Genco CFO on Baltic Dry Index Volatility, Chart

Interview with Genco CFO John Wobensmith on Bloomberg News on the Baltic Dry Index. The BDI has been in a downtrend since June. When will there be a Baltic Dry Index ETF, ETN?
"I think that the dry bulk industry has turned the corner... What has really made the dry bulk industry come off of those lows is all the spending that has been going on in China. The stimulus spending, the increased loans and the increased steel industry which has been driving the iron ore imports. What we've also been seeing are coal imports going into China, increased coal imports going into India as well as Japan. So we are now starting to see just the beginnings of those recoveries, and we think towards the end of the year you'll start to see iron ore import numbers increase as well..."

FXI Put Protection, Andy Xie On China's Bubble

Here is an update on FXI or the iShares FTSE/Xinhua China 25 Index. From the chart below FXI almost doubled from the March lows and more than doubled from $19-20 in late November 2008. Also see Jim Rogers saying Chinese equities were overpriced. FXI is brushing up against the lower channel of the uptrend and sitting on $40 support and the 50 day moving average.


FXI (stockcharts.com)


Diane Swonk Sees Rocky Road To Recovery (Video)

Chi-town represent. Diane Swonk of Mesirow was on BloombergTV saying she sees a rocky road to recovery.
".... So all that along with inventories rebuilding a bit, you'll get some growth but it's half of what we should be getting given the depths of the crisis. And as we get into 2010, unless we see that emergence of good news, which is employment gains you can't see a self feeding recovery. I think we will see that but even that limited. Many companies who relied on short term credit to finance payrolls can't anymore even as we emerge from the crisis......"

Chart Comparisons: Copper, BHP, Shanghai Index, Baltic Dry Index

First went the Baltic Dry Index ($BDI, shipping indices), then the Shanghai Comp ($SSEC), now will $Copper spot and BHP (Iron ore co.) follow? Check out the chart comparisons. As you can see the BDI has been in a downtrend since June and the Shanghai Index broke below some support and the 50day moving average. Copper doubled since the beginning of the year and BHP has been piggy backing China. Shanghai is down tonight about 2.80%. Watching to see how Copper and BHP reacts, if it flat lines or breaks down. I think Asia needs reflation jumper cables.

$AUDJPY, $AUDUSD, FXA Fibonacci Retracements, Articles

I've been watching $AUDJPY and $AUDUSD recently and the 50%, 61.8% retracement levels. My post a few months ago retraced $AUDJPY from it's 2008 highs to see a correction which filled at 70ish (6/22 Post). Now I'm looking at AUDJPY's 50% retracement level from the 2007 peak. $AUDJPY pierced above resistance but could not hold 80. It might need jumper cables again. If the Baltic Dry Index doesn't rally back here and China and commodities sell off, AUD could take a hit IMO, thoughts? AUDJPY is part of the global reflation, risk appetite and commodity trade, however interest rate differentials and inflation data are also important. If Japan sees deflationary pressures while Australia sees inflationary pressures, money could keep flowing to the $AUD based on interest rate speculation. But when will that trade be priced in and/or the yield gap peak (article looks at AUDUSD)? We'll see what happens with the Aussie. Read the articles below for more info on what is driving the currency pair.

David Tice: S&P to Hit 400, Earnings Multiple Overpriced (Video)

Uber bear David Tice of Federated investors was on Bloomberg saying the market was dramatically overpriced and fair value on the S&P is $400 in the near future. He is bullish on gold and silver, hedging against Helicopter Ben.
"We think we are going to get to $400... We think the market is dramatically overpriced at 22 times 2010 earnings according to strategist numbers. That's an exceptionally high number for the bottom of a bear market.. We think earnings are still going down and the problem is that expectations that were beat were being done at much lower levels than last year due to cost cutting, revenues were down significantly..."
Anyone know what 2010 EPS number he is looking at to get a P/E of 22? Here is Standard and Poor's 2009 and 2010 reported and operating EPS estimates in a spreadsheet. It looks like 2010 EPS estimates average out to 70.

Marc Faber Sees US Dollar Strength and Market Correction

Marc Faber (Dr. Doom) made a macro call on CNBC last week. Faber sees US Dollar strength and a market correction in the next few months. That has been the correlation these days. Nouriel Roubini (Dr. Realist) also asks him a few questions during the segment. Faber also believes the US Government is in a bubble. Aired on August 12.
"What we have is a bull market in assets between 2002 and the end of 2007, early 2008, and a weak dollar during that time. 2008 was the opposite, a strong dollar and all asset markets went down except for bonds. And now 2009 we bottomed out on the S&P at 666 in March and since then have rallied strongly and in emerging markets even more, but the dollar was weak. And I expect now maybe for the next couple of months a period of a recovering dollar and a correction time in asset markets..... Because a strong dollar means global liquidity is tightening." Watch the full interview."

2nd Half Economic Recovery Update From WalStreetPro

WalStreetPro's 2nd half economic update is up. Go to his site at WalstreetPro2.

Tyler Durden of Zero Hedge Speaks With Max Keiser

The man, the myth, the legend, Tyler Durden of Zero Hedge speaks with Max Keiser about high frequency trading and the Fed.






Source:
On the Edge with Max Keiser – The Fed, front running, ponzi schemes (MaxKeiser.com)
Max Keiser's Youtube channel at http://www.youtube.com/user/MaxKeiserTV
Also visit ZeroHedge.com

Bob Janjuah of RBS: Global Stock Markets Will Test March Lows

Uh oh, this just out at Telegraph.co.uk. Bob Janjuah, Chief Credit Strategist at RBS believes the V shaped recovery will fail and "expects global stock markets to test their March lows". He made some good calls last year: RBS issues global stock and credit crash alert (Telegraph, June 18, 2008). This could explain the elevated put/call ratios on SPY today. Watch out for black swans!

