Da Player

“Now, there are probably four or five people in the world who, if they sent me an e-mail, told me to learn a stock, I would actually take them seriously… [Lenny]’s one of the great ones in this business. He’s one of the great ones.”

So I got an advance invitation to an exclusive event in New York the other night.

OK, it was our annual Fantasy Baseball league auction, not this High Society shindig, written up in Min Online.

Last night we attended the launch party for Player’s Club magazine, a shiny new lifestyle magazine published by DoubleDown Media and founded by former NY Met Lenny Dykstra. And where better to launch a glitzy new glossy than at the heart of glitz, the Mandarin Oriental Hotel? Dykstra describes the magazine as being written by professional athletes, for professional athletes. It’s basically a resource on nutrition, finances and lifestyle. The goal is to teach athletes how to invest their fortunes and protect their assets (Um, don’t spend your millions of dollars all in one place?). He basically started the magazine because, “You can’t play professional sports forever. You either have to grow up or die, so I grew up.”

I may not have dined on rare steak, but hey, I did manage to blow 25% of my available salary space on Bobby Jenks. Maybe he would get more saves if he had the mental security of knowing his financial future did not depend on your typical Wall Street operators (or if the White Sox starters can keep their ERA in single digits).

Hmmmmmm…..wonder who I could hook him up with……

Honestly think Lenny’s big concept is a winner, I just would hope he’s not managing everyone’s money with his DEEEEEEEEP Call program.

Well, whatever. His new spruced up Website is here. Featuring of course his World Famous Stat Book. Which shows $205, 850 in total wins on unlimited capital. Versus no losses. Which we of course know to be false. Verbotenstylen did some work in the comments here and came up with a net figure more like $21,000, and that assumed he wouldn’t have kept adding to loser positions.

For those who’s exposure to Lenny consists of the current media blitz, here’s a quick synopsis. He buys 10 lots of deep calls in beaten down stocks and looks for a $1 pop in them to lock in the “win”. Losers are for …..losers; they just get doubled and redoubled and never booked until they expire. Which is generally half a year from now. The success rate is very high on this strategy, the net gain though is not; the magnitude of a typical loser is anywhere from 20 to 50 times each winner. Yada yada yada, that 1.000 batting average will remain unscathed until October.

So why not subscribe today? Here’s the deal.

THE DYKSTRA REPORT is available for $995 for a full year. The money you make from just one win with Lenny’s picks can pay for the whole year’s subscription.

Although not sure the need to subscibe to the cow when he gives the milk away for free on theStreet. Today’s steal is Garmin, we’ll check it out later.

This is actually a measure of 90 day volatility in XLF.

Now 90 day volatility in anything should be on the stable side. In the short term, there is always fear of news flow. Particularly in this sector.

But farther out, it tends to expect mean reversion.

In here, not so much.

This chart covers the past year, and it’s a pretty unreal move. Until last summer, it basically traded at a 15 volatility, By Bear Monday, it hit 50. And again, this is a measure of normalized options with 90 days until expiration. Just thrombolic, not sure I can not remember a similar move in an index of any sort.

Compare this to the somewhat similar tech bubble deflation. QQQQ volatilty actually peaked in 2000 and trended lower until troughing with everything else last February. And the move in the XLF itself is way less in magnitude than the QQQQ.

Not sure what it all means, but it’s wildly divergent behavior

Breaking News: Cramer on Stop Trading says to take profits on the financials. “I would “shnitzel” a little Citigroup….I would take some off the table”.

Um, what Citi? Here he is on Stop Trading last week.

I do not want to own the bank (Citi), I do not want to own the shares……I do not want to own that stock.

……That Jim I am, That Jim I Am

Anyway, some opinions on shorting/plus ticking from Michael Steinhart.

Here’s my Uptick Uptake, I don’t care which argument is right or wrong. I deal with the rules that are in place right now.

There are many market forces and identifying one or the other as a primary cause of total market movement is very simplistic and dangerously ignorant. The idea that the uptick rule would have prevented us from declining a whopping 15% off the record high is absurd. I tend to place more emphasis for the selloff on the credit crisis, declining corporate profitability and the general contraction in the economy. Those seem to be pretty fair reasons for a market decline if you ask me.

And Doug Kass.

