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Intra-Day Update: Cui Bono?
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Intra-Day Update: Cui Bono?

by The MoleOctober 2, 2008

UPDATE 2:48pm EDT: So, the market is in a tumble obviously and everyone is assuming the impending doom. Now, bearish as you all know I am, I cannot help but suspect a ruse, or let’s call it a bear trap. Are we making new lows? Well, not yet at least. I also don’t see any indication that the Feds are stepping in to stem the drop, which would be relatively easy considering today’s low volume. So, maybe I’m going on a limb here but I have doubts that this one is for real. Why?

Cui bono? (in the spirit of Tim’s latin lessons) – literally “as a benefit to whom?” Or in English – who benefits? Tomorrow we’ll have a big vote in the House – would a stable market or even a rallying market benefit the PPT’s cause? Or would it make more sense to let the market fall, or even worse, engange in robotic selling, which seems what it is happening today. Your guess is as good as mine, but I wanted to throw it out there.

UPDATE 3:10pm EDT: Just saw this on the slope – it seems at least BofA is preparing for a nationwide one week shutdown. Is this for real? Does this only affect BofA? Should we all go and grab our cash from our other banks? Input/Insights appreciated. FYI: my wife is already on her way to grab all her cash out of her BofA account.

UPDATE 4:19pm EDT: Here’s a short term chart of the NASDAQ futures (NQ) – does this look ‘real’ or does it look like a systematic sell off to you? And where’s the panic selling in the last few minutes? I actually see a spike up!

Real or Faux?

Real or Faux?

MarketWatch claims that the market dropped on economic slowdown fears – yeah right! After months of bad news and a House vote the next day that is expected to ease the credit crunch investors are dropping everything today? I know the average lemming out there is pretty vacuous but this just smells like a huge bear trap to me. Perhaps I’m wrong – and even if – wouldn’t matter. Nobody can afford puts at a VIX hanging at 45 anyway. Maybe I’m going to regret it tomorrow when we drop like 600 points again, but I just don’t trust this and the risk/reward ratio does not add up.


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • sonnyblk

    I agree and we may even get a rate cut before the market opens after the potentially horrible employment report. I like cash as a position right about now.

  • T.B. Aurelius

    Ye Mole.
    BAC shut down?
    Are they muscling congress?

  • Archangel

    The set-up so far looks that way. Plunge and then range-bound never feels quite right to me. … Stupid foreigners don't get the plot. Dax made new lows today…

  • bill108

    I also see it as a head fake- it it was for real where is the volume??

  • tradertom

    The path of least resistance is definitely down.

  • molecool

    Exactly!

  • molecool

    LOL 🙂

  • molecool

    I don't know but I wonder if it's only BAC or other banks as well…

    Puts on BAC?

  • molecool

    Yes, under normal circumstances I'd be trading the trend. But I just can't help but be suspicious about the timing. We all expected at least a little rally today and the news has been bad all along. So, why do we drop so much now? The day before the vote? Mmmmhh…..

  • molecool

    Okay, honest now – anyone catch today's drop?

  • T.B. Aurelius

    You know I already have a ton from pre-jerk off through the sky.
    But this is getting wackier than ever.
    I think there is some serious move by the cartel.
    But the good thing is they get fucked for their smarts…
    I am waiting.
    When the pheasants spring up assuming all is clear, sniper is at aim…

  • gagelle

    I wouldn't be surprised if the Feds orchestrated the fall to try to scare Congress into passing the bill.

  • T.B. Aurelius

    This is one crazy trading day…
    Yesterday I bought AAPL & IBM OTM calls(which I still think is coming)
    This morning when things started drooping, I bought ATM puts trying to recover some of the call costs.
    I ended up buying and selling puts 5 times and my calls are cost free now.
    If the market gaps down tomorrow, I am going to look for a chance to load up on more calls…

  • HungryNewt

    nope. BAC wasn't dropping for me. 🙁 A few of my other short positions worked out ok though.