Read full article:
RBS uber-bear issues fresh alert on global stock market (Telegraph.co.uk)

Simple Explanation on High Frequency Trading

Here is a simple explanation on high frequency trading with Market Place Senior Editor Paddy Hirsch explaining co-location, algorithms, program trades, automatic market makers and flash orders. Visit my previous post with CNBC/Bloomberg guests explaining HFT.



High-frequency trading from Marketplace on Vimeo.



Source: http://vimeo.com/6056298

John Paulson Keeps GLD Investment, Watching Symmetrical Triangle

From his most recent SEC filing, John Paulson's fund Paulson & Co. kept it's 31.5 million share position in GLD (the gold ETF). This position could be a hedge against inflation and/or a hedge on one of his funds denominated in gold. I bet he is watching this symmetrical triangle though. OR he dumped post June 30, we'll see. I'm looking at his whole portfolio later.


GLD (Gold ETF)


Here is when we first heard about his $GLD position:
Paulson Buys GLD, GDX. Laidi Long Gold/Oil Pair Trade (May 20)

Jim Rogers Not Buying Chinese Stocks, Buying During Collapse (Video)

This is a 2 weeks old. Jim Rogers on Bloomberg talking about Chinese equities and commodities. He's staying away from buying Chinese equities at these levels. Yeah, $FXI has doubled over the past 9 months ($20 to $40), I see some hedging going on but someone might be buying a 50% retracement spike. Check next post.

  • Not buying any stocks in China, bought last shares in October and November of 2008
  • The market has more than doubled over the last 9 months
  • Much rather buy when things collapse, got another 10, 15, 20, 30 Years
  • Real estate has boomed in last 2-3 months, back around 2004 bubble levels
  • Certainly not selling but market has doubled in 9 months, usually a worrisome sign (buying puts Jim?)
  • Down 70-80% a year before that
  • To play China buy commodities, China has to buy commodities
  • We are "told" that the Chinese are spending Dollars on real things
  • Water treatment, infrastructure, agriculture booming in China no matter what happens

Steve Forbes Eating A Cheeseburger At McDonalds, 1996 Campaign Trail

Now on Distressed Volatility History Channel. Ever wanted to eat dinner with Steve Forbes at McDonalds? Well now is your chance. Virtually via time warp. Steve Forbes ran for President in 1996 and campaigned through Iowa (Youtube below). You can watch the full 55 minute video including his press conference at MediaBurn.org. Also check out "The 90's" series. It shows footage of the 1989 Tiananmen Square political uprising with students in China discussing the revolt. There was also an educational segment on crack cocaine in Hell's Kitchen, NY, and a bit on the early stages of the internet and email via "Wired In". Interesting retro videos there, btw futures are up.
"Steve Forbes one of the many 1996 Republican Presidential candidates makes a campaign stop at a McDonalds before the Iowa Caucuses. The awkward silence speaks for itself. You can watch the full video and learn more about the filmmakers here" full video is at MediaBurn.org

Commanding Heights: Privatization in Britian (Video)

This video is from Commanding Heights a series made on PBS. The video below is called the "Privatization of Britain" about targeting state-owned industries, the economics of coal, breaking the miners' strike and socialism turned back. The battle of socialism vs. capitalism and free markets vs. State ownership. It took place in the early 1980s. The full series is at PBS.org.

ProShares UltraShort Real Estate ETF SRS Faces Lawsuits -Video

$SRS faces class action lawsuits.. As you can see from the chart SRS tried to stay alive in July but the sharp market rally combined with leverage killed SRS violently with a hanzo sword.

Economic Activity Leveling Out, Inflation Will Remain Subdued (FOMC 8/12/09)

Here is the FOMC statement on August 12, 2009. I provided charts of GLD (gold), UUP (us dollar bullish), TLT (long Treasury bond) and SPY (S&P 500) reactions. As of 3:20 $SPY is +1.71%, $TLT -1.22%, $UUP -0.55% and $GLD +0.34%. Below are 1 min/3 hour charts at 3:30est.

Release Date: August 12, 2009
For immediate release

Information received since the Federal Open Market Committee met in June suggests that economic activity is leveling out. Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

GLD Trade Setting Up Here + UUP, AUDJPY Pre FOMC

Update: The biggest trade set up in the history of GLD (gold etf) might be forming through a symmetrical triangle. It is being squeezed to the point of no return and will break soon with momentum. After the commodity currency $AUDJPY sold off to 78 last night, it quickly reversed earlier this morning and broke above 80 resistance. It is trading at 80.10 and awaiting the Fed and will follow commodities +/- Australia/Japan economic data and debt. It hit the 2 year 50% retracement level a few days ago. UUP is down 0.59% and awaiting a catalyst (yesterday's post on technicals/recent volume). Get ready for some action.

AUDJPY Selling Off After Hitting Retracement Level

AUDJPY has come a long way since the late 2008-09 commodity crush. The Australian Dollar is a commodity currency and is imported by China to purchase Aussie goods. When traders have appetite for risk they can utilize the AUDJPY (Australian Dollar/Japanese Yen) carry trade where they borrow cheap yen to buy higher yielding Australian dollars/assets. When this trade gets overextended AUDJPY sells off and these days it's coupled with commodities and risky assets. AUDJPY hit the 50% retracement level a few days ago and is selling off (2007 highs to 2008 lows). It also broke through 80 support. If the reflation trade (RFLA) reprices here, AUDJPY would follow suit IMO.. The reflation trade needs jumper cables part 2.

