Bank of Hawaii, Oil, & China

Bank of Hawaii has weathered the financial crisis extremely well and looks to be a solid buy. Picking up some long calls with a stop just below the 50 week moving average may pay off huge in the near future. The next three charts give a long term, intermediate, and short term look.




Crude was the story today, but be real careful getting long here as it has only retraced back to a longterm trendline and Fibonacci.

The China index sporting similar action to Crude and could very well be a bull trap. Shorting here or some short-term puts 3-6 months with a stop at the fib line may be the play.

ZION

ZION: 52.83 +7.61 (+16.83%) : ZIONS BANCORP - Yahoo! Finance
4:00pm 09/19/2008
$52.83

Low: $38.76
High: $107.21
Change:+7.61 +16.83%
Volume:14,189,097
Avg Volume: 6.18M
Shares Out: 107.57M
P/E: 16.16

This is an awesome example of how volatile days should be traded:

What if instead of anxiously/fevorishly trying to sell your calls on the Open spike you instead place Buy on Open Puts WAAAAAAYYYYYYYY Out of the money at "key" strike levels. For example: What price would a market PUT order to trigger at $105 strike been filled at the Open versus trying to clumsily pick a limit order to set in order to sell your calls? What about creating a Vertical Put Spread to trigger at certain levels?

No matter how you look at it the goal is to preserve the profits gained on your long held calls by the insane open. What difference does it make if you just get neutral with a corresponding PUT amount of contracts? Technically you would be even thus preserving the maximum profits of the gap open....

The issue is which order is easiest to make? The one you can place for practically nothing the night before or

1. the stab in the dark limt order that may not get filled at your wish price
2. or worse gets filled WAAAYYYYYY below the Open bid thus leaving major profits on the table
3. or the catastrophic not get filled at all as the bid and profits quickly disapate

Bottom line:

Regardless of the Call profits that were made; how much do you think a $105 strike PUT +ZNQMD would be worth if it did get filled at $0.05? By my math around $52 or for 10 contracts or $52,000. Well the close for +ZNQMD on 9/19/08 was $86.20 or $86,200.

BUY 10 +ZNQMD if ZION >= $105 $0.05 09/19/08 $17.49 = ($67.49)
SELL 10 +ZNQMD MOC Market on close $86.20 09/19/08 $17.49 =$86,182.51
Profit $86,115.02

To me that makes selling those calls later in the day a WHOLE lot easier.......

Market outlook

Next week I expect the market to absorb the huge gap up by tediously fading back. If support is found at the shoulder lines it will lend more credence to charts across the board setting up for an inverse H&S pattern that could send things back up the year highs. The QQQQ's is looking like easy money if this turns out to be the case.

US GOVT inc. - Great trade with 80% stake in AIG

In arguably the greatest insider trading deal in history....the US Goverment takes control of AIG.

No wonder they would not let any more shorts.......

Checkout this excellent post on Friday: http://quantifiableedges.blogspot.com/

I'll do another post later this weekend setting up for next week......

CNBC's take of the week.......

From Dylan Ratigan of CNBC

"An historic week on Wall Street mercifully comes to an end. Usually this column highlights next week’s most tradable events. And while investors will look to make money around Nike and RIMM earnings on Wednesday, and perhaps housing data on Thursday, the truth is these events, which normally would consume the collective interest of traders, will recede into an ever-changing backdrop that is the new financial landscape. The Government has changed the rules, nationalizing risk, and altering the natural balance between buyers and sellers in an effort to save the financial system. We are by no means out of the woods, and while the infusion of cash into the system will certainly assuage some investor concerns, no one should take this to mean the crisis is over. The capital markets have suffered an enormous trauma, and as with any injured body, the road to recovery will not be instantaneous. If you had been in a cave for the whole week, you might think nothing happened. After all, the Dow and S&P are virtually flat. But over that time, the financial landscape has been irrevocably altered. Lehman Brothers has failed; the Government’s bailout of AIG; Merrill’s merged with Bank of America. It has become a brave new world that will require even the most seasoned traders to take a step back before acting. But one thing is clear. An open market, even one where the rules seem to be changing on a daily basis, is a market in which you can make money. So let’s relax tomorrow, and come back next week and try to do just that. ."
-Dylan
If you have questions about The Final Trade or suggestions for Fast Money, please send an email to FastMoney@cnbc.com

The Govenrnment rumour Bounces the market....

Today the "rumour" abounded that the Government is putting together a bailout fund to cover both the Financial and home building/mortgage crisis at once. The only things that can be said from here is that tomorrow is expiration day, long equities and short Gold, and it is now the Fed's ball......

10 yr cups with handle

As the global financial structure is under seige and fear is high...could this be the time to BUY.....
The DOW is sporting a decade long Cup with handle formantion which is bouncing off a FIB line. It would be pretty easy to go long and place a tight stop just below the level.

Extreme caution going long here because if this pattern fails the bottom could be tested.....

Hmmmm the S&P looks exactly the same.....

However the laggard of the crowd the Nasdaq throws the brakes on a bit and adds that there could be a bit more downside first.


One interesting thing is the Slow stochastic line (the red line in the bottom of each graph) has yet to start turning or bottoming out. Seeing this in all three major indices tells me to be patient going long here and keep your Call and Long powder dry till an uptrend is confirmed.

Broken lines

Wow, if you are a trader you ar oving this environmnt. Otherwise, the whipsaws from tops of ranges to bottom of ranges could test one's fortitude.

