Friday, July 11, 2008

Morning Post

Pressed Flower Art - Balance
Giclee Print
by Shelley Xie

As I have no feel for this market, unwilling to make any upside or downside bets, I've been mostly on the sidelines. In anticipation (that's a really nasty word I think!) of a bounce, I let go of my DIA SEP $125 puts as well as my BWA JUL $50 puts).

Under the guidance of M. Musashi's rule #9, "Do not do anything useless", I've been spending time going through charts--perhaps too much time as my eyes and neck remind me.

Over the past few days, the HMO stocks have gathered some strength. Yesterday that strength was punched away due to some changes in the Medicare Advantage Bill being passed. For all of the big HMO's, there is no one left to buy. Accordingly, growth in membership is tough unless you find a new pool. That new pool was Medicare. The bill that passed ended up to be a shark in that pool.

The point that I found interesting is that the run up almost seemed a bit of a feint. Here are thumbnails. It might be worth watching to see if these prices hold.

I've been enjoying getting re-acquainted with The Book of Five Rings. I did put my hands on Sun Tzu's The Art of War (Trans. J. H. Huang). It was languishing in my son's room--and I do mean languishing. It was stuffed in the bookshelf with the cover and about 10 pages folded over backwards. Half of the book is the translation, and the other half of the book is comments on the translation. It was odd to see my penned notes in the margins as they related to business strategy. The applicability of these texts to investing/trading is extraordinary.

There is a natural rhythm to everything, and these texts reminded me of that. In the translator's preface, Sun-Tzu's quotation as follows is highlighted:


"Not battling" is a form of strategy.

6 comments:

nice said...

To that rule I would add..

"The less you do - the fewer mistakes you make"

Less is more...

Gold usually leads oil - if gold cannot make a new high - then shorting commodities will be the correct trades going forward...

Otherwise... stagflation with possibly a market crash scenario will play out as gold crosses $1000 again... and goes higher

Agressive traders could short gold in this 970-990 area and oil in this area 146-150 (plus accumulating highly liquid stocks that have sold off hard on rising commodities)

Otherwise - oil and gold are going up for a reason (war, monetary crisis) etc... and 'waiting' could prove the wisest decision of all...

Jan and Mar was easy to generate activedollars off the V bottom as everyone was in a state of panic...

The recent decline however has been slow and steady... what goes low goes lower...

nice

nice said...

Next week is an options week - so a large swing in the market over the next 5 days could make a lot of sense IMO...

Or has Wall Street other concerns lately than trying to rob people of put/call option premiums?

nice

nice said...

Most interesing thing today is that the 10yr note yield has been rising - despite the 'fears'

Asset allocation out of bonds?
Or Bonds selling due to stagflation worries?
Or are bonds as a 'flight' to safety finished?

nice

nice said...

Thinking about oil...

All the talk about bombing Iran - has probably caused more longterm economic damage than an actual bombing would have...

And all the selling that happens on rumors about financial institutions being in trouble - is very odd - condidering everyone knows many are in trouble - so why do we need targeted rumors to tell us which ones are in trouble?

And why weren't the prices already way down in the 1st place?

Not a normal market.

Market is running on hope and hype.

This market is unable to completely discount anything properly IMO...

It can't (or won't) figure things out on its own.

And it will gladly believe in the hope or fear spread by Wall Street so it can make a profit.

... creates a 'nice' volatility

nice

nice said...

Couldn't get more wild than it was today...

I think this song is fitting..

http://www.youtube.com/watch?v=Yo2DQBlVcJ0

... the weekend at last...

nice

nice said...

I'm not an options trader but...

Traders over the weekend may want to examine the number of call options on SPY and XLF that are in the money... as well as take note of the premiums of their put/calls
going into an options week... and prior to Mondays open..

esp in light of the fact that IndayMac has just failed...

Then one may wish to reexamine the those calls as well as changes in the premiums on the put/calls on the SPY and XLF AFTER Mondays close - to gauge the markets reaction to IndayMac

Any options traders out there see a trade here?

Very very large volume on NYSE today...

enjoy the weekend...

nice