Bounce?

Today I should know better, a bounce after the sell off. Too bad I had an appointment this morning and didn't get chance to sell the puts. On the other hand, I didn't put the trigger on FXI puts as well. Market was up .6% in Nasdaq and .4% in Dow.

1. Is this just a technical bounce off 50MA on S&P500?


2. Or this is due to the Blackstone IPO tomorrow, people know we'll have a rally tomorrow?


3. Or this is due to Merrill Lynch's back away from the sale of Bear Sterns' asset it collected from its failed CDOs? Therefore, no chain reaction in the CDO market.


4. You can't use 10 year yield as a reason for rally, we had another move higher today, no impact on market.


5. I think it's just a bounce. But tomorrow, let's see if BX can ignite new interests in bulls, or a failed early rally replaced by lower close at the end.
   

Signs of more troubles ahead:

1. After market, Bear Sterns said it may take 3.2B loss on the failed hedge funds. For them, it's just a number, and market can forget about it and move on. People are getting smart now, in 1998, Long Term Capital lost 6 B and market had a sell off. Now it does not even bother the stock price of Bear Sterns?


2. But this is not a good sign for credits in the markets. More may come later.


3. And we have BX pushed IPO from June 25th to June 22. Why is that? They are very smart people, they know the market is heading lower?


4. BX's IPO may indicate the top of this round of liquidity in the market, the end of easy money. Just like AOL's purchase of TWX back in 2000.


5. Any way you look at the market, you feel like at most it has one more dead cat bounce left. But this market makes lot of experienced traders lose tons of money, so don't underestimate the strength of the bulls.

I'll be careful not to add puts. Sit and wait.

I checked the latest COT report, looks like commercials are extreme bullish, large speculators are extreme bearish, this is very unusual, indicates something will happen soon. Either it's the new beginning of an extreme rally or a sharp correction, I think we're close to a correction than a rally.

Tomorrow:

1. Market will open at the high of the day and close lower. That's my feel of the market.
2. BX will open higher, touches high early in the morning and then close lower than the opening.
3. I won't be surprised if the market rally again tomorrow, if that's the case, I missed another chance to sell early today.