The Lauriston Letter

Barack Obama II

2009-01-20T15:10:00.005-05:00

The 44th President of The United States of America

All lined up

2008-12-09T17:06:00.003-05:00

Stocks have hit a wall here, with volatility indexes also starting to rise from recent local lows. To top it up, put/call ratios are in "sell" territory. Could not get better for a short-term drop. Bulls have been quite aggressive recently, and as we head for year end one should expect some rally into year-end. But first a little pause or drop here would be just fine...

Still in bear market

2008-12-02T18:01:00.002-05:00

But shorting rallies and going long after sustained drops seems to work, with each cycle about 5 days long. Today's rally is not convincing enough to go long, so unless there is another massive drop, I'd prefer to short the rallies than try going long here. With markets about 50% down from mid-year levels, a rally into the end of year is not out of question, but have to wait for a better entry...

There's the new lows now...

2008-11-19T15:51:00.001-05:00

And this time they come with much higher levels of put/call ratios than we had yesterday. Rocket fuel for a bear-market rally here... options expiration is coming on Friday with puts fattened on record volatility levels...

Toying with new lows...

2008-11-18T14:48:00.003-05:00

The bears are still in control, even at these very elevated volatility index levels. Put / call ratios have come down some, there does not seem to be much fuel for a rally here. Maybe even lower price levels may entice more put buyers before a rally ensues to sap those fat implied volatilities. For now, nothing to do but watch for a mega rally that could confirm a bottom... not yet though...

Back to over-stretched volatility index levels

2008-11-13T14:28:00.001-05:00

Another chance for the bulls to come in for a little ride and for the bears to unload their short positions. Just passing the buck back and forth... put/call ratios also look lined up to favor the bulls for the near-term, perhaps going into options expiration next week. Those puts are bloated with implied volatility which somehow has to be deflated before next Friday...

Amazing America!

2008-11-05T15:24:00.003-05:00

VIX was too high

2008-10-28T16:19:00.001-04:00

Way too stretched. It was high time for perma-bears to get roasted... there will be more such days in the coming months until VIX is deflated. Ahhhh, don't you just love volatility?

VIX near 80 again!

2008-10-23T14:40:00.002-04:00

And put/call ratios in "oversold" territory. That can only mean one thing... we'll see where we are next week and into month end. Will there be any month-end "Window-Dressing" this October?

Profits: AAPL's up 26%, YHOO's down 64%

2008-10-21T17:46:00.002-04:00

At these high volatility levels I doubt those results matter much- institutions may be more interested in selling volatility than anything else in the short-term. Nimble traders' paradise- the last 5 years of generally low volatility have driven speculators mental, especially those with ursine dispositions. Jack be nimble! Macs and iPhones save Apple, while Yahoo is laying off 10% of workforce (Bloomberg.com).

VIX heading back to highs

2008-10-15T14:38:00.003-04:00

The volatility indexes are heading back to the recent highs which were all-time closing highs. There is only one conclusion I can draw from this- Friday's options expiration will be interesting with those puts and calls fattened up with so much implied volatility. There is a real incentive for those with the powers and know-how to sell volatility here and make some free mullah- just like picking it up from the gutters. Mark this post and we'll see where we are next week... for now, recession "fears" is the journalistic explanations (Bloomberg.com story).

At last, some signs of a bottom...

2008-10-10T15:28:00.001-04:00

next week should be most interesting. Well done, bears! Now we turn over to bulls next week. Meanwhile, enjoy the weekend! The VIX is dead, long live the VIX!

No end in sight yet...

2008-10-09T15:35:00.003-04:00

Where's the bottom? Rate-cut hasn't helped. Bail-out didn't. What's next? Too dangerous to take the long side. Close all short positions and then watch from the sidelines. Waiting for a double bottom may be the better option since VIX is still extending the uncharted territory moves...

Volatility Indexes in uncharted territory

2008-10-06T14:52:00.002-04:00

Where's the bottom though? Is there going to be a rate cut soon? What's going to get this market to stop plunging? Anonymous, what say you?

El Greenie predicts greener pastures...

2008-10-02T16:19:00.002-04:00

And it is amazing that his English keeps improving these days, it's easy to understand what he says, somehow he has found talent for plain simple speak! Amazing what retirement can do for you. "Former Federal Reserve Chairman Alan Greenspan said financial markets and the economy will recover 'sooner rather than later' from the worst turmoil in seven decades" - Bloomberg.com. Ok, you heard it first from Greenspam, so tomorrow expect a huge rally...

