Southwest of Wall Street

Its a Beautiful Day

2009-12-15T11:05:00.000-06:00

Hey folks. I'm back, but no play by play. Compliance issues with b/d will prevent me from talking about anything business related. So if you are interested, shoot me an email, if not, I will try to give some kind of outlook on what I see from a personal level.

Cheers,
Eric

Na na na na, hey hey hey, Goodbye.

2009-08-04T20:28:00.002-05:00

Bet here is that we don't stay long above 1000 SPX. AAPL looks vulnerable, and volatility is cheap. SEP options usually a great value, and now is the time. QQQQ 40 puts @ 1.40 also a good play. Remember, to define your risk, and let the trade develop. Stay small, and let your winners run.

A lot of cash mergers announced recently. Good place to put some of that hard earned trading money to rest.

All Star break

2009-07-15T11:25:00.002-05:00

Sell them now. 925-930 SPX should be resistance here, although with expiration in 2 days, we could see a real short squeeze. 5% in a week baby, that's what we like. Longer term still bullish, but we will most definitely retest the 905-910 gap from this morning. Tech's leading the way, with telecom the laggard of that group.

Interest rates, currencies and commodities pretty volatile here. Seems the real battle is being done in that arena. Stocks waiting for the global economy to pull us out of the abyss. Summertime trading is wet and wild, be careful out there.

Merger activity small, as NRG still interesting.

Peace out.

Summer Loving happened so fast...

2009-07-08T10:53:00.003-05:00

Buy hat on. Looking to get some love in here 875 SPX level. Plenty of negative sentiment on the boob tube, oil the leading indicator. I like the homies, banks, and metals. Lets roll baby.

Bye Bye Love

2009-04-30T13:06:00.003-05:00

Market made a new high, then sold off, then gapped higher, then sells off. Hmmmm. Distribution is the name of this game. How am I to play it? Looking at DIA options, buying the 82/78/74 put fly for $0.85. Thats 4 weeks for the market to retrace 5% and nearly a 4 to 1 risk reward. Don't wait for the goods to be on sale, buy now and I will throw in a Graty :)

Swingtown

2009-04-29T12:57:00.002-05:00

Elliot wave theorists looking at this recent up move from 850-875 SPX as a 5th of 5 wave. I see it as a bull trap. That is when the market charts make it look easy to buy the new high, but we will see what pain the market brings. Raising some cash and getiing hedged here at 875. If we make a new low on the day, then this bull move should be done for a while.

I'm not waiting on a lady, I'm just waiting on the FED.

Apple Pie

2009-04-22T13:34:00.002-05:00

So its time to see if the recession has slowed down iPod's and iPhone sales. AAPL reporting tonight and I would have to say any whiff of disappointment may send the shares lower than the price of an ishuffle. Earnings plays make you pay for the move in spades. One way to offset the premium is to sell time spreads. In this case, I think we see lower prices so selling the June 130 calls and buying the May 130 gets you about $2.30. I would also sell the June 100 puts and buy 2 x the May 100 puts. This will get you another $0.50 and some juice for a big miss.

I don't want to kill you, and you don't want to be dead.

2009-04-20T16:51:00.002-05:00

So a 4% selloff from the expiration high is what the market gives us. I am still looking for increased volatility during the next 3 weeks to shake out both the new longs, as well as those shorts who have still not covered. Once that happens, we should see that move to 1000 SPX that I have been looking for.

If you have been leaning from the overbought camp, today get us back to the top of that 815-835 SPX range from 2 weeks ago. My play here is to get the shopping list ready, and start to place some bids at some names that have truly showed a bottom. Watch your charts, and keep tabs on the new leaders. We know the true rally will not be from the dead money banks. Not sure if energy or natural resources will have the juice, their charts are not looking so well. Large cap tech seems the next logical sector, so I will come up with a QQQQ strategy to follow.

Be careful out there.

NBA and NHL playoffs in action. Spurs need a win tonight or else they are done.

Back to back to back.

2009-04-09T13:13:00.003-05:00

Seems like old times. Chart says buy, you buy and the market goes your way. People are getting a little frisky out there. Bank stocks trading like 2007, come on get real. Pain right now is to the down side as shorts seem to be very wary here. I am looking for a 6-8% selloff into expiration next week. Would buy in the money puts as a way to play the negative delta as well as the sub-40 VIX.

Dy dayenu...

2009-04-08T15:08:00.003-05:00

Market is marking time in the 815-835 range here for the past couple of days. That is enough to knock the VIX sub 40. 200 day MA drops to 875 as the calendar from last springs highs drop off. This is acting like a real bull. My guess is we get a rally soon as most people out there are waiting to buy the next dip.

Earnings season is here and the time is right for calendar spreads. You can do this in two ways. First, about 3 to 4 weeks before earnings, you want to buy the earnings month vol, and sell the front month against. So for instance, last week or so, you would have bought IBM MAY 110 calls and sold APR 110 calls against them for about $0.60. Today, that spread is worth $1.40.

A second play would be about a week before earnings to buy the May, and sell the next month against it. In this case you could sell the MAY/JUL 110 call spread in IBM for about $2.50. That currently does not look that appetizing to me as you are selling the JUL options on about a 35 volatility, not very pumped in this market. I will scan for better plays out there.

See you on the other side of the Seder plate.

Cop and a Half

2009-04-02T17:18:00.002-05:00

A quick reversal off of that 809-813 SPX level this week led to a test of 782. A gap breakout over last weeks/months high, has turned the charts into bull mode. Heck we are a short 9.5% away from the 200 day at 911. Remembering some of Prof. Coopers work, 911 SPX is a big number.

With this in mind, huge good news, breadth, trend, the market will give us a "bait and switch" move to leave us in doubt. My guess is a break of 782 SPX, with a quick flush reversal. VIX staying above that 40 handle until jobs number tomorrow.

Time to play ball, but don't swing at the first pitch. I think we let this first one go by, and wait for that 2-1 fastball to rip up the middle.

One with a smear.

2009-03-31T13:21:00.002-05:00

807 SPX coming into play here. For those who bought yesterday, selling here makes sense. If you want to short, the gap of 809-813 is some good resistance. Looks like someone wanted to goose this market a little bit. I cannot remember the last time I saw $MSFT up over $1 on a day. Makes sense, you can put some good size to work in a beaten down name with cash to burn.

Que pasa.

2009-03-30T13:07:00.002-05:00

For those who followed my advice, congrats on a 6% pullback. Seeing 782 SPX as a fib, so shorts I would cover, those looking for a quick trade, get long with a tight stop. Any upside should be capped at 807 for now. Target on this downmove is 768-750. Financials telling the story right now, but lots of news out there that could whipsaw this market all over.

Watch the VIX as last weeks new high in the market did not get us to close under 40. We should see a confirmation of the rally with a lower low in this index.

How the market handles this dip is crucial. We should make some headway by the end of the week to turn the calendar and hopefully the charts up.

1000 SPX still in play.

Down to the Waterline

2009-03-25T09:23:00.002-05:00

At home dealing with plumbing issues today. See the market broke over Friday's high, as we held Friday's breakout on yesterday's close. (823 to 803 SPX). Charts looking like they are bending backwards, tends to be a sign of the rally running out. Most technical targets out there looking for 835-840 gap fill, so the odds are is that is where some supply rests.

Money flowing out of large, into small. Seems we are ready for a dip in the averages. I would lock in any gains from 675 SPX here by buying calls and selling stock, or collaring up. You will get some ammo to load up for that 750 dip.

All I want to do, is have some fun.

2009-03-23T10:43:00.002-05:00

We are back at 800 SPX via the next round of Government market intervention. Financials have stopped going down, hence they must go up. I still like buying gamma here as we should not take each day's move as the prevailing trend. We spent the last 8 months in a down trend, going up is still counter trend.

