Yes. I am calling for a rally. How big? Not sure. Have we put in THE bottom? Not even close. But I think we will rally here.

Energy names look to have put in a short term bottom.

Financials have been ripped to shreds.

If financials don’t go down and energy rallies, the S&P ($SPX) will go higher. If Financials rally and Energy rallies, then the ($SPX) will go even higher. I’ll say two upside levels are 1288 and 1324.
As far as the NASDAQ ($COMPQ) goes, it looks very bearish, but many of these names are stretched way down here. A bounce is in order. Ultimately, I see (RIMM) at 45, but we won’t go straight there. I expect a bounce.

So where do I own insurance? I own upside insurance in Valero (VLO), I own downside insurance in Prologis (PLD). I am also inspired by some other ideas. Next week, when I am listening to the trading pit and watching the price action, I will decide if I find further inspiration and am compelled to buy or sell some volatility.

Peace

Andy Warhol’s Annunciation magnifies one little nuance of Leonardo da Vinci’s Annunciation.

Art is trading and trading is art.

The picture below is the endpoint. There is a series of lithographs that will help you understand the process that led to the endpoint.

A picture is not worth a thousand words to Mr. Volatility. A picture is worth a million little slivers of volatility.

Be sure to check out the Leonardo da Vinci exhibit at the Tech Museum of Innovation.

Peace

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Earliest men perceived…their world as largely chaotic, and so do we! There is a difference, however. The cavemen viewed nature as as indifferently rolling unbiased dice; modern men recognize nature’s dice are only slightly but nonetheless purposefully loaded.

-Joseph Ford

From different reference frames there can never be agreement on the simultaneity of events.

-Unknown

Are you readin’ me? Do you believe I do voodoo.

A trade is a trade is a trade. And that trade was quite a trade.

Peace

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I have written about downside insurance in such names as (RIMM) and Prologis (PLD).

I sold some of my RIMM puts this morning. RIMM announces earnings this afternoon.

I am starting to buy upside insurance (calls) in the energy sector. I like this sector for a trade.

Check out Valero (VLO) and Tesero (TSO).

Peace

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The TED Spread is above 300 basis points. This is not a good sign. View this through the lens of caution. This is no time to try to call a bottom. The bottom will only be known in hindsight. From this traders point of view, the bottom is far far lower. For another view of this, check out The Chairman’s blog.

Along with the TED spread, take a look at the $VIX. Typically, when the $VIX hits the mid 30’s to low 40’s, it backs off pretty quickly. It is not behaving as it typically does. It looks to me like it is basing for a move higher. Perhaps higher than any of us have ever seen. Downside insurance remains my play.

Peace

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