Stock Market
All comments and Stock Market Ananlysis are made by Guy Brumley. Guy has been trading the Stock Market daily since 1992.
Trading, evaluating stock prices and predictions
Market Commentary 2-20-2009
Today we break the November lows. It would be surprising to see the morning sell off hold into the afternoon’s close. As I have said, all week options on equities today are as cheap as they get. Example, guess right on ISRG and buy the 105 call at $2.80 and get a close over 107.80 and you make money. Or buy the 105 put at $.50 and get a close below 104.50 and make money. However, the market makers will close it at 106 and you will lose on both, or they will close at 105 and you will lose the total on both.
The market has a so-called net under it today, as all of February’s options will close at a value that has to be cashed-out, today. Meaning, the market makers will make (or lose!) money today.
The market starts a new options period Monday – March, and that means a clean slate and very volatile days the first few days of next week. The 1929 crash was on the Tuesday after options expiration, and the 1987 crash was on Tuesday after option expirations.
It appears the fear levels are raising, reaching 50 this morning. Volumes are six down stocks for every one gaining. Many DOW stocks are reaching decade lows GE under 10, Alcoa under 7, so it is getting uglier which is what we need to start to put in a bottom.
What is needed next is for stocks to show their real earnings, before any estimates for their stock prices can be determined.
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