Saturday, July 19, 2008

What now?

OK, so this week Monday's close will be crucial to the health of the market here, particularly TECH, which we feel will be the next in line to sell off. AAPL reports earnings after the close. The stock, like GOOG was, is trading horrendously. Does that mean it sells off post earnings? Not necessarily, but it'll be interesting nonetheless.

The RUT puts played out nicely Friday if you played them. I am staying a big neutral here to see how the week plays out. We may get another push a bit higher. One market that is interesting here remains CHINA. The Olympics are 3 weeks away and their market is cracked, it could get a bounce here that is tradeable. We played the FXI and CAH before with nice results, its not a bad idea here if you use a stop loss. And, it could be a nice hedge if you do short some US stocks here.

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Friday I made a couple of bad calls, I have to admit. I called LEH long at around $18, which was the right call, but then called SKF long as well, which was the wrong call. We looked early as though they might sell the news on C. I made the mistake of thinking SKF might get pinned higher, which didn't happen, they basically pinned $135. My bad. Hey, it happens. We got MF and made some nice sheckels late day, though, so there ya go, and MF could get a nice gap up Monday if the market decides to stay a bit positive. Monday's open should be a nice fade either way. I think the Bulls and the Bears are lined up and are going to have a nice fight here. A lot of people were caught short, and a lot of funds came in with both fists buying, sending the market zooming. You'll notice what happened, the stuff that was and has been red HOT and the so-called safety stocks, like energy, AGs, and such all SOLD OFF HUGE (hence our USO puts being so steller!). Commodities are cracked here. There is definately a pairing in this market which is a good way to guage and profit from the market. Commodities up, financials and consumer staples down. Commodities down, reversal. Oil $150 was strong resistence, a lot of funds that were long unwound the position over $145. I'd like oil to pull back here as much as anyone, I think $125 looks to be the next level. This weekend if there is good news out of Rice's trip to Iran, and US policy looks to have short term solved that issue, oil SHOULD pull back in a big way and the markets could get a further boost UP.

I like that scenario, I think thats how it plays out, which is why I am backing off the idea of flat out shorting the market this instant. Let's wait and see how it pans out. For the moment, I think oil heads lower unless news overcomes that view. You can short oil futures, I did this week, with Terra Nova ( That's who we recommend as a broke, and who I use. Tell them sent you and they'll give you some nice discounts and some free trades I believe.

In the meantime, its a beautiful day in NYC and I intend to enjoy it! See ya all Monday!

happy trading!




TheBeerGuy! said...

Hey Waxman,

Dennis Gartman, who really knows his business and is probably the most astute visionary of the commodities markets likes the refiners here. In fact, so do I and that was prior to Gartman blessing them. Some moron downgraded TSO and VLO on Friday...same dude that Upgraded them $35 HIGHER than they're trading at now. LOL!

The way I see it, oil is coming down but not necessarily the price-at-the-pump to any great extent so the crack spread should improve.

And regardless of demand down, it looks to me these stocks are trading far too low so I'm buying.

Just thought I'd pass it along.

Waxie said...

I called TSO and VLO last week.


TECH short, period. SKF long, period.