TGIF – Stop the Rally, We Want to get Off!
by phil - September 7th, 2012 8:30 am
This rally is never going to end!
Just look at this chart – we're breaking every level. THIS time is different – not only are we going to go on to 1,450, we're going to 1,500 and 1,550 and then 1,600 and then we're going to 1,700 and 1,800 and 1,900 and then we're going on to take on 2,000 – yeeeeeergh!
Sorry, I was channeling my inner Dean… Now that I've calmed down, I realize that this chart that got me so excited was actually the chart from March 5th and, as you can see from my end of February headlines like "Sell in March and Go Away," "This is the End – But For Who?" and "Fake-Out Thursday (March 8th) – Dollar Sacrificed on an Altar of Lies" – where I pointed out that rumors of more Fed easing (by John Hilsenrath of the WSJ, of course) had dumped the Dollar to 79 and that was accounting for the 1% gain in the S&P that day so – don't be fooled!
The ECB had just dropped $712,800,000,000 in fresh stimulus on the 29th and I asked "Will Another $712Bn Buy Us Another Day at 13,000?" Was I early? Yes. Did we miss the end of the rally? Yes. In fact, our $25,000 Portfolio at the time was so bearish, we were down almost $8,000 with huge bearish bets like 10 Short XRT March $55 calls, 10 short GLL March $17 puts, 10 April SCO 31/39 bull call spreads and 10 SCO short March $34 puts, 5 short FAS $88 calls, 5 March TZA $18 calls, 10 short SQQQ June $14 puts, 40 USO April $40 puts, 5 short FAS March $75 calls, 10 long FAS March $85 calls and 10 short FAS March $89 calls (a bearish spread), 10 TLT March $114/115 bull call spreads and 10 DIA March $129 puts.
The only bullish play we had at the time in our virtual portfolio was DMND, where we had 4 hopeless June $29 calls which we lucked out on when they spike on rumors in mid-March. Every other bullish position had been dumped and we were practically 100% bearish because the rally, at that point, seemed totally ridiculous. Just a months later, the Portfolio turned around and was up $8,000 and by May…
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Monday Monetary Madness – This is what the Yield’s Like when Fed Doves Cry
by phil - February 20th, 2012 6:37 am
Why do we scream at each other
This is what it sounds like
When doves cry – Prince
It's no coincidence that this week we will be hearing from Fed Governors Kocherllakota (1pm Tues), Hoenig (12:30 Weds), Plosser (1:30 Weds), and Bullard (9:15 Thurs) ahead of our 2-Year Note Auction (1pm Tues), 5-Year Note Auction (1pm Weds) and 7-Year Note Auction (1pm Thursday) as the Fed needs to bring out 4 of it's 5 most hawkish members to talk up the Dollar (by talking down QE3) to keep those rates paid as low as possible for Treasury.
Once the Hawks drive the rates down and the notes are sold, the Doves will once again be released to talk them back up by extolling the glories of QE3 – completely reversing whatever was said before just as the Hawks will once again be called upon to reverse what the Doves say at a later date – when they need rates to come back down. The joke of it all is that traders will react to each statement, every time, as if it's a "game changer" and adjust their positions to reflect the new reality of the moment. It reminds me of a quote from Orwell's 1984:
As soon as all the corrections which happened to be necessary in any particular number of The Times had been assembled and collated, that number would be reprinted, the original copy destroyed, and the corrected copy placed on the files in its stead. This process of continuous alteration was applied not only to newspapers, but to books, periodicals, pamphlets, posters, leaflets, films, sound-tracks, cartoons, photographs – to every kind of literature or documentation which might conceivably hold any political or ideological significance.
Day by day and almost minute by minute the past was brought up to date. In this way every prediction made by the Party could be shown by documentary evidence to have been correct, nor was any item of news, or any expression of opinion, which conflicted with the needs of the moment, ever allowed to remain on record. All history was a palimpsest, scraped clean and reinscribed exactly as often as was necessary. In no case would it have been possible, once the deed was done, to prove that any falsification had taken place.
After all, what…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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