Saturday, March 28, 2009
These stocks/eft's to me are some of the best primed up nicely to fall off a cliff here (imo)....starting MID next week.......bearing that the m2m "SELL THE NEWS" is of course correct, which I do believe it will be, and THEN some.
Friday, March 27, 2009
But ya would be surprised
Just something to be cognisant of. (if of course not already)
Let's say one wanted to purchase FAZ calls, as they think its going higher.
Today's current ask:
FAS 5 puts 0.65 ask
FAZ 25 calls 2.80 ask
The reason i picked those 2, was b/c the underlying assets are of course inverse to each other, and the current price is 26% away from these strikes. Well actually one is 25%, the other is 27%, but that's the closest i can find.
So for ease of purpose here, please let's assume that FAS at 6.36 and FAZ at 19.85 are each 26% away from those respective strike (5 and 25). They basically are, within 1%.
So why are the FAZ calls 4X as much?
Well of course the underlying asset is more expensive.
Options writers would MUCH MUCH rather pay out an FAS in the money option, than an FAZ in the money option. (heck its 3X cheaper to pay out the fas!)
Wait, 3X cheaper.......
So why are the FAZ options 4X as much? (considering they are only 3X for the underlying asset)
That's 25% divergence in price!!
Comparing the underlying assets of FAZ to FAS.......FAZ is 3X the value of FAS.
(which in turn means that 3X more PAIN the writers would endure to pay out FAZ, over FAS)
However, ya can get FOUR FAS 5 puts, for the price of 1 FAZ 25 call.
(four, not three)
***Bottom line: Be sure to watch your option prices on levered etf's, and dont overpay 25%.
Just something to watch and be cognisant of and look at when trading options w/ etf's that have long/short versions.
Wednesday, March 25, 2009
Cobra's Blog has a very gasping observation of the last push down being 18 days. 18 up of this one, takes it to (yep....that takes it to April 1st at the close...ie INTO April 2nd).
(mentioned b/c the 18 day part credit is not mine)
Here is my target, (estimate)
However, I'm much more set on the TIME target, than the price.
However this is an idea, to me of where i think it can do, b/c of how symmetrical this is panning out here.
Market psychology trumps em all.
Market is NOT going lower into m2m on April 2, it generates too much hope.
window dressing is just adding fuel to the Bull's fire here.
suspending or even eliminating m2m will NOT DO ANYTHING
So we have this m2m accounting, and the pundits are all crying that it's killing the financials.
Why, b/c its real true accounting? that is absurd! Here is why....
So if Bank ABC has a huge investment in let's say some crappy real estate, and that real estate is of course "market to market" and now the market value of that real estate is in the crapper, so pundits think that harms the banks. Well yes it does harm the banks and yes it should, it harms everyone, its part of the process. (they are no different)
So if suspend m2m or modify it, will that help the banks and resume lending? why? that's going to be the biggest fake, since oh I dunno... TARP 1?
So let's seriously and logically think about this:
If they let's say eliminate Mark to Market....what will the assets then be market too?
(that's the 64,000 dollar question)
They will be then market to peoples "PERCEPTION" of what they should be worth, that is what they will be market too, plain and simple.
So i suppose the REAL "$64,000 question" is then, What will peoples PERCEIVED value be??
.................... yep, you guessed it MARKET VALUE!
Ok, so let's say: (example)
If a Pento has a price tag of 2,300....people expect to buy it for 2,300, right?
If the next day they ELIMINATE the price tag, rip it off the window, do people all of a sudden pay MORE than 2,300? NO...WHY would they. It changes nothing!
Just like a few days ago, i saw a politician on TV, say "CHANGE THIS NOW....WHY HAS THIS NOT BEEN DONE!!" all hostile like, demanding and such.
Well anyone that acts that way in terms of a problem just ADDS TO THE PROBLEM. (ie: fear monger)
Remember the TARP fear "the world is going to end if you don't do this NOW. the sky is going to FALL!!!! we must have an emergency 20 second meeting and spend this 600 billions ASAP!
yea...right LOL. More like the spx is going to 666 ONCE ya do it! LOL smooth move guys, glad we all picked up the tab for that one.
So come (April 2nd), 3 possibilities of what might happen:
a) they SUSPEND m2m totally (we "might" get a small push higher of that, but it will be very short lived, like 1-2 days max, IMO as the pento is still a pento, price tag or not, and that's still a sell the news)
b) the MODIFY m2m (we likely start heading lower that day)
c) they do NOT change it (we tank HUGE starting right then)
ALL 3 results will result in massive intermediate sell off in the financials, imo. (they only differ in starting ASAP or delaying a couple days at most)
m2m will NOT change anything, pundits on TV have this "notion", that if they do this it will FIX all the financials.
