You Can't Make This Stuff Up

In 1998 the week after July expiry the down fell 4.3%, a large amount for that time period, and hit 4.2% off in this week in 2007. Last week the first wave of quarterly corporate earnings reports arrived stronger than expected, and investors were further soothed on the economic crisis and the Dow gained 7.3% alone last week, it's biggest since March. It should be noted that even lackluster earnings were "ignored" and that only 11% of major companies have reported so far. But, 71% of those quarterly reports that have been issued have beaten analysts expectations.

This is conflicting news. Unemployment is rising. Savings is going up. People are spending less. Yet again we've seen a market take meteoric rises, and typically slow consolidations, and "events" seem to trigger whipsaw.

This is why we have been saying the higher the market had gone last week, and now, the deeper the potential decline. If the market can absorb good gains in a more normal fashion, see quarterly's that are not so stellar, or begin to wonder "why all is so good when it is not" then consolidation can be healthy.

For example, GE's profits fell 49% as the recession took its toll on its industrial businesses and its struggling finance unit. Citi and Bank of America had second quarter profits on hefty one time gains, and it's Floyd's bet that we will soon mounting credit card losses from banks, despite the rape of America with rising fees to return them to profitability, with our money.

You really can't make this stuff up. And the market gains on rising hope. CIT, as the example, in is process of obtaining debt refinancing from its bondholders, and this triggered the early morning rise. Imagine, a bank close to bankruptcy buys some "time", and it's good news :)

And from our Floydian Blog at www.bluechipoptions.com:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHcr2O3tkOCo

1. The obvious will show that "things are improving.".
2. The market may take this as "the real estate market is gaining ground."

Oops. One in every two homes being sold in the U.S. is sold out of foreclosure.
Skews those "happy facts" a bit, doesn't it.

The Floydian Lesson: Read information, but do not believe interpretation.

In fact, within the euphoria, answer:

1. Record Foreclosures
2. Record Chapter 11 Filings
3. Record Unemployment - not that BS the Gubermit puts out.
4. Record expanse of the money Supply
5. Record Price declines in Housing
6. Record Insider Selling
7. Record low volumes in NYSE trading for Retail - not Black Box Goldman
8. Record Secondary Equity Offerings
9. Record FED and Gubermit false dating of statistics.

You really can't make this stuff up :)
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So, with all this: the S &P 500 hit new highs, and the market hit theoretical Dow tops of 8895, at our top, and lows of 8705. We project below Dow moves possible to just under 9000, but see the market at overbought tops.
Our recommendation for the OXBHM August 465C is an excellent example. It opened at 2.800, moved down to the prior day close at 2.40, and moved up only .60 to highs of 3.00. This is classic sign that an OTM call was not rising in value because the market acted overbought.
We'll list the signal today as "open" for any last minute profits. We are a market led by euphoria. Let's keep taking the profits!