Futures were up overnight and then Initial Claims came out not so bad, so the market was going to have a decent day. Then, St. Louis Fed Prez said we were close to jap-style deflation and the markets broke down! It was a wild ride. It looks like there is a bull snorting in one corner and a bear growling in the other….there’s a fight going on…and no apparent winner…yet.
All the indexes closed barely in the red. But we went up then way down and then fought back to breakeven. The Industrials and Russell are still above their 200ma and the S&P is still below….not much change this week….but it sure hasn’t felt that way!
I was lucky enough to have time to get out of some, but not all, longs at the market open. I tried to hedge with ES but got chopped to bits every time. I finally just quit trying, and by the end of the day, all the positions I had remaining returned to where they started.
On Friday we have lots of numbers coming out: GDP Price Index, Employment Cost Index, Chicago Purchasing Managers Index and University of Michigan Consumer Sentiment. Now, this afternoon I would have thought traders would have stayed away, but volume increased in the afternoon and GS really took off. Do you think GS knows something about those numbers? 
Published on
July 20, 2010,
10:36 pm in
Opinions, Tools and Trading.
Tags: AAPL, BAC, C, dollar, GE, GS, oil, Tools.
So wasn’t there some news this morning about bad earnings from GS? And weren’t C BAC GE still bad? Isn’t everyone worried about the bank stress test in Europe? So why are all the traders happy today?
Funny that the US dollar did not matter, or at least there is not that strong correlation between the US$ and the markets. Oil still seems to be correlated, as oil went up so did the indexes.
Lots and lots of earnings on Wednesday…and even more on Thursday! I’m interested in MS WFC KO QCOM and NFLX. That should give me an idea of how the world is doing. And if the markets can’t rally on this evening’s AAPL report, then we’re in real trouble!
I apologize for some short blog entries, but I’m having technical difficulties with my hardware this week. I have tracked the problem(s) down, but new parts will take 7-10 days. In the mean time I’ve fired up a backup PC and getting it ready for trading tomorrow.
See you on the playing field.
C joined BAC and JPM with higher than expected earnings and improved credit trends. But they and all financials puked on Friday. You have to wonder… If you’re making more money on less revenue, isn’t that a good thing? Would you rather see increased revenues with lower earnings?
This earnings season expectations are that all earnings will be good, and so far so good. It’s all about what you say in your conference call. BAC laid out a scenario that doesn’t sit well for any financial institution. They are saying that FinReg will curb debit-card fees and that will reduce revenues and increase costs. In BAC’s case, they say they may have to take a charge of up to $10 Billion dollars. That’s gonna hurt not only BAC, but all banks and financials, like MA and V. Boy did that show on Friday!
So now July OpEx Friday is down 7 of last 10. That sucks…and I’m reading in the Stock Trader’s Almanac, that in the week after July OpEx, the Dow has been down 7 of the last 11 years. That’s ominous.
This week will be one of the biggies with hundreds of earnings reports, including GS and AAPL, 11 of the Dow Industrials, and about every airline! Ben Bernanke speaks on the Hill, but otherwise a fairly data-quiet week.
And one more for the intereting reading pile: Short side of commodity market becomes crowded.
See you in the market 
First it was all the pre-market news like Initial Claims, PPI, Empire Index and Philly Fed numbers. Although the numbers weren’t all that bad, actually the IC numbers were pretty good, traders didn’t like them and we went down…and pretty dramatically after the Philly Fed announcement. Oh yeah, and AAPL scheduled a meeting for Friday morning. We meandered down under for the rest of the day.
But (there’s always a but) first rumors then news came out after 3PM that had the markets giddy with happiness. Maybe BP has finally capped the well! BP took off. Then GS might be announcing a settlement with the SEC. GS took off. Then, kaboom, the markets took off, some ending green…others red. Pretty much breakeven for the day, again. Although that was a nice recovery for the indexes.
