Hey guys,
Even though I had already had a video on friday, I wanted to add another video to show the BULLISH case in the action that we’ve seen in the last week. This will help you decide whether you want to be a bull or a bear into next week, and what price levels you should be looking at to confirm your suspicions.
I look at the 3 major indexes, SPY, S&P, Dow, QQQQ or Nasdaq, and XLF
Timmy To Demonstrate Math Skills in Beijing
Geithner needs to show how the U.S. can prevent the value of China’s debt holdings being eroded by a weaker dollar or by inflation driven by the stimulus money being pumped into the U.S. economy, according to Yu.
“It will be helpful if Geithner can show us some arithmetic,” he said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSAcRWnvE6ww&refer=home
There’s little doubt that the US will eventually screw over China and other creditor nations. I think the US knows it and the creditors know it. The question becomes who can USE who more in the meantime to their advantage? Will the US succeed this time in gaining the upper hand? highly doubtful this time. Will there eventually be World War III over this?
Some scenario’s;
eventual U.S default
Infaltion/hyperinflation
war and other very very distubing things
Some possible, but improbable “solutions”
A major US oil/energy find or major technolgical advance (don’t we wish?)
enticement of massive productive immigration into US
“Soylent Green” or something else contrived (maybe biological) to rid the US of old, unproductive, entitlement demanding, ready to retire and downgrade home size baby boomers, along with social “deadbeats”.Not a pretty picture at all.
The truth is, i really don’t see any viable way out, and that this can only end VERY VERY badly, regardless of what happens in the near term
I will like to also add that there has been huge PUT option buying out of the money on the SPY and the USO (oil)
Idan, is there a link to this information?
Thanks in advance.
hmmm i’m just looking at my option chain platform…but i’m sure if you go cnbc they usually have something about option activity, especially fast money trader pete najarian
Use dollar cost averaged put/call ratios. An investor that is hedging a position through puts may not really be all that bearish. He just wants to buy some insurance. In that case, he would likely buy far out-of-the-money puts that cost very little money. A really bearish indication, on the other hand, would probably choose an option with a higher delta (an at-the-money, or just in-the-money) put option. In that case, it would make sense that as traders get more bearish, the Put/Call ratio using dollar volume would show a larger increase than the one using contract volume.
well that would be true… if there weren’t 2 of those strike prices on high volume.. it looks like people are putting on a PUT vertical spread.
According to OptionPain.com, the SPY max pain is still at 89 and USO is at 32. However, If you look at Open Interest, the $90 strike is seeing 4x the volume of calls/puts than the closet range.
My theory is that this could be one of two thing:
1) Usually the big funds make the most money by SELLING options and then forcing the market back to the max pain levels; however we’ve seen tremendous volume of 100k lots of option buys to open, most likely so they can profit from BUYING options this month.
2) The big money is allowing the market to rise to sell more calls and buy-back those puts, and then take it down right before OpEx. We saw this happen every single month from September until March like clockwork. This is quite easy to do because all “they” have to do is sell into this rally, they won’t even have to short it. The 200sma is a very good excuse to do so.
All told, I’d be very very cautious about getting long this market, especially with Open Interest on Calls and Puts at the $89-90 strike.
Brilliant.
Art Cashin is way beyond disturbed and has been calling for the market to correct, like us, for a month. it’s true, making this call for the market to turn south, FOR A MONTH. is he going to end up in the hospital? —– http://www.cnbc.com/id/30999808 —–
Even Erin Burnett is visibly perturbed by the numbers yet the market moves nowhere
—– http://www.cnbc.com/id/15840232?video=1135241989&play=1 —–
I’m bashing the CNBC bullshitishness all the time but if you serach hard you can find things that bring my concerns to the table. people have been and are being strong armed into stocks. — http://www.cnbc.com/id/15840232?video=1136183825&play=1 —
Richard:
Logic has nothing to do with it. In fact the more you raise these realistic objections the more this rally would persist.
thanks for the links, Richard.. Some pertinent points I have gotten from them;
There continues a trend of revisions to economic reports/indicators for prior months, almost always downward, and sometimes huge.
“9.12% of ALL US loans are now delinquent, and 12% of ALL US loans are not current.”
