Hilarious comment on Zero Hedge this morning:
"When Bloomberg blasts headlines like this: S&P FUTURES UP 1PT, AT SESSION HIGH, ERASE EARLIER 3.4PT DROP, you know Bernanke hasn't spoken in over 24 hours if a 4 point swing is headline worthy."
It's a great description of how precarious this market truly is. Again, the market is making progress overnight and not by day. Yesterday's 22 point S&P headline rally to a record all-time closing high prompted an CNBC Special Report which superceded the Kudlow Report, however, only 4 points of net progress occurred after the first 8 minutes of opening imbalance. The index took the entire day to exceed the number of NYSE advancers from June 27th, doing so by a mere 6 issues.
Mentioning volume these days is like mentioning deflation: it opens the door to ridicule. Even though we've had a low volume market since 2009, on a relative basis it still matters. NYSE volume (used as a proxy for the S&P) was 12% lighter than the May 2nd high, while UVOL (volume of advancing issues) was 18% lower than the June 24th UVOL peak.
At this point, with the current internals, I hope the S&P makes a new high, just like I hope Larry Summers becomes the new Fed president.
I'm bidding on VIX 18 calls and way OTM (outta the money) SPY 100 puts, both with a lot more time value than usual. When I get a better signal, I will get more aggressive. There are enough gaps below the market to keep me confident of at least a small correction to square up the losing SPXU position. Even with it down 11% now, due to the SSO hedge and yesterday's score on calls, the total loss is still only 1%.
Obviously, the 1687.18 high is a reachable target. So is each gap down to 1631.89.