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Options Expiration Blowout
Yet another blowout day for Goldman Sachs. How much did they make this week? $150 million?
$250 million? Puts were blown out
5 days in a row, and even the weak longs in the futures market were chased out
with surprise rate hikes, PIIG disasters, and other assorted
"convulsions" that sent the ES futures tanking.
This one was a classic play I've never seen before:
Step 1: Punch indexes
under the 150-day, then roundtrip the close.
Step 2: Walk up the
markets every day with periodic shanks to keep hope alive for the bears
Step 3: Powerjam the
indexes over the 50-day EMA, blow out more bears, knowing that 10 minutes later
after the bell, Ben is going to jack up rates.
Step 4: Sell down the
futures in the overnights, then jam them up again the next day to stick the
knife in the last of the bears.
Now that every bear has been crushed, most likely they will
sell everything next week, jam the dollar, and nosedive all commodities in
order to float off some new U.S. Treasuries at ridiculously low interest rates.
Imagine you are a hedge fund with "billions under management".
You read blogs every night, everyone is screaming
"depression", or "3rd wave down", or "china bubble collapse", or "sovereign debt default", etc. and you would have been shorting like mad, or buying puts on all breakdowns.
You would have been far better off investing in restaurant
stocks, sitting back, and "watch the money roll in" as these particular issues have been impervious to EUR/USD gyrations, Fed Head
"words", "Risk On/Risk Off" sprints, or anything else for
that matter.
Now that most bears have been destroyed, there is probably a huge auction scheduled for next week, which means stocks will be sold, bonds will be bought to bring rates back down and re-energize the "Animal Spirits" for yet another run in the credit bubble.
After all the Fed's balance sheet is going parabolic, but so is the U.S. Dollar, and bonds always get a bid at the first sign of any trouble.
Just more "Wash, Rinse, Repeat".....
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"there is probably a huge auction scheduled for next week",
114 billion, plus or minus.
Robo,
Same shit, different month. But alas, markets are efficient...lol! Want to make a bet Goldman and their big hedge fund clients were busy buying up solars today? Wait till next week. Seems the SEC is on board too:
http://www.reuters.com/article/idUSTRE61I5BR20100219
As I wrote, same shit, different month.
Solars were a leader as the markets come down in January, they were very weak on Friday.
Why limit short sellers in a market that only goes up?... Very interesting.
It really is better than fiction at this point.
Next expiration month we'll be here again.round and round to the same place...
great note, Robo. thanks for it !
nice piece.
robo rules!
Good analysis (and better pictures), Robo. What fire alarm is going to get pulled over the weekend or early next week? Get ready for the next "surprise" to be unleashed. My personal opinion is that a lot of other people in the world are seeing what you have witnessed and aren't going to fall for it. It sucks when cause has no effect...
Nice to point out the strong moves by the restaurants. I'm sure GS got word on the rate hike prior to the announcement. Nothing ever changes.
Vice versa. The FED got to know AFTER Lord Blanfein told him what he was supposed to do.
There's "Inside information" and then there's the manufacturers and inventors of same.
It ain't inside information if you create it.
Mt thoughts exactly. I felt like my nuts were in a wringer over the past few days, but I stayed the course and remain shorter than a winterized dick. I'm not falling for the 21 green Mondays out of the past 24 trick. Did you know that since the March 9th low, 85% of the entire move came on only 14% of available trading days and all of those were Mondays. The mathematical probability of that being a random event are effectively "impossible". Sheer lunacy.
So according to your own statement, most of the gains of the last 10 months have come on Mondays and yet you're holding a short position going into Monday? Is that what you meant by sheer lunacy?
I thought the same thing, but I think he's just playing the odds - the odds it won't happen 21 out 25 times. :(
My statement about the gains is accurate. The odds of 85% of all the gains from the March lows coming on only 14% of available trading days, all of which were Mondays, is not possible in a normally functioning market. It's the sheer lunacy of the manipulation that's got my dander up.
Concerning your insult, no the fact that I'm short is not the lunacy I was referring to, because it's very well thought out. I do my own technical analysis and have done so ever since I stole my first book from the public library at age 11, on technical analysis. Based on my own analysis, I believe this Monday is going to be one hell of a whopping down day. So yes I am short as hell.
