Stock Traders Blog

I mentioned in my previous post that Baidu’s September option pain was $300. I checked it again and the option pain was higher a little bit at $310 at the moment. What would be your guess if you predict Baidu’s price movement without looking at the option pain a couple weeks ago when Baidu was about $340? I would probably think it would go up instead of retreating. Obviously option pain can really tell something. It can tell how institutional traders see a particular stock. If option volume on an issue is large enough option pain on that issue may be able to tell how institutional traders see the market overall.

I checked INTC and BAC September and October option pain. They are trending downward. They seem to tell the bearish sentiment of the market should be extended into October. However Baidu’s Oct option pain is at $330 which is higher than September’s. I am not sure if you agree or not but I have already convinced that option pain is a very good leading indicator on the underlined issue or even the overall market.

Anyway I didn’t trade for a while. I was busy looking for a new job. I add 200 shares of CSKI at $13.09 and I sold 2 contract of Baidu Sep 290 Put at $3. I was thinking if Oct Baidu option pain is $330 I wouldn’t mind to have it at $290 in the mid of September. There is $20 difference or about 9% difference between $290 and Sep option pain. I thought it could be safe. But again who knows. We will see how it goes.

A video of Peter Schiff in Daily Show with Jon Stewart showed that people was having a good laugh at him when he predict he housing bubble a couple years ago. I originally have this video embedded here but it is no longer available.

I came across an article that was about Peter Schiff and his prediction of the housing bubble a couple years ago. He is now predicting the hyperinflation. Given the time frame of his prediction I would guess hyperinflation is going to come after two years. I am not trying to spread the bearish sentiment here. He could be wrong but I would like to keep this in mind.

Here is the article that is questioning the United States’ ability to pay back its national debt, “Can they pay it back”. The following is a quote from it which is originally from Peter Schiff.

The current recession, is only the beginning of a larger economic restructuring. The American economy has been destroyed by years of reckless spending and borrowing. And now, the U.S. government is so deeply in debt that at some point in the very near future, its lenders—namely China—are going to come to their senses and cut America off. “We can’t have one country that just borrows and one country that just consumes that’s supported by the rest of the world. It doesn’t work.” When this system collapses—and it inevitably must—inflation will run wild as the U.S. prints money to support its spending habit. Interest rates will jump and everyone will suffer. The real day of reckoning is still to come.

If I don’t remember wrong this is the third collection in my “Bear Thoughts” category. I don’t know why I don’t find any “Bull Thoughts” so far. Maybe subconsciously I am very bearish and I was very sensitive to bearish message. If you find any good article of bullish thoughts. Please let me know.

I brought western refining yesterday and I felt I was lucky that I made a small profit on it. It was closed down a lot today. It looks like the whole independent refinery sector is bearish. See the following Barron article. I didn’t know that before I brought into Western Refining

More Misery For The Refining Story

Oil refiners have been broad-sided by dismal fundamentals. As a group, they’ve tried valiantly to retreat from higher utilization levels. But the gap between the input costs of rising crude and the dismal pricing in their end markets has left the sector in something of a limbo. Fundamentals aren’t going to improve until the demand picture ratchets back up - something that has continued to seem remote, according to analysts watching the sector.

Credit Suisse said independent refiners have done the right thing by holding down utilization, but that the effort wasn’t a long-term solution to weak margins. Demand would need to recover before participants in the market could see some recovery - a prospect that the firm suggested looked remote.

Bearish as it is Western Refining has dropped from its recent height of $15 in the mid of May to now below $8, almost 50% drop. I personally like the idea of shorting the high flyer and buy in the dip. The question is how dip Western Refining can be. Many economist suggest recession will end starting next year. Next year doesn’t look remote to me. See Roubini VS Buffet

I just created two posting categories, the Bull Thoughts and the Bear Thoughts to collect the thoughts of different authorities. Here is the first one and it is a bear one.

More Pain Ahead For US Economy

A rebound in key U.S. economic indicators masks an underlying malaise that will likely hamstring growth for many years and keep housing and banks in a rut, several top economists said Monday.

Nouriel Roubini, president of RGE Monitor, said a recovery in risk assets like stocks and emerging markets would not last, since it had been based on unrealistic expectations for a global economic rebound. “I see subpar, anemic, below-trend growth for the next couple of years,” Roubini said on a panel sponsored by Time Warner.

Housing expert and MIT Professor Robert Shiller was equally pessimistic, saying, with regards to the four-year housing downturn: “This thing is not over yet.”

Banking analyst Meredith Whitney said she was even more bearish than her fellow panelists, saying that better bank earnings would eventually be challenged by the toxic assets on their balance sheets.