Intra-Day Update: Putday

UPDATE 10:01am EDT: I love to hear the sound of screaming bulls in the morning. A little warning to my legions of revenge filled bears however – don’t try to catch a falling sword – wait for a bounce (IF we get one).

It’s interesting to see the market drop 200 points through 2 pivots without even so much as looking back. As I’ve said – that short sale ban is really backfiring on the bulls now. Anyway, here’s a little chart I cooked up over the weekend:

Of course, right now might not be the time – at least wait for a rip before you load up (VIX on a steep rise).

UPDATE 10:25am EDT: The yen is simply exploding this morning, despite the Dollar painting a gap up.

The inverse relationship remains to be a valid indicator – keep watching the Yen if you want to know where the market is going.

BTW, I want to strongly discourage folks from ‘buying the dip’, hoping to ride up the bounce – unless you’re trading index futures of course. The VIX is at 39.71 right now, so the market makers are going to charge you a huge premium, the bid/ask spread is insane, plus you get killed by a drop in IV on the way back up. Our plan at this stage is to wait for a bounce to load up on puts, although I’m a bit worried as I do not see any buyers step in despite the Dow having dropped 300 points in one hour.

UPDATE 10:50am EDT: I just came across a new Fed press release. The interesting part (among others) is this:

The Federal Reserve announced today several initiatives to support financial stability and to maintain a stable flow of credit to the economy during this period of significant strain in global markets.

We will continue to adapt these liquidity facilities as necessary and will keep them in place as long as circumstances require.

Actions by the Federal Reserve include:  (1) an increase in the size of the 84-day maturity Term Auction Facility (TAF) auctions to $75 billion per auction from $25 billion beginning with the October 6 auction, (2) two forward TAF auctions totaling $150 billion that will be conducted in November to provide term funding over year-end, and (3) an increase in swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, Danmarks Nationalbank (National Bank of Denmark), European Central Bank (ECB), Norges Bank (Bank of Norway), Reserve Bank of Australia, Sveriges Riksbank (Bank of Sweden), and Swiss National Bank to a total of $620 billion, from $290 billion previously.

Mole here again: These ‘swaps’ basically mean more ‘cash for trash’. The Fed has made its priorities clear at this opint: It’s more important to save failing banks even at the cost of the complete destruction of our currency and the solvency of our nation.