BEHIND THE MONEY: Stocks Won't Get Any Love Until After Valentine's Day
The stock market will continue to churn sideways to lower as brutal earnings reports (and subsequent poor outlooks) keep rolling out and Washington haggles over President Obama's stimulus, according to Goldman Sachs strategists and other market observers.
The President has set a deadline for passing his stimulus of Monday Feb. 16, the very same week that the last few Dow members (Wal-Mart, Hewlett-Packard) are set to report. That makes Valentine's Day (Feb. 14, but many of you should already have that on the calendar) a good marker as to when sentiment may change in the marketplace.
In the meantime, "we expect poor 4Q earnings, lowered and withdrawn 2009 guidance, and decreased forecasting visibly to spur another wave of negative revisions this season," writes Goldman Options Strategist Krag Gregory, in a note to clients this morning. "Until the (stimulus) bill is signed, there will likely be volatility around changing expectations and eventual results will take time to play out."
Goldman recommends buying S&P 500 Feb-09 puts with an $830 strike price, as well as buying a Feb. VIX future vs. selling a June contract. The VIX future rises when volatility increases, as measured by the CBOE Volatility Index.
The always smart and always entertaining Jon Najarian, of OptionMonster.com fame, recommended last night on that show that you ride out this coming tumultuous period by going longgold. He's buying calls on Freeport McMoran to do just that.
So forget that last minute Pajamagram or Vermont Teddy Bear. Think ahead and buy your sweetheart a VIX future or Freeport call.
Got something to say? Send us an e-mail at email@example.com and your comment might be posted on the Rapid Recap! If you'd prefer to make a comment but not have it published on our website send your message to firstname.lastname@example.org.