We appear to be in a holding pattern. "FV" approximately 870. Oil futures are down 2.5% pre-market. Gold futures down a little. SIFs mostly unch'ed. Could be another day of mind-numbing going-nowhere day.
"FV" ~ 880. We take note of 791 SPX, where yesterday they ran over shorts at the EOD when SPX screamed higher from there. Oil futures has been pretty volatile lately.
"FV" ~ 850. Strong chance of final convergence to +/- 25 from "FV" by EOD today. Oil futures have been +/- 2.5% pre-market for a week. Not sure what that is about. SIFs in a holding pattern on the daily time frame, but imo today will be a market phase shift. Just like there are four states of matter, solid, liquid, gas and plasma, I believe markets enter similar phases, each having distinct risk profiles and each with single or multi humped probability distributions. http://en.wikipedia.org/wiki/Multimodal_distribution The "plasma" phase is the most complex, and analogously represents a multi-modal distribution. I believe we are entering that phase. Option MMs and traders that know how to trade this phase will do well.
GM up 10+%. The beginning of good news for GM starts. To be clear, this is good news for GM, and should not necessarily be taken as good news for the market. This news and most other good news we are likely to hear in the next 3-6 months for automakers is already in the market. However, I do not believe this news is completely in GM stock, and I reiterate that GM is a double stock.
"FV" has taken a big drop and is now at ~825. I rarely give "FV" numbers intraday once I state them pre-open because it rarely changes much. Imo, there is little or no edge being long at this point. Trading has become intensely more complex.
Normally, I would not make the following statement, but since I am stating the above I feel compelled. We are seeing massive action by institution(s) on the GM 1 puts. This strike is almost certainly being used not as protection, but as speculation on GM bankruptcy. I think they are wrong, but these guys put a shit load of money where their mouth is, and all I am doing is analyzing. You decide who is likely right.
I'd wager you're right on GM, but I have no dog in this fight, so that makes my opinion pretty much useless. I'm just thinking that back when I still had hair GM was considered a bellwether for the stock market, and I think we've transitioned to a bull phase at this point, so GM also being in a bull would be pretty good confirmation. We'll see...
The meeting they had this weekend was scheduled well in advance. The $1 puts bought on Friday, while they are worth more now than they were then, you sell them and you take score at expiration. Putting the philosophical argument aside for now of whether market forces should decide GMs fate and not the government, I hope that the Obama administration pushes hard on the unions. A worker making in excess of $100k to put a car together that is mostly done by machine anyway is a gross overpayment for that skill, imo. "FV" approximately 800. Oil futures again moving 2%+ (-1.875) pre-market. As I stated above, trading has become hugely more complex, since there is no real edge either way.
Initial support SPX 791. Then we want to watch 782 closely. If my "FV" estimate is accurate, put yourself in the shoes of money sitting on the sidelines. Why would you buy @ "FV" in a bear market? Perhaps mathematically we have no edge to either direction, but psychologically the path of least resistance is down because no real $ is likely to step in unless being given a hefty risk premium.
"FV" ~ 825. As I have been stating almost daily, oil futures rocking again pre-market. Perhaps I am slow to realize, but the fact that most of the gains and losses in QM come pre-market may be sending a signal that we have entered a specially sensitive time to overseas markets. Just a theory. SPX held ~780 yesterday. That is a plus if you are bullish.