US Dollar Index ETF Sees Volume Ahead of FOMC ($UUP)

The US Dollar Index ETF (UUP) is setting up for the FOMC meeting tomorrow. From the chart below you can see that volume rushed into UUP during the past few trading sessions. UUP implied volatility is up in the last week with UUP call IV (14.11%) at a slight premium to put IV (13.35%) from ivolatility.com. A large amount of UUP September calls are open between the 24-27 strike with a large block of puts open at 22. Btw there are 25,000 March 2010 $26 calls open, interesting to say the least. At the close of Aug 11, the put/call open interest ratio stood at 0.63. If you remember from March the UUP put/call ratio was at 6.41 before the big US Dollar implosion. Either way I see hedges or speculative bets being made on UUP. Watch the SPX, FOMC reaction, safe haven appetite, real yields and global yield differentials. Let the market decide. It still needs to break above the 50 day moving average and downtrend. Utilize hedges, remember UNG this year?

Hedging a Market Pullback Using The VIX

The optionMONSTER Volatility Sonar reported yesterday that someone bought 25,000 Sep $37 VIX calls for 0.65. "It's a continued hedge on a major pullback". VIX futures have been trading at a premium to spot recently which is interesting (charts). Today the VIX is up 5.56% to 26.38. I'm also watching for a USD breakout.

Dow 1929 Bear Market Rally Compared To 2009 Rally (Charts + Smoot Hawley)

And now for a comparison between the 1929 bear market rally and the current 2009 rally. During the 1929 bear market rally the Dow rose 48% and pierced through the 50% retracement level before breaking down (198 - 294). Looking historically, the Smoot Hawley Tariff Act of 1930 was the downside catalyst for the stock market. Massive protectionism and cartels ruined trade and prices. Read Rothbard's America's Great Depression (quote below) also the Economist in 2008.

High Frequency Trading, Flash Orders Explained (Videos + Articles)

I provided a collection of news articles and video interviews regarding the high frequency trading/flash orders debacle. First of all props to ZeroHedge for bringing up the issue a few months back. Here are Google search links of "high frequency trading flash orders" on Zero Hedge.com and Zerohedge.blogspot.com. Here's a recent post out of ZeroHedge: Is The SLP The NYSE's Answer To Direct Edge's "Advance Look" Enhanced Liquidity Provider Program Or You Trade You Lose, You Trade Goldman Wins (link) and Direct Edge CEO Redirects Flash Anger Back To Exchanges (link). If firms are using flash orders to front run trading activity it is bullshiz. Senator Schumer challenged flash orders recently and Mary Shapiro talked about HFT on CNBC.

The Onion Is Out With Potential Market Moving News For Equities and Treasuries

The Onion could move the markets this week after these articles.

Solitary Crow On Fence Post Portending Doom, Analysts Warn (TheOnion)

"GREELEY, NE—Experts confirmed Monday that a single black crow perched ominously on a fence post in rural Nebraska is almost certainly a harbinger of great doom and despair for all Americans." Read full article

Rosenberg Takes Other Side of Abby Joseph Cohen's Call (Bear Market Rally)

David Rosenberg (former Merrill economist, now at Gluskin Sheff) was featured on Fast Money taking the other side of Abby Joseph Cohen's bullish call. He believes "we may be in the midst of the mother of all bear market rallies" (quoted by Melissa Lee). Like Denninger he mentioned the 2002 inventory build.
"If I remember correctly in the opening months of 2002, under similar, not the same but similar circumstances, which was an inventory build that we know in 2002 was never backed up by an improvement in consumer demand which was why GDP growth by the end of 2002 was 0, and the stock market surprisingly hit its lows....."

Abby Cohen: In a New Bull Market, Sees 1050-1100 Target on S&P

What financial collapse six months ago?? Erase that from your head. The economy now runs on the reflexivity of market prices. Today on CNBC Abbey Joseph Cohen, investment strategist at Goldman Sachs, told viewers that we are in a new bull market and that the recession could have ended in March, exactly when the market bottomed. She also expects to see the S&P to hit 1050-1110 by year end and a stair-step recovery (slow, not V shaped). She likes tech, energy and financials (why not, Gov subsidized balance sheets w/ free steep spread income?). Full Story at CNBC.com.

Gold Spot Eyeing $1,000, GLD at Inflection Point (2 Year Chart)

Traders have a big decision to make on the price of gold here... $GLD is forming a symmetrical triangle formation which means judgment day is approaching. Below is the 2 year chart and the Gold/US Dollar relationship. Since May, Gold and the US Dollar moved inversely (gold up, dollar down) once the safe have bid collapsed and fiat-flationary forces took hold. If deflationary pressures continue with low inflation expectations and decent real yields, Gold's time to shine above $1,000 might be on hold. However if this new bull market (according to Abbey Joseph Cohen) puts pressure on prices or expectations going forward, Gold would probably be a great hedge. Remember that monetary policy could also throw the currency markets a curve ball. Rates have nowhere to go but up. Watch to see if Gold gathers momentum and breaks through resistance. I'd wait for the set up to play this on the long side with put protection, or vice-versa (short). Or as BNY Convergex Group says, buy options on gold as volatility increases (chart below). No recommendation. Watch the chart.

SLV SEP $14 Puts Active, 20,000 Contracts

Wow h/t CrimsonMind. After I saw that GLD DEC 75-85 Put spread I checked out Crimson Mind and saw that 20,000 $14 SLV Puts traded at 0.50 with 628 open. $SLV is currently at $14.49. This could be a quick flip or a massive hedge on a long position. Either way watch for a move in $SLV, and the $14 level.

