of stocks in established downtrend is increasing.
SPX:
OOPS, it closed up and bullish precentage closed down:
NO McCellan for SPX, but
Opps.. sell signals increase on a up day. And this is scary:
COMPX next:
That chart does not really tell me anything. You could call the actions since Jul 17 a big bear flag, Today's candle could be view as retrachment. Notice how the top of the body is about half way yesterday's candle. MACD? All I can say is that look at the MACD at the beginning of July where it was going up but the histogram bars where not increasing. The actuall cross took place about 12 days and about half of the fall later.
OOPS........
That's a bit better, but I cannot really see any support in it for the bear or bull. It's closer to the behaviour I would have expected from the other indices. But this does not look healthy at all:
NDX:
This is actually improving:
If the bear case can be trusted, it better turn down soon. On the other hand the real question is will it make a lower high or double top?
That's less problematic for the bears.
Bear with me for two more indices. First, the semiconductors:
I wish I could get the other indicators for this but I didn't find them at stockcharts.
Lastly, and I think this at the end determines the market because the members have just a heavy weight in the indices:
In short, I am worried because the bear case is so obvious and easy. It cannot be that easy, can it? The market will screw you over?
I am extremely tempted to take large short position on the market. I am short already, but in a conservative way. But I am getting very, very tempted to plunge.
General market
Worth reading:
http://biz.yahoo.com/tm/060810/14614.html
and check the charts of those companies mentioned. Basically, I am expecting a huge down day soon to start the next leg of bear market and I simply do not believe in a signicant rally before next leg down any more.
Let's look at the indices.
Let's start with NYSE, the broadest indicator of market health:
Does that look like it is about to launch or at least fall to the support below somewhere around 8100 to 8050, about 100 points below current levels? And look at the MACD which is in the process of crossing. The histogram tells a story. Note that 8200 area where we are is dividing line, breach that significantly and bear case is made. On the other hand if we can make above 8300 I would start worrying.
The problem is that if NYA falls to support, I doubt we stop there because the damage to other indices is going to too much and we will just start seeking support below.
What about the internals:
Is that a double top? Notice we closed marginally higher, but bullish percentage index fell. You would expect the largest market breadth health indicator to at least improve marginally if we are about to have a significant rally.
This actually supports the bull case a bit more. Notice the upward trend line of lows since June 12.
NYSE stocks above 50-day MA:
That looks distinctly bearish. Falling below 50-day MA is considered a sell signal for a stock. And being below 200-day MA is indication of being in down trend:
In other words, the number of stocks in established downtrend is increasing.
SPX:
OOPS, it closed up and bullish precentage closed down:
NO McCellan for SPX, but
Opps.. sell signals increase on a up day. And this is scary:
COMPX next:
That chart does not really tell me anything. You could call the actions since Jul 17 a big bear flag, Today's candle could be view as retrachment. Notice how the top of the body is about half way yesterday's candle. MACD? All I can say is that look at the MACD at the beginning of July where it was going up but the histogram bars where not increasing. The actuall cross took place about 12 days and about half of the fall later.
OOPS........
That's a bit better, but I cannot really see any support in it for the bear or bull. It's closer to the behaviour I would have expected from the other indices. But this does not look healthy at all:
NDX:
This is actually improving:
If the bear case can be trusted, it better turn down soon. On the other hand the real question is will it make a lower high or double top?
That's less problematic for the bears.
Bear with me for two more indices. First, the semiconductors:
I wish I could get the other indicators for this but I didn't find them at stockcharts.
Lastly, and I think this at the end determines the market because the members have just a heavy weight in the indices:
In short, I am worried because the bear case is so obvious and easy. It cannot be that easy, can it? The market will screw you over?
I am extremely tempted to take large short position on the market. I am short already, but in a conservative way. But I am getting very, very tempted to plunge.
TICK made a big push up but futures kept it down
NYSE TICK was above 1000 for a quite awhile. I stil think we close red. You can't go far without NYA and SPX. And who wants to stay long over weekend?
QQQQ Aug 38 Call Open interest went down by 106483 yesterday
Make what you want out of it. Short covering at cheap prices? That would be positive. Long giving up? The price is unchanged 0.05-0.10.
Other large OI changs is some 50 000 increase in Aug 36 puts.
