Closing AAPL Put

This was a quick trade, but looks to be worthwhile.

Situation Update

Contagion fears in the Med are spreading as Greek GGB (Bonds) have fallen 7%, this is the entire year's gains wiped out on the fear of contagion from Cyprus.

Senior German officials have come out and doused the fire with gasoline saying they have no idea if there will be a vote in Cyprus, the problems lie with Cyprus and without some rescue program in place, Cypriot banks face liquidity shortages and (according to the German official), won't be able to open. We've already heard that without the bailout the 2 largest banks on the island would fail as of their opening today (which has been pushed back-BANK HOLIDAY-See I told Ya! I'm just kidding about the victory lap, not the bank holiday).

Then the German Finance Minister himself, Schaeuble, came out and said Cypress had the wrong business model and he "Feels sorry for the Cypriot people", this prodding of course will not go over well as Cypriots tore the German flag from the German Embassy yesterday.

A volley was returned by the former head of the Cypriot Central Bank in comments to Bloomberg,

"What we have seen in the last few days is a very serious blunder by the European governments that are essentially blackmailing the government of Cyprus to confiscate the money that belongs rightfully to the depositors in the banking system in Cyprus." He then concludes quite clearly, "It is not clear how this can affect in a positive manner the European project going forward." 

He actually went further...

Next the Cyprus Finance Minister resigned this morning, the president has said he will not accept his resignation... I'm sure Germany has a Goldmanite pal who is a Cypriot citizen with all of his money in Swiss accounts who would be more than happy to fill the position.

What has really dumped water on the market is the news that parliament in Cyprus WILL VOTE on the plan, but the only votes that were yes, were from the president's ruling party and they will abstain from the vote so it sounds like there won't be a single vote in favor of the package-WAY TO GO EU FIN-MINS, another job WELL DONE! Can this vote be anything other than poking a stick in Merkel's eye?

After all of this, Spanish, Italian and Portuguese bonds are moving to their wides as there's more contagion fear. Spanish and Italian Equity indices are down 3-4% on the week so far.

As mentioned yesterday as part of the Flight to safety trade, Swiss 2 year rates are even more negative than yesterday, people are willing to accept negative returns just to find some safety.

Currencies are getting very interesting, please recall the carry trade and up to 200:1 leverage when I post on FX.

GLD Follow Up

The gain wasn't what I hoped for as these were opened in late April when they were a bit more costly, but the decision was made to go with a longer expiration for the very reason of the fact that it looked like there was a good probability the GLD move would take longer to get started, if it didn't, then the calls would have made a killing fast, if it did (as it did), they'd still make money.

 This in itself wasn't a huge gain (I closed 2 earlier as a test of the fill), but with the other positions moving the right direction, the weekly options rank is 5 of 606 with a nearly 23.5% portfolio gain.

Again, while I do like to see good rankings, I find it more useful to see how our positions which tend to be earlier than most people's, fare vs the crowd. We ended up in the right spot at the right time it appears and we really haven't even seen the moves we are looking for yet.

Oh, by the way the fill did come in at $6.50

Closing GLD April $150 Calls

The EUR/USD looks like it will put more and more stress on gold, but you might consider a partial profit exit and save some to see how they do.

I'm closing all wile there's still some momentum.

GLD Update

Yesterday in at least 4 posts, I covered gold/GLD, the Daily Market Wrap in which I made the case that risk asset movement was much different than the flight to safety movement and one of those assets was gold/GLD.

Early in the day, Gold Update I talked about how I wanted one more decent momentum move up and GLD looked ok at about 10:45 a.m.

Then Gold Catching Another Bid around 1:30 which was the start of a much more impressive positive divergence toward the closing hours.

Then there was this GLD update at 3:30 where the positive divergences for today's move  were VERY obvious.

We have double digit gains in GLD right now in the April $150 Calls, I'm just really struggling with whether or not we get more and with momentum, a slow melt-up will most likely lose money.

Here are the charts, you should see what the charts looked like in lat night's Daily Wrap, because those are the kind of charts that scream something bullish is happening in underlying trade.

 GLD hourly looks pretty good, but this is more for a long GLD equity position, not so much an option position unless you wanted to exercise them.

 The 15 min chart is also looking good, but kind of the same story.

 Here on the 5 min chart we can see yesterday's leading positive movement.

 So far today this is the 1 min intraday, it started building positive and has since made another run higher.

 I'm not sure how much weight to put on this 2 min chart yet, I'll see how it develops.

 The 3 min showing very positive yesterday and in line today so far.

Again the 5 min is in line so far so that's pretty good, but it's not just in line or positive trade, it's momentum where the money is to be made.