GLD Dec OTM 75-85 Put Spread, GDX Dec 45 Call Active

**Updated w/ GDX call activity

GLD is at an inflection point on the 2 year chart. It looks like someone initiated a Dec 75 - 85 put spread today and it is trading at $94.66. Is someone hedging there? At 2:30 1 million shares hit on $GLD raising it from $94 to $95 in a minute so something is up. Looking at the Gold Miners ETF ($GDX), 22,000 DEC $45 calls traded at $2.80 with 1,324 open and GDX closed at 40.85. Option activity is all over the place. Here's a good explanation: Gold GLD ETF implied volatility to rise (Forbes).

Economic Update From The Shed (Aug 5)

FYI, new video out from WalStreetPro2... Parental advisory explicit content.
"The *** recession's over huh? That's why 39 million people got food stamps in June, which is up 20% from just a year ago. Oh everything's ok though. People on food stamps is part of the economic recovery, you know?"

Jefferson County Volatility, Interest Rate Swaps to National Guard

This report comes to you from the DV muni bond division. Municipal volatility continues in Jefferson County, Alabama. See other municipal posts at the bottom.

If you remember this post from late 2008, Jefferson County was hit hard by a bunch of external forces that ruined them financially (auction rate security freeze, rate spike, recession, downgrades, interest rate swap default etc). To this day they are trying to stay out of bankruptcy with $3.9 Billion of sewer debt they are unable to service. Bond insurers are also threatening to sue the County for failing to disclose pertinent financial information on the 2003 sewer "refunding" deals (Bond Buyer). S&P is threatening to downgrade their sewer revenue bonds to default if they fail to pay principal or interest (WSJ). It seems like they are already insolvent..

SPX Relative Strength index, Chaikin Money Flow At October 2006 Levels (8/09)

Here is a closer look at technicals on the $SPX continued from the ETFs Above 70 RSI post. The Relative Strength Index (RSI) and Chaikin Money Flow oscillator are hitting highs not seen since October 2006 on the S&P. The CMF oscillator measures the strength of the accumulation/distribution line. For a better explanation visit Stockcharts.com Chart School: CMF.

From the chart below you can see that once the head and shoulders breakdown failed, traders and investors rushed into the S&P 500. The RSI, CMF and volume all made strong moves..

SPX (S&P 500) 3 Year Chart (Stockcharts.com)

Related:
Nasdaq Volume Highest Since Oct 2008 ($COMPQ) (June 23, 2009)

ETFs Above 70 RSI: SPY, DIA, QQQQ, RUT, XLF, XHB, IYR, KRE, HYG (Aug 4)

There are a few ETFs trading above 70 on the RSI (relative strength index). ETFs I included below are SPY (S&P 500 SPDRs), QQQQ (Nasdaq 100 Trust), RUT (Russell 2000 Index), DIA (Dow Diamonds Fund ETF), HYG (iShares iBoxx High Yield Corporate Bond) XLF (Financial Select Sector SPDR), KRE (SPDR KBW Regional Banking), IYR (iShares Dow Jones US Real Estate) and XHB (SPDR S&P Homebuilders).

Relative strength could overshoot and/or prices could move higher while strength declines, that would be the negative divergence to look out for. The RSI should also dip below 70 for confirmation. For more information on the RSI (relative strength index) Stockcharts.com and Investopedia have information. Here are chart snapshots you can find at Stockcharts.com. Also watch that 38.2% Fibonacci retracement level on the $SPX at 1,014.

XHB Dec Call Option Up 30 Percent In Eleven Days, RSI Alert

The $XHB DEC 16 Call was active again today with over 30,000 contracts traded. If you remember my post on July 27 I wrote that 42,000 calls traded at the DEC $16 strike. To be exact 39,864 XHB Dec 16 Calls traded at 0.575. OptionMonster mentioned that it could have been a "ratio trade".

On August 3, 30,000 contracts hit the bid at 0.75 with 85,243 open (ht crimson mind). If a hedge fund bought 30,000 contracts at 0.575 and flipped it at 0.75 eleven days later that is a 30% profit, or $525,000. This is assuming the trade was solely speculative based on the price and volume. It could have been new money or part of a spread.

Denninger Looks Back At 2001 Bear Market Rally, Inventory Drawdown (CNBC)

On July 31, Karl Denninger (market-ticker.org) was featured on Dennis Kneale's show on CNBC. He first discussed the Q2 GDP number. He then talked about the 2001 bear market rally where hope led to 30% losses from the peak. The 2001 bear market rally was fueled by an unexpected drawdown in business inventories. The most recent GDP report showed a record decline in inventories (economist reactions).. Will we see a 2002 redux? I provided the change in private inventories chart below from the St. Louis Fed. Look at the massive decline. Denninger and others believe this will lead to higher Q3 GDP. It will be interesting to see how the supply/demand equation plays out and if the replenishment overshoots.

