Happy Days Are Here Again

Happy Days are here again.

-OXBJN OEX.X OCT 2009 470.0000 CALL we bought at 12.78 last week, and sold to highs of 16.20 by 3 p.m. on Monday, for a great start to the week.
We had issued new Dow projections showing a 9679 resistance, and twittered out new Dow calculations at 11 a.m. that showed R2 at 9619, and r3 and 9649. Astute traders saw our new calculations, and the upsurge, and most held right to our high market sell at r2.

A comment from a subscriber: Wow these ITM calls really move in price. I bought 4 contracts last week as close to 9376 as I could get for 11.50. Sold today - limit order while I was in a meeting for 16.00. I am still sitting on some losing OTM calls. They only moved a few cents today while the ITM calls moved a couple dollars. I think I saw a lesson in this one. I am assuming we went with the ITM call for the price movement since we were at a turn around point in the market. I see how we can profit on the movement without waiting for bias to increase prices on the OTM issues. Is that a fair observation?" Floydian comment: ITM works very well in tight ranges, ATM at other times, and OTM can be hugely lucrative for less risk at certain times. This was one of those times for an ITM call!


However, everything is NOT good, and the market upsurge may have been an exhaustive gap up, with a potential downside to surprise us all. There's enough talk about it, and there should be:


First, some information:

1. Treasury Yields Drop to Lowest Since May as Recovery Falters

http://www.bloomberg.com/apps/news?pid=email_en&sid=abdGwSy.WPGI

2.This was in Bloomberg on Sunday, showing the "hope of investors":
http://www.marketwatch.com/story/us-stocks-await-the-earnings-cavalry-2009-10-03

3. This may soon become Floyd's favorite quote of misinformation:

· “The DIF (Deposit Insurance Fund) balance going negative doesn’t mean we’ve run out of money”, said FDIC Chairman Sheila Barr told reporters last week. Of course, one might wonder why this would be said when the FDIC is asking the FED to fund it, and that the protection of our bank deposits now may require this. Think long term. The failure of banks began many years ago; we are now just paying for our own GREED and lack of oversight.
4. · Historically MACD gives strong buy signals at this time of year, and many option and stock services use this as a “buy signal”. My comment on MACD, which I do watch at this time of year, is that there appears to suddenly be a loss of momentum. Follow this on daily and weekly charts to see the differance, and remember it means different things to us as short-term traders vs. those that are watching MACD also for buy signals. We only track MACD, and use PnF charts for all of our final decisions.

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Next, I will cry for and with you:

This is so sad. My favorite journalist, Matt Taibbi, writes another scathing article for Rolling Stone Magazine, the third to gain world wide attention as he exposes the Wall Street that collapsed.
Wall Street's Naked Swindle

A scheme to sell fake stocks helped kill Bear Sterns and Lehman Brothers — exposing the counterfeit nature of our entire economy. By Matt Taibbi
Find this article today on the web. Taibbi correctly exposes how the game has been played, and sadly shows us how there are so many regulating bodies that none have been organized to solve the situation.
I find Taibbi a frightening journalist. His facts have been checked, he gains much national TV interview exposure, but continues to work for Rolling Stone Magazine vs. a top news organization, because he will "not be muzzled".

Here he is on YouTube: http://www.youtube.com/watch?v=OqZUbe9KIMs

It leaves me naked, with no weapons, and an army advancing. I'm disgusted, discouraged, saddened for society, and angry.


5. Roubini Says Stocks Have Risen ‘Too Much, Too Soon, Too Fast’

Oct. 4 (Bloomberg) -- New York University Professor Nouriel Roubini, who accurately predicted the financial crisis, said stock and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors.

“Markets have gone up too much, too soon, too fast,” Roubini said in an interview in Istanbul yesterday. “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U- shaped. That might be in the fourth quarter or the first quarter of next year.”

Stocks have surged around the world in the past six months as evidence mounts that the economy is emerging from its deepest recession since the 1930s. The Standard & Poor’s 500 Index has soared 51 percent from a 12-year low in March while Europe’s Dow Jones Stoxx 600 is up 48 percent. The euphoria contrasts with the cautious tone of Group of Seven policy makers, who said after their meeting in Istanbul yesterday that prospects for growth “remain fragile.”

“The real economy is barely recovering while markets are going this way,” Roubini said. If growth doesn’t rebound rapidly, “eventually markets are going to flatten out and correct to valuations that are justified. I see a growing gap between what markets are doing and the weaker real economic activities.”

‘Anemic’ Recovery

The International Monetary Fund predicts the global economy will expand 3.1 percent in 2010, led by growth in Asia, after a 1.1 percent contraction this year. That is still “anemic” and “very weak,” Roubini said.

U.S. stocks fell last week after manufacturing expanded less than anticipated and unemployment climbed to a 26-year high, fueling concern the economy is rebounding more slowly than forecast.

Gains in the S&P 500 have pushed valuations in the index to more than 19 times reported operating profits from the past year, data compiled by Bloomberg show. That’s near the most expensive level since 2004.

The performance of the U.S. economy is probably more sluggish than reflected in stock markets, risking a correction in equities, Nobel Prize-winning economist Michael Spence said last month. U.S. stock-market investors have “over processed” the stabilization of growth in the world’s largest economy, Spence said.

Creating Bubbles

The global equity rally has added about $20.1 trillion to the value of stocks worldwide since this year’s low on March 9. Governments have poured about $2 trillion of stimulus into the global economy while central banks have cut interest rates to close to zero in efforts to revive growth.

“In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets,” Roubini said. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability.”