Wednesday, July 18, 2007

Red Rubber Ball

It was an interesting day on the market. Non-amazing earnings from YHOO and INTC, coupled with the continuing problems at Bear Stearns with their hedge funds, took the Dow down about 130 points or so. Looking at the 60 day intraday minute bar graph, I thought that was about all that was going to squeezed out of the market for the day, so I sold all my index puts.

This doesn't always work........back on February 27th, I also sold my puts at what I thought was the bottom, when the Dow was down about 130 - - and it continued to fall hundreds more points.

The only honest-to-goodness bear market right now is anything to do with residential real estate. It's a slow death.


After the close today, IBM reported good earnings, and the after-hours market is up a little. At this point, it's simple a question of whether we shake off the worry and truly blast through 14,000, or if the weakness will get us down to at least that breakout point from last week.


The intraday of the Russell 2000 shows how nicely we swooned and then recovered up to what is a pretty substantial point of resistance. Falling today was easy. Pushing through this resistance area will be tougher.


Much the same can be said of the S&P 500. This longer-term graph shows the small rounded top, the fall, and the recovery.


I'm staying away from the Gold and Silver index ($XAU). I'm not sure what it's going to do next. But it has clearly made the (former) long-lasting channel irrelevant.


Longs might want to consider CCJ. It seems to be bullish and is done with its retracement.


Although residential real estate is getting thrashed, these problems seem to just be starting in the commercial real estate world. Maybe there's an opportunity to short these and enjoy a spill similar to what we're seeing now in residential real estate.


I don't think I'm going to take a position in Union Pacific (UNP), but this is an awfully terrific looking shooting star candlestick.

38 comments:

JakeGint said...

Aw shoot, ah thought Tuna Can got eaten by a Michigan bahr.

Tim Knight said...

*Boom!* Comment destroyed.

newequity said...

what comment?

Tim Knight said...

The TTT advertisement.

Andrew755 said...

Man, what a screw job on the market today.... they waited until the last 20 mins of the day to run it back up. Unbelievable.

I have no clue what happens for the rest of the week, but I wont be doing much, with it being an expiration week.

JakeGint said...

Great, now I look crazy.

(At least I don't have the grinning vampire eyes, though)

Winace said...

Tim,
Ok don't know quite where to start with questions. First off, your option trading strategy is quite interesting and "against" most traditional options trading strategies. Do you ever play spreads, condors, butterflies, etc? Are you always directional? How far out, expirations, do you typically buy? What is your average hold time? Do you take theta in account? Do you consider delta neutral trading or an overall portfolio delta neutral strategies? You state this is a hobby, so I am assuming you are not glued to the chart day in day out. Do you use contingeant stops? I've been watching IWM all day and I know you didn't see the turn on a daily chart. After narrowing down a trade opportunity with daily charts, what time frames are you watching? 30-10-3 day? Do you use the underlying security price for your stops? Typically what percentage? What delta range do you typically purchase? Do you buy ATM and Sell ITM? Or buy ITM and sell deeper ITM? I know, a lot of questions, but at least I bought yur book! One last one, at least for now. What is your reasoning for working a day job? I know your commitment and confidence is there. What gives on that one? Just something to do? By the way, if you do work a day jon, just what exactly is it?

newequity said...

Winace,
You do know that spreads, condors, butterflies, etc are all just a fancy way of ripping you off, right. How do you play options? I play options just like Tim does. You have been reading to many guru books on options trading.

Winace said...

Pretty much buy calls, buy puts. Nothing fancy typically, a spread here and there, depending on volatility. Advanced strategies can alter deltas though, of couse at an increase in commisions.

Tim Knight said...

For once newequity and I agree.

I just buy puts and calls. Plain as that.

As for my day job - good grief, my profile is right here on the page!

newequity said...

True enough winace. I stick to buying itm/atm calls and puts with little time premium and use IB so its only 75c a contract.

Winace said...

Do you guys play a protfolio delta neutral? An even amount of calls and puts to minimize market effect and maximize the movement of the underlying security?

Winace said...

My bad for overlooking the profile.

JGilly said...

Hi Tim,

Thanks for your commentary, I enjoy reading blogs with differing views on the market. I was very bearish about a week ago, but have changed my ways big time.

