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Intra-Day Update: IPI On Special Today
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Intra-Day Update: IPI On Special Today

by The MoleSeptember 26, 2008

UPDATE 2:39pm EDT: We’re waiting for wee-bit of a drop to go long IPI – info is on the chart:

If you take this trade your toenails will fall off and you will lose your premium and the respect of your peers.

UPDATE 3:20pm EDT: Mark your calendars boys and girls – Berk and I just went bullish (for one weekend). Thus we decided to grab a small amount of DIA calls. The PPT is most likely going to get some kind of bailout deal this weekend, so just for once we trade along with the baldies. Let’s see how that works out.

UPDATE 5:42pm EDT: Great article I encourage you to read. Basically, in a nutshell – government bailouts and other types of manipulation do not prevent or stem economic contraction. Incidentally, they are also priced into Elliott Wave Theory I would like to add – in the end market forces always always prevail. Don’t worry my wicket little evildoers – we will get our crash rather sooner than later.

UPDATE 9:57pm EDT: Failure Friday strikes again. This week’s (2nd) victim: Wachovia – a plan seems in the works to force the bank into a merger with Citigroup.


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 the usual social media waterholes.
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  • beardadday

    Are you going long on this @ the Support level as I dont understand your remarks below the graph. Please clarify.

  • molecool

    We grabbed them just now.

  • jcoors

    I'm concerned this might be a buy on the rumor, sell on the news type situation. No one with any brain cells should be holding on to stocks for the long-term. Everything is bailout this and sector rotation that. Who knows though, could be a big pop Monday. Seems like a big gamble though. So I'm staying mostly in cash, with some PWE (dividend and commodity and Canadian dollar play), DBA, and UNG. The only thing certain is the death of the dollar.

  • molecool

    I'm 95% in cash πŸ˜‰ Very small positions, as I said.

  • Archangel

    So did I. The bald one must be pushed higher – to fall harder.

  • gagelle

    Going along with the baldies–I don't know–remember what happened to Samson?

    “Samson was born to aged parents. He was a Nazirite set apart for God's service and therefore did not cut his hair or drink alcohol. His exploits included tearing a lion apart with his bare hands, killing a company of the men of Ashdod, setting fire to their fields and orchards, and slaughtering a thousand men with the jawbone of an ass. After a Philistine woman named Delilah enticed Samson to reveal the secret of his great strength, she cut off his hair, and the Philistines gouged out his eyes, bound him with strong fetters, and set him to grind at the mill in the prison. But Samson's hair, the secret of his strength, began to grow again. The day came when the Philistine lords sent for the blind Samson to laugh at him. Samson felt for the pillars on which the house rested, pulled them down, and died along with many Philistines. “

  • gagelle

    I may be wrong, but I have a feeling the “bailout” has just been priced into the market.

  • molecool

    Jeeez – for one weekend, Gagelle. We're as bearish as ever but couldn't pass up the possibility of some easy money. Again, our exposure is very small – only a handful of contracts.

  • molecool

    BTW, gagelle – I see you post here a lot and I wanted to say thanks for your continued support.

    1+

  • boomer55

    Mole
    We can still buy puts on the financials if we sell to close?

  • gagelle

    No problem. I really enjoy the blog.

  • gagelle

    I was just kidding. I'm one of the biggest supporters of the bald community. Ask Larry David.

  • Ukla the Mokk

    Well, here's what my trading day went like…

    http://www.youtube.com/watch?v=cOKJW6gFydw&fmt=18

    Bought puts on SPY for a quick day trade. I would like to add that I am an asshole. I put these trades on from work. Bad idea. Never again. Fortunately it wasn't too costly, but my account is small and I can't afford this Mickey Mouse shit. I HAD a proven track record of day trading on paper awhile ago, but once again, when I go with real money, something in the formula changes. But GM met my trigger to go bullish so I sold some Oct 9 puts. And if it gets put to me I won't really care…I'll just write covered calls on it.
    Go ahead…call me a put selling covered call writing pussy. I don't care. It's the only thing that has made me money for real. I just have day trader in my blood and I'll get there sooner or later. But at least I'll never give up!

  • molecool

    “Go ahead…call me a put selling covered call writing pussy. “

    You're a put selling covered call writing pussy, Ukla!

  • Ukla the Mokk

    Allow me to reiterate: “I don't care.”

    I guess that was just a little too easy…if not a little unimaginative. Sucka!

    +1

  • gagelle

    Great article and exactly what Tim was saying. It doesn't matter what they come up with. It will not stop the bear.

  • gagelle

    “It is a disgrace that no professional economist was consulted by Congress or invited to present his/her views at the Congressional hearings on the Treasury rescue plan.”–Nouriel Roubini

  • gagelle

    Absolutely yes.

