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  • Technical Level To Watch In Dow And S&P500 After Moody's Bank Downgrades 6 comments
    Jun 22, 2012 1:25 AM | about stocks: CCL, CUK, MOC, DRI, CAT, MBLX, IILG, DVN, BMTI, GEVO, SPPI, VRSKQ, AMRS, INCY, NLST, R, AEC, MAIN, RENN, HNR, MUX, BRFS, AVX, XOM, SPY, QQQ, IBM, PCLN, AAPL, WLT, PCXCQ, GOOG, UVXY, XIV, SVXY, TVIX, GLD, TZA, FAS, FAZ, GMCR, NOK, ACI, HAL, M

    This was the 7th straight week when the government data showed less jobless claim at the time of reporting and then revised it higher following week. This kind of revision doesn't have any impact on the market. Last week, jobless claim was revised higher by 3k. So this week headline number was 387k while expectation was 380k, which was below expectation by 4k instead of 7k. It was the 12th straight week rise in the jobless claim.

    Initially, market rallied up on this bad data, but it was short lived after Spain asked for additional 60 B in the rescue fund which would leave EFSF with 35 B. Lets, not forget that Italy, Greece Cyprus, and Ireland are still in trouble and 35 B is not enough to rescue this countries. Dow was down 250 point, S&P500 was down 30 point at the close as the fear of bank downgrade was built up.

    After hours, Moody downgraded 15 banks and almost all the bank stocks rallied on this bad news. It proves again, "this market goes in opposite direction of what majority think." Many took short position in bank's stock to take the advantage of sell off on possible downgrade but the opposite happened. I think because of the downgrades, funding cost and collateral will rise and this will impact bank's earning. Any rally in the bank is a good selling opportunity in coming days.

    Summary:

    Bank of America L-T senior unsecured debt cut to Baa2 from Baa1, outlook negative.

    Barclays L-T issuer rating cut to A3 from A1, outlook negatuve

    Citigroup L-T senior debt cut to Baa2 from A3, outlook negative

    Credit Suisse Group L-T deposit, senior rating cut to A1 from Aa1, outlook stable

    Goldman Sachs Group L-T senior unsecured debt cut to A3 from A1, outlook negative

    HSBC Holdings L-T senior debt cut to Aa3 from Aa2, outlook negative

    JPMorgan Chase L-T senior debt cut to A2 from Aa3, outlook negative

    Morgan Stanley L-T senior unsecured debt cut to Baa1 from A2, outlook negative

    Royal Bank of Scotland Group L-T senior debt cut to Baa1 from A3, outlook negative

    Royal Bank of Scotland plc L-T deposit rating cut to A3 from A2, outlook negative

    BNP Paribas L-T debt, deposit rating cut to A2 from Aa3, outlook stable

    Credit Agricole L-T debt, deposit rating cut to A2 from Aa3, outlook negative

    Royal Bank of Canada L-T deposit rating cut to Aa3 from Aa1, outlook stable

    Societe Generale L-T debt, deposit cut to A2 from A1, outlook stable

    UBS L-T debt, deposit cut to A2 from Aa3, outlook stable

    Deutsche Bank AG L-T deposit rating cut to A2 from Aa3, outlook stable.

    June 21 - 22 Eurogroup meeting of euro zone finance ministers in Luxembourg ahead of June 28th summit. "Expect lots of rumor out of Europe"

    Italy Prime minister Monti is due to host a four-way summit between Germany, France, Spain and Italy in Rome on June 22.

    Trading Strategies For June 22st:

    Based on the chart tomorrow, market should open higher but it could sell off if 1320 and 12,510 are broken. Since Monday, Dow is down 150 point. I still think there is more sell off to come tomorrow. http://tinyurl.com/6wcx273

    Dow expected to open higher and if it's able to survive 12510 resistance there could be recovery rally. Dow closed in bearish zone but in oversold condition
    Unusual heavy volume at the open and close
    S&P500 is expected to open higher as it closed in oversold bearish zone. If S&P500 survives 1320, then there could be recovery rally or else S&P500 is falling below 1300.

