As we all know, the stock market had an incredible September but we are bumping up against some really strong resistance at 1150 on the SPX. Even the good PMI and Confidence data on Thursday wasn't enough to hold the SPX up over 1150 after the initial pop to about 1157. We have been hanging around up here trying to get a close over 1150 for over a week and now as you can see in the chart we are about to get a cross down on the MACD if we don't get over it in the next day or two.
Citi (C) had a nice 4.6% pop on Friday with strong volume to close at 4.09, which is the first close over 4 we have seen in some time. Because of this move I stopped out of my short Dec 4 calls and now am just naked long Dec 3 calls with this nice move up. If you listen to the financial media everyone is so negative on the banks quarter saying things like, " trading revenues are going to be terrible because there has been no volume" and so on and so forth but have they not been paying attention to the fact that we had a 100 handle rally in the S&P in September and as I saw someone say on the twitter stream - if you didn't make money in September, you need a life coach. I think that expectations are so low for the banks that they should be able to beat and Citi reports October 18th. My synthetic Citi position that I have been adjusting here and there is up about 15% at this point and I think has much more to go.
LULU had a nice breakout on Tuesday with some nice volume and this one has a huge short interest so I decided to pick up, what I consider a lotto ticket, just 2 Oct 50 calls at an average 33 cents. It has backed of a little bit after that strong move up so we'll see what happens next week. Hoping for a strong move over 46.50 because then I think we could see 50+ pretty quickly.
I am also stalking a short bonds position via the TBT. In the chart you can see the possibility of a cup and handle forming so I will keep a close watch on what happens next week.
On a side not I wanted to mention that I am reading Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street
and it's quite interesting if you haven't already read it.
and it's quite interesting if you haven't already read it.