  • toad37

    nope, but I did cash out some index puts I've had since last Friday.

  • toad37

    Yes, I'm humbled on my Silver call, but they are January calls on DBS. There is still time for the hyperinflation effect to take hold of gold/silver by then. ;0)

  • T.B. Aurelius

    Mole
    I am a chartist, and don't mix fundies with my trading.
    But I suspected the syndicate would flood the world with reds and flage to draw out enough panic from public before congress vote.
    If so, tomorrow morning will be the same, anything to induce panic.
    BAC bluffing, stock sell off on low volume, they are falling into pieces and fit.
    Let's see what happens to these clowns…hehe
    btw) after the opening i shorted the shit out of the market, so in a way I did catch the drop.
    But if you ask me if I would load up on all kinds of puts, my answer is Hell no.
    One of the fastest way to get killed, I reckon is just that.
    I think the way you trade is absolutely correct!
    Even if crash comes tomorrow, I have no regrets on my action to be defensive.
    About 20% of my capital is still riding on puts from pre-jerk off pop.

  • gagelle

    I read somewhere that bear markets can go down in long grinding periods of low volume while a high volume fall is often a signal of a reversal. I think I read this as part of an analysis of the 73 bear market.

  • Archangel

    Mole, you told me this morning that we are still in iii down 🙂

    So with a small position yes. Mostly in cash, as I have lost my party-membership book which is a prerequisite to trading in govt-sponsored markets.

  • gagelle

    Another thing is that Bush tried real hard to scare people into supporting his bill, but it backfired because investors now think the situation is so grave that they don't believe passage of the bill will do anything.

  • buylo

    newbie here – did anyone notice 2 sweets Retrace levels are at about 95% odds to go long when SPX hits 1114 which is the close today – any thoughts will be appreciated?

  • molecool

    Possible – sometimes these tactics backfire, but when it comes to a game of chicken between Bush and Congress, I'm sorry to say that Bush wins every time.

  • molecool

    Has there been a NORMAL day lately? Seriously, I'd like to mark the calendar…

  • molecool

    Nice – good stuff, T.B.

  • gagelle

    The only thing that would change my mind would be if Beine (how do you spell his name?) came on and started telling everyone to load up on puts.

  • molecool

    I saw reverse repos being paid to the Feds today, so they intentionally didn't flush money into the system to stem a drop. We're being played, people….

  • molecool

    Chop chop chop chop chop chop chop chop…… Weeeeeeeeh!!!!!

  • molecool

    Sweet poetry 🙂

  • gagelle

    He has so far but election day is near and even his closest cronies are really worried.

  • SwissCheez

    You are right Mole, the Feds have been drying the swamp over the last two days. Net removal of liquidity from the system was over 10 billion today. Tomorrow is a smallish net add. However, I was positioned for a drop – but it was easier for me to do from Europe!

  • tomo

    nope, too hot for me. sometimes you just have to walk away.

  • Ukla the Mokk

    From what I'm looking at, the DOW was the only main index that was lower than average on volume. But I agree…it's a head fake. I remain in cash.

  • toad37

    That is interesting Gagelle… it makes sense to me.

  • toad37

    Not a one that I can remember.

  • http://z-stock.blogspot.com/ zstock

    Moontrader is very spooky. He said wait till OCT 2nd before going long. Well I went long today, $NAUD at (-1900), so I suppose there could be a little touch of downside in that reading, But, I like my odds a lot better than Naud's yesterday 50/50 reading,

  • tomo

    All last month the Fed was expanding the money supply – until they reversed their position last Wednesday and started sucking it back up. Why?
    http://www.ny.frb.org/markets/omo/dmm/temp.cfm?…

  • toad37

    Does anyone else get that feeling that we are not going to get that chance to load up on puts that we have all been waiting for?

