Day Traders Welcome the Obama Volatility

From 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, at tradingmarkets.com.

The socialists lost a key election in Massachusetts on Tuesday and the next day they changed their colors and “saw the light” and if you believe that I have a bridge in NY you can buy on the cheap. However, yesterday Obama countered with his bank attack regulation proposal and the market immediately sold off. The SPX made an intraday low at 1114.84 and closed at 1116.48 with the 50DEMA at 113.61 Both the INDU and NYA traded and closed below their 50DEMA’s.

The devil is in the details, and the market doesn’t know the specifics yet. [Read the full article]

The free market rebelled against Obama’s plan to mitigate risk taking at banks. Stocks fell sharply on the session despite positive earnings at several major names. The Obama led plan would prevent banks from investing as they see fit in hedge and private equity funds. It would also ban proprietary trading at the institutions. The VIX index soared on the news with option activity forecasting an over 70% volatility gain in the near future. The DJIA fell 213.27, the Nasdaq gave back 25.55, and the S&P 500 dropped 21.56.

Google (NasdaqGS:GOOG – News) reported fourth quarter sales that missed some analysts estimates. However, advertising sales climbed neared $2 billion for the first time. The Stock PowerRating for GOOG is 6.

Dow stalwart, General Electric (NYSE:GE – News), announces before the bell with a forecast EPS of 26 cents. The Stock PowerRating for GE is 6. [Read the full article]

While it seemed risky at the time, the pattern of new highs with strong volume pointed toward higher prices. I don’t see any better indicator of institutional buying than volume

You can see from the 60-minute chart below the breakout of a tighter formation. In trading options, my calls have to be right in direction and timing, or I will lose or just spin my wheels. I need to see acceleration and velocity, which rarely ends after one session. Continuation moves are the norm rather than the exception, but those without patience will pass on such a trade. An example of trading the Feb. 10 options is below, from an entry date of Jan. 11 to a closing day of Jan. 20.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quote data delayed 15 minutes for Nasdaq, NYSE and Amex. [Read the full article]

Health care has been in the news a lot lately. Democrats in Washington have been working for months to push through health-care reform legislation, and late last year they passed separate bills in the House and Senate that still have to be combined into a single bill. Now Republican Scott Brown’s victory in the January 19 special election for Ted Kennedy’s old Senate seat has thrown a wrench in their plans. Brown will be the Republicans’ 41st vote in the Senate, allowing them to filibuster the combined bill and prevent it from coming to a vote. Health-care reform isn’t dead, but it now looks more difficult for Democrats to achieve.

Financial markets pay a lot of attention to what’s happening in Washington, especially these days. Uncertainty over the status of reform was a big reason health-care stocks underperformed the market in 2009, and the stocks of big health insurers jumped ahead of the election when polls showed that a Brown victory was likely. [Read the full article]

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