The past few week have been absolutely intense. At the 2pm hr has been moving time, then reversal @ 3pm, then 3:30pm the other way, then resolution @ 3:45.
Here is some music to play in anticipation of those times. Just push play, and get ready for the fireworks.
TRADING ACTION
I was quite active today: As we have broken below the previous trading box, I am now unwinding my sideways trades.
HRB - exited half my Dec/Jan 17.5p Calendar for .55 and .57. Purchased for .25 last week.
This trend is sucking everything down the drain. I wanted to keep my profits on this one.
KLAC - Exited half my Dec/Jan 20p for .40. I took a .05 loss on this trade. I would like to exit more if we see continued weakness.
UNM - exited Dec/Jan 15p calendar. Sold 1/3 for .35. Bought for . 42.
SAI - Bought Jan 17.5p for 1.30 @ 18.40, to hedge my Dec/Jan and Dec/Feb Calendars. I hedge 1 put for ever 10 calendars. This locks in profit to the downside, and I will still have a significant Theta decay position. If we get a move down to the 16.50 lvl I may buy 1 - 17.5c for every 10 calendars to create a straddle underneath my calendars.
WPI - closed my Nov/Dec 25c calendar for .92 and .80. Originally purchased these for .20. Nice trade.
PBR and XLE - closed both offsetting positions for a small profit. I was playing for XLE to stay below 47 and PBR above 20. It fell apart, and I didn't want to deal with it.
Directional:I was most active in the midday hrs (above SPY 81) I was busy adding a few negative deltas.
FPL- bought Jan 40/30p for 1.97 @ 45.50 price level. My target price is 29.
CHKP - bought Dec 20/15p for 1.60 @ 19.20. Price target 15.50 by Dec 11.
RTN - bought Feb 45/35p for 2.90 @ 47. Price target 38 by Feb 23.
Other shorts: GILD, ANSS,
Longs via short puts (ouch): XLF, AUY
Current cash position: 83%
SARA(H) Model-
Shock Anger Retailiation Acceptance (H)elp
When I train instructors and introduce something new, I often find I have to be aware of the SARAH model. When information conflicts with what was previously "known" we often find ourselves move through these stages. At this point, I think we are all in a bit of Shock. We are experiencing the worst year in the market EVER.
At some point will come the Anger and Retaliation Who is going to prison? Dick Fuld, Marty Sullivan, and Alan Schwartz? Yes... I don't have much empathy for the "victims" who are loosing their homes either, unless it was due to job loss or major health issue. But the crap Congress is trying to pass off as innocent victims who bought a low rate mortgage by the evil lenders, only to have it go up on them. ARE YOU KIDDING ME? IF you don't understand your mortgage rate adjustments... ARM, LIBOR, etc.. Then you should not own a home. What is wrong with renting? Nothing!
Whew... OK, I'm back. I am happy to not be loosing all my dough. In fact, I feel fortunate to be up slightly for the past two months, and up 72% on the year. Albeit, I am frustrated with myself for not taking the sell signals when I get them. And prematurely entering a few small positions in mutual funds and taking staggering losses in these relatively small positions.
At this point the market it just puking it's guts out in what feels to me like a Wave 5 selloff. I equate it to the same feeling of exuberance at the top. The problem is, even at the top, you don't know how far it can go. I will be looking at Fibonacci extensions on low volume and breaks of trend.
At the same time we are experiencing a puke out bottom, we are also seeing a blow off top in the TLT bond mkt and people are happy to buy low low rates rather than risking ANYTHING more. PANIC.
I was looking at the SPX chart for some clues. About 5 weeks ago, the Profit Source Charts I use targeted SPX 750 as the "initial target" by Jan 12. And 610 as the furthest Fib extension. Frankly, I didn't want to believe it. I let my mind get in the way. I should have simply respected the power of this trend, the most powerful downtrend in my lifetime. Yet I haven't. I don't think many have. The clues were certainly there. And except for listening to the talking head goobers on CNBC. I believed we were going lower.. I really felt it.
This SPX chart does not yet have today's closing data. SPX 752.
Let's hope these Fib levels actually mean something. If so, I will be looking for a trend breakout to the upside. And using very simplistic EW rules, I will be looking for a retracement to the previous W4. I our case SPX 1000. Crazy times for sure, and I don't think it is over. According to my data, we closed below the 2002 SPX lows. I could assume that we are coming to a near term bottom. And I am willing to bet on it. I am looking at these extensions closely. The market of late has not underdone anything. So at this time I will still be selling the rallies until it stops working. But I will be keeping the 610 target in mind.
I was talking in hushed voice about S&P 750 since Jan '07. People would dismiss me. So much so, that even I didn't believe it. Not really anyway. Not enough to trade on it anyway. This an opportunity of my life. But as my problem normally is, I am too quick to move against the grain. Trends they are the most powerful force in the markets, and this one is not done.