Option Investor
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Jeff Bailey : 9/19/2008 11:38:38 PM

Well, Drake the dog has convinced me that it is time to knock off, get to bed, then get up early and head to the hills and look for a brace of blue grouse.

Sounds good to me! Have a great weekend.

Jeff Bailey : 9/19/2008 11:34:50 PM

SPX Heavyweights (09/15/08 sort) at Q3 Triple Witch Link

Jeff Bailey : 9/19/2008 11:27:29 PM

Closing Internals found at this Link

Jeff Bailey : 9/19/2008 11:17:35 PM

Quick thought ... would think with no financials, NDX/QQQQ option premiums would be "lower" over time. Not a bank/financial in the bunch.

Jeff Bailey : 9/19/2008 11:08:39 PM

UBS $21.45 +31.35% ... Up/DnTick Vol 728,556/683,987
HBC $81.75 +2.80% ... Up/DnTick Vol 374,145/335,352
RBS $4.26 +21.71% ... Up/DnTick Vol 251,103/252,609

Jeff Bailey : 9/19/2008 11:11:35 PM

SPX Heavyweight Financials
BAC $37.48 +6.90% ... Up/DnTick Vol 7,283,562/4,597,162
JPM $47.05 +16.74% ... Up/DnTick Vol 3,403,891/3,557,856
WFC $39.80 +7.56% ... Up/DnTick Vol 3,590,885/4,067,946
C $20.65 +24.02% ... Up/DnTick Vol 8,200,675/7,278,563
GS $129.80 +20.18% ... Up/DnTick Vol 2,482,137/2,401,474
USB $37.99 +3.31% ... Up/DnTick Vol 1,656,087/2,882,211
BK $35.70 +13.08% ... Up/Dntick Vol 4,585,183/1,445,360
AXP $40.40 +7.10% ... Up/DnTick Vol 1,036,762/1,215,306
MS $27.21 +20.66% ... Up/DnTick Vol 9,771,004/5,543,843
MET $60.24 -4.38% ... Up/DnTick Vol 578,221/3,153,090
PRU $86.25 +2.69% ... Up/DnTick Vol 357,196/459,126
MER $29.50 +33.72% ... Up/DnTick Vol 3,400,440/3,096,226

Jeff Bailey : 9/19/2008 11:02:48 PM

NYSE, AMEX, NASDAQ, BB internals at today's close Link

Notable differences here. May need and come back to in sessions to come.

Jeff Bailey : 9/19/2008 10:38:22 PM

Closing U.S. Market Watch found at this Link

VIX.X on a 5-dayNet% notable considering SPX unchanged. This I do believe a reflection of option Market Makers new RISK assessment for themselves (see MM discussion/analysis regarding how Market Maker hedges Option risk). Retail option traders (you and I) become MORE AWARE that premiums are high. Should "no short financials" rule change, then volatility/premiums could decline in rapid fashion.

DIA and SPY 5-dayNet% difference between their respective index is this quarter's dividend.

OI Technical Staff : 9/19/2008 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Linda Piazza : 9/19/2008 6:32:16 PM

Reader Question: I'd love to see a market monitor post on Linda's thoughts on the outrageous option spreads today in relationship to the no short rule. Looking at WB calls/puts... the spreads are outrageous... Oct 15 Calls with a 3.60 x 5.90 with WB at 19.70... Oct 15 puts with 1.00 x 2.50 with WB at 19.70... never seen this before... do you think this is simply a matter of the sharp runnup, or is this because the market makers need these spreads to cover themselves now that they do not have the ability to short the underlying security? Could this be the new game... if so, I don't see a way that we option traders stand a chance given these new spreads... YIKES!

Answer: I just received this email so I'm sorry if you waited for your answer for a while. As I noted earlier, I, too, noticed some spreads that were wider than I anticipated and remembered them being for setups a similar distance from the current value. I have in the past noticed spreads widening in times of greater uncertainty: just before an FOMC decision is announced, as particularly strong resistance or support is approached, that sort of thing. Those wider spreads reflect greater uncertainty, and we were certainly seeing some of that. I don't know how the various no-shorts rules will impact options pricing, although I'm certainly concerned about it as I've expressed. The uncertainty provoked by this new development probably contributed some of the widening of spreads if they didn't yet strongly impact what market makers were willing to do. The Dow Jones article in which some market making firms avowed to stop trading options in the 700 (with GE added) no-shorts-at-all stocks included on the SEC list shows that they're fearful and that their behavior may change. How much will it matter to us options traders? I don't know. My suspicion is that in markets such as the Q's options, which see strong volume and in which buyers and sellers can be matched up fairly quickly through electronic trading, near-the-money options at least wouldn't be as strongly impacted. But for the kind of trading that I do, often in far OTM credit spreads on the SPX and OEX, in which market makers are often involved, I'm a bit worried. Who is going to be willing to take the far OTM put or call I'm selling and simultaneously by a hedging one? Will there be enough interest to match up what I want to do with someone else who is willing to be the counterpart to that trade? And what will happen with premiums?

The truth is that we don't know. We don't even know the ultimate parameters of all the decisions being made this weekend. Some changes could be made, some pressures brought to bear. Some fears may prove to be exaggerated, some, not given enough emphasis.

Jeff Bailey : 9/19/2008 5:00:35 PM

AIG goes out at $3.85 ...

No short + (($5.00 - $2.50)*.50) + $2.50 = $3.75

Jeff Bailey : 9/19/2008 4:56:25 PM

Somebody cares about those that utilize derivative to hedge, rather than just pure speculation! Best news of the day!

Options and futures were created in order to HEDGE RISK!

Jeff Bailey : 9/19/2008 4:54:26 PM

dj- CFTC to provide temporary hedge exemption relief to swaps

The U.S. Commodity Futures Trading Commission said Friday it is prepared to provide temporary hedge exemption relief to firms that are taking on swap positions from distressed companies. The exemption would be limited to existing positions only, and it would also require weekly reporting by firms that choose to utilize the exemption. The exemption would expire after 90 days. "These are extraordinary times in the financial markets," said Acting Chairman Walter Lukken. "The CFTC continues to coordinate closely with our sister regulators in the U.S. and overseas to ensure that futures customers are protected under the commodity futures laws and to facilitate the continued functioning of the commodity futures and options markets during this challenging time." In a prepared statement, the agency also said it is monitoring financial company single-stock futures traded on futures exchanges in coordination with the Securities and Exchange Commission's emergency action on short-selling.

Jeff Bailey : 9/19/2008 4:52:49 PM

dj- GM common stock issue (update)

DJ- General Motors Corp. (GM) said Friday that it issued 28.3 million common shares in exchange for $321,981,326 principal amount of its 1.5% series D convertible senior debentures due 2009. The amount of common stock GM exchanged for the debentures was based on the daily volume weighted average price of the stock during a four-day pricing period, according to a filing with the Securities and Exchange Commission. The company said in the filing it entered into the agreement to "reduce its debt and interest costs, increase its equity and, thereby, improve its liquidity." Shares of GM closed Friday at $13.08, up 31.72%.

Jeff Bailey : 9/19/2008 4:48:27 PM

dj- CME Nikkei 225 Stock Index futures settle up 715 points

Jeff Bailey : 9/19/2008 4:36:25 PM

Check your accounts ... iShare Russell 1000 Growth (NYSE:IWF) $51.94 +3.30% ... H/L ??? $101/$0.17

Tell your friends that have not wanted to look at their brokerage account statement the last couple of weeks to check their accounts.

Jeff Bailey : 9/19/2008 4:33:20 PM

NYSE 52-week highs 228 (partial) and 115 NL Link

Jeff Bailey : 9/19/2008 4:27:54 PM

Good gravy! ... you won't believe the following unless you've been following ...

Jeff Bailey : 9/19/2008 4:27:03 PM

Interesting, interesting strategy.

Jeff Bailey : 9/19/2008 4:26:32 PM

dj- GM Issues 28.3M common shares in exchange for notes

Jeff Bailey : 9/19/2008 4:23:46 PM

SPX 1,255.08 +4.02% ... for the week .. +0.27%. Not much happened. :P

Jeff Bailey : 9/19/2008 4:20:20 PM

US Bank Business Loans Down $4.9 Bln In Latest Week ... DJ- U.S. banks' commercial and industrial loans fell $4.9 billion to about $1.510 trillion in the week ended Sept. 10, the latest week for which data are available, the Federal Reserve said Friday.

