Options Trader: Thursday Outlook

What a friggin’ mess!

As you can tell from my rant on the Fed, Bush and the Top 1% last night, I’m pretty pissed off at what happened yesterday.  The Fed not only did the worst possible thing they could do by holding rates steady and softening their strong-dollar language, but then our buddies at Goldman Sachs went on a rampage, putting "conviction sell" ratings on Dow components Boeing (BA), Citi (C) and General Motors (GM).  Why do we, through the Fed, lend Goldman Sachs (GS) our money at the lowest rates ever recorded so that they can turn around and downgrade US industry and invest in oil and other commodities and tell their clients (who are the top 1% of the nation’s wealth) to do the same?

We may as well be handing them the gun, buying them the bullets and painting a nice round target on our foreheads for them while we apologize if they may be feeling any guilt about pulling the trigger and putting us out of our misery.  When did America sell its soul to these people?

Gold jumped $28 since the Fed MISstatment, and while we played it perfectly with some quick covers on Financials during the morning rally as well as some very well-timed index puts, I am just disgusted with this blatant attempt to take down the US markets that seems to involve not only GS but the Fed and the Administration, who have done less than nothing during the greatest financial crisis since the Great Depression. 

On the bright side, unless the voters in this country are truly insane, we only have 6 more months under the current regime and then we can get back to the very serious business of putting this country back on the right track.  Meanwhile, from a market perspective, we will once again be testing our lows for the year in the indexes EVEN THOUGH the GDP Report was revised UPWARD to 1% "as stronger gains in consumption and exports bolstered the economy, providing evidence that the U.S. avoided recession in the early part of the year albeit with anemic growth."

We added puts on the Dow yesterday and we took the Ultra-Short QID calls in the afternoon and that will give us the cash we need to roll our longer positions down and take out more callers when this crazy train finally comes to a halt.  North Korea is complying with nuclear regulations and the global economy is slowing so, of course oil is up $4 in pre-market trading as Goldman makes every other possible investment look too dangerous to consider.

The Nikkei was flat in another interesting session today as they erased a 150-point gain into the close.  The Hang Seng never did look pretty and fell 179 points on the day but fell 300 points from the open, so that’s 2 days of aggressive pre-market pushes being rejected by actual trading.  The Shanghai held up and added 0.5% in very mixed trading.

Europe is off about 2% ahead of our open as the stronger Euro (thanks Uncle Ben!) knocked exporters down considerably and Fortis Bank announced a $12.5Bn capital raising program that spooked the financial sector.  Banks in Europe have been, like US banks, hoarding cash while everything collapses around them which is, of course, choking the economy and causing everything to collapse around them.  Banks in Europe are playing the same game as US banks and funds are, sabotaging the economy in order to keep their Central Bank from raising rates and taking away all that lovely, cheap money they’ve been borrowing.

Because we are still hedged and still mainly in cash, I am going to take the chance that this is indeed a purposeful train wreck aimed to end Q2 with a bang, allowing pretty much anything funds invest in in Q3 to look good.  So we will be committing a bit more capital, holding onto our index puts (unless a miracle occurs), buying back into the financials and crossing our fingers over the weekend.

They say that things look darkest before the dawn and this will be a real test of that adage!

Comments

[DLRegister]

Phil,
I respect your timing skills, but you are missing the boat slamming the conservative party along the way. I pray and coddle my guns that we may continue to live in America, not Amerika. The liberal party will royally screw this country if Hussain Obama, the anti-christ, dupes enough people to get elected!! I am dumb fonded that a person of your standing can't see through this liberal fog.
Sincerely,
Darryl Register

[mdmrjsds]

You think a socialist is going to fix America??? Really? LOL

It doesn't matter who is elected. They won't be able to do anything about this because it is systemic, driven by forces beyond the control of the US. Our dominance of the world economy is ending. The best they will be able to do is be a good steward to the birth of a new order. Good luck with that, given the selfishness and incompetence of congress.

[mdmrjsds]

You think a socialist is going to fix America??? Really? LOL

It doesn't matter who is elected. They won't be able to do anything about this because it is systemic, driven by forces beyond the control of the US. Our dominance of the world economy is ending. The best they will be able to do is be a good steward to the birth of a new order. Good luck with that, given the selfishness and incompetence of congress.