22 C
New York
Tuesday, August 16, 2022

Subscribe

Manic Monday – Dubai, CitiGroup and GS Move Markets

What a morning it's been already! 

Last night, at about 11:30 EST, Abu Dhabi gave a $10Bn bailout to Dubai (until the end of April, anyway) with the following statement from Sheik Ahmed bin Saaed Al Maktoum, chairman of the Dubai Supreme Fiscal Committee: "We are here today to reassure investors, financial and trade creditors, employees, and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices."  That was enough to send the Hang Seng from down 300 points to up 300 points in less than 30 minutes of trading (on both sides of their lunch break) while the Shanghai went from -2.2% to +1.7% and the Nikkei also reversed a 100-point drop, but only managed to get back to even at the close

US futures trading also went wild, up over 100 points at the time but we've given up about half of those gains as of 7:30.  Does it make sense that the Dubai crisis, which dropped us from 10,450 back to 10,250 when it came up, should be the catalyst to get us over 10,500 just because they were bailed out?  Of course it doesn't – that's why we went to cash.  This is one of the most ridiculously irrational markets I've ever seen.  The other "good" news this morning is also the same old songs:  Citigroup will repay their $20Bn TARP loan by diluting their stock by about 20% and GS says oil will go to $85 early next year.   

I don't know why they even bother to pretend anymore – they should just put 10 market-boosting statements on a chip that randomly plays one of them whenever the MSM needs a quote for the morning.  People don't seem to notice it's the same thing over and over and over again so why even bother with the pretense?  Speaking of pretense – I mentioned in the Weekend Wrap-Up that we expected this nonsense this morning but, had I realized that Greenspan AND Cramer were going to be on Meet the Press yesterday, I would have gone more bullish as those are the two biggest market hypers GE could have used for this week's quotes.

 

Europe seems happy enough with Asia's recovery and all the bull*** commentary (that's bullISH – what were you thinking?) and they are up about a point ahead of our open DESPITE the FACT that Q3 euro area employment is down 0.5%, the fifth straight quarter of contraction.  All sectors reported declines, except public services, health and education.  October euro area industrial output was also down 0.6%, the first contraction since March.  Production was down 11.1% vs. a year ago.  Yes – 11.1% WORSE than last year.  Economists, however, expected a steeper 0.8% decline so yay – I guess…

As we usually do on a Monday, we have to plan to switch off our brains and simply watch our levels.  Other than the silly Dow, we are no closer to making new highs than we were last Monday.  There is little change to our level watch in general as we still need to see those 27.5% levels broken to call this anything but a range top and the NYSE is STILL not even over the 25% line, nor are the Transports, who are still below their retrace level.

        Dow S&P Nasdaq NYSE Russell Trans HSI Nikkei  FTSE  DAX 
Current  10,471  1,106  2,190  7,125  600  1,920  22,085  10,105 5,314  5,807
27.5% Up 10,500 1,127 2,242 7,380 615 2,113 22,421 11,787 5,381 5,894
Recnt High 10,549 1,120 2,190 7,241 625 2,045 23,100 10,397 5,396 5,888
2.5% Down  10,128 1,077 2,139 7,002 587 1,878 21,766 9,913 5,157 5,640
July Base 8,200   880  1,750  5,600  480  1,650  17,500  9,200  4,200  4,600 
25% Up  10,250  1,100 2,187 7,200 600 2,062 21,875 11,500 5,250 5,750
Retrace 9,840 1,056 2,100 6,720 576 1,980 21,000 11,040  5,040 5,520

No wonder our plays from 2 weeks ago performed so well last week – NOTHING HAPPENED!  Since most of our trades are the selling of premium, we love it when an entire week goes by the market doesn't move.  Sure it can go up 500 and down 500 – we don't care – as long as it ends up in the same spot and last Monday morning we were at Dow 10,388, S&P 1,105, Nas 2,194, NYSE 7,182 and Russell 602.  So it was a big, fat nothing for the week last week but today they've got the hype machine cranked up all over again because 67,200 brand new suckers were born over the past 7 days and Cramer, Greenspan, Goldman and all the other carnival barkers are going to do whatever it takes to bring 'em into the tent.