That followed a $2.7 billion increase the previous week.

Jumbo certificates of deposit grew $12.9 billion to about $2.141 trillion in the latest weekly data, after growing $4.7 billion the previous week. Revolving home equity loans rose $2.3 billion to $530 billion after falling $300 million the previous week.

Jeff Bailey : 9/19/2008 4:14:25 PM

dj- Canada to auction C$2B of 10-day T-Bills Monday

Jeff Bailey : 9/19/2008 4:12:52 PM

Sovereign Bancorp. (SOV) $10.23 +20.35% ... sells CDO's

Check your accounts here (per NYSE:Arca notes earlier). Showing $37.20 as opening tick highs.

Jeff Bailey : 9/19/2008 4:10:02 PM

dj- Greenspan: Short-selling bad a bad idea

Paulson, Bernanke have his support.

Jeff Bailey : 9/19/2008 4:09:00 PM

dj- Lehman terminates credit pacts for $4.5B

OCTBB: LEHMQ $0.22 +340% ...

Keene Little : 9/19/2008 4:04:03 PM

Not much else to report at the end of the day. I took a quick peak at NDX and noticed it pulled back to and found support at its downtrend line from August. That's bullish. So we'll just have to see what if any follow through to the upside we get on Monday. I'll be studying the charts over the weekend to see what patterns make some sense of all this and I'll get a post out Sunday evening in hopes of helping with some ideas for what Monday might look like.

I hope everyone has a great weekend. Let the weekend rejuvenate you for the coming week.

Jeff Bailey : 9/19/2008 4:01:36 PM

IWM's WKLY R1 $74.18 ... check out today's lows.

Jeff Bailey : 9/19/2008 4:00:51 PM

Fascinating trade to the close in the WKLY Pivots. All trackers just under except the IWM.

Linda Piazza : 9/19/2008 3:57:46 PM

I agree that the government could ultimate benefit from the bad debt they've assumed. I don't think either of my daughters is ever going to default on a mortgage, for example, but their mortgages are being lumped into devalued tranches of mortgage-backed paper. The problem is the transparency issue. I heard a program on NPR the other day, discussing why AIG couldn't be allowed to fail, and it talked about the impossible tangle of deciding who owned what paper and who had sold it to them and what it was worth. No one knew what would happen if AIG went under.

Jeff Bailey : 9/19/2008 3:57:40 PM

Fitch: Changes Comerica, Inc. (CMA) outlook to negative.

Jeff Bailey : 9/19/2008 3:56:41 PM

SPY $124.96 +4.67% ...

Linda Piazza : 9/19/2008 3:55:29 PM

What happens Monday? There are no important scheduled releases that I've found, and Japan's market will be closed overnight, too, so futures traders will be left to study the implications of the actions taken this week and react to those. Today, the OEX charged up to likely strong resistance on intraday and daily charts, up to about 581.20 on daily closes. The 8/19-8/22 daily lows were near that level, too so there's some historical S/R there, too. The daily Keltner chart suggests that until and unless the OEX can produce daily closes above that level, it's vulnerable to pullbacks to about 563-564, where it might again find support on daily closes. A push above 581-584 that's sustained suggests a move up to 594-601. Remember Cashin's warning this morning that today's rally was inflated by 30-50% by short-covering, so that when those shorts are through, it might be natural to see a pullback to support before another push higher. When will shorts be through covering? Beats me. Just know the vulnerabilities here and the landmarks you should watch.

The 15-minute chart shows a possibility that the OEX could push up toward 579 and maybe 583-584 if the OEX can sustain values above 579-579.50, but the OEX is likely to find strong resistance at that higher level. An immediate decline below 573 Monday morning and a sustaining of values below that level would suggest a decline toward 565 instead.

Jeff Bailey : 9/19/2008 3:52:54 PM

To the expiration Profiles ...

NVDA $11.35 +4.22% ... UVA-IX $0.00 x $0.05

SSO $57.50 +8.14% ... SUC-IJ $0.00 x $0.05

Jeff Bailey : 9/19/2008 3:48:58 PM

Sign me up!

Jeff Bailey : 9/19/2008 3:48:15 PM

CNBC guest ... thinks US Govt. could make between $25-$28 billion for taxpayers.

Linda Piazza : 9/19/2008 3:48:03 PM

The OEX looks as if it might close this 15-minute period above the potential resistance now at 574.33. If it does, next resistance appears to be at about 577.80.

Linda Piazza : 9/19/2008 3:40:15 PM

The OEX did find support in the 569-570 region, as anticipated that it might do. It now might have resistance on 15-minute closes at 573.65. We don't have much time left in the trading day, and I lean less and less toward relying on technical analysis setups toward the end of an opex Friday, though. Remember if you're holding OEX or XEO SEP options, they settle at the end of the day today. As with Friday morning settlements on indices such as the SPX, when the settlement value is not the value of the index at the open, the settlement value is not the value of the index at the close. Rather it is calculated from the closing values of all the component stocks. Therefore, if stocks are falling after the close, the settlement value coudl be lower than the closing value; if they jump as they're closing, it could be higher.

Jeff Bailey : 9/19/2008 3:38:55 PM

But we "knew" where the RISK was at, and we attacked it.

Jeff Bailey : 9/19/2008 3:37:56 PM

AIG $4.32 +60.59% ... almost all are lower from opening tick.

Linda Piazza : 9/19/2008 3:35:31 PM

Jeff, what are you referencing in your 2:47:50 post?

Linda Piazza : 9/19/2008 3:31:45 PM

What are some of Sunday night and Monday morning's scheduled releases and events on foreign bourses? ECB President Jean-Claude Trichet speaks at 10:00 am ET Sunday morning in Bratislava, about Slovakia's adoption of the euro. I don't know whether he's going to have a Q&A session, but if he does, what he says could impact markets. Japan releases the Monetary Policy Meeting Minutesand the All Industries Activities Index at 7:50 pm ET Sunday evening.

By the way, Japan's markets will be closed, I believe, for a holiday.

ECB President Trichet is on the schedule again at 3:15 am ET, but I'm not sure that there's not a mistake somewhere because the information on both appearances is identical. The U.K.'s Sir John Gieve, a member of the Monetary Policy Committee speaks in London at a Family Office Summit. Again, I'm not sure if this will include a Q&A session. In this case, I'm not sure of a time, either, as it's not provided on the source I use. Canada's Retail sales comes at 8:30 am. That's it until our markets open.

Jeff Bailey : 9/19/2008 3:27:05 PM

03:21 PM EDT Market Watch at this Link

Jane Fox : 9/19/2008 3:24:38 PM

The crude November contract CLX08 has a volume of 265K today wheras the October contract CLV08 has only 129K, obviously traders made the switch today. I See CNBC is quoting Crude at 106.38 but the November contract is at 104.06 so they are still using the October.

Jeff Bailey : 9/19/2008 3:23:34 PM

Only equity-based index in U.S. Market Watch I show red.

Jeff Bailey : 9/19/2008 3:23:15 PM

Semiconductor HOLDRs (SMH) $25.79 -0.23% ... slips red.

Jeff Bailey : 9/19/2008 3:21:44 PM

So as a MANAGER OF RISK, I, you should not assume anything and OVERLEVERAGE anything. Thus becoming a "poor soul"

Jeff Bailey : 9/19/2008 3:20:49 PM

ABK is on "the list" ... yet longs liquidate $4.55 -31.63% ...

Jeff Bailey : 9/19/2008 3:19:05 PM

SEC's no short Financial List ... (.pdf file) Link

Jeff Bailey : 9/19/2008 3:16:50 PM

Semiconductor HOLDRs (SMH) $25.90 ... $0.05 from unch ...

Linda Piazza : 9/19/2008 3:15:09 PM

Watch for potential OEX support at 569-570. I'm not sure it will hold in this last-of-the-day move, but there's potential that it will.

Jeff Bailey : 9/19/2008 3:09:23 PM

Didn't think of that as an answer!

Jeff Bailey : 9/19/2008 3:09:07 PM

The next bubble: Pessimism ... CNNMoney Story Link

Jeff Bailey : 9/19/2008 3:06:01 PM

One hour, or One hour 15-minutes until op-ex.