If you want to enter into a discussion, just say so. No need to be a prick about it.
me-thinks thou needs to put on your thicker skin...
the way the original post reads, the response was spot-on.
there are many far more prickly responses on ZH than that...
some of my blisters still haven't healed...
:^)
Thanks for the point of view i.knoknot. That was my first post here and I try to write well and to provide something of value. But there's no need for insults or smartass comments. Is that what Zero Hedge commentors hang out here to do? The guy was just showing off at my expense, and I'm one fiery bastard when I get attacked. I really, really took it easy on him, believe me.
I don't need to post here, I'm plenty busy enough on other blogs where I'm properly set up with an identity, avatar, etc. and am very, very active and well known. I just thought I'd give it a try here, and I won't bother again. I didn't realize that the comments section on ZH isn't much more than insult central for blowhards.
I really like Zero Hedge and Tyler in particular, so I'll continue to read his valuable contributions and findings. In the meantime, I have a lot to do since I write a lot of stuff myself and provide some pretty detailed articles and findings that I'm happy to share with those who are serious. So I won't waste any more time commenting here.
But thanks for your point of view. I wish you well.
All in prep for next week's Treasury auctions. It should be interesting!
has anybody heard --- was Leo buying the dip?
He was likely pissing his pants in the corner after the rate hike yesterday, but will continue to say he's buying the dips. Amazingly, he will also get out at the top before the next leg down.
So monday is a big day for Leo. Gonna be a nice dip.
Robotrader, your excellent writing reminds of a story we formula car drivers joke about during the off season and perhaps it is akin to the GS story you smartly write above. Apologies if this seems OT.
During the winter time we drivers will put on our Nomex suits and sit in front of the fireplace while someone sprays a gas and oil mixture in our face while the wife/girlfriend throws money into the fireplace. The end result is almost the same(!). :)
Ok, seriously, thanks for another great article with superbly chosen pictures of course. Fully agree 'they' always, ALWAYS cause a panic to get the fools back into buying bonds. This is also usually a good time to buy gold due to them knocking it down $30. Then again gold is acting very strongly recently so maybe the paper pushers are seeing their end game? Naaa, the Fed with their henchmen JP Morgan and others will find ways to keep the carousel-o-fun spinning for another week.
old adage of nothing beats cubic inches except rectangular dollars.
I am probably not near as smart as most of the people that post on this site. However, if you all have the playbook and know what is going to happen with the market why are you posting on a stupid Blog and not enjoying all of the millions of dollars you should be making by your fortune telling abilities. I am tired of reading someone after the fact telling me the playbook. If any of you can predict the future next week I will put some money under my Christmas Tree for you.....
On that note I did buy the VXX today anticipating some volatility this upcoming week and the fact we are over bought but we are in short term bullish position being above the 18DMA on the S&P and Below the 18DMA on the VIX. not Rocket Science i know..
Opinions on this board are like assholes ... everyone has one and they all stink. But its fun to come here and "act like you know what the hell you are doing." :)
"Opinions on this board are like assholes ... everyone has one and they all stink. "
LOL. Good one Psquared...
I always say:
Opinions are like assholes ... Some are just bigger than others...
nice
how about "opinions are like noses, most smell, and i prefer if you don't pick mine..."
the vix could go up 20% and you may make 5% on vxx if you're lucky and buy the low and sell the high
Ok i am a dummy re finance, but keep hearing to starve the beast, the beast killing our future and country!
Doesnt that imply not buying stocks? In fact would it not suggest to get out (sell) .
I have gotten out , bought silver, prepped.
And i love Zerohedge for the awareness it brings as did watching zeitgeist.
Just fail to understand why you all still consort with the enemy?
Not wanting to judge or be critical, just failing to understand why we allow greed the upper hand over our future.
Since i believe most of you know re 1913, the squid etc. how can you still trade?
I will reread in the hopes of an honest response to an honest question.
Thank you all in advance
Encouraged People to Short then proceeded to ram their Shorts down their throat.
Another Head fake. Run Oil and Commodities on the stonger Dollar. Boy, they must have really caught a lot of shorts on that one.