  • ZigZag

    Marc Faber Says U.S. Credit Losses May Total $5 Trillion. I couldn't get the sound to play on my Mac. Had to use Windows..

    http://www.bloomberg.com/avp/avp.htm?N=av&…17…

  • gagelle

    We've Only Just Begun
    Steve Keen, Sept. 19 2008

    I've had a couple of very enjoyable chats this week with Red Simon, on the ABC Breakfast Show in Melbourne, Australia, and some friends have been trying to get me to throw some old Skyhooks song lines into the conversation–such as “Horror Movie” and the like (for non-Australian and/or non-“Living in the Seventies” readers, Red was the drummer and lyricist; here is a link for the lyrics).

    Though they're definitely apt, the piece of 70's music that most came to mind when I spotted this new feature on the US Federal Reserve's website this morning was from The Carpenters (which in contrast to The Skyhooks, was not one of my favourite bands): “We've only just begun”.

    It's an interactive map of the subprime and alt-A mortgage catastrophe in the United States. The numbers, which are also available for download as Excel spreadsheets, are simply staggering.

    The scariest part of the data relates to what are known as ARMs (“Adjustable Rate Mortgages”)–fixed rate mortgages that began with a “teaser” low rate, and then reset after a number of years to a higher rate (the standard US mortgage is a fixed rater, unlike Australia where variable rate mortgages are the norm).

    Of the almost 3 million subprime loans (the precise number is 2,919,604, representing 2.5% of America's 115,904,641 housing units), almost 2/3rds are ARMs (the national average is 62.9%), and just over 30% of them will reset to the higher rate in the next 12 months (with another 10% to follow over the next two years).

    That's why this crisis has “only just begun”. There are two sides to this catastrophe, and whatever is done about it, one side or the other is bankrupt.

    IF the ARMs go ahead, then the number of American households that will go bankrupt is at the minimum 1 million–because there's no way these borrowers can pay the higher rate. At the simplest scale, this is because the rates will rise from an already high average rate of 8.8% to a usurious 14.8%. But on top of this, the effective rate for the loans throughout has been the higher rate–and the gap between this and the initial teaser rate was capitalised onto the debt.

    So a borrower who took out a loan in 2006 of $183,900 (the average subprime loan size–note by the way how small this is compared to median Australian housing loans), and whose loan resets to the higher rate next year, will go from paying 8.8% on 183,900 to paying 14.8% on $219,200–a doubling of annual interest payment commitments, from $16,180 to $32,440.

    This for a cohort of borrowers who are already massively behind on their payments–though not as massive as it will get (currently 10% are behind 30-60 days, 5% 60-90 days, 10% 90 days plus, and 11% are in foreclosure). There's no way they can manage this: they are, as the Americans put it, “toast”.

    But what if they are freed from this obviously onerous burden by legislative fiat? Then the people and institutions who bought the residential mortgage-backed securities (RMBSs) that these mortgages finance are “toast”: the bonds will be next to worthless.

    So We've Only Just Begun. And it is a Horror Movie, though not “right there on your TV”–if you're American, you're living in it.

    And if you're not American, then it's still almost guaranteed that some of your investments will suffer–whether indirectly if you own shares or property, or directly if you or an agency that affects you purchased the RMBSs that funded the subprime scam. You may well wish that you were still “Living in the Seventies”.

  • molecool

    BTW, I don't know if you guys ever ran across my little tidbit about how much a trillion actually is. Imagine you have an unlimited amount of $1000 bills (yes, they exist: http://www.dreckless.com/images/1000%20dollar%2…). Now keep stacking one on top of the other until you reach a stack 4 inches high. Congratulations – you're a millionaire!

    $1 Trillion Dollars would be a stack of $1000 bills 87 MILES high – it would basically reach lower orbit in space. Simmer on that for a while and remember it next time pundits keep throwing talking about various trillions to be spent on corporate bailouts.

  • Ukla the Mokk

    Because I was too busy mucking around with my failed SPY puts, I missed what appears (now) an obvious trigger to go long on the one issue I watch more than any other: IWM. I have a 23.6% retracement at 68.40 based on a fib from a 1-yr chart, but a confluence of 23.6 from a 10-yr chart and 38.2% retracements from the aforementioned 1-yr chart at about the 71.40 level…and for awhile the 71.40-50 level has been huge (it also formed the neckline of a beautiful H&S pattern that formed back in May/Jun). So it wouldn't shock me to see a bounce off of that resistance level.

  • BigSteve

    Just wanted to take a minute and let you know that I'm enjoying the intra-day updates. I used to check in in the evenings or early mornings, but I guess now I'll have to alternate between here and SOH during the day. Thanks!

  • molecool

    Don't feel bad – any trade at this time is a bit of a lottery ticket.

  • molecool

    Hey, thanks BigSteve – we try to make you guys come back for more πŸ˜‰

  • TonyPCF

    Good clip! If I may say so myself πŸ™‚

  • TonyPCF

    While definitely a good defensive strategy (the near all cash), I believe (and let me know what you think of it), that short exposure (although painful in the last couple of Fridays) needs to be in place.