For some it comes to early. For some, not soon enough.

Jeff Bailey : 9/19/2008 3:05:07 PM

YM "pinned" at WKLY Pivot ... 11,366

Jeff Bailey : 9/19/2008 3:03:46 PM

Yen CurrencyShares (FXY) $93.06 -1.30% ...

Jeff Bailey : 9/19/2008 3:03:15 PM

Pound CurrencyShares (FXB) $184.09 +1.29% ...

Jeff Bailey : 9/19/2008 3:01:44 PM

USO $82.66 +4.40% ... gap low close from 09/02/08 was $89.19 and juuuuust under its 200-day SMA.

Jeff Bailey : 9/19/2008 3:00:32 PM

Euro CurrencyShares (FXE) $145.10 +1.24% ... probes its gap low close from 09/02/08.

Jeff Bailey : 9/19/2008 2:54:17 PM

"All the SEC has to do is bring back the up-tick rule" ... and the options market makers will be fine.

Jeff Bailey : 9/19/2008 2:47:50 PM

p, pa, pu, ... I can't ... (see top of your MM)

Jeff Bailey : 9/19/2008 2:43:36 PM

OptionsXpress (OXPS) $22.50 +5.28% ...

Jeff Bailey : 9/19/2008 2:40:21 PM

Knight Capital (NITE) $16.51 +6.10% ...

Linda Piazza : 9/19/2008 2:39:52 PM

Uh-oh, this is what I was talking about yesterday when those no-shorting rules were being discussed. This is what's at stake for us options traders. A.W. sent me a Dow Jones report that some options makers now claim that they will stop trading options on the financials included in the SEC's no-shorting rule today. They said they will stop trading options as of Monday.

I'm telling you: I'm worried about what happens for us options traders. You might give this some consideration if you're holding contracts, because you might not be able to easily buy or sell them come Monday.

Jeff Bailey : 9/19/2008 2:39:46 PM

Pathfinder Bancorp (PBHC) NITE bidding $8.10 with UBSS offer $9.50 and no shares traded.

Jeff Bailey : 9/19/2008 2:38:22 PM

Citigroup (C) $20.67 +24.08% ...

Jeff Bailey : 9/19/2008 2:37:59 PM

"modest" exposure? (wink)

Jeff Bailey : 9/19/2008 2:37:39 PM

Pathfinder Bancorp (PBHC) ... DJ- Pathfinder Bancorp Inc. (PBHC) said Friday that it plans to record a non-cash impairment charge in the third quarter related to a senior unsecured note issued by Lehman Brothers Holdings Inc. (LEHMQ). The Oswego, N.Y., parent company for Pathfinder Bank said in a filing with the Securities and Exchange Commission that its investment in the note was included in securities available-for-sale at a cost of about $994,000 as of June 30. Pathfinder said it doesn't have any other stock investment or security investment positions in Lehman, which filed for bankruptcy protection on Monday. The company said the impairment charge from its Lehman investment won't affect its "well-capitalized" status under regulatory requirements.

Linda Piazza : 9/19/2008 2:36:55 PM

Jeff, I was wondering what kind of synthetics the options MM might be able to concoct to hedge their risks with no shorting in certain issues and no naked shorting at all. I was going to spend some time this weekend researching it.

Jeff Bailey : 9/19/2008 2:36:03 PM

MBI $13.15 -6.07% .... we/I've traded this one here in the MM with relatively NO success in the past.

Linda Piazza : 9/19/2008 2:35:53 PM

Potentially strong resistance here for the OEX on 15-minute closes at 577.14, and for the SPX at about 1251. Take these with a grain of salt at this time on an opex Friday, though.

Jeff Bailey : 9/19/2008 2:35:12 PM

ABK $4.93 -26.23% ... are they on "the list"

Jeff Bailey : 9/19/2008 2:34:52 PM


Jeff Bailey : 9/19/2008 2:34:42 PM

dj- Ambak, MBIA shares fall on Moody's downgrade warning

Jeff Bailey : 9/19/2008 2:33:58 PM

USO $82.64 +4.38% ... from $81 about 10 minutes ago.

Jeff Bailey : 9/19/2008 2:32:33 PM

with AIG $3.99 ... $4 C AIL-JE's are $1.05 x $1.11

$5 C AIL-JA are $0.80 x $0.84

Jeff Bailey : 9/19/2008 2:29:16 PM

Help out our options market maker friends ...

Jeff Bailey : 9/19/2008 2:28:31 PM

What about a buy, run write there ...

Jeff Bailey : 9/19/2008 2:25:45 PM

Good gravy! ... AIG $4.12 +53.15% ... probes gap open high.

Jeff Bailey : 9/19/2008 2:21:35 PM

02:00 Internals found at this Link

Jeff Bailey : 9/19/2008 2:05:12 PM

SPX 10-minute ... Link

Jeff Bailey : 9/19/2008 2:00:56 PM

and euphoria ...

Jeff Bailey : 9/19/2008 2:00:46 PM

and anger ...

Jeff Bailey : 9/19/2008 2:00:12 PM

Even during "chaos"

Jeff Bailey : 9/19/2008 1:59:17 PM

Sitting on MNTHLY S1 asy I type ... 1,250.29

Jeff Bailey : 9/19/2008 1:58:22 PM

Checking out the SPX with your MONTHLY and QUARTERLY pivot retracement. Remember too! YRLY S2 @ 1,260.

Jeff Bailey : 9/19/2008 1:57:01 PM

M, M, mmm

Jeff Bailey : 9/19/2008 1:54:41 PM

RVX.X 37.83 +4.07%
VXN.X 33.36 +1.64%
VXO.X 33.65 -6.68%
VIX.X 31.82 -3.86% ...

Jeff Bailey : 9/19/2008 1:51:18 PM

Swing trade NAKED PUT cancel order alert ... Let's cancel the order for the WFC-VE at this time. WFC-VE $0.40 x $0.75 ... WFC $38.60 +4.32% ... VIX.X 31.95 -3.47% ...

Linda Piazza : 9/19/2008 1:50:54 PM

The OEX is testing potentially strong support on 10-minute closes at about 576, the new benchmark for when something had changed in the tenor. Don't take these benchmarks too literally in this market, on this day, at this time in the option expiration cycle. However, it's possible that if this support is lost, the OEX might drop back toward the morning's swing low of 569.83. That's not a given, but it must be considered a possibility. Another is that it could steady higher, at about 573.20. Of course, it hasn't yet violated that support on a 10-minute close, so no such targets have been set yet. Just keep this possibility in mind.

Keene Little : 9/19/2008 1:47:38 PM

I'm still tied up in knots trying to get some things done for my aunt but I'm checking in to see what's happening. No surprise the market has gone relatively flat following the gap up. Absolutely stunningly incredible what has happened in the past two days. Anyone with expiring September short calls or long puts that were in the montey very likely got fried and I would imagine many just lost their trading accounts. Where's the protection for them, for those who simply take the other side of the trade? I know it's not a fair system but this is beyond imaginable. But I'll stop ranting for now.

The move up from yesterday is actually a clean 5-wave move up to today's high. That move should now see a correction which, based on the number of points in the rally, could be a rather significant decline and not mean much. It's also possible it's the conclusion of a strange correction that started from the July low (for example, two equal legs up from July is at SPX 1246 which was clearly exceeded but a throw-over ending to this insanity can certainly be expected).

A little higher, at 1280, is the downtrend line from May. Above that, at 1315 is a Fib projection where the leg up from yesterday would achieve 162% of the July-August rally leg (to complete what's called an expanded flat correction). The bottom line is I have no confidence what to call this 2-day rally as to how it fits in the larger pattern. Manufactured or not, it's what we have on the charts and we'll just have to do the best we can in analyzing moves from here.

Jeff Bailey : 9/19/2008 1:47:41 PM

RISK / Reward should CIT not be added to the "protection list" not overly compelling. For a buy $11, write Oct. $10 for $2.20 in my opinion.

Jeff Bailey : 9/19/2008 1:46:06 PM

CIT-JB's (Oct. $10 call) are $2.20 x $2.55 ... so "values" CIT at $12.20.

If I buy 100 shares at $11.00, write the in-the-money, I've got some protection down to $11 - $2.20 = $8.80.

Recent low $4.57.

MAX gain would be $12.20 - 11.00 = $1.20/share.

