I love it when a plan comes together….Earnings season is always something of a daily crapshoot based on the latest stock to report, and the first one out of the gate certainly did crap. Markets had a gap down and continued down….for a while. But then, as usual, “someone” started to buy up the futures and associated baskets of stocks, and the indexes moved up. Check the article below for the conspiracy theory.
Since I have been positioning myself to the short side for over a week, it finally paid off. It was my best day of the new year. AA puts, QQQQ puts, QID calls, EDZ, and TZA all got into the money….cashed some out completely and others just partially. Looking for some more downside.
I found this interesting: 10 times more 3-yr treasuries sold in 2009 vs 2008 and 15 times more compared to 2007. That’s some credit card! It’s going to be a bitch when we have to pay it back 
Not only are we losing jobs, companies are afraid to hire!
Many Firms Reluctant to Hire Because of New Taxes, Rules
And thus, confidence drops:
Confidence Drops Sharply, Erasing a Positive Trend
Finally, my conspiracy theory gains traction:
The Government Must Be Buying Shares, Because Private Demand Just Isn’t There
It wasn’t a good Initial Claims report, unexpectedly climbing this week and revising last week’s report up also. Markets started red and then began a slow grind up for the rest of the day. It was still a mixed day at the end, no index gaining or losing much.
As I said yesterday, employment numbers will not be that important…it’s how the markets react. If jobs numbers are lower than expected, traders will sell fearing the economy won’t come back quick enough. If numbers beat expectations, traders will worry that the Fed will take away the punch bowl and raise rates sooner then expected. So there may be an upside pop, but I’m looking for a down market…if not on Friday, then Monday.
If the markets pop or move up on Friday, I’ll add to my shorts. If they happen to start diving right away I’ll just ride ‘em down….EDZ SDS QID
Have you watched GOOG the past 2 days? I guess nobody likes that new phone they announced. And AAPL VZ T and all the techs must have sympathy pains. Everybody must be getting out of tech and into banks.
More good news?…More than 6% of commercial-mortgage borrowers in the U.S. have fallen behind in their payments! Delinquency rates on loans for hotels, shopping malls and other commercial properties could rise to between 9% and 14%. Might be time for SRS again. Here’s another reason why this bailout sh!t ain’t working. Geithner’s New York Fed Told AIG to Limit Swaps Disclosure. Gee, maybe Timmy may lose his job.
And if there is anything you don’t like about my blog, please tell me. I don’t want to end up like these guys:Blogging is a dangerous business.
That stock fall at the close on New Year’s Eve turned into a big stampede of bulls for the new year markets…. It started in the futures markets Sunday overnight and continued thru the day. We moved quickly from an oversold position into overbought….all on low volume….crazy market!
Seasonally, today and tomorrow are strong days, but then, Santa’s rally ends. I’m actually looking for a reversal this week, so I started to enter some short positions via QID calls, QQQQ puts and EDZ. I hedged those positions by scalping ES futures….a few bucks from the long side while accumulating short positions.
I sure hope volume starts to pick up no matter which direction they choose to go. I would have thought everyone would be back from the holiday festivities. Maybe the holidays aren’t really over until the BCS Championship Bowl is done. 
Was anybody trading today? Volume was so low! I spent the day…and probably the week, just closing positions that I have been nursing….GS calls popped in the morning and PSID popped in the afternoon, allowing me to get out with a few bucks. I close out many positions here because I use mark-to-market accounting….even if I didn’t close out the positions I would still have to take the loss. So why not?
On the other hand, I did pick up some puts in QQQQ and calls in QID….just a few contracts each, looking for a correction soon.
ES usually trades a couple million contracts a day….today only 472K! Man, talk about low volume. 
Consumer Sentiment comes out tomorrow, Chicago PMI on Wednesday and Inital Claims will finish out this year on Thursday. And if the eco-data doesn’t stir things up, there’s always all the political shennanigans going on. Have a fun week…..and a Happy New Year
Published on
November 2, 2009,
3:29 am in
Trading and Weekly.
Tags: BGU, BGZ, ES, QID, QLD, Russell, SP500, TNA, TZA.
If you had slept through Thursday, the markets only went down a little bit on Friday. But if you got suckered in on Thursday’s trap, you probably got upset.