  • SwissCheez

    I actually think we may bounce off the 61.2, or the 50 Fib (but the latter looks less likely), thus making an oscillating move, and establishing an entry into a bearish wedge. I think we are in the process of printing an IT bottom. It is just a feeling. I re-shorted today in Europe, and tomorrow will exit half after a gap down in the morning. Will leave the rest run. I also have puts from a pre-shorting ban, and those are up very nicely. I might let them run for another week, the underlying stocks were bloated crazy – so they have a lot of room to deflate (biotech).

  • Jackal1

    I've read a number things talking about banks shutting down for days or a week – total freeze on outflows – checking, savings, credit cards. I don't I'm underestimating how serious things are – GE pays Buffett 10% on 3 billion! – stunner. But shutting down all accounts like that would cause rioting – wouldn't it? I just can't believe they'd do it. Why we would thye do it? Anybody?

  • molecool

    Yeah, you boys get all the breaks lately. Francais ou Deutsch?

    I was raised in Lenzerheide as a kid – went to Kindergarten there.

  • molecool

    It's possible but we couldn't know for sure. My impression was that any panic buying of puts in anticipation of a bigger drop might come to bite me in the butt. Never to trade based on emotion. IF we crash tomorrow for whatever reason then I will just play it the way up. I hate to chase the market.

  • toad37

    I hear ya Mole…. that is where my mind has been going too. If I miss the crash, I'll just look to play the bounce… no biggie. No chasing and no emotional trading.

  • beardaddy

    This drop today is to scare those in the Congress. With the emp report out due before they reconvene for the vote, I am sure they will have one more rude awakening to get off their asses. I know we all bears want this to drop more, but does it not feel better when the drop is from a higher point? What good is it to see POT drop to 60 from here, where as a drop from 180 to 95 is as exciting as it gets!

  • molecool

    It doesn't just FEEL better – it's actually actionable. Right now as it is the option market is broken and it frustrates me to no end.

  • Ukla the Mokk

    I have thought about this a lot toad. Because I want to actually jump in on a rally when the VIX cools off a bit, it would not shock me if we simply just went down from here. Then, after a few weeks of market devastation, I'd look at the chart and think, “Why didn't I just get in when I knew it was gonna head south?”

  • toad37

    Yeah, I'm with you pardner, I have that same thought going through my mind 100 times a day. I think we are all so conditioned that the PPT will
    allow us chances to reload. This time that chance may not come…. we'll see. Good luck to all either way.

  • Bartholomy

    I missed today drop too, being at work make it difficult to check market.
    I was expecting a rally.
    Also my gold contract when out.
    I'm nom 85% cash.

  • tomo

    NYSE Bullish % at 23.66! VIX above 45.26!
    What else is in the PPT arsenal Mole?
    Another Reverse Repo tomorrow morning to drive the spike home?
    I'm learning something new on your site every day
    (also thanks for your morning tip on following $TNX for trend confirmation).

  • Ukla the Mokk

    Here's my latest contribution to the bearish candidates, should the opportunity arise via a falling VIX or some other favorable market condition…

    http://screencast.com/t/Zg8FgVFNo0m

  • Ukla the Mokk

    PPT to the rescue please!  Is there a hotline we can call?
    1-800-CONGRESS

  • Jackal1

    Just out! Paulson and Bernanke rush to Capitol Hill. Apparently a math error has been caught. What they really need is 700 Trillion$ not billion!

  • molecool
  • molecool

    Don't forget the Yen.

  • http://gotoguy.com CA

    this is crazy…i hope we are wrong at gotoguy.com on this one!

  • Ukla the Mokk

    Well, what I meant was, “Are these pics too annoyingly big for those who have smaller displays?” — but I see we think alike. >:)  Either that or you're mocking me and I haven't picked up on it yet.

  • molecool

    Expect the latter at all times.

