Feb 12th- Support held, market rallies

Market opens up, holds, then rallies. But is it real???


Well, we woke up to a pop. That makes sense to me. Then Buffet basically came out and said, we made an offer to take all obligations from the Monoline insurers. I doubt he did it from the kindness of his heart. Although, he seems to be a kind fella. Cents on the dollar comes to mind.
So the market pops. I thought Cramer has it in perspective:

I reiterate that until the government takes over some of the liabilities of these insurers and gets warrants, and until we have a real FHA guarantee and lower interest rates for refinancing, neither trouble will disappear.

The 61.8% retracement on the QQQQ is 44.38. I will hedge my MSFT with a short on the the Qs.
The March Quarterly puts have the lowest IV at this time. And I am looking at the MarQ 44/40 put spread.
Steve Smith from Real Money.com has a good under the hood review:

Stocks are opening substantially higher after Monday’s support levels, most notably 1320 in the S&P 500, held fast. Monday’s bounce off that level seemed to be mostly short-covering and bears not wanting to press their bets. This morning’s action is coming on better volume and feels like fresh buying from investors that are essentially “rejecting” that 1320 level which bullish action.
Remember, this is an option-expiration week, and the open interest in the SPX options is heavily tilted to the put side. But as the market rallies and these puts move out-of-the money, the likelihood of options triggering sell programs or forcing those short February puts diminishes. Right now, 1350 is the strike of peak open interest, and it is fairly balanced with 61,000 calls and 72,000 puts. This could become an important fulcrum point in the next few days.

I peeled out of some AIG this morning, and have 34 orders on the board, mostly playing behind the net.
AIG – sold remaining 55/50/45p butterflies for 1.30. I exited prematurely, but I feel like I have enough exposure in AIG at this time. Sold 1/2 of my 6 units of the 45p Mar/May calendar for 1.50. 1/2 at 155, and 1/2 at 1.57. I am done selling for now, but a 40% gain in a day is good. I will pick up more 45p calendars if I get my price. Love this market.
SPY – Shorted 4 units of an Iron Condor Mar 127/129p 142/144c for 1.00. I am playing the high volatility and strong support and resistance levels for this 38 day trade.
SDS – Picked up a 1 unit for 62.25 on a retest of a lower high. The internals were not supporting, but the technicals where worth giving it a shot. I tightened my initial stops as the SDS bounced off technical support. I considered selling at 63 against a high, but I decided to sell below a previous 15 minute bar. I am out @ 62.56. I screwed up a bit. I should have drawn a uptrend line, and played the stop that way. Next time.
All and all, a decent day of trading. I am up about .5%. and have exited most of my February risk. I have a few positions DTV, CAL that benefit from a strong move down this week. The others fairly market neutral. That was my main objective this week. Make a few bucks, and put on a few beneficial Theta decay trades. I am delta negative and Theta positive at this point, and am 65% in cash.
Thanks America for giving us another crappy choice for a Republican President… At least Colorado got it right. Romney should have been the Rep Nominee

Although Mr. Obama is an exceptional speaker and a person I respect greatly, I am frightened of Mr. Obama’s tax policies. Greatly favoring the “employee” and proposing the jacking up of marginal tax rates. Totally screwing investors and small business owners. And with a Democratic Congress I am afraid current tax laws will sunset. As Americans we are already taxed to death. I will continue to overfund my life insurance policy and any other ways to legally not pay more than my fair share to the gov’t. The gov’t has not shown me that it is better at spending/investing money that I am. But that is a rant for another day.

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