It is noteworty that the S&P precisely touched the July lows and does appear to have more room to fall.


The VIX blew out the top of the downtrend and is definitely a barometer to keep a close eye on for a direction change.

Another way to will be GLD. Its just uncanny how GLD has bounced off the FIB extenision and retraced back to a fan line.

Also, the FXI or China index broke a long term trendline as the Chinese government lowered their rates today. I believe the bottom will be tested here before any sustainable bullish movements on the American side will hold.

The IKE, LEH, & AIG crash........

Welcome to reality...........I wanted to post charts of the culprits at hand on Friday's close so a before and after picture can be readily seen after the demise is complete.





The real key will definitely be the VIX.....How high will it go. Watch the fib lines for resistance.


Good luck and have a great week... Oh yeah, perhaps some theme music is fitting for the open....

Wally World

The last time WMT was at this level was late 1999-early 2000. Hmmm didn't the market nose dive after that?

GLD, EUR/USD, & THE S&P

How low will Gold go?
As the commodoties trade unwinds will a precious metals bottom signify the time to get back in on the long side?

Here's a thought...Where are all the profits from the Energy and commodities run-up going?















Equities? No they're down too....

Maybe the Dollar....It will be interesting to see if the EUR/USD finds support at the next FIB line.

Bull follow thru - Hah

The VIX broke through to the upside and the next stop could be above $30.The S&P took out all of yesterday's gains and breeched the bottom of the fib line. The July lows are next...

















AAPL has hit the bottom of its year long range again, but is looking weaker here. The failed inverse H&S of last month propagted this downward move. Look for a bounce off of this resistance line and then the getting short should yield some nice profits.

Today means NOTHING......

It is pretty interesting that a 300 point move in the DOW means very little. All that Paulson and the bailout boys have done is manufacture a move back into the range-bound areas of last week. The catch is that one would expect the BULLS would have blown through the upper boundaries for a 500 point move and at least gotten above 50-week EMAs with ease. NOPE. Now take a look at the VIX...finding support above its EMA's...

What worked:

Consumer staples were on fire...a lot of new highs made. Checkout CHD, PG, GIS, HNZ.

CALM has retraced and may be worth picking up some calls on here.



















What did not:
Technology got taken out to the woodshed....
AAPL, RIMM, GOOG, etc

Why:
Bottom-line is the BULLS have to have follow-through tomorrow and same store sales at 7:45 am prior to the open, Pending Home sales at 10am will slow the upward momentum.

Bull (T)rap -

OPENING JUMP FOR EUROPE STOCKS ON FANNIE, FREDDIE SEIZURE; UBS LEAPS 8%
Call it a melt upGlobal stocks, U.S. futures surge on Fannie Mae, Freddie Mac seizure

Global rally on back of plan to rescue beleaguered mortgage giants. • U.S. stock futures leap Gold, oil rise

BAILOUT U.S. seizes Freddie, Fannie Treasury Secretary Henry Paulson (left) and Federal Housing Finance Agency Director James Lockhart announce the FHFA will take control of mortgage giants Fannie Mae and Freddie Mac. Bernanke says move will strengthen housing market.• FDIC to help small banks with exposure to Freddie, Fannie• Reserve debt, reserve judgment? (First Take) Likely fall for Fannie, Freddie

Bottom-line here folks: the people just got screwed, the banks just received an executioner's stay and are still on death row, and you have just witnessed the biggest fleecing of America since the purchase of a $600 toilet seat. Oh the simalarities........

Be VERY careful going long here. Take profits quickly. The SPY chart shows the levels that will be tested.

This rally may be the bulls last stand and plainly conveys the DIRE situation in housing and the continued rise of foreclosures. When the VIX bottoms out the Bulls are DONE....

The VIX will define the direction..

Which will it be?

Market Bears: the VIX made a higher low and is merely pausing to break out of the current range?

Market Bulls: The sell off today capitulated at almost the exact level of a previous turn and is now at the right shoulder top of a H&S pattern and will thus test the bottom of the current range.

6.1 % unemployment and Consumer out of cash.....

The unemployment news speaks for itself.

Check out the true measure of the global consumer...Mastercard and Visa. Do not get hung-up on the fact that these guys are Credit card companies. They derive their business solely from the number of TRANSACTIONS made where a credit or debit card is swiped. It's pretty simple: No swipes = No Sales.














So where is the money going? How about indulgence items like tobacco, spirits, and can you say sex.....Yep when people are couped up inside what else is there to do.....So lets take a look at the Best in brand condom manufacturer...CHD. They deliver the goods of the powerful brand name condom "Trojan" as well as other consumer staple goods. I believe the charts speak for themselves....it's almost as if they've been taking Viagra....up, up, up some more......

OUCH! if you were long......

Today was a Bear's dream as everything pretty much sold off. You could pick any sector to look at as the oil/commodoties/equities trades continue to unwind. In short the global growth theory is no more or at least on an extended pause.

The Technology sector shows what can happen when patterns fail. The QQQQ, AAPL, CSCO, GOOG, & MSFT exemplify how the Bulls are facing an uphill battle of resistance.

Let's be real clear: there will be bounces along the way down to test the July lows, but those levels will be tested eventually.

AAPL is set to announce something on September 9 and here a a couple links to what it could be:
http://www.appleinsider.com/articles/08/09/04/apple_looks_to_take_multi_touch_beyond_the_touch_screen.html

http://www.ilounge.com/index.php/news/comments/ipod-nano-4g-touch-2g-dimensions-revealed/