How low can we go today? While the 4th quarter GDP was lower than estimates, it wasn’t terrible by any stretch. But if you combine it with end of the month coming next week, and today is Friday (with negotiations over the Greek debt continuing today), and a big drop could be in the cards for today.
If we get the “worst case scenario” drop, the number 1292 stands out to me on the S&P 500. Coincidentally, it is both the midrange on the Bollinger Bands, as well as the high from last October. However, to drop that far would be a nearly 2% drop in the S&P. Not impossible, but it would require some heavy selling volume (Volume? What’s that?).
On the other hand, if we get some good news today (Greece fixed?), yesterday’s high of 1333 could easily be challenged, and I wouldn’t be surprised to see the S&P challenge 1344, the high from 11 months ago.
On a personal note, I will be gone most of the day today. I need a new chair for my computer desk, and my wife wants to drag me grocery shopping. If I do any daytrading, it will be either early or on the road.
(Hat tip to Cheezburger.com for the cat picture)
I think we have to be very careful here. If you read the headline for honeywell it looks like they knocked the ball out of the park-but then you read they really lost money because of pensions. Funny money accounting 101………………..
http://www.marketwatch.com/story/global-ship-glut-fueling-baltic-dry-index-plunge-2012-01-27
Reading material
Thanks Bill. That definitely explains the BDI.
mike, thoughts on jrcc?
Tony I have had a buy on the last 2 days at 6.48 for JRCC. Watching it but will not keep very long when I buy
I missed the first move in TNA this morning. Dollar gaped down and so did TNA. TNA should have gaped up. It didn’t take very long for the traders to realize this wasn’t right and TNA took off. Would have been a nice trade. I’ll wait now.
I thiught the same but did not pull trigger.
TZA @ 21.35
21.25 tza
Come on now I need some yes and no votes on the Buzzards- New Deal Wheel plan to get us out of our deficit troubles.
Sold covered calls on TZA maturing March 17th, strike 24 for 1.4$ each, against my shares bought at 26.06.
Haven’t sold calls on my TZA position yet but am getting close. Based on Ben’s recent comments, I don’t thing he will let the market fall very far. Low rates and keeping the dollar down should hold the market up unless there is some huge blowup somewhere.
Georic…
Would you mind explaining or listing the steps you used on TZA?? I’ve never use covered calls but it sounds like something that might help me to decrease my loss rather than just putting in a limit sell order. If you’d rather do this in a separate email, Ed can give you mine. I’d be most grateful for helping me understand the basics or if there is a specific website that I could visit that teaches a kinesthetic learner!
Thanks a bunch!
Leigh
STL, my account is with Fidelity. You go to trade options. You type TZA, then Options chain. You then have a listing of all the available calls and puts. (you can however access this options chain on other sites, Market watch for example). You find there, at present, the available strikes for February and March. To help you lower your cost on a share/ETF you bought and possibly get rid of it, you sell a put. You select the strike, the price at which you are prepared to sell the share at maturity, along with the price the buyer has to pay you immediately, by checking “sell to open” the put. If you let the operation go to options day, at maturity, worst thing which can happen to you is you keep the premium and are not called (market value of the share is lower than strike price). You start the operation again. Hope it helps. Fidelity on its site gives a free course on option trades. And, of course, you can google covered calls and get much more detailed info and examples, and, probably, more reliable as I had not done any such operation 4 months ago.
Sorry, 3rd line should read, you sell a call instead of “put”. Same thing on 5th line.
STL, you may not have the ability to trade options available on your account without filling out paperwork to get it. I don’t believe that it is typically just available. Call your broker and they should be able to set you up. Short form.
Georic & w_seattle….
Thank you soooo much for explaining that to me! I’ll do some research on Etrade to see about the paperwork involved, see if they offer something similar to Fidelity. It sounds like a better strategy than just holding onto a ETF that’s underwater.
Ah, and the minimum quantity you can trade is 1 contract (=100 shares)
Why the disparity between the S&P and russell today? S&P down 6.5, russell up 3.4…
I am Whining about that myself!!!!
Dollar down .5% dow .6% spy .3% Util1.5 Tran up .6 and UCO dn.7 and RUT up .3 nothing makes any sense…………
I agree. A real disconnect. Have no idea what it means but it is hard to believe it is anything good.
I think it means that they are going to make a new dollar it will either be about 2″x1″ so more will fit in wallet or they will come on a roll kinda the consistently of toilet paper…………. Which will have much more value!!!!!!!!!!!!!
I see Fitch just downgraded Belgium, spain and Italy. Should have made dollar go up………….
Sold PXD Feb puts 95/2.9
Going to sell my entire SPXU position at 11.49 if it gets there.
Sold my entire SPXU at 11.30 for an 11.3% loss. Moral of the story: Never assume you’ll get another chance to sell at a profit or breakeven later, especially on triple leverage.
Sold TZA from this morning at 20.84. Lost .51. Didn’t work today. I don’t want to carry over short positions in this market
Finally saw a little bit of volume in the last 5 minute sell-off there, but even so, very low overall. I’m still hoping that everyone who is going to buy has bought at this point and the only way to go from here is down (short-term at least). We’ll see what happens Monday.
I would not count on that Garrett-Do not fight the FED is what I think they call it. Everytime today market started to puke they slammed the dollar………..
Of course there is no way to know, I am just holding off until next week to either dump my shorts or sell calls. Correlation between currency and equity markets has been off, but I agree the dollar trend and QE3 on the horizon is not in my favor. A 20% rally in 4 months should warrant some sort of a pause though, at least you would think. I especially need to dump EUO since holding out for a Greece default isn’t working… Like you said earlier, even with more downgrades today, the euro rally continues…
Garrett, Do you read Jubak I think this maybe what has us both lost. http://jubakpicks.com/2012/01/24/dont-fight-the-fed-and-the-ecb-and-the-banco-central-do-brasil-and-the-peoples-bank-of-china-is-good-advice-most-of-the-time-heres-why-it-wont-work-out-quite-so-well-in-2012/
Understanding all of this stuff isn’t one of my stronger points.
I do occasionally, but I had not seen this article, thank you. The article you linked earlier today about the BDI provides a bit of insight into this I think. When global stimulus is happening, expectations of growth are going to follow. But when that expected demand isn’t there, that’s when we see overly-inflated asset bubbles like Jubak points out (and we get things like the BDI falling off a cliff). The problem is, for the time being, more asset purchases by the Fed and other central banks will push markets higher for the time being, but it won’t actually solve any problems facing the global economy. They are just kicking the can further down the road, except the can is getting bigger and harder to kick the further it goes. But honestly, I don’t pretend to understand what these things mean either. If it was easy, making money as a trader would be too
.
Sold covered calls on EDZ March 17/0.8$. STL, shall revert later.