Just found out that CIT is NOT on the "protection" list.

Jeff Bailey : 9/19/2008 1:39:56 PM

Now ... if you're a "poor soul" you need to be getting things under control.

However, if you've been following my profiles ... then we're looking for some new opportunities. MANAGE the RISK, as we've been doing. Don't overleverage.

Jeff Bailey : 9/19/2008 1:37:20 PM

Heck, with premiums as they are , a buy/write

Jeff Bailey : 9/19/2008 1:36:46 PM

Let's check out a "buy, run, write" on CIT group.

James Brown : 9/19/2008 1:36:03 PM

Wow! What a Friday.

I am posting to say thanks. Thank you to all the Monitor contributors for all your comments, opinions, and observations today and this week.

The market has delivered one amazing roller coaster ride. It is great to see it through another set of eyes. Or in the Monitor's case several pairs of eyes.

Jeff Bailey : 9/19/2008 1:30:06 PM

Here recently ... I feel like I am ...

Jeff Bailey : 9/19/2008 1:29:15 PM

I'd be "mad as he double-toothpicks" if I lived in Canada.

Jeff Bailey : 9/19/2008 1:27:35 PM

24-Month Average Retail Price Gasoline for Canada, USA, Austin TX, with Crude Oil overlay Link

Jeff Bailey : 9/19/2008 1:25:14 PM

CIT $11.34 +6.54% ... UpTick Vol 974,719 : DnTick Vol 977,661

Jeff Bailey : 9/19/2008 1:21:33 PM

Cit Group (NYSE:CIT) $11.80 +10.93% ... finds a bid.

Jeff Bailey : 9/19/2008 1:20:56 PM

CNBC reporting that CIT group asking to be added to list of "no short"

Jeff Bailey : 9/19/2008 1:16:58 PM

Retail Gasoline Prices @ 10:00 AM EDT ... Link

Jeff Bailey : 9/19/2008 1:11:20 PM

MS $29.50 +30.82% ... UpTick Vol 7,689,788 : DnTick Vol 3,069,717

Tab Gilles : 9/19/2008 1:10:52 PM

How many barrels of oil you can buy with an ounce of gold? Link

Jeff Bailey : 9/19/2008 1:10:20 PM

CBOE Most Active Puts/Calls @ 01:03:35 Link

Jeff Bailey : 9/19/2008 1:07:18 PM

For those that had/have any open transactions, thought they got filled, might want to check your accounts.

Jeff Bailey : 9/19/2008 1:06:46 PM

NYSE Arca: Investigating "potentially erroneous transactions"

Jeff Bailey : 9/19/2008 1:05:37 PM

AXP $40.07 +6.23% ... UpTick Vol 574,857 : DnTick Vol 832,317

Jeff Bailey : 9/19/2008 1:04:44 PM

That's the most lopsided so far. Almost pulled the trigger on a SPECULATIVE call, but couldn't do it.

Jeff Bailey : 9/19/2008 1:03:56 PM

BK $34.65 +43.00% ... UpTick Vol 3,916,774 : DnTick Vol 870,605

Jeff Bailey : 9/19/2008 1:02:36 PM

USB $37.71 +2.69% ... UpTick Vol 914,224 : DnTick Vol 933,400

Jeff Bailey : 9/19/2008 1:01:38 PM

GS $132.85 +23.00% ... Uptick Vol 1,468,161 : DnTick Vol 1,411,597

Jeff Bailey : 9/19/2008 1:00:48 PM

Shering-Plough: ... To cut 1,000 US sales rep jobs.

SGP $18.65 +1.35% ...

Jeff Bailey : 9/19/2008 12:58:04 PM

US Representative Frank: ... Tsy plan may make govt. money over time.

Jeff Bailey : 9/19/2008 12:56:39 PM

Storm Properties Closes Transaction on 13 Industrial Real Estate Properties ... DJ (partial) - Storm Properties, a developer of industrial and commercial properties, announced today that it sold approximately 545,000 square feet of its industrial real estate portfolio to TA Associates Realty for more than $52 million. A total of 13 industrial properties located in Los Angeles and San Diego counties were sold. The properties were key leased assets with a diverse group of Class A, long-term, global tenants. "This is a good deal for both parties because it shows that there is long-term confidence in the industrial and commercial real estate sectors in Southern California and that cash flow allows companies to take advantage of the current market conditions," said David Simard, vice president of Storm Properties. "This transaction provides Storm Properties the opportunity to diversify and acquire new properties in different asset classes in Southern California that include office, multi-family and retail."

Tab Gilles : 9/19/2008 12:53:59 PM

$SPX Link PnF Link

$NYA Link

Jeff Bailey : 9/19/2008 12:54:06 PM

Better cut back on some of those earmarks ... (wink)

Jeff Bailey : 9/19/2008 12:52:13 PM

US Representive Frank: Link ... Rescue plan should help with foreclosure.

Jeff Bailey : 9/19/2008 12:50:10 PM

US 59-day Bills: $40.416 Mln in Noncomps

DJ- The U.S. Treasury Friday sold $40.416 million of 59-day bills on a non-competitive bidding basis to foreign and international monetary authority accounts and other non-competitive sources. The issue is dated Sept. 22, 2008 and matures Nov. 20, 2008. The CUSIP number is 912795H79

Linda Piazza : 9/19/2008 12:47:13 PM

Technical analysis is likely going to become less useful than is typical beginning about now as the markets move into the last few hours of this expiration week. (Although, can you imagine the effort needed to pin this market to "the" number or any number?) However, watch for the potential for resistance to kick in at any moment on the OEX and SPX. That's not a given but it is a distinct possibility.

Jeff Bailey : 9/19/2008 12:38:55 PM

The next bubble? ... Hmmmm ... might be oil.

"Last time I looked, they weren't making more land/oil"

Tab Gilles : 9/19/2008 12:35:15 PM

XLF / GLD Link

Linda Piazza : 9/19/2008 12:32:02 PM

Potentially strong resistance on 15-minute closes is at 583.68 for the OEX and 1264.95 for the SPX. The OEX is currently 581.26 and the SPX, 1260.66.

Jeff Bailey : 9/19/2008 12:29:06 PM

12:00 Internals found at this Link

Linda Piazza : 9/19/2008 12:24:47 PM

Here's your earliest benchmark for when something might have changed in the tenor, but an early and tentative benchmark that might be soon reversed: for the OEX, sustained 10-minute closes beneath 574.25, and for the SPX, sustained 10-minute closes beneath 1244.77.

Tab Gilles : 9/19/2008 12:23:55 PM

Golds dramatic moves are trading based on financials concerns, were as oil/commodities trade on economics.

Jane Fox : 9/19/2008 12:23:34 PM

Well said Linda. I may be mad as hell but still know what Paulson did was necessary. I wonder how long this will remain in our memories before the next "bubble" starts.

Linda Piazza : 9/19/2008 12:14:30 PM

I have some concerns about the government's actions. I have some concerns about the ultimate fallout. As an options trader, and, more importantly, as a trader who has been supporting herself and her retired husband, as well as supplementing healthcare costs for a disabled grandchild on her earnings as an options trader, I'm very concerned about what the changes will mean for options traders.


I thought we were on the verge of total financial collapse. I was personally on the verge of my grandmother's tactic: money under the mattress. That's only a slight exaggeration. So, do I think this is all great, what's been done? No. Do I think it could have bad repercussions? Yes. Do I think something was absolutely necessary? Absolutely, I do. And, in fact, I'm kind of proud along with Treasury Secretary Paulson, although I don't agree with all his choices, that our country is one in which we can get something done and get it done quickly.

I hope you're all proud of yourselves, too, that you've weathered this historic week on Wall Street in some shape or fashion. We've made mistakes. We as traders reaching for higher and higher returns and ignoring warning signs and as homeowners reaching for more homes than we can afford and then furnishing them as if we were members of the Rockefeller family must also take some responsibilities along with the others we're blaming. We need to learn from our mistakes and, in the end, be proud of ourselves for being willing to examine those mistakes and move to correct them.

Jeff Bailey : 9/19/2008 12:13:33 PM

A bit busy with some profiled trades here in the MM this morning.

Jeff Bailey : 9/19/2008 12:12:54 PM

Internals correction alert! ... will be posting some corrections to the 10:00.

