Hi,
It's getting scary. Last week, Germany's ECB member Jurgen Stark quit, while the Bund reached a record low of 1.77%(!). Obama's jobs plan got a lukewarm reception, and it was basically discounted as electioneering - and not cheap, either. The Swiss stopped their currency appreciation at 1.2 to the Euro. Bernanke added no direction. Trichet blew his top.
Stocks sold off, but could have done worse. Have a look at this 2-yr chart of the S&P 500, courtesy of BigCharts:
We seem to have entered a mini range with support at 1100, resistance at 1250. We'll probably stay in this range until the FOMC meeting, 20-21 Sep. A TRADE IDEA is to look for this range to hold through the meeting. If the meeting results in nothing to break the range, there will be a premium-selling opportunity such as selling options at technical levels while buying covering options. For example, you might sell the 1050 put and the 1300 call while buying the 1000 put and 1350 call. Please consult your financial advisor before you do this trade.
Meanwhile, market analyst and derivatives guru Satyagit Das, in Friday's Evening Standard, expressed renewed doubts about the European bailout plan, banks exposure to Europe's debts, while citing evidence that the money markets are beginning to again tighten (or freeze) up, while the broader economic environment deteriorates.He said, "If the markets seize up again, this time it will be different. There may not be enough money to bail out everyone and every country that needs rescuing."
Stay tuned.
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