Random Walk Trading.com
Wednesday
January 28, 2015
1-855-RWT-0008
Prepared by the good people at Random Walk, LLC.
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Closing Prices From Yesterday
Company News
Two seats left of Vegas session – Feb 19-21
The year-end book for “POT – A Year in Review” went to the printers today
EARNINGS
POT Class Tonight and Fed Rate Decision at 2:00pm eastern
Yesterday and Today
Yesterday
Sunday night/Monday morning
The day started well before the market opened with the Greek elections scaring all of Europe, and the shock wave making it across the pond to the US. The E-minis were down -$15, the Euro was below e1.12, and bonds were getting bought up in a flight to safety. All this indicated we would have a rocky start, and we almost did.
Pre-Open
When it came time for the US markets to open it appeared they were going to be marginally lower, but nothing like earlier at night. The stupidity of Greece’s elections sort of ran its course faster than normal. As a matter of fact yesterday’s update was a warning to not take it serious despite the fact that the market was going to open lower.
Open
On the open the E-minis were unchanged but started to fall seconds after the bell. The Dow, SPX, etc went with it. The Dow was down over 100 points right out of the shoot, but they then started to limp their way back up.
Trading Day
The trading day was spent mostly with the Dow, SPX, and NDX vacillating around the break-even point. It really was a normal trading day compared to what we saw for the first three weeks of the year, further strengthening my belief that the ugly January market is in the past. Please keep in mind that last year’s ugly January market ran through the middle/end of February before calming down, therefore we are doing a lot better this year (so far).
And that is how things looked until the end of the day – a coin flip on if we would be higher or lower on the bell.
Last Minute
The last few minutes of trading saw $300 million in ‘buy programs” on the bell driving the markets to the “tails” side of the coin, thus a positive close. What is interesting is that the buy program momentum kept the E-minis running after 4:00pm. From 4:00pm – 4:15pm the E-minis ran up another $5 points, or about 50 Dow points. Those Dow points are not factored into the closing price since stocks had closed.
After the Bell
After the close a couple of stocks reported their earnings (MSFT, STX, TXN, RMBS, UTX, etc.) most notably MSFT. Microsoft will likely open lower by a few percent after its commercial sales numbers fell. Of all the tech companies reporting yesterday everyone (I saw) fell after earnings.
TODAY
Based on how the Dow closed and then the E-minis kept running higher we will see a slight disconnect from the Dow and the SPX all day tomorrow until things get back into line. It is as if the two are always in a race where they are about dead-even in results most of the time, but today the E-minis got a head start.
BULLISH CASE
What is bullish looking forward is that the E-minis are only down 1.25 at 11:15 eastern. They ran up $5 after stocks closed, so either stocks have to meet the E-minis or the E-minis fall back to stock levels. In addition oil is unchanged, the Euro is up pretty decently, Russia is in the news again, and tech earnings disappointed after the close.
With the four or five quick jabs to the face the market is still holding up, and that is bullish.
BEARISH CASE
We are seemingly always having something attack the bull. If it is not government shutdowns, Syria news, terrorist attacks, another law against business (after all you didn’t build your business, remember that speech? Your business is only needed to provide campaign contributions), oil falling, ending of QE, weak economies of Europe and China, oil falling even more, Switzerland pulling its currency peg off of the Euro, and now Greece (again, and again), this could be just more sticks being thrown on the camel’s back in a fragile recovery.
CLOSING:
Today’s initial tone likely will be set by companies reporting before the bell. In addition….we will see how the media portrays snow falling as something that will ruin the economy (as if we have not had acts of God before). Be careful of small liquidity today if the snow pans out as bad as the media is claiming. I find my weather rock is more accurate
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POT is held each Wednesday night at 7:00pm eastern.
SCHEDULE
More on hedging a long vertical spread (going for or against you)
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Using the E-mini options as a hedge against the SPX and/OR a portfolio of stocks to enable a trader to be able to hedge 23.5 hours a day.
-Convoluted Spread in PCL/TSLA middle of Feb.
As has been the case with everything in the market for January I have no idea what is going to happen. I wish the Dow was down yesterday so I could get bullish, but it is just a water torture of volatility. That is why the game plan for the month has been to just keep lopping condors, risk reversals, etc. on top of one another. We added more to AAPL today and at 5:15pm eastern the stock climbed from a close of 109 to 114. We hit a triple if the stock is there Friday night.
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Contract the office at 1- 855 – RWT – 0008 for more details.
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Trading is almost as much fun as black jack in Vegas, but without all the annoying distractions of free drinks, Broadway shows, gorgeous people with low morals, and free buffets. It also has about the same odds of success, so when you lose all your money you wont have to walk past a smiling pit boss. Even Bruce Wayne lost everything with options in The Dark Knight Rises, and Superman keeps his day job at the Daily Planet newspaper.
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