Shanghi market has been closed for chinese new year all this week. This jam job on Commodities may be a head fake in itself and an effort to clear the deck for some kind of reaction to the tightening over there ( announced after their markets closed going into the long holiday, a week ago Friday I believe). Hang seng was down 2 1/2% last night.
Our token tightening may have been in reaction to theirs, also our relations with Japan may be on "edge" over the Toyota quality issues. Those bond auctions next week have potential!
Do you really think that companies like GS that dominate the trading at the exchanges formulate strategies for different days and different weeks to blow out longs and shorts and profit from stopping them out? And have plans that link manipulation of stocks with bonds and currencies and commodities all to make profits in each market at the expense of other market participants? How could they not, lol.
Isn't that what they get paid for?
this market just sucks. NTRS BK STT had nice moves this morning because they benefit from the increase in the discount rate. but no follow through...
isn't it more fun when someone does the wash. rinse. repeat. to you?
http://cache4.asset-cache.net/xc/sb10069958ad-004.jpg?v=1&c=IWSAsset&k=2...
The banks just keep loving each other all the way up the upgrade ladder with the "super duper you must buy bank CONviction list or everybody will laugh at you" recommendation.
Today we have the following in collusion to advance the Ponzi scheme (though BK and NTRS are good banks in my view):
*****************************************
Financials were mostly higher today after Morgan Stanley recommended buying banks including New York Mellon
[BK 28.67 0.98 (+3.54%) ]
, Northern Trust
[NTRS 54.60 2.13 (+4.06%) ]
, PNC
[PNC 51.67 -0.20 (-0.39%) ]
and Wells Fargo
[WFC 27.34 --- UNCH (0) ]
.
"If this group trades down because investors assume that rising rates for the bank group is a negative, we strongly recommend investors buy,'' Morgan Stanley analysts wrote in a note. "The discount window rate hike signals rising confidence in the recovery."
Morgan Stanley also likes JPMorgan
[JPM 40.02 -0.39 (-0.97%) ]
, but the stock fell.
PNC has quite the pattern. Two headed monster.
http://stockcharts.com/h-sc/ui?s=PNC&p=D&yr=0&mn=8&dy=0&id=p72578065018
those 2 gaps are begging to be filled. hope they get filled and killed.
pnc is another Fed propped regional.
Measured move off that neckline points to $45ish, still along way from reality at that price.
Her smile and soft touch aided my recovery.
Robo liked the pics but missing the usual gratutious soft porn images! Move back to the center mind set and more girlie pics.
Funny because I closed scaled out of my longs 2 days ago, and initiated shorts on yesterday's close and added today...
Here's great evidence of how badly retail traders get screwed/BS'd. I give you the majestic archives of the S&P "Market Insight" column, going all the way back to the end of 2005. If you want to laugh your butt off, read the columns for October 2007 through February 2008. I have never seen such utterly wrong, horribly stupid predictions.
http://outlook.standardandpoors.com/NASApp/NetAdvantage/displayCompanyAr...
The very best is from May 5, 2008 -- the last lull before the real stock market drops began:
"S&P Chief Economist Sam Stovall thinks investors may be exiting at exactly the wrong time ... '[b]ad news about our economy's state of affairs is so pervasive that everyone is talking about it, which may signal that the worst is over,' says Stovall."
New rules coming soon for shorting perhaps in anticipation of some calamitous event. That should chase more bears away back into the woods.
"New rules "
I thought the new rule was the market only goes up, I am lost.
the way market started pricing in the rate hike on wednesday, 2 whole trading days ahead almost made me puke
It's all a fraud. Here's some great economic perspectives from a "former" insider.
http://www.youtube.com/watch?v=3erD4QyhCQ8&feature=channel
PS. Could this be TD's real identity?
Wow, what a great documentary, thank you so much for the link.
Conspiracy Theory on steroids
brilliant interview. must watch.
You know, I am beginning to think that all of the folks yelling "market manipulation" and "rigged" and "front running" are just people who missed the rally over the past 11 months. You know, peeps like me!! :)
This manipulation stuff is all true and has been for the last 11 months (since Congress forced FASB off mark-to-market). But the real question is not that it happened, but how long will it go on. There will be money to be made on the short side ... but when?
