The Big Board Should Become a Supper Club

sandy1 300x203 The Big Board Should Become a Supper Club

Big bad Sandy is on its way, and Twitter was all “atwitter” with whether or not the New York Stock Exchange would stay open for trading or shut down tomorrow.

The New York Stock Exchange will close its trading floor Monday as Hurricane Sandy barrels its way up the Northeast, but Big Board trading will continue electronically.

The New York Mercantile Exchange, a commodity futures exchange, also will be shutting on Monday its trading floor which is located in a mandatory evacuation zone. The CME Group, which owns NYMEX, said all electronic markets will open at their regularly scheduled times.

To me this really says it all. The big board has become nothing more than a Hollywood movie lot these days. Stations have been set up for CNBC and other financial media outlets and Bob Pisani sees more action in his Roth IRA than Specialists see order flow these days. It’s so sad, but so true.

I read a blurb in the Wall Street Journal this weekend that the SEC is considering a return to fractions to some degree. Many of you were riding a big wheel or getting tanked in your college dorms when stocks were actually  up or down “an eighth or a quarter.”  There were no HFT’s. and things always managed to work out fine. We didn’t have flash crashes.

Maybe Mary Shapiro can salvage her epic fail as appointed SEC czar and finally do something. I really don’t know one thing she has done as chairperson accept talk about what a great personal relationship she had with Madoff back in the halcyon days.

Her mandate and mantra of “best execution” at all costs has blown up in her face. It had a cost.

Martha and Wilbur out in Toledo could give a rats ass about “best execution” and saving a “mil” on a hundred $IBM. They would much prefer crash avoidance and less volatility.

High frequency folks claim they “provide liquidity”.  Newsflash, this market doesn’t need liquidity, it needs VOLUME.

Don’t get me wrong, the Big Board was a willing co- conspirator, but basically made moves to survive to. In a defensive move, it acquired the all-electronic Arca exchange in 2006.

So can we please just call a spade a spade, bring back the fractions and wave goodbye to Mary and the HFT’s? Bring back the humans, I know its a pipe dream. There wouldn’t be any trading at all tomorrow if it wasn’t for the gizmos gadgets, algos and ECN’s.

Welcome to the freaking Matrix. I could have used the day off.

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This Market Really Needs Apple Tomorrow

The S&P ($SPY, $SPX) broke yesterday’s lows today, but closed pennies above that level. The $QQQ and $NDX pretty much landed right on their respective 200 day simple moving averages today.

The short term future of the tape will depend on the outcome of the AAPL report tomorrow after the close. A good earnings report, and these levels should rebound from the edge of the Apocalypse. A bad number from AAPL, and the market will have the negative catalyst it needs to break and go lower.

The $QQQ is sitting and waiting for $AAPL at the 200 day moving average.

qqq5 300x188 This Market Really Needs Apple Tomorrow

The $SPX is looking for a reason to go down and tag 1375-1380, maybe AAPL can save the day.

spx113 300x198 This Market Really Needs Apple Tomorrow

A miss by $AAPL and there is a good shot the 570-580 level gets tested.

aapl20 300x196 This Market Really Needs Apple Tomorrow

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Did the Market Jump the Shark? No Way

omg bitch blosked me 300x296 Did the Market Jump the Shark? No Way

We are in a world of doody right now.  $AAPL is falling apart, the bears say 575 or lower and the bulls hope on hope that tomorrow’s earnings report will save them. I don’t have a clue, but I can see $AAPL testing those levels if this tape rolls over some more. Wouldn’t it be trading at like three times earnings though if it did? Apple is a year into Steve Jobs two year blueprint, I haven’t seen a whole lot that makes my leg tingle other than the same product repackaged into different shapes and sizes.

I’m not an Apple fan boy as many are, but I do love the product and trade the stock. My daughter turns eighteen this weekend and gets a new iBook. I just wonder though if it hasn’t already become a commodity (as all technology eventually does). $MSFT and $INTC did. They were the balls once too. The stock is silly cheap based on cash and other things, but maybe the stock isn’t getting the multiple of earnings because people know that it is now just a value play. Who knows? I’m  not that smart.

I’m not an uber geek, but I fooled around with my buddy’s Samsung Galaxy today, great phone, does basically the same stuff, and it  has a GPS feature that actually works. I am not denigrating $AAPL, I am simply being devils advocate here. If I wrote this post at 700 I would have looked really smart.

This isn’t about $AAPL though, I wanted to talk about the market in general. $AAPL is important though, because its 20% of the Nasdaq and a nice chunk of the S&P. From a trading slant, I never wanted Apple to split, I thought it would kill the integrity of its trading flow, but in fairness to the market and better flow in the indices, it probably should. The stock can cut both ways, and when it goes down it will leave a mark. Thing is, it really doesn’t go down, does it? Now it is.

On the general market front, things look sketchy at best. Two guys that I respect (I basically listen to no one) as I do my own work, are bearish.

