Logic: Protect the June position because the stock got oversold in the short-term.  However, buy half the number of JUN 25 PUTS as the 30 spread.  This is the "payday" portion of the spread.  This gives you profit potential if the stock continues to fall but at the same time if it retraces to 30 you will not be giving back much, if any.

I started in with half at 30.30.  My peabrain thinks that was a full 5 waves down on the weekly.  A target of 42.50 by the end of summer is not out of the question, which is 40% up from here. 

Long XLE / Short XRT is a correlation trade I hope to put on right near here.  It is mostly a play against the XRT.  I have yet to decide how I want to structure the trade.  Stock, Options or Both.  Dollar for dollar should yield some nice gains.  That's my theory anyway.

While there are non guarantees in the market, I do like this trade and see it as a relatively safe pair trade.  I will try and get some charts up in the morning.

PS.  Merrill had a correlation trade go bad, which resulted in $7B in loss.  Because of this I plan on having a stop loss somewhere near $3.5B.

[Note: I have started writing this before the futures had opened.  Now that it's traded down 2% to 850 the dynamics might have changed.  However I will present this viewpoint anyway]

Don't end up getting into a short squeeze by being overly aggressive getting short.  This is neither a bullish or bearish call but more of a warning to shorts.  But first and foremost,we must yield to the market.  We can come up with ideas and scenarios but ultimately we are at the mercy of the market.  

 This viewpoint obviously goes against the "technical grain".  The flu news could prove to be the catalyst for the necessary leg down, but at the same time it could led to a snap back rally.  The market is 'tarded. 

You can read around and find enough negative divergences in charts while the indexes are rising.  This is luring more and more bears back into the game while Goldman Sach's program trading runs over them and financials being propped up until they can raise capital. This in turn fuels more garbage buying and short covering and late to the party buyers who ate the green shoots and drank the kool-aid (soon to be the bag holders).  

All eyes are on that 875 level and there will be plenty of stops just above.  Thurgy has a sneaking suspicion we could short-squeeze all the way to 912+.  Why?  Everything else shows overbought, low put/call, falling VIX, negative divergences and indicators registering 2007 bull market highs.   Then on the other hand you have earnings, the Fed prop, quant deleveraging and bulltards.  Those pretty much negates the use of technicals at the moment.  For now watch the 850,843,835 levels for support.  I see the same technicals, and I too am waiting for the leg down.  However, I'm not getting in front of the bus, but I will ride in it whichever way it's going.  I do plan on putting on the +XLE/-XRT trade regardless.  I am also long Gold right here and will buy dips.

Thurgy could see us having back-to-back turnaround-Tuesdays.  We gap down tomorrow to 850 and trade down to 843'ish.  This will lure in a lot of shorts but I think turnaround Tuesday will set the stage for that push to 900+, lasting for one week.  This should complete the wave 1, in what I believe to be a larger 1-2-3 correction.   The following Tuesday we'll start into the downward 2, that possibly could run through the end of May, ending somewhere near 800. Trading here will be extremely choppy.  From here we should get the final push higher towards 980 and complete wave 4 sometime late summer.   Get your financial house in order.  Prepare yourself mentally, physically and financially for some very tough times ahead.

Those who consider themselves "investors" will watch as the green shoots wither away as they are left holding the bag.  The visions of seeing their Bank of America and Wells Fargo stock doubling or tripling suddenly turns into desperation.  The home gamers "investing" in the financials will never realize the banks and the fast money traders have taken your money.  Your consolation prize will be increased taxes to give to the banks.

 

More than 150 examiners, supervisors and economists from the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation participated in this supervisory process. Starting from two economic scenarios--a consensus estimate of private-sector forecasters and an economic situation more severe than is generally anticipated--they developed a range of loss estimates and conducted an in-depth review of the banks’ lending portfolios, investment portfolios and trading-related exposures, and revenue opportunities. In doing so, they examined bank data and loss projections, compared loss projections across firms, and developed independent benchmarks against which to evaluate the banks’ estimates. From this analysis, supervisors determined the capital buffer needed to ensure that the firms would remain appropriately capitalized at the end of 2010 if the economy proves weaker than expected.

The name of the firm escapes me at the time, but I seem to recall ONE institution many years back requiring 150 examiners to pour over the books for a month. Here we have 1/10th the people, and some of those are supervisors.  Considering this is a government job there are probably 3 supervisors and 1 examiner per institution...