Stealing a Jeff Cooper line, the second mouse gets the cheese, we should see a breakout above last weeks high. Whether that holds, I am not sure, but I am still waiting for one more push down to get the weak hands out of play.

Looking at the moving averages, we should see a negative slope on the 50 and 200 day as January's high comes 50 days past, and last years high comes 200 days past. This will make the charts start to look really good soon if we rally from these levels. My 1000 SPX target still in play.

Hot Child in the Citi

2009-03-18T18:26:00.003-05:00

Having a great discussion with Adam W. about what's going on in the C options today. http://adamsoptions.blogspot.com/2009/03/citi-not-sleeping.html

It seems a few big customers are paying $1.05 for the June $5 conversion. In laymens terms, that allows you to put on a synthetic short in C, but it will cost you 33% to create a borrow for the shares. Why? I believe the reason is to play the preferred/common arbitrage that was created when Citigroup agreed to convert those lousy TARP preferreds for lousy common stock. What they did was sell the preferred at $25 face value, paying between 6.5% and 8.25% dividends. Now with the common so cheap, they offered to take the preferrerd off your hand for a premium to where it has been trading in exchange for the common shares. Without getting in too deep, you can buy the preferred for lets say $8.00, it is convertible into 7.3 shares of the common, which was trading about $1.25, so you are creating about $1.125 of value. As the stock has run to $3, the spread between the offer and where the preferred is trading has gone kablooey. Today, you could have effectively created about $8.40 of value!!!. Remember, you can only lock this in with a short of C, so that is why the options reversal traded so wide.

By the way, the WSJ picked this trading activity up so you can read about it tomorrow.

Pop Goes the Weasel

2009-03-18T13:57:00.002-05:00

Call this the Bernake Short Busting rally. First the financials are being scooped, then everything else. As I write this we are sitting at 800 SPX with money flowing into retailers, home builders, you name it. Get out a shopping list, because the bull is back. I still like straddles here as a way to play the gamma and give you a real shot at buying the dip, whenever that may be.

Around Here

2009-03-18T12:28:00.002-05:00

Financials with the big perk up this morning. AIG near a buck and a half from .40 earlier this month. Buying gamma in some of the big banks here an easy shoe in. Either we have busted out of a trading range in them, or else the shorts have covered and we head back down. Either way, the ATM struddle looks nice. With a bearish bias, I would maybe sell some out of the moneys also, but only for a trade.

The IBM/SUN deal rumor put a fire under the tech group, but the oils and consumer staples are dragging. Would not be surprised for that expiration week vol swing from these levels. We held 750 SPX, would like to see a recut of that level before I get super long again.

Bubble Busters.

2009-03-16T10:42:00.002-05:00

As the Mad Man on TV says, I would schnitzel some here and take some off of the table. What that means, is to hedge some longs here as there is a strong possibility of a market correction from these levels. For those aggressive playas, maybe a short or two.

Financials acting like there is huge upside to come, but tech is holding the market in slow mode. We have expiration this week which may put a cap on the rally for a few days, but I am still looking for 1000 SPX before long.

My John Malone play still looking great. Hey, we almost are above a quarter a share.

Looking for some interesting bracket plays for the early games this week. Go Blue! Welcome back to the NCAA's. I hope they got some game left for Clemson this week.

Love on the rocks.

2009-03-16T07:19:00.003-05:00

From yesterday's NY Times article on Madoff investors:

“These were people with a fair amount of money, and most of them sought no professional advice,” said Bruce C. Greenwald, who teaches value investing at the Graduate School of Business at Columbia University. “It’s like trying to do your own dentistry.” Mr. Hedges said, “It is a real lesson that people cannot abdicate personal responsibility when it comes to their personal finances.”

A friend of mine was describing to me his reaction to the Cramer-Stewart confrontation. What he got from this was that there are 2 financial systems, one for the everday joe investor, and one for a privledged few, which cannabilized the everyday joe. Now myself being involved on Wall Street for nearly twenty years, I offered him some pretty hard evidence to the contrary of whatever ideas he thought were being given to him via the Stewart camp. But that did not matter, his mind was already made up.

The sum of all fears it seems is distrust. Distrust with a financial system that was preached for the past 50 years as a way for the salaried worker to see his money grow faster than inflation. It still is, in my opinion. Only with the guidance and dilligence of the few, not the many. If your only means of financial literacy comes from the idiot box, rather than the squauk box, thnn caveat emptor.

Stop in the Name of Love...

2009-03-12T14:57:00.001-05:00

750 SPX looks like some minor resistance on the way to 1000. Would not be surprised for some backing and filliing for the next day or two.

Big Bottoms

2009-03-06T10:04:00.001-06:00

This is it. I am calling the bottom of the move here at 675 SPX. For anyone in cash, this is the time to buy. Any shorts, please cover. You will see a 50% move up on this trade.

March 6 2009 10:05 am CST

Hubba Bubba

2009-03-04T10:23:00.002-06:00

After one bubble pops, probably another one is about to lose air. It looks like the 10 yr note is about to settle comfortably with a 3 handle yield. We havn't seen this one for a while, my guess is a quick move to 4 is a good trade.

Market holding well with GE being brought to the woodshed. A lot of bearish talk on the tube. Seeing one interview with SPX value derived in the 375-425 range and other looking for silver coins.

Next event risk is in the Autos.

Farewell to the AMEX, lots of memories.

Whop bop a loo bop...

2009-03-02T18:13:00.002-06:00

Doing some serious charting this evening. Fibbonacci numbers from the 2006-2008 top put us at 675-695 SPX target. Based on all of the other doom and gloomsters out there, probably have found a level to rally from.

Saying that, where can we go? My theory is always to a level beyond the mass expectations. Just like we have sold off so far so fast, it will be the same on the upside. So buckle up and get ready to rumble.

Taking in to account the fiscal dollars flooding the system, and using 1931 as an example, 50% from these levels puts us at 1050. Just north of the 200 day as well as the high of 2008 Q3.

Crazy, yes, but that's what got us here in the first place!

Hey Now

2009-02-27T15:40:00.002-06:00

Watching Dr. Doom on the CNBC. Doesn't he remind you of Yul Brenner in the Ten Commandments?

Other significant research shows that since Tiger Woods went off the PGA Tour, the DJIA has lost 40%. The 25 or so years that he has played golf (since age 2), the DJIA has gained about 1000%. Things look to be picking up with him back on the course!

Speaking of commandments, Thou shall not try to pick a bottom seems to be the one most broken around here.

Enjoy the weekend. Its 88 and sunny here in Tejas. Time for some BBQ and Beer.

Spongeworthy

2009-02-26T09:29:00.002-06:00

Looking at the 10 min SPX chart, perfect reverse head and shoulders. Measured move from 780 to 818. Stops around 754. About a 2 to 1 set up, but pretty reliable I think.

Ding dong the witch is dead.

2009-02-20T13:25:00.002-06:00

Looks like an all clear signal. I guess we can attribute this to the Oscar's.

Had a bad day.

2009-02-20T10:10:00.003-06:00

Two things. Kind of had my dates crossed with today being expiration, so got whomped on any Feb trades. With that, we have a expiration/nationalization selloff. Remember the good old days of 2008 when every Friday we saw huge out of the money put buying on financials? Well, we are now just seeing long capitulation. Hey, if the common is going to zero, no need to hedge, just sell it. No body want to go home long on Friday to wake up Monday with C, BAC, WFC as part of the Fed.

760 looks like the target on SPX chart dump. Long term bullish, but you got to respect the trend.

