OptionNewbie, Blog Has moved

Although it might be a little early to invest in a domain, I didn't want to have to make a change later. I figure its easier to move when your small. Anyhow, my new blog is located at :

www.optionnewbie.com

What is next for the Dow?

Although the fed cut discount rates, I wonder how much that really affects the long term picture for the stock market. Discount rates really only provide a bail out mechanism for financial institutions. I wonder how much of Friday's bounce was related to a combination of short covering and financial sector recovery. The housing and mortgage issues will undoubtedly extend beyond what has been seeing these past few weeks. For the short term, I am looking to see if the Dow can clear 13,200 and hold the line. If not, I still see resistance at 12,500 and with that in mind there is potential to see another sell off. Only time will tell.

Fed cuts discount rate

A discount rate is good news and undoubtedly means that the banking sector will see an uptick today. What is in question is the mood of the market. Will this create a sustainable rally? The Dow did touch the 12500 support yesterday before bouncing. We are at a turning point and until more is revealed regarding the subprime issues its hard to tell where we stand. Regardless, the issues with subprime has made lenders nervous and the sudden restriction in lending standards has limited the market for sellers. Housing is in for a long recovery. I will be keeping and eye on Banking, Finance and Technology for the next 30-60 days.

Housing starts hit low

The US Census released housing starts today ( http://www.census.gov/cgi-bin/briefroom/BriefRm) . As I suspected, they were poor. It doesn't take a genius to figure out that this number was going to be lower. Although its never a good idea to trade on news, due to the volatility, almost all news is being taken negatively. I viewed this week as an opportunity to make bearish plays on builders.

Watchlist: CFC, ESS, AVB

Look Out Below! Dow going down!

Well, the Dow was showing resistance until today. This is a bad sign for the bulls and my previous hope, that we were looking at a bounce, has been replaced. The Dow is currently showing a point and figure price target of 12500. With housing starts and building permits being announced this Thursday, it could get ugly.

Energy Sector BP Reverse

The Energy sector presented a point and figure bullish reversal today. This is one technical indicator that I follow closely and I will be screening energy stocks looking for deals.

Watch List:

BP,RIG, PTR, NE, SU

Dow meets regular resistance

The Dow is forming a reliable looking price channel. As a result I am looking for the Dow to break through 13700 resistance or 13200 support. This next week should be interesting and assuming that the subprime gossip slows, I am guessing we will break through 13700 and march back up to 14000.

PreMarket Woes, Fed jumps in

Today I am paying attention, close attention to the pre-open market and after hours trades. Looks like wall street stocks are taking a hit. The Fed is lending money to banks for liquidity purposes and this certainly brings concern.

I think the slightest series of positive news could reverse this whole thing and it would be a good idea to stay close to the monitor. I plan to place some early stops and contingent orders. I have a few puts that should really take off but need to lock in the profits.

No! you can't have your money, BNP and Subprime

BNP
"Im sorry, you cant transfer funds today, all funds are on hold."
Client
"Why not."
BNP
"We made bad investments, we think."
Client
"So how does that affect me if you made the bad investment?"
BNP
" Well, we arent sure yet but you cant have your money until we figure this out."
Client
"What, well then, I guess I'll be taking my money somewhere else."
BNP
"Nice try, we arent giving you the money"

Dow up 287! So what happened to subprime?

Although the Dow appears to have bounced back from major losses on Friday, underlying indicators remain unstable. The bounce seems to have started with news from an S&P analyst regarding Bear Stearns. Meaning back at the ranch, the news and reporting related to subprime lending has suddenly gone silent.

read more digg story

Hedge Fund Gambling, Bear Stearns COO Resigns!

1.5 Billion dollars of investor money has been lost and the COO resigns. This smells of Enron and nobody knows the real story. An AP article released today states "Bear Stearns made wrong-way bets". Nice to know that reputable market makers are in the habit of making bets!

read more | digg story

S&P 500 losing ground, So much for large cap

All markets took a beating today but I
wanted to point out that the S&P500 broke its last resistance on July 31st (see my blog entry). Is the next stop 1360? Technicals rarely lie, particulary when they are supported by reliable measures of market volatility such as the volotility index (VIX). Predicting the future is not my specialty and rarely is it worth the effort to proclaim an ability to predict. What is the bottom line? The technicals definitely support the bear.

Ambac Financial (ABK), leading the S&P500 dogs with a -6.47% loss on the day.

Detecting Liars

Seeking out the worst in people is a dangerous course. I think this article " how to detect bullshit "has some good ideas and everyone should exersise caution from time to time but if you look for liars, you will find them. Additionally, not all forms of BS are bad, softening the blow of the truth can be a necessary evil. I dint want to visit the doctor and be told "your going to die". I would prefer something like " Although you chances of survival are low, we have many new successful treatments for your condition". Like everything in life, balance and good judgment are key.

How the EPA ruined the auto industry

I am going to go out on a limb and say that auto sales are going to continue to perform poorly. As long as oil prices continue to rise against a weak dollar, can we expect more of the same? Everyone I know is sick of driving an hour to work and paying double the price for fuel. Unfortunately, all the vehicles made today are major gas guzzlers and oh, by the way, the EPA estimates have been incorrect forever.

http://autos.yahoo.com/green_center-article_153/

DOW Positive, For Now....

Although the DOW finished on a positive note today, fewer stocks are out of the red. Decliners outpaced advancing stocks accross the board. Smart money remains in cash, well at least 75% or more.


http://finance.yahoo.com/advances