Apparently a report is floating around that a default in Greece debt will have minimal effect on the capital ratios of the EU banks. Tier one will go from 9.5% to 9.2%. There are the obvious caveats that this is spread out over multiple banks, and that some will fail. But the larger caveat is that if Greece goes, it may cause a domino on Ireland and Portugal, which will require a bailout of the banks. (Ireland is making real progress, and Portugal is getting the bailout.)
To me, the report downplays the threat. If anything, its pretty bullish for the global economy, which should be good for global markets. This could be the reason why the SP500 has held up fairly well. (But I would expect rallies.)
When I only look at the SP500 chart, I see a sense of strength. But when I look at individual names, I wonder how the hell the market is holding up.
Its weird.
I see the action of AAPL and I scratch my head wondering. (Do you know if GOOG was to trade with AAPL's ex-cash multiple, Google's stock would be at 469.) I see AAPL, POT, DIS, AOL, ATI, etc, and I want to buy as much as I can. But instead, my curiosity of the above development caused me to unload my AOL position to store up cash, hoping the market collapses and ATI goes to 64, DIS goes to 40.5, AOL goes lower. (Although I do not know if AOL goes lower. Here is a good article summing up its technical prowess that is one reason why I like it.)
I may also have to re-position my POT to more efficiently enter the various opportunities I am seeing. Currently I have the common, but if ATI and DIS achieve my desired prices (along with expected additions if IBM and AAPL continue to fall), I will shift from the common and enter the Sept 50 or 52.5 strike Calls on POT.
As a hedge, and a play on potential continued weakness, I am looking to short OPEN via the July 90 Puts. It has some support at 85, but the heavy support is around 70. (If it rallies from current levels or from the current level, I will look to add these puts. But the sweetest time to have taken this position was 4 days ago, when it was initially testing its 62 SMA.)
No comments:
Post a Comment