Running with the Band

2009-02-19T13:29:00.002-06:00

Bears trying so hard to push this puppy down, but the markets got some left. Kind of like Rocky vs. Apollo Creed. The numbers look too good, but the underdog just outlasts the champ.

Remember, you got to eat lightning, and crap thunder.

SPY FEB 80 calls for .50 look yummy.

Hotel California

2009-02-18T14:42:00.003-06:00

Markets making a digestion day. Hopefully we can keep the bad news in our stomachs and get an expiration Wednesday pop. Charts look like garbage, need a close above 798 on the 10 min SPX to make anything look good. Large gap 818-826 good target for bulls this week.

Large cap growth (tech) looking mahvalous. Time to play the QQQQ's here as they are the best of the breed out there. For a trade it looks like $1 up with a .30 stop.

Stay cool.

I heard it on the radio....

2009-02-17T09:03:00.002-06:00

Well not quite 3 to 1 on SIRI, but I'll take it in this lousy tape.

VIX soaring over 50, SPX under 800, end of the world scenario again. Using this pullback to roll some buywrites out 3 to 6 months if possible. .90 on the SPY 80-82 call spread looks like a good trade for the week.

Would hedge some of that GLD here at 95, looking for a pullback to 88-90 to add to positions.

What's with oil? I just paid $2.00 for gas and we don't even have a $40 on crude. Damn crack spreads.

I'm on WKRP in Cincinnatti

2009-02-14T09:41:00.002-06:00

In this world of 0.25% money markets and $950 gold, any type of risk is avoided. For instance, SIRI is already trading as it is in bankruptcy. ENE traded for .05 before that puppy was settled. Buying SIRI this week was a free call on someone out there with financial acumen besides the government. The odds are low, but the risk reward lines up. I'd say at .10 you have a 3 to 1 upside/downside. Pretty good if you are willing to take that leap. More news and Les Nessman.

Golden Slumbers

2009-02-12T09:44:00.002-06:00

Well a lot has changed since I last posted on this blog. A few new rules, first of all, I am going to do less market analysis and more on specific trading strategies. Think of it as reading the manual in your glove compartment as opposed to Car and Driver. I am more about when to change the oil than whether the V8 is a better buy than the 6 cylindar.

Moving from one of the major wirehouses to a regional B/D, has given me the freedom to allocate assets in across a wider spectrum of risk profiles. In order to do this, I attempt to capture market inefficiencies using my knowledge and tools.

An example of this is available in the WYE/PFE transaction. Because of the decreased use of leverage across hedge funds, we have a wide arbitrage spread. Buying WYE at $43 is effectively creating PFE at $13.10. This is a great way to pick up a large pharma with lots of cash at a 8% discount to market value. Using the large edge in the spread, you can effectively hedge market risk with a put on XLV (about 14% combined of PFE and WYE).

Of course, we would add this to an already allocated portfolio to create some alpha. With assets at a huge discount to fair value, it is important to manage the volatility of the overall portfolio. I currently do this with ETF puts and calls.

Told you about Brett Favre, what a maroon.

Today's Tom Sawyer gets high on you.....

2008-12-11T08:13:00.002-06:00

Seeing a lot of bullish confirmation out there. The hold of 818 SPX on last weeks dip set up for that nice rally. 952 is the next inflection point on the way to some August levels (1125-1175). Volatility still pumped so use that to your advantage when using options.

My background as a trader lets me look at certain situations and break them down into simple risk reward equations. Take a look at the TIPs market. They are at an alltime low vs. Treasuries. With the government backing, you have a risk free call on the CPI index while getting paid CD like returns. Great idea for the cashlike part of your portfolio.

Merger arbs are still running scared. BUD closed with $1.48 spread remaining on the table. Show that the playas have zero bullets. Allows the smaller fish to get some nice trades.

Thankful that College Hoops is here. That Curry kid on Davidson is pretty fun to watch.

That's Amore

2008-11-25T08:00:00.002-06:00

Nice action on Friday, with a new low followed by a 10% rally. Technically, we have set up for another 25-35% move from here. The market is making it hard to stay long, blowing thru stops, and then reversing. Next target is 1006 SPX with a final move to 1125 ish. But as Kenny Chesney says, don't blink. This could be done in a matter of days, not weeks. Good strategy here would be backspreads on your favorite blue chippers. With VIX over 60, you will be selling the meat of the vol.

Jets over Titans, ...there was once a dream called Rome.

"All the Gold in California...

2008-11-12T20:54:00.004-06:00

...is in a bank in the middle of Beverly Hills, in somebody elses name." Austinite Larry Gatlin.

A once infamous bank robber was asked why he robbed banks. His answer, that's where the money is. In this market, you have to go where the money is. So far that has been on the short side. Looking at a slew of charts today, I can't find anything that looks positive. The one chart that is really sticking out is Gold. About 18 months ago, we broke out of a $730-$660 trading range and made new highs at $1000. So far with every other asset making new lows, this has held. Even with the dollar index on a tear from 75 to 88, the shiny metal seems to have support. GLD, the gold future ETF, made a low recently at 66. Today it settled at 70. A good trade here would be to sell some near month put spreads to finance later dated out of the money calls. I believe we can see GLD back in triple digits in a years time.

By the way, nobody is thinking about the Titans going 19-0. No respect.

How can I miss you, if you never leave?

2008-11-05T22:00:00.003-06:00

"Barrack Obama became the 44th U.S. President last night in a practical landslide victory. Unfortunately, the stock market melted down on fears regarding his economic leadership skills and true ability to navigate the country."

Not being too political, but the stock market really does not care who is President. People asked me about my views on the election and I told them all that since the economy was slowing, the incumbent party would not be reelected. Proof, see 2000, 1992, 1980, 1968. As for possible economic policies like higher taxes and spending, well it seems a lot of the recent weakness in the market began once the polls started to reflect an Obama win.

My main concern in this matter, is whether or not we will have to continue financing a buildup in the national security budget. Although the dollar has had a pretty good rally lately, I would not be surprised to see a test of the 72 level on the DX (about 15% decline). This is bullish for gold, bearish for bonds, and neutral for stocks.

Skyrockets in flight, afternoon delight.

2008-10-28T21:21:00.002-05:00

Combination of pension rebalancing, end of redemption selling, short covering, and good old fashion buying will get you a 10% move off of the lows. Still many skeptics out there, but one thing is true, the market makes it hard to sell when you have to, and then rips to the upside when you think its time to get back in. I mentioned to someone this morning, that 9700 DJIA was my target for this week. That could be a conservative number. The "news" being a rate cut/credit ease/commercial paper buy/full moon/end of the baseball season/beginning of the NBA season, you name it.

Whoa Nelly, We got a barnburner here!

2008-10-07T22:27:00.002-05:00

Boy did I miss this. Biggest plunge in 7 years and I was long. Still there, looking for a retrace back to 1200 SPX to get out. Elliot Wave of 5 in progress, making 890 a possibility out there. VIX should come back into the 35-40 range that will show a nice bear rally.

I may be crazy, but it keeps me from going insane.

2008-09-28T15:27:00.001-05:00

Nice rally on Friday after a gap lower on fears of Congress taking its usual course. Looks like a gap higher that should take us to 1265. A weekly close above that level will put in the bottom, and get us moving up for the next six months or so. 1450 here we come.

I Love You Just the Way You Are

2008-09-23T07:31:00.002-05:00

Pretty normal post expiration Monday retrace. After a 120 pt move on the SPX, we do need a little breather to take care of some overbought indicators. Really like the VIX not moving on this low volume downdraft. We should see a close above 1265 in the Dec futures to really knock the socks off of the shorts.