Full list:
Aug 10, 2006 @ 15:24 ET (Data 15 Minutes Delayed) Bid 36.67 Ask 36.68 Size 3076x333 Vol 87124750
Calls Last Sale Net Bid Ask Vol Open Int Puts Last Sale Net Bid Ask Vol Open Int
06 Aug 35.00 (QQQ HI-E) 1.80 +0.15 1.75 1.85 173 102442 06 Aug 35.00 (QQQ TI-E) 0.05 -0.05 0.05 0.10 56 162667
06 Aug 36.00 (QQQ HJ-E) 0.95 +0.05 0.90 0.95 20494 151643 06 Aug 36.00 (QQQ TJ-E) 0.20 -0.10 0.20 0.25 1004 702909
06 Aug 37.00 (QQQ HK-E) 0.40 +0.10 0.30 0.35 1676 210300 06 Aug 37.00 (QQQ TK-E) 0.60 -0.10 0.55 0.65 5770 226905
06 Aug 38.00 (QQQ HL-E) 0.10 -- 0.05 0.10 385 279257 06 Aug 38.00 (QQQ TL-E) 1.20 -0.30 1.30 1.40 1224 141287
06 Sep 35.00 (QQQ II-E) 2.15 -- 2.15 2.25 36 20763 06 Sep 35.00 (QQQ UI-E) 0.35 -0.05 0.30 0.40 10184 49075
06 Sep 36.00 (QQQ IJ-E) 1.45 +0.05 1.40 1.50 19779 21242 06 Sep 36.00 (QQQ UJ-E) 0.60 -0.06 0.60 0.65 7862 103323
06 Sep 37.00 (QQQ IK-E) 0.85 +0.05 0.80 0.85 3115 52649 06 Sep 37.00 (QQQ UK-E) 1.00 -0.10 0.95 1.05 1067 82599
06 Sep 38.00 (QQQ IL-E) 0.45 +0.05 0.35 0.45 1744 82618 06 Sep 38.00 (QQQ UL-E) 1.50 -0.20 1.55 1.60 3766 81911
Just sold futures
I recommend that people take a look at the daily charts of SPX and NYA. Do they look like about to launch or fall apart. For awhile I though that the terrorism issue would cause us to rally (aside from 9/11, we've rallied after terrorist attacts), last year London is a good example. Can't have them win...
But failed plot, failed rally....
Heathrow closed for all incoming flights that are not already in the air because they are out of place to land and park the planes.
Airline and related stocks hit big time. FTSE-100 down 78 points. OOPS correction, now down 104 points.
London Police Foil Plan to Blow Up Jets in Flight
No hand luggage allowed is allowed on any flights, only passports, tickets and wallets. Shoes are checked. Huge delays.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ax.3SYF_yP38&refer=home
http://news.bbc.co.uk/1/hi/uk/4778575.stm
London Police Foil Plan to Blow Up Jets in Flight
Plan was supposedly to explode three UK to US flights mid-flight. No hand luggage allowed is allowed on any flights, only passports, tickets and wallets. Shoes are checked. Huge delays.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ax.3SYF_yP38&refer=home
http://news.bbc.co.uk/1/hi/uk/4778575.stm
Facing the sanctions....
That's diplomatic language basically saying that start behaving by Aug 31 or you have to go to your room next.
Results, AH reactions and fundamentals
Just checking what news has come out and how the AH has reacted to it, I see the following:
AIG's Profit Falls 29 Percent on Derivative Declines
http://www.bloomberg.com/apps/news?pid=20601087&sid=aqWyKfqEnuJs&refer=home
" American International Group Inc., the world's largest insurer, said second-quarter profit dropped 29 percent as a decline in the value of derivative investments held during the period countered record underwriting profit...."
Member of Dow Jones Composite, Dow Industrials, S&P 100, S&P 500, S&P 1500 Super Comp
AH reaction: -0.49 or 0.84%
Disney had good results, but fell after hours:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ7DBxfDwz94&refer=home
Disney Third-Quarter Net Rises on Film, Cable Sales
AH change: down 0.16 or 0.56%
Member of Dow Jones Composite, Dow Industrials, S&P 100, S&P 500, S&P 1500 Super Comp
Viacom's Profit Rises on Higher Cable Network Revenue (Update3)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aS0wtQQS7K24&refer=home
AH: up 1.260 or 3.56%
Member of S&P 500, S&P 1500 Super Comp
And finally this:
Johnson Controls to Close 16 Plants, Cut 5,000 Jobs
http://www.bloomberg.com/apps/news?pid=20601103&sid=a7yaYClpH_.Q&refer=news
AH Change: n/a does not seem to trade after hours
Member of S&P 500, S&P 1500 Super Comp
Cease fire - you are looking at wrong geopolitical conflict
I have not seen anywhere anyone bring up the Lebanon Isreal conflict as a reason for this sell off as far as fundamental or uncertainty issues are concerned and I do not see how a cease fire would help the markets in anyway. That I call crasping for the straws.
