May 16th – a fitting end to the week

This market is silly strong. But I think it may have topped out for but a week.


The bulls are winning the week. It has been an amazing week. I ended down 2% on the week, and I am exhausted. I took a few beatings, and had a few very nice directional plays as well as some great adjustments to a few trades.
The market seems unstoppable. There is tons of buying on every dip. What is a delta neutral trader to do. The month is ok, up 14.06%. I would like to have a few really good weeks to round out May.
Logically, I don’t understand this market. The Government, through intervention and regulation has somehow brought us back to the 200 day MA at S&P 1425. Not far from the All-time market high. Curious. All I know is that I am looking for reasons not to have to take a trip in my car. I know many people who are in cash preservation mode. $50 fill ups for my Subaru are interesting experiences, and I only fill up once every two weeks. I am not sure how the majority of Americans are doing it. Feeding two vehicles, including the SUV twice a week seems like an interesting experience.
Even with all that logic, it is flawed when in comes to trading. Oil goes up, the market rallies due to the XLE and OIH, Oil comes down the rest of the market rallies. Fortunately I have been baised in the up direction for the past few weeks. Although, as of the close of today I am leaning short. Delta negative with 294 deltas, and 64% in Cash.
Trades of the day:
FMCN – Sold all of the July 45/35p for 4.15. I was rolled over on this trade. not happy.
PM – Sold 5 units of 55c for .15 and .17. That was a very good trade. I would like more.
BCSI- June July 22.5p for .33, sold the same day for .43. I sold this one quick as the underlying continued to move up passed 24, and I didn’t want too many short deltas.
MFE – Opened a 2 unit position June/Sept 35p for 1.46 in this sideways trending issue.
AFL – Sold 1/3 of the 65/70c for 2.66. I opened this trade on monday. It has been a nice winner. I still think it is going higher, however I just don’t trust this market. I wanted to book profits.
Here is the SPY (S&P 500) chart. A few things worth noting.
1) The market has formed a “Hanging man” pattern on the daily chart. (Bullish engulfing on the Weekly)
2) We are at the top of the Bollinger Band range on the daily
3) We have touched the underside of the 200 day Moving Average for the first time since Dec 27th, 2008.
4) For the past 9 weeks we have been seeing alternating up and down weeks. It would seem “logical” that we see a pullback next week based on these 4 observations. Who really knows?
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Have a good weekend

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