Take some profits in the rails. They are trading at the higher end of their PE range, and the economy is in a severe slow down. At most, they will be range bound before they break out.
Just a heads up to be cautious out there. Getting caught up in a rally is easy… just remember, we are in a recession.
The resistance set points I pointed out earlier are approaching. Be prepared. I will be using the 138 May SPY Puts.
An initial short (or protective position) should be taken soon… I am waiting until lunch time or when the market sees its intra day push upward again or if the market decides to loose its footing.
I will post more updated market charts later in the day, time permitting.
FYI… I took on the MA option trade.
Heard some interesting fact while driving to work this morning… apparently the financial sector was responsible for 1/3 of the incomes in NYC.
Over the weekend I saw all the layoff chatter going around via the Investment Banks. All I know is, if Goldman is considering substantial layoff, then the situation for the IBs is weak.
As of now, NYC real estate prices were being held up by Wall Street money and money from abroad. I can understand money from abroad continuing to be put into NYC, but the Wall Street cash will dry up. (And if there is a global recession, I can see a hick up in the abroad inflows.)
There could be a decline or hick up in NYC. Granted Manhattan’s real estate market is its own animal, and will not see drastic declines, but an easing in price appreciation it should see.
I am thinking about buying 220 April puts in MA for a pull back.
MA is overbought, and pricey at the moment. (I am not expecting some big break down… I am a big fan of MA, and understand the fundamental very well… MA just needs to consolidate.)
MA may see the high 52 wk high again, and even surpass it, and when this happens I will buy the puts. (I am only looking for a few points of a decline to around 215 or so.)
I get a good laugh when I see a downgrade, and in the same report the price target raised. How can that be?!?
Anyway, the Citi downgrade caused AGO to decline pretty nicely in the AM, but I think that decline was due to ’shoot first-ask questions later’ attitude. The analyst, despite the downgrade, increased the price target to 28, and admits to the bullishness toward AGO’s business. (article)
I pretty much agree with the article, except for the downgrade on such a bullish scenario. But I think the Citi analyst was looking at a chart when they called it a hold. At the moment AGO will be range bound, but this is the time to buy it, not when it breaks from the pattern.
AGO should be bought now, and when it reaches its upper limit of the trent line (around 26), sell the 25 April Calls or buy the 25 April puts. As AGO consolidates back down, close out the protective option positions. (I have been selling calls everytime mid 25 was seen, then closing the position when 23/high 22 was seen after the call sale. I also had the intention of buying puts when the upper trend limit was achieved.)
I am trying not to be overly optimistic, but I am still seeing some bullish signs despite the market being down today.
As soon as I upload this post the market will most likely crater… why… because that is how karma works 
… irrespective, this is what I see.
Oh, and I find the Oil ‘report’ (if that is what the media wants to call it) extremely weak. The audacity of the EIA to report that demand will diminish as prices rise, yet their very data this week goes against the report, truly laughable. (Follow the numbers, not some agency that is told what to write.)
Gasoline demand has been declining for some time, MasterCard issues ‘gasoline demand’ every week or so, so there is no surprise there.
Added to my position… added at 1.00. (This is still a speculative play, but their is potential promise here.)
FYI… I will most likely sell is position when the stock trades up, but hold on to the rest.
Now that the seemingly short-term bottom was established in the market, trying to be one step ahead I am looking at potential resistance points…
SP500
SPY
Based on my review of the charts that compliment the market, determining the resistance point at the moment is a bit difficult/fuzzy.
Around 1365 maybe broken through if the current positive sentiment remains. I do think the begining-of-the-end for the credit crunch is here. IMO the access to the discount window for the investment banks could act as some stability to the credit market to allow price stability for the high quality bonds. (True ‘talks’ can take place to prevent margin calls, and force sales of high quality bonds.)
The ecnonomy is still in the crapper, so I am hard pressed to believe 1410 or 1450 will be broken upward.
I eased up on my exchange exposure after this recent run, and unloaded ICE. I still think it is great story, and inexpensive… especially with all the trading volume generated with this commodity bull run.
I will be active in trading its options, as I have been doing for some time, and it has treated me very well. (I will post the option positions I take on ICE going forward.)
Just a heads up.
I am seeing signs of a short-term market bottom. I eased up on most of my protection, and am considering the April 125 SPY Calls.
The oversold condition, along with the location on the rise in the VIX is telling me this.