Pimcos El-Erian: July Stock Rally Sugar High Built On Assumptions, Sees 2% GDP

When the bond guys start making calls on equities, something has to give here. Pimco's Mohamed El-Erian, who manages $750 billion in bonds with Bill Gross, believes the July stock market rally was built on assumptions and on a sugar high. The Nasdaq is up 57% from the March lows and continued to rise with the better than expected Q2 GDP number.
"So as investment guys we look at the rally in equities, especially what happened in July, and you get a feeling that the equity market is now on a sugar high. Assumptions are being made, assumptions are being made on things like.. corporate profitability can continue to be driven just by cost cutting, that's not true you need revenue growth. Assumptions are being made that the stimulus is going to have a permanent affect, that's not true just look at what happened in China today. The Chinese equity market was down 5% on talk that some of the stimulus may be withdrawn. And finally an assumption is being made that the stabilization of housing is sufficient to get this economy going again. It's not sufficient, it's necessary but it's not sufficient. So our feeling is that the July part of the rally was a bit of a sugar high"

Skyworks (SWKS): Smartphone Growth, Aug Call Option Up 740% Since Feb

SWKS is up 140% since we covered it in early February and currently trading at $12/share. Skyworks builds wireless semiconductor solutions (power amplifiers, front end modules, RF subsystems, diodes) for devices across different markets (smart phones, handsets, infrastructure, wimax, rfid, automotive, medical etc. skyworksinc.com). They continue to capitalize on the high-end smart phone trend with Samsung, Sony Ericsson, Motorola and LG all 10% customers (Nokia in the high single digits)-Q3 call.

Revisiting Arbinet Corp, Broke Above $2.0 (Small Cap $ARBX)

Sometimes DV looks at illiquid small cap stocks and analyzes price valuation comparables and historicals. More often during times of growth and small cap buyouts (2005) with ThinkOrSwim Group the lonely exception (analysis pre-2008 TD Ameritrade buyout). Full disclosure I do not own ARBX. I've been watching this stock tank since the IPO. I'm revisiting Arbinet Corp after this post on April 3. Arbinet is a global telecom minutes exchange and call router. From their company overview:
"Arbinet is a leading provider of innovative voice and IP solutions empowering communications companies to create the most efficient and valuable global interconnections. Arbinet manages business relationships, backoffice operations and call routing for Members who route through Arbinet approximately 2% of the world’s international voice traffic to more than 1,300 destinations worldwide." Arbinet.com.

Recession Is Over According To Newsweek, Obama Responds

The cover of Newsweek.... Get your party hats on. Barack Obama responded to this Newsweek article during a speech in Raleigh, North Carolina (video below).


"The Great Recession, which rolled over our financial lives like one of P.J. Keating's giant pavers, is most likely over. Home sales, while still far below the levels of a year ago, have risen for three straight months—a first since 2004. The stock market has rallied 44 percent since March, thanks to renewed optimism and improving earnings from big companies like Goldman Sachs and Apple. In June, seven of the 10 indicators in the Conference Board Leading Economic Index pointed upward, including manufacturing hours worked and unemployment claims...... Read full article"

SPX Testing 1000 and 38.2% Fibonacci Retracement 1014, QQQQ Eyeing 50%

SPX is eyeing the magical 1,000 level. Nothing is stopping this market. This morning it opened at 975 and rallied quickly to 996.




Looking at the $SPX (S&P 500) 3 year chart w/ annotations it is currently testing the 1,000 level which was hit during the Oct, 2008 bear market rally. An important level that might get trading bots hyperventilating is the 1,014 38.2% Fibonacci retracement level measured from the October, 2007 high 1,576.09 and the March, 2009 low 666.79. However, above 1,000 there is ZERO overhead resistance which could pave the way for a 1,121 50% retracement test. We'll see folks. Eventually we'll have to test that long term downtrend line which hits today at 1,200 but it could come months from now and at lower levels. SPX is up about 50% from the March lows. The bears are waiting for a downside catalyst which is yet to appear.

SPY Put/Call Volume Ratio At May Highs, Correlation to Underlying Stock

Deep thoughts on put/call ratios. I want to give an update on the $SPY Put/Call Volume Ratio and show correlations between the ratio and the underlying (S&P SPDRs) during the past year. Even if the moves were just large players hedging, the SPY put/call volume ratio-to-underlying trend was on a roll until May 2009.

SPY Put/Call Volume Ratio (SchaeffersResearch)

On July 7, 2009 during the head and shoulders neckline test the SPY put/call volume ratio (0.77) hit lows not seen since January 1, 2009 (0.74). Read post: SPY Put/Call Volume Ratio Low vs. Open Interest, 7/7/09 to see the P/C volume chart on July 7.


The capitulation in put volume on January 1 (SPY put/call volume ratio: 0.74) set up for a major move in puts (SPY put/call volume ratio: 1.52) which timed the $SPY sell off perfectly to 666. Read post: S&P 500 (SPY) Sentiment Check, Put/Call Activity, Volatility Index and Short Interest Charts, 1/12/09.

Fund Initiates Large $SPY Ratio Put Spread Expiring In December (1x2)

On July 23, a total of 720,000 $SPY AUG 80-92 and DEC 82-95 PUT contracts traded on ISE which, according to sources below, appeared to be a 1x2 ratio put back-spread rolled from August to December as a way to hedge long exposure, cash neutral. This was one of the "largest trades ever conducted on the options market" (WSJ).

More color on that gigantic SPY put trade on Thursday (HamzeiAnalytics)
"It was a 120K by 240K put backspread rolled from August to December, executed on behalf a major US-based hedge fund; 120k of Aug 92 puts were traded up to Dec 95 puts and 240K of Aug 80 puts were traded up to Dec 82 puts; the transaction was virtually fresh cash-neutral for the fund."

Quoted from Reuters: S&P 500 ETF draws big bearish play as losses eyed:
"This trade is bearish and has a large area under which it would remain profitable to the downside," said Joe Kinahan, chief derivatives strategist at online brokerage thinkorswim Group. "This institutional investor is definitely looking for a pullback in the S&P 500 between now and December expiration."

Rather than an outright bearish bet, this appears to be a hedge on a long stock position in the Spiders, Schwartz said." (Reuters, July 23)

Here is when the AUG Puts were originated. Hopefully it was just a hedge against a large SPY position ($SPY rallied 11.3% since June 15).
"At least one option trader appears to be on the defensive in an exchange-traded fund that tracks the performance of the Standard & Poor's 500 index .SPX on fears the benchmark could suffer extended losses this summer."