Look at how many people got shanked on the short side of BIDU in the last few minutes of trading (open interest on 480 and 490 put options). The OI put to call ratio was nearly 2 to 1, and the stock takes off going into the close!? Come on!
Does it matter that market is manipulated? Who cares? Its game, you understand rules, you put position and you follow stops... Everything else just a fluff!
watch interview above , your not alone.
Front running is definitely going on and has been for a long time. But the 'unethicality' of it escapes me.
When I think to put an order in for a buy at 12.00 while it's 14.00 I know that my broker knows what I'm willing to pay and that he's going to make money by selling me stock he bought at 10.00. That seems o.k. to me if I think it will go to 14.00 again and I'll profit.
Is this not what front runners are doing albeit on a much grander scale?
"Now that every bear has been crushed"
Not every bear.
It feels like a kind of social capitulation today, evidenced in no small way by the decided lack of participation on this site. Comment levels are way down from the last few days, and what comments there are (perhaps with this exception) are barely one full sentence. Those hoping for "change", or a comeuppance for the guilty in this entire debacle, are coming to the realization that nothing is going to change and no one of substance is ever going to have to pay for their errors, foibles, or greed. Whether anyone likes it or not, the market, and the system, are what they are and will continue to be something in the control of those who will forever run the show.
For the vast majority of people on the outside, the choice remains play a game whose rules are skewed in favor of the few---and always will be---or just walk away. The rulemakers will allow the occasional scrap to fall off the table, and will throw saltpeter at the masses' passions by offering lite fare such as the Tiger speech or Olympic curling or the forever-numbing Idol. That has to satisfy, because it is all the masses will get. And satify it does. Patronizing works wonders amongst the un-evolved. The few are better than the many, since the former believe in their superiority and the latter accept it, just as subjects in kingdoms past accepted the near divinity of the monarchy.
The market has absorbed absolutely everything thrown at it and refuses to break. A rate hike, Dubai and Greece, near-failed bond auctions, 10% plus UE, plus two coming ugly years of Alt-A and Option Arm resets are ignored. Bears, if not extinct, are in a state of permanent hibernation. There is no P3. Bob Prechter will need to spam the same way the Nigerian scammers are now forced to do in order to find those few naive souls yet to fall for the ruse. ("God Bless you from the Director of Inactive Accounts at the Bank of East......I hope this mail finds your goodselves healthy and of prosperity")
For the eternally plient and the Born Again chumps alike, everything is "better than expected" and the ongoing recovery "will be better than most people (sic) expect" and earnings will continue to "surprise to the upside"---because those in control will make sure the rules allow all of this, and only this, to happen. Unless someone's loved ones are directly involved, the masses even have forgotten that the Nobel Peace Prize-winning President has the country in numerous ongoing hot wars.
Placation knows no bounds. Soon Ralph Lauren will introduce a line of Tea Party fashion apparel, and Time-Life will issue a "Golden Hits from the Tea Party Circuit" on a 10-CD package. Anger is a marketable commodity just looking for a hook. Everybody falls in line.
Those among the masses who are unemployed, and those who either lost their homes or are about to, are society's dross and should just go away and stay out of view of the other of the masses whose "confidence is improving" and who "have to tip their hats to the heroes of this recovery in the form of Ben Bernanke and Tim Geithner". Failure is now "your own fault", even un-patriotic. It's back to grabbing the bootstraps, or being a loser. There will be more crumbs tossed, but only if the masses do their part to enrich the elite, who know what is best because, well, they are the elite. Possession and position are tautological proof that they are deserved.
Once in a while someone will not go quietly into the long night. Out of either frustration or insanity, an occasional pawn will try to make a statement either about the overall unfairness or his inability to accept that his failings must be born by him alone. He will engage in one last dramatic act that steals all the headlines on a Thursday afternoon, only to be forgotten on Friday.
And then everything will be better than expected again.
I closed out my shorts today and can certainly relate to what you are saying ... my wife said yesterday; "Lets get out of our short positions", my broker said the market is all set for substantial rise, the best market timer I know went long last night ... could they all be right?
I was thinking of changing my handle to "Bull" and be aligned with CNBC.
I can't ... I can't ... I can't
There are times in life where you just have to make a stand!