  • SwissCheez

    I actually think we may bounce off the 61.2, or the 50 Fib (but the latter looks less likely), thus making an oscillating move, and establishing an entry into a bearish wedge. I think we are in the process of printing an IT bottom. It is just a feeling. I re-shorted today in Europe, and tomorrow will exit half after a gap down in the morning. Will leave the rest run. I also have puts from a pre-shorting ban, and those are up very nicely. I might let them run for another week, the underlying stocks were bloated crazy – so they have a lot of room to deflate (biotech).

  • Jackal1

    I've read a number things talking about banks shutting down for days or a week – total freeze on outflows – checking, savings, credit cards. I don't I'm underestimating how serious things are – GE pays Buffett 10% on 3 billion! – stunner. But shutting down all accounts like that would cause rioting – wouldn't it? I just can't believe they'd do it. Why we would thye do it? Anybody?

  • http://evilspeculator.com molecool

    I can confirm that the NY Fed was not selling any TOMOs this morning, they were actually doing reverse repos (taking liquidity out of the system). Altogether $118 Billion of reverse repos in the last week….

    What is your measure?

    Francais ou Deutsch?

    I was raised in Lenzerheide as a kid – went to Kindergarten there.

  • http://evilspeculator.com molecool

    It's possible but we couldn't know for sure. My impression was that any panic buying of puts in anticipation of a bigger drop might come to bite me in the butt. Never to trade based on emotion. IF we crash tomorrow for whatever reason then I will just play it the way up. I hate to chase the market.

  • toad 3,7

    I hear ya Mole…. that is where my mind has been going too. If I miss the crash, I'll just look to play the bounce… no biggie. No chasing and no emotional trading.

  • beardaddy

    This drop today is to scare those in the Congress. With the emp report out due before they reconvene for the vote, I am sure they will have one more rude awakening to get off their asses. I know we all bears want this to drop more, but does it not feel better when the drop is from a higher point? What good is it to see POT drop to 60 from here, where as a drop from 180 to 95 is as exciting as it gets!

  • http://evilspeculator.com molecool

    It doesn't just FEEL better – it's actually actionable. Right now as it is the option market is broken and it frustrates me to no end.

  • Insect Overlord

    I have thought about this a lot toad. Because I want to actually jump in on a rally when the VIX cools off a bit, it would not shock me if we simply just went down from here. Then, after a few weeks of market devastation, I'd look at the chart and think, “Why didn't I just get in when I knew it was gonna head south?”

  • toad 3,7

    Yeah, I'm with you pardner, I have that same thought going through my mind 100 times a day. I think we are all so conditioned that the PPT will
    allow us chances to reload. This time that chance may not come…. we'll see. Good luck to all either way.

  • Bartholomy

    I missed today drop too, being at work make it difficult to check market.
    I was expecting a rally.
    Also my gold contract when out.
    I'm nom 85% cash.

  • Tomo

    NYSE Bullish % at 23.66! VIX above 45.26!
    What else is in the PPT arsenal Mole?
    Another Reverse Repo tomorrow morning to drive the spike home?
    I'm learning something new on your site every day
    (also thanks for your morning tip on following $TNX for trend confirmation).

  • Insect Overlord

    Here's my latest contribution to the bearish candidates, should the opportunity arise via a falling VIX or some other favorable market condition…

    http://screencast.com/t/Zg8FgVFNo0m

    By the way…is anyone having any trouble viewing these?

  • Insect Overlord

    PPT to the rescue please!  Is there a hotline we can call?
    1-800-CONGRESS

  • Jackal1

    Just out! Paulson and Bernanke rush to Capitol Hill. Apparently a math error has been caught. What they really need is 700 Trillion$ not billion!

  • http://evilspeculator.com molecool
  • http://evilspeculator.com molecool

    Don't forget the Yen.

  • http://gotoguy.com CA

    this is crazy…i hope we are wrong at gotoguy.com on this one!

  • Insect Overlord

    Well, what I meant was, “Are these pics too annoyingly big for those who have smaller displays?” — but I see we think alike. >:)  Either that or you're mocking me and I haven't picked up on it yet.

  • http://evilspeculator.com molecool

    Expect the latter at all times.