Wednesday, October 21, 2009

P.M. Post.

Here's a snapshot of SPY. Click to make larger.

See my notes on the chart. We many not quite be at the edge of the cliff to dive off. I surely do not know, but from the H&S pattern (in cyan), the great promise of that chart did not deliver. To be sure, this rally is getting long in the tooth, and the easy money (is there such a thing?) has already been made.

Here's a one minute chart from today.

I would have had a better view of this if (1) my cable was not out and I could hear the TV and (2) if Fidelity had not become a pig. I knew the market was moving fast because of the Fidelity issue. I wasn't moving any merchandise though.

Below is a longer term chart.

We are getting into a vulnerable period of memory on the p/v chart. At any rate, the chart suggests that we need some consolidation of gains.

There is some attribution to the sell-off to Dick Bove, who single-handedly missed the bank stock debacle and believed that @ $40 (on its way down to <$1) that C was the buy of a lifetime, believed that loan losses were accelerating.

You will remember, that on September 14, I expressed concern that bank loan losses could be significantly higher than they have been in past recessions largely due to the poor underwriting and the inflated asset values. Well, looks like my eye and surmising are not so far off the mark.

I closed my CFR put position out today for a gain. The stock did not react as negatively to earnings as I expected. AS these were front month options (ex NOV) AND the stock was bouncing strongly upward from its low, I sold just off the low. Sadly, the stock moved very quickly and I had an iffy connection. So I made a gain, but one that diminished rather rapidly. I did sell at the high of the day a PIECE of the position.

I still have NOV 57.5 COST puts. Yes, I went to that well again after having drank from the poisonous bowels of it before. But....they are in the green today.

I hope that your day was a good one. It is nice to see both Glenn and Mark posting. I may have to dust out the cobwebs in the woodshed!

P. S. Nikkei is down as I write.


Anonymous said...

See how volume exploded on the selloff, L? That has been happening for months. So we take it up on low vol and then once we have enough luft we distribute underneath. Really don't have to get out your copy of "Reminiscences" to figure out the result of that game.

Talking heads always have to have a "reason" that this or that happened. Dick Bove, LOL! It's all part of the misdirection.


Leisa said...

Yes, the volume did pick up a wee bit.

I do think that Bove's comment is shaking some out of the complaceny around banks. Meredith Whitney ignited the financial rally, and perhaps DB who has ceased to be significant will make a claim to fame that he ended it!

That the vix went so low day before yesterday was very telling IMV.

Glenn_in_MA said...

good analysis all around...hope I'm not just saying that because it's consistent with my own! :)

vix is interesting here

Anonymous said...

My goodness. Anyone who can figure out what is going on is smarter than me. I expected an up day but lordy!


Anonymous said...

L, did you see the short squeezes yesterday on some names that had been trashed AH due to bad earnings? LOL.

Resumption of trend today? What a ping pong match.


Leisa said...

Whatever market we wish for, all we have to do is wait a few minutes and it is ours. Market chopping around;I believe the good news is getting sold.