Watch those three names.  BIG looks ripe to short straight away with a stop just above the most recent swing high.  The other two have similar setups... No positions yet but it's getting very hard to resist.  There is no guarantee of the trade working but the Risk/Reward setup is very nice when using strict stops just above their recent swing high (daily chart)

The XLY has just moved above it's 200d moving average.  I'd rather fade this move, but knowing I can get ran over by a bunch of RetailTards.

I'm considering long Gold / short Oil here.  In the words of Clark W. Griswald, "this is crazy, This is Crazy, THIS IS CRAZY!".  

I will be watching and waiting to see if the market makes a new high before I go in.

Edit: Long Gold, but not shorting oil.  

24-Apr-2009 12:00 EST

Well, when using the SPX as the comparison.  Rising prices, falling TICK... Hmmmm.  You could extend those trendline out a couple of days and it's the same picture. Reversal or squeeze...  868 and 875 are the major resistance points.

In order for this pattern to be valid we can not see IYR go higher than 32 (~32.10).   The measured move would be 28 - (33.30-32) = 26.73; a good 15% lower from here.  A stop loss at just above 33.30 would be sufficient.

Edit: It has broken above the perceived resistance, therefore the measured move is no longer valid.  I will be watching this one near the end of the day, I will more than likely scale into a short position today.

Also, I will be cherry picking from the short ideas list now that we've got to watch these for almost a week.  I also wanted to wait till after earnings before taking any positions.  I will also consider the ones who's earnings are more than a couple weeks away.  NFLX, AIPC and JOSB are the only positions I've taken out of the list thus far.  

Rather than take profit I decided to short half the number of contracts in the May 45's at a whopping $4.50 when the stock was trading at 43.80.   It will probably bounce back to around 45.50 or so.  

Stocks I watch that are most vulnerable to a reversal if we fafil to break above 867 today: CMI (L:29.30), HOG(L:18.78), M(L:13.20), CTV(L:19.2).  I will  look to short these on weakness in the market.  

I would prefer to short these AFTER a bounce higher, perhaps near 845.  Since I would rather wait for this bounce higher I'm guessing the market will go straight down without me :)  I also feel FCX will have a snap back rally once it reaches 36.50, or 35.  But they do have earnings tomorrow and I do not play the earnings coin-flips.  I will probably be stubborn and bite on NFLX soon.

APOL has already ran away for now.

Edit: The two stars on the upside are possible upside retracements.

No quicker than it took me to say I felt a shallow pullback was more likely did the market make me think twice.  Originally I stated 836 as a shallow target, and even with today's close at 833 it's highly probably we go to 812, 800 and 780 as likely stopping points in this wave.   However, we need another day or two before making that determination.   We are oversold in the very near term so a bounce sometime tomorrow is likely.  Targetting 855'ish as a possible top, with resist at 845 as well.

Intraday Prices as of Noon EST.

I had only managed to put on a couple of these Friday, unfortunately.  Since I had posted this a couple hours before the closing bell on Friday I didn't have time to put on many positions, nor did I want to.  There are a couple of duds here and NFLX doesn't want to play ball.  It's managed to stay in the green most of the day so I will stay away from this one.  A couple of these were gimmes (DB, FCX, IYR and JOSB) as they were so extended.  However,  as "real" as this sell off feels, I'm still not going to put on the second half of the index shorts yet in fear of another jam-job by the Fed.  Par for the course here would be a total market meltdown and me not positioned fully.  Quite simply day trading the 50x inverse etfs might have been more appropriate.

Somewhere along the way there will be a great clash between the people who feel they missed out on the sell-offs and those who missed out on the rally in March.  I think the bulls will win out in the short-term, but the bears will put up a fight.  Propping up markets is only temporary and eventually the love potion will wear off.

I've did very little posting lately mostly because I do not feel comfortable putting out long or short ideas in this market while houdini-bank-profits are going on.

I've only shorted a tad at this point and am holding off before getting a little more aggressive. After further consideration I feel like any pullback from here will be shallow (836?) with another push higher towards 900, perhaps even 935, before we get a deeper pullback to 8'hunert. I'm fairly neutral at the moment. If we gap down big tomorrow then perhaps its on but the chances of a snap-back rally is high.  I don't feel like being the first one in the water this time. I'll let someone else test the waters first to see if they are eaten by a shark. Nor am I chasing up here. This week will be the telltale on whether we get the pullback sooner or later. Every technician sees the overbought conditions coupled with negative divergences which is why I'm cautious shorting here because of the squeeze factor. If the market turns down then I'll gladly pile on, but until then I been keeping myself occupied in the futures market and writing some automated trading strategies which I hope to cut loose soon.