Remember that many mutual funds had their year end take place on Friday, which surely contributed to the selling pressure as they locked in gains and reallocated their portfolios. But Monday starts the historically strongest 3 months of the trading year. Of course last year wasn’t very inspirational. 
Reading articles and blogs over the weekend, it sounds ominous out there. But, when everyone gets scared, it may be time to pick up some cheap stocks. Looking at some charts, we look to be close to support in the S&P500, around the October lows.
The Russell has already cut through its October lows, after putting in a double top, and is approaching its September lows.
FOMC meeting this week and lots and lots of economic data with the monthly Non-farm Payroll report on Friday topping it off. The futures this evening have already put in a 10-point range and looking up. Should be the start of an exciting week. I’m going to concentrate on the ES futures this week and also watch the 2x and 3x ETFs like TNA / TZA, BGU / BGZ, QID / QLD. I’ll let you know how that pans out. 
The markets early this morning were thinking of reversing Wednesday’s sell-off, but then we heard about the housing market via existing home sales, which stunk by the way, and the markets sunk. Did you also notice the jobless claims? Recently the government has shown a nice drop in claims after revising the previous week’s numbers upward. Sorta confusing, but the less bad scenario is loved by traders. The scenario, or was that a dream, I laid out yesterday is progressing nicely!
Then at the end of the day, first PALM got slapped when VZ said they would not carry the Pre. After the close RIMM came out with bad earnings and bad estimates for the future. If this holds, the Nasdaq and the QQQQ’s should start the day on the downside. And me, still short, will be happier than I was today 
I sold off half of my short positions in TZA QID and UYG, and held half for, hopefully, greater profits tomorrow morning. I laso have a long position in OPXA and had a buy limit for NSM at 14.60 but it hasn’t been filled.
Okay, let’s get some more downside movement on Friday, maybe an ES down to 1035, and we can go long for next week for the money managers to dress up their portfolios.
It was an uneventful trading day, until the FOMC meeting concluded a little after 2PM…..then, well, it got real interesting. The markets were making a slow grind upward prior to the announcement and then quickly took off upward doubling its day’s gain in a matter of minutes. You could hear the bears groaning as their stops went pop, pop, pop.
Then reality set in as traders realized there was not any revealing or new news in the Fed statement! Duh! Haven’t we already priced in all this bullshit? The markets then spent the next 90 minutes diving fast and hard. You could smell steak grilling as the bulls had their stops popping on the way down.
If you’re a regular reader, you know that I have maintained fairly bearish positions for the last month…..and you know that for the past week I’ve had problems with my internet connection. That mixture put me in a precarious position today. I was nursing my position most of the day between internet outages. About 2 o’clock, prior to me setting some emergency stops, I lost my connection…cable internet down….cable TV up (it is the same cable isn’t it?). So I’m cussing up a storm as I was watching CNBC and waiting for the internet to come back. It took about 15 minutes this time and I’m still sweating. My positions were all down TZA QID and UYG puts….but not as far down as I thought they would be with that market run up. So I let them stay…..and by golly gee willickers, they ended up smelling like roses. Yeah baby!
I did close OPXA early in the day after a fantastic move. It was drowning well underwater last night, but resurrected in the pre-market and reached its high of the day early in the session. After taking profits it had a very nice and orderly pullback and re-entered. So I have one long position in a sea of shorts.
Tomorrow we have jobless claims, always a market moving number, and Durable Orders on Friday. So there is still action to be had this week. If it acts out like my dreams, I’ll see a corrective action this week before we get some quarter ending window dressing. Then a nice crash in October. Well, it could just happen that way y’know.
I spent the day trading in between the ups and downs of my Internet connection. The morning was tough, but later in the afternoon I actually had a 3 hour uptime. By that time the markets were having up and down issues themselves. The Nasdaq ended in the green but overall the markets ended lower on even lower volume.
I played AIG for a bit taking $1.50 of the toal $10 dollar run…a profit is a profit. Took some profits in TZA in the morning and then re-entered, so I’m doing the short overnite thing again, along with QID,and UYG puts. I’m hoping that strategy keeps working.
Some interesting reading: If it walks like a duck, and quacks like a duck,it’s a duck! WSJ reports on Obama’s Nontax Tax.
I’m outta here before the next down tick….
Another uneventful day in the markets and options expiration Friday upon us. Oh boy, this should be a good one. If the markets go any higher, it just means that Monday should be a bigger drop….the time is coming and I think it is close at hand. Futures are already down this evening, but we’ve been here before. The bears need some follow-thru when the markets open in the morning.
