Manyequityinvestorsarescratchingtheirheadsandtryingtofigureoutwhethertopulltheplugorhangonatcurrentlevels,nowdownabout20%fromthehighsoftheyear?

Unfortunately?

Idonthavetheanswertothatquestion,butIwilltellyouthatthecloserwegetto1050intheSPX(thelevelwherewebottomedsummer2010beforetheQE2rally)themorelikelywearetogetafiercebearmarketrallythatwillripthefacesoffshortsSoIcontinuetorideshortsbutoneveryselloffItakesomeprofits?

Myhopeistowhittledownthosepositionstotagendsbythetimewemakethatlittleneartermbottom。

Wellthemarketsaretellingusatthemomentthatthisrecentdowndraftwasmorelike1998,than2008,andalmosttotheexactdaysoftheyearJuly20/21sttoOct4/8th。

Thecross-currentsrangefrommixed?

economic?

datahereandabroad,tosomemarketparticipantsplacingagreatdealofvalueonChinasPMInumberreleasedyesterday,andsuggestingthatwastheonlynumberthatmatters。

Idontbuythatforonebitandthinkthereisastrong?

likelihood?

thatwelookbackatthatasamassive?

head-fake。

Alsoearningswhiletheyhavegenerallybeengoodtherehavebeensomeinterestingnamesthathaveclearlydisappointed,MMMjusttoday,TXNlastnightandIBMandAAPLlastweek?

Willwelookbackandsaythesewerethecanariesinthecoalmine?

Throughoutthispast2weekssomeofmybesttradeshavebeenontheshortside,soIwouldargueforthosetradersoutthere,eveninwhatfeelslikethere-emergenceofabullmarketthatthereareplentyofopportunitiestoplayfrombothsidesofthemarket。

YesterdayI?

initiated?

somebearishshorttermpositionsinMSandGS(readhere)andNFLXintoearnings(readhere)thejuryisstilloutonthebanks,butNFLXimighthavebeensorightthatiamwrong。

Igotthedirectionrightandthereasonsfortheselloff,butatthemomentthemagnitudeisfargreaterthatwhatIexpected。

CheckbacklaterforhowIwillmanagethistrade。

SoIremaincautiousanddefensive,primarilyasIfeelnomatterwhathappenstomorrowthemarketswillbedisappointedandIthinkthereisagoodneartermopportunityforatradeontheshortsideofthebroadmarket,ImaylooktoweeklySDScallsorlookouttoNOVandbuyPutsintheEWG,theIsharesMSCIGermanyIndexetf。

TheDAXwhichwasdownalmost35%fromitsMayHighsisnowupabout23%fromtheearlyOctlowsandjustbrokethrough?

important?

resistance,IfindithardtobelievethatEuropeanindiceswillcontinueontheirpathtounchangedmerelyonaplantofixtheirdebtissues,therealtestwillbetheimplementationofausteritymeasuresandco-operationamongEUmemberstoseethebail-outthrough。

thiswillbemuchharderthanitlooksandplayoutoveralongperiod。

MorningWord:10/24/11:Fridaysclosewasnothingshortofimpressive,withtheSPXclosingat2monthhighsandpoppingthelittleflagithadbeen?

formingabove1200forthelastweek?

Fromatechnicalperspectivethechartlooksprettydarngood,ithasconsolidatedabovethetopendoftherange(sinceearlyAugust)andnowlookspoisedtotestthatall?

important?

1250levelthatservedasstaunchsupportformostoftheyearuntilthedramafollowingtheSPsdowngrade。

SPX5monthchartfromBloomberg

Theindexisnowupabout15%fromtheintra-dayOctlowsandbarringanybigsurprisesoutoftheEurosummitthisWednesday,wecouldbeheadedtowardthat1300level?

