Not too much technical damage on the Big Chart so far but we have critical crosses of our 2.5% lines at S&P 1,400 and Nas 3,075 to watch. I think we'll hold the Nas unless AAPL takes a dive so, despite the 1% drop in Europe this morning (7:30) – I don't think today's the day the music dies.
We have our 3rd estimate of Q4 GDP this morning at 8:30 and I'm not expecting it to be better than the last 3% estimate – probably a bit worse as the data has been downhill since then. Clearly sentiment has turned a bit sour and, as I mentioned in yesterday's post – if this is all we can get out of the markets after our Central Banksters all held a QE revival meeting on Monday with promises of Trillions more free money – then we are pretty screwed.
If Iran doesn't nuke the Strait of Hormuz very soon, this is going to turn ugly for those stuck with oil contracts as October 2013 barrels are still trading under $100 and 2015 contracts are under $90 – indicating no long-term support for all these speculative barrels. Yesterday, another 7M unwanted barrels piled up in inventories as consumers continue to cut back on gasoline they can no longer afford.
When I was on BNN earlier this month, oil was at $107 and my trade idea was to pick up the SCO April $29/33 bull call spread for $2.10, selling the April $30 puts for $1.35 to pay for it on the premise that oil wouldn't go over $110, where we begin to lose more than the net .75 cash. We're at the halfway mark to April expiration and, with oil at $105, SCO is at $33.63 (our goal) and the April $29 calls are $5 and the $33 calls are $2 and $30 puts are .40 for net $2.60 – up 246% already. That's the way we like…
