Tuesday, December 29, 2009

12/29 Morningline

A new pps bull signal in the making on the EUR/USD currency pair, but no corresponding signal on the USD/JPY pair.

KO, my iron condor, also shows a potential new bull signal and has broken above its trading range of the past six days. It is trading at the top of its profitability range (at expiry).

SMH -- I hold a bull put spread on this semiconductors etf -- shows a potential bear signal but remains so far within its trading range of the past four days.

A pps signal becomes valid only if it is still in place a the end of the trading period, in this case, the day, since I'm working with daily charts.

Speaking of days...

Three more trading days left in 2009.

Strange to think that a year ago volatility on the S&P 500 (the VIX) was in  the mid-40s and preparing to leap up another 20% to the mid-50s.

Last week, the VIX dropped into the teens, and yesterday's "gap up" still kept the indicator below 20.

The VIX is described as a "fear index"; what it measures is volatility. The greater the volatility, the greater the uncertainty over the future course of the market.

With volatility below 20 in an up market, it's clear that traders have put the unpleasantness of last autumns near-total collapse of the financial system behind them. Ah, happy days. They're here again.

To the indicators...

  • Blue chips (SPY) open at 113.01, entered bear mode at close on Dec. 8 (at 109.61)
  • Fear index (VIX) 19.87 at the lower end of yesterday's trading range, bear (bullish for stocks), Dec. 22 (20.49)
  • Treasury long bonds (TLT) 89.26, bear, Dec. 21 (91.14)
  • Gold (GLD) 108.50, bear, Dec. 17 (108.00)
  • Oil (USO) 39.06, bull, Dec. 16, (36.74)
Currency pairs:
  • Dollars per euro (EUR/USD) 1.4378, bear, Dec. 4 (1.49)
  • Yen per dollar (USD/JPY) 91.63, bull, Dec. 15 (89.60)
Holdings, January expiry, no new signals:
  • KO, iron condor (p50/-p52.5/-c57.5/c60) 57.45, bear, Dec. 16 (58.42)
  • LVS, covered call (-c16) 15.32, bear, Dec. 18 (15.29)
  • SBUX, bull put spread (p22.5/-p24) 23.84, bull, Dec. 18 (23.68)
  • SMH, bull put spread (p27.5/-p29) 27.86, bull, Dec. 21 (27.62)

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