"The Aug $92 and $80 puts have jumped to the top of the most actives list in morning trade as an investor apparently bought the $80-$92 (2X1) put ratio spread 120,000 times for about $1.75 premium on the International Securities Exchange, said WhatsTrading.com option strategist Frederic Ruffy. Both legs look like opening trades, he added." (Reuters, June 15)


Additional Information on the trade:
Other Plunge Protection Team: 122,017 December SPY $95 Puts (Zero Hedge)
S&P 500 ETF draws big bearish play as losses eyed
(Reuters)
Huge Deal Captivates Traders (WSJ)
Massive Trade Printed on the ISE in options on the SP500 ETF (WhatsTrading)
Don't Get Lulled by the Calm (Barron's)
Beware of the Options Boogie Man (Barron's)

Ron Insana Reporting Crash of 1987 Live at CBOE, Old School FNN Videos

Here are more old school teletext videos while I'm on Youtube. Below is Ron Insana of the Financial News Network (FNN) reporting the 1987 stock market crash live at the CBOE. Another classic video.



Next is an eight minute FNN promo from 1990 featuring Jim Rogers and the last FNN segment before they were bought out by CNBC. They show the evolution of the tape and feature CNBC commentators (Bill Griffeth, Insana and Sue McMahon).






More old school videos:
Paul Tudor Jones 1987 PBS Film "Trader: The Documentary"
Jim Cramer "Betting the Market" PBS Frontline '97
Revisiting the 1987 Stock Market Crash!! (NBR, FNN Videos)

Paul Tudor Jones 1987 PBS Film "Trader: The Documentary"

In 1987 PBS did a film on Paul Tudor Jones called "Trader: The Documentary". His firm saw statistical correlations between the 1920s and 1980s which enabled them to predict and short the crash of 1987 (watch part 2). Also check out the 1997 PBS documentary "Betting the Market" featuring Jim Cramer and Revisiting the 1987 Stock Market Crash (NBR, FNN Videos).

**They took these videos off Youtube, however duplicates popped up at http://www.youtube.com/user/traderdocumentary. Hopefully they stay.

$XHB Sep and Dec Call Options Active, New Home Sales Data Monday

XHB (S&P Housing ETF) is setting up for New Homes Sales data on Monday (Market expects 352K) and the S&P/Case-Shiller Home Price Index (Market expects -17.8%). There was huge call volume on XHB on Friday. 20,000 $XHB SEP $14 calls traded at 0.75 with 18,284 open and 62,500 $XHB DEC $16 calls traded with 4,721 open. The DEC calls traded 42,500 contracts at 0.55 and 20,000 at 0.65. Here are 1 min charts via OptionsXpress.

**This just came out of OptionMonster.com: Heavy trading in homebuilders ETF

XHB SEP $15 CALL (Courtesy of OptionsXpress)

XHB DEC $16 Call (Courtesy of OptionsXpress)


The actual chart of $XHB looks interesting. It broke out of a downtrend, formed a potential inverted head and shoulders pattern, gathered relative strength (close to overbought) and might be diverging with the MACD (broke above zero). Also volume rushed into XHB on the upside. XHB still has the ultimate $14 resistance level to violate. XHB closed at $13.56. So were the calls speculating a break above $14, or were they leaning on resistance? I'll be watching those 42,000 Dec 16 calls (XXJLP.X) that exchanged hands at 0.55-0.57. New Home Sales come out tomorrow at 10:00am. Tonight the S&P E-Mini future is up 0.33%, Dow up 0.34%, Nasdaq up 0.41%, USD Index down 0.44% and Oil is up 1.35% to $69

NAHB Builder Confidence Index Highest Since September 2008 (17, Chart)

I engineered a chart with the most recent Housing Market Index and Traffic of Prospective Buyers data. The data was released on July 16, 2009. In July the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) or Builder Confidence Index was up 2 points to 17 and the ToPB Index was up 1 point to 14. We are testing levels not seen since September 2008 and both downtrends have been violated. We'll see if we retest the lows. Until then the trend is your friend.

NAHB/Wells Fargo Housing Market Index (NAHB.org Data)

Dow Chart Dating Back to 1929 Market Crash, 1932 Market Bottom

I didn't realize you could chart out the Dow Jones Industrial Avg on Yahoo Finance dating back to the 1929 stock market crash and great depression. The S&P 500 chart only goes back to the 1950s. I provided the long term linear and logarithmic chart with trend line. I'm wondering if the long term trend line on the log chart has any significance due to the speed of innovation and information recognition. However, if stocks and indexes have to revert back to their mean or long term trend could you say the Dow has more depletion ahead? I'm wondering what you think. Or the other possibility, could we move sideways for the next 15 years to hit this trend? If you look at the trend line from 1929 the Dow rallied hard from 1945 to 1965 and then moved sideways until 1983 (the bottom that hits the long term trend today). From 1983 to 2007 the Dow rallied 11 fold (when Max Keiser was hating on yuppies lol). The chart at the bottom shows the Dow bottoming out in 1932 after the crash. Also, were we already in a recession before the 1929 crash/great depression?

Monthly TEU Statistics, Cargo Volume + Port of Long Beach

In addition to the Port of LA, the Port of Long Beach provides valuable cargo data. You can find the most recent month, YTD annual container trade totals, an archive of monthly totals since 1995, in terms of TEUs for import export and empty containers. They also provide a five-year comparison of cargo volume, value and container units or TEUs. Also they provide a "report on year-to-date tonnage figures, with statistics on inbound cargo, outbound cargo, containers, general cargo, petroleum/liquid bulk and dry bulk".