If you want to look for "excuses" for the sell off, the list should run more along the lines:
- Prudue Bay production cut half and the pipe line closed resulting oil price moving up and even though it fell off highs today, we have a good support
- Pause on interest rates was followed by a couple of banks basically saying that it is a pause, not the end of the cycle and fed will raise rates twice this year still. (Of course, this is actually double bad for markets: higher rate expectations are bad for markets, but markets have always fallen by about 10% after the feds stop raising the rates!)
- As for geopolitical issue, the big shadow is Iran, their nuclear ambitions and UN deadline of Aug 31:
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/31/AR2006073100353.html
"UNITED NATIONS, July 31 -- The U.N. Security Council approved a resolution Monday demanding that Iran suspend its enrichment and reprocessing of nuclear fuel by Aug. 31 or face the threat of economic and diplomatic sanctions."
Iran on the other hand has made it pretty clear that if there are UN sanctions, they will turn the oil tap off. Do you think that has been missed by the hedge funds and other oil speculators. Also, remember that most oil from Middle-East must pass the sea routes that can be distrupted by Iran even if they do not control the production. As I said before, the oil is the second best deterent they have after the nuclear weapons that they do not. So the oil uptrend is safe as long as there is no settlement on this issue. In addition, Nigeria as usual has political unrest and they are the biggest producer in Africa.
- US consumer debt reached 108% of their total gross income last year; consumers have finally reached the limits of their ability to borrow. I think this at the end will kill the US economy, but it is a tsunami in slow motion that will keep gathering force. Btw. you do know that July was the first month that large numbers of those (I forgot what they called in the US, Axx), variable rate mortgages will reset the interest rates to reflect the current rates. Expect property markets to start seeing a steady stream of forced sellers.
- Inflation, inflation!
- The corporate spending was supposed to carry the economy through the patch of soft consumer spending but how long do you think it takes for corporations to start adjusting their spending downwards when there is no demand for their goods. I bet that a lot of expected corporate expenditure will never be spend.
- Oh, USD has been very interesting this week
And if you think that is negative, the reality will be worse. But we will get big rallies on the way. I just do not see how we could meet PS expectations, though now. I have been raising the concern about the time frame not fitting for awhile now. We are going into seasonally very weak period with pretty much every day given another BIG NAIL into the coffin and the long term investors without doubt are using any opportunity to sell.
More option data
Looking at the CBOE final intraday statistics tells this:
3pm central time or 4pm market close:
DJIA:
Calls 4160
Puts 13061
P/C 3.14 ==> I think this is called R3 that indicates down instead of being contrarian indicator
SP100:
Calls 30341
Puts 44836
More balanced, no special signal here
SP500 big boys:
Calls 94892
Puts 198046
Hmm. P/C 2.087
QQQQ open interest and today's volume for AUG/SEP
Let's see whether the large volume in Aug 38 CALLS was closing or opening position:
06 Aug 35.00 (QQQ HI-E) 1.65 -0.05 1.70 1.75 143 102566 06 Aug 35.00 (QQQ TI-E) 0.10 -0.05 0.05 0.15 1053 161153
06 Aug 36.00 (QQQ HJ-E) 0.90 -- 0.85 0.95 2716 153022 06 Aug 36.00 (QQQ TJ-E) 0.30 -- 0.25 0.30 3969 670987
06 Aug 37.00 (QQQ HK-E) 0.30 -0.10 0.30 0.35 8213 204175 06 Aug 37.00 (QQQ TK-E) 0.70 -0.10 0.65 0.75 9373 209792
06 Aug 38.00 (QQQ HL-E) 0.05 -0.05 0.05 0.10 20001 385740 06 Aug 38.00 (QQQ TL-E) 1.50 +0.05 1.45 1.50 1114 140891
06 Sep 35.00 (QQQ II-E) 2.70 +0.55 2.10 2.20 57 21131 06 Sep 35.00 (QQQ UI-E) 0.40 -0.10 0.35 0.45 410 48252
06 Sep 36.00 (QQQ IJ-E) 1.40 -- 1.40 1.45 575 21059 06 Sep 36.00 (QQQ UJ-E) 0.66 -0.09 0.65 0.70 2352 90957
06 Sep 37.00 (QQQ IK-E) 0.80 -- 0.80 0.85 6240 56315 06 Sep 37.00 (QQQ UK-E) 1.10 -0.05 1.05 1.10 2380 79045
06 Sep 38.00 (QQQ IL-E) 0.40 -0.10 0.35 0.45 889 82966 06 Sep 38.00 (QQQ UL-E) 1.55 -0.35 1.60 1.70 520 81167
Tomorrow will tell it.......
