VIX Update From Davos, Switzerland (Video)

Dr. Phil Pearlman on Stocktwits.tv reported live from Davos, Switzerland on Friday at the World Economic Forum featuring Adam Warner, author of DailyOptionsReport.com and Options Volatility Trading (book). Also follow them on twitter @ppearlman, @agwarner for good info. Dr. Phil and Adam discussed the recent move in the $VIX (Volatility Index) and what it's implying about the underlying S&P 500 Index. Adam talks about the dynamics of implied volatility, the quick change in sentiment (VIX spiked 50% in a week (18-27), how the measure is still low relative to 2008 and if technical analysis is applicable.  Adam noted that it was the biggest weekly move in the VIX since 2008.  It is reflected in the chart below.  Keep in mind the VIX hit 90 in 2008 and we are at 24! So there would need to be 5 black swans in a row to retest those levels, imo.  Never know, anything can happen. They both gave market predictions as well.

Weekly VIX Chart from August 2008 (Courtesy of Stockcharts.com)

IYR Intraday Descending Triangle and Carnage, Technical Analysis | DVtv

As you've noticed, with the boost in volatility lately I've been showing intra-day trading activity.  I use Screenr to record my computer screen.  Below I presented live intra-day trading activity of IYR (iShares Real Estate ETF) inside a bearish "descending triangle", where price makes lower highs after an initial spike and rides floor support towards the downtrend vertex point. Learn more about descending triangles at Stockcharts.com Chart School.  Obviously breakouts/breakdowns fail half the time so trades warrant a decent stop and/or hedge imo.  In this case downside momentum was dominating the market so I thought there was better risk/reward on the downside. It ended up taking out support.  I've seen this work (and fail) across many different time frames. It is just analyzing the supply/demand of stock (via traders) over time measured in price.  I was thinking that a long term example would be if the S&P tested the 2002/2009 lows again and broke down right at the 2007 downtrend.  Hopefully the downtrend demon from 2007 gets violated soon so we don't have to experience that.  If it does happen I'm sure it would be priced in gold not Dollars.  The high speed rail idea could boost jobs and economic activity... First is a live streaming video of IYR and then a snapshot of IYR at the close (chart from freestockcharts.com).

IYR (chart courtesy of FreeStockCharts.com)

How Low Does Tech Go, Potential Support for QQQQ, AAPL, GOOG, MSFT, QCOM

I've been on a massive charting spree given the sell off and volatility. This post is dedicated to technical analysis on QQQQ (Nasdaq ETF) and its largest holdings, $AAPL (Apple), $GOOG (Google), $MSFT (Microsoft) and $QCOM (Qualcomm).  Charts are courtesy of FreeStockCharts.com.

QQQQ:  I'd like it exhausted at $37.50 (June, 2009 support) but that's just me.


AAPL:  Apple is being mashed in an interesting triangle.  It is 15.66% of QQQQ.  If people continue to exit this stock, $180-ish looks like decent support from August, 2008 and $150 from June, 2009.  Watch Apple to guide the QQQQ.


Senate Reappoints Bernanke For New Term (77/23), Traders Sell SPY Into Close

"Bernanke Clears Senate Hurdle for Confirmation as Fed Chief" (Bloomberg). $SPY was riding an uptrend channel in the last half hour of trading but broke below floor (109) and uptrend support and closed at 108.55 (-1.15%).  See video and snapshot of the close.  Streaming chart is from FreeStockCharts.com. Any thoughts going forward?



(Chart courtesy of FreeStockCharts.com)

Wall Street 2: Money Never Sleeps Trailer Video

Here is the Wall Street 2: Money Never Sleeps trailer. Yes!



Hat tip Reformed Broker

Technical Analysis $SPY, $ITY, $IWM, $DIA Charts 1/28/2010, Obama State of Union Overnight Hope Trade Today

So much for Obamas State of the Union overnight hope trade! Last night I showed you Screenr videos of traders bidding up the March S&P future during Obamas speech. They almost drove it to 50DMA resistance before the big plunge.  Watch out for the Bernanke vote as well.