Idontsaythiswithawholeheckofalotofexcitement,asIhavenotbeenandamnotsetupforit,andfranklydontreallyseethelogicinourequitymarketsbeingpracticallyunchangedontheyeargivenallthepotentialnear-termheadwinds。

InvestorshearthesayingthattheequitymarketsareadiscountingmechanismallthetimeandmostofthetimeitisfairlyaccurateatthispointourequitymarketsaretellingusthatrisksofEuropesdebtcrisisspreadingtheworldoverarenotgreat,andthatU。

S?

corporate?

earningsarewhatreallymatteratthemoment。

wewillgetaverygoodreadonthisasalmost200oftheSP500indexreportthisweek。

AsfortheEuroSummitWednesdayIamhardpressedtothinkthatthesetalksdescendintochaosandthattheyarenotabletoatleastintroduceaplanthatwillkeepthestatusquo。

ifwecontinuetorallyintoWednesdayIthinkyouhavetotakeashotandfadethemarketsandtryforasellthenews

MorningWord:10/21/11:Eventhoughweareintheheartofearningsseason,ourequitymarketsarefeelinglittleimpactfromthebeatsandmissesonsingular?

occasions,theonlythingthatappearstomatteratthemomentisaunifiedEurosolutiontotheirdebtproblems。

YesterdaysmarketactionwasgenerallyawhipsawsessionresultingfromrumorsandheadlinesregardingtheEurosummitthisweekend?

Mypersonalopinionisthattheoutcomefromweekendisgoingtobedisappointingtothemarketsandregardlessoftheheadlinesthatpointtoanagreementonhowtotackletheissue,itdoesnotsolvetheissues。

Rememberbacktolate2008,early2009afterTARPwasagreedapon,thestockmarketwentaheckoflotlowerinthemonthstofollowtheannouncement。

Iamnotsuggestingthatthiswillbethecasenow,partlybecausecorporateearningsseemtobeonfarbetterfootingthantheywere3yearsago。

SOatthispointwesitandwaitfortheheadlinesovertheweekend?

ThisdoesntparticularlyhelpwhatcouldbeanalreadyvolatileexpirationFridayanyrumorstodaysuggestingprogressbyEuropeanleadersbehindthescenespriortothefirstsummitshouldclearlycauseshortcoveringrallies。

Ithinkthisisprobablyasgoodastimeasanytositonyourhandsandwaitfortheoutcomeasthemarketsarelikelytotrendinthedirectionoftheperceivedoutcomeforsometimefollowinganyresolution?

TherealoutlierhereisifEurocrisisdoesnotgetresolvedandobviouslycontinuestostraineconomicactivitythateventuallywillsendtheworldbackintoarecession。

OfcourseIremaindefensiveandcautiousinmytradingandwilllooktogetmoreaggressiveoncewehavemoreclarityontheEurodebtcrisis。

Onasadnote,mypartnerCCandIwillbeofflinemostofthedaytoday?

CCsfatherinlawDr。

RobertDalypassedawaythispastSundayandwewillbeattendinghisfuneral?

Dr。

Dalywasagreatandveryaccomplishedman,andafriendandhewillbemissedbymanyfamilyandfriendsthathetouchedthroughouthisyears?

ThepicturebelowshowsDr。

DalyrunningforHolyCrossin1956(middle-whiteshirt)whichwasfeaturedonthecoveroftheFebruary13th1956issue。

MorningWord:10/20/11?

Wednesdayspriceactionwasabitconfusingtosaytheleast,AAPLhadoneofitsworstselloffsinawhile,andwhileitwas?

definitely?

adragontheNasdaq,therewerenttoomanywaystoextrapolatetheirresultstoothernamesintheirsupplychain?

Thatbeingsaid,INTChadaday,up3。

59%followingitsownresultsthatbeatexpectationsinthefaceofmanysemicompaniesthathavebeendisappointingoverthelastfewweekswithoveradozenpre-announcements。

Sowhilethere?

doesnt?

appeartobeanobvioustrendinTechshares,theoppositemighthavebeensaidaboutbankstocksrightupuntilyesterdayafternoon。

Whilemostresultswerelessthansensationalinthespace,only2names;JPMandWFCfacedserioussell-offspostresults。

EvenGSthatmissedalreadylowerednumbersrallied?

following?

theirprint。

In?

hindsightitseemslikeitwasafarelyobvioustradetoshortextendedtechnameslikeAAPLandIBMintoearnings,andbuybeatenupbankstockslikeMSand?

andGSwellIgothalfright

Todaysmarketresultisgoingtohavelesstodowithearningsandmoretodowith?

sentiment?

andnewsflowrelatingtothisweeksproposeddeadlinefortheEurorescueeffortandthismorningsexpectedGreekausterityvote。

onthistopicIcanthelpmuchbutIwouldsuggestthatintheneartermthisislikelyto?

disappoint?

andanyshortcoveringralliesarrivingfromtapebombsareprobablygood?

opportunities?

totakesomeprofitsonlongsand?

possibly?

layoutsomeshorts。

Ifitdoesntlooklikewewillgeta?

neartermsolution,thanIwillgostraightbacktoshortingthebanks。

especiallyafterthishugerallyofthelast2weeks。

Iremaincautiousanddefensiveandspendmostofmydaystryingtoshortintra-dayrallies,alwaysusingtightstopsandnotbeingstubborn

MorningWord:10/19/11?

