[stylinexpat]

Originally Posted by Vanity

Someone purchased 24,000 SPX weekly puts with strike point at 1150. That's a 20% decline from current levels. The index needs to drop 10% to even make profit on this trade. The put expires next Friday, so, whichever institution just made that bet better hope for a huge 10% decline in 7 days, or lose that capital. Interesting to see that up there. Not sure what to make of such a put-play.

Where did you see this purchase? 24,000 SPY puts is not much.. When did you see this trade happen? Do you have a screenshot of this trade

[slamako]

Originally Posted by stylinexpat

Where did you see this purchase? 24,000 SPY puts is not much.. When did you see this trade happen? Do you have a screenshot of this trade

See below.

[mact3333]

plot Dow/SPX with $TRAN...plot same vs new 52 wk high on NYSE...plot same vs % stocks trading above 50DMA.

Pic is clear...next week will be fun.

[Vanity]

No more monetary stimulus anymore boys. No more LTRO (draghi said it was the last), twist is a failure (why LTRO had to come in to pump markets back up), and Benny hasnt hinted towards QE3 yet (which i believe he's holding off on until a serious correction. He wont be announcing that until we're in deep morass, as when all QE's are released).

Look up what happens at the end of each QE. Also, everyone here should familiarize themselves with the immediate drawbacks of LTRO. Though the loans are 3-years displaced at low interest, there are also immediate risks alongside it's provided benefits.

[stylinexpat]

Originally Posted by slamako

See below.

I am assuming that person bought them at $.05 each which is not a lot of money. Most likely figured if he asked $.10 and got people to join in on the ask he would double his money.. There was little to no activity on those puts.

[mact3333]

As suspected, the week starting off in a fun way.......more to come.

[mact3333]

Originally Posted by Vanity

No more monetary stimulus anymore boys. No more LTRO (draghi said it was the last), twist is a failure (why LTRO had to come in to pump markets back up), and Benny hasnt hinted towards QE3 yet (which i believe he's holding off on until a serious correction. He wont be announcing that until we're in deep morass, as when all QE's are released).

Look up what happens at the end of each QE. Also, everyone here should familiarize themselves with the immediate drawbacks of LTRO. Though the loans are 3-years displaced at low interest, there are also immediate risks alongside it's provided benefits.

Vanity,

Never mistake fundamentals(economic) with asset prices...its about liquidity and supply-demand...when liquidity runs a plenty, being short is a losing game no matter how crappy the fundamentals truly are.

[Epacy2]

How much can Coal sell off everyday??

[Vanity]

Originally Posted by mact3333

Vanity,

Never mistake fundamentals(economic) with asset prices...its about liquidity and supply-demand...when liquidity runs a plenty, being short is a losing game no matter how crappy the fundamentals truly are.

Understood, but my post was referring to the end of liquidity injections similar to what we saw with the end of QE 1&2. The markets are only going up on these injections. Volume in the market already shows demand is thinning as equities march higher.

[Vanity]

March 8 is the final deadline by which Greece needs to carry out the debt swap with its private creditors. This crucial operation might encounter problems however as it is rumored that private bondholders are rather reluctant to take part in it.

Unless 90% of the creditors sign up for the deal, the Collective Action Clauses inserted into Greek bonds last week would be activated; if participation falls below 66%, the deal would collapse completely and Greece would be facing a default on its debt.

Source Here

A disorderly Greek default would probably leave Italy and Spain needing outside help to stop contagion spreading and cause more than 1 trillion euros ($1.3 trillion) of damage to the euro zone, the group representing Athens' bondholders warned.

"It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed 1 trillion euros." [IIF document says]

If the Greek deal fell apart, the European Central Bank would likely suffer substantial losses, the document said, estimating the central bank's exposure to Greece of 177 billion euros was over 200 percent of its capital base.

The IIF, which helped negotiate the bond swap deal on behalf of creditors, said there would be more massive bank recapitalization costs, which could easily hit 160 billion euros.

CNBC Source here

Btw, not sure if you guys are aware of this fact, but the ECB's balance sheet is $3 Trillion dollars. The ECB itself only has about $10-11 Billion Euros of physical money. That's a leverage of 300:1. And here we thought the deviation of standard 8:1 frational banking to 26:1 world-debt leverage was bad. Here the ECB is leveraged 300:1. This is a large reason why previous ECB Trichet did not attempt LTRO. While I agree the effects of LTRO are very good for solving liquidity issues in banks, the collateral posted up was sub-par quality (junk, you could say. Like government bonds).

However, should anything terribly unexpected happen like, oh I don't know, governments defaulting on their debt, then the collateral used to borrow LTRO money from becomes worthless. This is a large part for why the ECB refused to take Greek Bonds as collateral during LTRO 2. 75% of the collateral would've dissapeared after the bond-swaps, but not only that, the bond-swaps themselves dont really stand a good chance of reaching 90% participation. (read up about Vulture Funds and Greek Bonds. Large hedge funds bought Greek debt betting on a collapse to cash in on CDS. They hold English-law versions of these bonds, exempt from CAC's. They hold over 10%, more than enough to derail this voluntary debt-swap).

With the ECB factoring in a voluntary debt-swap (and the markets too), LTRO would be a great plan. However, should this plan not go through, expect contagion as explained above and more cash-injections from the Bundesbank in Germany (If the germans really want to finance their debt, greece's debt, Spain's debt, and also Italy's debt, by themselves. Imo, I sort of take Germany on their word when they say "they've reached the limit of adding more money into saving the EU through the ESM. When have you ever seen a German joke about a serious matter?) Not to mention Greece losing it's second bailout this Friday. March 9 also happens to be a cycle cross-over from bull to bear. Coincidence....

