If the indicators turn or we hit the $115 level, I'll look at long exposure again (made a stupid trade and held too long), but so far today's trade has been on the short side. Breaking News: Putnam closing institutional money fund on redemption pressures (dollar level not broken). Tomorrow is options expiration, otherwise little official news on the calendar.
o TraderFeed - Notes on a Weak Market
o Kathy Lein - Market Still Believes in Perfect Storm
o Calculated Risk - 25% Off Sale
o BeSpoke - Multiple 4% Moves
o SeekingAlpha - Nasdaq Worst Since 9/11
o Trading Markets - How to Recognize Capitulation
o SEC - New Rules Against Naked Shorts
9:50AM PST: VIX Breaks 40 (now 41+). This is the washout underway. My personal belief is that good intermediate- to long-term buying opportunities will be found between here and SPX 1,100 (yes we could go lower even if we bounce here). Again, patience will pay for cash reserves -- these are volatile times. When I referenced S1 earlier, I was looking at a 15 minute screen. Usually I refer to my three-minute chart, as posted on this site. We are now resting on S1 by that measure ($114.20). I'm very interested in reader thoughts.
Republish from Sunday Post:
"...But the global financial system's value is entirely hinged on trust and hope, and the former is very much a prerequisite for the later. Here, I can even put that into mathematical terms for you:
I hope you recognize that formula. It's about as basic as it gets and lies at the heart of modern finance, such that it is. I know, I know -- save it for the drama queens on the financial news networks..."
10:20AM PST: Not to get too high here -- bugle and all ;) -- but watch to see if we can break the declining VWAP here. Momentum has shifted a bit, but the $116.50 level may prove resistance... and blew right through it back to pivot (add: now resistance).
Breaking News: "A Short Holiday"/ Calpers to Stop Lending Financial Shares/ "RTC-Like" Fund to be Announced/ TSP Waives Restrictions on WAMU Sale...
SHAZAM! - Hey, I get to have a little fun with this, don't I? Let's see if we can get follow through tomorrow. I'd trail loose stops for the time being (I prefer ATR-type stops).
Comment: Najarian makes a really good point... the cost of hedging through options will get more expensive by an order of magnitude with added short sale restrictions. Maybe one more reason the VIX has been relatively low this year until today. Think about it.
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