Website link: http://www.polb.com/economics/stats/default.asp

Posted by newsbysector.blogspot.com.

SpaceX Falcon - Razaksat Launch Video (July 13)

Elon Musk's SpaceX passes the test. Awesome.



Quoted from Youtube bio and Spacex.com.
Musk stated, "We nailed the orbit to well within target parameters...pretty much a bullseye. Satellite has separated and is communicating with (the) ground." This launch marked the 5th flight of the Falcon 1. Liftoff from Omelek Island, Kwajalein Atoll occured at 8:35 P.M. PDT.

Bernanke Video: State of the Economy and Monetary Policy (July 22)

Here is the full Bernanke testimony video and text before the Senate Committee from CSPAN.org.

"Federal Reserve Chair Ben Bernanke testified in a hearing on the Humphrey-Hawkins Semiannual Monetary Policy Report, current economic conditions, and the outlook for the financial sector and the broader economy. Several members voiced concerns about the commercial real estate market, and expressed concern that troubles in that market could threaten any recovery. Additionally, lawmakers pressed Mr. Bernanke for more solutions to tight credit markets and continued foreclosures." CSPAN

Treasury ETFs TLT, TLH Setting Up For $200 Billion Auction

The Treasury is set to auction off $235 Billion worth of Treasuries (70 day cash management bills to 7-Year notes) next week. Karl Denninger at the Market Ticker provides more info on the auction schedule. This is a big debt issuance.
"NEW YORK, July 23 (Reuters) - The U.S. government is set to sell record amounts of long-dated Treasury securities next week in an effort to raise billions to fund its economic stimulus package and industry bailouts." (Reuters)

Today 9,000 $TLT (iShares 20+ Treasury ETF) December $90 out-of-the-money puts traded at $4.50 with 82 contracts open . $TLT closed at $91.01 around $90 support. Including the premium, these contracts would net profit if exercised below $85.50 before December 18, 2009 if the trade was bought-to-open.

TLT 3 Year Chart(Stockcharts.com)
TLT DEC 90 PUT (Yahoo Finance)


David Rosenberg Sees 2002 Redux, Not Fazed By SPY Breakout

$SPY breakouts don't faze David Rosenberg... He's still bearish. The Chief Economist and Strategist at Gluskin Sheff & Associates was on Bloomberg Radio today (July 23) - Bloomberg.com Audio Link, Windows Media Player.
Tom Keene: "David Rosenberg you say it is a redux of 2002, what do you mean by that, what is a redux of 2002?"

Rosenberg: "Well what I was saying was that you know today we talk about the green shoots and back then we were talking about V-shaped recoveries. Essentially what I was talking about Tom was that the stock market on September 24, 2001 hit what everybody believed at the time was going to be the low for the cycle. 955 on the S&P 500 that was universally believed to be THE low and we didn't bail out banks at that point but we were bailing out airlines, tremendous fiscal monetary stimulus and people were building in this view that we were going to have post 9/11 reconstruction, gobs of fiscal stimulus, the FED had cut rates dramatically and of course the fabled inventory rebuild which we saw and it took the ISM above 50 into the opening months of 2002 and it was all good. The Nasdaq rallied about 40%, all the major averages were surging, bonds were getting killed and the primary view was that we were going to get a really nice post recession recovery and the problem of course is that in an asset deflation cycle which that was, it wasn't easy street it took about a year and a half before we got a durable sustainable economic recovery. This time around it wasn't just asset deflation times three, it was coupled with a credit collapse and here we have this universally held view that the March lows are going to hold. Everybody believes that and maybe they will but I'm a bit of a Maverick contrarian at heart. Everybody believes those March lows are going to hold and everybody is talking about the green shoots and the onset of the economic recovery and of course we're probably going to see a positive third quarter GDP number because of the rebuilding of inventories in the auto sector and everybody is extrapolating that into the future as they did in the opening months of 2002."

"...We actually didn't put in the conclusive low in the stock market until 2003 which was a year after the recession ended.." (Listen to full 17:24 audio)

Other David Rosenberg interviews:
Rosenberg: Secular Bear Market at Halfway Point (CNBC Video) (July 7, 2009)
$SPY Testing May 2008 Downtrend, Technical Views From Strategists (June 9, 2009)

Market Bottom Chart Comparisons:
1973-75 Recession History, Chart, 2009 Comparison? (June 6)
Charts Comparing 1974, 1982, 2002 Market Bottoms To Today, 80s Recovery (June 7)


*Good find Pragmatic Capitalist.

VIX Futures Trading at Premium to Spot, Implied Volatility at Premium to Historical

Even though VIX (CBOE Volatility Index) futures are being pulled down during this market rally, VIX futures going out until October are trading at a steep premium to spot and VIX implied volatility is up significantly. An article at OptionMonster.com says this is a rare situation. I put together 2 charts with the VIX Futures Curve (on 7/20/09 and 7/22/09) using CBOE data. You can see the nice premium gap. It will be interesting to see how this gap fills and how the options play out.

S&P Looks In The Mirror And Sees The U.S Dollar

Look at the tight inverse relationship between the U.S Dollar and the S&P. Watch both prices at these critical levels.


