Just Another Day at El Swindle Grande Casino ~ The Risk Averse Alert

Monday, April 20, 2009

Just Another Day at El Swindle Grande Casino

Contrary to Cramer's belief that, today's pullback is setting up the next leg in a new bull market, I rather believe it paves the way for the final leg in the current bear market bounce. So, in answer to Cramer's presumption that, "all those bears" could not possibly be right...

Investors Intelligence

Well, they were last year ... and the trend is your friend, pal.

What we have here are the fruits of a market quite dominated by investment banks. Our tax dollars put to use in a game of cut throat at El Swindle Grande Casino.

"Winner banks," Shemp? A couple good trades does not make a winner. Particularly when what bets are on the books more dramatically slant toward losing propositions with each passing day. Your darling JP Morgan/Chase and its monstrous derivatives book is only the most glaring case in point.

SPX 5-min

Just like that ... long positions which had become increasingly well-hedged up until last Friday's options expiration (OEX Put open interest, finally, had been closing the gap on Call open interest) ... suddenly were not so well-hedged once April options went off the board (with May now the front month there are 1.5 Call contracts open for every Put contract, meaning long equity position hedges were not rolled forward) ... and so, today, the winning players at El Swindle Grande quickly cashed out.

If ever you needed conclusive evidence confirming my recent, more apprehensive outlook ... markedly wary of further upside prospects ... the dynamic you just read should do the trick. Look at it this way. If the market had a lot more upside remaining, long equity position hedges would have been rolled forward to the May contract and today's straight line down likely would not have developed.

Anyone who knows anything about casinos understands the house always wins. Apparently, however, the ideologically blinded just don't get it...

Ah, Mr. Albertson! This claim there was no need for TARP ... is this how El Swindle Grande earned its name? Or is your testimony meant to placate a nearby herd of wary sheep the house wishes to shear?


Duly note the ten day period prior to today likewise began on a sour note. Furthermore, RSI and MACD remain constructively positioned on the buy-side of their respective ranges. Only but first-signs of deteriorating momentum are presented by each. Still to come it appears ... is another belated visit from Santa Claus.

Believe it or not, there really were no disconcerting cracks in any underlying technical measure resulting from today's banking of Q2 '09 earnings at major investment houses and financial holding companies. Yet strictly from the perspective of price action (and the failure of so-called "scared sideline money" to reveal its fear of missing the so-called "new bull market" ... brother, where art thou? ... just a figment in the imagination of the Hallelujah Bernanke crowd?), we might conclude leading up to bank stress-test day (May 4th) ... when Washington is slated to demonstrate all it has learned from Wall Street about winking and smiling ... any subsequent recovery could be even more strained than was the market's advance over the ten day period prior to today.

Just an educated guess anyway...

(p.s. When is Cramer going to rant about the one-day delay in reporting open interest? It is antiquated and reeks of swine. Don't tell me the CBOE hasn't been raking in enough dough to replace their abacuses with that newfangled thing-a-ma-bob called a computer.)

Fast Money
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