TRIN, TRINQ and VIX.X DAILY PIVOTs were incorrect. GLD's price quote at 10:00 was keypunch error.

Jeff Bailey : 9/19/2008 12:00:54 PM

WFC $39.09 +5.67% ... UpTick Vol 1,360,300 : DnTick Vol 1,761,322

Jane Fox : 9/19/2008 12:00:42 PM

We have the internals at odds with one another. The VIX is more bearish than bullish yet the AD volume is very bullish. The TRIN is at least back to normal. Link

Jeff Bailey : 9/19/2008 12:00:00 PM

BAC $36.20 +18.37% ... UpTick Vol 2,893,581 : DnTick Vol 2,120,724

Jeff Bailey : 9/19/2008 11:58:56 AM

C $20.40 +22.58% ... UpTick Vol 4,065,249 : DnTickVol 3,805,099

Jeff Bailey : 9/19/2008 11:58:05 AM

JPM $45.47 +12.82% ... UpTickVol 1,280,073 : DnTickVol 1,594,177

Jeff Bailey : 9/19/2008 11:56:57 AM

XLF $22.03 +11.15% ... UpTickVol 3,557,914 : DnTickVol 3,403,109

Jane Fox : 9/19/2008 11:54:41 AM

Heh everyone, if I am sounding just a tad cynical today, please just let me rant and I will get it all out of my system at some point.

Linda Piazza : 9/19/2008 11:54:02 AM

Potentially strong resistance on 15-minute closes for the SPX at 1264.81 and for the OEX at 583.66. I'm not sure that the indices will get to these levels, however, as it's possible that they will form lower highs and continue to drop back within a flag-like formation that's widening.

Jane Fox : 9/19/2008 11:53:38 AM

Maybe the market was in a major rally since July 15th that made Gold sell off. If it was, I certainly missed it.

Jane Fox : 9/19/2008 11:50:54 AM

NEW YORK (MarketWatch) -- Gold futures plummeted Friday -- at one point falling 7.6%, the biggest percentage drop in more than 25 years -- as speculation that a Washington-engineered rescue plan could avert financial crisis reduced demand for gold as an investment haven.

I'm sorry but this just seems like so much nonsense. Please explain why Gold has sold off 25% since July 15th Geesh!!

Jeff Bailey : 9/19/2008 11:49:51 AM

VXN.X 32.36 -1.40%

VXO.X 33.68 -6.60%

VIX.X 32.09 -3.05%

Jeff Bailey : 9/19/2008 11:49:00 AM

RUT.X 744.36 +2.85% ...

Jeff Bailey : 9/19/2008 11:48:35 AM

RVX.X 36.94 +1.62% ... anyone notice that?

Jeff Bailey : 9/19/2008 11:47:40 AM

#*$&%#& Capitalism

Jeff Bailey : 9/19/2008 11:47:22 AM

SSO $57.65 +8.42% ... SUC-IJ $0.00 x $0.10

Jeff Bailey : 9/19/2008 11:45:55 AM

Ah Capitalism!

Jeff Bailey : 9/19/2008 11:45:45 AM

AIG $3.15 ... AIL-IZ now $0.65 x $0.70 ... VIX.X 32.63 -1.41% ...

Jeff Bailey : 9/19/2008 11:44:01 AM

AMEX:SEF $15.61 -78.29% ...

Jeff Bailey : 9/19/2008 11:43:36 AM

AMEX:SKF $93.00 -19.43% ...

Jeff Bailey : 9/19/2008 11:41:06 AM

WFC-VE $0.40 x $0.70 now ... WFC $39.09 +5.64% ... VIX.X 32.62 -1.45%

Jane Fox : 9/19/2008 11:38:03 AM

WASHINGTON (MarketWatch) -- Saying government intervention is "essential" to stemming the financial market crisis, President Bush said Friday a broad-ranging U.S. plan to fight the crisis will get the financial system moving again. But that plan will put "significant" amounts of taxpayer dollars on the line, Bush said in a statement from the White House. He said Democrats and Republicans must come together to approve the plan. The Dow Jones Industrial Average soared more than 340 points on Friday morning as U.S. financial authorities began to enact a plan to buy bad assets from financial companies.

Jeff Bailey : 9/19/2008 11:37:04 AM

Believe me when I say that yesterday I was very "when in doubt, get out" on the RKH.

What if?

RKH $121.56 +8.82% ... ALWAYS assessing risk and supply/demand dynamics as much as I can here in the MM.

Jeff Bailey : 9/19/2008 11:34:42 AM

ProShares Announcement ... BETHESDA, Md., Sep 19, 2008 (BUSINESS WIRE) -- Due to the emergency action announced by the Securities and Exchange Commission on September 18, 2008, temporarily prohibiting short sales of shares of certain financial companies, Short Financials ProShares (SEF) and UltraShort Financials ProShares (SKF) are not expected to accept orders from Authorized Participants to create shares until further notice. Unless notified otherwise, shares will be available for redemption by Authorized Participants as normal.The shares of these ProShares are expected to trade in the financial markets today, but may trade at prices that are not in line with their intraday indicative values.

Jeff Bailey : 9/19/2008 11:33:48 AM

That's another can of worms I've been wondering about. If you can't short 700-some financials, what about all these type of ETF's?

Jeff Bailey : 9/19/2008 11:32:35 AM

DJ- ProShares not expected to accept orders to create shares until further notice

Jeff Bailey : 9/19/2008 11:31:48 AM

DJ- Argentina: August Primary Surplus ARS3.7 Billion; Up 36% on Year

Jeff Bailey : 9/19/2008 11:30:43 AM

30-year up 24.5 bp at 4.358% ... TLT -2.76% ...

Jeff Bailey : 9/19/2008 11:29:32 AM

Beetles Balanced (06/30/08) at this Link ... Think about all those poor souls ...

Linda Piazza : 9/19/2008 11:26:10 AM

The SPX and OEX have not yet dropped to the 567-568 or 1229-1230 levels, and may not, as I mentioned earlier when they seemed to be finding support at a higher price level. I closed out the put position I entered near the open, as I also mentioned, before this bounce. However, I wanted to note that bulls still need to exercise caution as this current bounce could be of the type that just widens a forming flag, so be careful of any lower high that then pulls back. If that happens, those levels mentioned earlier could still be tested and, based on the width of the flag, it wouldn't be impossible to see tests of 560-562 and 1212-1216.

Jeff Bailey : 9/19/2008 11:25:27 AM

DJ- Tsy Official: Govt. to up buys of Mtge-Backed Secs to $10B from Original $5B

Jane Fox : 9/19/2008 11:24:30 AM

Another email from a subscriber

Yeah, that scum that was a bartender transformed magically into a mortgage broker expert you wrote about in your post -- if Congress were worth a dang, they should track people like him down, make them live in a foreclosed house, maintain it, and pay him enough food stamps to keep him in bread and water. I'm just ranting too but some law enforcement agency needs to take control and punish those who were part of it. You're right, you don't know who to blame, but people know people and once you put the squeeze on them, there's no loyalty and you'll get some of them. Better to get some of them than to get none of them. It may never happen again in our lifetime, but these deeds cannot go unpunished. That bartender HAD to know what he was doing could not possibly have been legal, any more than the moron in the opening minutes with the NINA loan had to know that the loan he was getting was impossible for him to pay off. Are people really that stupid? I don't think so. Are they that greedy? YUP

Jeff Bailey : 9/19/2008 11:23:27 AM

CME Nov'12 Regional Housing Futures ... one depiction of what market participants value housing prices at four (4) years from now Link

Jane Fox : 9/19/2008 11:21:07 AM

If you want to be mad a somebody, my pick is Greenspan because it was his easy money policies at the Fed that made all of this possible.

Just my opinion, but I'm sticking to it!

Well Greenspan did acerbate the problem when he kept interest rates so low, forcing the Giant Pool of money to look elsewhere for its return.