Tom DeMark came out yesterday and said that the highs for the year were put in last week, and the folks over at McClellan are bearish. The latter has a much shorter time frame though.

I am somewhere in between. I do as much work as they do and have probably been as right or wrong as the two of them.  The $QQQ broke its 50 day moving average on October 19, but $AAPL broke its 50 day on October 5th, so that was a big “tell”.

The S&P broke but “kinda-sorta” held its 50 day moving average, but collapsed and broke it hard today. The DOW broke its 50 day moving average yesterday, but put in a good effort (like the SPX) and closed at the line. Today it collapsed.

The Russell 2000 broke its 50 day last week, but held its 200 day moving average today, which I like, and as a result, I am long $TNA.

My feeling is that this is merely a correction. My feeling is that if you aren’t nibbling here, you will miss an epic move higher between now and year end. All the good is on the come.

Technology has been massacred and there is great value. Look at $IBM and $AAPL (after earnings tomorrow). Stay away from crap like $DELL and $HPQ.

Coal is going higher, yet it has had a great move, so look at $BTU, $CNX, $ANR $WLT and $ACI on  any further weakness.

The $XLE names are getting really cheap again. Look at names like  $APA, $CVX and $OXY. I bought $ERX today.

My worst case scenario for the S&P 1370, it may not tag it though. The rally will be epic. Layer in, and buy the dip.

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Good look tomorrow

Joe

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Black Monday and Buying Fear

crash 300x124 Black Monday and Buying Fear

“The borrowing has to stop. The market slide was a shot right between the eyes that had better wake us all up to the simple fact that we can’t keep romping forever on borrowed money” -Lee Iaccoca, Chrysler Chairman, Oct.1987

In September 1987, the economic concerns over the weak dollar and rising interest rates started making investors nervous.  Volatility in the market increased dramatically as both good and bad economic information was in the news.  A record single day point gain for the Dow was set on September 22nd, only to be followed by the largest single day point loss on October 6th.  During the three days of October 14th through 16th, the Dow fell over 260 points and the S&P 500 declined 10%.  The volatility of the market created a great deal of anxiety over the weekend.  Investors were left wondering what would happen on Monday.

Program trading was a new tool, and was introduced to take advantage of rapid market movements.  On Black Monday, program trading moved millions of shares, and clients as well as investment houses were left wondering what their actual market positions were like for most of the day.

Portfolio insurance and program trading were intended to help investors take advantage of short-term market fluctuations.  Unfortunately, these two systems, along with a lack of investor confidence, drove the Dow Jones down 508 points.  This was a 22% decline in value in just a single day.  Investors in the stock market would lose over $500 billion on Black Monday.

Always Buy Crashes

It’s the hardest thing in the world to do, but had you bought the 87 crash, or for that matter the 08 crash, you would sipping coconut drinks on a pretty little island. Look how far we’ve come from the 87 crash, just 25 years ago.

spx110 300x200 Black Monday and Buying Fear

 

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Tech Sucks, Play What’s Working

goog9 Tech Sucks, Play Whats Working

Today was a flashback to the 80′s for me. Back in the day, the Fed would randomly raise or cut rates and announce “money supply” figures midday. Money supply was all the rage back then. The market didn’t know when it was coming and everyone had to move quickly when the announcement came.

I don’t know exactly when  it happened, but someone decided that it would be a good idea to inform the markets ahead of time for these events. By now we know exactly when the Fed will meet (weeks in advance now) and when earnings are due,  with the specificity to the quarter hour of the report.

Today $GOOG blew it all up, as it trusted their ever important earnings report to an old media company named R.R. Donnelly $RRD.

Anyhoo, someone hit a button and it hit the interwebs with greatest of speed. The number sucked and $GOOG dropped a quick 70 bucks while traders were getting pedicures or trying to find a bottom in $AAPL.

$GOOG was halted for an hour or two and the shorts were euphoric, the longs had razor blades.

Technology isn’t working right now, $IBM, $MSFT, were weak, and now $GOOG put in a big miss. $AAPL continues to be rudderless, as it tries to carve out a bottom between here and maybe 600-620.

We are all guilty of trying to pick off a bottom on occasion and catch the proverbial knife, but why play that game, when you can just play what is working.

While we are all eating our tuna sandwiches in front of our screens, lest we not forget that Bernanke is buying all kinds of crap on a weekly basis. The dollar has no where to go but down, so materials ($XLB), coal ($KOL), energy ($XLE) and metals and mining ($XME) are working to the upside. The financials $XLF for the most part are looking great and most of the “big” bank names like, $GS, $MS, $JPM, $BAC, $WFC and $C have reported and are behind us, which makes trading them much less stressful going forward.

While we lament over $AAPL and technology in general , stocks like $JOY, $ANR, $WLT, $ACI and $CLF have been ripping. There are many more.

Don’t fight the weight of tech right now, they will rip again, they always do, but not here.

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