Yesterdaysmarketactionsawaninterestingreversalbetween2dominantforcesthathavebeenplayingabitoftugofwarinourequitymarketssincethespring;techsafehavenvsbankstockmalaise?

BankstocksralliedsharplyonalessthanimpressiveearningsbeatoutofBACandmissofalreadyloweredexpectationsforGS?

ThestocksIguesshadjustgottentoooversoldandalotofbadnewswasinthestocks。

MSwasupsharplyinsympathyyesterday,andwillbeveryinterestingtoseehowthestockreactstoits?

ownQ3reportjustoutthismorning。

Ontheflipsidetherearetechnologystocks,wheremanyhavebeenintheirownsecularbullmarketthisyear。

stockslikeIBMandAAPLweremakingalltimehighsastheyapproachedtheirearningsreportsandmysenseisthatifyouwanttoflipthebankstockoversold?

argument?

onitsheadfortechsharesyouprobablyhaveafairlylogicalconclusionofwhythesestocksaresellingoffpostearningstherewasjusttoomuchgoodnewsinthestocksattheselevels。

AAPLThoughtsand?

TradeManagementof?

AAPLOCT405/390PutSpread

AsitrelatestoAAPLmanyfanboysofthestockaregoingtosuggestbuyingthisdipasitisthebuyingopportunityoftheyear。

well,asmanyofyouknowIboughtthediplastmonthat$360andagainat$380andwashappytobeshortintotheeventat$420。

Now,Iamtryingnottobreakmyarmpattingmyselfonthebackhere,butthatscalledtrading。

thisisawebsitefortraders,IllleavetheinvestingadvicetoallthebrokeragehousesButIguessmypointisthatstockslikeAAPLthathavecultfollowingstendtoovershootontheupside,andeverysooftentheygetalittleoverboughtasforbuyingopportunityIamsuretherearemanyinvestorswhowilllistentothemonkeysonTVandruninandbuyontheopen,andthatisprobablywhythestockisonlydown5%inthepre-market。

youhaveshortscovering?

because?

theyfinallygotalittlesell-offandyouhavetheherdbuyingIthinkthestockneedsalittlere-setandwouldlovetoseeitgetalittlesloppytheonlywaythatisgoingtohappenisifafewportfoliomanagersatlargemutualfundscometotheirsensesanddecidetounloadaportionoftheirpositionsattheselevels

Asformy?

Oct405/390PutSpread(IamalsolongtheOct410puts)?

Iwilllooktotakemycost(andsomeprofits)ofthetableonhalfofthepositionfollowingtheopenandtrytolettheotherhalfride?

Iwilldothisbecausethestockhasahistoryofbeingvolatilethedayafterearningsandthensettlingintoarangesomewherewithintheimpliedrange?

ThelastthingIwouldwanttodoistakeashotlikethisintheshortside,wheneveryonewantedtogotheotherwayandwatchanygainsdisappear

Asforthemarketssurgeyesterdayintheafternoonrelatingtoa?

rumorthatGermanyandFrancehadbackeda2billioneurobailoutpackage,Icantreallyspeaktothe?

authenticity?

ofitotherthanwiththisweekends?

summit?

loominganddeadlineforasolutionIwouldexpectmoresuchrumorsandmorevolatility。

thereversalcomesMondayifEuropeanleaderscantagreeasIexpectwillbethecase。

SOtodayIwillbewatchingMSandthebankstockreactiontoitsearnings。

Notexpectingtoomanyfireworkshereasitdoesntappearthattheirreportatfirstblushshouldcauseareversalofyesterdaysrally,butmaybeaportionofitAAPLwillalsobetellingasitmakesupalmost10%oftheNasdaq?

unfortunately?

Iamexpectingto?

disappoint?

thoseshortthename,somystrategyaboveisprobtherightone,coveraportionoftheshortinthemorningsoyoudontspendtherestofthetradingdaywishingyoudid。

MorningWord:10/18/11?

SundaynightintheWeekenderpiece?

