Posts Tagged ‘options expiration’

Options Expiration Friday – Anything Can Happen

SPY 5 MINUTEAnother crazy day ahead

What else is new in this market?  As you can see from Dave Fry's SPY chart, the pattern is holding up of high-volume (relatively) sell-offs following low-volume run-ups.  This is how the Institutional Investors manipulate the markets to dump unwanted shares on retail investors.  I've been telling you all week how it works and now we can see it in action.  

Of course, it's nice to have this knowledge ahead of time – that's the edge we strive to give to our Members at Philstockworld.  Even if you are just reading us for free and don't have access to our Live Member Chat Room, you would have done very well to follow our advice on Tuesday and go with the DIA puts at $166.80 and the DXD longs at $26.20 – it was right there on top of the morning post (which you can have mailed to you every day, pre-market by SUBSCRIBING HERE)!  In our Member Chat, the previous day, our trade ideas were:

A 5% pullback on DIA is 8.3 points (830 Dow points), back to $158.40 from here.  The June $161 puts are .95 so, if you have $100K to protect against a 10% drop, you can buy $5K worth of the June $161 puts and a 5% drop pays you back $8,000 and a 10% drop to $150 (15,000) would net you $11 per contract so a 10x return is $55,000 back – that's overhedged actually!  

On DXD, the July $25/28 spread is $1.10 and is $1.25 in the money so you get all the upside on DXD up to a 140% profit on a very small move down in the Dow.  We already have July $28 calls in the STP and it's a little too soon to roll but we will.   

On a new trade – you can just get out if the S&P holds 1,900 for more than a day – that's not too far from here.  


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Quad Witching Expiration and a Pullback from the Long Term Trend

Quad Witching Expiration and a Pullback from the Long Term Trend

Courtesy of JESSE’S CAFÉ AMÉRICAIN

The front month on the SP futures has now switched from March to June as a part of the Quad Witching Expiration. (Technically it switched last week, but for charting purposes I made the switch last night.) The June Futures have essentially the same formations as did March, it’s just that the earlier months have few trades to mark them.

This is the first serious test for US equities since mid-February, as it has been on a spectacular rally streak, no doubt fueled by excess liquidity applied to a selling exhaustion in the funds. Curiously not among corporate insiders who were selling at a rate of 57 to 1 in this latest rally, no doubt for diversification purposes.

The extent of this correction will be determined on the amount of actual selling that starts to occur. For now what we are seeing is more of a trading correction in response to an outsized rise in price, or as the Street likes to say, the market was getting ahead of itself.

Key levels to watch are 1135 and 1120. If we break those I would look for a consolidation around the 1080-1100 level.
 

 

 

“Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows”

Leonard Cohen, “Everybody Knows”

 

 


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US Equity Market Options Expiration: Shenanigans Central

US Equity Market Options Expiration: Shenanigans Central

Courtesy of Jesse’s Café Américain 

Paper Dolls Cut from Stock Market Listings

For those of you not keeping track, tomorrow is option expiration for the US stock exchanges. This normally precipitates an unusual amount of gaming and painting on the tape, as the writers and holders of puts and calls shove the prices around to inflict the most pain on anyone foolish enough to play their game.

Intel reports after the bell tonight and the market is expecting great things from them.

Tomorrow the US reports CPI, and then heads into a three day weekend, as Monday is Martin Luther King day in the US. Marin Luther King had a dream; and this may not be it.

The SP 500 futures have been the lead sled dog in this rally with the banks carrying the water. The daily chart has a rising wedge on it that is quite ominous, but we recall the rising trend in the 2003-7 stock reflation that never broke, and kept rising on light volumes to the bubble peak. And the of course it collapses with the other bubbles of which it was a symptom.

Here is the last reflationary bubble that the Treasury and the Fed created. Remember that one?


 


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Stock Market Rally: Shenanigans Abounding

Stock Market Rally: Shenanigans Abounding

Courtesy of Jesse’s Café Américain

This is just an opinion, and it could be wrong, as all opinions may be.

To be long US equities at this point seems risky, bordering on reckless, for anything but a daytrade. And there is plenty of that going on.

The US markets in general have every mark of a maturing Ponzi scheme in the steady run ups on weakness, and the ramps into the close with the selling after hours on weak volumes.

But why?

Thursday is option expiration, a quadruple witch as we recall. September is one of the big ones, often setting up declines in the month of October. Further, we have Rosh Hoshanah beginning at sundown on Friday September 18. As the saying goes, Sell Rosh HaShana and Buy Yom Kippur.

The government is anxious to encourage ‘confidence’ to the extent of skewing the statistics to create hope in the public, the consumers. The banks are flush with liquidity, but really have no place to put it but for a minimal return at Treasury, or in some hot money trades.

Where is Goldman Sachs business revenue and profit coming from now? How much real investment banking is being done? How much M&A activity and IPOs are there to sustain it at this size, unscathed by the recent market downturns?

Obama and his team have NO credibility for reform on Wall Street after their handling of Goldman Sachs and the AIG payouts. We hear that Goldman had shopped the idea of those derivatives to them, became their biggest customer, and then managed the 100 cents on the dollar payouts from the government even as AIG became hopelessly insolvent.

Bonds, stocks, metals, sugar, cocoa, and oil are all moving higher, while the dollar sinks. Is the dollar funding a new carry trade?