Good arguments made by Merrill's Rich Bernstein on why the banks are close to a bottom but not quite their yet. I think once we see the Treasury's plan on mortgage bonds, the financials will skyrocket. Playing the range right now in the XLF (19-23). A close above this will start a new bull run.

Getting down to the wire for the Mets. The Brett Favre acquisition is going as I thought for the Jets. Spend a lot of money on past talent, and you get a mediocre offense.

Yowza, Yowza, Yowza

2008-09-19T22:07:00.002-05:00

So that's what you call volatility. For those of you playing the home game, hopefully you did not get whiplashed too much. Now with this short sale restriction in place, we will see the rally I have been looking for. A move of 10% to 15% from here on the quick is in the cards.

Get back in there and buy, Mortimer.

Back in Black

2008-09-04T07:18:00.003-05:00

Well almost in the black. The market has done what I thought it would by staying in a tight range even with oil coming down. The economists at Merrill Lynch are still seeing slower growth throughout the world economy. My view is that these numbers are already priced in to most stocks so we are at bargain levels. Financial stocks have stabilized and are poised for an upmove here. Made some good short term trades on the airline and retail stocks as fuel prices have stabilized for the time being. Move to neutral on those sectors now. Pick up some good names in the commodity sector here as the 4th quarter approaches and yesterday's winners will be marked up.

For those of you not too familiar with my trading style, let me revisit some of my themes:
1. Buy stocks when they are in a cheap market.
2. Buy good names in good sectors on pullbacks.
3. Buy volatility in beaten down stocks that have based for a few weeks. Time is needed to wring out the sellers.
4. At all times, sell out of the money calls. Take in some premiums and trade around the positions. You can always buy them back if you want to. Remember, a cheap sale is better than an expensive buy.
5. And most importantly, the market will always move to the point of most pain before it reverts to the norm.

My Mets still 2 1/2 games ahead of the Phillies.

Surfin' USA

2008-07-24T06:53:00.003-05:00

Looking for gasoline to hit that $3.25 level, do not know what crude price that translates into since the crack spread ( how many gallons of gasoline per barrel of oil) is pretty screwed up these days. But let's say I would not be surprised to see double digit crude come October. This should keep a bullish wind behind the market, as long as a major financial institution does not fail this summer.

This rally is "the end of the world is not tomorrow, so I need to own stocks." probably looking like 1250 to 1325 SPX as a good trading range for a couple of weeks.

Hey, the Mets are now tied for 1st, good luck to the boys of summer!

Where have you gone Joe Dimaggio?

2008-07-16T08:09:00.002-05:00

So its been about 8 weeks since I posted anything. Let's recap what has happened in the markets:
1. Banks are struggling to stay solvent.
2. Home sales keep dropping.
3. Non-financial earnings holding steady.
4. Commodity prices soaring.

Gee, same news from last year, but what's different? Perception. Last year we saw this as a short term blip. Now, all the pundits are calling for a "New Deal" type of legislation to shore up the system. If you let the free market react, we will wipe out the non-performers, while letiing the stronger players survive. This happens every decade and will continue in the future.

Still bullish, see new highs by end of year.

Let the Good Times Roll

2008-05-20T05:47:00.003-05:00

Oh by the way, seeing topping of commodities trade as the small fish is looking to move from stocks to grains. Also, lots of interest in energy as well, which will make the dip buyers carry the pain. A good trade here would be to be long some indexes and short a portion of energy against it.

By the way, doesn't Chris Paul remind you of Carlton from the Fresh Prince?

What's Love Got to Do With It?

2008-05-19T18:00:00.002-05:00

Using the top of the March lows, you can draw a nice channel for the SPX. With the top being hit today, I am looking for a quick pullback down to 1375-1395. with volatility relatively cheap for the past month or so, it is easy to pick up some downside protection for this move. I am unwinding a number of buywrites at this cheap vol and setting up index hedges. Still bullish for a summer move to new highs, but we need a little work to be done first. Financials still under performing and will lead on the downside.

Mets crush Yanks. Stop the season now.

ChartyChartCharts

2008-04-09T07:23:00.002-05:00

Lots of nice looking charts out there. Take a peek at some transports, tech, and consumer staples names. Yes, they are all defensive, but that is where the money is flowing, so stay with the trend and stop trying to bottom tick Wamu.

Dividend yields also very attractive, combo that with call sales and you got yourself some nice returns. Thats what I like.

Moon Shot

2008-04-03T11:08:00.002-05:00

I will say this in print, we will see new highs in the market by July expiration. Why is this? Successful retest of the January lows followed by 3 300point up days in a month. All this converging with a 40 week cycle low in the Elliot wave cycle and bearish sentiment at all time highs. If you add that to all the liquidity added by the Fed, you have a recipe for a quick run to the upside. The sell in May crowd is short right now and will create demand quickly for stocks.

Ah, Final Four, first weekend of MLB, it couldn't get much better than this.

Day Tripper

2008-03-31T15:45:00.002-05:00

Well its been a while on the old blogger. The more things change, the more they stay the same. Still like stocks here. Cheap valuations, oversold technicals, bearish sentiment, low interest rates. Buy writes still give an awesome risk/return in this environment.

Take a look at Muni Bonds. Yielding 120% of Treasuries. History has shown this to be a great trade. We are talking 15%+ on a bond position! The market is pricing in huge defaults by municipalities, way out of whack with the risk profiles.

Born on the Bayou

2008-02-06T10:02:00.000-06:00

Nice pullback here. We trade down to the recent weekly pivot, should see solid support 1335-1340 SPX. Took some of the nice sub 1300 buys off the table around 1380 on the Fed rip. That's what you got to do here. My strengths tend to be entry and exit points on a trade, but holding them as an investment can be hard, especially at this volatile period.

Still love them buywrites as the VIX new range of 25-35 will get you paid for selling premium.

8 days until pitchers and catchers. I only have to say one thing for the Mets, Oye come va.

Fed Shmed

2008-01-30T05:34:00.001-06:00

So we are all going to sit around all day and wait. That is the feeling I got from an institutional broker yesterday. He said his clients are doing nothing. I guess they have better things to do than make money. I see tons of opportunity in this market, whether long, short, or neutral. It all depends on your style, risk tolerance, and ability to get liquid.

By the way, I'll take the Giants with a 50 basis point cut.

Duke and Duke

2008-01-29T07:00:00.000-06:00

Buy, Buy, Buy. Please don't ask again what I think the markets doing. When the local news yesterday morning had a "Global Market Sell off" with Europe down 1% as one of the top stories, it reaffirmed my instincts. I strongly subscribe to the shoeshine/cab driver theory. We are poised for a new high this year.

Lord I was born a Ramblin' Man.....

2008-01-27T19:46:00.000-06:00

So Societe General decides to unload a $7 billion loss onto one trader. They say he hacked into their systems and created offsetting trades to make the position look smaller. I executed trades for their prop desks in the past, and would take a beating by them if we were off on a couple of hundred shares. Trust me, they know of every position on every desk at the bank. They have risk controls for how many rolls of toilet paper are used in a week. The only way I see this as a "rouge" trader, would be if he ran up commissions with one of his broker buddies. A couple of thousand euro Bordeaux's on an expense report would be the first place to look.

So back to the market. A classic panic and rally to end the week with some consolidation. Feeling the bottom is near as the public is getting chills of 2001 all over again. Remember fear and greed are the real drivers of financial assets. Right now fear is on top, then greed will take over once the easy money is made at these levels.

Trade long here until April Earnings. Then I would look at shorts as that will draw the public back in.

I am the walrus, goo goo ke choo.