Ilaidout3factorsthatwilldeterminethedirectionofworldequitymarketsforthebalanceoftheyear;1stUScorporateearnings/healthofour?

economy,2ndEuropeandebtsituationandapotentialsolutionand3rdtheextenttowhichChinaseconomyisslowing?

Theabovemayseemobvioustosome,butthemarketsdailyreactiontoincrementaldatapointswilllikelyprovetobeveryinstructivetothesortof?

positioning?

investorsshouldtakeasweheadintotheendoftheyear。

Inthelast24hourswegotadecent,albeit?

initial,readonall3oftheseinputsandnonereallypointtowardsthe?

enthusiasm?

thathasbuoyedthemarketsovertheprior2weeks。

1。

Forstarters,U。

S。

corporateearningshavebeenamixedbagnotunexpectedly,bankearningshavebeendisappointingandthestockshavebeeninretreatmodelastnightsreportsfromIBMandVMWofferedsoberingoutlookfromaspacethathasbeenasortofsafehaventhroughoutthisturbulentyear。

Ifwestarttoseecracksintechnologyearnings?

visibility,thiscouldbethestartofanunwindinasectorthatinsomewayshasbeentheanchorforoursupposedeconomicrecoveryAAPLreportsaftertheclosetonightandwhiletheirresultsandguidancewillbeastockspecificevent,anydisappointmentthatcausesthestocktoselloffwillhaveanegativeaffectontheNasdaqasthestockmakesupabout10%oftheindex?

Asimportant,GSearningsaredueoutthismorningandthestocksreactiontowhatwilllikelybeokresults(streetestimateshavecomedowndramaticallyinthelast2months)coulddictatethecourseoftheday?

WFCsweaknessyesterdaytodisappointingresultswasfranklyabitsurprisinggivenhowwellknowntheproblemsinthe?

sector?

areandspecificallythe?

perceivedsafetyofanamesuchasthisrelativetoitspeers。

2。

EuropeanmarketsreversedyesterdayfollowingtheopeningenthusiasmaboutwhatwasperceivedtobeprogressfromtheG-20meetingaboutadeadlineforasolutiononthedebtsituation。

onlytobesquashedbyGermanFinanceMinisterssuggestionthattherewouldbenoquickanswerstothedebtcrisis?

Thiscommentandthemarketsreactionshowshowdelicatetherallywas。

AsIwriteat7:45am,Europeanmarketsaredownacrosstheboard,withtheDAXfairingthebestonlydown1/2%,whilemostoftheothersaredownmorethan1%?

AnyincrementallybadnewsaboutthetimelineforforEUleaderstoagreeonwaystoattacktheirdebtcrisiscouldcauseseriousvolatilityinthemarketthisweek。

3。

LastbutnotleastChina,overnightQ3GDPwasreportedandcameinslightlylessthanexpected,butindustrialproductionandretailsaleswereslightlybetterthanexpected。

growthinQ3slowedto9。

1%,fromtheprior9。

5%,andlessthanthe9。

3%consensus。

thisisnotadisasterbyanymeans,butsomehavestatedthattheindustrialandretaildatacouldtiethehandsofChinesecentralbankersif?

necessary?

tostarteasingsoon?

TheHangSenggotsmokedafterthedatacameoutclosingdown4。

2%andShanghaiwasdownabout2。

3%。

SOthenetofitisthenewsinthelast24hoursisfarlessgoodthanmanyexpectedasweclosedon2monthhighsonFridayat4pm。

AsmanyreadersknowIstartedputtingoutshortslatelastweekasIfelttherallywasgettingabitextendedandIwantedtolooktonamesthatseemedtobeparticularlyoverbought,wherealotofthegoodnewswaspossiblyinthestock,asinthecaseofIBM?

IfthetakeawayfromIBMandVMWscommentarythatthe?

upheaval?

intheworldmarketsoverthelastfewmonthsisfinallycrimpingdemandthanwecouldbeinforarockypatchaswegettothemeatofearningsseason?

Iremainshortbiasedanddefensive,butinallinstancesIwanttodefinemyrisk。

MorningWord:10/17/11?

Fridaysclose,atnew2monthhighssaidalotabouthowquicklythesentimentchangedinjustdays。

wewentfrommakingnew52weeklowsonOct4thtoclosingatthedeadhighoftheAug/Septrange?

