Tuesday
Sept 29, 2015
1-855-RWT-0008
Prepared by the good people at Random Walk, LLC. (and Scott)
Government Shutdown Possibility/Probability This Wednesday
Great Morning!
Closing Prices From Yesterday
Yesterday and Today
Yesterday
Another down day for the markets with the Dow closing right at 16,000 and the SPX closing 14 points away from the August 24 lows during the limit down day.
Below is a chart indicating the lows from last month in what many people (including myself) call a BS price. We had a gap down of 1100 Dow points with stocks trading on the open at prices that were not real. AAPL, for example, opened at $92 and was at $102 moments later. There was forced liquidation on the open and the machines did not put in realistic prices. Because a print that only specialists could have been filled on is not a real price in my book (more like theft) I don’t consider the SPX lows of 1867 a real price either.
But none of that matters since that is what is in the history books, and that is what the market is focused on right now. And since everyone is looking at it, there is a good chance we will get close ā if not today then the next day or two.
Meanwhile:
Donald Trump announced his tax plan to simplify the IRS into 4 tax brackets. Rumors are flying that Republican Mitch McConnell is being forced out like John Boehner was, for not standing up to Obama with all the executive orders.
Obama can appoint NO ONE to a post unless the Republicans sign off on it. People inside the party are upset the leaders of the GOP didn’t hold Obama hostage with his appointments with the same ferocity that Obama went around the Republicans with executive orders.
Hillary Clinton has found the āvast right wing conspiracyā is STILL WORKING (after 24 years) for her. So now she has taken Bill off the Mustang Ranch and put him to work. And it is a shame. He has done his two terms ā just let the old horse go out to stud like he always wanted.
We had a lunar eclipse pass and now have a Blood Moon tonight. They found water on mars, but that is not as surprising as Obama’s speech to intimidate Russia was laughable. We have killed about 5 of the number 3 guys in ISIS, if that means much. The problem is that on a JayVe team the bench is deep ā especially when driving 2400 of US humvees with 50 GPS Howitzers behind them. You just know that this would NOT have been the case with Ronald āRay Gunā Reagan.
This is the 3rd consecutive quarter that the market is down. The first two were negative by a negligible number, but this one is real.
APOLOGY
I was wrong and have to admit it when wrong. Despite my low expectations of Obama I overestimated him nonetheless. I felt that with all the problems with Russia in the Ukraine (and the shooting down of the commercial airliner) Russia would get tired of sanctions.
I felt Putin’s friends would be tired of having their accounts seized for laundering Putin’s money. I also felt Obama was feeling insecure about his dealings with Putin, too afraid to push him hard. So between the two parties needs/wants they would join together to fight ISIS. You know…āThe enemy of my enemy is my friendā type of thing.
Well it appears that is not going to happen.
Now it looks like Obama’s apathy towards ISIS (or do you say ISIL?) is Putin’s advantage. It now appears that Putin is going to seize the opportunity to kick the JaVee’s ass all over the desert ā if not to just help out his buddy Ass(ad), but to also humiliate Obama. I called it wrong, but thankfully the purchase of the RSX index when it hit $12.5 worked out nonetheless.
TODAY
We are LONG overdue for a rally, if for no other reason than to scare the bears who have had an easy time pulling down the bee hives full of money. But the closer we get to SPX 1867 the more people will sell in fear of us getting there. This becomes a self-fulfilling prophecy at some point.
What typically happens here?
1 ā Closing close to the number
This is the scenario we face now. We closed at 1,881.77. This was a bit of a surprise to me as there was not any real news yesterday to force us that low. But that is 14.76 points away from 1867.01 ā the low of August 24th.
The Eminis are up $1 point now, but that doesn’t mean much of late since they have not been an accurate gauge of the open in some time. But most of the time we get in a situation this close to the magic number we will either bounce the next morning or open at that number and bounce ā at least temporarily.
If a big gap open down is needed to hit the number we often form a āVā bottom. In this case a 14 point drop is not much since we were down 45 points yesterday. Here w might bounce a little to give the impression of a bottom, and then sell off again going through the number to scare people.
2 ā Closing far from the number.
Closing away from the number that would indicate it is within striking distance, but still pretty far away, we would usually work our way down with a lot more certainty that scenario #1 (believe it or not). But this is no the situation we see ourselves in.
OPTION TRADERS
What can I say. The last time the market was here the VIX hit 50 ā now it is 27%. Though this is a very elevated level compared to the 11-13% area we hovered in most of the year, it is still cheap considering the moves we have been getting and what will happen if 1867 doesn’t last.
I am not inclined to sell premium here ā yet. Here is the reason. If we bounce from here ā even with a strong bounce ā the VIX will probably only decline to 22%. But if 1867 doesn’t hold and things get sloppy the increase in the VIX will be huge.
For those reasons if I were a premium seller I would be more inclined to wait and miss selling the top of vol than stepping in front of the train. And most reading this KNOW I like to sell premium.
A separate update.
We did NOT spread off the $20 wide put spreads we own. As a matter of fact, depending on today’s actions I might buy more since so many people are expecting us to ounce off of 1867. I will keep you posted in the update.
POT is held each Wednesday night at 7:00pm eastern.
Contract the office at 1- 855 ā RWT ā 0008 for more details.
Too True To Be Funny
These 11 states (below) have more people on welfare than they have working. In addition, the average U.S. Household below the poverty line received $168.00 a day in government support. That comes to be $30 per hour (after taxes), which is disgusting when the average income for an American is $20 an hour. And we need Bernie Sanders for what? It is almost like he was President. Anything to buy votes with our kids and grand-kids money. It is sickening and we all have to be ashamed of ourselves.
California
New Mexico
Mississippi
Alabama
Illinois
Kentucky
Ohio
New York
Maine
South Carolina
Attorney Stuff
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