Tuesday, December 23, 2008

Stocks are supposed to waft effortlessly higher the last week of the year, but the buying power just doesn’t seem to be there. So much for desperation’s final fling, a hallowed tradition of Wall Street money managers hell-bent on padding their Christmas bonuses. We still expect a flurry of criminally brazen mark-ups before New Year’s Eve, but it looks as though DaBoyz might be saving what precious little ammo they have until the final session hours of 2008. We glimpsed pale evidence of underlying weakness yesterday bottom-fishing in the E-Mini S&Ps and the QQQs. A recommendation to buy call options in the latter went out Sunday night, pegged to a mildly bearish target about one percent below Friday’s close. We lowered the target via a bulletin Monday, and bought a January 29 call just as the underlying stock was bottoming at our target, 29.13. Ordinarily we would have expected the bounce to last for at least 3-4 hours, since it had taken the QQQs four days to reach the target. But we had to settle for a feeble rally that survived barely 90 minutes, and a profit on the option that would not have covered the tip for two at I-Hop. The Cubes subsequently exceeded our downside target by 39 cents, and although DaBoyz managed to trigger off a short squeeze from those depths, it was barely strong enough to torment bears, never mind strike fear into their hearts. As much could be said of the E-Mini S&Ps, which bounced tradably and precisely from Hidden Pivot supports, but not robustly enough to give buyers even an hour of pleasure. Incidentally, we held an impromptu webinar yesterday morning to watch and trade the market as it cavorted intraday. We’ll probably do it again this morning, so if you get bored and