Meet the new boss, same as the old boss (well, maybe a bit more balls than Bernanke has). I love the timing, does the GOP have the energy to fight this nomination while keeping the Government shut down? This is going to be a toughie.
Today is a bounce day for the market but, as you can see from the Big Chart, Republican idiocy is taking it's toll with a MASSIVE drop in the Nasdaq yesterday as well as the Russell which, fortunately, was exactly what we told you to play for on Friday, with the TZA Nov $22/25 bull call spread at $1 along with the SPY Nov $163 puts at $2.
As of yesterday's close, the TZA spread was already $1.35 (up 35%) and the SPY puts hit $3 (up 50%). That's pretty good leveraged protection against a 3.2% drop in the RUT (11:1) & a 1.5% drop in the S&P (33:1). Having good risk/reward profiles and strong upside leverage is the key to good hedge selection (see early morning Member Chat for more conversation on this topic).
As far as the Big Chart, my comment from morning Member Chat was:
Big Chart – Holy Cow, that thing looks ugly! We'll see what kind of bounce we get today – of course the Dow won't go below previous low without some sort of bounce and it's going to be an easy line to watch (14,750). Nas has to hold that 50 dma, as does the RUT and those are the technicals into the Fed Minutes (2pm).
Dave Fry's SPY chart shows us support here, at the 100 dma but we already passed below 5% Rule™ support at 1,670 (also as foretold last Friday) and that means we now have to take back Dow 14,950, S&P 1,670, Nas 3,740, NYSE 9,500 and Russell 1,063 before we're even ready to discuss whether any bounce we get today is anything more than WEAK. Speaking of weak, our 3-year note auction yesterday SUCKED and we have $21Bn worth of 10-year notes today we have to find suckers for and you can see the rats leaving this sinking ship as Bond Outflows hit 5-year highs (yes, like our financial crisis when it was in full bloom):
IN PROGRESS
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