Tag Archives: Bear Spread

CSI

Bouncing S&P

CSII’m disoriented.

A 5.2% bounce in the CAC40 and a 3.0% bounce in the SPY ? It looks like the IMF-Italy rumors from Europe and the Black Friday sales numbers (fabricated numbers) sent a wave of euphoria through the markets this morning. Again, nothing has changed. Rumors might have some truth to them, but european sovereigns are still a huge mess and contagion management is still absent. It’s been 2 years.

Is this an opportunity to short the EUR.USD? It’s up only about 0.5%. Doesn’t that seem a bit weak given a 5% rise in Paris and 3% rise in the $SPY? It does to me.

My ratio spread idea that I proposed last week is performing well. I added a 120/112 bear spread now that 115 has appeared as a potential resistance point if the market decides to head south. Unfortunately, I continue to get burned with my ES trades, I’m not working with the right time-frames (for me). I know that and have made this error more than once. I’m writing that here for one reason, so I don’t forget, again.

I hate reading negative headlines day after day without an alternative point of view. We’re fed politically motivated rumors attempting to reassure, though these attempts fail miserably because they’re UNBELIEVABLE, think ‘super committee’. We’re fed ‘viral’ Black Friday sensational pepper spray fights and occupy protests – which sadly are MORE BELIEVABLE. You really don’t have to wait for consumer confidence numbers to understand the mood on the street.

On French television last night, by pure coincidence I watched a pepper spray-human combustion-aluminium lady rerun of The Experts (CSI). It wasn’t agency issue water based pepper spray, but butane. Ah! The person that selects these reruns must have a sense of humor, if only Grissom had a financial column…

SPY Rollup

Sitting in this range is making it hard to find setups that I like.

I rolled up some SPY 117/110 Bear Spreads to 120/117. I don’t believe so much in this rally. If it’s real the shorts should be covered here, and we’ll blow through the 120 resistance by EOD (on volume?), but if it’s not we’ll pull back again at least to 115 and my initial 117/110 spread will ¬†go the way of, ‘phew’.

SPY October 10th, 2011

What makes me doubt the optimism?

  1. Gold ( GC_F ), it’s trading too much like the market… It should be falling if the risk trades were flowing back into equities.
  2. Europe is filling the airwaves with marketing spin, Slovakia is copying the republican freshmen, and Greece just won’t go away.
  3. The run up yesterday on such light volume.

I can simply count on the fact that it’ll probably surprise me…

TIF – Trade Idea

Tiffany & Company ($TIF)

Judging from the volumes on the October contracts for $TIF it looks like there were two relatively large Bear Spreads open.

There’s a 70/62.50 and a 65/55.

I like the 65/55 spread, and the 6 month chart below will give you an idea why.

The trade will cost you about ~$1.85 and the max profit if $TIF closes under 55 would be ~$8.00.

Both of these might be hedges against a long stock position, but I still like this trade. The headline risk which Tiffany faces at the moment, will be any weak news on upscale consumer spending. That seems more and more likely to me, especially if we’re going to tax the rich… The other element which I find curious is the extreme divergence with Nordstrom ($JWN) today. ($JWN up 4%, while $TIF is down (2.3%), this is uncommon. Look at the divergence today on the 5 day chart.