I was proud of myself for being patient this morning. I went short early yesterday. And in retrospect it was a good decision. Today the market started down a little, then there was a 15pt S&P rally. I bought more COF and AXP put spreads. I also bought the SDS (S&P) ultrashort. I set a tight (.20) stop. That stop held, and then the market reversed. I have now moved up my trailing stop and have a profit built in.
By 11am, the market retraced 61% of it’s rally. That was my que to move up the SDS stop.
Yesterday’s Non-Manuf ISM number (41.9)was the 2 worst in 5 years. It indicates DEEP slow down in the service industry.
SPY Chart – Initial target is the previous low. Does it hold? 50% retracement seems likely to me (Orange).
Similar targets for the Dow are 11,700 and 10,800.
IWM targets are 65 and 58
To me the Fundamentals tell me to sell into the rallies. As do the charts.
This morning I added a few positions and sold a few:
COF – added 1 unit of Jun 45/30p for 3.25 @ 52.60.
SDS – 1 unit @ 63.00. I set a stop @ 62.75, then moved the stop up. Eventually exiting upon the trend break @ 64.42. My eventual reward to risk was 5:1. Very Nice. This was a great trade. I purchased @ my determined support level and rode it all the way up to the maximum resistance level. But rather than exiting there, I decided to wait for the trend break. When that happened, I was decisive and exited. I may re-enter if the SP touches it’s downtrend line. I missed the re-entry by .01. Then it broke out again dramatically. WOW.
COH – Bought back 2 units of my short strike of my Mar 17.5p for .05. I still have 2 units of Mar 25p.
AIG – Sold 3rd of 8 Feb 55/50/45 butterfly units. I bought these for .50 and .40. I am peeling these off into this down cycle. I have taken all of my initial risk off from the original trade.
WEN – Sold 1 of 4 remaining Feb/Mar 22.5p for .82. Original purchase .19.
MSFT – 100 sh @ 28.44 @ 1:45pm MST. Normally I don’t buy stock, but I believe in the MSFT story. And I like the YHOO addition.
UST – Bought 4 units of the Mar/Apr 55p for .53. Great sideways chart. Lots of juice in the March options.
Yesterday was a nice 3% gain in the portfolio. Today I am up 1% on the day. Not bad. I have some other trades working well for me. Although I am still light in my positions. I have 85% cash.
The market fell hard from 11:30 right into the close. 26pts from top to bottom. I rode 15 of those with SDS. I was a pretty impressive fall into the close. SP off 10, DOW of 84, Russell off 1. But the story is not off 10 on the SP but rather a Pop and Flop on the day. I was a good trading day. Up more than 1% with a few nice entries.
The crush of the day was the CME. Down 103pts!!! The government is considering breaking up the exchange clearing firms. Evidently, they make too much money. GOVT… Get out of the kitchen. We don’t always need you to protect us.
This is a quote from a Market Plot service I receive:
As for the broad market, not much has changed on a technical level. Tuesday’s break of the hourly uptrend lines put additional pressure on the major indices yesterday, causing stocks to retrace more of their gains from the near-term bounce off the January 23 lows. As the main stock market indexes remain firmly in long-term downtrends, this should not be surprising. Both the S&P 500 and Dow Jones Industrial Average are likely to test their closing lows from January very soon. The Nasdaq stealthily already set a new 52-week closing low yesterday. With every industry sector suffering in this sell-off, there are really no safe places to hide in the stock market. If you missed the short-term bounce a few weeks ago, this is not the time to be a hero by trying to catch another market bottom. The logical choices for capital preservation are simple: wait patiently in cash, trade only in non-correlated ETFs, or conservatively sell short the market.