2008-01-23T07:07:00.000-06:00

I guess that was the reversal. Breadth never went positive so it was hard to close up on the day, but opening down 400 on DJIA and trading up to -50 was a pretty good rally. With the 2yr yield below SPX dividend yield, it is easy to make the case that stocks are cheap. Still in for a bumpy ride, but the trend will soon change and new highs will be in the cards for 2008. A close above 1400 SPX will be an all clear signal.

Happiness is a warm gun

2008-01-16T07:40:00.000-06:00

"Sell at the sound of trumpets, buy at the sound of cannons." Not sure where that quote comes from but we are under artillery fire now. Looking for a reversal bottom any day soon. Probably today as we are in an expiration week and the dealer community is probably short gamma at these levels.

Back in the USSR

2008-01-10T21:07:00.000-06:00

So I have been a little too premature in picking the bottom of this market. As we bounced of support at 1380 SPX, we have not damaged the weekly chart too bad. A close above 1435-1440 would be the springboard to a nice rally. Still waiting for those mutual fund flows to come in.

Dear Prudence

2007-12-30T14:59:00.000-06:00

consolidation after that nice rally. got my Dow 15000 hat ready for 1Q 2008. industrials have the nicest charts. sick with the winners in this rally. Oil stocks getting very heavy. could see a nice selloff in the larger names as rotation out of the winners into tech should be a good trade for the next year.

happy new year to all of my fans and wishing you and yours a healthy and wealthy 2008.

La Grange

2007-12-18T21:10:00.000-06:00

So looking at individual stock charts, I see nothing pretty in the financials, retailers, or transportation sectors. Can staples, energy, utilities, and tech carry the load? They are going to in order for us to make new highs come 1Q 2008. Take a look at any beverage, food, or drug stock. Good odds that they are consolidating for a move upward. If you want to play the beaten down ones, at least buy write them to take in some income. You may have to wait a while to get some good traction in those suckers.

I made some sales at 1522 SPX and am fully loaded again at 1455. Look for a quick rally from these levels into 1490-1515, then a pause. Come January expiration, we should be ready to rally out of a flag into 1550 territory.

See Barry Ritholtz's Big Picture for some great economic insights, especially the negative real interest rate discussion. With all of this central bank liquidity flooding the system, it will keep a floor underneath financial assets for a while.

Cheap Sunglasses

2007-11-28T15:42:00.000-06:00

So I am scanning the media this morning and one of the TV shows has a market analyst whose bullishness on tech in 99-02 is noteworthy. This morning, he was the "bear" in the conversation. That is all I needed to know, 300 points later on the DJIA and it confirms most market moves. This afternoon a report on how to "hedge" your home from losing its value. A little too late? The market is a forward looking discounting mechanism. If you listen to what the money honeys are saying, its too late to act. I would take some profits SPX 1485-1495 in order to reload on a pullback, but still looking for a rally above 1540 in Q1 2008.

Gold had a nice dip last week, but I did not buy it. Oil missed 100, probably headed for 78. Aggressive traders could buy put spreads on oil ETF's. Volatility will crash on the way down. This is a commodity play, not an equity play. Stay away from energy stocks unless the chart looks like a breakdown.

Volatility is still high, would be a seller of OTM options vs stock, especially in financials.

I found my thrill, on Blueberry Hill

2007-11-15T21:07:00.000-06:00

Had the trigger ready to put some shorts on at 1495 SPX, just a bit outside, would have been nice. Ah the beauty of the market, you can get another shot if you preserve your capital. One way to do this is to trade options. Yes, that is the derivative of choice by myself. Having grown up in the pits with my values on paper, it is the only way I can make rhyme or reason of any trade. Today I will start on some basic strategies:

I. Buy writes. Get long a stock you like and sell a slightly out of the money call. Very simple, able to earn good returns with some downside protection. What every investor is looking for. Of course I look for large cap names that have a nice spread between the 30-day historical and implied volatility. Stay away from any event like earnings or merger plays. You want a flat to mild up trending stock. For example, if you bought KO when it broke 50, wrote 55 calls all year, rolled the last one up to 60, you would have easily turned a 20% gain into 30%. That buys a few extra cases of diet coke.

II. Straddles. When a stock hits a 52 week low, I like to buy the ATM straddle to see if we bounce or break. Look for more than 15 day paper, and keep the trade on a short leash. Some recently good trades were on the financials as panic selling created the waterfall and then a mild bounce.

Bad, Bad, Leroy Brown...

2007-11-08T12:59:00.000-06:00

Long and wrong. What to do. I think we hold em and let some go on a rally back to the 1500 level SPX. Hate to double dip in this volatile environment, but still some names are being stomped. Would nibble on more big cap tech here if underweighted, add to financials if flat. Probably the best move is to buy call verticals going long deltas and skew.

Pour some sugar on me.

2007-11-06T06:21:00.000-06:00

With all this bad news, the market holds. That means it wants to go up and watch the shorts go screaming for the exit. I see new highs come year end. I also see the far-east settling down. Waiting for a good entry in gold, seems it makes a new high every day. Once we get a bounce in the dollar, since everyone is short, gold will come down also. My view on crude is stay with the trend, looking to get long also, but not at these levels.

Stay with the winners in equities: tech, drugs, and consumer staples. You can bottom fish, but tax selling ain't over in some others. Financials are good values, but you will probably have to wait a year to get a good rally in them. Small caps are under owned, look at some charts for breakouts in beaten down names.

Still like buywrites with the VIX over 23.

Countdown to November 17 begins......now.

Grasperino

2007-10-30T16:39:00.000-05:00

You notice this guy on CNBC who is the current star "journalist". You see his book is out on the shelves. No wonder he has the latest word on everything. I don't call that unbiased, just clean business. Call it for what it is, let the buyer beware. If I made a statement without disclosure, I could lose my job, how come reporters have that option?

Now back to our regularly scheduled market, time to take a breather after a 68% retracement of the latest downdraft. I would not be surprised to see a test of 1515 SPX before we make new highs for the move. Still like the short vol play after 3Q earnings, tax selling, and mutual fund distributions. Set up them buywrites.

Hey Delilah

2007-10-26T06:43:00.000-05:00

So the market did not crash on Monday, or Tuesday, or Wednesday. In fact, we have held the 1495 SPX level quite easily. With a retest early in the week with afternoon rallies closing out the days. Money managers are busy setting up their end of year holdings. Have you seen MSFT this week? Long tech, out of anything financial seems to be the game.

Speaking of financials, speaking to a prospect the other day, he asked my opinion of a beaten down mortgage company, suggesting he thought is was a buy. I said, how could it be a buy if the CEO just cashed out after they sold a convertible to a larger institution. Hey, I used to watch the CNBC Dennis Koslosky interviews with him sitting in Bermuda also. That stock was a buy at 8 too after crashing from 60, but the CEO was a crook, not a bad business model.

867-5309

2007-10-20T10:53:00.000-05:00

So here is the scenario, middle of October, options expiration, news about currency dislocation all over the tape, two middle market baseball teams in the World Series (probably), market coming off new highs from the summer, a really bad selloff on Friday: 1987 redux???

If I was still a floor trader, probably take one of those 10-1 shots here on some cheapy puts. Something like buying a lottery ticket and you know what the last number is. However, now that I work with clients, I am already positioned with some cash and was able to be a net buyer on the day. If there is that "Black Swan" event, our portfolios are pretty diversified and bonds and commodities will do well.

Looking for 1495 SPX to hold, I would start to get nervous with a weekly close lower than that. Buywrites looking real nice here with VIX blowing above 21.

Smoke on the Water

2007-10-11T10:04:00.000-05:00

A few things are making me nervous about this market run:

1. Oil making new highs on expanding economy. Wait, I thought oil was a commodity not a consumer staple.

2. An old time naked put seller V.N. has closed up shop again after covering his out of the moneys. Last time he was forced to cover back in 1998, we had a 5% drop the next month.