Linda Piazza : 9/19/2008 11:19:10 AM

Jane, it's some of us, too, reaching for higher gains without thinking about the consequences. A few years ago, someone suggested that I read Bryan Perry's THE 25% CASH MACHINE for investment ideas. Among those ideas? How about mortgage Reits such as New Century (NEW)? Don't look for the chart, though, under that name at least, as it's long since imploded. Some of the Canadian Royalty and Business Trusts were included, such as HTE and PWI, but Canada's tax code was changed and many of those imploded, too, as foreign investors pulled out their money. How about Business Development Companies (BDC's) such as ACAS, another touted group of high-yield investments? I could go on, but the fact that the book existed set off alarm bells for me. It signaled to me that the market was big for such a book--publishers don't publish such books unless they believe they'll be bought by many--and that worried me. Why were so many people willing to overlook the obvious fact that the higher the yield, the bigger the risk? Wise investors using these as part of their portfolios, the speculative part, is one thing, but I feared this was taking the place of all those mo-mo stocks from the late 90's and early 2000. We should ask more questions, be more careful, be less greedy for high returns, realizing that the returns of those mo-mo days were inflated. The trader who recommended the book to me was not too greedy, and neither are those among our readership who were just trying to improve their returns and honestly doing their research. The trader I knew was wise enough to limit exposure to these and get out when the getting was good, but did everyone reading the book understand that, getting past the hype and the dreams of the great returns to be had? Readers were encouraged to manage their positions, but to consider them long-term ones and not micromanage, remembering the yields they were receiving.

Jeff Bailey : 9/19/2008 11:17:47 AM

There ... CNBC mentioning that all these mortgages taxpayers are "backing" may actually be worth something 10 to 15 years from now.

See my comments from a couple of days ago.

Could create a MASSIVE SURPLUS!

Jane Fox : 9/19/2008 11:13:56 AM

LOS ANGELES (MarketWatch) -- Bank employees worldwide are losing their jobs due to the global financial crisis but nowhere are bankers suffering more than in the United Kingdom. Some might even deem it cruel and unusual punishment.

Jeff Bailey : 9/19/2008 11:07:46 AM

All equity-based indexes in U.S. Market Watch now in the green.

Jeff Bailey : 9/19/2008 11:06:17 AM

Remember yesterday we couldn't get a fill at $0.65.

VIX.X was HIGHER then and WFC's stock price was LOWER.

Jeff Bailey : 9/19/2008 11:04:34 AM

These PUTS seem "expensive" don't they?

Think about that market maker on the offer. What's their RISK with the new SEC regulation?

You think your taxes are going up? Think about all us poor option traders and the market makers.

Jeff Bailey : 9/19/2008 11:02:24 AM

WFC-VE $0.50 x $0.90 ... $37.60 +1.48% ... VIX.X 32.02 -3.26% ...

Jane Fox : 9/19/2008 11:00:56 AM

The mortgage companies didn't care who they were selling the mortgages to because they just packaged them into MBS's and sent them on this hungry beast (all the fixed assets in the world looking for a better rate than US treasuries were giving them). They started to see a problem when the mortgages started to default BEFORE they could package them.

Jeff Bailey : 9/19/2008 10:58:57 AM

Reminder! ... October Crude Oil futures terminate on Monday.

Jeff Bailey : 9/19/2008 10:56:51 AM

And there were plenty that were taking the lender's offers.

"too good to be true!" 125% loan to value? Sign me up! ARM? Rates will NEVER go up! House price fall? No, +15% year like the last years! There will never be a down cycle in housing! There will never be any type of down cycle!

Jane Fox : 9/19/2008 10:56:28 AM

This program profiles a gentleman who was a bar tender and started working for a mortgage company finding people to take on mortgages so he could put them together into a Mortgage Backed Security. At one point he was making 25K a month and rubbing shoulders with rock stars.

You see the money sloshing around was astounding.

Jane Fox : 9/19/2008 10:52:23 AM

Mortgage companies were doing anything they could to get people into mortgages because this Giant Pool of money was so hungry for them. These companies were putting together no income, no assets, no questions asked loans just to get a mortgage that they could package into a MBS and sell it to this hungry monster.

Linda Piazza : 9/19/2008 10:51:46 AM

Here we go after all. If the OEX and SPX should continue dropping, watch for support on 15-minute closes to kick in between 565.70-567.76 for the OEX and 1226.94 and 1231.21 on the SPX. Bulls do definitely want this support to hold, as a failure to do so sets up the possibility of a drop to about 559 for the OEX and 1212-1213 for the SPX.

Tab Gilles : 9/19/2008 10:52:50 AM

NASDAQ New Highs (daily using a 10-ema) Link

NASDAQ New Lows Link

NYSE New Highs Link

NYSE New Lows Link

Jane Fox : 9/19/2008 10:50:26 AM

I certainly blame Wall Street but if you listen to the program I mentioned yesterday "Giant Pool of money" you realize that Main Street needs to step up to plate as well. This program was talking about a fellow making 46K a year who took on a 540K mortgage. I mean what the heck was he thinking.

Jane Fox : 9/19/2008 10:48:02 AM

I totally understand that what Paulson is doing is necessary and I admire him for having the intestinal fortitude to do it. It will alleviate the pain for now but at some point the piper will come a-calling and we will all have to pay. Or like Linda was saying we all ARE paying, even though we played the game according to the rules. I don?t know who I am mad at and that makes me even madder that I cannot point my finger at anyone group.

Jeff Bailey : 9/19/2008 10:47:28 AM

VIX.X 31.69 -4.25% ...

Jeff Bailey : 9/19/2008 10:47:02 AM

Swing trade SELL NAKED calls alert! ... for two (2) of the Wells Fargo WFC Oct. $25 Puts (WFC-VE) $0.40 x $1.00 ... for $0.90.

$38.65 +4.29% ...

Linda Piazza : 9/19/2008 10:45:43 AM

The charts are unclear to me now. I still see the possibility of a decline toward OEX 567-568 and SPX 1239-1240, but that possibility is being somewhat undercut by the strong support they're finding at support on 10-minute closes just under their current prices. So, continue to factor in vulnerability to those lower levels but if you're in bearish trades, don't count on them being hit, but instead prepare for the possibility that these indices could bounce from this support first.

Jeff Bailey : 9/19/2008 10:42:51 AM

SPX +2.98% currently at 1,242

Jeff Bailey : 9/19/2008 10:42:23 AM

European Markets Link

Jeff Bailey : 9/19/2008 10:41:50 AM

Asian Markets Link ... $NIKK finished +3.76% at 11,920

$HSI finished +9.61% at 19,327

$SSEC finished +9.46% at 2,075.

Linda Piazza : 9/19/2008 10:42:19 AM

Jane, all week I've been saddened by the plight of people who were losing their shirts in this market environment. I'm close to a family of thirty-somethings who have always done everything right: studied hard, went on scholarship to top schools, saved religiously, rigorously researched and interviewed various financial advisors and found one who outperformed the markets. Yet, as of two weeks ago, they'd lost an amount equal to one spouse's entire yearly salary, and these are professional with high salaries. I hate to think what's happened since. At their ages, they have time to make it back, but if some believe that a blip right back up to where this started will bring them back everything, you're wrong. A wise financial manager was probably wisely managing risk and making some decisions about closing out some positions along the way.

But what's worse is that I also know the parents of the male spouse and they're nearing retirement. In fact, they've put off retirement once before due to the 2000-2003 events. They also use a financial advisor after they lost more than a million of their earned and carefully saved money in the 2000-2003 downturn. In their mid-60's, they may not have the time to make up the losses. Perhaps you think these people are among the rich and if they had a million dollars, they could afford to lose it, but these are people who worked hard, saved a lot, lived well beneath their means and deserved to keep the money they had earned. Still, they do have more resources than some others. A friend from Port Arthur who works in a low-paying job in a hospital has a 401K that's been decimated, and she's nearing retirement, too, but will likely work as long as her health allows. I've been scouring the retirement blogs, reading heart-rending stories of others who have been struggling to put together the money they'll need and making what they're told are wise decisions, only to have this happen to them.

Jeff Bailey : 9/19/2008 10:37:19 AM

Better grow that account with profits Jane! Try and offset your tax bill!

Jane Fox : 9/19/2008 10:32:50 AM

I am not a Democratic or Republican and please do not think I am making a political statement here, I am not. I am just plain Jane mad.

Jeff Bailey : 9/19/2008 10:30:37 AM

Yesterday's bottom 10 performing sectors ... Schools -0.92%, Gold/Silver -0.72%, Computer Networks -0.54%, Computer Storage Devices -0.43%, Security Systems&Serv. +0.21%, Crops +0.37%, Airline +0.59%, Paper&Paper Pdcts +0.81%, Personal&Household Pdcts +1.06%, Tires +1.07%.

