6/7/2007 – 3 big falls in a row.

RIIIPPPPP. That was the sound of the bull trying get out of the tent. One way all day. Down. Fortunately I was pretty safe. A few of the errors of the past few days bit me today. However, the overall portfolio is up.


There is some carnage in the stock world today. @ 9:20 the S/P is down 11. QQQQ’s hit 46.8 then bounce. I was queing up a stop order just below that level. Overall this is good for my acct. Temps are cold today. 34* right now. And it snowed last night.
The indexes were ripping through support levels. When all was said and done today, my acct was up about 1%. I have some good plays on right now to take advantage of volatility in the mkt. I have no idea where this market is going from here. Then next fib# is 147.5 in the S&P. I am in very good shape if it heads there by expiration day.
I have been putting on some very cheap protection in the way of June quarterly and regular June OTM put Butterflies, and Iron Condors. Whew!
Disappointed in AIG. sold it for a small loss today. I found myself investing too much Mental capital for being such a small postion. Within an hour of my sell, I could have scratched the trade. The underlying has come down less than a $1 with a 33 pt SPX decline. Phoey.
72.01 was a double-bottom this morning. UPDATE – bummer, it dropped .80 after I sold my put spread.
I am disappointed in my play of SPF. I had a short term synthetic straddle on from 21.50. Rather, I chose to be bullish. I probably should have held onto the June 22.5p, rather than moving to a July 20p so soon. It was a trading decisions, but obviously ill timed.
COGN and AMTD july/aug calendars are doing very well. Underlying prices 39 and 20, respectively.
STLD – I put on 2 small levels today, ave .39. The spread is tightening, even as the underlying was approaching 45, and continues to drop. Nothing wrong with that. I have a few more levels I will put on as this happens.
EK – The spread is widening, but the underlying is not dropping. A .20 drop should exit one of the 2 remaining units. This stock is up, even though the market is down hard. HMMMM, clue?
The BWLD plan is shaping up. Nothing entered yet. Bullish IC, Bearish Butterfly, with a protective call and put. July and Sept expiration months
There are no Calendars which are meeting my criteria at this point. I am going to read for awhile. The book I am reading right now is The Trading Athlete by Murphy and Hirschhorn. So far, it is pretty good and pretty basic.
Mid-day:
I am getting schooled today. I exited QQQQ’s. I had to chase the price down. I was trying to exit while giving up a little bit of an edge, but there were no buyers. It bounced off the Fib level of 46.66, I sold into the bounce. Does it go lower? I am not going to be around to find out. The loss was minimal. I stuck to my plan.(great work)
I am also getting schooled in JADE. Again, I am giving away an edge, and it still won’t get taken. The next support level is 10.85. I got out at 11.20. UPDATE – I exited the straddle @ 3.6. Nice 60% profit on the trade. I would have liked to have straddled it @ 12.20, I had my chance but missed. I would have stayed in the trade if I would have done that properly.
AIG has now tanked. Got out too early. dang it. I was out due to frustration, rather than the game plan. I am not too happy about that. The underlying ended .80 below my exit.
COGN, EK, and AMTD are doing well.
Midday SP down 21 pts, Dow30 down 141.
End of Day SPX 26.6, Dow30 196. HUGE Volume
I can learn from today. There are losses and there are gains today. Overall the account is nicely green for the day. Thank goodness for some of my bearish IWM and SPY butterflies and Iron Condors.
THIS is IMPORTANT:
I was looking at last year’s summer plunge. The timing is similar. The correction made a full 62% retracement, and off to the summer/yearlong drive.
Now I am not saying that last summer will predict anything. I just think this may be worth watching. I think some higher volatility ahead. Big daily swings. Perhaps a dive at the open, and then a drive higher.
SPY%20CHART.gif
I’m playing in the bearish camp for a few weeks here. I won’t establish any long positions until I see a retracement into the fib numbers, and I want to see the Oscillator pull back below the zero line.
What has changed in the past 5 trading days? 5% bond yield. Is that really so much different than 4.9%? The market reacts… Terrorist event, China market tumble, now 5%. It was quite a reaction. As if there was anyone who has not notice inflation running… i.e. GAS prices. The bears have their day, and maybe for a few weeks upcoming. But like the other stuff, the market will stabilize. In the mean time, thank you Volatility!!! I am looking at my higher Vol strategies… i.e. Butterflies, Iron Condors, at some point Credit spreads.
I am specifically interested in the Oscillator strength lately. Compare it now to last May. Obviously more institution and global investors getting involved. It is often said that Institutions rule the Wave3, and the investors who missed wave 3 get into wave 5. May this be what we are setting up to see?
Might the brokers to individuals (AMTD, Etrade, OXPS) pump on the news?
Looking at butterflies to the downside for the month of July.
until tomorrow,
Jon
p.s. this is not investment advice.

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