Gold continues its march downward. I would expect it to get a bounce not far from 865 up to as high as 925-950. I'm considering silver or getting long the miners near gold 850. GG at 25 looks like a possible entry, but its too early to tell.

Best 

Based on a pullback from near this area (874+/-), down to the lower 800s. I will try and get up some charts this weekend. These are not positions, but swing trade ideas. I need to check the earnings dates on these though to make sure there are no land mines. Since the short/intermediate trend is up in these, this is a counter-trend trade so tighter stops will be required. I'll update these with closing prices after the close. I have no positions in these yet.

Symbol, Last Trade
MVSN 19.98
MYL 14.72
TRA 28.52
PBR 34.20
NFLX 48.75
JOSB 39.61
PENN 28.72
DB 55.53
BBBY 31.75
AIPC 32.10
IYR 33.03
FCX 43.10

I half in now, and half if we get to 875. This is for a swing/pullback to around 812'ish. Getting toppy here. FCX is looking juicy for a short-term short. So is Jos A Stanks (JOSB). There are several short candidates I'll try to get up in the morning.

IYR +9%
XLF +5%
XHB +4%

Transports? Nothing. Energy? Nerp. Materials? Nadda. Tech? Negative. Consumer? Sorry. Commodities? Flat.

Real healthy rally. lol.

Repeat after me.  Goldman, Paulson, Geithner, Banksters.  Birds of a feather flock together.  I would like to know how Goldman might have used the TARP money to make any further hedged bets against banks common stock.

On 17-March Thurgy writes on the topic of Goldman Sachs:

This was a headline several weeks ago out of Bank of America.  Apparently the secret to success in business is to just charge higher fees.  Right.  The secret is the backroom gaming of the system in which Goldman is the house.  

It goes all the way back before AIG received its first "loan".  The weekend meeting between AIG, Treasury and Goldman Sachs.  It was known at the time Goldman had approximately $20B exposure to AIG.  We also know that Goldman received $10 billion in TARP funds, which it says it would like to return.  Goldman has also admitted to having a hedged position against the AIG exposure.  My guess?  They were shorting AIG common and every other instrument to cover a good portion of the exposure in case they were not made whole.  In the end they were made whole by the taxpayer giving Goldman $18b by way of AIG  I'm guessing Goldman also scored on the hedged side of this position as well.  No need to keep the TARP money now.

Today Market Ticker sounds off on the topic.

There is a rumor about Goldman Sachs flying around on the street - allegedly they are about to report their second-best quarter in history, +$12 billion or so.

Gee, you don't think being paid by the taxpayer through AIG's "conduit" for losses that didn't (yet) happen at 100 cents on the dollar might have anything to do with that, do you?

And further (and potentially much worse) there is the repeated statement by Goldman executives that they were "fully hedged" against a potential counterparty default by AIG.

One wonders - was that "hedge" to be short the equity on AIG itself, perhaps?

Why is this important? 

Because if that's how Goldman hedged they got paid twice and the taxpayer literally got robbed.

Someone in Congress needs to look into this now; there are already rumblings of investigation.  Those rumblings need to get a lot louder and turn into subpoenas, not "polite inquiries." 

If in fact Goldman (or anyone else) was "hedged" against a possible credit loss from their CDS with AIG and they were able to collect on that hedge (no matter what it was) those payments through AIG need to be clawed back immediately as nobody is entitled to be paid twice for the same risk and reap what amounts to a windfall profit by quite literally engineering a multi-billion dollar transfer of funds from the Taxpayer to the firm!

This is not small potatoes either - we're talking $100 billion+ in aggregate with these various banks on a worldwide basis.

One helluva run in two short weeks, up nearly 50%.  I mentioned I felt this stock could double  over the next 6 months and it's already half-way there since posting.   However, it's pretty much over done in the short-term; 21.50-22 should be the stopping point for now.  There is no better time than the present to harvest those gains and wait for a pullback.

Last Mentioned:  New Position - CLF