Jane Fox : 9/19/2008 10:30:12 AM

I am sitting here about ready to blow my gasket!!! I didn?t partake in any of the #&*(#&*#& yet I am going to partake in bailing out those who did. I was not part of the party yet I am going to part of the cleanup crew.

My husband is a Republican and will not vote for a Democratic because all they do is raise taxes well guess what folks - if you think any party in the White House will not have to raise taxes to pay for all of this then I have some ocean front property in Arizona I have to sell you.

Jeff Bailey : 9/19/2008 10:32:08 AM

Yesterday's top 10 performing sectors ... Photography +22.3%, Motion Pictures +14.4%, S&Ls/Banks +13.3%, Money Center Banks +12.8%, Life Insurance +12.69%, Consumer Finance +12.58%, Real Estate Operations +10.68%, Regional Banks +10.6%, Insurance (Prop/Casualty) +9.13%, Rental&Leasing +8.58%

Jane Fox : 9/19/2008 10:25:31 AM

Treasury Secretary Paulson says "hundreds of billions" of dollars are needed to resolve U.S. financial crisis.

Jeff Bailey : 9/19/2008 10:24:25 AM

10:00 Internals at this Link

Note: It would currently take a closing measure of >=22.00% for the NASDAQ's 10-day NH/NL ratio to see a 3-box reversal back higher.

Jane Fox : 9/19/2008 10:18:32 AM

CRude is now back to 100.00. Remember the good 'ld days when we cared?

Tab Gilles : 9/19/2008 10:17:49 AM

$VIX Link

$VXD Link

$VXN Link

$RVX Link

Jeff Bailey : 9/19/2008 10:16:13 AM

Good gravy ... NH and NL have been turned "inside out"

Linda Piazza : 9/19/2008 10:15:55 AM

I've mentioned the possibility of the OEX dropping to 567-568 and the SPX, to 1229-1230, but noted strongly that this was information for bulls to use to protect profits and not for bears to use as a suggestion to jump in with a trade. If you decided to try a put position, even though I said I wasn't suggesting them with money you couldn't afford to lose, you should know that both indices are finding at least temporary support at levels showing up on their 10-minute charts, at 572 for the OEX and 1240 on the SPX. It's possible that these levels might support these indices at least for a time, and they could even prevent the rest of the decline I had thought possible. I wouldn't be trading anything unless it were with lottery money today. I did try to a quick OEX put position (SEP 570) because it was lottery money I could afford to lose but I've just jumped back out again and collected my profit (bought for $2.50 and sold for $4.50). FWIW.

Jeff Bailey : 9/19/2008 10:14:09 AM

VIX.X 30.41 -8.12% ...

Jeff Bailey : 9/19/2008 10:13:56 AM

USO $81.32 +2.71% ...

UNA-VT $1.25 x $1.45

Tab Gilles : 9/19/2008 10:13:17 AM

Statement by Secretary Henry M. Paulson, Jr. on Comprehensive Approach to Market Developments Link

Linda Piazza : 9/19/2008 10:09:50 AM

For those at work and not watching television, Treasury Secretary Paulson's press conference has begun.

Jane Fox : 9/19/2008 10:04:38 AM

Internals are very hard to read today. Trin is jumping all over and is now at 1.30 and normally I would caution the bulls with a TRIN at this level but not today because this is not normal times.

Then there is the VIX. It is hardly moving at all yet the S&P futures are making new daily lows.

Both AD ratios (Volume and line) are ridiculously high.

Linda Piazza : 9/19/2008 10:04:19 AM

So far, the OEX's pullback has been minimal, but do keep that possibility of a pullback to 567-568 in mind as you update your profit-protecting plans for bullish trades. It's not a given, but is a possibility and it wouldn't even be all that bearish of a thing to happen if that's where the pullback stopped and if it were a gradual pullback. The analogous level for the SPX is 1229-1230. The OEX is 575.13 as I type, and the SPX, 1246.96.

Jeff Bailey : 9/19/2008 10:03:28 AM

Pacholder High Yield (PHF) $7.14 +29.11% ...

Linda Piazza : 9/19/2008 10:00:35 AM

What do those trading the treasuries and eurodollars think about the government's efforts to reduce default risk? The TED spread has dropped from a high of 3.14 to its current (at least on my delayed feed) level of 2.33. That's still at the level seen last August and not far beneath that seen in 1987, but that's a big drop.

Jeff Bailey : 9/19/2008 10:00:18 AM

Regulators Provide "Tips" for Broker-Dealers on Avoiding Failures to Deliver Securities Link

Jeff Bailey : 9/19/2008 9:58:03 AM

SEC Bans short-sell for 799 financial companies ... CNNMoney Story Link

Linda Piazza : 9/19/2008 9:56:20 AM

I said this twice yesterday and it never came true either time, so take this with a grain of salt: I wouldn't be surprised to see a pullback begin soon. I also wouldn't be surprised to see that pullback take the OEX back to 567-568. This is not a promise and an invitation to spend money you shouldn't spend on puts in this environment, but rather a caution to protect your bullish profits and decide now if you want to weather such a pullback, should it occur. OEX at 578.74 as I type.

Tab Gilles : 9/19/2008 9:56:16 AM

Interesting story on stock bubble and crashes... Link

Jeff Bailey : 9/19/2008 9:54:39 AM

SPX Heavyweights at this Link

Jeff Bailey : 9/19/2008 9:51:18 AM

Washington Mutual (WM) $4.10 +37.12% ... cash open high $4.74.

Jeff Bailey : 9/19/2008 9:50:27 AM

Wachovia (WB) $19.62 +34.89% ... cash open high has been $24.00

Linda Piazza : 9/19/2008 9:50:03 AM

What's also sobering is that I was loading up that order page to check on whether I could exit my OCT SEP 1030/1020 bull put credit spread and lock in some of my profit, since the deltas on the positions had dropped to -0.04 and -0.03. However, the bid/ask spread on that spread is now -0.40 x +1.70, and I can tell you from experience, this is a change. While I might not have been able to close it out for my preferred $0.20 or less with one delta still at -0.04, I don't believe that the midpoint of the bid/ask would not have been anywhere near its current $0.65.

Jeff Bailey : 9/19/2008 9:49:00 AM

VIX.X 28.53 -13.80% ...

Jeff Bailey : 9/19/2008 9:47:08 AM

Stocks soar at opening after gov't rescue plan ... AP Story Link

Linda Piazza : 9/19/2008 9:45:35 AM

It's sobering to load up your order page on your brokerage's site and be greeted with this message: Link

Tab Gilles : 9/19/2008 9:43:24 AM

For those who didn't happen to catch Art Cashin on CNBC (veteran floor trader NYSE).

He said ....Yesterday's rally was the most credible I've seen in awhile"... "Watch the bank lending rate, this is where the whole thing is played out."

Linda Piazza : 9/19/2008 9:42:08 AM

First potentially strong resistance is coming up on the 15-minute chart of the OEX, now pushed up to 582.70. Whether this matters or not, I don't know in this environment, but I can tell you that the 10-minute chart tells us that the move is already excessive and the 10-minute chart's outer boundary did matter yesterday when it was being repeatedly tested on the downside. Here's what I mean: Link As I was noting yesterday when the 15- and 30-minute charts were showing downside breakouts, these show that momentum is strong, but such breakout moves are also often suspect and result in whipsawed trades. I can't emphasize enough that we're in a new landscape here and so we don't know how much our old landmarks will help us. Don't step in front of the freight train going this direction any more than you would the one going the opposite direction yesterday, until you had proof that something different was going on, but do be skeptical and ready to protect your bullish profits.

Jane Fox : 9/19/2008 9:40:51 AM

AD line is bullish +1644 but the TRIN is back to normal at 1.07.

Jeff Bailey : 9/19/2008 9:34:24 AM

Swing trade calls exit alert! for the four (4) American Intl. Group AIG Sep $2.50 Calls (AIL-IZ) at the bid of $1.50

AIG $4.20 +56.13% ...

Linda Piazza : 9/19/2008 9:32:00 AM

We obviously have a massive short-covering rally going, and we do not know where it will stop. Nor do we know what happens when it stops. What happens where there are no shorts underneath the market, shorts who might decide to cover at key levels? What happens with the options market when market makers can no longer offset their risks by selling short? We're in a new world here, and so those of us trying to use old parameters to measure what happens to the market may find themselves on the wrong side of a trade.