AsianandEuropeanequitymarketswereupovernightbetween1and2%onenthusiasmthattheG-20sdeadlinefortheEUtoofferupasolutiontotheirdebtproblembynextSundays?

summit?

in?

Brussels。

Notcomingastoomuchofasurprise,buttheGermanssquashedallthefunas?

their?

financeministerstatedafewhoursagothathedoesnotseeaquicksolution?

SincethesecommentstheDAXisdownalittleover2%,alongwiththerestofEuropeandfutures。

OnFridayIwadedbackinthewaterontheshortsidewithahandfulofcontrarianplaysinfrontofabusyearningsweek(readsummaryhere)?

MyconvictionlevelontheshortisntashighasitwasbackinJuneorAug/Sept,largelybecauseIthinkwearefightingsomefactorsthatareoutofourcontrolGovt/CentralBankinterventionandtheCalendar?

CoordinatedeffortstosolvetheEuropeandebtcrisisarecomingtoatheaternearyou,butwealsohavingalittleexcitementcomingfromourownGovtinNovasthecongressionalsuper?

committee?

isswiftly?

approaching?

theirdeadlinetoofferspendingcutsforourdeficittalks?

Asidefromnonmarketfactors,aswegetclosertotheendoftheyearandasthemarkethoverstheunchangedarea,thegreaterthe?

likelihood?

thatwerallyintoyearendforthetypicalmarkingperiodSOifwearegoingtoretestthelows,orretraceaportionoftherecentmoveitislikelytobeinthecomingweeks

TodayIwanttofocusonCandWFCastheybothreportedQ3thismorningandwhilebothhaveshownsomereasonablesignsofrelativestrengthtotheirpeersoflate,bothsetsofresultswillbecombedthroughandtheir?

analyst?

callswillbehighscrutinized。

wheretheyaretradinginthepre-marketisnoindicationofwheretheywillclosetodayandthe?

direction?

forthesector。

WFCiscurrentlydown4%andCisupabout1。

75%IsuspectCwillbedownonthedayby11amandthesectorwilltradewithit。

AlsoIwanttokeepacloseeyeonsomehighflyingtechnameslikeAAPLandIBM,bothwhoreportthisweekandbothclosingatalltimehighsonFriday。

Idontexpectthemtocontinuetomakenewhighseverydayintotheirearningsreport

SOwhileIamplayingforapullback,Iamnotall

MorningWord:10/14/11:Yesterdayspriceactionwasfairly?

constructive?

forthosewhofeelthatthelowsmaybeinfortheyearthefactthatourmarketsopeneddown~1%onwhatwasperceivedaslessthanstellarqualityofearningsfromJPM,andthenclosed?

practically?

unchanged?

onthedaydemonstratestheunderlyingbidinthemarket?

BankstockswereweakacrosstheboardasmanyinvestorsfeltthatifanyofthebanksweretoreportdecentnumbersandofferupbeatcommentaryitwouldhavebeenfromJPM,andthe?

balance?

ofthereportswillbeworseoverthecomingweeks?

UBSprobablyhadthemostsoberingtakeonJPM,excerptshere:

Awellrunbankbutnotcompletelyimmune

·Economicheadwindsbecomeveryapparentwith3Qresults

ThedifficultenvironmentisweighingonJPM’snear-termoutlook。

Withcapitalmarketsnotexpectedtomateriallyimprove,capitalmanagementlikelytomoreconstrainedthanpreviouslythought,andorganicgrowthprospectsdiminished,therewasverylittlein3Q11resultstogetexcitedabout。

·Givenmacrostress,webelieveconsumercreditmaydeterioratemodestly

Weareincreasinglyconcernedthatsomeoftheearlytrendsinconsumerlendingdatacouldbebeginningtoflashwarningsigns。

Specifically,whileweunderstandthatJPMstoppedreleasingreservesintheinterestofconservatismgiventhecurrentenvironment,weareapprehensivethatincreasingdelinquenciescouldbejustaroundthecorner。

·Reducingestimatesonlessreservereleasesandweakercapitalmarkets

Wearereducingour4Q11estimatesto$1。

03from$1。

17;2012Eto$4。

70from$5。

40;and2013Eto$5。

65from$6。

25,respectively,drivenbylowerexpectedreservereleases,weakercapitalmarketsactivity,andhigheroperatingexpenses。

·Valuation:Loweringpricetargetonweakernear-termROTEoutlook

Weareloweringourpricetargetto$44,whichassumesJPMwilltradeat1。

2xour3Q12TBVestimatein12months(vs。

10-yearavg。

of2。

1x)。

WhileweviewJPMasthebestpositionedfirminourcoverage,webelievethedifficultenvironmentislikelytoweighonmoneycenterbankresultsoverthenextseveralmonths。

JPMasIwriteisonlyup。

15inthepre-marketfromyesterdaysclose,thatwiththeSPfuturesupover1%asof9;15am?