Too much emphasis on maxpain too early
There are a lot of myths about options. I am not sure at all how many options are just sold. And most often puts are though as being sold, but the same takes place with calls.
The option market makers do not hold naked positions, they hedge their delta exposure either on the cash equity markets or futures markets which ever gives them the cheapest and best match.
If we make it below maxpain, I have seen it over and over again, the large OI actually acts as further pushdown. Not sure why, but I think there are two reason for this:
1) When the maxpain is breached (up or down), the delta on at money and near money options is moving rapidly (gamma is large) and option market makers have to buy or sell additional amount of the underlying (this activity takes place into the direction of the market!) to stay delta neutral.
2) OI at leas in part in this case might represent hedging and the hedge takers might be selling whatever asset they were hedging in order to collect on the hedge at max value. (In reverse, buying to cover hedged short.)
People make a big deal that 80% or whatever the exact percentage of options expire worthless. That's because the buyer fully expects that to happen. They bought insurance to protect they portfolio for the worst case scenario or to lock in to gains when it would be impossible to get out of the position in the cash market.
Remember that on both futures and options markets there always is someone short for each long contract. Someone is holding the other side. That way the view points are always balanced. The question is does someone have better knowledge for their position? Or as I said before, maybe they are fully hedged and do not actually care.
Going long?
Transports are down 3%. We haven't had a wash out sale yet, just erased gains and a bit down. There is no way, I would go long anything.
I'm lightening up some short/put postions tiny bit to allow me to trade confortably around the positions, but I do not believe any big rallies, sustained rallies. Intraday fine, but we have not actually had large down days yet. We've just had days where the gains were erased. As I said yesterday, I am looking for a string of 6 to 9 days goind down before I will but my feet in water going long unless I am there to nurse the positon every second of it.
Nasdaq TRIN
When NYSE and Nasdaq TICK or TRIN are in conflic (particularly, the TRIN), NYSE one trumps. Proceed with caution in this situation, do not start new positions. You might wait to squeeze extra cents out of your existing Nasdaq position but NYSE TRIN tends to trump Nasdaq one.
I think today's story was CSCO vs. overall economy and the overall economy seems to have big time. CSCO statement was, anyway, mostly backwards looking and their gross margins fell quite a bit.
Down...
We've had two days of large gains sold off. That tells something. It is not so much a call for tomorrow but for the next few days. I think we are solidly in the sell any bounce mode.
Futures except NQ took out yesterday's lows
Both ticks below -300 and NYSE TRIN 1.11, Nasdaq 0.4. Short watch out, we might get a save here...
Thanks
I was lucky enough to go short earlier when SPX hit the resistance, I thought that I just add to the position if it rallies a lot into the close.
Now it looks like I have to restart my computer as my IB futures display is seems to be stuck, Sep mini NQ has been 1503.75-1504 for ages. Some prices update some clearly not...
It's strange, the market depth displays work and update but the charts don't. How annoying.
Was some news released?
All the sudden things fell off the cliff. Even without news, I'd say based on NYSE TICK and TRIN economy wins over CSCO and the bounce is dead.
Btw. for those who might not know, when Nasdaq and NYSE TICK and TRIN are in disagreement, NYSE trumps Nasdaq. You might hold you position based on Nasdaq awhile longer to squeeze the extra cents out, but use extreme caution when going against NYSE TICK and TRIN as they can take Nasdaq with them all the sudden.
Todays story is the economy vs. CSCO
By the end of day we'll know which one wins.... I really want to short, but since I cannot follow markets at the moment, I'll sit on my hands until later in the day.
But if we fall below 36, those puts accelerate the decline
Anyone looked at the call numbers?