However, let's look at what the charts tell us, starting with the OEX chart that I showed first thing yesterday morning. Link Clearly, support mattered yesterday. How it made a difference might be up for grabs. Just as the indices began violating these long-term trendlines and threatened to waterfall down, not just move down in an orderly fashion through this channel, new developments began to be announced fast and furiously, including the U.K.'s FSA's announcement about no short selling in listed financials. It imprints an impossible-to-erase picture of people sitting around in a boardroom with some techie running in and breathlessly saying, "It's broken the trendline," while the somberly dressed people in the boardroom nodded solemnly and pressed some button to send an already prepared press release. Of course, it didn't happen that way, but I find the image impossible to erase.

My 30-minute charts suggest that the OEX had what should have been strong resistance on 30-minute closes up to 564.85, but the OEX will likely just leap-frog over that. What's next? One chart suggests an upside target of 581, and, if that is breached, the 30-minute chart currently suggests 599.80, but only if the support at the line currently at 564.85 but likely to be much higher after the open is maintained as support on 30-minute closes.

The truth? This is a new landscape and we don't know what will happen once short positions are unwound.

Jeff Bailey : 9/19/2008 9:26:00 AM

WFC $44.40 pre-market.

Jeff Bailey : 9/19/2008 9:25:36 AM

Cancel NAKED PUT order alert .... for the two (2) WFC Oct $25 Puts (WFC-VE) from yesterday @ 03:31:47

Jane Fox : 9/19/2008 9:24:51 AM

NEW YORK (MarketWatch) -- Russian stocks rallied as much as 26% Friday, causing the markets' regulator to halt trading once again on the two main stock exchanges, as investor sentiment was boosted by a series of government measures aimed at stemming the country's financial turmoil.

Jane Fox : 9/19/2008 9:23:58 AM

LONDON (MarketWatch) -- In the latest step designed to stem the turmoil in financial markets, the U.S. Treasury said it will guarantee money market funds so that no other fund "breaks the buck."

Jane Fox : 9/19/2008 9:23:14 AM

NEW YORK (MarketWatch) -- Money-market fund company The Reserve, shaken by seeing its flagship fund "break the buck" and suffering from record redemptions, has closed all its funds.

Jeff Bailey : 9/19/2008 9:22:23 AM

$4.00 - $2.50 strike = $1.50 ... so be ready with the AIL-IZ

Jane Fox : 9/19/2008 9:22:08 AM

LONDON (MarketWatch) -- The FTSE 100 index surged almost 400 points on Friday, as hopes that regulators and governments around the globe would find a solution to the current troubles in the financial markets and curbs on short-selling practices improved sentiment towards banks.

Jane Fox : 9/19/2008 9:21:35 AM

HONG KONG (MarketWatch) -- China's sovereign wealth fund, China Investment Corp., is holding talks to purchase a stake of up to 49% in Morgan Stanley, the Financial Times reported Friday, citing people close to the discussions.

Morgan Stanley chiefs prefer a stake sale to CIC, which already owns a 9.9% stake in the U.S. bank, to a merger with Wachovia, the report said.

The executives believe a tie up with CIC, which was formed last year and given $200 billion to invest by the Chinese government, would help restore investor faith by assuring the market it has adequate resources to survive the current turmoil.

Jeff Bailey : 9/19/2008 9:21:00 AM

American Intl. Group (AIG) .... $4.11 pre-market.

Jane Fox : 9/19/2008 9:19:39 AM

The bullishness is running rampant and has spilled over into the crude market as well. Link

Jane Fox : 9/19/2008 9:17:43 AM

Here is a full list of "unshortables." I wonder how many times we will be hearing this new word. Link

Jane Fox : 9/19/2008 9:16:23 AM

I would be very careful trading around 10:00ET today due to Secretary Paulson speaking. Needless to say we will all be listening to this speech.

Jane Fox : 9/19/2008 9:14:47 AM

For anyone trading Crude, please make sure you are charting the November contract now (X). The actually rollover happens Monday and the continuous contract is still October but you will not able to trade Oct today.

Jane Fox : 9/19/2008 9:10:58 AM

I have no idea what happened to the delayed Russell 2000 overnight data (TF) that I am currently getting from the NYBOT. The delay should be only 20 minutes but I think the exchange probably blew a gasket because of the buying and was just not able to keep up.

Jane Fox : 9/19/2008 9:07:42 AM

Here are your overnight charts. All the shorts are heading for the door as well as the news that the Federal Government is trying to take control of this credit crisis is giving investors a collective sigh of relief. Unfortunately though that sigh will turn into sheer panic when main street realizes that the only way the government will pay for all of this is making our federal deficit even bigger.

I certainly hope I never heard anyone telling me they want a Democratic or Republican in the White House because one or the other will never raise taxes. I would love to know how any clear thinking human being could ever think taxes will not go up from this point on. Link

Jane Fox : 9/19/2008 8:59:11 AM

Another proposal would be the creation of federal insurance for investors in money-market mutual funds, coverage akin to the insurance that currently safeguards bank deposits. The move is designed to stem an outflow of funds as consumers start to worry about even the safest of investments, a sign of how the crisis is spreading to Main Street. There is $3.4 trillion in money-market funds outstanding. (Separately, early Friday, the Federal Reserve said it will extend loans to banks support the purchase of assets of money market funds.)

In addition, the Securities and Exchange Commission proposed a temporary ban on short-selling on 799 financial stocks. The ban, which is effective immediately, is set to last for 10 days, but could be extended for up to 30 days. (As Linda reported earlier)

Jane Fox : 9/19/2008 8:49:06 AM

WASHINGTON -- The federal government is working on a sweeping series of programs that would represent perhaps the biggest intervention in financial markets since the 1930s, embracing the need for a comprehensive approach to the financial crisis after a series of ad hoc rescues.

At the center of the potential plan is a mechanism that would take bad assets off the balance sheets of financial companies, said people familiar with the matter, a device that echoes similar moves taken in past financial crises. The size of the entity could reach hundreds of billions of dollars, one person said.

U.S. Treasury Secretary Henry Paulson will hold a 10 a.m. EDT press conference Friday to discuss a "comprehensive approach to market developments."

Linda Piazza : 9/19/2008 8:25:53 AM

This morning, the SEC has followed the U.K.'s FSA and has banned short-selling in 799 financial stocks. This is not the naked short-selling banned earlier in the week, but is any selling short of these financial stocks. Here's a link to an AP story on the development at this Link and a CNNMoney one at this Link .

When the FSA announced its plans yesterday, a massive short-covering rally began. It's continuing this morning. My question is: what happens when our markets are dropping and there are no shorts to get scared and cover, fueling such a rally? What happens when our market makers can't hedge their own risks? What happens to the options market as a result? What are the unintended consequences of this action?

Keene Little : 9/19/2008 7:43:30 AM

If you had asked me yesterday if SPX would be able to settle at 1250 by Friday morning I would have asked you to share what you're smoking. With ES having tagged 1257 for a high so far this morning I'm wondering what this market is smoking (other than bears). With the big investment banks in so much trouble I have no doubt they were instructed by the Fed to load up on October call positions and not to worry about their short put positions.

When everyone was loaded up and ready the Fed engineered a short squeeze the likes of which we've never seen before. ES is up more than 110 points from yesterday's low (equivalent to 1100 DOW points). There's a new term now--MOAS, Mother of All Squeezes. I had warned of opex shenanigans but this one takes the cake. Whether it will hold after the manipulated squeeze is the bigger question.

Just imagine the profit after having loaded up with thousands of dirt-cheap October calls near yesterday's low. No need for the Fed to give the banks taxpayer money; they'll just engineer it so that they take the money from those nasty bears. It's obvious the Fed and SEC blame the shorts for the trouble the banks are in and therefore they're trying to do whatever they can to fry them. Shorting the market has always been a dangerous game and the government has made it doubly so. Be careful out there.

I have to meet with a lawyer this morning (I'm Executor for my aunt's will) and will again only be able to post sporadically until I get back this afternoon. Now that the Fed has done what they want I wonder if the market will just go flat today. But with the recent volatility who knows. Maybe another 500-point decline, or rally.

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