July 9th – Rough, rough day in the markets

There are some fund managers and private investors who are going to panic soon.


S&P down 29, Dow down 214, Nasdaq down 52. Huge moves down, the markets were crushed today. Interesting that for the first 2:30 hrs the market churned within about an 8pt range. And then waves of selling hit. My guess, is that when the sellers saw that yesterday’s rally, and the opening gap didn’t have anything left, the shorts decided to press the issue.
The first selling wave from 12:30-1:15, then churn, then 2:30-3, bear flag, then a strong sell into the close 3:30-3:45.
I went on an early morning walk/read. It gave me some ideas, and I researched them in the morning. I am looking to buy Canadian oil/gas trusts, when the time is right. I am looking to buy via shorting puts for the amount of stock I want to buy. I have also noticed that Volatility is very high for these issues. This will give me more credit premium to cushion a bottom for me.
Here is some relief for you. This is so amazing to me. It makes me think that when things look like hell, that if I keep my mind open I will be incredibly surprised at the beauty that is revealed.

I managed a few trades to take some money off the table to:
KEY – Bought 2 units of the 10p calendar for .05. I was only able to get half my order filled, but it did come in 3 separate fills.
FNM – sold 1/2 of my 15p position in the morning for .20. The spread and underlying closed on its lows. I was please to bank the profit and turn it into a guaranteed profit. I will look to rebuy during tomorrow morning’s panic.
MFE – Sold the remainder of the July/Sept 35p for 1.45. I took off all these high gamma calendars, and hold 1 unit of the Aug/Sept 35p calendars.
Today was flat out brutal. Not a good sign for anyone long. My positive delta calendar position took it in the shorts. No big losses, and I am please to continue taking risk off the table, but I still don’t like being down at the end of the day. And I am down 1% (less the microcalendar positions).
I am looking for panic soon, and I have a strategy that should make a killing without exposing me to much directional risk. The market is too volatile for me to effectively trade it. I think many people are scrambling. When the panic hits people will do irrational things. I have my buy list in place, but better yet I have my panic list in place. And at the time of this writing I sit in 86% cash, 0% long mutual funds, 0% bond funds, 4% long dollar funds (could be iffy). But when it comes down to it, I am ready.
“Test the market with 1 lot orders, but lean into the sellers when you have the edge”

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