XOM pitched in this morning with a $31Bn deal to by natural gas giant XTO and that's boosting the entire energy sector but it's an all stock deal, which is kind of like you buying 20% of your neighbor's house at an inflated value by pledging to give him 20% of your house at the same inflated value and then holding a press conference to tell investors: "Look how valuable our houses are!"  Once again, at a birth rate of 6 suckers a minute, you can do stupid crap like this and make it work…

As a bullish hedge, I was struck by the still very high premiums in the Russell Index Futures that we can take advantage of as they sit right on the 600 line.  You can buy the Dec $590 calls for $14 and sell the $600 calls for $7.50 and sell the Jan $560 puts for $7.50 which is a net $1 credit and you collect $10 more if the Russell holds 600 through expiration, at which point you can set a stop on buying back the puts or just ride them out for an additional gain if we stay bullish.  I'll be making a similar play on IWM and other ETFs for members in chat this morning as we need some upside covers but it's likely to be more of a watch and wait day as we see how high they can push it.

Be careful out there.

 

207 COMMENTS

Subscribe
Notify of
207 Comments
Inline Feedbacks
View all comments

"Eurosclerosis"- the "new normal"?

http://www.bloomberg.com/apps/news?pid=20601109&sid=axaPYnuYlqbs&pos=10

Slow growth; Persistent unemployment; Low interest rates;

Persistent European-style unemployment means that the Federal Reserve, which holds its last policy meeting of the year Tuesday and Wednesday, won’t raise its benchmark interest rate from near zero through 2010, according to Curtis Arledge, co- head of U.S. fixed income in New York at BlackRock Inc., the world’s largest asset manager.

‘Wouldn’t Surprise Me’

“I don’t think they’re even going to be thinking about it until the third or fourth quarter of 2010,” says Arledge, who helps oversee more than $500 billion. “It wouldn’t surprise me if it was into 2011.”

Buy?
Stock prices will continue to rise as companies boost profits by concentrating on cutting costs and getting more out of their workers, Sinai says. Employee output per hour rose at an 8.1 percent annual rate in the third quarter, according to the Labor Department, the fastest pace in six years.

Rising Corporate Profits

Sinai sees profits for the companies making up the Standard & Poor’s 500 Index climbing by more than 20 percent next year.

Or, Sell?

“I’m more bearish than the consensus,” says El-Erian, who sees the dollar experiencing “periods of downward pressure” during the year. “We start the year at 3 percent and then end up at 2.”

Mimic Euorpe?

The U.S. is also starting to mimic Europe by increasing the role of the central government in the economy, says Nobel Prize- winning economist Edward Prescott.

“There’s been a regime change,” he says. Taxes are likely to rise and that will weigh on the U.S. economy by reducing incentives to work, just as is the case in Europe, adds Prescott, who is a senior monetary adviser to the Federal Reserve Bank of Minneapolis and a professor at Arizona State University in Tempe.

Hope and change you can believe in or a slow motion train wreck? Break out the Kool Aid.

Phil – you’ve gotta use this one sometime in a post….OH MY!  Good Morning Vietnam!…I mean all!

Sthompson, Maybe it all depends on your entries and allocations on Phils 4 disaster plays. I played all 4 and am up nice on 
SDS and FAZ, down small on DXD, and flat on SMN. Yes, SMN is .90 now. I was too bullish generally so nice plays for me.

TOS- I am setting up a new account w/TOS. They offered commission rate choice of:
1. $1.50 / contract
2. $9.99 ticket + $.75 / contract.
3. $5.00 stock ticket.
Anyone doing better than this?

TOS- applying for Portfolio Margining on the new account. I have filled out the open book test and would like to check my work.(honestly). I recall someone posting about this several weeks back but could not find it. Anyone have this handy?

Pstas – I have TDA which owns TOS.  I am paying $6 + $0.75/contract, $6 stocks.  Let me know if you need my reps info.

pstas – you should be able to get better.  $1-1.25/contract unless you do larger orders 10 or more contracts where the $9 is a better deal.  Stock is $5 for the first 333 shares, then increments after that….

Has anyone tried Scottrade’s optionsfirst? Regular Scottrade options doesn’t allow many of the option trades that Phil does.

Phil,
I have long stock positions in ERTS & MCO Badly underwater on both and I don’t see anything positive on the horizon. My inclination is to redeploy the capital and/or go to cash unless you have a suggestion or two?

AMZN- Barrons did a hit on AMZN- anyone have a link to the story?

Short COF … its gonna crack ….

What a morning indeed. Terra Industries TRA scared the bejebus out of me holding a DEC09 36/38 bull put credit spread – turned out they’d just had a special 7.5 dividend and the stock price was adjusted down to 35.3.  Whew!

Options First- I have them and regular Scottrade. You are right- not much you can do on options with Scottrade. However, I like the direct link to S&P reports which I find useful for historical financial info. Options First is OK but from what I can see in my early exploration of TOS- it has many more bells and whistles.

Xto/xom some fun risk arb. sold xto 2011 puts for 9 at the open. this gonna be fun. can play xto calls for a run up of xom.