3. Talking heads confused once again how the market can go from bad to good in a few weeks.

4. No real interest in the MLB playoffs.

I like buywrites on some defensive names here.

Do Do Do, De, Da, Da, Da

2007-10-01T19:58:00.000-05:00

No blogs from me because nothing has changed. The trend is up as we make new highs on the DJIA and NDX. Best September in 9 years, Citi trades higher after missing earnings. Bulls still in control. For those with conservative bents, I would sell at the moneys against some longs to pull in some income here. If we rally, then you made some nice gains, if we fail, then you've lowered your basis for a fourth quarter rally.

The Mets got what they deserved. Lollygaggers.

Seems the Yankees are hot, but I don't think their pitching holds up against the Indians.

Yakity-Yak

2007-09-19T20:48:00.000-05:00

What? The market rallied? The Fed cut 50bps? Who would have believed this reading all of the so called experts. The charts never lie. Another 1.5% and we are back at new highs. Once again heading into earnings season, if we hold that 1475 SPX level, 1650 is in the cards for year end.

So the Mets are now playing like minor leaguers. I cannot catch a break anywhere. My surprise pick in the NFL this year, the Oakland Raiders. They took Denver down to the wire on the road, I like them make it interesting in the AFC.

All Along the Watchtower

2007-09-16T08:00:00.000-05:00

Hurry Up and Wait. That is the tone of the market these days. Did anyone notice the friggin rally on Friday? We gap down 100 and trade up 30. You think the shorts are in charge, I beg to differ. Sure volume is not what it was on the down days, but it never is. Price is the leading indicator on the upside. When we get a close over 1500 SPX this week, then the fireworks will begin. Fed shmed, I see 25bps with "easing" language. That should keep the bull market in tact from a psychological view.

Take a look at the consumer staples charts, they are quite strong as they should be. A falling dollar, slowing GDP, pricing power, all good things. Think about it, are you going to stop buying your favorite soft drink for a $.03 increase? I think not. The wife just bought 3-12 packs for $9.99, last year that deal was $8.99. Less than a penny, but multiply that by a billion and it shows on the quarterly earnings.

Oh by the way, did anyone see the Notre Dame offensive line? Cause they were not in Ann Arbor yesterday. Maybe there is somthing left in Lloyd Carr's tank. I'll take a win over Ohio State please.

The Longest Yard

2007-09-10T16:53:00.000-05:00

Ohio State, USC, App. State, and now Oregon. The NL playoffs can't come any faster. Yes my fall is over, time to concentrate on the pitching matchups against the Dodgers or Padres. I think a healthy Pedro will take the Mets back to the brink.

Speaking of the brink, a lot of my technical brethren are calling for the market to retest the summer lows. September is normally a weak period, Financial stocks in bear markets, the Fed on hold. That is why I like the upside here.

Every little thing she do is magic

2007-09-05T07:01:00.000-05:00

Will the Fed cut rates? That is a question that was asked to me on Labor day. My unqualified opinion is not will they, but what happens if they do? Right now the markets are discounting a cut, so will it be a sell the news type of reaction? Will a 25 or 50 bp cut really effect the credit markets? Not really, but supposedly it will be a psychological buffer. All I have been saying is stocks got cheap, Bear Stearns did not go out of business, and fear ran real rampant on a 7% pull back in the indicies. If you are playing the home game, I would lock in some of those short term trades by the end of this week in time for Fed Watch 2007.

By the way, $%^* Appilation State.

I write the songs the whole world sings.

2007-08-24T06:06:00.000-05:00

It seems some of you are not in tune with my song titles these days. I guess any Barbara, Barry, Neil or Englebert are not cool (hip, phat, jive) enough. Its always that damn rock and roll. Ahh to be young again.

How about those Texas Rangers. They scored more runs in one game than they have since the All Star Break.

Memories, like the corners of my mind...

2007-08-23T05:22:00.000-05:00

Investors have a long memory. Most people can talk about the details of the exact trade that made them a lot or crapped them out. Those that lived through 2000-2002 saw 30-80% declines depending on sectors. A mere 10% dip off of 4 years of gains is pretty tame compared to the last down market. That is why I expected the market to have a nice bounce, the small fry did not sell. This move, for the umteenth time, was all about liquidity not valuation. If earnings are short, then I will change my tune.

Who took the kishka?

2007-08-20T05:51:00.000-05:00

My buddy Rob and I attended a party held by Kinky Friedman hawking his new line of cigars. Smoked a "Texas Jewboy" (of course). Very smooth, a little tough draw but and overall good time. Not my preferred corona, but one of the better torpedos I've had. Very interesting character Mr. Friedman is. Although his politics may be far off the norm, his causes such as animal rescue and human rights are pretty much right on. Just found out a cigar bar is opening in my neighborhood. I guess my life insurance premiums are going through the roof.

If you looked at the market technically on Thursday's close, and added expiration, what happened was pretty in line. It was a coiled spring, just needed a push (thank you Sr. Bernake). As the yen begins it decent back to 120, we should see some upward push on stocks for a couple of weeks. Still need to close above 1500 SPX to reverse all of the techincal damage of the past month. I would use this time to take some quick trades and/or reduce risk.

Two weeks to college football season gets going. My Wolverines are #5 in the coaches poll. Big games include Notre Dame on 9/15 and Ohio State on 11/17 (my 40th, so a couple of tickets including flights to Ann Arbor would be a nice gift).

Its Raining Men....

2007-08-16T02:54:00.000-05:00

Actually, its raining stocks. They are all on sale.

Getting into the pennant races. Yankees making it interesting in the AL, Mets with a small lead over the Braves.

I really do not like Starbucks. Too much money for a mediocre product.

You really need to check out Cousin Keith, his writing is fantastic.

I want to Rock and Roll all night, and party everyday.

2007-08-13T05:32:00.000-05:00

Looking at a number of charts. Had a lot of hammers and dojis (for those who candlestick), MACD crossovers and over sold stochastics (for the technofiles). With a retest of 1425 on the SPX, we will rally from these levels. My guess is a break of 1500 on the upside.

It is no longer flooding here in Texas, finally summer has arrived. 100 degrees and climbing. In the pool with the kiddos, on the golf course scrubbing up some clients.

For those who smoke cigars, I highly recommend the Cusano 18's. After being a Montecristo 3 for most of this decade, I find the Cusano a refreshing smoke at a reasonable price. Had one the other evening with a little Ruby Port. Ahhhhhh.

P.S. New line of cigars out from my man Kinky Friedman. Need to check out the Texas Jewboy.

Good Day Sunshine.

2007-08-07T05:44:00.000-05:00

Borrowing from Bull Durham:

"Its a simple game. You hit the ball, you catch the ball, you throw the ball. Some days you win, some days you lose, some days it rains."

Any other explanation of why things happen on a day to day basis in the market is pretty lame. There is no PPT, no black ops options team. It is fear and greed that causes individuals, traders, and fund managers to do what they do.

This is the end, my only friend the end.

2007-08-04T06:17:00.000-05:00

So this is what happens on Fridays. Market down all day and a massive dump into the close. My guess is next week the shorts get rammed on Friday. Remember, the market will trade to cause the most pain. Right now it is the bulls. Speaking of bulls and bears, it seems our friends at BSC are getting a lesson in risk management. The stock is now priced with a 20% decrease in earnings based on this CMO mess. They will be acquired before any talk of bankruptcy becomes real. I heard Cramer blew a gasket on TV the other day. Quoting the most important philosopher of the last century, What a maroon.

Blood on the streets in the town of New Haven...

