Tuesday
Aug 25, 2015
1-855-RWT-0008
Prepared by the good people at Random Walk, LLC. (and Scott)
Great Morning!
Closing Prices From Yesterday
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Call the office for assistance!
Today’s Number(s)
Yesterday and Today
Yesterday
1,000 Points Were Cut Last Week – 1,100 Cut on Open
It was one of the craziest days I have seen, but not the craziest. (the Russian Coup would be the craziest). The Dow opened down roughly 1,100points on the open, though it is hard to tell given the spastic and amateur-like manner in which brokerage firms and computers handled the situation. And it is not like they were not given some foreshadowing to get ready for their “A” game.
Wednesday the market declined 1% (after being up on the day) after Janet Yellen did her “Mighty Oz” in her written statement that should be studied and Kellogg (Northwestern) and Wharton.
Thursday we were down 2% after the rest of the traders realized what she said, China continued its fall, and oil continued its decline.
Friday we were down 3% after the fissure in the wall became evident, end of the week wanting to go home without risk, and oil nearing $40 a barrel. Oh, and China again.
Monday we were down 4%, 5% on the open. Oil fell to the $37 and change level. China was down 8.4%. Still no word from the Mighty Oz or The Golfing President. Obama was too busy golfing and Janet Yellen feeding her cats to notice we have given up 11% in 4 days and S&P futures were limit down on the open. I remember 1987 when Ronald Reagan found it prudent to turn off old John Wayne reruns and address the nation.
You see, Ronald Reagan was bright enough to know that you don’t need leadership, rather just the appearance of a “wise old man” controlling things – not playing golf, forcing politicians to sign off on the worst deal America has EVER made (Iran nuclear deal), etc.
But I have HOPE so I sent POT students home long deltas for the first time in 3 days. I have HOPE that China’s leaders are brighter than ours and will do something to stave off the selling.
Below you see the linear progression of the selling since last Wednesday’s Fed meeting. You know the meeting. The one where MOST of the requirements for a hike were NOT met, but they almost hiked (despite their own requirements). “Hey Moe…give me a 1/4%”
THE DAY IN REVIEW
OPEN
The markets opened with the S-minis limit down 101.5 points, and then the limit was removed so we sailed lower. How much lower we sailed is hard to say but I saw a down -136 print. The Dow supposedly opened down 1,100 points but I only saw -1,000. Things were moving fast. Stocks were getting hit in the head.
AAPL
Minutes before the open I saw a 98 and 101 bid for shares of AAPL. I was horrified, shocked and confused to see a $92 print on the open. Only a computer program can do that, which is why we had a “flash crash” and prints like that.
30 Minutes Later
About 30 minutes later we were down only -500. Shortly after that we were down -400 and then -300. From there were had a slow and gradual climb to where the Dow was down only about 90 points and it looked like we might go positive on the day.
1:00pm
The Down -90 points occurred at about 1:00pm, and then reversed. It went from down -90 to down 200 in a few minutes, but that was a relief as we had been use to hopping through 100 point increments in seconds, not minutes.
Close
Near the lose Oil was at $38 and bonds were unchanged, meaning the flight to safety was going on in places other than bonds. Futures then fell from -60 to -86 leading into the close. After ash closed we sailed down further in last minute liquidation and panic, with futures down 101 and the Dow down 588 points, one point more (for good measure) than the 1987 crash. The VIX closed at 40%!
TO MAKE MATTERS HORRIBLE (BELOW)
Many popular brokerage firms went down during the day. I know with our POT class I was having more problems than a math book. What should have been a no-brainer, easy, sell puts on the open day turned out to be the most frustrating day I have had in a year.
Link to USA TODAY article above
http://www.usatoday.com/story/money/2015/08/24/investors-report-problems-td-ameritrade-amid-selloff/32258207/
TODAY
I am stupid but not an idiot. I am NOT going to say anything definitely is going to happen on any given day like I did during the GOVERNMENT SHUTDOWN (where when we were down 1000 points leading into the deadline I said “THIS IS A SCREAMING BUY”.
I will say this. This is the first day in 3-4 days I am going home LONG >250 SPX delta equivalents. As I said above, I don’t think Yellen, Obama, Kerry, Clinton or even Trump will say anything to help support the market. I am putting my faith in leaders – not politicians.
I think China is getting a little afraid of their markets falling 8% every single day despite half measures, and will pull out a bazooka. And if one of our politicians do talk up the markets I HOPE they don’t have Yellen prepare the speech. We don’t need another -10% in 4 trading days. A slow steady decline based on news is healthy – not this.
A Separate Update is Coming – OBVIOUSLY
We did a LOT yesterday despite the limitations and confusion. The day would have been confusing because of the market conditions alone, but add to that a platform experiencing problems and it was frustration.
YESTERDAY
We came in LONG some WIDE put spreads that we sold out chunks of. I came in long the 1930-1905 put spread ($25 wide) that some people questioned the intelligence of until we opened at 1867.
Near the close (or what I thought was near the open, near the middle of the day, and then finally near the close) I sold a slightly ITM $35 put spread against the long ITM $25 put spread. This turned the trade into a BWB for a HUGE credit.
I took some of that credit and bought a near ATM call spread 1925-1950 call spread. I also sold out any put spread II saw I was long that was trading for >90% of its maximum value. This flipped our deltas from short to long >250 SPX deltas and growing with the long gamma.
Tomorrow / TODAY we will be MOVING FAST on the open to clean this up. I am hoping for a move higher of greater than >$30 points in the E-minis or 300 Dow points. If so I will include this in the Maui 2016 text coming to a beach near you in January.
POT is held each Wednesday night at 7:00pm eastern.
Contract the office at 1- 855 – RWT – 0008 for more details.
Too True To Be Funny
Like her clients Ashley Madison is going to get screwed.
There is a long list of White House staff and Senators on the client list. You don’t think Ashley Madison is going to survive this, do you?
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Attorney Stuff
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