HOLY SMOKES : Did i read this right? Dow below 10,000 S&P;1,100 Nasdaq 1500. Is this possible by October?

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I'm itchin to pick up some Dow & S&P Nov puts at the end of the day because it looks like today is gonna be a rally day. What do you guys think? Wait till next week?
 
[quote author="usctrojanman29" date=1224288485]I'm itchin to pick up some Dow & S&P Nov puts at the end of the day because it looks like today is gonna be a rally day. What do you guys think? Wait till next week?</blockquote>


I think that one either needs to be a professional trader to trade this market: a professional trader with success trading highly volatile markets. The trader I respect the most is in cash and sitting this out. He knows his limits and has no illusions.
 
[quote author="usctrojanman29" date=1224288485]I'm itchin to pick up some Dow & S&P Nov puts at the end of the day because it looks like today is gonna be a rally day. What do you guys think? Wait till next week?</blockquote>


Thats my play. Taking advantage of a short rally atm, but once this market peaks at the end of the day, all my calls will be sold and I will load up heavy on puts.



Credit is tight, consumer index is down, industrial production is down, home sales are down more than expected on top of all the current issues. But we have a rally? LOL.



Monday will be an ugly day on Wall street. Thats just my opinion though, we all have our own.



I wish we had a stockmarket like the past 2 weeks every day for the rest of my life.



Screw the end of day...i'm not taking chances, this market switches fast and one must go with it.
 
[quote author="usctrojanman29" date=1224288485]I'm itchin to pick up some Dow & S&P Nov puts at the end of the day because it looks like today is gonna be a rally day. What do you guys think? Wait till next week?</blockquote>


On a technical basis, the market failed to push through the 10-day simple moving average. Every time it has touched this in the last 6 weeks, it has moved lower. It touched it several times today and sold off into the close. This is probably a sign that the markets will now either retest the lows or move through them.



Of course, that being said, I could also see the markets gapping up and pushing strongly through this resistance level on Monday. The markets are a crapshoot.
 
Right on IR. Many times people ask "where do you think the market will be tomorrow:...so I do...but 10 minutes later I change my own mind based on the most current data available. Like earlier, my plan for the day was to sell at the peak which I expected to happen at the end of the day, well...as the day went on, technicals painted a different picture, and I had to act completely different then I planned.



Another view is that I think DOW will hit dirt bottom around 1500-2000 when this whole mess is over, but that long term view can change for me overnight. (orginal view was 7K when dow was above 10K, now revised down to 2K)



So many times I feel bad for giving advice because 10 minutes later my advice often would have been different. So its tough to give short term advice.



But it's all about being flexible, adaptable and never "all in" IMO.
 
[quote author="skek" date=1224306785]<a href="http://www.bloomberg.com/apps/news?pid=20601109&sid=a2bXQaolDINs&refer=home">Bloomberg article</a>:



<blockquote>Credit markets have fallen so far that they are providing a ``once in a lifetime opportunity,'' and investors are still selling.



Prices of loans rated below investment grade declined to a record low 66.1 cents on the dollar, virtually guaranteeing investors get their money back, based on historical recovery rates, according to data compiled by Standard & Poor's. Yields on corporate bonds show investors expect 5.6 percent of the market to go bust, the highest default rate since the Great Depression,...</blockquote>


and



<blockquote>Commercial-mortgage securities rated AAA that require an unprecedented three-quarters of the underlying loans to default for any loss of principal are trading at about 70 cents, according to New York-based Citigroup.



``We're not at these prices because of the fundamentals: We threw those out the window a year ago,'' he said. ``This is strictly people want to sell something to raise cash, and it's easy to sell these CMBS because it's a liquid market.''</blockquote></blockquote>


Unlike residential assets, the delinquency rates on CMBS paper are still very low.

A prolonged economic slowdown or recession will certainly have an impact on this market.
 
[quote author="skek" date=1224308807][quote author="blackvault_cm" date=1224304696]Right on IR. Many times people ask "where do you think the market will be tomorrow:...so I do...but 10 minutes later I change my own mind based on the most current data available. Like earlier, my plan for the day was to sell at the peak which I expected to happen at the end of the day, well...as the day went on, technicals painted a different picture, and I had to act completely different then I planned.



Another view is that I think DOW will hit dirt bottom around 1500-2000 when this whole mess is over, but that long term view can change for me overnight. (orginal view was 7K when dow was above 10K, now revised down to 2K)



So many times I feel bad for giving advice because 10 minutes later my advice often would have been different. So its tough to give short term advice.



But it's all about being flexible, adaptable and never "all in" IMO.</blockquote>


Your prediction of a 2k DOW has always intrigued me, blackvault, in no small part because you've demonstrated you know your stuff both on the forums and in the short-lived Panda-less Challenge. Yet, it seems odd to go from 7k to 2k -- in your mind, what factors initially supported a 7k bottom, and what factors do you see now that indicate a much more complete collapse? Are you seeing different fundamental indicators, or are you reading real-time market events? Perhaps both?



Anyway, sorry to impose, but I'm curious what changed for you between the two predictions.



EDIT: And just so Graph doesn't go all search cop on me, I did search for a longer explanation, and I found a couple posts in <a href="http://www.irvinehousingblog.com/forums/viewthread/3345/">this</a> thread, but I was curious if there was more to it.</blockquote>


Maybe I opened a can of warms with that. I had the word prediction too. I really am not trying to predict just sharing what goes on in my screwed up head. As far as more insight I just responded to another thread <a href="http://www.irvinehousingblog.com/forums/viewthread/3416/">here.</a> However it might not answer your questions, so maybe you can PM me and I'll explain without spamming these forums.