Then afterhours, GOOG comes out with a crappy earnings report. GOOG quickly dove more than $20 dollars. But (what did I tell you?) it had no affect on the QQQQs or Nasdaq futures or S&P futures. Maybe GOOG is no longer an 800-lb. gorilla? Even AAPL went green afterhours.
Oh yeah, and Congress passed FinReg….ho hum.
Tomorrow brings some very anticipated earnings: GE BAC and C and they might just set the tone for Friday’s trading, well at least until 9:55AM when Michigan Sentiment numbers come out.
You know I’ve been bullish on oil for a couple weeks now, and news like this can really perk it up in short order: An Attack on Iran: Back on the Table. Now, just clean up the mess and maybe we can get back to normal. 
It looks like the bears only have enough energy for one day. Every once in a while, like yesterday, the bears come up with enough energy to drive the market down. But they soon exhaust themselves and give the field back to the bulls, like today. I think it just may be a dance in this whole topping process, or part of the correction process, but these swings can make sausage out of your portfolio….so you better find a bun to put it into. 
I tried to have another great ES trading day, but I traded 2 out of 3 losers…and my one winner could not make up for my 2 losers. I did clear out some of my short positions, but the way the indexes closed up strong, was to me a signal that it may be time to short again.
After hours today had some interesting mews. A Federal criminal probe opens into Goldman Sachs and staff over possible securities fraud in mortgage trading. That will not sit very well with the gang down on Wall Street. SEC sends Goldman case to prosecutors. Remember what happened two weeks ago when GS had some bad news? Uh oh.
Some strange happenings today…did you notice how the goveernment jobless claims every week raises the previous weeks numbers so that this weeks numbers look like they dropped a whole lot more than it should? Are we really that dumb? Did you notice that this is about the 10th time that Greece has had a report that it is being bailed out? And that the other Euro loser countries will need to help out…like Portugal, Spain and Italy? Did you notice how GOOG has been having a tough time lately? Did you notice the VIX is back to its lacksidasical self? Did you notice that these up moves continue to go up on lousy volume?
Ok, here’s a postscript: I’ve been working on explaining how I use different indicators and tools. It’s a work in progress, but I would appreciate any notes or comments you may have. Check out How?, or Moving Averages or Stochastics….and keep checking. Thanks.
The question was, “What are CDOs?” And Sen. Levin continued to use that word all afternoon talking about CDOs or the GS sales force or describing Goldman’s deals! As it turns out, Mr. ”Shitty” Levin doesn’t know a thing about what he’s asking! And here’s the best joke I saw today… from Lloyd_Blankfein: “The joke’s on Levin. I had my boys put the Senator Pension Plan in Portuguese bonds this morning.” heeheehee!
Here’s how the market reacted to the GS grilling: Financials (-3.4%), Materials (-3.2%), Consumer Discretionary (-2.9%), Energy (-2.8%). Of course there was more to that than just GS…we had the downgrading of Greece and Portugal debt. I’m sure that was worth a few points.
Personally, I had one of the best days of the year. The short positions via TZA, QQQQ puts and TWM calls were all golden, but I spent most of the day playing the S&P emini to the short side. The best position would have been just to short in the morning and cover in the afternoon, but I was in and out 4 different transactions….but all to the good.
Tomorrow is Fed Day with the rate announcement coming at about 2PM EDT. Before that we have today’s continuation…maybe a gap down with a bounce? A lot will depend on if we have any more downgrades like Greece and Portugal today. Play ‘em like they’re dealt!
My takeway after watching hours of Senate grilling of GS on TV: Throw away all email servers!
Never write when you can speak, never speak when you can nod, never nod when you can wink.
What a day…a great morning for bears and a great afternoon for bulls, as the markets recover from a triple-digit loss. What the $%@&*? And although price led the way up, market internals did not look so good. The high-beta stocks in the Nasdaq and the Russell reached new highs, but the blue chips in the Dow and the S&P did not! The NYSE closed in the red. Major indexes are trying hard but cannot break to new highs.