How? I am no economic expert by any means, but last i checked for BANKS to be profitable, that means people have to WANT to BORROW money. How does accounting changes relate to the desire to take out new loans. (it doesn't)
Further more, the pento example, albeit maybe not the best. If the financials assets are NOT market to market value (which makes total sense)....then ok lets say the eliminate it...so what will they be market too?
They will STILL be market to market value!!!! Because then it leaves people to GUESS what they are worth. And the safest and SMARTEST and the most common "guess" will be the same, ie MARKET VALUE!!!
If anything, in my strong opinion messing with the M2M it will actually create MORE uncertainty, b/c now people wont even have a CLUE at ALL what the balance sheets are really like. (remember the market HATES uncertainty!).
This will create MORE instability in the financial sector, and it will not increase earnings power. They have NO relationship to each other.
If AAPL (apple), has materials and plants and such worth 1billions let's say (ie market value)...and they get the market value changed to "you decide what its worth value"...does that make people want to buy more IPODS? Does it cut the operating costs? Does it increase revenues?
I know this might sound "too bearish". But to "paper-fix" a balance sheet does by no means automatically translate into increased profit or desire of the product it's selling.
This rally is going to continue INTO April 2nd, and im not sure if it exactly stops in it's tracks right then, or perhaps it goes for another day? (i don't know!). But the financials have EARNINGS after that....and with this run up, who is gonna want to hold them. Earnings are from 1st qtr anyhow.
Have ya noticed that none of the financials are CHEERING for this? It's all politicians. I mean if it really was truly going to be the FIX ALL, i would assume that you would see a different BANK CEO on TV every 10 seconds proclaiming how "its the best thing to do". I haven't seen that. (b/c they know, imo)
The bulls will continue the parade till April 2nd, then turn out the frigging lights. M2M will go down as another worthless idea, and yes a GIMME short entry. I will be buying every FAZ call and GS put for MAY month (and a few April's too) i can find come Wed's close.....and then some more a couple days later.
Ok so "throw away the charts" let me take BACK that statement, that is excessive.
Here is what i see in the charts that points to this as well, as strong support. (basically the same post from last night, in regards to the Vix)
Look below at the VIX chart, as my last entry, it is NOT signaling this is a true bull turn, the vix is ALIVE and STRONG, as long as its over 38, period. There is no debating that, it's a technical line that has been there A LONG TIME (see chart).
Now the SPX weekly chart, just so ya know the weekly rsi has BROKEN out and above a resistance line that has held since MID 2007. (an extremely bullish signal, EXTREMELY bullish).
However, if the SPX weekly is EXTREMELY bullish breakout
but the VIX weekly is still above its SUPPORT line....
there is no reason YET to think this is real.
The spx should break OUT, and the vix break DOWN at basically the same time, to really signal a large bullish change, imo.
The vix does not measure market current sentiment, it measures the FUTURE market sentiment (ie 30 days ahead) as it's based on options. So just chew on that, part. and think about it a lil. As from my last post prior to this one AND actually best of all my very first post ever on this blog.
The vix to me, is going to be extremely beneficial to being able to differentiate a "bear rally" from a new BULL trend.
I expect this rally to TOP on April 2nd (b/c this is supposed date to the M2M rulings....and i expect the vix to BOTTOM at about 37.50 - 38.50
remember until the vix breaks BELOW that line, its NOT a bull market, its a trap, imo.
M2M is going to disappoint, and technically its showing here, b/c even tho the spx is breaking out (wait...look closer) the vix is NOT breaking down. (they should be in sync here, but they are not).
Bears are toast STILL until April 2nd, my apologies for the weekly calls, they will likely be off. LCC long still looks good, but goog and wfmi are NOT going to be winners.
Monday, March 23, 2009
Friday, March 20, 2009
GS Short: (-1.54%)
MA Short: (-1.76%)
SOHU Short (-18.75%)
However my "intraday" reversal opinion on focm being a sell the news knee jerk reaction was totally WRONG. Yet another reminder to myself...that the charts are far easier to interpret for me than my forecasted news "prediction" of a reaction for a single day.
I'll try to stay to my #1 strength, which is charting and looking for short term trades. (ie 3-15 days kinda length).
I'll post my outlook/opinions/picks for the week ahead, after i do my complete anaylsis.
have a good weekend.
that's TYPICALLY how it works.
very very rarely do ya see STRONG neg divergance where they both go in the same direction. (as today)
Sorry to sound like a perma bear, but that IS a very very bearish sign.
EWT 804.30, it was not breached.
Things dont look good for the bulls here, imo.
And i would not "bet" on the dollar tanking too much harder. Heres the chart of the dollar compared to all other currency. (uup)
.....Oh yea, DBA trumped GLD again today (hint hint)....as refered to in a previous post. (for the hyper-inflation traders)
Thursday, March 19, 2009
Wednesday, March 18, 2009
for the next 5-10 trading days.