I think I'll short the market on Sunday
Well done.
chindit - wonderfully stated.
re: "...are coming to the realization that nothing is going to change..."
i suppose someday i'll learn the truth of that statement, but right now, all i've learned is that time is outrunning rationality, and will continue to do so, apparently.
i think the reason comments are sparse these days is not due to capitulation, but rather because most of the core thoughts have been (well) stated, and now we wait. and wait.
even some of the regular 'anons' can tell us "you can't eat gold" so many times before even they lose interest. :^)
i love the "anger as a marketable commodity" thought. brilliant insight.
Chindit , you write good posts. This time i think you are wrong due to math, compound interest and exponentiality.
Added to that the hunger of millions who are figuring out they were cheated.
If thats not enuf, there is China and Japan who are likely pissed at us.
OH yea i see change, the water is getting dirty. And a little yellow.
Maybe the day of reckoning is coming, maybe not. As my time is opposite that of EST trading hours, I often get on ZH late enough so that most articles have had time to ripen and draw the usual assortment of comments. Today, there was a dearth, which prompted my typically wordy post.
I sometimes feel as if the Titanic has slipped beneath the waves with the dearly departed, and those lucky enough to be in lifeboats are now going about living the rest of their lives with only passing thoughts of the dead. Compassion, as well as fear, run their course.
The gainfully employed, while not aggressively buying goods they don't need, are---according to some observers here and on other sites---slowly drifting back in to restaurants and shops and car showrooms. Firms have slashed costs to the bare minimum, thereby boosting profits and realizing they may not need to hire back the laid off workers to meet demand. (Yes, the accounting "profession" helps with that little extra to beat expectations.)
Generally the numbers do not add up, but since investing now is either driven by Mondays, benchmarks considerations or skinning shorts alive, numbers don't much matter. Everyone looks around and says "I'm willing to say that is already priced in if you are".
When the market starts to tumble, most investors cover their eyes and block their ears like a child not wanting to sense something unpleasant, and when they do take another look, the market is back to where it was before. This has been reinforced repeatedly since March to the point where only the weakest of hands (i.e., highly levered, or soon-to-be whiplashed bears) sell into the declines. Quickly, however, all is forgiven and the inexorable rise resumes.
Yes there is but a small bid under this bubble, and when it does turn it will be as violent as October '87, but that day may still be a bear's lifetime away. In the meantime the cheerleaders are the ones making hay.
The market has absorbed absolutely everything thrown at it and refuses to break.
it means market was short, not long. What you want to do? you want to be right, or you want to make money? I want to make money... So been short IS NOT GOOD TRADE. You may be right, but it doesn't put food on the table, does it?
i have succumbed to laughter. i noticed the same thing.
http://www.youtube.com/watch?v=Xbt30UnzRWw
just whip it, whip it hard. i came 3 different times last night watching "real time with bill maher"
not to diss ZH or anything but why did you take down the “most popular” tally side bar?
Golf clap
I have been reading this blog for the last 6+ months, and this is my first post. I split up my $200,000.00+ portfolio last October. Sold off my gold and oil stocks ( which I had held for 15 months +/-) and put that half into SDS. With that position, every time the market dipped, I sold the nearest month's calls against 2900 shares. For the last 4 months every single one of those covered calls has expired worthless. Currently I am down on the SDS position about $15, 000.00, but have made $13,000.00 on the covered calls. March's calls are on my radar now. The other half of the portfolio is in mundane stocks like SLE, EAT, and several others like them. All have been covered call positions, and a number of them have been called away, at profits. This manipulated market is for short-term traders only, playing both the "short" and "long" sides.
This type action simplifies a traders life. Trade week prior to Option Expiration, than play for 3 weeks.
Hey ... I know her
That was a good summary, Robo. I mean, since they are making it all up as they go along anyway, it was nice to see old friends like a couple of blowouts, "roundtrip," "jam the futures overnight," "PIIGS Disasters" and still manage to slip in "shanks" on the inaugural Tiger Woods First Annual Budget PR firm Media Day™. Noice!
Your pictures look nice, but i am not so sure your right. SPX got kicked O/N bcs NKY and HSI got bitch slapped, so Asia had to cover long and hit SPX. Then London came in and put it all in order... So, it was not US of A who pushed it down, thats for sure. And if market went up after FED - it means market short, not long...
hi