Wednesday, October 28, 2009

UUP up again today marginally, USD @ support. Gold sliding (UUP,USD)

March 23 2010 Update: UUP currently is trading at

The USD gained in trading today on renewed chatter the FOMC is going to change its "language" on its current near 0% rate stance. The chart on the left again highlights on a weekly chart of the UUP the oversold condition and the massive capitulation volume coming off support.

Are we "topping"... Examine these charts GS - JPM (GS)(JPM)

WE have on the LEFT a JPmorgan chart on the right GS. Why are these examples of a topping market? JPM has been strong through out the whole downturn and Goldman has led the train like a valiant leader.

Tuesday, October 27, 2009

Dollar strength kept S&P500 & Nasdaq at bay (USD)

Has the vise started tightening on the UUP shorts? Granted the move today was not huge, the UUP bid most of the day with daily volume being 4,060,000 higher than average of around 1.8 mil. The clear inverse relationship between the UUP and S&P500 is demonstrated by the chart to the left. 

You see as the UUP(blue) traded up, as equities(red) came under pressure. If you take volume into consideration, you can argue UUP moved FIRST then equities moved inversely. I personally did not watch trading close enough to see this anomaly, but one thing is true, if one moves the other moves opposite.

Monday, October 26, 2009

Has the S&P500 broke the almighty uptrend? Listen to the tape. (S&P500)

Today price action told the story. We had a trending down day where we broke previous days low in the S&P cash market of (1037.25)with sustained selling on higher than average volume(132,000,000 more on SPY than average of 189,000,000). This action has not been seen in six months.

The old saying goes, "The biggest market moves happen when you least expect it." Today was a great example, the longs were sucked in yesterday and smashed today. One of my old risk managers told me, "The market can remain irrational for longer than you can remain solvent." Best market advice I could ever get.. If you fought the tape up until this point your done, i'll admit I fought the tape in the beginning but i threw in the towel and got long riding the trend. There is a time and point for every trade, the best traders recognize when they are wrong and flip the trade around.

Dollar squeeze coming? UUP showing signs of life (UUP)

Today the price action (mainly on the bid per NYSE tick) on the S&P500 & Nasdaq indicated a clear inverse correlation between the dollar and equities. Obviously the connection has always been part of the equation, what has not been as obvious is how many traders are watching this trade. As i posted earlier today on twitter, UUP showed large volume spikes today following the rumor of S&P downgrading the banking sector. If you look a bit further out you can see UUP has been in a downtrend finally finding some historical support down here around 22ish. As Roubini mentioned a dollar collapse is a lot less likely than a dollar rally. If this is the case profits from the rally we begin to be taken aggressively out of fear of, this will create great sell side pressure on equities and commodities alike.

This timing is almost perfect, the rally has been way over extended, near 60%, we are exhibiting price action (tight ranges, easier to fall than to rise) in the index's which indicates a toppy environment. I am basing this off of most good news is being sold in relation to earnings, as NOT good enough. The only example i have which goes against this hypothesis is Amazon, though I think this was more of a market momentum trade than fundamental. Amazon will at some point have to trade down a bit as profits are taken on a nearly 45$ run in less than a week.
Anyway, back to the my point.. UUP has had nearly zero volume on the buy side in months, today it woke up the market sold off on rumors. Rumors are moving the market, the financial sector still has systemic risk associated, I.E. Bove downgrading WFC sent the market into a tizzy, today the S&P downgrade rumor sent everyone heading for the bid.

These rumors have not even been substantiated, what happens when something real hits the market? I think as the dollar firms up we are gonna see the market become sell side again. I could be wrong but if you use these signals to help formulate your trading plan you will be rewarded.

Friday, October 23, 2009

Micrsoft & Amazon beat, party like 1999? (MSFT,AMZN)

I would say main street might think its 1999 but i am skeptical. Why? Because we are still losing jobs hand over fist, in 1999 companies were paying kids in and out of school NOT to go to grad school and come work. This rally is getting extended, a bubble could be in the making, if it pops the bottom will fall out faster than you can log into your TDameritrade account and hit the bid.

Yeah yeah the shorts, maybe it will collapse into the open but i doubt it. The really was a wild card, the options yesterday did not price in this move. Aha this confirms the number was a true smash, no whisper # here. My play for this type of move is either bid the OTM calls under the market hoping to get hit on a pullback & price inefficiencies. As i type this Amazon is up another dollar on increasing volume. Good luck do not be greedy, if i were you i would take profits, you can not go broke taking profits.

Place your bets, place your bets... No more bets please (XHB, TOL)

Not to sure what to make of these big bullish bets on the front month options in the XHB, but as options traders we use information like this to help foresee the future. 

Based on the call volume in the XHB 16 strike, TOL 20 strike and LEN 15 strike its looks like there maybe some bullish news out on the us housing situations. 

The volume today has exceeded the open interest meaning a new position has be opened. Though we are not reading into this to much, it is something to keep on the radar.

Thursday, October 15, 2009

GoldenSlacks beats the street est, traders say... NO SOUP FOR YOU!

Looks like Goldman beat estimates with non banking revenue, . This is all old news to traders as the ramp up from 145 ish was the classic, "buy the rumor, sell the news" trade. As for Citi group i think they will disappoint, im basing this solely on the price action in the weeks and days leading up to this number. If they beat, it wont be by much.

The trade out of this is gonna be futures sell off in the AM and most likely catch support near the mid day pivot points yesterday. If you got puts overnight solid, if not do not chase the trade. Buy the dips, sell the rips.

Other interesting news Nokia reported a surprise miss ... not good for the industry as a whole sentiment. Its already down almost 10% pre market, the trade could be over. Ill keep this on radar for sure.

Tuesday, October 13, 2009

Morning Musings. (CIT) group and (AIG)

This morning we have a few pre market movers, CIT is down on some news its basically going to do a . AIG finalizing deal to sell its life insurance arm to Primus. after meeting expectations. STAR halted on news of CSCO takeover ($2.9 bil). Meredith Whitney and her "advisory firm" have downgraded GS from buy to neutral.

What bothers me about the STAR deal is why could they not waited 30 min till the market was open, give us some fodder come on.. Big deals like this make for great indraday trading, all this pre market stuff is for the birds. I personally feel all these companies are afraid of what will happen if they announce during market hours. I know what will happen, they will sky rocket. Maybe they do not want to have options markets persuade the price? who knows.

This am i am looking to play JNJ on a possibly gap fade up, and i am bidding some CIT puts. The CIT trade could be over but ill watch the price action as they options open up so i can figure out the trend.

Thursday, October 8, 2009

Triangle trading. AIG case study (AIG)

Today i saw sustained selling pressure in AIG, to me the chart said it all. The chart on the left has key breakdown points highlighted with red circles. Inside each red circle there is a breakdown candle with volume confirmation. A lot of my trade set ups come from pattern recognition, either on the macro(daily chart) or micro scale (5 min chart).

Wednesday, October 7, 2009

Do not "chase" the trade.. Buy dips / sell rips

An issue i have seen pop up quite a few times the past couple weeks has been the urge by myself and other traders around me to chase a trade. The psychology of being left behind is the driver behind the "Chase". Here is the trade setup:

You're left behind, the trade is running, you see offers being taken, you see panic buying, 5-10-50-200-500 lots buying on the offer.. The chart looks like a rocket ship (on a 1 min mind you).. you give in you take the next offer. *what happens next is what i have found happens 70% of the time.

BOOM someone smarter than you just dropped a market order on the bid in stock

PPS drops back, options holders get scared and hit the best bid, boom each price levels are exhausted until everyone is done puking what they bought during the rocket up

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