Tuesday, March 17, 2009
--noticed this a FEW trading days ago, something to watch, if it pulls back and retests the wedge/trend breakout line as support.
***Long DBA, Short GLD...hedge combo Swing trade?? Hmmmmmmm***
Monday, March 16, 2009
Saturday, March 14, 2009
Friday, March 13, 2009
Check Cobra's blog. Give credit where credit is due, this guy is thorough, and no need doing HW...on something that is already done.
Thursday, March 12, 2009
Tuesday, March 10, 2009
What i think is going to be very interesting, is if they DON'T really say crap on Thurs, as most of us expect....(yea we are gonna sell off, that "should" be a given)...but just compare the velocity of the sell off. I mean all it "SHOULD" be equal to or GREATER than the entire run up into it, b/c it will all be hot air. But what if we sell off LESS after, than we did rallying into it?
If they come out and say "ahhhh the hell w/ suspending m2m, that crap aint happening, banks are toast".....hehehe.......well SKF "should" go back to 265 in a snap......but if it only goes back to 245, as subtle as that may sound or seem, i think it can be very telling. As that would mean the SHORT the EVENT is losing momentum.
I'm not "calling it will", heck...i think there is just a good chance if they say "NADA"...we crack to 615 on the spx! Just saying to be cognisant of the impulses both ways, and notice if there is a shift in the weight of the 2 compared, that's all. :o
Selling the news has been the trend here for the entire bear market. Selling the news and selling EVERY govt intervention/pop! That's the meat and bones of this bear, so just watch to make sure that punch is still packing. That's all im thinking and going to be watching closely.
at any rate....
As for those spx tickets:
.40 cents off on the spx to 720-725 call (oh shucks)
I honestly did "think" when we broke that rsi wedge at the open, we would get 720 today.
(rounding up counts right?)
upside.....line in the sand numbers, imo
784 (i would short the *(&^ outta the spx if we got this one)
i think they ALL will provide some "trouble" at least, for the bulls.
(selling out the remainder of my longs tommorow by close no matter what, that's just me)
charts attached to right.
- looks like to me we still got HIGHER prices to go here over the short term. I don't thinks its gonna happen in a straight line. But technically the most of all i would (well, this is looking ahead a lil here) i would LOVE to see us at WEEKLY RSI resistance, imo that would be yet AGAIN another awesome short entry,as it has been since 2007.
Sunday, March 8, 2009
- Double Top RSI/Resistance line stalling on 60 min
Saturday, March 7, 2009
695 price channell resistance as well as the corresponding rsi wedge top should form resistance initially FIRST OF ALL out the gates before anything else.
To obtain the "The Free 725 SPX tickets"......
they will be ONLY be handed kindly out WHEN the 60min RSI crosses over 50 and HOLDS over 50 for an hour. Ticket maximum value is subject to decrease, the longer they take to become valid (ie the longer it takes to cross 50 on the 60min rsi)
Impression: there is an extremly pure RSI wedge channell formed the 60min spx chart. Respect it, Be prepared to play the breakout, to the upside (close shorts, open longs) when the wedge does decide to breakout to the upside.
**This ALSO applies to breaking DOWN below the support of the wedge, and playing that accordingly as well, however i lean on this as a far more likely BULLISH t/a developed buy signal upcoming i plan to trade, b/c of the Positive divergance developed. But the chanell is to respected both ways of a breakout or breakdown, and one is coming very soon, simple math. **
**correction to chart, support is 660 (as of now)...however true/pure support remains the decending line of the channell, 651 is an external fibonacci retracement level as well**
anaylsis will be "on the money" for catching the "perfect"
However i do believe it will be very
helpfull in CONFIRMING and being able to differentiate
a "little pop" from a "REAL RALLY". So unlike Sandford
& Son...we can have a strong conviction of when the "big
one" really is upon us if you will.
I am a firm believer and trader of the Weekly chart "always" trumps the daily chart, as from my experience it virtually always does.
What we have here is since the low volume late dec-early jan "january effects" rally, the vix has been in a very pure, slow and steady technical UP-trend, and the spx has been headed lower, and lower and lower.
Every prior vix peak (temporary spx bottom) in this current bear market has caused the vix weekly to puncture THROUGH the top of the bollinger bands. (will this one follow that golden rule?) (thanks kenny, for observing that first)
I will be watching the shorter term macd's to FIRST crack below their current support lines to move out of the bear camp, and the rsi to confirm it after.
Impression: from a technical perspective, the vix remains in a strong medium term UP-Trend, and that is to be respected, untill violated.
- When the t/a support on this breaks down (whenever that happens to be????)....i will be looking for a spx rally, to be confirmed as "real" and a "strong" one at that.
- When the bear looks like he wants to go into a temporary hibernation, he will tip his hand, and clue us in....