SLAR250

Option Ratios Urge Cautious Investing

Under normal volume conditions this is an excellent contrarian measure for future price action of the marketplace. By contrarian, yesterdays 206 reading indicated a large amount of opening call purchases, would send out an alarm for lower valuations- usually in the next 3 trading sessions. However, the ISE only had 1.6 million contracts hit the tape yesterday compared to its annual ADV of about 3.9 million. Light volume and a few large opening SPY trades skewed this number considerably discounting the value of the ISEE Sentiment reading yesterday.

The Bush Administration will not pursue the remaining $350B of the bailout package, sources say, allowing the incoming Obama Administration to make the decision.

I am glad Obama will not get the free look here. If Bush puts the money to work, and where he allocates the funding is a bust, he will be blamed. On the other hand, if the money is used in a program that is successful Obama will take credit. Similiarly, to bailing out the Automakers- there is nothing that needs to be allocated in the next 2 months. Why do we have to rush to throw more $$$$ at an Industry and Management team that has been failing for years.

5 Reasons Why the $700B Bailout Could Translate to $250 Oil

Spike in oil Sept 22nd was directly related to a short squeeze on the OCT futures contract.Oil futures contract the last half hour of trading was directly related to a demand and supply issue. Refiners and end users hedged their oil exposure created by recent hurricanes Ike and Gustav positioning themselves to take physical delivery of the “ black gold”. Traders who supplied this liquidity will normally close short futures positions to alleviate the physical delivery and remove these shorts from their sheets. As this unwinding occurred, offers were non-existent as the original buyers held their longs creating a massive short squeeze.

Thursday Outlook: Commodities, Emerging Markets

Charts tell it all, and they are all very similar. Relative strength numbers(sub 30) and MACD lines( below zero and diverging) show we are poised for the bounce. Option flow indicates MER next shoe to drop in the financials, look out below and take cover!!!

Friday Outlook: Financials' Time to Shine?

Dave...what do you think of XAL? Have we hit the bottom with Oil prices appear to be at the top of the RSI range and MACD looking to crossover. DAL/NWA has not been a catalyst for improved price action and talks of more mergers on the horizon have not put a ray of sunshine on this group. I almost tested the waters on Weds but could not pull the trigger.