So VIX goes up 40% in one day

2008-09-29T15:41:00.002-04:00

Is that a buy or what? Mark this post and in the next 1-2 weeks we'll see where the markets will stand. This feels like the Mother-of-All shakes. Shake that tree, shake, shake, shake. Get those weak longs out of the way... keep shaking...

Bottom forming?

2008-09-22T16:34:00.003-04:00

Most bottoms are formed by frantic and volatile sessions as both longs and shorts are "shaken" out of their positions. Imagine grasping hold of a young apple tree and shaking really hard to get all the apples to drop down. Usually this happens for a week or two with confusing and alternating up and down movements that bring out senseless headlines like these:

both from Bloomberg.com, but certainly most news media will try to ascribe some silly notion to explain the "shaking" movements. Don't you think if a recession was on the way, that both stocks AND commodities would be down? Anyway, tomorrow when stocks are up and crude oil is down, we'll see what sort of headlines are dreamed up. But for those prepared for both up and down movements, there are many opportunities... you just have to be fast enough to move with the "shaker" each alternating day. Don't be shaken, be stirred....

Temporary relief is here!

2008-09-18T16:15:00.002-04:00

Those shorts who over-stayed their welcome have had to squeeze out through a most narrow door late today. Still looks like downtrend is intact and SAR (sell all rallies) is still in play. Tomorrow could be exciting with options expiration, is it quadruple witching? U.S. Stocks Rally on Federal Plan to Shore Up Financial System- Bloomerg.com

Is this capitulation, or what?

2008-09-15T13:59:00.003-04:00

We'll see at the end of the day, but sure looks like the toros are giving up here, throwing out the bathwater with the baby. Financials are posting mega-volumes not seen in the history of trading... might be too early to consider changing alliances to the bull side... U.S. Stocks Decline as Lehman Bankruptcy Deepen - Bloomberg.com

The Unraveling

2008-09-09T16:01:00.003-04:00

Wow, things are really unraveling here. There is now no connection between crude oil and the stock markets, everything is heading south. Things Fall Apart, as Chinua Achebe's Okonkwo would say, or is it William Butler Yeats? No matter, the door is too narrow and the bulls cojones squeeze is tight. Remember last few years it was the bears' cojones that we squeezed practically every day. Now it is the bulls time to enjoy those moments. Wow-eeeeeeeeeeee, I didn't think i would see the likes of Lehman Brothers down 50% in one day, after dropping from 2007 highs of $85 now LEH is trading about $7.60. Nice change (no pun intended).

Gubberment to control Fannie and Freddie

2008-09-06T07:15:00.003-04:00

The same people that brought you "a strong dollar policy" and "small government", are now taking control of FNM and FRE. Shareholders will most likely lose 100% of their moolahs. Sorry bulls!: "Treasury Secretary Henry Paulson is preparing to announce plans to bring Fannie Mae and Freddie Mac under government control, seeking to halt the crisis of confidence in the companies that make up almost half the U.S. mortgage market" - Bloomberg.com

In bear market, SAD!

2008-09-02T14:30:00.001-04:00

It seems to work pretty successfully on almost any sector whether oil, energy, financials, techs etc. Shorting All Rallies (SAD) has a lot more success than trying to jump on the next bullish sentiment. Especially when there is a gap up. Turns out more like gap and crap!

Politico: Are you long or short Palin?

2008-08-29T18:49:00.005-04:00

Newsweek has an interesting piece, "McCain's 'Hail Sarah' Pass". It's progress for America to have first Republican vice-presidential candidate. Congrats America! Happy Birthday Johnny Mac! And congratulations to Palin and her husband on their 20th wedding anniversary! She hunts, fishes, and eats moose burgers. She is such a keen runner that she named the first of her five children Track. She is a lifetime member of the National Rifle Association and was runner-up in the Miss Alaska beauty contest in 1984. What more do you need? She will make a great VP!

Shortable rallies

2008-08-22T14:52:00.002-04:00

This is a bear market- who can argue against that? Volatility indexes have recently deflated significantly and put/call ratios are also down in "shorting" territory, implying short-term complacency or shortable rallies. Welcome to the long and winding recession (CNNMoney.com)

Here is the catalyst needed to end rally

2008-08-12T15:21:00.002-04:00

Financials:

Last week I commented that rally would probably last until this week of options expiration. One good hard drop here will take us to lows typical of October seasonals...