Earnings are a story also….There are a few exceptions, but, it looks like companies are still making profits from cost-cutting and not from higher sales. So unless jobs come around, where will topline growth come from? And just because some Euro boss said that Spain and Portugal would not be like Greece, traders drank the Kool-aid!
MSFT and AMZN sucked after the close. Futures started to go down right after the cash close. Not that any of the reports have been bad, it’s just because they haven’t been as great as the run-up in price.
Not too many reports tomorrow and eco-news is light also. So…maybe the bears can accomplish what they need to do, bring down this market. Here’s some interesting reading in the GS bullshit….
That’s exactly the problem I have with SEC’s case. When you buy a call option, do you scream foul when you discover the guy who sells you the call is bearish on the stock? If Goldman clearly disclosed what was in the Abacus portfolio, why does it matter who selects them?
Goldman Is Tarnished, but Don’t Write It Off. You may need to sign up for a preview to read the entire article, but a subscription to Barron’s is not a bad thing.
If you told me this morning that the Dow was going to end up 70+ points, I would have called you an ass. Turns out it was me…I mean the ass part. Unbelievable that the Dow made a 120 point u-turn! The S&P had a similar strange day. GS made a crazy u-turn also. The Russell had some semblance of sanity closing in the red.
The big trading volume was still on the downside, as was the advance/decline line and the A/D volume. The new 52-week highs today was way low for all indexes, turning both the 5-day and 10-day moving averages downward. So we had the lowest number of new highs and the highest number of new lows. Click on the chart to see it bigger.
I took profits from TZA and also the SPY puts I was still carrying. I’m still holding some TZA because I was expecting some more downside follow-thru! Again, the move up was uncalled for. 
This week and next are the busiest earnings reporting weeks and this week has a lot of biggies, IBM today, AAPL and GS tomorrow. IBM had a good report but sold off afterwards. As I had mentioned before, I think the good reports are priced in so either good or bad they selloff. Here’s more good news: U.S. Bankruptcies Spike 35% in One Month
The details are an even clearer warning sign that both the “bottom” in the U.S. housing market, and the “job growth” reported by the Bureau of Labor Propaganda are nothing but the “smoke and mirrors” of private sector shills, and/or government propagandists – dutifully reported by the mainstream media-parrots.
Gives you the warm and fuzzies, don’t it?
Futures continue their downside move this evening. This is the first chance for the Asian markets to react to Friday’s GS spectacle. But the rest of the news isn’t that great….
The carnage of seizing banks continue….51 already this year. Regulators seize eight banks We’re on pace for twice as many closures as last year!
The SEC’s Fraud Case Against Goldman Seems VERY Weak
The SEC’s case against Goldman seems weak. The case against Tourre seems somewhat stronger, but it’s not no slam dunk.
Overall, based on a close reading of the evidence, the case against Goldman seems much less clear cut than the press and SEC are making it out to be.
Traders see room for a pause in stock market climb
Goldman Sachs May Face U.K., German Probes After Suit
We’ve been looking for an excuse to correct this market and today we found one. If the market indicators weren’t on sell signals already, maybe the market wouldn’t have reacted to GS so badly. It’s not just banks that went down today. Either way, I suspect no more campaign contributions for this administration from GS. I’m also gonna venture that GS bought its own April puts ahead of the news and will report a stellar quarter next week. GS volume was 7 times above its average trading.
Other good news today: Unemployment rises in 24 states in March according to the Labor Dept. All the big earnings report companies sucked, but not as bad as GS’s surprise: GOOG BAC GE ISRG were all down big.
For the week the Dow ends up .19%, the S&P down .18%, NYSE down .57%, the Russell up 1.7% and Nasdaq Composite up 1.1%. So the high beta stocks are still doing okay, but the blue chips suffered. I expect next week to be down for the small caps.
Should Small Investors Jump Into Stocks?
And oh yes, the SPY puts, VIX calls and TZA did their jobs today!
Sometimes, entranced by the screens, watching equities, options and futures change colors, charts moving in a wave, and indicators pointing in every direction, I just have to scream....
