If not for after-hours manipulation designed to leverage thin markets, stocks would be flat since September. As Tyler Hurden documents, virtually all of the substantial gains shares have achieved since then have come after the NYSE closing bell. Click here for the full story at ZeroHedge.com.
From the monthly archives:
December 2009
It is absolutely dumbfounding that Harry Reid’s legislative turd is about to become law. For yet more reasons why this is The Worst Bill Ever, click here. A Wall Street op-ed piece dissects some of the bill’s hidden costs, which are all but certain to bankrupt or drive out insurers who serve the market for individuals and small groups. For one, because such companies don’t enjoy the economies of scale of larger insurers, their administrative costs are typically around 30%. And yet, Reid’s big, fat stinker would make them give rebates to customers if administrative costs exceed 10 percent.
Buyers of the January 46 puts could have paid as much as 1.11 or as little as 1.06 — more than I’d anticipated because put volatility surged on yesterday’s gap-up opening. We’ll stick with the 15-cent stop-loss in any event, using the low end of the range. That means you should exit the puts on a sell-stop if they trade for 0.91.
Gold was moving effortlessly higher Wednesday night even though the Dollar Index was off just slightly, suggesting there are committed buyers behind the rally. The high so far is 1103.70, the precise target of the pattern show in the chart, but any progress above it would portend a minimum 1107.50/1108.60. To determine whether this surge is more than a one-day wonder, we’ll use 1123.90 as a benchmark. A print today at that price would shorten the odds that an important bottom is in.
The futures are bound for at least 1146.50, presumably by New Year’s Eve. Another Hidden Pivot that will be playable when the futures take out yesterday’s high is 1132.50. That will be my minimum upside objective on a breakout, and it is shortable with a stop-loss as tight as 1.00 point. Longs from these levels therefore have a potential 14-point ride, but camouflage will be tough to come by with the bear rally now scraping highs.
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Despite my bullish outlook for the E-Mini S&Ps, the 45.44 rally target flagged here a while back still looks sufficiently persuasive to justify our risking small change to short it. I’ll suggest buying two January 46 puts (QQQMT) for around 1.02 ( instead of the original four January 45 puts) when the Cubes get within a few pennies of the target. Stop yourself out if the puts trade 0.15 below their purchase price. If the stop is hit, the Cubes are signaling more upside to at least 46.00, another place where we would attempt to get short. The last stop, Hidden Pivot-wise, would be at 46.91, where I’ll be more eager than ever to lay ‘em out. Bottom line: Save some ammo for later, just in case.
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A while back, I identified a Hidden Pivot at 607.28 as a minimum rally target, suggestion that you short this chazzerai when it hit our number. That day has nearly arrived, and the bet is still on. Short by buying two January 570 puts (GOPMN), day order. You can use a 1.90 limit order today if you want to park the order with a broker. However, this estimate is subjective and may go unfilled if put-option volatility rises as GOOG rallies toward the target. I’ve included a snapshot of an options calculator with a 21.1 implied volatility that closely approximates the option’s actual volatility with the stock trade about $6 shy of our target. The best way to get a fair price on the option, however, is to eschew calculations and simply position your bid so that it is in line with the spread as GOOG approaches the target. _______ UPDATE (1:00 p.m.EST): I’ve issued a “sell” order in the chat room, since GOOG trashed the target after slightly exceeding it on an opening gap. A chat-roomer reported paying 2.35 for the puts — reflecting a volatility explosion as GOOG climbed, and so there would be a $50 loss on the trade if exited on a 2.10 bid. It was possible to avoid the loss, however, and perhaps to come away with a small profit, if you used the initial pullback to 605.00 after the target was hit to take a partial gain.
$1059 Is a Number to Watch in Gold
by Rick Ackerman on December 24, 2009 12:01 am GMT · 10 comments
Gold’s slippage in recent weeks has closely mirrored the U.S. dollar’s rise. For bullion bulls, the good news is that the dollar is rallying not for fundamental reasons that might persist indefinitely, but because of short-covering by carry-traders who effectively went short against the dollar. Mostly, they borrowed greenbacks in size in order to plow them into something else offering either higher yields, greater leverage, or both. That’s what happens when the Fed artificially lowers interest rates: financial speculators, including most of the biggest banks, borrow all the dollars they could conceivably wish for, » Read the full article