3:41pm
Sellers just won’t show up ahead of options ex. Stay tuned for today’s video.
3:23pm
Market consolidating on its 50MA (1289.70).
2:47pm
Covered long. Playing SKF.
2:23pm
Watch out for potential head and shoulders pattern. Neckline around 1292.50. I will cover my long and get short on a break of the neckline. Crude oil rallying above 115, still down $1 on the day.
2:18pm
Earnings after the close A, JWN and KSS may report. Tomorrow before the open, we see ANF, JCP and NWY.
2:14pm
July Global Junk bond default rate at 1.79% v 1.44% in June. US at 2.37% v 1.92% in June. 15 minutes left in energy pit trading.
1:47pm
Be careful if the selling picks up here. This is options ex and anything is possible. XLF still does not look healthy. Cannot seem to break resistance around 21.10. I still like the market through today and tomorrow, but things could get volatile.
1:36pm
ES pulling back into its 20 MA (1294) on light volume.
12:05am
Oil and nat gas at fresh session lows. Nat gas at a fresh 6-month low, negating yesterday’s rally attempt.
11:09am
Natural gas is getting slammed with the UNG down 3.5%. The ES continues to rally, at fresh session highs. Let your longs run.
10:36am
Nat gas inventory: +50bcf
In line with expectations. UNG is moving lower on the announcement.
Meanwhile, the ES is rallying to session highs at 1290. It just tore through the 50 and 200 moving averages and probably needs to consolidate a bit.
10:23am
ES approaching 50MA (1285.75) and 200MA (1286). These levels should provide resistance.
10:20am
15 minutes until the EIA natural gas inventories.
Consensus Estimate Range: +50 to +55 bcf
10:10am
20MA serving as resistance, possible topping candle. Scalpers may want to cover SSO (L).
10:08am
ES rallying here into its 20MA (1283.66). The 50MA and 200MA are above around 1286.
9:30am
As the market comes into its ascending trendline, it may be worth taking an SSO (L) with a tight stop. But if we break, reverse the position.
9:26am
By the way, Wal-Mart beat earnings estimates and raised FY08 guidance.
9:18am
Here’s an informative chart breaking down CPI. (click image to enlarge)
8:48am
The ascending trendline sits around 1276.
8:39am
ES down 6 points to 1278.50 after hotter than expected CPI data. CPI is up 5.6% y/y. Jobless claims were also worse than expected, again. (click image to enlarge).
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August 14th, 2008 at 9:08 am
This is a good short article about the scope of the US foreclosure problem. It puts a perspective as to the size of it, and the areas where it is most prevalant.
http://biz.yahoo.com/ap/080814/foreclosure_rates.html
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August 14th, 2008 at 9:15 am
CPI data- Gasoline - I believe the average price of gasoline has declined for nearly 30 consecutive days. While inflation in food prices will take longer to be impacted by decreasing fuel costs, the fuel and food aspect of the inflation indicator should begin to drop off considerably in the next few reports. Other sectors of the CPI will begin to feel the repreive from lower fuel as it works its way through the supply chain.
Oil is the leading indicator.
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August 14th, 2008 at 9:19 am
Craig, are you looking to enter a SSO trade if we get down around 1276 in early trading this am?
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August 14th, 2008 at 9:24 am
MIchael, I agree with you on the CPI data. It’s old news republished. This data should improve now that commodity prices across the board have fallen sharply.
Thai, I’m about ready to take an SSO (L) position right here with a tight stop.
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August 14th, 2008 at 9:57 am
Craig - for newbies, can you elaborate how you trade the SSO and what kind of stops you put in typically.
Have been an avid follower and appreciate all the great work you do here !!
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August 14th, 2008 at 10:07 am
Thanks, Anjali.
I picked up some SSO when the ES fell very close to the ascending trendline, around 1276. I don’t enter actual stop loss orders. I use mental stops. I would have covered on a break below the trendline. During options expiration, I keep my stops even tighter than usual. For instance, on a non-options ex week, I may have given the trade extra cushion in case the break of the trendline was a fakeout, but not on options ex. Only enter trades where you have a clear and near exit point. Does that help?
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August 14th, 2008 at 10:16 am
After the possible topping candle, I have my finger on the sell button ready to take profits it case of a reversal.
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August 14th, 2008 at 10:31 am
Yes - makes sense … so even for mental / actual stop loss … is there a number that you suggest … I have heard 7% - 10 % - what do you typically keep.
Also, what does that become during option ex ?
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August 14th, 2008 at 10:53 am
7-10% may be appropriate for investors (IBD approach), but is way too high for traders. I don’t have any specific rules for % loss, but I would estimate that I cut day trades at 0.5% and swing trades at 1%. I take a lot of small losses (or at least I try to). This requires getting in at great entry levels where a stop point is easily defined and nearby.
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August 14th, 2008 at 11:07 am
Anjali -
Hi,
As to where to set your stop. If you are an active trader, use mental stops vs. an actual trailing stop or a stop loss as often as possible. In the case of a trailing stop, unless you have had a significant move upwards, or a climax rally giving you an outsized gain, trailing stops will only give back some of your hard earned profits. If you want to sell, then sell.
As for stop losses- they are best used under levels of support on a given chart. The percentage depends upon the chart, the volatility, and the traders risk/reward tolerance for the trade. 7-10% to the downside is very high for an active trader. That would be more of an investor strategy. The other aspect is how to spread your bets, and what size denomination of your bank roll are you using with every bet. That’s really the key.