But if there's any funny-business with the ISDA not recognizing a default on greece, or CDS's are rendered useless and Greece goes through with this all dandy, except the bonds on Spain and Italy to ascend upwards again. Why? Because when CDS's aren't recognized/triggered, government bond assets become much more riskier assets, entailing a much larger premium before investors are tempted back in. And you've all already seen Spain miss it's fiscal targets this year. -1% contraction already, and 8.5% GDP deficit ratios. It's going to get worse. And now they're defying EU treaties by factoring in their own 5.5% GDP deficit fiscal targets, as if they don't care anymore about what Germany wants. Anybody already forsee funding issues in the future? I see Germany not wanting to fund for much longer, of course, jmho.

Sometimes the eerie reflection of this rally, compared to the 2010 charts, is spooky. However, I don't think we're going to be waiting till summer for a sell-off this year. I think Q1 or early Q2. Just imho again of course. And I'll make everyone a promise here: after this next major leg-down, Vanity promises to put away his Matador costume and become a hopium-CNBC-DOW 13,000-cheerleader.

Oh btw, those Bank stress test results commissioned last year by the Fed are due out next week. Reports on Monday are saying not all of the banks will pass the test. Food for thought. When are they going to blow up Iran again? We need to get away from our problems here.

[mact3333]

Originally Posted by mact3333

plot Dow/SPX with $TRAN...plot same vs new 52 wk high on NYSE...plot same vs % stocks trading above 50DMA.

Pic is clear...next week will be fun.

Next week is here....anyone having fun yet?...the massive divergences had to play out to the downside.

[mact3333]

Originally Posted by Vanity

Understood, but my post was referring to the end of liquidity injections similar to what we saw with the end of QE 1&2. The markets are only going up on these injections. Volume in the market already shows demand is thinning as equities march higher.

agreed!

[mact3333]

think the low is in for the day at 1344SPX...buying cheap short term SPY calls to protect short positions for VST bounce we should see soon.

[Epacy2]

Coal has been all over the place today . Finally coming back to even off a 5+% loss early.

[Vanity]

Mact,

What are your thoughts on today being the initiation of 'the' major leg-down for 2012 as opposed to just a correction? Looking at a 010' vs. 011' comparison of SPX, it looks like equities have definitely marched much stronger in this 6 month rally than last year. My inclination is the sell-off will occur now, rather than later.

And if this is the major leg-down, my 1260 SPX expectation is overly-conservative and should be revised downwards. What's your view?

[Vanity]

$12 Million dollar put option purchased today for June, shorting IWM Russell 2000 index. IWM needs to drop to 69 from 78 currently (12%) before this put turns green.

Some very aggressive put buying here. Also, corporate insiders are selling shares at 6:1 sell:buy ratio now. Highest selling ratio in a couple months. Reminiscent of last April/ July.

I also thought it was interesting that Barclays only has 2.61% institutional ownership over its shares outstanding now. I believe this was around 50-80% ownership just a few weeks back. Pump and dump.

[mact3333]

Originally Posted by Vanity

Mact,

What are your thoughts on today being the initiation of 'the' major leg-down for 2012 as opposed to just a correction? Looking at a 010' vs. 011' comparison of SPX, it looks like equities have definitely marched much stronger in this 6 month rally than last year. My inclination is the sell-off will occur now, rather than later.

And if this is the major leg-down, my 1260 SPX expectation is overly-conservative and should be revised downwards. What's your view?

We will get a scary selloff right now...gotta reset the sentiment indicators and relieve the divergences.

But I dont think we have hit "THE" top yet...we get a scary selloff the get the bears on board than rally resumes to punish them yet again.

The top has been pushed out imho....but for this week and next, Im going to have some fun...will unload the SPY and QQQQ calls I have as protecting for my short positions today...more selling to come...perhaps after AAPL Ipad3 announcement.

[mact3333]

Originally Posted by Vanity

Mact,

What are your thoughts on today being the initiation of 'the' major leg-down for 2012 as opposed to just a correction? Looking at a 010' vs. 011' comparison of SPX, it looks like equities have definitely marched much stronger in this 6 month rally than last year. My inclination is the sell-off will occur now, rather than later.

And if this is the major leg-down, my 1260 SPX expectation is overly-conservative and should be revised downwards. What's your view?

I like your 1260 target...think 1250-1300 is reasonable...just start buying when retail starts unloading in droves....

One day soon, we will see a massive hammer candle on very high volume...that is the thing you watch out for.

[mact3333]

I have a feeling we will see fireworks Sunday night....gap down anyone????....we shall see....euro down hard and dollar up yet metals and equities up...hmmm...someone knows something.

[Vanity]

Originally Posted by mact3333

I have a feeling we will see fireworks Sunday night....gap down anyone????....we shall see....euro down hard and dollar up yet metals and equities up...hmmm...someone knows something.

Agreed! Those are some massive movements in the Forex market. Very rare days do we see currencies move as much as they have today. Still trying to figure out the magnitude of this next correction.

[r0wr]

When the hell are we gonna move down..

[Vanity]

Originally Posted by r0wr

When the hell are we gonna move down..

Can't really tell you that. All anyone can say right now is that: DOW has failed 6 separate days to reclaim and hold 13,000, and that the markets only went up +14 points on good jobs data and Greece deal finally finishing. So it's close. The bigger question is where it will fall and what might the catalyst be.