The markets are increasingly the flavor of choice, and if the markets do not show a way, they will make one. Volatility is a screaming buy. Put vertical spreads are remarkably cheap.

Be careful. October looks to be the stormiest of months, if we hold out until then. The market is overdue for a correction, which can be up to 20%. Given the distance we have come on thin volume, what may make this correction shocking is the speed with which it will come.

Watch the VIX.

We remain guardedly ‘optimistic’…
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Zero Hedge

"Global LIBOR Scapegoat" Turns To Public Crowdfunding To Fund Appeal

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

While UBS agreed to pay $1.5 billion to quickly settle charges that the bank manipulated LIBOR, trader Tom "Libor is too high, 'cos I've kept it artificially high" Hayes wasn't so lucky however. Alas, Hayes' pockets weren't that deep and he was the scapegoat UBS chose to offer up to the masses in the wake of the scandal, eventually being found guilty and ...



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Phil's Favorites

Atlas Crumbles Under Weight of Italian Banks

Courtesy of Mish.

On April 12, in one of the easiest financial predictions in history, I challenged the notion that a €5 billion slush fund dubbed “Atlas” could possibly prop up €360 Billion of non-performing loans in Italian banks.

Less than a month later, “Atlas” is already a notable failure.

I seek no credit for my call, and none is due. Failure was a certainty from the start.

Instead, I question the sanity of anyone who thought such a preposterous scheme could work in the first place.

Please consider Atlas Strains to Hold up the Sky Over Italy’s Banking Sector.

A government-orchestrated, privately backed €4.25...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil Turns Lower After Bigger-Than-Forecast U.S. Crude Build (Fox Business)

A bigger-than-expected build in U.S. crude inventories to fresh record highs pushed oil markets down after an early rally on Wednesday over concerns about production cuts in Canada's oil sands region due to a wildfire.

Trade Deficit Shrinks as Goods Imports Hit Five-Year Low (Fox Business)

The U.S. trade deficit fell more than expected in March as imports of goods tumbled to their lowest level since 2010, a potential boost to first-quarter ec...



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ValueWalk

Pension Funds - Taking the Long View: The Dangers of Short-Termism

By Jacob Wolinsky. Originally published at ValueWalk.

Pension Funds – Taking the Long View: The Dangers of Short-Termism

Moderator
Scott Minerd, Managing Partner, Chairman of Investments and Global Chief Investment Officer, Guggenheim Partners

Speakers
Christopher Ailman, Chief Investment Officer, California State Teachers? Retirement System; Co-Chair, Global Capital Markets Advisory Council, Milken Institute
Scott Evans, Deputy Comptroller, Asset Management, and Chief Investment Officer, New York City Retirement Systems
Vicki Fuller, Chief Investment Officer, New York State Common Retirement Fund
Hiromichi Mizuno, Executive Managing Director and Chief Investment Officer, Government Pension Investment Fund, Japan

Intensifying global competition, flagging corporate earnings and emboldened activist investors ...



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Chart School

Market Recap May 4, 2016

Courtesy of Blain.

Wednesday was another session where indexes opened down and buyers never really showed up.  The S&P 500 fell 0.59% and the NASDAQ 0.79%. This despite a pretty positive print in the ISM data:  ISM non-manufacturing for April was 55.7, above expectations and rising from March’s 54.5 print. The employment index rose to 53.0 from 50.3 the prior month.  Factory orders rose a more-than-expected 1.1% in March.   The ADP employment report for April missed expectations with a gain of 156,000.

“I’m definitely seeing a momentum shift and this market has seemed like a momentum-driven market these few months. If momentum does shift it feels like there’s not enough economic foundation and initiatives, what the Fed is going to do. … This is a pretty good challenge point...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

Junk Bonds- Potential breakdown at triple resistance zone

Courtesy of Chris Kimble.

Many like to watch the price action of Junk Bonds, because they can send important messages about the strength or lack of in the stock market. Below looks at Junk Bond ETF JNK

CLICK ON CHART TO ENLARGE

As you can see, JNK looks to have created a double top in 2013 and 2014 and weakness in the sector soon followed. Once weakness really started to take place in this sector (2015), stocks didn’t have much luck moving higher.

JNK created a bullish reversal pattern (bullish wick pattern) the week of 2/5 and started turning high...



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Digital Currencies

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On 'Satoshi Nakamoto'

Courtesy of ZeroHedge. View original post here.

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On ‘Satoshi Nakamoto’

By Mark O'Byrnewww.GoldCore.com 

Craig Wright, an Australian computer scientist, self-declared cyber security expert and entrepreneur, has claimed to be the creator of Bitcoin, the elusive &l...



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OpTrader

Swing trading portfolio - week of May 2nd, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Biotech

PRGO, VRX and an Overpriced Papa

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

By Ilene 

Remember this? It was Monday. PRGO is down from around $130 to under $100 since I started following it LAST WEEK. That's down almost 25% in a week, and almost 50% in the last year. So I wrote, 

"Perrigo CEO Joseph Papa leaves Perrigo (PRGO) to lead Valeant (VRX) while PRGO issues a warning about missing earnings expectations. Not surprisingly, PRGO stock plummeted today. 

Robert Ingram, Chairman of the [Valeant] Board, stated, "The Board has conducted a thorough search process and believes that Joe is the ideal leader for Valeant at this time. He has a strong shareholder orientation,...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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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...

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