 Gold Futures / YG I think the 1 min chart hasn't caught up, I'm not sure but watching it

 The 5 min chart is insanely positive

As is the 15 min, but after that it looks like GLD is likely to consolidate a bit.

If you are in the GLD options trade (this is different than being long GLD equity), pay attention as I may look to close that position at the first sign of a consolidation or serious loss of momentum.

GOOG Update

Since I've had several emails in a row this morning about GOOG as it is moving up as we hoped (for our longer term April Puts and equity short position) so we can add in to price strength and underlying weakness or so anyone interested can get better positioning with lower risk and higher probabilities on a new position.

 These are the price levels in which a failure below has the potential and even the probability of creating a "Failed move creates a fast move" so the $800-ish level and $775 are ultimately what I'd like to see break before April expiration and the equity short would be a longer term trend position so any upside in the near term as we have been looking for in GOOG, is a bit of a bonus.

 Not only did the trendline break, but the Trend Channel broke as well, the earlier January brush with the Channel was so close, it may have been on the line, but in my view it wasn't a solid close below the channel, the break on the TC is now $796.46. As far as the 10-day ATR, you see the last time price pulled an upside channel buster last year, it led to a sharp downside reversal, the ATR was up as it would be on a mini-capitulation move. As the trend started in the new year the ATR was rising as it should, but has since fallen off badly and again at an upside channel buster, one of the more effective signals using price.

 My DeMark inspired indicator (9-day) with a buy @ 2009 lows, sell at 2009 highs, 2012 highs and right now.

 Intraday GOOG looks pretty good, momentum, RSI, MACD and Stochastics are all moving in line.

 The intraday 3C chart is in line with price

 3 min chart showing a small positive at yesterday's closing dip.

 I think the 5 min positive divergence is clear here without any notations.

 As for the longer term short position, the 30 min chart is pretty clear

 The 60 min chart is VERY clear and this is how we define a leading negative divergence

 The 2-hour chart, again showing how to identify a leading negative divergence

And the 4-hour chart , the leading negative right now is the worst GOOG has seen in a long time.

All looks clear for GOOG, I'm not concerned about it and look forward to the possibility of a better or a good entry for anyone who is interested.

OPENED SPECULATIVE AAPL APRIL 5TH $460 PUT

This is a weekly option, just out a bit further.

AAPL Follow Up

I still think AAPL is an interesting, but speculative short term short position. I'd think you'd need some leverage, I'd prefer a weekly option, but perhaps next week's expiration.

Here are the AAPL charts (see yesterday's coverage of AAPL and the bigger picture as well).

 AAPL daily 50-bar m.a. as resistance

 Hourly 50 bar as support.

 Momentum has fallen off since yesterday with momentum, RSI and MACD all going negatively divergence and Stochastics breaking below its embed.

 The 1 min chart did not improve at all yesterday or today

 Nor did the 2 min

 or 3 min

 or 5 min

Even the 10 min is negative here.

I don't see this as a position or longer term trade, more like a quick swing that probably needs some leverage to make it worthwhile. You might consider waiting for a break below the 5 min 50-bar average, but I don't mind it here at all. THIS IS A SPECULATIVE TRADE AND RISK MANAGEMENT SHOULD REFLECT THAT.

There's still a fair degree of risk asset correlation

Judging by the pre-market CONTEXT model, the very tight risk asset correlation we saw yesterday is still somewhat in place, although the ES (SPX Futures) model is a bit more dislocated and lower than iI remember seeing it at anytime yesterday, we'll see if it hold in to today's trade, especially afternoon.

At a negative differential of nearly 6 points, this is about as far as the model has diverged from ES since yesterday's extremely well-correlated risk asset class, yet as explained yesterday, it would seem to be a facade as TLT/ Treasuries and Yields all showed safe haven buying yesterday, the VIX showed hedge/buying of protection to the largest degree we have seen in a while (traders are fearful) and gold gained ground against the pressures of a rising $USD, clearly traders were moving to safe haven assets even as correlated risk seemed to suggest otherwise, you know my feelings or theory on why we saw this; today could confirm the theory.

In Cyprus

Apparently just before today's parliamentary vote was to take place, President Anastasiades has put forth a change in which no depositors with $20k Eur. or under face any levy, however it seems the problem of getting the needed votes still centers on the taking of private property, as such today's vote has been delayed, the president will meet party leaders tomorrow morning at 9 a.m. and we are told the vote may not happen tomorrow.

The consequences of the outcome in Cyprus could be or already are precedent setting, but even more so, Cyprus "could" be the first EU nation to face an banking system failure and subsequent expulsion from the EU (Something Merkel probably would shed no tears over as Cyprus is surely the smallest importer of German goods).