Anyway, time to go feast and have drinks...it's been a good week.
 
interesting
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[quote author="IrvineRenter" date=1224302398][quote author="usctrojanman29" date=1224288485]I'm itchin to pick up some Dow & S&P Nov puts at the end of the day because it looks like today is gonna be a rally day. What do you guys think? Wait till next week?</blockquote>


On a technical basis, the market failed to push through the 10-day simple moving average. Every time it has touched this in the last 6 weeks, it has moved lower. It touched it several times today and sold off into the close. This is probably a sign that the markets will now either retest the lows or move through them.



Of course, that being said, I could also see the markets gapping up and pushing strongly through this resistance level on Monday. The markets are a crapshoot.</blockquote>
What are those 10-day simple moving averages on the major indexs?
 
[quote author="blackvault_cm" date=1224555317]Glory or Crash and Burn...



40 puts on +XOMWN 3.75, go go go!!!</blockquote>
I'll be keeping a very close eye on the Dow and S&P...if the Dow breaks 9300 to the upside and the S&P breaks 985 to the upside (both of which are the Fridays highs) I'll be selling those puts to get the out of the way.
 
Its good to have an exit strategy. Do you have plenty of stocks where your portfolio somewhat follows the DOW or S&P? If you don't I'm not sure I would have made that bet, unless you are just making a straight up bet.



I bought 40 short term puts, but I also own 25 Jan 2010 XOM calls, and 600 XOM shares.
 
[quote author="blackvault_cm" date=1224556741]Its good to have an exit strategy. Do you have plenty of stocks where your portfolio somewhat follows the DOW or S&P? If you don't I'm not sure I would have made that bet, unless you are just making a straight up bet.



I bought 40 short term puts, but I also own 25 Jan 2010 XOM calls, and 600 XOM shares.</blockquote>
Well, let's put it this way...I have just under $100k in my 401k and Roth IRA and both have significant exposure to the index funds. My total expense of buying both puts was just under $7k.
 
[quote author="usctrojanman29" date=1224557738][quote author="blackvault_cm" date=1224556741]Its good to have an exit strategy. Do you have plenty of stocks where your portfolio somewhat follows the DOW or S&P? If you don't I'm not sure I would have made that bet, unless you are just making a straight up bet.



I bought 40 short term puts, but I also own 25 Jan 2010 XOM calls, and 600 XOM shares.</blockquote>
Well, let's put it this way...I have just under $100k in my 401k and Roth IRA and both have significant exposure to the index funds. My total expense of buying both puts was just under $7k.</blockquote>


Ahh ok. Well then you did the right play. Only thing I would recommend (assuming the 7K is all you are planning to put in options) is to buy in 2-3 stages if not more. So do 3.5K and 3.5K or do 2.33K, 2.33K, 2.33K. Options move fast and its very dangerous to go "all in" unless the probability is working in your favor 85%++. A decent movement like today can easily put you 30-50% in the hole, so cost averaging options is important. Also, another strategy is buying 3.5K this month and 3.5K next month. It's another way of cost averaging, but not direct.



As for me? I profited well on XOM and my calls to be countered by my puts (actually I'm at a slight loss as the last 15 min kicked me right in the groin. Sometimes you're right, sometimes you're wrong)
 
[quote author="blackvault_cm" date=1224560916][quote author="usctrojanman29" date=1224557738][quote author="blackvault_cm" date=1224556741]Its good to have an exit strategy. Do you have plenty of stocks where your portfolio somewhat follows the DOW or S&P? If you don't I'm not sure I would have made that bet, unless you are just making a straight up bet.



I bought 40 short term puts, but I also own 25 Jan 2010 XOM calls, and 600 XOM shares.</blockquote>
Well, let's put it this way...I have just under $100k in my 401k and Roth IRA and both have significant exposure to the index funds. My total expense of buying both puts was just under $7k.</blockquote>


Ahh ok. Well then you did the right play. Only thing I would recommend (assuming the 7K is all you are planning to put in options) is to buy in 2-3 stages if not more. So do 3.5K and 3.5K or do 2.33K, 2.33K, 2.33K. Options move fast and its very dangerous to go "all in" unless the probability is working in your favor 85%++. A decent movement like today can easily put you 30-50% in the hole, so cost averaging options is important. Also, another strategy is buying 3.5K this month and 3.5K next month. It's another way of cost averaging, but not direct.



As for me? I profited well on XOM and my calls to be countered by my puts (actually I'm at a slight loss as the last 15 min kicked me right in the groin. Sometimes you're right, sometimes you're wrong)</blockquote>
We got a few missed from the likes of TI (not the rapper), Sun, and Sandisk but those bastards at American Express beat estimate and are up about 8% in after-hours.
 
Is everybody still trying to call a bottom/2nd crash of armageddon?



I think the short story's done for a little while. Probably won't be a raging bull either.



I'm just going to sell calls against my long positions here. The VIX is still so high, I'd need a 15% drop before I lose a single dime on the covered call position I sold, and a sideways/rising market will hand out a hefty 7-10% premium for barely a month of holding.



So worse case we crash another 20% and I lose about 5% after the premium, and best case I collect a large premium. Rinse & repeat, until the VIX dies down to less freaky levels.
 
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