2007-08-01T07:35:00.000-05:00

Well, the SPX closed below my target of 1465 yesterday. What does that mean? I would use this doom and gloom to snap up the best quality financials, housing, and natural resource stocks. Oil seems to be getting frothy. For a short, it would be in oil stocks since they would have to correct soon. Remember, sell when you can, not when you have to, and buy em when they are on sale. It looks like Nordstrom's anniversary out there.

We have nothing to fear, but fear itself.

2007-07-27T05:32:00.000-05:00

When the market corrects a quarterly move in one day, most people get the feeling we are heading for some kind of disaster. Because of electronic trading and globalization of markets, what is happening is an overnight readjustment of risk. In the past, this would take months, the past 2 years we have seen it take days. I would use this opportunity to pick up battered names that are still in uptrends.

An Okie from Muskokee

2007-07-26T06:38:00.000-05:00

One of the most consistent ways to make money on Wall Street is to buy what is called deep value. Usually, these are companies that are down on their luck, but have good management and sound financials. These are not trades, but if you take a long term outlook, they will be a great part of your portfolio before long. Examples are energy stocks from 1998, tobacco in 2000, and tech in 2002. My pick today is housing. Every day we see the bad news coming out about the housing market. The stocks have already discounted this as they are hitting 52 week lows. With many trading under book, find the solid management and buy and hold.

Just a Good Ole Boy

2007-07-23T13:07:00.000-05:00

If I was a betting man, the trade here is to fade the flight to quality. Maybe get long some closed end hi yield funds which are at 52 week lows, and short treasury ETF's. The flight to safety is a lot like out of the money put buyers after they have taken a hit. Sure it lets you sleep at night, but you are locking into a bad position usually. This was a pattern that I saw in the merger arbitrage game. When no one needed puts, they were cheap to own. Once the proverbial shyte hit the fan, the out of the moneys would trade at ridiculous prices. For example, back in early 2001, GE was trying to buy HON. With GE trading around 50, the deal was worth 52.5 for HON share holders. The spread, where HON actually traded, was 2.50 or 50 for HON. The 40 puts were trading at $.80. Guess where the stock opened after the EU slammed the deal? Thats right, 39. No real protection, but you had to own them.

All My Rowdy Friends are Coming Over Tonight.

2007-07-18T14:20:00.000-05:00

Isn't it funny how Hank Williams Jr. is more popular because of Monday Night Football than his entire career? I guess its a family tradition.

As posted previously, index break outs are usually short lived. Too many other factors are at work. Earnings season is upon us so crank up the volatility and keep to your discipline. Right now I like some tech names that have not really participated in this quarter's run up.

Back in baseball, the Yankees are toast. Yes, stick a fork in them, they are done. Its time to get Metsmorized.

Spirits in the Material World.

2007-07-12T16:10:00.000-05:00

So did you catch Live Aid? Yes, the one 22 years ago, not the terrible music played last week. Does anyone really care about the Police getting back together? Sting is by far the most overrated musician of the past 20 years. I liked there stuff when it first came out, but it really doesn't have any staying power if you know what I mean.

Massive short covering today. Especially the retailers. Sears misses and guides lower, all the hedgies get short any other retailer, and the first rally they scramble to cover. Index breakouts rarely work as a trade, I am guessing we get some overbought signals over the next week.

No Reply at All

2007-07-06T07:16:00.000-05:00

Big jobs number coming. We will see if that 5.25% is tested on the 10year and how it hits the market. I would not chase any rally here.

Ramblin' Man

2007-07-03T13:06:00.000-05:00

Market has pretty much stabilized as bond yields come down. Today's action, as the 10yr bounced off of the 5% line, will lead us the rest of the month. If the market gets comfortable with 5-5.25%, and we get liquidity back in the hi yield and CDO's, then we can have a continuation of this summer rally. Me thinks the market could hick-up further down the line as earnings will not surprise as last quarter. Still like 1465 support in the SPX.

Enjoy the 4th.

Green River

2007-06-26T14:32:00.001-05:00

Hedge funds blowing up, credit spreads widening, SPX below 50-day MA. Just what the doctor ordered to put some volatility back in the market. Like I prevously stated, all the sideline cash is in, so there should be less support and more time in this correction than the last 3 or 4 we have seen over the past 2 years. My guess is a nice downdraft occurs after the Fed meeting. Hey, they need someone to blame it on.

Hearing a huge 4-way trade in NBA. Does it really matter?

Video Killed the Radio Star

2007-06-21T07:17:00.000-05:00

Just imagine this, your favorite broadcaster decides after years of being on the sidelines, analyzing the game, he could jump right in. I mean what if Howard Cosell jumped in the ring to fight Larry Holmes, or Jim Nantz became the next coach at Kentucky, or Matt Lauer was running for mayor of New York. Sounds funny, but it is happening on Wall Street. Yes, one of the long time market cheerleaders, Ron Insana, is building a fund of funds. Because of the 20 years spent reading news reports of what analysts said, CEO interviews, and having lunch with money managers, makes him the right man for the job. I guess we can all go short now, since this is definitely a sign of a bubble in the markets. Moops.

As they Mets take a month off from playing baseball, I am looking forward to the pre-season hype for college football. Here in Austin, its all Longhorns, all the time. I think Colt McCoy has a good chance of getting back into the quick pass offense that he was successful with last season. The rest of the Big 12 seems weak, so it should be another BCS bowl for Coach Mack Brown.

Don't Stop Believing

2007-06-17T20:04:00.000-05:00

Yes its been one week since the Sopranos ended. But life goes on. I think that's what David Chase wanted to put across.

The market had a nice bounce off of the 50day MA,(thanks Muckdog). With options expiration out of the way, and summer vacations starting, my best guess is the sideline cash has been put to work. That means the next dip, is going to be slower, and further. Probably a break of that 1515 pivot makes a nice short trade into the 200day around 1460, into late summer. Based on the earnings and now a normal yield curve, trend is still up for the next 12-18 months.

Getting back to the Mets and Yanks, El Duque getting lit up by his former team. I don't think the Mets have it with a starting rotation collecting Social Security.

Season's in the Sun

2007-06-14T18:46:00.000-05:00

So when bonds have a massive selloff and that takes equities with them, which do you buy? Based on the action of the past week, you take stocks. My mantra is to buy em on sale, smoke em when you got em, not when you have to. In english, usually things get out of whack on the down side fast, so you should always have cash for these moves. But how do you get cash? You need to sell them either when they are going off the charts, or when you hit a mental stop.

Off to see the Spurs sweep.

Take me out to the Ball Game...

2007-06-12T06:54:00.000-05:00

Took in my first Round Rock Express (AAA, Houston) game last evening. John "Bob" Saccamanno had the big stick with 2 boppers. The later came with 2 on in the 6th to straight away center field. We'll see him in the show.

The SPX bounced off of that 1515 pivot I mentioned the other day. Mid day strength could not hold especially with the 10-yr note above 5%. Apple I-Phone news out so the stock reverses an all time high. Even with an upgrade today, you probably have seen a short term top in the name. Support in the 97-99 range for you dip buyers.

Keeping a keen eye on the Gold chart. Looks like the bugs have left and trend is down. As the dollar rally continues, watch for more downside action in the commodities. With gaps in material stocks from last week takeover rumors, it may be a good time to play some of these on the short side.

"Sweet Ginger Brown"

2007-06-08T15:30:00.000-05:00

So I bluffed the first pot of the night. I had a Jack and like an off 6, raised once, took the pot. The rest of the night went quickly. Had Jack Ten suited on the big blind, rest of the table folded except for me and the short stack, he goes all in, I call, he beats me with pocket Queens. Next hand I fold Ace of spades, deuce of clubs, flop comes all spades, guess what floats on the river?

