Friday
September 11, 2015
1-855-RWT-0008
Yesterday and Today
Yesterday
More volatility. The market opened unchanged and sold off a little. After that the market climbed to +13 in the E-minis. After that oil inventories came out and the market fell to a net change of -7 (a 20 point reversal). From there we climbed and ran up again to +20 in the Eminis, and once again sank to unchanged. It was not until the last minutes of the day that we staged a small rally.
Some of the day’s highlights.
European markets were down over 1% on average. Oil ran higher. Binds sagged slightly. Gold bounced a little off the lows. In addition QCOM saw HUGE buying of the Sept.2 expiration 55.5 strike calls with over 16,000 calls traded. Someone came in buying calls 1,000 and 2,000 times at a clip.
POT people, we bought call spreads in the stock and I almost spread them off when the stock was up $1.40. But I didn’t get the trade written up fast enough. We might try again tomorrow.
TODAY
It is likely going to be a volatile day for several reasons.
1 ā Traders are short volatility and their short gamma is requiring them to exaggerate moves by buying on the way up and selling on the way down.
2 ā It is the anniversary of the 9-11 attacks where a bunch of cowards killed over 5,000 people. Because of the anniversary people get jumpy that someone, or some group, will try something on this date to make a point. Remember Benghazi on Sep. 11, 2012 when Hillary gave the order to āstand downā and let the embassy and ambassador die. The administration was watching the events unfold real-time and knew from the CIA that the attacks were not because of people upset over a movie. It was an al Queda attack that was done purposely on that date.
3 ā We still have people guessing when, if, how much the Fed may or may not raise rates. The unknown is holding this market hostage.
When we were falling and the markets looked down 1000 Dow points in the pre-markets I wrote an update saying āthis is NOT 2008ā. I think this market has calmed down and would be doing even better if it were not for the Fed giving us mixed signals on their intentions.
FOR EXAMPLE
The Fed has suggested that if they raise rates it will be ā1 and doneā. This means they will raise rates just one time, almost symbolically. But at the same time they say they are data dependent. If truly data dependent they will raise and lower rates according to what the data shows, and they could not say ā1 and doneā.
Last month the Fed stated that MOST of the criteria needed for raising rates has not been met. Then a few sentences later they said that they almost raised rates. Again, more conflicting stances that are causing some traders to lose faith in their ability.
OPTION TRADERS
We have had 14 of the last 15 days being Dow moves of greater than 100 points. This is keeping volatility on the high end of the range, but I have been saying we are likely out of the woods. The market closed yesterday at the same place it did a week ago. Yes, we are getting +400 point days and ā 300 point days, but we are not going anywhere ā yet.
If volatility continues I am going to possibly start a second Random Walker a week or two even further out in time (than the current one). How much fun, and what a great learning experience, will that be? We will also be getting on a new Black Ops just in case.
POT is held each Wednesday night at 7:00pm eastern.
Contract the office at 1- 855 ā RWT ā 0008 for more details.
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