It is my continued view that short sellers — and I am clearly talking my book — play a far less important role in influencing share prices generally. The dedicated short community is well under $10 billion — less than one-fifth the size of Fidelity’s Magellan Fund. There is no empirical evidence that the short-selling asset class, the elimination of the uptick rule or that the role of short sellers (as part of the long/short hedge fund class) are in any way responsible for the bear market of 2007-2008.

There are ample fundamental reasons (especially of a credit kind) for the market’s weakness, but the short-selling blame game is quite simply a figment of the bullish cabal’s imagination — and an easy excuse for their mistakes.

I realize they both have some axe to grind, moreso with Kass. But it doesn’t mean they are not correct.

I have absolutely no axe at this point, other than an opinion that it was a dumb and outdated rule that actually disadvantaged the smaller trader. When I started trading in ’88, puts were generally overpriced relative to calls, even on the same class. Why? Because the market only traded in eighth’s then, and there were no ECN’s to trade with if you needed. And no ETF around that was a nice correlation to your stock. And if you sold puts or bought calls, you needed to short some stock and with so few price points, plus ticks did actually come into play. In that world, yes, not letting you hit bids on down ticks did probably keep a stock in place longer.

But you know what? Who did that really benefit? Probably the stock specialist more than anyone. The stock would just tick on bids and the specialist would see all the short sellers in there and eventually get it down enough and he or someone else would lift the ever-decreasing offer. And all this would happen in very slow motion, you literally might have waited an hour or two for a plus tick. Which of course let new, unwitting buyers walk in.

And in my humble opinion, the stock ultimately got the same place then it would get to now, just slower.

I want all of you to get up out of your chairs, I want you to get up right now, then to the window, open it, and stick your head out, put your Congressman on speaker phone, and yell. I’M AS MAD AS HELL….AND I’M NOT GOING TO TAKE THIS SHORT-SELLING ON MINUS TICKS ANY MORE”

Howard Beale.

Amazing they were squawking about the Plus Tick rule 30 years before it even was abolished.

OK, it’s possible I tweaked that a little bit.

Anway, there must be some sort of headline indicator here. This from BooYa Central last Friday.

A Market Without Fear Is Scary

Lack of Uptick Rule Could Kill MER

LEH Upgrade Is Still No Reason to Buy

And following yesterday’s mongo pop, we get…..

LEH Opens the Door for Lots of Stocks

JCP, FDX Are Signaling a Bottom

Don’t Hate the Rally

Housing Could Be Headed for Stability

The Selloff Will Be Mild

Top Big Board Short Squeeze Plays

OK, the last one is from Jim Altucher on Real Money. Ironic, no? But in a way it highlights the whole point. If shorts are creating artificial prices, use them to your advantage. And so far so good on those last calls.

But hey, as long as we’re on the subject, instead of whining about the swings, how about doing something proactive? If you are fretting about the volatility in the market, buy some. Option volatility has gotten slammed this week, why not buy some *insurance* now in some form. Maybe switch out of a stock winner and into calls to limit downside risk and maintain upside exposure. Maybe just buy some puts. Maybe go long some near money straddles as a way to actually bet *on* volatility if you feel your portfolio is exposed to sudden flashes.

That *massive* volatility everyone is talking about? It’s apparently history. Just one indicator, but the VIX is suggesting we are due for a bid of a pause in this rollicking….two day rally.

We are 10% below the 10 Day MA, and right at the 200 Day MA. The market has not done well any time we have seen this in the past half year.

Now that being said, one time the VIX will bust through (and then really fake us out, no doubt). And it is worth reiterating the the VIX gives more reliable (market bullish) signals when it gets overbought.

It’s also worth mentioning that the better way to view these is NOT to use it as a trading signal, but rather as a signal of overall market health. If this does not stop the market in it’s tracks, as it has through this Bear move, it suggests the market’s character has changed for the better.

….And apologies for VIX-ing too much.

Is there anything Dick Fuld can’t do? This from Briefing.

13:07 LEH Lehman Brothers: CNBC commentator says LEH CEO Fuld has told Wall St. execs and regulators that he has information that short-selling hedge funds colluded to bring about the demise of BSC (43.15 +5.51) -Update–

Sounds like a bit of a stretch, but this will surely embolden the Plus Tick-a-nistas. Of course the play here that got this whole thing started was the size cheapie put purchase. Whether that caused some sort of Feedback Loop that caused hedgies to take their money out of prime brokerage accounts at Bear, which caused stock selling….and so on….is certainly possible.

But last I checked, they didn’t put all that garbage on Bear’s sheets that made them vulnerable to this to begin with.