I’m in with you Cap – short COF.

Thanks Pstas….

Phil/Santa  Maybe a small cash payoff for your 9 year old will help. Our 10 year old son looked the wife and I in the eye and asked "Well, IS there a Santa?"  He was crushed. Our sharp 10 year old daughter has always had her doubts and she would never say a word as long as the gifts keep coming…… 😉

Anyone understand what’s happening with LYG’s share price? I think there was a right’s offering approved, but I don’t know anything about it, or how it would affect current price

Phil:
With the natural gas industry having an orgasm over Exxon news, would you consider shorting
any of them?  looking at buying RRC Jan 45 puts. 
thanks.

Are LYG options suspended? Can’t pull up a chain in OX and in TOS the stock is down 30% but the options have barely moved (if at all).

Phil
Time to sell the FDX Jan 90. ?

LYG just closed a short dec 5 option pd .10 even that the stk is shown at 3.62 should have pd some how 1.40 so .10 is not a bad deal furthe more the beloved Cramer show LYG was listed a a looser!

Phil any comments on BAC and C only JPM shows some plus ?

LYG- rights offering should adjust everything by approx 34%. Should have 134 shares now for every 100. The Jan 5 calls are now showing an * of 100 shares plus 146.80 cash. The additional shares have not appeared on my screen as yet but I am assuming they will.

thanks pstas…

Executed a short position on GRMN today… Why would anybody buy their product when you get it free on your smart phone?

Phil
do you think that AIR and LOW is toppy? may be sell additional calls?

phil,
where do you think aapl will be pinned this week and  could you give me the basis of your analysis?

NTRI is getting fat, while popularizing thin. Stock is up 116% since I did the buy/write, I keep doubling down on my covered calls and waiting for a down day to dump them, but it never comes.

Phil:
I think all shareholder meetings should be held in Texas so we can make sure the board is facing people who carry guns when they have to explain this BS…
Hey, there’s something George W did that you liked. I think when he was Gov of Texas he strengthened laws allowing citizens to carry concealed weapons….lol

Phil,
 
I have April 40 puts on slg and it seems to be going up steadily. I have been selling shorter month puts steadily. But, at this point,  how can I salvage the position ??
 
thanks

Looks like they heard your comments on AAPL phil

TOS / Pstas & All,
I applied for Portfolio Margin a while ago.  I asked on the board to see if someone was willing to check my answers.  I passed the exam.  So, you can email me at cwancalo at gmail dot com.  Swear that you’d be honest 8)
 
As far as commissions, I contacted Scott as well.  I already have $1.25/contract.  I was trying to negotiate something better.  I posted his reply on this board once before (with his permission).  I am posting it again below:
 
Hi,
The simple answer is that Ameritrade has begun to limit my ability to
change rates.  The $1.25 per contract rate that you already have is really for
somebody trading 1,500 contracts per month (the stated PSW rate is
actually $1.50 per contract).  To go to $1.00 per contract we look for
2,500 contracts per month.  I can not change your rates at this time but
will be happy to revisit the issue should your volume approach the next
level.

Enjoy the day,

Scott

$SLG … holy cow …. 50.75. 
 
That is insane crazy.  Tough to short; but if you can …

cwan 120 – is there a per trade fee on top of the 1.25?

Morx, No per ticket fee.  Just 1.25/contract straight.

Hi, Peter D & SPX strangle fellows,
Any new ideas?  With VIX going lower, is it better to sit on our hands and wait?

cwan120, what is scott’s email at TOS again? I copied it somewhere and couldn’t find it anymore when I finally am setting up TOS account

Cwan – I am in the Jan RUT strangle and sitting tight.  If you are interested in the wild plays it might be a good idea to purchase some put verticals with the lower vix.

scott at thinkorswim dot com

Phil,
So at 10:40 you were thinking things were going lower, so with DOW at 10,501 are you shorting ?

On Friday you were anticipating a sell off either that day or today (Monday). Are you still planning on a selloff this week or before year end or do you see market staying flat with low volume until after New Years? Thanks for your thoughts.

Phil,
sorry May 40 slg puts at $5.
thanks

Sorry .. but I have to laugh at these specific questions to Phil on his projections on a specific stock price or exactly where the market is headed in the next few days.  Phil is one of the best but if he was a seer if wouldn’t have to run this web site.  I guess we just all want confirmation before an order is placed.

1 2 3 5

Stay Connected

160,906FansLike
408,788FollowersFollow
2,120SubscribersSubscribe

Latest Articles

207
0
Would love your thoughts, please comment.x
()
x