Enjoy the weekend
1/16/09
Ranges for the close
XLF is really the only sector besides oil that is down....No legs shon so far today and a long weekend for the market
Market Digesting a lot of bad news But up 86 here on the DOW
May take a few hours to work off Thursdays close and todays open if it wants to go higher today...Options Exp tend to neutralize the movement
XLF Day chart
Posted before...Update
Watching this RSI turn at the right place...also for a new low breakdown in case
XLF should Change Composite
to banks without Bailout monies (TARP) excluded
S&P and DOW should drop them as well...GM ect
Otherwise downside pressure on the indexes will remain for months if not years
S&P and DOW should drop them as well...GM ect
Otherwise downside pressure on the indexes will remain for months if not years
SPX breaks 60 min channel 851 now support on pullback
lots of room for the shortterm tech to run
DOW +114
SPX Res 877 - 862
Support levels on trend line ~ 835 then that 817 level
Today is Options Exp...be safe!
1/15/09
I guess I shouldn't be surprised
Bears Next Target: Bubble in Treasury Bonds
There's a bubble in US Treasury bonds. Here's the explanation:
1. The bailout money is not being lent to consumers, but rather is being used by banks to buy Treasury bonds.
2. We've been seeing Treasury bond prices rise strongly (i.e. falling yield rates), which reflects increased demand for Treasuries. At the same time, though, the fundamentals of the US dollar (the underlying asset the Treasury bond is a derivative of) are deteriorating: the country is carrying more debt while taxes are declining and government spending is increasing, thus signaling even more debt and greater difficulty in repaying it.
3. Consistent with Austrian business cycle theory, bubbles are the result of central bank distortions in the money supply. Peter Schiff recently wrote an excellent article elaborating on this topic as it relates to the Treasury bond market.
As we've seen, bubbles don't last forever -- and they always search for needles. So the question: how will the Treasury bond bubble find its pin, and what happens when it does?
1. According to Ka-Poom Theory (which we previously discussed on TradingGoddess), a black swan event -- an outlier with a disproportional impact -- will be the trigger to causing the Treasury bubble to quickly pop. In recent US history, previous examples of black swan events that have lead to sharp bubble deflations have been (1) 9/11 popping the dot com bubble and (2) the Bear Stearns collapse bringing about the subprime crisis and the collapse of the mortgage bubble.
2. As Treasury bonds are owned primarily by foreign countries, the popping of the bubble will be external to the US economy. In other words, deflating of Treasuries requires debt holders in foreign nations, particularly China and Japan, to sell off.
3. Just as global deleveraging to pay off dollar denominated debts resulted in a sale of foreign currencies to purchase the US dollar, a mass exodus of Treasuries led by foreign holders will result in Treasury bonds being sold and exchanged for foreign currencies ( Iceland and Argentina serve as historical examples of this concept, as they were environments in which bubbles government debt were owned pre-dominantly by foreigners). And given that China and Japan are primary Treasury bond holders, an appreciation in those currencies as that money is brought home seems natural.
So when will it happen?
Impossible to predict, in my opinion. As a market bear by nature, I think playing this from the short side by looking for when momentum in the Treasury bond market turns south represents an opportunity. Currently, the chart for TLT, a 20+ year Treasury bond ETF, looks a bit bullish. and is rallying after bouncing off support in the 111.60 area. Should the market re-test this level with bearish momentum, it may be an opportunity to ride a bear trend as the Treasury bond bubble begins to deflate.
Disclosure: short USDJPY.
Simit Patel
InformedTrades.com
Posted by Simit Patel at 1/15/2009 12:03:00 PM
There's a bubble in US Treasury bonds. Here's the explanation:
1. The bailout money is not being lent to consumers, but rather is being used by banks to buy Treasury bonds.
2. We've been seeing Treasury bond prices rise strongly (i.e. falling yield rates), which reflects increased demand for Treasuries. At the same time, though, the fundamentals of the US dollar (the underlying asset the Treasury bond is a derivative of) are deteriorating: the country is carrying more debt while taxes are declining and government spending is increasing, thus signaling even more debt and greater difficulty in repaying it.
3. Consistent with Austrian business cycle theory, bubbles are the result of central bank distortions in the money supply. Peter Schiff recently wrote an excellent article elaborating on this topic as it relates to the Treasury bond market.
As we've seen, bubbles don't last forever -- and they always search for needles. So the question: how will the Treasury bond bubble find its pin, and what happens when it does?
1. According to Ka-Poom Theory (which we previously discussed on TradingGoddess), a black swan event -- an outlier with a disproportional impact -- will be the trigger to causing the Treasury bubble to quickly pop. In recent US history, previous examples of black swan events that have lead to sharp bubble deflations have been (1) 9/11 popping the dot com bubble and (2) the Bear Stearns collapse bringing about the subprime crisis and the collapse of the mortgage bubble.
