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

Refugees Expose Europe's Lack Of Decency

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

I want to say something about the issue of the refugees -never ever again migrants- that are swamping Europe. So much has been said about them, and so much has happened since I made my first notes, but not a soul has put their finger on the sore spot, and the real story. At least not that I’ve seen.

That real story is the painfully woefully inadequate -and I’m being painfully polite here- failure of Brussels and Berlin and Paris in responding to what’s been unfolding. And don’t get me started about London; ther...



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Phil's Favorites

Steve Keen on Economic Forecasts, Ponzi Schemes, GDP, China; One Way Streets and Poison

Courtesy of Mish.

Economic Forecasts

Economist Steve Keen pinged me in response to my post Regional Manufacturing Expectations From Mars.

In that post, I compared Richmond Fed manufacturing survey expectations (six month look ahead projections made in February for August), to what actually happened in August.

In response, Steve Keen Tweeted

@MishGEA gets it wrong! Says "Regional Manufacturing Expectations From Mars" when...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Charting the Markets: Stocks Rally to Erase the Week's Losses (Bloomberg)

The turmoil in financial markets to start the week is fast becoming a blip in the rear-view mirror, with developed market equities posting robust gains on Thursday as volatility subsided and the commodity complex largely advanced.

Dow sets a 2-day record, fin...



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Chart School

Shorts Rally - But For How Long?

Courtesy of Declan.

A second day of gains keeps pressure on shorts in squeezing them out of their positions, but is also looking to sucker shorts into trying to second guess when this rally will end.

The S&P is heading fast towards 2,044. Given the speed at which it has enjoyed this advance it will be there by Tuesday! In reality, it will likely slow before it gets there. When markets do head lower it will be important they do so slowly to sow further doubt into shorts.


The Nasdaq will be testing resistance tomorrow, and is close to coming up against its 200-day MA.  Those who bought the low will be very happy.

...

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All About Trends

Mid-Day Update

Reminder: David 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

30,000 Foot view after a wild 10-days

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

If one takes the highs of 1987 and the lows of 2003 and ties them together and then projects a line into the future, you get line (1). The Dow hit line (1) and its Fibonacci 161% level in May and the Dow could make no more upward progress after that!

Speaking of momentum, it reached lofty levels at the same time! Momentum recently hit levels last seen in 2000 and 2007.

This was a price point where the Power of the Pattern suggested that “Slow Money members”...



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Insider Scoop

Garnero Group to Merge with Grupo Colombo, Deal Value AT $330M

Courtesy of Benzinga.

Garnero Group Acquisition Company (NASDAQ: GGAC), a public investment vehicle formed for the purpose of effecting a merger, acquisition or similar business combination, and Grupo Colombo ("Grupo Colombo" or "GC"), a leading apparel retailer in Brazil, announced today that they have entered into a definitive investment agreement to merge the companies in a transaction valued at approximately $330 million. The combined company will remain listed on the NASDAQ Stock Market and be renamed "Garnero Colombo Inc."

Headquartered in Sao Paulo, Grupo Colombo is one of Brazil's leading retailers focusing on menswear, with over 400 stores throughout the country. Founded in 1917, Grupo Colombo is the largest retailer of men's shirts and suits in Brazil with net revenues of R$550 mill...



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Sabrient

Sector Detector: Finally, market capitulation gives bulls a real test of conviction, plus perhaps a buying opportunity

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

Courtesy of Sabrient Systems and Gradient Analytics

The dark veil around China is creating a little too much uncertainty for investors, with the usual fear mongers piling on and sending the vast buy-the-dip crowd running for the sidelines until the smoke clears. Furthermore, Sabrient’s fundamentals-based SectorCast rankings have been flashing near-term defensive signals. The end result is a long overdue capitulation event that has left no market segment unscathed in its mass carnage. The historically long technical consolidation finally came to the point of having to break one way or the other, and it decided to break hard to the downside, actually testing the lows from last ...



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OpTrader

Swing trading portfolio - week of August 24th, 2015

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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ValueWalk

Some Hedge Funds "Hedged" During Stock Market Sell Off, Others Not As Risk Focused

By Mark Melin. Originally published at ValueWalk.

With the VIX index jumping 120 percent on a weekly basis, the most in its history, and with the index measuring volatility or "fear" up near 47 percent on the day, one might think professional investors might be concerned. While the sell off did surprise some, certain hedge fund managers have started to dip their toes in the water to buy stocks they have on their accumulation list, while other algorithmic strategies are actually prospering in this volatile but generally consistently trending market.

Stock market sell off surprises some while others were prepared and are hedged prospering

While so...



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Digital Currencies

Bitcoin Battered After "Governance Coup"

Courtesy of ZeroHedge. View original post here.

Naysyers are warning that the recent plunge in Bitcoin prices - from almost $318 at its peak during the Greek crisis, to $221 yesterday - is due to growing power struggle over the future of the cryptocurrency that is dividing its lead developers. On Saturday, a rival version of the current software was released by two bitcoin big guns. As Reuters reports, Bitcoin XT would increase the block size to 8 megabytes enabling more transactions to be processed every second. Those who oppose Bitcoin XT say the bigger block size jeopardizes the vision of a decentralized payments system that bitcoin is built on with some believing ...



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Pharmboy

Baxter's Spinoff

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

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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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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