    For Bullish sentiment to continue: Dow needs to break 12625, while S&P500 needs to break 1328.

    For Bearish sentiment to continue: Dow needs to break 12510 while S&P500 needs to break 1320

    In the chart below Red circle represent Bearish sentiment, Blue Circle represent Bullish sentiment.

    In Forex Currency trading, Eur/Usd is at 1.255 (+0.07%), Usd/Cad is at 1.0272 (-0.12%) and Aud/Usd is at 1.0059 (+0.08%). US dollar Currency Index is at 82.28(-0.01%)

    CBOE Volatility Index VIX up 16.47% at 20.08

    GOLD is at 1567 (-1.80)

    SILVER is at 26.955 (+0.43)

    Earning Before Market open: CCL, CUK, MOC, DRI

    Earnings After market Close:ASA

    After hours big gainer: MBLX, IILG, XTXI, BMTI, GEVO, SPPI, HNR, MUX, BRFS, AVX

    After hours big loser: VRSK, JRCC, AMRS, INCY, NLST, R, AEC, MAIN, RENN

    Stocks for Day trading: UVXY, XIV, SVXY, TVIX, GLD, TZA, FAS, FAZ, GMCR, NOK, PCX, WLT, ACI, HAL, MT, X, FSLR

    Stocks for Option Trading: CAT, XOM, SPY, QQQ, IBM, PCLN, AAPl, WLT, PCX, GOOG, MT.

    Upcoming FDA approval : QRX on June 25th and ARNA on June 27th.

    Economic calendar:

     

     

    TIME (NYSE:ET)REPORTPERIODACTUALFORECASTPREVIOUS

     

     

     

     

     None scheduled    

    Forex Currency event:

    EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Fri., Jun. 22, 4:00 am, ET.

    Just as the ZEW survey, the German Ifo index is forecast to head lower with a reading of 105.8 in June compared with 106.9 in May.

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Comments (6)
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  • ziadgh
    , contributor
    Comments (20) | Send Message
     
    Hi everyone, am looking to buy TVIX at the lowest price an hold it until it reach 100 or 150 when the market correct soon, i wonder when TVIX will reach the lowest price, or in other words will SPY reach it's 2007 level of 150 ? Or not

     

    Any advice is appreciated...
    22 Jun 2012, 05:50 AM Reply Like
  • freefdawatchlist
    , contributor
    Comments (24) | Send Message
     
    Author’s reply » $TVIX, $UVXY, $XIV, $SVXY, $VXX are very risky stock and you should never hold it more then one day. Also check out vix future to finad if its contango or backwardation before buying it.
    23 Jun 2012, 01:11 PM Reply Like
  • freefdawatchlist
    , contributor
    Comments (24) | Send Message
     
    Author’s reply » Since $TVIX and $UVXY are in contango, any rally in this stock will fade quickly. My suggestion would be play tvix on daily basis, you can easily make 5% on daily basis as it has swing of 10%
    23 Jun 2012, 01:13 PM Reply Like
  • ziadgh
    , contributor
    Comments (20) | Send Message
     
    But if you bought it at july 8 and hold it until oct 3 you would have made 500% so why not to hold it from now until the corrective wave ends maybe few months or 1 year?
    25 Jun 2012, 12:17 PM Reply Like
  • freefdawatchlist
    , contributor
    Comments (24) | Send Message
     
    Author’s reply » I agree with your strategy but between july to oct last year, vix futures was in backwardation which means vix will rise sharply. Right now vix future is in contango. Just check this chart S&P500 vix http://bit.ly/v8FEJ5 June future is less then July, if it reverses then buy tvix and then hold. Currently just play tvix on daily basis.
    25 Jun 2012, 12:42 PM Reply Like
  • ziadgh
    , contributor
    Comments (20) | Send Message
     
    Yeah I got it, Thanks for the advice
    25 Jun 2012, 06:04 PM Reply Like
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