2. As Treasury bonds are owned primarily by foreign countries, the popping of the bubble will be external to the US economy. In other words, deflating of Treasuries requires debt holders in foreign nations, particularly China and Japan, to sell off.
3. Just as global deleveraging to pay off dollar denominated debts resulted in a sale of foreign currencies to purchase the US dollar, a mass exodus of Treasuries led by foreign holders will result in Treasury bonds being sold and exchanged for foreign currencies ( Iceland and Argentina serve as historical examples of this concept, as they were environments in which bubbles government debt were owned pre-dominantly by foreigners). And given that China and Japan are primary Treasury bond holders, an appreciation in those currencies as that money is brought home seems natural.
So when will it happen?
Impossible to predict, in my opinion. As a market bear by nature, I think playing this from the short side by looking for when momentum in the Treasury bond market turns south represents an opportunity. Currently, the chart for TLT, a 20+ year Treasury bond ETF, looks a bit bullish. and is rallying after bouncing off support in the 111.60 area. Should the market re-test this level with bearish momentum, it may be an opportunity to ride a bear trend as the Treasury bond bubble begins to deflate.
Disclosure: short USDJPY.
Simit Patel
InformedTrades.com
Posted by Simit Patel at 1/15/2009 12:03:00 PM
VIX - May be too early to tell
But we may have seen the lows for a while...but if it breaks that trend line we will have another crash in prices again. Keep an eye on it
Older Post
SSO hit 21.60 today and those 23 Puts that expire Friday were worth $160 at the lows today.. Sorry had to brag on that one
1/8/09
Play for Fridays report
Jan option spread on SSO or other 2X ETF 5 to 10 % out of the money puts and calls. SSO 29 calls are $30 each and 23 puts are $35 each SSO is at 26.30 here. Options expire next Friday.
Little Lotto spread.
Posted by MAX2205 at 2:31 PM
1/8/09
Play for Fridays report
Jan option spread on SSO or other 2X ETF 5 to 10 % out of the money puts and calls. SSO 29 calls are $30 each and 23 puts are $35 each SSO is at 26.30 here. Options expire next Friday.
Little Lotto spread.
Posted by MAX2205 at 2:31 PM
S&P Make up
TOP SECTORS IN S&P 500 ... While on the subject of sectors, I thought it would be helpful to rank the S&P 500 sectors according to market capitalization. Data for the table below comes from the Standard & Poor's website. Information Technology, Healthcare and Energy are the three biggest sectors in the S&P 500. The financial sector dropped to the number five spot over the last two years. Two years ago, the financial sector was the biggest sector in the S&P 500 and accounted for over 20% of the index. Chart 10 shows the performance of the Financials SPDR (XLF) and the Energy SPDR (XLE) over the last 2 ½ years. XLE is down around 17.36%, while XLF is down a whopping 65.95%. With this 2 ½ year decline, the financial sector is just below the consumer staples sector in terms of influence. In another sign of the times, notice that the consumer staples sector is bigger than the consumer discretionary sector. Chart 11 shows the performance of the Consumer Staples SPDR (XLP) and the Consumer Discretionary SPDR (XLY) over the last 2 ½ years. XLP is down less than 5%, but XLY is down over 35%.
At some point the market will diverge from the financials
like today all the market could go down was 2.2% while BAC and C were down 25% and XLF -8%
XLF is a MUCH smaller part of the SPX now BTW
XLF is a MUCH smaller part of the SPX now BTW
DOW -180 XLF hammered -8%
RSI is not confirming this low on the 60 min chart....looking for a long entry on FAS or UYG
VIX making new high over Wednesday
DOW -128...busy morning
XLF filled Nov gap -5.6% 9.90 now wow, remember when it was over 40?
XLF filled Nov gap -5.6% 9.90 now wow, remember when it was over 40?
SPX 836 breaks
If we bounce off the MACD it would be a good long play BUT XLF is where the action is today
XLF thoughts
XLF has a Gap from Nov that could be filled today around 9.80 coupled with the possible rsi TREND TEST.. watching still for a long play here BAC -16% now 8.61 XLF -2.6% 10.20
1/14/09
SPX Ranges for Thursday
No PPT today, no fire power if there was. Saving their ammo?
This is like the 4th big gap down open in the last 7 days...
?????????????????
My theory (not hope) that the Feds willl buy the market near the close is near upon us with 2 hours to go....where she stops ...nobody knows. Right now The market is holding on here by it's chiny chin chin
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