Mad Hedge Fund Trader

S&P 500: Decline of Short Interest Reinforces Bulls' Conviction

They will pay. OK, so they didn’t mention the mosquitoes, the poison oak, or the guy snoring in the next tent on the website. But I’d rather put up with all of that than the absolute dearth of trading opportunities I faced on my return. The S&P 500, the Dow, NASDAQ, the euro, the Australian, New Zealand, and Canadian dollars, gold, copper, lumber, and anything else I like are overbought, bumping up against Fibonacci’s, moving averages, RSI’s, oscillators, and any other technical warning light you want to mention. Only wheat looks cheap, the greatest growing conditions in history knocking a bushel down to the low five dollar handle (click here for the argument at www.madhedgefundtrader...). Natural gas prices are low, not to be confused with cheap, with every uptick getting smashed with a new field discovery. Only a hurricane can save NG. It’s amazing how many people have turned bullish now that everything has gone up for two plus weeks. The only thing that makes sense here is to go short, but not on my first day back. Give me some time to gird my loins and build a risk appetite. And pass the calamine lotion, please.

S&P 500 Buy and Sell Ratings

Er &g There is some fascinating action going on the options market right now. There is some massive buying of short dated puts in Wells Fargo (WFC) and JP Morgan (JPM), while buying of longer dated puts has weirdly almost vaporized. These are the only two high priced big bank stocks left. It is not happening in Citibank (C) or Bank of America (BAC) where there is so little meat left on the bone that buyers don’t want to feel like they are the last man at an all you can eat buffet. Brace yourself. This is good news. It means that traders expect to see some short term volatility in these names. After that Obama’s bank bailout, stimulus program, and new budget will start to kick in and come to the rescue of the sector. Call me the “options whisperer.” I stroke these things, and they speak to me.