Today it looks the risk trade couldn't hold and the downtrend will resume, we will see how the markets close.  Qualcomm's forecast, Greece bond sell off and US Dollar Index rise crushed the hope trade (Stocks, Greek Bonds, Commodities Fall; Dollar, Treasuries Rise -Bloomberg) Also a glitch went down at the NYSE (NYSE Says Error Delays Delivery of Price Quote Data -Bloomberg) and the Senate is voting for Bernanke's second term today (Final Bernanke vote may come Thursday, Reid says -MarketWatch). The Dow is down 149 points as of 12:32pm.  Here are 9 month charts of $SPY, $IYT, $IWM, $IYR, $DIA and $VIX with trend lines, 50 day moving average and support/resistance levels.

First of $SPY (S&P 500 ETF): After the multi-day plunge a squeeze was inevitable and the 50 day moving average resistance level looked like a target. On the 9 month chart it pierced through an uptrend channel (1) and is trading at 108.12, 3 points under the 50DMA 111.36 (2).  If the S&P stays weak $102.5 (3) and ultimately $95 (4) are support levels.  It's just a historical look at selling exhaustion which is now considered support. 


Next up $DIA (Dow):  Same type of deal, it broke through uptrend support and the 50dma however it is near a support level from October at $100.  That could easily get taken out but if there's a bounce it would be there in my opinion.  Minor support occurs at at 97.5 and 95 it looks like.  I'm thinking the 200DMA $93.20 is big support and if it breaks that $87.5 (June highs).  We'll see what happens.  There is always a chance it retests the downtrend demon again (long term downtrend).

S&P E-Mini Future Breaks Out During Obama State of Union (Live Chart Action During Speech)

Below, watch the E-mini S&P 500 March Future break through ceiling resistance levels at various time frames. ESH10 is heading towards the 50 day moving average resistance level of 1,110. As I write it is trading at 1,103. It's interesting that the USDX (US Dollar Index) and $SSEC (China Shanghai Composite) pierced through their 200dmas on the upside and downside respectively (h/t Bespoke). Judgment day is near for the risk trade imo. I took a screen shot of an OptionsXpress Flexchart during Obama's State of the Union address (full speech video). Next time I'll play some Marilyn Manson for you loud in the background.

Obama State of the Union Speech Video 1/27/2010, Transcript

Here is Barack Obama's 2010 State of the Union Address from 1/27/2010. I provided the full video and transcript. You can find everything at Whitehouse.gov.

Videos from iPad Keynote by Steve Jobs and Introduction Video

iPad is set to be released in late March, 2010 for $499.  Here are videos from the keynote and iPad introduction.   Interesting piece of technology here.  The text below is from the iPad press release at Apple.com.
"iPad features 12 next-generation Multi-Touch applications. Every app works in both portrait and landscape, automatically animating between views as the user rotates iPad in any direction. The precise Multi-Touch interface makes surfing the web on iPad an entirely new experience, dramatically more interactive and intimate than on a computer. Reading and sending email is fun and easy on iPad’s large screen and almost full-size “soft” keyboard. Import photos from a Mac®, PC or digital camera, see them organized as albums, and enjoy and share them using iPad’s elegant slideshows. Watch movies, TV shows and YouTube, all in HD or flip through pages of an e-book you downloaded from Apple’s new iBookstore while listening to your music collection."
"Pricing & Availability

iPad will be available in late March worldwide for a suggested retail price of $499 (US) for the 16GB model, $599 (US) for the 32GB model, $699 (US) for the 64GB model. The Wi-Fi + 3G models of iPad will be available in April in the US and selected countries for a suggested retail price of $629 (US) for the 16GB model, $729 (US) for the 32GB model and $829 (US) for the 64GB model. iPad will be sold in the US through the Apple Store® (www.apple.com), Apple’s retail stores and select Apple Authorized Resellers. International pricing and worldwide availability will be announced at a later date. iBookstore will be available in the US at launch.

