Faith is easily shaken but hard to extinguish completely. Clearly investors have faith that the EU crisis CAN be solved, hence the strong reaction to "good" news out of Europe. But then, all it takes is a single naysayer and all but the most faithful lose their resolve while the whipsaw nature of the market punishes those who try to hold fast against the panicked crowds.
We have faith in our trading range but we PRAY that is gets broken – as it would be better for the Global Economy if we are able to make some progress in the markets. C had decent earnings, BAC made $5.9Bn last quarter (although really from a sale of their shares of China Construction Bank) – both have been priced for bankruptcy and I still think XLF ($12.20) is one of the best bargains in the market and you can play them through earnings with the Nov $11/12 bull call spread at .72, selling the $12 puts for .55 for net .17 on the $1 spread with a 488% upside if XLF just holds $12 through earnings season.
Matt McCormick had a great quote on BAC this morning:
"I think there’s a tremendous value opportunity in Bank of America shares, but it’s only for people with strong stomachs. I don’t have a strong stomach so I’m not going to buy it."
I was just telling Members in Chat this morning to keep the faith because charts can be deceiving – especially when you only look at ones that are priced in Dollars:
See – priced in Oil, Gold, Silver or Copper that S&P chart is looking pretty damned strong, isn’t it? Priced in Euros, we also have strong support from a rising 50 dma and, according to our own 5% rule, we’re not bearish off the 125-point run until we get a 25-point pullback and we’re not there yet. In any case, we’re certainly going to give the S&P some leeway down to the 50 dma at 1,173, which is our -5% line on the Big Chart. Even if we "only" establish that as a new floor – it will be nice progress into earnings season.
We nailed it on the bear side yesterday with our Dow Futures shorts, which didn’t give us a reason to stop out until…
