This is what created a day of euphoria yesterday:
U.S. stocks cheer Lehman's ability to raise capital
Economic data aren't that great, but not as bad as feared
(Floyd comment: "it's not as bad as we expected, time to rally:)
NEW YORK (MarketWatch) -- U.S. stocks on Tuesday celebrated the start of a new quarter, rallying as Lehman Brothers Holdings Inc.'s equity offer drew a warm reception, fueling the Dow to its 8th-biggest point jump ever.
"Clearly there is a recognition the credit markets are healing -- usually stocks begin to rally about six months before the end of a slowdown," said Jeffrey Kleintop, chief market strategist at LPL Financial Services.
(Floyd comment: some guy we never heard of tells us it's better)
"And with earning season less than a week away, and we haven't heard a flood of negative pre-announcements," Kleintop said.
(Floyd comment: True, because they are cooking the books:)
Yesterday our April620C hit highs of 21.60, prompting a rash of great subscriber testimonials as to how Floyd predicts the Dow, and just how profitable this signal was. A good start to our month!!!!!
Market upturn was typically investors looking for "good news", and little is really that good. Ignore the analysts now telling us "it's okay, and bulls will rise". Perhaps for a bit, but not for that long, we think.
For today's opening, the calls have the obvious bias, and we think now have opportunity for a pause. Floyd will not offer a new signal, YET. Let's wait it out, and not be greedy. We've hit 10 for 10 signals recently, and that's too good. We will be cautious.
FED days continue to be tremendous "event" days for our traders.
As FEDS day continues to show a great time to trade the OEX I'll be sharing some of my scalping techniques with the Bernanke jig starts up on fateful Tuesday's.
If I own an option at that time, I'll have sell orders in for three price moves up.
If I am buying an option at that time, I'll have buy orders in for three prices moves down.
Ex: Sell 2 at 3.00, 2 at 3.50, 2. and 4.00 or buy 2 at 2.00, 2 at 1.50 and 2 at 1.00. The concept of the buys in fast movement are the key, as the trader gains the ability to buy in ranges, and quickly put averaged profit margins of 10 to 28% on your costs, with sell orders in at this price, and also in ranges above and slightly below.
Effectively you are bidding the market up and down, and trading the same range with the volatility of the advance move. If you are trading with us for that day you already know how we are seeing the market, and interpreting the potential FED bias. Much of my trading during this time period occurs 2.14 to 2.30 p.m., just as the FEDS announce, and the first interpretation takes place.
Almost always there is a reaction to the first interpretation later in the day, or the following day, unless the news is extremely clear-cut and cannot be interpreted.
As the market moves up 400 points, and all is good, please think about....
Today we do not need more dialogue on Obama's preacher, or whether Hillary should stay in the race. In the situation we are in we start with a huge government deficit and record private debt, all run up when times were good and we should have been storing up acorns. We now have a drama where people begin losing their homes, which is usually the last stage of the drama. This is the one that is bringing back stagflation, a poisonous combination of economic slowdown and eroding currency that we cured at a huge cost back in 1981. When that red phone that Hillary talks about rings at 3 a.m. it probably will not be the National Security Adviser saying that Osama Bin Laden (oh, where is he by the way?) has struck again. More likely it will be the treasury secretary reporting that the markets have opened in the Far East and the dollar has become worthless. This is like the economist that predicted 9 of the last 5 recessions.
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