Monday
September 21, 2015
1-855-RWT-0008
NEWS: Fed left rates unchanged
Sept 30th is the expected government shutdown
“A pessimist sees the difficulty in every opportunity;
an optimist sees the opportunity in every difficulty”
Yesterday and Today
Yesterday
Prior to the open the E-mini futures were down -30 indicating a -300 point open. Yet once the bell rang buying came in and the futures were down -20, and the Dow was down about -220. We had a brief rally higher from there with the futures down -14 and the Dow down -170, but that was short lived. After the rally failed we slowly sold of in a surprisingly quiet manner with the Dow and E-minis at their lows o f the day.
One stock held up wonderfully – AAPL.
AAPL won a patent ruling over Samsung, and that should be no surprise. When Samsung has a new idea it is because AAPL engineers have already had the headache of years of research first. Also a tech reporter from Guardian Tech said AAPL may be releasing its own car in a matter of weeks. Lastly APPLE PAY was launched in China Friday. This was enough to keep the stock from falling more than $0.50.
Bonds also staged a second day of runs higher after the Fed kicked the can on raising rates.
TODAY
We have strong headwinds going into the week. People are Fed(up) with the Fed for many reasons, and Thursday’s rate decision (or lack of) is the reason(s). People are also going to be watching the rhetoric coming out of Washington. Yes people, it is that time of year again. Congress goes back to their busy work schedule for a couple weeks (before a vacation) and have to come up with a budget agreement.
Here are the big frustrations traders have from the Fed:
1 The dual mandate of growth and low unemployment has now seen the addition of a third mandate, making sure not to disrupt other countries economies.
2 The Fed originally stated that they would not raise rates until unemployment hit 6.5%. It is now at 5.1% with no signs of raising rates.
3 The markets were braced for and ready for a Fed hike. They assumed it was coming this month, and part of the reason for the selling last month (SPX 2100 to 1867) was building in the hike.
4 No one sees any guidance for when to expect a hike. All conditions the markets were anticipating as being a requisite for a hike have been met, and now new ones are being added. Predicting the Fed is like hitting a moving target, and that throws markets off. Markets do NOT like unpredictability.
TODAY
This is tough. We have the sword of Damocles hanging over our heads with the Washington. What politicians probably remember is that the last time the market shut down it backfired. They thought the stock market collapsing would put pressure on the others side to make a fast deal.
Instead the stock market rose higher on the prospect of the government’s wallet being closed. All the fear mongering and bull threats the President made about teachers, police and fire being laid off also proved to be a lie. Only dolts would have believed that BS. The President putting up barricades to close out door monuments like the WW2 wall backfired as veterans threw the barricades over the White House gate. They were actually going to spend $1 million to put a tarp over Mt Rushmore. If that is not politics at its worst, what is?
They were spending money to close down out door monuments to show the government had no money to keep them open. How much work is it to keep up Mt Rushmore or a wall? A lot less than it was to shut it down. And then they shut down the White House tours despite Donald Trump (yes, I am accurate) telling the press he would pay for the tour cost out of his pocket. They still have not opened the tours.
Both Democrats and Republicans measured success by seeing whose polls dropped less. The charade embarrassed everyone involved. Obama’s threats of police and teachers being laid off showed up for what it really was – fear mongering to get his way, and that didn’t work.
But here they go again with a shutdown set for September 30th if no agreement is met. And be assured it will be a lot of fun to watch the kids play their games. Almost all of them selling their vote to the highest bidder, and not giving a damn about the American people who they represent. This is why this election people are fed up and the people in the lead on both sides are not politicians.
The American people realize that a trained chimp of a cheap software package riddled with glitches could do a better job at governing. And the Chimp could be bribed with bananas a lot cheaper than the $50 k a pop Trump had to pay for Hillary to show at his daughter’s wedding.
But we have a short memory in this country. Perhaps it is from all the GMO crap we ingest because our politicians sold out to Monsanto as well. Monstanto is the most corrupt of all companies, spraying their seed in the middle of the night on farmers land, and then suing the farmer for planting their seed without a purchase order. Why is nothing done about these mafia-like tactics? I will give you 435 + 100 + 1 guesses.
So this week may be a little choppy, but if no settlement is forthcoming by the weekend, we will see weight on the markets.
In summary: We have indecision on the rate decision coming from the Fed, and a government sequester. We have a market still jittery from last month’s Fed- wreck. It could be fun!
OPTION TRADERS
Well, we did get down to under 18% briefly this week. We also only closed at 22.28% vol in the VIX despite a big down day. But these HIGH volatility days can’t last long. Once the Fed selling is done, and it looks like DC will kick the budget down the road another year, volatility as measured by the VIX will dry up like a raisin.
It was a busy two days this week. WOW. But we demonstrated some very cool concepts and strategies. We got a new 1st step Black Ops hedge on for a small credit. We took our bullish risk reversals, turned them into condors and bearish risk reversals, and then on the close turned them into bullish ones again.
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
I will leave this empty for the day and let Donald Trump fill it in.
Attorney Stuff
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