FOMC STATEMENT 1/27/2010: Inflation Subdued, 0-1/4% Fed Rate, $SPY Short Squeeze, Triangles and Parallelograms

FYI, not a surprise about 0-1/4. Nice short squeeze.  Shout out to triangles and parallelograms.  Intra-day chart courtesy of FreeStockCharts.com



"Federal Reserve Press Release

Release Date: January 27, 2010
For immediate release

Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. Firms have brought inventory stocks into better alignment with sales. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack continuing to restrain cost pressures and with longer-term inflation expectations stable, inflation is likely to be subdued for some time.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter. The Committee will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in financial markets.


In light of improved functioning of financial markets, the Federal Reserve will be closing the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility on February 1, as previously announced. In addition, the temporary liquidity swap arrangements between the Federal Reserve and other central banks will expire on February 1. The Federal Reserve is in the process of winding down its Term Auction Facility: $50 billion in 28-day credit will be offered on February 8 and $25 billion in 28-day credit wil be offered at the final auction on March 8. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30 for loans backed by new-issue commercial mortgage-backed securities and March 31 for loans backed by all other types of collateral. The Federal Reserve is prepared to modify these plans if necessary to support financial stability and economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted."
Source: FederalReserve.gov

Video: Nouriel Roubini on Economy, Pre-State of Union (CitizenTube)

From Newsweek on Youtube.



For a more in depth 2010 economic outlook by Nouriel Roubini see his speech in Hong Kong at the Asian Financial Forum.

A Ratio Put Spread Traded on SPY Today (120K/240K)

Big volume in SPY put options are always interesting. I remember back in July, 2009, a total of 740,000 SPY puts traded in one day and was the largest trade ever conducted on the options market. According to articles and institutional traders it was an out of the money ratio put back-spread rolled from August to December.  If it was in fact a back-spread they bought cheap downside protection and sold the higher strike to fully hedge the purchase if SPY kept rising.  Which is exactly what happened.

Today I saw that SPY was on the most actives list on the ISE put/call widget on the sidebar.  Digging deeper, according to Crimson Mind, 120,000 March $100 puts and 240,000 March $85 puts traded with 283,000 and 379,000 open respectively.  They noted that puts were rolled from December to March in October, 2009.
"note that on Oct 20 one investor rolled Dec 95/82 ratio put spread (120K/240K) to March 100/85 ratio put spread (120K/240K) - Oct 20 - 120,000 March 10 puts traded at $3.21 and 240,000 March 85 puts traded at $1.01 (120k) and $1.02 (120k)" (CrimsonMind)

No idea about the ticks but here are some ideas. Chris McKhann of OptionMonster thought it was a protective ratio put spread but did mention it could have been "buying back" an existing back-spread given the open interest (video). Fred Ruffy at WhatsTrading.com thought it was a new backspread (link). The S&P March e-mini future is down again tonight, -0.66%.

FXI Under 200DMA, China Has Mini Real Estate Bubble According to NAI

FXI broke below an uptrend channel and most recently the 200 day moving average. I remember traders were playing with near term FXI puts last August and economist Andy Xie said China was overvalued. For the last 6 months FXI bounced around between $38-$45. FXI closed at $38.55 today so it is unchanged on a 6 month basis. Still it broke some barriers on decent volume and could be anticipating a slowdown in China. Recently China reported very strong productivity numbers (December HSBC China Manufacturing PMI Hit 56.1 vs. 44.8 in March (Chart)). However, with the Bank of China tightening bank reserve requirements and underlying market jitters about a possible rate hike and/or Yuan de-peg from the $US (Goldman's O'Neill Says China Yuan May Rise More Than 5%), volatility could continue as the flow of goods/capital adapt to the different environment, imho.

