4/24/2014 Afternoon Tea

Recap: Today was all about Apple. Nothing else mattered. Furthermore, if it weren't for Apple then markets could have been down hard. The headlines from Ukraine were terrible. T. This tomorrow may bring about heavy selling into the weekend. Last week we were saved by some gentle talks last minute from politicians. They will need to repeat it tomorrow. There is a good chance that tomorrow we will have a pressured set of futures.

More specific:

  • Geo-political headlines: Yesterday I said that markets are still ignoring the scary headlines although locally the situation is getting worse in Ukraine. Now it's getting real. I am reading of deaths. Markets listened today. Also the West is ratcheting up the rhetoric; the phone calls for solution-seeking meetings were canceled. This is scary stuff. I feel like it's an accident happening in slow motion yet no one is hitting the breaks.
  • The VIX: gained a little but had spiked 5% early in the day. VIX calls still outnumber puts by a large margin =traders remain cautious.
  • SPX: Still not chasing the SPX and the resistance level that we noted in the pre-open note held. Click here for my detailed thoughts on this from earlier this week.
  • Options make up: more calls than puts in most names that I checked = signs of optimism. 'cautiously optimistic' since markets still buying VIX calls too. Note that Netflix puts outnumbered calls today. I also see bad things lining up for the stock price (will post).
  • MOMOs: super green Tuesday, then turned into bloodbath Wednesday, followed by a 'meh' Thursday. Book profits where ever you have. Meaning don't overstay your welcome in winning trades.
  • The Apple Rabbit: BAM. Enough said. I cashed in my lotto calls then bought lotto puts at the open spike. Then within minutes I closed them for a quick double. Now I will let it settle before setting a longer term trade in Apple. I still don't know where the growth will come from. All I've seen is stock price specific and NOT fundamental game changers in the thesis.
  • Google: Though it relatively underperformed the NDX, I am still happy to see markets NOT treating it like a MOMO. Again the GOOG performed in stride with GOOGL. I think traders are coming around to what I expected.
  • IBM: Yesterday I said: '2 Dojis back to back = market indecision. This tells me that there should be a good move coming. I still may reload my puts.' Today the candle is worse. Again had I noticed it mid day I would have reloaded the puts. Someone poke me tomorrow so I can revisit it during market hours :-)
  • The 10-year: Though it closed green, it was a terrible day as it lost a +1.65% lead from the pre-open. Caution.
  • TLT: Here too the actual percentage up doesn't tell the story. It started the day from a whole then chugged up all day and closed strong. Caution. Just look at the 180day range. This has been a stock market crippler.
  • The YEN: We are now in the middle of my danger zone for the past 180days. Here is a visual

Caution is still warranted especially that traders are likely to sell going into the weekend with headlines looming. We need anything sign of de-escalation. Else, tomorrow might be a tough day.

Nic.

Teaching traders make money from a relatively safe distance: Create Income with Options Spreads, a large community of Options Traders looking to create extra income by trading credit spreads. For just about the cost of a cup of coffee per day, you can get all the benefits of the CIWOS subscription, including analysis, alerts, trade recommendations, chats & video updates.

Posted to Create Income with Options … on Apr 24, 2014 — 5:04 PM

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