According to marketwatch, LEH seems unable to raise capital and that’s what is taking it down. At OPNewsletter I was selling this rally. Here is what I wrote to OPN members yesterday-
Markets are going to the sky, moon or whichever planet you can think of. I shall share with you my version…before that…I may be completely wrong and hence take it with not just pinch of salt but loads of salt….
My version- Dow will rally it finds some resistance somewhere in between 11,560-11,600 (allow few points here and there) with a bigger resistance around 11,770….SPX will rally to 1280 area followed by resistance around 1305…I am not a buyer of this rally…till I see major buying spree coupled with a 90% up day i.e. the volume of up stocks is >90% of up+down volume..I don’t think anything significantly changed except “new hats” and workload at “printing press”…I am sensing..”It’s time to get cash, pump-up the rally, pump-up the financials and get out from here as there is no one out there who is willing to give cash”…..
but in the end, it’s just me…and I may very well be wrong…
And rest is history now. It was hardly a strong rally with less than 60% up volume (of up+down). Oh well, we still have few hours left and anything can happen. LEH’s trading volume was huge yesterday (app 2X average trading volume), so it seems it’s shares were being off-loaded amidst strong rally. My guess is that smart folks knew that the deal is probably not coming through especially after the SWFs experiences since last year.
For OPNewsletter, we reduced our Delta exposure with this rally, we closed RUT Iron condor for >+28%. In spite of all the market gyrations, as of this writing it is trading above waters.
LEH, soon a penny stock, oh well, I may be wrong as usual,
Profitable trading, OP