Ifthebankstockscontinue?

yesterdays?

slideinthefaceofwhatisamountingtechrallyonthehealsofGOOGsstrongresultsthenIreallydontknowwhattotellyou?

CouldwereallyhavetechrallybacktowardstheJulyhighsandtheBanksstocksmakenewlows?

Ithinknot。

SoIamgoingtocontinuetoridebankshortsinatacticalway。

looktogetinfrontofsomestrongtechearningsstorieslikeAAPLandGOOGinthepastweek,whilenotexactlyholdingtheriskthroughtheevent?

IwanttotrytotakeashotatshortingthemarketbeforetheG-20meetingthisweekendbutasalwayswillusetightstopsIamnotgonnagetcarriedaway。

MorningWord:10/13/11?

JPMreportedQ3earningsthismorningandbeatalreadyloweredexpectations?

Thestocks20%rallyinthelastweekintotheprintwillnotexactlyhelpthestocktoday。

Theearningscallstartsat10ameasternandIwouldexpectthestocktoremaininatighttradingrangeuntiltheqaofthecall?

Citisearlyreadontheresults:

Resultsshowedcoremiss—JPMposted3QEPSof$1。

02vs。

our$0。

96estimate

andconsensusof$0。

91。

The$0。

06beatvs。

ourestimatewasdrivenby:1)$0。

26from

betterthanexpectedonetimers(mostly$1。

9billionDVAgain),2)$0。

05fromslightly

lowertaxrate(27%in3Q),offsetby3)$0。

14missoncorePTPP($8。

9billionvs。

our

$9。

7billionestimate)onweakerresultsacrosstheboardwitheachbusinessline

missingby$20-180million,and4)$0。

13highercreditcostsduetolessthanexpected

reservereleaseincreditcard。

Stocklikelytobeabitsofttoday,butwecontinue

toviewthisasthebestpositionedofthecapitalmarkets/universalnames…reiterateBuy。

-Creditlossesbelowourest。

Retaildepositsincreased2%LQAandcommercialdeposit

growthlookedverystrong。

-$4。

4bilofBuybacks,virtuallycompleting2011allocationof$8bil—JPMbought

back$4。

4bilofstock,vs$3。

5bilin2Q11,usingnearlyalloftheremaining2011

allocationforbuybacksinthequarter。

-CautiousGuidanceonInvestmentBankfor4Q—JPMguidancefor4Qiscautious

fortheI-Bank,statingitisnotunreasonabletoexpectmarketconditionstobe

similarto3Q。

Noneofthisshouldbeviewedasasurpriseandisinlinewithour

estimates。

-2012Guidancecautiousonmarkets,reducesNIIguidance$400mildueto

spreads2012GuidancesetsacautioustonefortheI-BankandAM,spread

compressionexpectedtoreduceNIIinConsumerBusinessbankingby$400mil。

JPMsreactiontodaytothequarterwillverylikelysetthetonefortheearlystageofearningsAfterthemarkets12%rallyinthelastweekahealthyconsolidationinnameslikethisthathavedoubledtheperformanceofthemarketinthistimeperiodwouldnotbealarmingButifthebankstocksgetalittlesloppyandappeartolosetheirrecentbidthenwecouldseearetestoftheirpreviouslows。

GOOGreportstonightandtheimpliedmoveisabout6%vsthe4qtraveragemoveofabout8。

5%MondayIspokeaboutbuyingOct550/600callspreadswhenthestockwas$534intotheprint(readhere)?

Thestockisupabout15%inthelastweekorsoanddefiningyourriskintotheearningseventcouldmakesenseforthoselookingtomakeadirectionalplay。

Alsoforthosewhoownthestockandhavenointentionofsellingcouldconsidercollaringthenameinatacticalfashionaroundearningswiththestockaround$550youcouldselltheOct585callatabout7。

50andBuytheOct515Putforabout7。

50。

Thiswayyoupaynothingforthecollarandyourlongisprotectedbelow$515untilOctexpirationnextFridayandontheupsideyourlongstockwouldbecalledawayat$585onOctexpiration?

