Happy St. Patty's Day!

Here at The Pub we would like to wish everyone a very happy St. Patrick's Day. Also we would like to encourage everyone to be safe as they indulge in some of the finest vices this world has to offer. The official Pub itinerary for this year's celebration will be as follows:

1) Green Beer
2) Irish Car Bomb
3) Irish Whiskey
4) Rinse and Repeat

Market Wrap- 2008 Week 11

THE TAPE:
DOW: +58 (+o.48%)
S&P: -5 (-0.34%)
NASDAQ: unchanged
RUSSELL: +3 (+0.31%)

THE STORY:

For those of us that trade a primarily directional strategy (puts/calls, longs/shorts), this week was just a big pain in the ass. For those that trade delta neutral strategies (spreads etc.) this week was ideal. The volatility/range this week was enough to make even the most salty of sailors seasick (pardon the alliteration). So what caused all of the volatility? Here it is blow by blow:

Monday was nothing more than a nice continuation of the previous week's selling.

Then Tuesday, ol' Jackass decided to throw another $200 billion (with a b) at the credit market. Here is a snippet from Yahoo! Finance: Wall Street rebounded sharply Tuesday after the Federal Reserve and other central banks said they will pump $200 billion into the financial markets to help ease the strain from the credit crisis. Get this... the government has now thrown over $1 trillion (with a t) at the market since October. I mean holy shit! This and the $500 billion (with a b) war in the Middle East, and we still keep printing money. But I digress. As a result of Jackass and his "benevolence" errrrrr.... stupidity, the market jumped HUGE.

On Wednesday, the mindless buying continued until the Commerce Department reported that the United States' trade deficit grew larger in January to $58.2 billion (with a b). This sobered up the bulls and some very healthy selling ensued.

On Thursday, the selling continued in the 1st hour of trading until the S&P came out with a report that the sub-prime and credit write downs were pretty much over for the large banks and brokers. In short "we are in the clear". This report was met with more buying and the market ended up pretty large.

On Friday we learned that the guys at S&P are real fucking jerks as Bear Stearns and Co. (BSC) admitted that they are in "dire financial straits". Thanks for the Thursday report S&P! The result was a complete reversal of Thursday's buying and the market ended up virtually unchanged for the week.

This is a 5 day chart of the S&P 500 with labels of the play by play:


So you can see a couple things here. 1) We had some unbelievable moves this last week. 2) We ended the week pretty much exactly where we started.

THE WEEK AHEAD: more of the same.

To begin with, it is a short week with the market closed on Good Friday. Also, Thursday is a triple witching. What is triple witching you ask? It is considered a "witching" on days when contracts expire. The "triple" comes in when equity options, index options, and futures expire all on the same day. When this happens there is a historically large amount of volatility that week because market makers are being tight asses on the spreads that they offer, and traders (institutional and retail alike) are running to take profits or to shore up losses.

Monday is St. Patrick's Day which has been an up day 75% of the time. Thursday before Good Friday has been a down day 80% of the time. I could go on and on pulling stats and quotes from the Stock Trader's Almanac to support the idea that this will be another rocky week, but you and I both know that the market is in an area where a decision must be made. Remember that LINE I mentioned last week? There will be a pretty big territorial pissing match between the bulls and bears over that line, and until there is a clear winner, it is going to be wild.

Also, there will be no watch list or charts provided until there is a clear winner of that fight. I would hate to lay a ton of bearish ideas on the line while the market is finding a bottom. Hang on tight this week.

Oh yeah... I almost forgot. Genius does have its rewards.

Phewww!

Last week the sentiment was "what a week". This week could also qualify as "what a week" but with daily doses of asprin and pepto. I will be back in a day or so explaining why this was such a turbulent market week. For this weekend, I really want you to clear the mechanism. And I really do mean it this time. I will be up to the same tomfoolery this weekend as last. Tonight is curling (and the wife has brought some new recruits) with a possible visit to the public house afterward, with a definite 12 years old waiting in the wings. If you got your ass handed to you this week, shake it off and prepare for more of the same next week. I'll be back with more.

Joke of the Week Pt. 2: An Homage to Women

This week's joke supplied by BAC.

Joke of the Week

A woman meets a man at a bar and goes back to his place at the end of the night. When they enter his bedroom, she’s surprised to find that his walls are lined with hundreds of teddy bears of all different sizes.

“Wow,” says the woman. “It’s nice to meet a man who’s so sensitive.”

They proceed to make passionate love, and after finally climaxing, the woman rolls off the guy and asks, “Well, how was it?”