I’m short the market this evening holding XLF puts along with TZA, QID and ES futures short. I am also long OPXA, which just happened to crap on me today. It pulled back to the 34ma and will watch how it opens in the morning. Another biotech CRXX pulled back to the 8ma so I entered and it bounced…nicely. I’m net even between the 2 biotechs and will see how I dispose of them tomorrow.
I’m too tired to rant this evening, so here are several stories to read:
Double-Digit Unemployment As Far As The Eye Can See
SEC Proposes Ban on Allowing Stock Flash Orders —-finally
The myth of the jobless recovery
Bank of America, BAC, whose directors were subpeonaed today, raised its ratings for AMZN and sent it on its way to the moon….dragging the rest of the market with it. C recovered some from yesterday’s demise and the third amigo, AIG, went sailing again into the blue sky. What’s wrong with this picture? Well these 3 government-owned companies traded almost 2 billion shares.
If your head isn’t hurting yet, you have to read Forbes magazine:
Getco earns its outsize profits buying and selling securities up to thousands of times a second. This frenetic profession has come to be known as high-frequency trading, and in recent months it has emerged as the hottest ticket on Wall Street. Even as financial markets collapsed last year, high-frequency traders collectively enjoyed $21 billion in gross profit, according to Tabb Group. On the NYSE, daily volume surged 43% through June from a year earlier to 6.2 billion shares; high-frequency traders are believed to account for 50% to 70% of the activity and similar proportions in electronic futures and options markets.
This 2-man company currently buys and sells 15% of all the stocks traded in the U.S. You have got to read this entire article: The New Masters of Wall Street. It will make you sick and you will have to scream What the $%@&*
So what’s the SEC doing? Nothing. Sure they make Registered Investment Advisors (RIA) take tests and complete all kinds of paperwork, and yeah, they bitch-slapped Martha Stewart for making a questionable trade…. but if you want to take over the stock market….sure, go ahead, what the hell…… I digress….my head is hurting.
So besides all that, I was able to trade some ES futures successfully, probably because I didn’t hold anything for more than a few minutes. My QID position from yesterday is underwater, but since it is small I’m still holding. If this damn market continues up tomorrow, I’ll just have to cut my loses…..dammit. Oh well, that’s trading.
One more story for you to read: Bank Failures Could Surge as Commercial Real Estate Losses Continue to Mount.
Enjoy all this good news out there!
There isn’t much to do between the open and the close. I got out of my ES shorts before the open and QID didn’t do anything all day…it only had a 40 cent range, so I’m still in it. And yes, I shorted again at the close. I’m waiting for a tumble in the markets…. sooner than later…. and I don’t want to miss it.
Since there wasn’t much action, I thought I would rant….I’m always visiting blogs and news sites. I should have marked down where I got this, but I forgot. The facts are verifiable though:
A total of 358,471 properties received a default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18 percent from a year earlier, and down 0.5 percent from July, the Irvine, California-based company said in a statement. One in 357 households received a filing.
What the $%@&* ! There has been more than a quarter-million foreclosure filings every month for the last six months, or was that eight! Whatever, that’s a lot and traders dismiss it and buy, buy, buy stocks. Banks are being closed every week but traders keep buying stocks. People are falling off unemployment rolls because they have been unemployed for too long….but traders keep buying stocks. Which comes first, the chicken or the egg?
Mine is not to reason why, mine is just to chart and buy!
Why did the market end in the green today? I did get out of my positions within about 15 minutes of the open, but I really thought the markets would continue down…sort of like the Nikkei did earlier. There was some sort of Obama speech on Wall Street, but it was just a repeat performance…same old shit, different day. So he can go to Wall Street to commemorate the Lehman disaster, but couldn’t make it on Friday to remember the 9/11 disaster. My, how patriotic of him!
Then there’s the whole protectionism thing with China, foreclosures still showing some incredible numbers, and volume is still stinking. So can you guess what I did? Yep, I’m short again. This overnight thing seems to work. Of course if the markets move against me at 4 in the morning, I at least can trade the index futures and close my position. It’s the equities that sometimes cause a problem. But I still picked up some QID near the close.
Remember it’s options expiration week so it will be crazy….real crazy. Keep your eyes open and be ready for anything.