“half of all past due loans are empty houses, they don’t want a modification.”
you better believe it. the “green shoots” data has run its course. it will be back to reality soon and im pretty patient. my puts are out to December so im not trying to time the market cracking to the day.
pretty amazing that banks can have loans on the books as “past due” on a fargin empty house. it actually makes me physically shake. the crap that is coming out can’t possibly be ‘priced in” .
the down draft in prices will come un announced and move the market lower before the open when many longs can’t get out. you guess what day because i have no idea.
many times in this bear market , rally’s have ended late in the first week of a month. this pattern changed. but remember, once you get used to a pattern it is too late to trade it. we may just revert back to the “be short for the first 2-3 weeks and get long for the last week” of every month. remember those days?
http://market-ticker.denninger.net/archives/1072-What-Was-THAT-Friday-Market-Close.html
I always get a kick out of reading/watching Karl’s posts. He was my sysadmin and internet provider in the mid-90′s at MCSNet.
Thanks for the link Phoevos.
The author brings up 2 interesting scenarios to explain the extraordinary (but becoming ever more ordinary) action on Friday. The author leans to his scenario #1. His scenarios basically are;
1) forced
2) planned
Being my suspicious self, I tend to lean more to #2,, which would then mean the action was a combination of both 1 and 2. Even so I still cannot glean any real insight as to the purpose ( and the next intended direction of the market), other than to believe that this week, and especially Monday will likely be very volatile.
The only thing I can say is that I’ve been itching and burning to go heavily short eventually, but only when I can do so confidently and with conviction.,
I am hoping the remaining indices pop above their 200MA’s tommorrow, and their May highs are topped. I want SPX 934.33., ha.
http://www.businessinsider.com/henry-blodget-niall-ferguson-no-one-has-the-faintest-idea-when-the-economy-will-recover-2009-5
I found this blog, it explains the role of Market Manipulators in general, and more specifically in the Junior Mining Companies in Canada.
http://www.stockhouse.com/Bullboards/MessageDetail.aspx?s=PLY&t=LIST&m=17009080&l=0&pd=0&r=0
The Chains Around the Zombie: Gold is Too Tempting
Judging from the Treasury TIC data, the US might expect to import about $400 billion of capital from the rest of the world, against a $1.8 trillion federal financing requirement. Earlier this year the World Bank warned of a possible $700 billion reversal out of emerging markets to finance the Treasury’s requirements. No such thin will happen. For the first time, the Treasury has to bid against other, competing assets, such as commodity-backed emerging market equities. In two fell swoops, the Bush and Obama administrations have put the US at a disadvantage in world markets.
http://blog.atimes.net/?p=1019
“Time Fibonacci’s”
I’m going to go post this on Social/photos in a minute. Note that there are 15 trading days in each of these P E R F E C T ‘time waves’.
Tuesday is day 15 for this 4th wave. Do we go down Tuesday? Will Ed be short Mon nite?
http://i44.tinypic.com/2afd202.jpg
It’s highly unlikely the market will get destroyed this Summer but Fall may be a different matter. Also watch the 12 Month EMA in the S&P 500 as that has a been a key long term resistance/support area going back to 2000.
3min…..I know this isn’t exactly what you were looking for but it’s a start and to say the least the PUT/CALL ratio is looking bearish everywhere.
http://www.iseoptions.com/WebForm/viewPage.aspx?categoryId=126&header3=true&menu0=true&link1=true
This one is what I use sometimes with Yahoo. It’s for TCK but I’m sure you’re smart enough to figure it out!
http://www.nasdaq.com/aspxcontent/options.aspx?symbol=TCK&selected=TCK
I have one more but for the life of me can’t find it?
Hope it helps.
I do have exactly what you’re looking for but still can’t find it. Getting warmer though.
http://www.marketwatch.com/investing/fund/spy/options
Thank you!
Just wanted to add some input on put/call ratios. I think they are meaningless unless they are dollar cost averaged. No use for the ratio, unless it takes into account how much they were willing to pay for the contract.
Before I get questions on why, it is more important to know how much total money is being spent on puts versus calls, rather than just simple contract volume.
Ken Tower at CyberTrade Inc calcualtes a 2-week versus a 26-week moving average of the pull/call volume.
EThe deviations between these two averages determine the extremes in option emotion. A high ratio suggests the uninformed players are pessimistic. Ned Davis Research compilies this information (www.ndr.com).
I frequently check the CBOE P/C ratios but I haven’t been able to use it succesfully. If someone could post weekly moving averages as suggested by Ken Tower, a reversal would be better determined.
ES 923 It’s gonna be a wild ride.
What’s On Timmy’s Table In Beijing?
Wang Jian, secretary-general of the China Society of Macroeconomics, agreed. “Prospects for the US dollar and US Treasuries do not look good at the moment, and even worse in the long run.”
Wang said Beijing would expect the Obama administration to lift the ban on high-tech exports to China and lower barriers for Chinese investment in the US.
http://www.chinadaily.com.cn/china/2009-06/01/content_7957227.htm