My question is do you think it's worth shorting a market that is in the "Presidential Cycle."

Historically, these years are very very good. Bush is good at one thing, and that's making rich people even more rich. Just an observation. I would be interested in hearing your view.

Market Speculator said...

I'd like to see Jim Cramer and Tim in the same room discussing the market. That is must see TV...

(not saying Tim has "beef" with Jim Cramer, just would fun to be involved)

The EOD action was quite strong. The longer this bull goes the harder this will fall.

Tim Knight said...

"My question is do you think it's worth shorting a market that is in the "Presidential Cycle." "

Couldn't care less. It's just not part of my analysis.

beanie11111 said...

market speculator,

you kiddin man? Cramer is a shark, and Tim is the goldfish.

I make fun of Cramer all the time, but i would never go against the shark on a death match.

Leisa said...

The Street.com has Rev Shark and Jim Cramer in conversation (not a Thunderball death round). It's worth checking out.

Toshi, thanks for your continuing your posts despite the goofball antagonists that show up in various guises. Not that I think that there is anything wrong with having a different point of view, but sweet Jesus on a biscuit (I'm still laughing at that one from you) why can there not be more intelligently plied debate. I suppose that it's summer time and tomatoes are plentiful; accordingly they are thrown with abandon.

Market Speculator said...

I bet Tim could hold his own against Cramer, just because he is bearish doesn't mean he is weak.

I hope all you bulls are paying attention to how Tim the Bear is trading in a bull...small and takes profits really quickly. That is how a bull should trade in a bear...cut losses small and do not leave capital hanging to be wiped away...especially when you are trading against the current.

Market Speculator said...

I really wish Tim could have a graphic showing him blowing up TTT's comment.

Fear And Greed said...

Cramer trades on fundamentals. Tim trades charts. Not even the same world. Cramer is a pump and dumper. Tim just shows you the charts. YOU decide.

JakeGint said...

Spec:

Why trade against the current?

Tim Knight said...

"I really wish Tim could have a graphic showing him blowing up TTT's comment."

I noticed that shortly after I deleted the ad, he put up another post chastising me for..........what else?.........not being a bull.

Clever chap.

newequity said...

TTT is nothing more than a scam artist trying to use your site to gain subscribers. We all know he is lying.

Fear And Greed said...

Newequity... I was wondering why, if you're buying opts, that you don't buy the time. Seems doing it your way that time (theta) works against you, unless you're day trading.

Chris said...

SunPower Swings to 2Q Loss on Costs

Solar Power is over hyped and over bought. Ticker SPWR. What say you now Bean Bag.

sam said...

My guess is we end in the red today. Sammy.

JakeGint said...

I'm thinking perhaps we change the comment label to a more veritable title:

Inciteful Comments!

beanie11111 said...

CLWR blowin thru the roof! How undervalue is this stock now? lol

APA breakout above 88!

RIMM new highs!

Shorts devastated once again...

good luck.

beanie11111 said...

chris,

silly boy. Couldn't even take SPWR down 10%. Just a minor blip. Did you even look how much revenue they made?????!!!!

Solar stocks are way too cheap relative to 2009.

beanie11111 said...

GOOG announces tonite. Shorts had better prey they don't impress.

beanie11111 said...

APA is as sweet as candy. You gettin it at breakout 88. What more can you ask for? The option calls are for you!

beanie11111 said...

Don't hurt yourselves shorting here.

Buy them APA !!!!!!!!!!!

beanie11111 said...

SPWR got nailed mostly because they offer 2.5 million shares.

Silly boy Chris, let me give ya this:

' Revenue for the quarter rose to $174 million from $55 million.'

small loss of 5 million. Probably due to opening up all these factories that's churing out major solar panels for you and i.

SPWR is too cheap and is a great great buy right here right now!

cantdrive55 said...

Change the comment label from...
'Insightful Comments' to 'Beanie's Comments' !

Tim Knight said...

Beano wrote:

...Shorts had better prey...

We always prey, Beano. It's our nature.

Or maybe you are just spelling-challenged.

beanie11111 said...

breakout APA on fire!!!!

newequity said...

Beanie chill out with the comments. You average over five a day now.