Example. We currently have an ascending trend line of support on the SP500. If you are bullish, you might set your stop loss maybe 0.5% -1% points below that line, and if it continues to rise, (if you expect it to), you can adjust it higher as the trendline advances upwards. That’s a simple defensive strategy.
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August 14th, 2008 at 11:22 am
This is good … thanks a lot Craig and Michael
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August 14th, 2008 at 11:27 am
topping tails on xlf valid to anyone?
retesting spy trendline?
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August 14th, 2008 at 11:28 am
Hi Craig, Today’s news are very negative. However, we still see a decent rally. Do you think this rally would be sustainable towards the close of this session?
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August 14th, 2008 at 11:30 am
Question for the board - Just curious… does anyone invest/trade/follow FCX. Do you think we will see 100 again?
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August 14th, 2008 at 11:31 am
Sal and Jack, I would not fight the trend. Bulls are in control. All the puts will expire worthless. Sellers likely on hold until next week.
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August 14th, 2008 at 11:33 am
good advice Craig, dont want to be stubborn headed
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August 14th, 2008 at 11:48 am
Re: XLF and SKF:
I sold 1/5th of my SKF at 125.4 and got back in at 122.2 when XLF started retreating at 21.05
21.05 level is now resistance for XLF?
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August 14th, 2008 at 12:19 pm
I agree with Craig. Put or calls have to expire worthless. We don’t even need to question today’s advance after headlines like this:
http://biz.yahoo.com/ap/080814/foreclosure_rates.html
http://biz.yahoo.com/ap/080814/economy.html
http://biz.yahoo.com/cnnm/080814/081408_quarter_three_home_prices.html
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August 14th, 2008 at 12:25 pm
In case we’ll have tomorrow a rally - I will load up on all possible short funds options. It will be just perfect if USO would touch its 50 mov. and we touch main resistance. On sidelines for now.
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August 14th, 2008 at 12:28 pm
UNG starts to look very appealing now, but because USO didn’t finish with short term downside - waiting.
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August 14th, 2008 at 12:33 pm
Oil and nat gas are also being held down by options ex. All the commodity funds that are being forced to liquidate positions due to margin calls will not get any reprieve from the oil and nat gas call options they are holding onto.
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August 14th, 2008 at 12:51 pm
Craig, do you think FCX can bounce back to 100
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August 14th, 2008 at 1:00 pm
Gold has retreated to ~ 810 all the way to its Dec 07 base where it began its run up to 1000+
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August 14th, 2008 at 1:02 pm
Not sure. I know it is best of breed metals play. I do expect a bounce in commodity names over the next month, which should push FCX to 100. The stock has declining 50 and 200 moving averages, which is bearish, but a bounce into the necktie around 100 seems very possible,
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August 14th, 2008 at 1:04 pm
The volume is gold is huge today. Could be a short-term bottom.
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August 14th, 2008 at 1:11 pm
I think the same thing about Gold which is related to my FCX question. The fall in gold has been huge and is at support right here. I own FCX at ~40 as a long term capital gain. I want to short it ‘against the box’ at ~100, because I think there will be a technical pop in both gold and commodities after this week that should get FCX to 100. From there I think it goes down, it would fulfill an easy potential MA mattern on the 2 year if the stock runs back to ~100 and then proceeds to retrace. I would then have to cover my short before Jan 30, 09′ to not be considered a constructive sale on my long term long hold.
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August 14th, 2008 at 1:26 pm
Excessive printing by the Feds today may be the reason for today’s strength.
News via Yahoo boards: 198.8 billion (I didn’t verify the total, but it seems accurate) was injected today. The market is up only 140 DOW points and 11 S&P Points so far.
http://www.newyorkfed.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUE
Is somebody in big trouble again? Me thinks that tomorrow we could hear that a couple of banks are shutting down. Today’s money pump by the Feds may be trying to give some cushion to the blow. Pure speculation on my part, of course.
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August 14th, 2008 at 2:57 pm
The Treasury Dept is allowing financial firms to ‘move their risk to Freddie and Fannie’ - in other words to the tax payers.
http://www.cnbc.com/id/15840232?video=824006447&play=1
RIP, Free Markets (if you ever existed).
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August 14th, 2008 at 2:58 pm
Its up in the air but i believe it all comes down to the retailers earnings. Im personally looking for a move to the upside to I can buy some puts, once spy hits 132, and we have a breakdown next week, and then test the july 15th bottom.
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August 14th, 2008 at 3:00 pm
Technical Analysis continues to amaze me.
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August 14th, 2008 at 3:35 pm
What a crazy day!
I god killed most of the day, but ended up with a decent gain.
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August 14th, 2008 at 3:52 pm
new to your site! i as wondering what your thoughts might be on the Qs?…
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August 14th, 2008 at 3:56 pm
Craig, are you going short because the XLF looks that weak? With low volume consolidation? (If that’s what you’d call the afternoon trading cession)
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August 14th, 2008 at 3:57 pm
August,
I like the Qs, but need to see a pullback. They are too extended for a new position. Sellers might show up early next week.
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August 14th, 2008 at 3:59 pm
Marc, I’m out of SKF. It just put it on for a day trade on a break of the head and shoulders. I think financials hold up through tomorrow, but the chart is not screaming buy. I think XLF will continue to frustrate both bulls and bears. 21.10 is resistance on XLF. A break above that level and we could see 22.50 tomorrow.
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