Monday
Sept 28, 2015
1-855-RWT-0008
Prepared by the good people at Random Walk, LLC. (and Scott)
Government Shutdown Possibility/Probability This Wednesday
Be very careful. TOS has a new platform look that they call “improvements”. I don’t see any improvements, just a different ”feel”. I hope the improvements are not as good a Windows 8 and 10. At least they kept the game Tetris.
The GREEKS are still not working, but now they are in a prettier font. Time to brag guys! What happened to the founders (Tom, Scott, etc.).
Great Morning!
Closing Prices From Yesterday
Yesterday and Today
Yesterday
The day had started with so much hope for the bulls. The Dow as up 200points and the Eminis were up 20. Everything was looking comfortable at those levels for most of the day.
At 2:10 pm eastern the market began to fall and didn’t stop falling for an hour. The SPX cash fell 30 points from 1952 to 1922 in just an hour, but bounced in the last 40 minutes to close about unchanged.
Some people may be infused about Friday when looking at the Dow closing up 113 points. The Dow was ONLY up because of two names, primarily Nike. The shoe company itself was responsible for 70 points in the Dow’s 113 point climb.
Meanwhile the Pope was talking and John Boehner was retiring. Despite that I have no idea what caused the market to reverse near the end of the day. Yes, there were fears of the government shutdown looming. There might have been fears of why the sudden and unexpected retirement of Boehner.
TODAY
My guess is down. There is going to be so much fear leading into the the possibility of a government shutdown that it will be hard for anyone (but me) to be bullish into it. And the only reason I am bullish is because I know that one the shutdown has happened or passed we will get a relief rally. But that doesn’t mean I think it makes sense to buy all the way down, only to break-even when it gets all the way back to the start.
I do know that this shutdown may be different than others. This time the politicians have been watching a knucklehead socialist and a TV personality lead a pack of 18 politicians in the most unorthodox election ever, and the politicians have caught on. Boehner quit and now talk of McConnell being forced out is surfacing.
The politicians want to/have to stop acting like politicians, but they don’t know how to change their spots.
OPTION TRADERS
eople are convinced the Fed is going to do a rate hike soon, and that they are not changing their mind. Many traders feel that the Fed is just verbally clumsy, but do know what they are doing. Being unable to articulate a coherent sentence doesn’t mean they are dumb. Look at Rain Man after all. (lol).
But what traders do know is that by the time you wait for all conditions to be perfect, the clouds clear, and uncertainty to evaporate it is too late to get long the market. Or as Baron Rothschild said, “buy when there is blood in the streets”.
Another compelling argument for a move higher is the extended volatility levels as measured by the VIX being near 25% for a couple of weeks.
MY OPINION
I have no idea. I am as confused as the next person. We are a lot oversold on a temporary basis, and when down 3 days in a row I tend to start believing the next day will be up. As such, in POT we came in long for the first day in 3 or 4 days. I will be hedging it off quickly on the open, though. Until about 1:30pm yesterday our deltas were primarily flat. After the bounce off the ledge started I sold out of long put spreads, left alone the short put spreads, and got a long delta risk reversal.
OPTION TRADERS
A separate update. Next week’s class topic will be contingent on the government shutdown. I hope it happens and the markets fall like a rock going into it as it will be the best buying opportunity of the year. If quiet and uneventful we will talk about “Where I leg into verticals, risk reversals, etc”.
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
Attorney Stuff
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