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Intra-Day Update: Keep Your Powder Dry
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Intra-Day Update: Keep Your Powder Dry

by The MoleSeptember 30, 2008

UPDATE 9:50am EDT: The markets seem to have quieted down on the following headlines:

Stocks in U.S. Gain on Speculation Rescue Plan to Pass; JPMorgan Advances

Senate Will Try to Revive Bank-Rescue Plan With a Vote as Soon as Tomorrow

Overnight the London interbank offered rate (LIBOR) reached an all time high on the failure of the bailout plan, and the market sell off.

“The money markets have completely broken down, with no trading taking place at all. There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending.”

-Christoph Rieger, a fixed- income strategist, Dresdner Kleinwort.

Berk and I are watching the markets right now and keeping our powder dry. If we are lucky the Senate will be foolish enough to pass some compromise of the bailout on their end, hoping to invigorate an agreement over at the House. If that happens, expect a major bounce – Christmas time for us nefarious bears. Well, one can dream – I for one am encouraged to see the Dow retrace 250 points overnight.

We’ll keep you folks in the loop with thoughts and ideas while we watch this sideways action today. I frankly don’t expect much to happen here as today is a Rosh Hashanah (Jewish New Year). Use this time to pick your new victims – watch our for retracements back to previous support lines. Remember, despite the focus on the averages, this is a ‘market of stocks’.

UPDATE 12:03pm EDT: For a good laugh point your browser here.

UPDATE 12:51pm EDT: Courtesy of our friends at TechCrunch – end result: The United Singularity:

UPDATE 1:16pm EDT: We’re planning to grab some R calls around 62 as risk can be managed very easily:


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.
  • gagelle

    I heard somewhere that oil is going to 70 because of so called “demand destruction.” Any opinions?

  • tomo

    I would be interested in hearing your wave count.

    Would you concur that a new wave began yesterday at the open and at the moment we are perhaps in (iv) of i ?

  • Ukla the Mokk

    Third comment, and a third question:
    Does anyone here feel that a rally on passage of a relief type bill will last more than a few days? Maybe a few weeks? I read SOH and I have to say that Tim's hypothesis (if the bill is passed) makes a lot of sense. I think the Q3 earnings are going to be absolutely huge.

  • tomo

    Just my opinion but I think that Sentiment has taken a turn for the worse – and Sentiment drives like an ocean liner – it takes forever to turn around.
    Businesses will stop borrowing. People will stop spending. Everyone will wait and see. Then prices will start falling. CPI will SINK while interest rates RISE. Why buy something today when it will be cheaper tomorrow…. I can go on and on. Just my perspective…

  • http://www.FinancingIdea.com Fork_Master_Serg

    til Oct 3-10 and we drop again

  • C.C. Rider

    I think the high is in for the day.Loaded to the gills on COF puts.I was looking for a bounce to $48 and nabbed a bunch.Potential for $35 in two weeks.Now I just need FFH to close below $303 to go on sell mode.

    BTW, JPM has the most toxic paper. I think JPM and C will be the next disasters to flame out.

  • tomo

    BTW: I admired your charts with the fork. The pitch is part of my kit for tracking advances – I haven't had much luck with it in declines but you're inspired me to take another look. Thanks.

  • http://www.FinancingIdea.com Fork_Master_Serg

    funny – got filled on 5 contracts order but with only 1 contract :)
    $250 in 1 minute :) it's a pizza party!

  • http://www.FinancingIdea.com Fork_Master_Serg

    yep, I need some hardware resources and some software to test my Forkoholic theory.
    and than I can write a book :))

  • Archangel

    Dresdner Kleinwort has been taken over by Commerzbank – what is this guy talking about? No one trading with them. Oh boy.

  • molecool

    Would LOVE to see that happening :-)

  • molecool

    We'll post a complete update of our wave count later this evening. Can you wait that long? 😉

  • Bartholomy

    I also read that oil should be around 70-80.
    Retracement from top indicated 90-95, at which we had rebond.
    I was short on energy for a while $++
    Bubulle burst !

  • molecool

    It seems we are painting a series of 1,2s. So, we MAY be in ii of (iii) of {iii} of minor 3. Again, we'll offer a more solid count later tonight.

  • tomo

    Thanks.
    Keeping my powder dry indeed!

  • molecool

    Exactly :-)

  • molecool

    Don't follow the news – just look at the charts.

  • Bartholomy

    Euro interest rate interbank is at the top : 6.88% (it was 5.05% for the month )
    In pratics, the financial system is so screwed, bank prefere put their money at current central rate minus 1%, than borroing it to another bank.
    Those that cannot get any borrowing, get central rate at 11%, while fed is only 2%.

  • http://www.evilspeculator.com berkshire

    Yes, for some reason these banks think they have done well buy buying up toxic companies. No wonder we are in this mess. If you take on more debt and bad paper, it takes away from ANY of the good stuff you have left.

    Skål!

  • http://www.evilspeculator.com berkshire

    Most likely no. While we are oversold on Daily, we are not there on weekly. If we get an extended rally, we would expect it to move sideways for most, if not all of that time. Looking at the $INDU today, if we push past the low of 9/24 (10753) we will have 1-4 overlap, and would need to adjust our count at this point. Right now, I want to see action before I move in. We could fall just as much tomorrow as we did yesterday, bill passing or not…

    Time will tell.

    Skål!

  • molecool

    Yes, losing 1% sure beats losing 10% in one day.

  • Ukla the Mokk

    I also must admit that I am more than a little intrigued by your forkology.

  • molecool

    “While we are oversold on Daily, we are not there on weekly.”

    Yes, this is the KEY sentiment here. Do you guys remember the weekly chart I posted? It's so easy to get sucked into daily trading (not day trading) when looking at charts. But the weekly trend remains DOWN, no matter how many 300 point rallies we're getting.

  • SteveInChicago (spsnomad)

    Demand destruction is part of it, but dollar strength will take it down too. Oil companies have spent the last few years building up capacity, and the supply/demand curve is really inelastic. Small drops in demand and small increases in capacity add up to large drops in price.

    I closed my XLE puts yesterday, as $100/barrel looks like support to me.

  • Gumbo YaYa

    Hey guys,

    I don't get the 'calls on R' either from the P&F chart or the candle chart.

    P&F is on a sell signal now, and wouldn't be on a buy signal until 62.5 but since the next sell signal would be at 58, that puts your risk at a minimum of $4.50 if you didn't wait for some type of pullback.

    The candle charts show a descending triangle confirmed (Berk just go with it despite it being in the wrong trend) with resistance at $62.50.

    Am I missing something or did you mean puts?

  • Gumbo YaYa

    Hey guys,

    I don't get the 'calls on R' either from the P&F chart or the candle chart.

    P&F is on a sell signal now, and wouldn't be on a buy signal until 62.5 but since the next sell signal would be at 58, that puts your risk at a minimum of $4.50 if you didn't wait for some type of pullback.

    The candle charts show a descending triangle confirmed (Berk just go with it despite it being in the wrong trend) with resistance at $62.50.

    Am I missing something or did you mean puts?