6-Month FXI (iShares FTSE/Xinhua China 25) - Stockcharts.com

FXI 1-Year Chart

FXI 3-Year Chart

2010 Detroit Auto Show, Year of Electric Car (Video on Electric Avenue)

Video courtesy of ClearSkiesNews. See cars on Electric Avenue at the 2010 International Auto Show in Detroit. Also, they showed the first electric car built in 1922.

Paul Kedrosky Talks About Riding Macro Trends on MissTrade TV (Video)

Paul Kedrosky (research consultant at hedge fund Ten Asset Management, venture capitalist and blogger at Infectious Greed) talks about riding macro trends w/ Matt Davio on MissTrade TV. Interesting conversation. Find the full video here.

Bob Prechter on CNBC 1/26/2010, Signals Similar to Top of 2007

He is seeing signals similar to the top of 2007 (extreme optimism, extreme valuation, low dividend yields, high P/E). He says wait for the ultimate buying opportunity.



I'm an affiliate of his firm, E-wave International, here is a free 2010 report.

DVtv 1/26/2010: IWM Broke 50DMA, SPY, DIA, SRS, VIX Into Close

At a coffee shop I put up a live screenr of freestockcharts.com showing SPY, IWM, DIA, SRS, VIX trading activity, technicals on multiple time frames. There's a little coffee shop volatility in the background. $IWM (Russell 2000 Index ETF) took out the 50 day moving average today, following everybody else. Interesting day indeed folks. The 2007 downtrend demon injured a few ETFs. Where are the market paramedics? It also looks like someone is protecting a large portfolio of Spdrs ($SPY) which I'll write about later. Today goes well with the recent ride in $VIX. The last few weeks were a decent time to run with put protection. Ladies and gentleman I present to you DVtv Episode #2 on Screenr. Once I get 4G I can do a post on top of the bean.

Episode #1, 1/24/2010: Technical Analysis on SPY, DIA, IWM, SRS, IYT, DRYS, DXY, VIX

S&P E-Mini Future Down .6%, China Raised Bank Reserve Ratio By .5% (ES_F, IWM)

This will be an interesting week for the markets.

Overnight the March S&P E-Mini future is down 0.6%. All major index ETFs (SPY, DIA, QQQQ, IYT) are under their 50 day moving average except for $IWM (Russell 2000).  So keep an eye on the Russell 2000 index imo.  IWM is right around October support after piercing it.


ESH10, 1 Year (E-Mini S&P March Future) Courtesy of Optionsxpress



$IWM (Russell 2000 iShares) Courtesy of Stockcharts.com

Economics Rap Videos: Hayek vs. Keynes and Economics 101

After big banks failed in 2008 which froze up the free market and led to trillion Dollar Government bailouts (and fiscal debt crisis on the way), these videos are dedicated to Keynesian and Austrian economics.  I saw a rap battle between economists/theorists Hayek and Keynes floating around Twitter ("Fear the Boom and Bust" a Hayek vs. Keynes Rap Anthem") h/t @Dogwood.  I added two additional videos that you might find amusing.  Are there any raps about credit-default swaps on collateralized debt obligations of CDOs of asset backed securities?

Correction of 10-15%? Prechter Thinks It Will Be Deeper and Longer (Reuters)

Lets hope Robert Prechter is wrong... He thinks "this wave structure is the LARGEST that we've lived through" (CNBC Interview, 11/23/2009). He sees "shelter in Treasury bills" and is going against some big xTARPies that are optimistic on 2010! Read the article.

Next bear market phase starting: Prechter

NEW YORK (Reuters) - The next leg of a bear market in stocks has probably started and gold and corporate bonds are likely to slide as the U.S. economy suffers long-term weakness, technical analyst Robert Prechter said on Monday.

Also, read free Elliot Wave International reports below. I'm an affiliate.


