Andrew Giovinazzi's blog

Is it different this time around?

AAPL and MSFT got a black eye tonight on less than stellar earnings reports.  I think that represents around 20% of the market cap of the NDX.  All those that have been calling for the demise of stocks will have reason to cheer today.  Our rally to all-time highs got derailed by something normal like reduced earnings forecasts instead of Greece, QE or some other macro mess.  While financials and tech have powered us to all-time highs, energy, oil and metals are hitting some near term lows.

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Market still cares about Greece, sort of.

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The morning looked solid today as stock ran on GOOG, FB and AAPL rallies.  Financials look good as BAC is finally getting out from the constant deluge of fines from the financial crisis.  All was going just fine until reports of unrest in Greece started rumbling through the markets.  Treasuries spiked even into Yellen's hawkish rate tones.  Something happened and it had nothing to do with the USA.

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Think of this weekend as an earnings straddle

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As we go into the 3 day weekend the traders are putting the juice back in the options.  As I said in our Vol Report this morning, VIX will stay bid to the close.  After all no one really knows how the market will react to whatever Greece decides about Greece.  It is a binary event similar to what goes on around earnings.  The best clue to the prospective move is around the ATM straddle.

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Greece Defaults

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It happened.  It finally happened.  Greece defaults on debt to the IMF and gets the title of most beautiful but deadbeat country.  What did stocks do?  They rallied after it appeared Greece’s citizens think the EU is saner than the current government. Voters will most likely vote yes on referendum to stay in the Euro Zone on Sunday.

 

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AAPL declares earnings and the market adjusts

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As I write this Greece defaults on debt to the IMF and sends its citizens into some uncharted waters.  The SPY is up .25 from the close so it is a safe bet for now that US stocks don’t care anymore.  The game is ending and is about to play out with a referendum this weekend.  It would not surprise me to see stocks start a rally again and end up at new highs after the labor reports this week.  Another surprise was the jump in AAPL IV on a down volatility day in the market.

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FB makes all-time highs

Stocks had a hard time today jumping up to all-time highs.  The SPX started the day down and never looked back as the better than expected GDP revisions caused some rate concern.  Greece’s PM also started back on the crazy train so that unsettled European markets after they were anxious to get to higher levels.  FB is not feeling that right now.

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Fed leaves things alone

Yet we have another FOMC announcement with the Fed choosing to do nothing.  I don’t know how far the economy has to grow before rates start to normalize but we have to be getting close now.  We had the 90’s and a government surplus and higher rates and no one was complaining.  Once again post-meeting the VIX dropped even with near sure 25 basis point rises in 2015 mapped out.

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AMZN volatility is cheap

Seeing news reports on TWTR about AMZN using couriers to deliver packages gave me the UBER kind of feeling.  UBER is on its way to becoming one of the highest valued pre-IPO companies on the planet and it makes some sense AMZN is taking a page from its playbook.  That got me looking to AMZN volatility and it is very cheap.

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The market starts to worry

The euphoria of Thursday is now over.  The rally we had on concessions from Greece now give way to the fact that the Syriza party is running for its next election realizing it cannot deliver on any promises besides sending Greece into the economic stone age.  Volatility traders love this because it is, well, some volatility to trade.  Volatility wants to move, but only at the pace of a 3 legged race.  The will to move out is not there yet.

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