Monday, July 30, 2007

Dow Up 92

Options Report: Bear Stearns, Lenders and The VIX
Options speculators still love to hate Bear Stearns and mortgage lender Countrywide Financial.

And for a little fun, a nice chat with John Bollinger of Bollinger Capital Management...
Technical Analysis: Stocks Bounce, But For How Long?
There isn't much doubt among technical analysts that the stock market is oversold. But that doesn't mean the major ind...

In the context of what John was saying earlier, today's rebound might be a good sign, but internals will need to look stronger - so one day doesn't vindicate the buy on the dippers. Still, the rise was better than what I was thinking in terms of a "blue Monday scenario", if not worse.

Today was a reminder that no market goes straight up, or straight down without a breather, unless it's the Chinese stock market. lol, I think.

One of the things I didn't get to write in the above link was that John was looking for rotation back in the leading stock groups of earlier in the year as a signal to confirm a bottom.

In high yield land, the LCDX even put in a modest bounce of .8 cents on the dollar with the spread coming down to 338 bps. Even the ABX had a modest bounce.

Let's face it... the reality of the stock market for the time being is that it will be driven by what's going on in 1. high yield corporates, 2. the mortgage market and 3. the carry trade. It will be deja vu all over again if any of the three misbehave, and really if 1 and 2 misbehave then 3 follows. And if 3 misbehaves, then 1 and 2 will misbehave as well. But as Jim Sinclair at points out, "expect every trick known to monetary mankind to be used when it threatens technically to unwind as it did Friday." One thing's for certain, volatility will reign supreme.

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