$VIX Had Wild Ride Last Week, VIX Cash Above Futures and VIX Volatility Sold off, Watch Action From The Options Pit

I missed the action from the VIX pit last week. Luckily OptionMonster had it on demand. Here is a summary of the last 3 videos (click the links). On January 20, when $VIX was at 19, traders bought February 40 and 32.5 calls and on 1/21 when Obama came out with his bank plan traders bid up the 32.5 calls. On Friday 1/22 the $VIX closed at $27.31 and someone bought protection against a double in the $VIX, Feb 42.5 calls. VIX cash is now above all of the futures (Feb VIX future closed at 24.75, March 25.10, April 25.35, May 25.35, June 25.30, July 25.40, August 25.25 data at cboe.com/cfe). I provided a chart below of $VIX cash and implied volatility of the VIX itself. Look at the volatility spike in volatility anticipating volatility. I embedded the video from Friday.  Will VIX futures catch a bid here, bottom out and widen or will VIX cash stay relatively stable in the 20s?  The curve is flat compared to late November, interesting.

$VIX Index (Courtesy of Stockcharts.com)


Implied Volatility of the $VIX (Courtesy of Ivolatility.com)


Hectic Week For Markets, January Now In Red, What Caused Sell Off? SPX, DJIA

Before I dig into charts, wtf caused the sell off? Here are a few ideas, comment more..
  • Bernanke’s Bid for a Second Term at the Fed Hits Resistance (New York Times)
  • China to step up efforts on overheating: analysts (AFP)
  • Emergency Unemployment Compensation, Claims Continuing to Grow (SeekingAlpha)
  • Homebuilders Index Slips Again In January, Confirming The Housing Double Dip (BusinessInsider)
  • Obama's Volcker Rule Outlaws Trading, Hedge Funds at Banks (Video/Text) (DV)
  • ECB Opinion on Greek Proposal Jolts Markets (WSJ)
  • UPDATE: Greece Sovereign CDS Spreads Widen To New Record High (WSJ)
  • China Targets Inflation as Economy Runs Hot (WSJ)
  • SPY, IWM, DIA Downtrend Demon™ Scares Traders, DIA Pierced 50 Day Moving Average (DV)

The S&P 500 and Dow are now in the red for January/2010 and stabbed through their 50 day moving averages. At the close The S&P  was down -2.09% and Dow -2.45% ytd.

S&P 500 LARGE CAP INDEX (YTD - January 22, 2010)


DOW JONES INDUSTRIAL AVERAGE (YTD - January 22, 2010)

Charts courtesy of Stockcharts.com

Is S&P 500 Going Higher or Lower in 2010? Chart Analysis Video

MarketClub has a free video analysis of the S&P 500 chart for 2010 titled "Where should YOU be in the S&P 500?".
"In today’s short video we take a fresh look at S&P 500 and what we think it is going to do in 2010.  We will also be looking at an important “Trade Triangle” that has just flashed an important signal for this index."

If you remember the videos from late December on the S&P and Dow they mentioned the long term downtrend and fibonacci retracements.  We sold off violently last week right at downtrend resistance.  Adam Hewison provides an update on the S&P using his trade triangle signals.  I am an affiliate partner of MarketClub for full disclosure.  The link above is to a free vid.

January 2010 Updates From Bob Janjuah (RBS Analyst) and Follow Up

Courtesy of ZeroHedge.com
1) Deep Thoughts From Bob Janjuah - January 2010
2) Deep, Grammatically-Incorrect Follow Up From Bob (Janjuah).

Technical Analysis on SPY, DIA, IWM, SRS, IYT, DRYS, DXY, VIX via Screenr

I'm testing out Screenr on my blog. It's a video of the screen while I look at charts on freestockcharts.com.  I'll review the last two weeks in detail next as trading activity, catalysts and technicals converged. Going forward I might use Screenr to record live intra-day trading setups instead of using static charts.  Below I clicked through charts of SPY, DIA, IWM, IYT, DRYS, SRS, DXY ($USD) and VIX with trends, volume and moving averages.  Obama talks about the Volcker Rule (bank plan) in the background for your listening pleasure.