Youwouldonlydothisifyoudidntwanttosellthestockfortaxreasonsbutwereworriedthatthestockcouldfacean?

outsized?

movethedownside。

SofornowIamsittingonmyhandsandwaitingtoseehowJPMreactstotheearningscall,whichIthinkwillbeveryinstructivetothedirectionofthemarket。

YesterdayinthelasthourofthedayIboughtaJPMoctweekly33/32/31PutFlyfor。

15?

withthestockdown2%pre-openIwilllooktotakeaportionofthisoffifandwhenIaminapositiontotakethe?

original?

costoffthe?

table?

andlettheotherhalfride。

MorningWord:10/12/11?

Yesterdaysawthesortofhealthyconsolidationthatonewouldexpectifarallylikewejustwitnessedoverthepastweekhasanychanceofgoinghighernearterm?

Ifthelastweekhasshownusanything,itsthatmarketscandefygravity,butan11%5daymoveneedstogatherabitmoresteambeforeitcan?

meaningfully?

testthe?

nextresistancelevel?

AfteropeninglowertheSPXralliedtounchangedandspenttherestofthedaytradingwithin3pointsofeithersideofthatlevel?

Thatsfairlyimpressiveactionandtellsmethattherearestillplentyofshortsinthemarketandevenondayswhenthemarketparticipantsshouldbenervous,theyarenervouslyoptimistic?

1daySPXchartfromBloomberg

Bankstockscontinuetoactinacuriousmannerassentimentinalotofwayshasshiftedfromworstcasescenariostothepossibilitythattheworstisover?

AsIthinkaboutthecarnagethatthissectorhasbeensubjecttothisyear,Icantputmyfingeronjustonereasonwhythesectorhasmassively?

under-performed?

thebroadmarket?

Atanygivenmomentoverthelast6monthsthereweredifferentheadlinesthattookthemdown,itstartedwithfinancialregulationandwhatthatwoulddotheirabilitytogrowrevenuesfromdepressedlevels,to?

mortgage?

portfoliosandpotentialliabilitystemmingfrompastdeals,totheirexposureEuropeansovereigndebttothefinalandmoredifficultreason,todownrighthysteria。

Thememoryofthe2008/09bankingcrisishasmuchtoblamewiththestocksactionthissummer,attimeswatchingthestocksgodown7%adayfornorealreasonotherthansentimenthadaneerilysimilarfeeltothelastcrisis,butformuchlessquantifiablereasons?

IhaverodeshortsinthissectorallsummerandfranklycanttellyouthatihavedonesoforanyofthereasonslistedaboveotherthanthelastoneIjustmadethe?

decision?

inApril/May/Junetoapplythe08/09playbooktothesectorforsheersentimentreasonsanditwastherightone。

SOthegazilliondollarquestion;isitover?

IhavenoclueandthestocksreactionoverthenextcoupleweeksastheyreportQ3earningswilllikelyholdthekey?

Isaidyesterdaythatthehighertheygooffoflastweekslowsthemore?

vulnerable?

theyareinmyopinion?

ButIwillreiterateyoudonotwanttobepressingasectorlikethisnearthelows。

ThereisnodoubtinmymindthatwhilefortuneswerebeinglostbythelikesofPaulsoninthissector,thosewithfreshcapitalandlongertermtimehorizonswillmostlikelyberewardedbytakingthe?

other-side?

ofhismisfortune。

SoIguessmypointis,ifwecanfigureoutthislittlebankstockthinginthenextmonthorsothereislikelytobeadefinableshorttermtrend。

ifthestockstakemediocreresultsandearningsanddontmakenewlowsIthinkIwillwanttotakeashotonthelongsideandabandonthe2008/09playbook。

JPMreportstomorrowmorning,checkbacklaterforapreview。

AsfortodayourfuturesareclimbingthelittleSlovakianmountainofworryhere,up1%,andEuropeisupacrosstheboardabout1。

8%SPXisisapproaching1200andacloseabovethatlevelwouldobviouslybebullishnearterm。

Chartbelowshowstherangesthemarkethastradedinsinceearlythisyearandclearlyshowsthenomanslandthat1200to1250is。

1yrSPXfromBloomberg

SOahandfulofclosesabovethe1200rangecouldsignalatestofwhatisnowmassiveresistanceat1250?