July 7/8 – Massive swings, and market breakdowns

Recapping a crazy monday market, and live blogging a wilder tuesday.


This is a brief recap of Monday, and an ongoing blog of tuesday.
Monday was a very nice day for me. The stress was very low, and the profits were comfortably large (3%) on the day, 6.5% for the past 2 days. Summer trades are the reason.
I was up very nicely early in the day when the market gapped up. It was soon met with selling, and my P/L dwindled. This action surprised me. I thought we would hold the gap, and then move higher. Especially since oil was down nearly $5. Evidently the market is smarter than that, and it realizes that until Oil breaks its uptrend line ($126), there is no reason to celebrate. The economy is still going to hurt as working men and women have to budget for $60+ fill ups.
I had a few positions run in my face @ 9:30am. The SPX dropped 30pts in 1 1/2 hrs. It chopped on the lows. At that point, I went to play tennis with my son. While playing, the market moved up strongly @ 1pm. It moved up 23pts in 40 minutes. During that run, I was filled on a few trades. I wanted to lighten up on some of my bullish calendars. I am glad I did that.
Also, the dollar fell from it’s highs during the course of the day.
To be long this market, is to not respect the trends. The SPX and the Dow Jones IA are ill.
I am looking for the next support around 1186, then 1096. Neither of these are good if you own long only mutual funds. The bounce is now based on hope, and hope isn’t profitable.
SPY%207.7.gif
Trades:
DPTR – Exited the remaining 47 calendars for a .18 profit.
HOLX – added 1 unit of 22.5p calendar
PM – exited last 10 contracts of the 50c calendar for .15. Originally this position was 780 contracts, now it is done.
during the afternoon rally;
MNX – exited 2 units of Aug/Sept 190p for 2.10. I wanted to take some risk off the table.
MFE – exited 1 unit of July/Sept 35p for 1.40. The underlying broke below previous support. When it rallied it have me an opportunity to take some risk off the table. I am looking to roll my July 35p to Aug. I am looking for 1 more price spike. Currently I have 4 units of this trade on, and I want to lighten my exposure. The current roll is .85 cr. I initially bought this Jul/Sept spread for 1.18, and the Aug/Sept is pricing @ .52. There is only .20 of extrinsic value in the July option, so I need to do something this week.
Tuesday Trading:
The market has been a little nuts. The S&P was down out of the gate, then a 10pt gain. Followed by a 14pt selloff, then a 17pt rally. ??? Fortunately I am trading a little differently right now, and I don’t have to worry about market volatility. Horray.
At 11am, the acct is up 3.5% on the day. 10% in the past three days. And better yet is that I exited some positions to lock in gains.
Trades:
SOLF – 4 units Sold 12.5p calendar for .20 and .25, for a very nice profit. I am flat on this position.
VCLK – Bought 4 units of 15p calendar for .05. Interesting fills. As I put a new order, in I was filled on the first order in the que. Even though I was being filled at first. This leads me to believe that it was a computer program that was checking the order que for liquidity. I think I was able to outsmart the computer and get an addition 100 contracts on. Within about 10 minutes the spread moved back out to 15
MFE – Rolled 3 of 4 units of July 35p to Aug 35p for a .85 cr. This leaves me .33 of initial risk on the table. And it lessens my Gamma risk during this whippy market. Rolled it @ 33.40.
The Ben and Henry road show has started. It has seemed to rally the market and the dollar. I am very pleased with results. With the success of my summer trades lately, it has allowed me to relax and let my other calendars work. Today the portfolio was working. It was up 4.5% at the end of the day
I have 84% cash, and I am biased slightly to the upside. The markets have a long way to rally. I would not be surprised to see it move up to 1315 in the SPY, or even as high as 1365. Seriously, these are very realistic fibonacci retracements. I may start to putting calendars on the board, as volatility drops.
I celebrated the day with a movie:

Today looks like some short covering. This is a good article. Bespoke Investment Group.
The Positively biased trades I have on are:
C
MFE
USB
IWM
MNX
GE
MSFT
Neutral:
URBN
MNX
Negative:
POT
Summer Trades (very neutral)
AMKR
FNM
HOLX
NTGR
SPLS
VCLK
Position Greeks (SPX weighted): Slightly bullish, yet neutral
Delta + 26
Gamma -.29
Theta +95
Vega +290

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