Watched some of the celebs in action, Kevin "Hercules" Sorbo was the most popular player, not so much the best. Also, the Major League Bubble gum champ of 1977, Kurt Bevaqua, at the table.

Many thanks to Rob at KASE 101, I think the turban would have worked great.

P.S. the market rallied off that fib line at 1500. First resistance 1515.

You got to know when to hold'em...

2007-06-06T15:02:00.000-05:00

One of the greatest concerts I have ever seen was Kenny Rogers at Foxwoods Casino. Pre-botox, he was the man. He did this thing where he picked a guy in the audience, asked him if his wife/girlfriend dragged him to the show. Then, he said "I'll make this worth your while. I'll give you $10 for every song you recognize." As he rolled thru the hits, he kept on doleing out the cash. The guy took home around $100.

Speaking of the Gambler, I was invited to play in a charity poker game tomorrow night. All I keep thinking about is the scene in Ocean's Eleven with Brad Pitt and the young Hollywood crowd. "You don't want 4 cards, you want to fold. Ok, I fold". Maybe I can beat Haley Joe Osmet.

The market has started its long overdue corrective move. Fibonnaci retracement on the S&P looks first at 1500, then 1465. Since the moving averages are upward sloping, shorts should be quick and cash nibbling at the support levels.

Ain't Love a Kick in the Head

2007-06-03T08:29:00.000-05:00

Catching the original "Ocean's Eleven" in the background, not as slick as the re-make, but probably way cool for its time. Hey anytime Cesar Romero takes off the make-up, its got to be good.

For any of you who grew up like me collecting baseball cards, you remember the color and style of the different years. Especially when you "flipped". When I was in elementary school, we flipped kind of like playing gin rummy. You had to match the other players cards. I vaguely remember some kind of shift in your hand when you had double of something that would always give you an edge. When I moved across town at the age of 12, they had a different way of doing it. Something about "Larry's". I never caught the grasp of it and now have only that brief memory of what, at that time, was the only subject I could concentrate on. Check out this link as the author describes his deflowering in relation to his baseball card collection:

http://cardboardgods.baseballtoaster.com/archives/677310.html

Of course, I was the type who hated the kid who's Dad bought him the complete set. That's cheating in my book, I would scrunge up $.75 or so to get that 3-pack every week. Somehow, you always got stuck with a lot of trips that everyone else had. But you looked cool at school with the big "wad" of cards wrapped by that industrial strength rubberband.

Thanks again to Topps, without whom, I don't think I could have made it out of 6th grade.

He stopped loving her today.

2007-05-31T19:04:00.000-05:00

You ever notice that people want something for nothing, and nothing is never good enough. Using basic calculus, then something is always the least. A bird in hand is worth two, whatever. As long as my stock is going up, nothing is wrong with my stock and vice versa. Guys like Steinhardt and Robertson couldn't grasp this in 1998-99 with the Nasdaq rally. They hung it up. I guess when you amassed a few hundred million, its easy to retire. Very simple, pick your entries carefully, define your exits, take some risk out of the equation when you can, let the rest ride.

I mentioned spin-offs before, here the street is giving you a great entry. The big holders don't want these little stubbies on their books, so they dump'em. As long as you give yourself some room (remember time and price), then they can work fantastically well.

China Girl

2007-05-30T06:54:00.000-05:00

Thanks for all of your commentary to my patriotism. I enjoyed the quote "the only time I feel red, white and blue is when I do laundry". Still holding back the tears from that. Well its back to business.

Woke up this morning, and the idiots on TV blaring the "Shanghi Swoon" alert. If a market goes up 30%, then down 10%, then up 40% in 6 months, do you really think it can't be down 6% in a day? The fact that it is the largest Socialist country on earth doesn't surprise you that they can get more tax dollars by raising fees on stock transactions? Doesn't anyone remember 1999? Beuller?

While I am on a rant, last night I read an article in one of these wealth advisors magazines. The supposed "financial writer" who contributed to this article on OTC derivs really blew my mind with his ignorance. He compared a bond fund that sells the CDS on its holdings is equivalent to covered call writing in equities. When in real life, we all know that the fund manager is simply doubling his bets. It is actually the equivalent of selling puts, not calls on his bonds. But that really doesn't matter, does it?

One item flying low on the radar is the amount of spin-off activity. While not as sexy as private equity cash deals, spin-offs allow you to trade like an arbitrageur with a hell of a lot less risk.

Memorial Day 2007

2007-05-28T20:18:00.000-05:00

Hopefully, we all paid our respects today along with the BBQ and swimming pools. Its great to be an American, but we all have to take time out of our hustle and bustle to think about how we got here. The sacrifices our ancestors had to make in order to provide us with our special brand of freedom not seen anywhere else. How many articles have you read today that criticize our government? Never before the United States was around would the public have the liberty to speak against our leaders. We have massive infrastructure and superior social services for half of the cost compared to others. From 1945 to 2001 we lived undisturbed by foreign advances and were allowed to pick and choose our battles. On a day like today we must look past individual needs in order to view our common goal.

You Want the Truth, You Can't Handle the Truth.

2007-05-24T04:01:00.000-05:00

Yep, stayed up all night just to catch Jack Nicholson explode in the courtroom. I'd say its one of the top 3 movie monologues. Alec Baldwin in Glenngarry Glen Ross and Mel Gibson in Braveheart are my other faves.

Cousin Keith over at Turbulence of Dreaming would like me to translate some of the terms I use. Let's look at the previous post:

Yes, Gordon Gecko, Boesky, and Dennis Levine are all back. made a lot of cash insider trading in the '80s both fake and real Private equity investors, not junk bonds, are the new rocket fuel for the merger game. idea here is that Wall Street needs to do deals in order to survive Adam Warner (AMEX Alum) over on the Daily Options Report brings up some really good facts. Blue Horshoe loves everything. another former market maker from the American Stock Exchange who blogs it real good, reference to the movie Wall Street Market opens up to new highs and sells off on Greenspan. Yep, that's correct, my great uncle Al said that China was a "bubble"and the spoos decided to hit the mattresses. My grandfather's name was Greenspan, the stock market closed on its lows after trading to a new high, reference to The Godfather WRONG. Its Moors not Moops. Seinfeld episode where George plays Trivia Pursuit with Bubble Boy This market has been toppy for 2 weeks already. NDX way underperforming, 30-yr rates backing over 5%, dollar, gold and oil all reversing trend. Liquidity drying up so assets need to be sold.random thoughts on what my gut tells me is going on in the markets after being involved for nearly 2 decades. I would wait till the price hits 1450, by then all the suckers will be out. Mr. Valentine sets the price. where the SPX index chart shows some support, and a Trading Places reference Happy Shavuos to all, and to all a good night. what Charles Dickens might have said to his Jewish neighbors on the day we celebrate when the Law was received at Sinai.

I hope this helps Cuz! using old school exclamation point because I can't remember how to do those smiley faces!!!

Because its Wreckable.

2007-05-23T17:34:00.000-05:00

Yes, Gordon Gecko, Boesky, and Dennis Levine are all back. Private equity investors, not junk bonds, are the new rocket fuel for the merger game. Adam Warner (AMEX Alum) over on the Daily Options Report brings up some really good facts. Blue Horshoe loves everything.

Market opens up to new highs and sells off on Greenspan. Yep, that's correct, my great uncle Al said that China was a "bubble"and the spoos decided to hit the mattresses. WRONG. Its Moors not Moops. This market has been toppy for 2 weeks already. NDX way underperforming, 30-yr rates backing over 5%, dollar, gold and oil all reversing trend. Liquidity drying up so assets need to be sold.

I would wait till the price hits 1450, by then all the suckers will be out. Mr. Valentine sets the price.

Happy Shavuos to all, and to all a good night.