“Terrific,” he replies. “You can take any prize from the bottom shelf.”

Market Wrap- 2008 Week 10

THE TAPE:
DOW: -373 (-3.03%)
S&P: -37 (-2.84%)
NASDAQ: -59 (-2.67)
RUSSELL: -26 (-3.73%)

THE STORY:
I hope everyone took my advice and had a nice relaxing weekend. I'll tell you what... curling is not so much relaxing but a big kick in the ass. I will have more on that in a later post.

I'll be quick.

Last week was exactly what we thought it was going to be. Hopefully, you were on board the short side of the market. I present the S&P:

Given that we still have some downside to go, I have found a few charts that could be interesting in the coming weeks.








And now time for the reality check. On the DOW, we have passed down below the very psychologically important 12k line. However, there is a lot of mess stacked up against us in the form of support. The next chart you will see is a 10 year chart on the DOW. I have drawn in a rather significant line with three points of interest. The first point is the peak of the tech bubble before one of the most magnificent bear markets we have ever had. The second point is the mid year peak in '06 when we failed to break the previous all time high (see point 1). The third point took place about 4 or 5 weeks ago when the world market had a serious breakdown and subsequent recovery all within a 48 hour time frame, a la Jackass and his emergency rate cut.

All this to say, we are drawing ever nearer to that line. In fact, for our short term triangle to be a success, we need to actually BREAK the line. I don't really know what to do about this other than wait. The point right now is awareness. Consider yourself informed.

This week, I would not be surprised if we consolidate a bit to the upside and then head south again. Be patient yet aggressive and kick some ass.

What a Week!

If you were paying attention last week you should have had a ball over the last five days of trading. As always I will be back later on to highlight some of this weeks moves and forecast some more brilliance for you. Until then, my advice is to uncork that bottle of 10 years old and take in a movie. As a trader you need to make sure to clear the mechanism over the weekend no matter what the previous week's results. For me, it is good Chinese, a bottle of Uigeadail (review pending), good friends, and curling. See you soon.

Joke of the Week

A Florida senior citizen drove his brand new Corvette convertible out of the dealership. Taking off down the road, he pushed it to 80 mph, enjoying the wind blowing through what little hair he had left.

'Amazing,' he thought as he flew down I-75, pushing the pedal even more. Looking in his rear view mirror, he saw the state trooper behind him, blue lights flashing and siren blaring.

He floored it to 100 mph, then 110, then 120. Suddenly he thought, 'What am I doing? I'm too old for this,' and pulled over to await the trooper's arrival.

Pulling in behind him, the trooper walked up to the Corvette, looked at his watch and said, 'Sir, my shift ends in 30 minutes. Today is Friday. If you can give me a reason for speeding that I've never heard before, I'll let you go.'

The old gentleman paused then said, 'Three years ago, my wife ran off with a Florida State Trooper. I thought you were bringing her back.'

'Have a good day, Sir,' replied the trooper.

This weeks joke supplied by BRS

Market Wrap Addendum

Here are a few items on my watch list for the week:

Bulls: GOLD, GLD, DBA, CF, POT
Bears: APH, WBD, RGA, GVA, FFH, FLIR

If you have any questions let me know. This week is going to kick some serious ass. Don't miss out.

Market Wrap- 2008 Week 9

THE TAPE:
DOW: -115 (-0.94%)
S&P: -23 (-1.65%)
NASDAQ: -32 (-1.36%)
RUSSELL: -9 (-1.28%)

THE STORY:

Every economic announcement that was released reflected what we already know: bad things. Ol' Jackass talked to congress for a while and pretty much told them what I have already told you... another 50 basis points in March. All you homeowners (if you have equitable room) may want to think about refinancing this summer. We probably have 2 more cuts coming after this one. He also talked about stagflation worries... which we also already knew. Oil broke $100, commodities are through the roof, and gold is up to $975. The problem comes in when I say those prices are going up and the value of the $$$$ continues to fall.


The GREAT news is that we know how to profit when everyone else is miserable, and we have what appears to be some pretty clear direction. The triangles I have been talking about for the last couple of weeks are becoming decisive. Take a look at two time frames on the S&P:

Also, take a look at LM. We have talked about this one for a least a month now. Talk about a clear break...
Feel free to jump on that train any time. It could take a while, I am looking at about a $47 price target on this one, which matches up with lows from 2004. Happy selling (or buying puts) this next week(s). Take a look at last weeks watch lists for some bearish ideas. A relatively low cost, semi-conservative play would be on the index ETFs. Those are QQQQ, DIA, SPY, and IWM.

Manage risk. That is all that matters.