Pabst's Blue Ribbon Trades
- Thread starter Pa(b)st Prime
- Start date
Good call nonetheless.Great trade, Bob. 
Sill long 1480 and 1440 Jan puts and short 1400's. I've been scalping futures from the long side against my puts and got lucky Thursday by catching them both ways on Bernanke. I was burned in Nov/Dec by virtually the same spread so I'm very quick to buy futures. Because vols come in on the rallies I can underweight my delta hedge knowing that my short gamma will make up the diff. I have a total of 4 1480's and 6 1440's against 8 of the 1400's. As a rule I trade 5 ES long against the puts but if my hedge is done at a crappy area I'll add another 5 ES on weakness. Naturally I'd rather not do that on the coming -1000 DIA day. 
Sentiment, as too many seem to know, is begging for a bounce. AAll, ISE and CBOE p/c's, ET polls and just talking to other traders, most everyone hates the market. We all know you're to fade the crowd and the crowd's either short or bearish enough to be getting short. This is one of those times that I believe the crowd is right.
I've talked earlier in the thread about football betting and sentiment. Reading consensus is a great indicator but no guaranteed be all. Just the fact that guy's who a month ago never heard of sentiment are now talking about "that fadable AAll survey" and "the retail morons are buying puts" makes me think fading the fade is the fade. Just the same I'll make judicious use of buying futures if the break doesn't seem in the offing.
Another thing. I talked about (I think I did lol) about how Bhutto was very, very big market wise. Just another instability nail, right? Notice we've never been to her asassination levels since. Well along the same lines, Friday's debacle in American Express is HUGE. The premier credit card company in the world-Amex customers have scant in common with WaMu's motley crew of borrowers-if AMEX is seeing bad things, then bad things are happening. No matter what the next 50 SPX points bring, don't be ignorant to reality. We're slipping not just into recession but into all out economic calamity. The world is broke. Don't buy into the China story either. Yea 30 million Chinese are living in Hi-Rises and drinking Lattes. A quarter billion of them are also virtually unemployed. If anything the emerging trend will be strife and labor unrest amoung emerging workers. Bet on it.
Why's gold rallying on asset devaluation? Read the above. There's folks who're increasingly scared to hold currency. They won't buy stocks, bonds or real estate because of excess valuations so they're forced into gold by default. Those who own it aren't selling because a. no where else to go and b. their macro word view is becoming the stark reality.
Good trading to everyone.
Sentiment, as too many seem to know, is begging for a bounce. AAll, ISE and CBOE p/c's, ET polls and just talking to other traders, most everyone hates the market. We all know you're to fade the crowd and the crowd's either short or bearish enough to be getting short. This is one of those times that I believe the crowd is right.
I've talked earlier in the thread about football betting and sentiment. Reading consensus is a great indicator but no guaranteed be all. Just the fact that guy's who a month ago never heard of sentiment are now talking about "that fadable AAll survey" and "the retail morons are buying puts" makes me think fading the fade is the fade. Just the same I'll make judicious use of buying futures if the break doesn't seem in the offing.
Another thing. I talked about (I think I did lol) about how Bhutto was very, very big market wise. Just another instability nail, right? Notice we've never been to her asassination levels since. Well along the same lines, Friday's debacle in American Express is HUGE. The premier credit card company in the world-Amex customers have scant in common with WaMu's motley crew of borrowers-if AMEX is seeing bad things, then bad things are happening. No matter what the next 50 SPX points bring, don't be ignorant to reality. We're slipping not just into recession but into all out economic calamity. The world is broke. Don't buy into the China story either. Yea 30 million Chinese are living in Hi-Rises and drinking Lattes. A quarter billion of them are also virtually unemployed. If anything the emerging trend will be strife and labor unrest amoung emerging workers. Bet on it.
Why's gold rallying on asset devaluation? Read the above. There's folks who're increasingly scared to hold currency. They won't buy stocks, bonds or real estate because of excess valuations so they're forced into gold by default. Those who own it aren't selling because a. no where else to go and b. their macro word view is becoming the stark reality.
Good trading to everyone.
That's a really nice thing to say Reaver. Thank's a lot!
Yup. Friday's action was real bearish alright. Definitely should have been a rally ( stocks oversold; Dow at Aug 16 low: Bernanke's comments ).
It's a rigged game so the crowd is always wrong. IMO This time they will be wrong in one of two ways:
a) The Fed saves the day and the market rallies long enough that the crowd changes its mind and goes long just before the decline, or..
b) The down move is HUGE and all the shorts cash in and go long 1/3 of the way through the decline.
If this boat hits that monetary iceberg emerging from the mist the crowd will go down with the ship while the captain and crew screw off with the lifeboats - although this time the lifeboats might be dragged under by the suction when the mega-ship goes down.
If it turns out that gold is the last thing left then even that gold will eventually have no meaning. There has to be an economic infrastructure for anything, including gold, to have value.
If we're heading into a global catastrophe you can probably buy a little time with your gold but ultimately you're better off investing in a hut in the woods, canned beans, bottled water, and an Uzi -at least until it's all been resolved by WW III.
Cheers
Yeah im short es at 1414. I felt pretty comfortable going into the weekend short but now im starting to have second thoughts. Although in the long run I think we could take the es to 1300 I also think that we might be a little too bearish too fast. Looking at both the daily and weekly chart of es it looks like a bounce isn't out of the question. Maybe to 1440?
On the other hand though look at a weekly chart of es. We havn't had a good healthy correction in this multi year bullmarket yet. We have had a few nice drops but not a real correction. We have broken major support levels but continue to hold 1400. Its a tough call but it wouldn't suprise me to see a pop in this thing.......but I hope to hell not lol!
YT
On the other hand though look at a weekly chart of es. We havn't had a good healthy correction in this multi year bullmarket yet. We have had a few nice drops but not a real correction. We have broken major support levels but continue to hold 1400. Its a tough call but it wouldn't suprise me to see a pop in this thing.......but I hope to hell not lol!
YT
Pabst - given your bearish view, at what price level would you become a long-term buyer of the S&P?
Also, if you have no stocks at all, what assets do you recommend as superior for long-term investors? Bonds are yielding very little, as is cash, they are barely beating tax + inflation. Commodities look good but would you really advocate a 100% commodity portfolio? Stock earnings yields are higher than bond yields by the biggest margin since 1974, so one can hardly argue that the S&P is expensive.
Also, if you have no stocks at all, what assets do you recommend as superior for long-term investors? Bonds are yielding very little, as is cash, they are barely beating tax + inflation. Commodities look good but would you really advocate a 100% commodity portfolio? Stock earnings yields are higher than bond yields by the biggest margin since 1974, so one can hardly argue that the S&P is expensive.