    Was it here in the last few weeks that it was mentioned that if 'the big move into the abyss begins, there may be no good short entry opportunities for at least a few 300-400 point days in a row' (I am paraphrasing from what I remember). Not to mention the increase in the option premiums (if you are inclined that way) as the VIX goes higher. Of course any intervention (not that there should be too many left; rate cut?) can really screw your account up in the short run.

    Observation/question: I haven't seen much talk about home builders lately as the focus is on financials. New home sales, jobless claims, tightening of lending, no money to lend, yet, while $SPX is around its July low, XHB is 50% above the July low and last Friday it had a new 52w high. Something wrong with this picture/relationship?

  • http://www.FinancingIdea.com Fork_Master_Serg

    Can you please REPEAT AFTER ME : “Mercury Retrograde!” :))

    >its 4,350 miles – Los Angeles to New York City

    Maybe in your America, but not in ours

    I drove from DC to LA, and I know distance between DC and NY :p
    Straight line 2443.79mi LA-NYC

    Google driving : 2792mi

    http://maps.google.com/maps?f=d&saddr=los+angel

  • http://www.FinancingIdea.com Fork_Master_Serg

    Evil astrologer Arch Crawford issues alert for Monday(9/29)!

    CRAWFORD PERSPECTIVES

    CONSULTING CLIENTS 080926

    WHAT WE WANT TO KNOW IS:

    HOW MUCH IS OUR GOVT SPENDING TO SUPPORT THE STOCK MARKET?!

    AS LONG AS WE ARE EVALUATING GOVERNMENT BAILOUT COSTS

    WITH THESE HEADLINE NEWS ITEMS, HISTORY MANDATES THAT THE 2002 LOWS WOULD HAVE ALREADY FALLEN!!

    THAT’S DJIA=7200, AND S&P500=760

    TODAY DJIA +138 NYSE -40 = TOTALLY FAKE RALLY!

    ASTROLOGY VERY BAD ON MONDAY OPEN!!!

    OPINION = RECENT LOWS WILL BREAK

    AND SERIOUS WAVE 3 DECLINE TAKES HOLD

    LOOK THEN FOR 2002-2003 LOWS TO BE TESTED!”

    GOLD MAKES ANOTHER RECORD SPIKE UP!

    UP OVER +$38 AND LOSES THE ENTIRE GAIN

    WE ARE STILL IN WORSENING FINANCIAL CRISIS!

    Remember that markets CAN DO ANYTHING, and keep protective Stops on ALL positions.

    Arch Crawford

    Crawford Perspectives
    520-577-1158
    http://www.CrawfordPerspectives.com

  • Meta

    Cramer on CNBC says market may go to DOW 8,000…seems like everyone is a bear now…interesting.

    Seems like there is a definite whiff of panic in the air, which is usually a good sign of a market bottom, at least in the short term here.

    http://www.cnbc.com/id/26906947

  • Meta

    That clip from the Toy with Richard Pryor had me laughing…good one Mulka.

    Mole…I also had to laugh at your Monty Python post…”bring out your dead”…lol

  • molecool

    There is a different between a 'market bottom' and a 'market low' – on the latter at least in the short term I consider that a possibility.

  • molecool

    “GOLD MAKES ANOTHER RECORD SPIKE UP!

    UP OVER +$38 AND LOSES THE ENTIRE GAIN”

    I hate this upper case business – sheeesssh. But anyway – he's spot on with Gold. Remember, I mentioned the same for the last few days. Ignore both of us at your peril.

  • molecool

    Great – so it's almost NYC-L.A. and BACK! That is simply an insane amount of money.

    BTW, you're a pedant πŸ˜›

  • Meta

    Cramer on CNBC says market may go to DOW 8,000…seems like everyone is a bear now…interesting.

    Seems like there is a definite whiff of panic in the air, which is usually a good sign of a market bottom, at least in the short term here.

    http://www.cnbc.com/id/26906947

  • Meta

    That clip from the Toy with Richard Pryor had me laughing…good one Mulka.

    Mole…I also had to laugh at your Monty Python post…”bring out your dead”…lol

  • https://evilspeculator.com molecool

    There is a different between a 'market bottom' and a 'market low' – the latter at least in the short term I consider a possibility.

  • https://evilspeculator.com molecool

    “GOLD MAKES ANOTHER RECORD SPIKE UP!

    UP OVER +$38 AND LOSES THE ENTIRE GAIN”

    I hate this upper case business – sheeesssh. But anyway – he's spot on with Gold. Remember, I mentioned the same for the last few days. Ignore both of us at your peril.

  • https://evilspeculator.com molecool

    Great – so it's almost NYC-L.A. and BACK! That is simply an insane amount of money.

    BTW, you're a pedant πŸ˜›