If you read yesterday's post, today's action would have come as no surprise at all. Luckily, I sold my puts promptly shortly after the opening this morning. I wasn't slick enough to buy calls - and shame on me for not doing so - but I'm at least glad to have exited. In the meantime, here's a live Webcam of me waiting for the push upward to exhaust itself.
The Bank for International Settlements (BIS) - a widely respected organization - recently issued a report citing the distinct possibility of not just a recession, but a worldwide economic depression. Here's a snippet from an article about the report:
The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.
This isn't some weird crackpot organization (or a crackpot blog writer). This is a fairly sober group of individuals. Take note.
The $VIX, as expected, absolutely plunged today. I'm not sure - no one is - what the market's reaction to tomorrow's forthcoming GDP report and Fed Announcement is going to be - - but it's possible that all the excess in the $VIX got squeezed out today. For myself, I think I'm going to keep most of the powder dry until well after the Fed announcement, which always throws the market into a bizarre spasm.
I've tried to emphasize in the chart below the pivot points of the Russell 2000. Just to be clear, the fact that today's is circled doesn't necessarily mean I think the buying is over. But it's a help visual aid in any case.
As you probably know by now, the Russell is my favorite index for option purchases. It was especially strong today. At this point, I'd say 840.02 is a good stop-loss level.
The S&P 500 also had a good day for the bulls. I've drawn the downward-sloping pennant that I believe is confining the market action these days.
Now it just wouldn't feel right if I didn't offer my JCP chart of the day. One reader commented I should get out of those puts. Well, earlier today, I did. I don't think the fall has exhausted itself, but I'd rather take profits now and re-enter the puts after a retracement. If this stock pushes its way back to the neckline, I'm going in big-time again.
I'm long Micron (MU) now. It won't be a long-term hold, I don't think. But this is a nice little bullish chart for now.
Let's enjoy a little George. See you tomorrow.