US Dollar vs. S&P 500 (Stockcharts.com)

Related:
SPY/UUP Ratio to SPY + Jim Rogers on Dow 30,000 (Video) (June 16)
Gold-USD-S&P Charts. Reflation, Stag or Deflation Correction? (May 24)

Gasparino Disses Zero Hedge, CNBC Hates On Bloggers

Source: TraderTim on Flickr
The financial blog wars continue... With the $VIX close to 1 year lows it's hard to find action these days, unless you're watching implied volatility on financial journalism. Today Charlie Gasparino dissed Zero Hedge calling it "Zero Intelligence". This is after Dennis Kneale had some words about Zero Hedge and The Fly (links below). Tyler at Zero Hedge came out with this response today (Charlie Lets Zero Intelligence Have It) and also provided a CNBC vs. Zero Hedge Google search chart comparison lol. Don't hate the player, hate the game CNBC! By the way I'm deep in the money on my financial media $VIX OTM calls purchase.

Related:
Denninger Featured On CNBC, Kneale Disses The Fly (July 10, 2009)
Kneale of CNBC Takes On Financial Bloggers! (June 30, 2009)

Jeff Jarvis, Future of Ads and Marketing (Videos)

Brands will soon be valued on their google juice! Jeff Jarvis on the future of ads on FORA.tv.

"Jeff Jarvis: Future of Media and the Prospects for Brands Columbia Business School".

Port of Los Angeles TEU (Cargo) Statistics

Go to the Port of Los Angeles website for container statistics. Go to: TEU Statistics (Container Counts) (loaded inbound, outbound, total loaded, total empty), Historical TEU Statistics (by calendar year; includes monthly data), Tonnage statistics (general bulk, liquid bulk, dry bulk). Go to this statistics page for monthly data. The Los Angeles Board of Harbor Commissioners have webcasts and special meeting videos (special meeting 7/2/09 video) Overall great information for the health of our economy.

Calculated Risk also analyzes this March, Junedata. Also the Port of Long Beach which I'll touch on later.

Posted by newsbysector.blogspot.com.

Goldman Sees $52 Earnings, 1,060 S&P Target

GOLDMAN SEES S&P 500 2009 EPS $52, 2010 EPS $75, 2010 S&P 500 TARGET 1,060

Links:
Goldman sees S&P 500 rallying 13% by year's end (LA Times)
Goldman Sachs Puppet Master? (Motley Fool)
Goldman Ups S&P 500 Target for End-Year (CNBC Stock Blog)
Bullish Calls Drive Markets Higher (SeekingAlpha)
S&P 500 to Rally Most Since 1982, Goldman Sachs Says (Bloomberg)

Posted by newsbysector.blogspot.com.

SPY Inverse Head and Shoulders Breakout Chart Analysis (S&P ETF)

I was watching $SPY intraday action today and saw that the 5 min chart looked exactly like the 2 year weekly chart. In the morning $SPY broke down through a descending triangle and formed an inverse head and shoulders pattern, breached neckline resistance and broke out to the upside into the close. Look how it compares to the 2 year chart, the set up is very similar. So you can see what would happen if the S&P 500 or $SPY broke through inverse h&s neckline resistance with conviction. $SPY is right at downtrend resistance, testing June resistance and the golden cross is in still in effect, in other words stay strapped w/ protection.

Inside Look at Lehman's Colossal Failure (Lawrence McDonald on CNBC)

Lawrence McDonald, who traded distressed debt at Lehman Brothers from 2004-2008, wrote a book called "A Colossal Failure of Common Sense" which gives a behind the scenes look at Lehman leading up to it's collapse. He promoted it on CNBC below.

Roubini: March Lows Will Stick, Chance of Correction (CNBC - July 20)

Roubini was on CNBC yesterday (July 20). He thinks the recession will be over by December, recovery will be weak with a 1% growth rate, unemployment will peak next year at 11% and the March lows will stick. However Roubini expects downside earnings surprises which could correct the market (and build that doggone inverse head and shoulders pattern). In early March Roubini thought the S&P would hit 600 (CBOE Conference Speech).

GLD Symmetrical Triangle, GDX, $USD, Australian Dollar/Gold ($XAD/GOLD)

Gold is still trying to figure out where it wants to go.... $GLD formed a near term symmetrical triangle or inflection point. It all depends on the US Dollar and inflation expectations going forward. There are still many analysts in the deflation or disinflation camp (links: Roubini, Shilling, Tom Lee of JP Morgan). You can see the inverse relationship between the USD and GOLD and the direct relationship between $XAD (Australian Dollar) and GOLD.

SPY P&F Chart Pierced 94 Resistance, Sideways Channel Since May

Last week SPY pierced through 94 resistance on the P&F chart (previous post shows the resistance test). It printed an X at 94 since it hit an intra-day high above $94 on Friday. For more information on point & figure charts go to stockcharts.com. The chart labeled the move on July 16 as a "Double Top Breakout" with a preliminary price objective of 109. In the very short term it could pave the way for a June 96 retest however I'd be ready to flip SPY if it rolls over and short/buy puts to position a h&s neckline retest. Since early May SPY has traded in a sideways channel and at some point a new trend MUST begin. The slow death of the VIX (volatility index) imo anticipated this 3 month trading range.

More $XLP (Consumer Staples) Call Activity (14000 XLP SEP 25 CALL)

Continued from my previous post: Consumer Staples ETF $XLP Calls Active, 40000 Jan 2010 $24 Calls Traded, XLP saw more call activity last Friday (JUL expiration). A large block dropped on the SEP XLP CALL. It closed w/ 14,503 contracts traded/1848 open. Looking closer via ISE, 10,000 contracts were traded at 10:11am on the ISE at 0.25. The ISEE value (ISE Customer Opening Long Calls/ISE Customer Opening Long Puts)*100 = 1.03M up 1.02M or 13.97k%. Calls/Puts = 10.32k/1 and Average Calls/Puts = 2.55k/2.09k.