What I Am Watching Monday

$SPX (S&P 500 Index)

Over the past week we have seen the largest downturn in the $SPX. The $SPX has fallen continuously on news from the Euro Zone. Protests have erupted in Spain and Greece over more austerity. On the front cover of the Wall Street Journal, there was an old lady trying to dodge bottles thrown by protesters. Europeans in these countries have there life in soul in the government and refuse to give any of the constant money flow up. So far I have noticed a correlation between any large protest in the Euro Zone and the markets. Markets go down when there is unrest this is because of a lack of stability. So on the technical side, markets have fallen of a fairly large rally. This is the largest movement down we have seen in the markets in three months. If you view the chart below you can see the same kind of correction not long ago. The markets rocketed on this correction and rallied further. Based of what I see we are at a very important level on the $SPX. As you can see before the same pattern formed on that last correction. There was a strong bar up, then a muted bar down, after we rallied very high. Based off what I see if we break the channel on the $SPX we are going to move down. The more likely scenario is that we finish the pattern and begin a move up.

Euro Futures (/6E)

Due to the unrest in Europe, I have been short the euro for the past week andeur have finally sold the position.  I have decided to take my profits because I have seen a slow down in the move down. Although this observations seems to be taking place, I am prepared to short the Euro anytime I feel necessary to make a trade.

Next Week Overview
I want to not have any net in my portfolio.

Stocks to Watch on Case Shiller Report

Real-Estate Sector ETF (IYR)

IYR has been beaten down lately and looks like it could break to the upside on some sort of news. It just so happens that the Case Shiller report is coming out tomorrow. We might see a break to a certain direction. If the report is bad I believe the trend will continue to the downside. If it does continue moving to the downside I will buy puts if not I will buy calls.

Simon Property Group (SPG)

I am interested in getting long SPG on the same hopes to a break to the upside. Also overall I like this company and the way it is managed. This causes my longer bias on SPG, I will go long this stock when  ever I see an entry point.

Bonds Screaming Up

The Fed has announced QE3 and this is having a effect on interest rates. Below is a chart of 10 year interest rates, it is screaming for a move down. Since bonds move against interest rates it looks like we will see quite a rise.

-Long 30 year bonds now

EUR/USD

Short EUR/USD pair
I would like to short the EUR/USD pair in hopes of a movement to the downside on this current market rally. Fundamentally the Euro is still out of shape because of the current economic situation and the major debt problems they still have to deal with. Along with that the ECB are always focusing on the wrong issue at the wrong time. They focus on buying bonds to stabilize markets instead of forcing the countries within the Euro Zone to cut spending and debts. What the countries need is cheap debt and spending cutbacks. From more of a technical/market perspective the Euro has come up on short covering. Afterwords we have the trend traders and more European news that could drive Euro prices. If you look at the chart below you can see the euro is starting to stall and is begging to go down. I would be careful with this trade and keep it small. I am planning to hold this only for a few days, If the trade does go the correct direction I will hold it longer.

Recent Option Trades

Call's: JNJ (Johnson & Johnson Corp)
I bought JNJ because I want exposure to major stable stocks instead of volatile stocks at this point. At the current time high beta stocks are all over the map and are seeing a lot of movement. This is making it risky to trade options on these certain stocks. I also would like some short-term exposure to pharmaceutical companies, after I sold all my LLY shares.
Call's: PEP ( Pepsico Corp)
I am hoping to make PEP one of my mid-term investments over the long run. For now I have bought PEP calls on a recent pull back in hopes of a short-term bottom. I also like PEP as a company and any chance I have to get long I will.
Put's: FXE ( Euro Currency ETF)
I have been hoping to short the Euro for the past month. I got long near the bottom because I did expect short squeeze rally. These types of rallies tend to happen when all people talk about is short this short that. Now I would like to short the Euro because of long-term faults in the EU and countries in it.

Fed and ECB Realities

 If you have noticed global economic fears and fed easing have been competing with each other for the last six months. So when we see a economic report that is not very good, markets do not react to the report. This is happening because the worse the reports get the more likely the fed is to provide QE3. Well a few days ago the fed finally announced QE3. The markets rocketed along with other news that came out from Europe. In reality,  fed easing is having less of an effect on interest rates than people like to believe. The more the fed buys bonds the less people can sell to them which forces the fed to buy less bonds than before. On the positive side the fed is buying mortgage bonds. This will help stimulate the mortgage market that is now in deep trouble. The only thing that worries me is the 10 year interest rate has not reacted to the fed news. Treasury bond interest rates actually went up on the news. Although treasury interest rates have not reacted, I still think they will do so soon.

I would also like to address the ECB bond buying program. I do not believe this program will work because the ECB is lending at the markets interest rate level. The countries that are in debt need cheaper debt so they can pay the money they already owe. The only problem with lending these countries money is that they are not making enough cuts to support themselves. As Jim rogers said, "Someday Europe is going to run out of other people's money."

My new blog!

Hello everybody this is going to be my first blog post not through Weisenbach Investments. This blog is going to be about my idea's and market views. I primarily trade ETF options and stock options. I also often trade underlying shares of stock's and ETF's. Soon I am going to be trading futures after two years of practice trading. Since I cannot yet trade futures I trade ETF's that track futures markets.