The Week Ahead

A very important week is ahead that might set tone for rest of the quarter. Fed Chief Bernanke will be announcing on Tuesday via FOMC announcement that he has decided to keep interest rates same (my guess) as US economy can’t handle any hike at the moment. Rate cut it out of question.

Though a lot of companies are going to announce earnings this week, here are few name that might see some significant movements- OTTR , OEH, HURN, BIO, NILE, PCLN, SNCR, WFMI, FWLT, KALU, AIG, COGT, CROX, DECK, HANS, INT

PIMCO chief Bill Gorss says “This deflating supply of credit is in effect the financial market’s version of Mad Cow disease.” Read more. On the other hand, John Hussman thinks that once market recognizes that we are in recession, we may observe abrupt losses-

The stock market certainly has experienced weakness year-to-date, but one of the important features of this weakness is that it has not been tied to any broad recognition of ongoing recession. Rather, the predominant source of weakness has been concern about financials and the mortgage market.

This suggests that there remains an important layer of risk to peel away: presently, the greatest threat to the stock market is not the potential for further mortgage writedowns, but the risk that enough evidence will emerge to remove the lingering doubt about an ongoing recession. Once an ongoing (and in my view, probably deepening) recession becomes broadly recognized, we may observe abrupt losses as the likelihood of more sustained earnings disappointments and much broader default risk becomes reflected in one fell swoop.

Whatever your perspective maybe, play it cautious. No single direction is a clear winner except that bears so far had upper hand. Whether it is a correction in the on-going long term bull market or it is a primary bear market, that still remains to be seen. I have shared my thoughts earlier and I am still holding on to those levels as primary indicator to tell whether or not tide has turned. At the same time, I would encourage my readers to read Adam’s perspective about bottom calling.

Read this if you are looking for understanding impact of high IV on options’s greeks. OTB has complied some good lessons on options. If you benefit from the posts, don’t forget to support the blog via visiting sponsors.

And of course, Olympics starts this week in Beijing China. A lot is on stake, national pride(s), sporting companies, travel companies and many china tickers are counting on business from Olympics. If those doesn’t materialize, we’ll see a show down on the likes of NIke (NKE). Stay tuned.

Trade carefully, Trade profitably, OP






Leave a Reply

Your email address will not be published. Required fields are marked *