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Random Thoughts: Expiration, Nationalization, and Realization


Tying together our five-session set.

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

Late yesterday, while trying to get out of my own way, I offered the following vibes on the Buzz & Banter:

The bears have to be frustrated with the price action into the bell as they had every opportunity to make a statement today. As it stands, the banks held their trendline, and the tech tape shouldered a shellacking in Apple (AAPL). We're not out of the woods -- note the analogy -- but in terms of a snapshot, it most certainly could have been worse.

I'm in a race against the bell to get this out so excuse the brevity; in terms of my positioning, I'm long some Banco Santandar (STD), LinkedIn (LNKD) (with a stop below $100), and my house-money Research in Motion (RIMM) September paper. Against that, I've got my S&P downside exposure (I pared some today) and my underneath puts in the Nasdaq. Net/net, I'm leaning short but more balanced than I was this morning.

On cue, the tape opened this morning with a better tenor as individual April options expired (April index options will do the same this afternoon). While those expiration influences will be in play today -- look for "pins" to strike prices when open interest is outsized relative to average daily volume -- our primary tells remain much the same. In short, note the BKX trend-line and the price action in Apple.

What we can't and won't see is the perception of further stimulus, with China serving as the latest whisper. It's funny in a not-so-funny way; free-market capitalism is looking to communist China as a next savior of the system. Just when we thought we'd seen everything, we realize we ain't seen nothing yet!

Random Thoughts:
  • Sacre Bleu! The French elections are this weekend and before you say, "Oui, oui," understand that Socialist Francois Hollande is currently leading conservative Nicolas Sarkozy in the polls.
  • Monsieur Hollande is in favor of higher taxes rather than public spending cuts, which could lead to higher French bond yields and potentially disrupt financial markets.
  • The tape is the moth and S&P 1379 (the 50-day) is the flame.
  • Do you think policymakers understand that you can't solve a problem by doing more of the same things that created the problem in the first place?
  • It's been a barn burner of a week on a number of fronts so I'm gonna tie this up, hop over to the Buzz, and spend the rest of the day figuring out the financial markets in real-time. Have a great weekend, Minyans; you've most certainly earned it!

Twitter: @todd_harrison

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Position in LNKD, STD, SPX, NDX, RIMM
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